OSG slides further into the red

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Overseas Shipholding Group, Inc., a leading provider of energy transportation services for crude oil and petroleum products in the U.S. Flag markets, reported results for the fourth quarter and full year 2021.

Shipping revenues for the fourth quarter 2021 were $95.5 million, an increase of $1.5 million from the third quarter 2021. Compared to the fourth quarter 2020, shipping revenues decreased 2.1% from $97.5 million. Shipping revenues for the full year 2021 were $359.1 million, down 14.2% compared with the full year 2020.

Net loss for the fourth quarter 2021 was $3.7 million, or $(0.03) per diluted share, compared with net loss of $16.0 million, or ($0.18) per diluted share, in the third quarter 2021. Net loss was $844 thousand, or $(0.01) per diluted share, for the fourth quarter 2020. Net loss for the full year 2021 was $46.3 million, or $(0.51) per diluted share, compared with net income of $30.0 million, or $0.33 per diluted share, for the full year 2020.

Time charter equivalent (TCE) revenues(A), a non-GAAP measure, for the fourth quarter 2021 were $80.0 million, an increase of $4.7 million from third quarter 2021. TCE revenues were down 7.0% compared to fourth quarter 2020. TCE revenues for the full year 2021 were $292.6 million, down 22.1% compared with the full year 2020.

Fourth quarter 2021 Adjusted EBITDA(B), a non-GAAP measure, was $16.6 million, an increase of $4.4 million from the third quarter. Adjusted EBITDA decreased 19.0% from $20.5 million in the fourth quarter 2020. Full year Adjusted EBITDA was $45.1 million, down 63.8% from $124.9 million in the same period in 2020.

Total cash(C) was $83.3 million as of December 31, 2021.

During the quarter, we removed one vessel from layup. Subsequent to quarter-end, we removed an additional two vessels. As of March 1, 2022, we have two vessels remaining in layup.

Sam Norton, President and CEO, offered the following comments on the quarterly results announced: “We are pleased with the operating results achieved during the final quarter of last year, marking the third consecutive quarter of improved sequential TCE and EBITDA performance. Importantly, we expect this trend to continue in 2022. As noted in our prior quarter’s release, Jones Act Vessel availability across the fourth quarter and into 2022 has tightened considerably, meaning that business fundamentals for our conventional Jones Act tankers continue to strengthen. Following on from having activated three tankers out of layup at the end of the third quarter and in the fourth quarter, the Overseas Anacortes and Overseas Long Beach have now joined the active trading fleet in recent weeks, leaving only one tanker and one lightering ATB in layup as of today. With additional available operating days at improved market rates, and the reliably solid contribution from our niche and Alaskan Tanker Company assets, we are witnessing steadily improving cashflows from our businesses and an improving balance sheet.”

Mr. Norton added, “Energy markets are experiencing dislocations at this time”, Mr. Norton continued, “creating trading opportunities that are not usually seen in the markets within which OSG operates. OSG’s fleet is well positioned to facilitate many of these new trading opportunities and, in doing so, providing reliably available transportation to meeting the evolving needs of the domestic US market.”

Fourth Quarter 2021 Results

Shipping revenues were $95.5 million for the fourth quarter, an increase of $1.5 million, or 1.6%, from the third quarter of 2021. TCE revenues increased $4.7 million, or 6.1%, from the third quarter to $80.0 million in the fourth quarter. The increases were primarily a result of a 168-day decrease in layup days as two vessels came out of layup in September 2021 and a third vessel came out of layup in December 2021. Delaware Bay lightering volumes also contributed to an increase in revenues.

The fourth quarter operating loss was $1.9 million compared to the third quarter operating loss of $5.6 million.

Quarterly adjusted EBITDA increased to $16.6 million during the fourth quarter, a $4.4 million increase from the third quarter of 2021. The increase was driven by the increased revenues for the quarter.

In comparison to the fourth quarter of 2020, shipping revenues were down 2.1%. TCE revenues for the fourth quarter of 2021 were $80.0 million, a decrease of $6.1 million, or 7.0%, compared with the fourth quarter of 2020. The decrease resulted primarily from a 173-day increase in layup days due to vessels in layup during the fourth quarter of 2021 and one less MR tanker in the Company’s fleet, reflecting the sale of the Overseas Gulf Coast during the second quarter of 2021. The decrease was offset by the addition to the Company’s fleet of one ATB, OSG 205, delivered in December 2020.

Operating loss for the fourth quarter of 2021 was $1.9 million compared to operating income of $2.2 million for the fourth quarter of 2020. Net loss for the fourth quarter of 2021 was $3.7 million, or $(0.03) per diluted share, compared with net loss of $844 thousand, or $(0.01) per diluted share, for the fourth quarter 2020.

Adjusted EBITDA was $16.6 million for the 2021 fourth quarter, a decrease of $3.9 million compared with the fourth quarter of 2020, driven primarily by the decrease in TCE revenues.

Full Year 2021 Results

Shipping revenues were $359.0 million for the full year 2021, down 14.2% compared with the full year 2020. TCE revenues for the full year 2021 were $292.6 million, a decrease of $83.3 million, or 22.1% compared with the full year 2020. The decreases were primarily a result of (a) a 1,894-day increase in layup days due to seven vessels in layup for most of 2021, a decision taken in light of the lack of demand due to the economic impact of COVID-19, (b) one less MR tanker in our fleet, Overseas Gulf Coast, which was sold during the second quarter of 2021 and (c) two fewer ATBs, which were sold in May 2020 and August 2020, respectively. The decreases were offset by (a) a 204-day decrease in scheduled drydocking, (b) the addition to our fleet of three crude oil tankers, Alaskan Explorer, Alaskan Legend and Alaskan Navigator, which were purchased in March 2020, and two ATBs, OSG 204 and OSG 205, which were delivered at the end of May 2020 and the beginning of December 2020, respectively, (c) an increase in Delaware Bay lightering volumes and (d) five voyages for Military Sealift Command, which were longer international voyages, during 2021 compared to two such voyages during 2020. Two of seven vessels came out of layup in September 2021 and operated in the spot market. One of these two vessels commenced a 26-month time charter in mid-November 2021. A third vessel came out of layup in December 2021 and operated in the spot market.

Operating loss for the full year 2021 was $29.1 million, compared to operating income of $58.6 million for the full year 2020. The prior year included a gain on termination of a pre-existing arrangement related to the acquisition of the Alaska Tanker Company.

Net loss for the full year 2021 was $46.3 million, or $(0.51) per diluted share, compared with net income of $30.0 million, or $0.33 per diluted share, for the full year 2020.

Adjusted EBITDA was $45.1 million for the full year 2021, a decrease of $79.8 million compared with the full year 2020.