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Overseas Shipholding Group Reports First Quarter 2021 Results

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Overseas Shipholding Group, Inc. (NYSE: OSG) (the "Company" or "OSG"), a leading provider of energy transportation services for crude oil and petroleum products in the U.S. Flag markets, today reported results for the first quarter 2021.

  • Net loss for the first quarter 2021 was $15.9 million, or $(0.18) per diluted share, compared with net income of $25.1 million, or $0.28 per diluted share, for the first quarter 2020. The first quarter of 2020 included a $19.2 million gain related to the acquisition of the Alaska Tanker Company.

  • In April, we entered into a contract to sell the Overseas Gulf Coast for $32.5 million. Based on the negotiated sale terms, the transaction will result in a $5.4 million loss, which we recorded in the first quarter of 2021. The sale of this unencumbered asset will provide additional liquidity.

  • Shipping revenues for the first quarter 2021 were $81.3 million, a decrease of 19.4% from $100.9 million in the first quarter 2020.

  • Winter Storm Uri resulted in U.S. refinery shutdowns further reducing transportation demand from already depressed levels as a consequence of the COVID-19 pandemic.

  • During this quarter, the Company had seven ships in lay-up and one vessel unemployed in the spot market for two months.

  • Time charter equivalent (TCE) revenues(A), a non-GAAP measure, for the first quarter 2021 were $65.5 million, down 32.5% compared with the first quarter 2020.

  • First quarter 2021 Adjusted EBITDA(B), a non-GAAP measure, was $6.2 million, down 88.2% from $52.8 million in the first quarter 2020.

  • Total cash(c) was $45.2 million as of March 31, 2021.

Sam Norton, President and CEO, commenting on the recently completed quarter, stated, "The ongoing coronavirus pandemic, and associated lockdowns, business closures and travel restrictions, continued to severely impact global and national energy markets – and by extension demand for crude oil and refined product marine transportation in the first quarter. Given this very difficult operating environment, the results announced this morning have met our expectations and point to the continuing benefit of having a diversified asset portfolio. Although our conventional Jones Act tankers experienced losses in the first quarter, our other operating assets performed largely in line with historical norms. Heightened uncertainty has resulted in the non-renewal of charters for tankers. In response to this we have placed six conventional tankers and one of our lightering ATBs in layup as of March 31."

Mr. Norton added, "We anticipate that, as vaccine distribution continues to expand and there is a continued lifting of COVID-19 restrictions, mobility and related US consumption of transportation fuels will normalize to fuel demand patterns consistent with historic levels of consumption. This normalization should stimulate more marine transportation demand, leading us to reactivate vessels from layup. The pace and trajectory of demand recovery continues to be influenced by many factors, including progress in resolving the pandemic outside of the US, and near-term uncertainty will continue to define a wide spectrum of possible vessel reactivation outcomes as we move through the late spring and summer. Nonetheless, we believe that, as our customers’ visibility and confidence in the future returns, there will be a resumption of more typical customer behavior and time charter activity will rebound, leading to improving financial performance as the year progresses."

A, B, C Reconciliations of these non-GAAP financial measures are included in the financial tables attached to this press release starting on Page 8.

First Quarter 2021 Results

Shipping revenues were $81.3 million for the quarter, down 19.4% compared with the first quarter of 2020. TCE revenues for the first quarter of 2021 were $65.5 million, a decrease of $31.6 million, or 32.5%, compared with the first quarter of 2020, primarily a result of a 624-day increase in lay-up days due to seven vessels in lay-up, a decision taken in light of the lack of demand due to the economic impact of COVID-19. The decrease in TCE revenues was partially offset by the addition to our fleet of three crude oil tankers, Alaskan Explorer, Alaskan Legend and Alaskan Navigator, which were purchased on March 12, 2020.

Operating loss for the first quarter of 2021 was $15.8 million compared to operating income of $37.5 million in the first quarter of 2020. We had seven vessels in lay-up during the first quarter of 2021. Additionally, one vessel was available in the spot market and was unemployed for two months prior to entering into a time charter. The first quarter of 2020 included a gain on termination of a pre-existing arrangement related to the acquisition of the Alaska Tanker Company.

In April 2021, we entered into a contract to sell the Overseas Gulf Coast for $32.5 million. Based on the negotiated sale terms, the transaction will result in a $5.4 million loss, which was recorded in the first quarter.

Net loss for the first quarter of 2021 was $15.9 million, or $(0.18) per diluted share, compared with net income of $25.1 million, or $0.28 per diluted share, for the first quarter 2020.

Adjusted EBITDA was $6.2 million for the quarter, a decrease of $46.6 million compared with the first quarter of 2020, driven primarily by the decrease in TCE revenues.

Conference Call

The Company will host a conference call to discuss its first quarter 2021 results at 9:30 a.m. Eastern Time ("ET") on Friday, May 7, 2021.

To access the call, participants should dial (844) 850-0546 for domestic callers and (412) 317-5203 for international callers. Please dial in ten minutes prior to the start of the call.

A live webcast of the conference call will be available from the Investor Relations section of the Company’s website at http://www.osg.com/.

An audio replay of the conference call will be available starting at 11:30 a.m. ET on Friday, May 7, 2021 through 10:59 p.m. ET on Friday, May 14, 2021 by dialing (877) 344-7529 for domestic callers and (412) 317-0088 for international callers, and entering Access Code 10155061.

About Overseas Shipholding Group, Inc.

Overseas Shipholding Group, Inc. (NYSE:OSG) is a publicly traded company providing energy transportation services for crude oil and petroleum products in the U.S. Flag markets. OSG is a major operator of tankers and ATBs in the Jones Act industry. OSG’s 22 vessel U.S. Flag fleet consists of three crude oil tankers doing business in Alaska, two conventional ATB, two lightering ATBs, three shuttle tankers, ten MR tankers, and two non-Jones Act MR tankers that participate in the U.S. Maritime Security Program. OSG also currently owns and operates two Marshall Islands flagged MR tankers which trade internationally.

OSG is committed to setting high standards of excellence for its quality, safety and environmental programs. OSG is recognized as one of the world’s most customer-focused marine transportation companies and is headquartered in Tampa, FL. More information is available at www.osg.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, the Company may make or approve certain forward-looking statements in future filings with the Securities and Exchange Commission (SEC), in press releases, or in oral or written presentations by representatives of the Company. All statements other than statements of historical facts should be considered forward-looking statements. These matters or statements may relate to our prospects, supply and demand for vessels in the markets in which we operate and the impact on market rates and vessel earnings, the continued stability of our niche businesses, and the impact of our time charter contracts on our future financial performance. Forward-looking statements are based on our current plans, estimates and projections, and are subject to change based on a number of factors. COVID-19 has had, and will continue to have, a profound impact on our workforce, and many aspects of our business and industry. Investors should carefully consider the risk factors outlined in more detail in our filings with the SEC. We do not assume any obligation to update or revise any forward-looking statements except as may be required by applicable law. Forward-looking statements and written and oral forward-looking statements attributable to us or our representatives after the date of this press release are qualified in their entirety by the cautionary statements contained in this paragraph and in other reports previously or hereafter filed by us with the SEC.

Consolidated Statements of Operations

($ in thousands, except per share amounts)

Three Months Ended

March 31,

2021

2020

(unaudited)

(unaudited)

Shipping Revenues:

Time and bareboat charter revenues

$

63,788

$

78,150

Voyage charter revenues

17,485

22,709

81,273

100,859

Operating Expenses:

Voyage expenses

15,760

3,786

Vessel expenses

31,807

35,769

Charter hire expenses

22,318

22,460

Depreciation and amortization

15,319

14,019

General and administrative

6,365

6,173

Loss on disposal of vessels and other property, including impairments, net

5,493

296

Total operating expenses

97,062

82,503

(Loss)/income from vessel operations

(15,789

)

18,356

Gain on termination of pre-existing arrangement

19,172

Operating (loss)/income

(15,789

)

37,528

Other income, net

122

31

(Loss)/income before interest expense and income taxes

(15,667

)

37,559

Interest expense

(6,370

)

(6,074

)

(Loss)/income before income taxes

(22,037

)

31,485

Income tax benefit/(expense)

6,169

(6,360

)

Net (loss)/income

$

(15,868

)

$

25,125

Weighted Average Number of Common Shares Outstanding:

Basic - Class A

90,111,701

89,422,311

Diluted - Class A

90,111,701

90,388,988

Per Share Amounts:

Basic and diluted net (loss)/income - Class A

$

(0.18

)

$

0.28

Consolidated Balance Sheets

March 31,
2021

December 31,
2020

(unaudited)

ASSETS

Current Assets:

Cash and cash equivalents

$

45,093

$

69,697

Restricted cash

37

49

Voyage receivables, including unbilled of $4,999 and $6,740, net of reserve for doubtful accounts

10,872

13,123

Income tax receivable

388

387

Other receivables

3,817

1,817

Inventories, prepaid expenses and other current assets

5,067

3,603

Total Current Assets

65,274

88,676

Vessels and other property, less accumulated depreciation

787,241

832,174

Asset held for sale

31,850

Deferred drydock expenditures, net

45,810

43,134

Total Vessels, Other Property and Deferred Drydock

864,901

875,308

Restricted cash - non current

59

73

Intangible assets, less accumulated amortization

26,067

27,217

Operating lease right-of-use assets, net

197,073

215,817

Other assets

26,058

24,646

Total Assets

$

1,179,432

$

1,231,737

LIABILITIES AND EQUITY

Current Liabilities:

Accounts payable, accrued expenses and other current liabilities

$

48,449

$

48,089

Current portion of operating lease liabilities

90,612

90,613

Current portion of finance lease liabilities

4,001

4,000

Current installments of long-term debt

38,718

38,922

Total Current Liabilities

181,780

181,624

Reserve for uncertain tax positions

183

189

Noncurrent operating lease liabilities

128,055

147,154

Noncurrent finance lease liabilities

20,793

21,360

Long-term debt

380,165

390,198

Deferred income taxes, net

74,821

80,992

Other liabilities

29,618

30,409

Total Liabilities

815,415

851,926

Equity:

Common stock - Class A ($0.01 par value; 166,666,666 shares authorized; 86,863,651 and 86,365,422 shares issued and outstanding)

869

864

Paid-in additional capital

592,732

592,564

Accumulated deficit

(229,203

)

(213,335

)

364,398

380,093

Accumulated other comprehensive loss

(381

)

(282

)

Total Equity

364,017

379,811

Total Liabilities and Equity

$

1,179,432

$

1,231,737

Consolidated Statements of Cash Flows

Three Months Ended

March 31,

2021

2020

(unaudited)

(unaudited)

Cash Flows from Operating Activities:

Net (loss)/income

$

(15,868

)

$

25,125

Items included in net income not affecting cash flows:

Depreciation and amortization

15,319

14,019

Gain on termination of pre-existing arrangement

(19,172

)

Loss on disposal of vessels and other property, including impairments, net

5,493

296

Amortization of debt discount and other deferred financing costs

557

533

Compensation relating to restricted stock awards and stock option grants

575

438

Deferred income tax (benefit)/expense

(6,178

)

2,135

Interest on finance lease liabilities

460

506

Non-cash operating lease expense

22,717

22,811

Distributed earnings of affiliated companies

3,562

Payments for drydocking

(8,179

)

(3,327

)

Operating lease liabilities

(22,860

)

(22,969

)

Changes in operating assets and liabilities, net

(1,217

)

2,162

Net cash (used in)/provided by operating activities

(9,181

)

26,119

Cash Flows from Investing Activities:

Acquisition, net of cash acquired

(16,973

)

Expenditures for vessels and vessel improvements

(3,227

)

(20,871

)

Expenditures for other property

(232

)

Net cash used in investing activities

(3,227

)

(38,076

)

Cash Flows from Financing Activities:

Payments on debt

(9,616

)

(7,865

)

Tax withholding on share-based awards

(402

)

(197

)

Payments on principal portion of finance lease liabilities

(1,026

)

(1,037

)

Extinguishment of debt

(301

)

Deferred financing costs paid for debt amendments

(877

)

Issuance of debt, net of issuance and deferred financing costs

80,886

Net cash (used in)/provided by financing activities

(12,222

)

71,787

Net (decrease)/increase in cash, cash equivalents and restricted cash

(24,630

)

59,830

Cash, cash equivalents and restricted cash at beginning of period

69,819

41,677

Cash, cash equivalents and restricted cash at end of period

$

45,189

$

101,507

Spot and Fixed TCE Rates Achieved and Revenue Days

The following table provides a breakdown of TCE rates achieved for spot and fixed charters and the related revenue days for the three months ended March 31, 2021 and the comparable period of 2020. Revenue days in the quarter ended March 31, 2021 totaled 1,473 compared with 1,898 in the prior year quarter.

2021

2020

Three Months Ended March 31,

Spot Earnings

Fixed Earnings

Spot Earnings

Fixed Earnings

Jones Act Handysize Product Carriers:

Average rate

$

24,467

$

65,165

$

61,951

$

60,260

Revenue days

148

477

92

1,052

Non-Jones Act Handysize Product Carriers:

Average rate

$

14,958

$

7,044

$

27,727

$

16,788

Revenue days

180

177

154

182

ATBs:

Average rate

$

$

32,339

$

28,332

$

24,015

Revenue days

180

93

89

Lightering:

Average rate

$

92,524

$

$

78,258

$

61,012

Revenue days

73

91

87

Alaska (a):

Average rate

$

$

58,743

$

$

59,015

Revenue days

238

58

(a) Excludes one Alaska vessel currently in layup.

Fleet Information

As of March 31, 2021, OSG’s operating fleet consisted of 25 vessels, 13 of which were owned, with the remaining vessels chartered-in. Vessels chartered-in are on Bareboat Charters.

Vessels
Owned

Vessels
Chartered-In

Total at March 31, 2021

Vessel Type

Number

Number

Total Vessels

Total dwt (3)

Handysize Product Carriers (1)

6

11

17

810,825

Crude Oil Tankers (2)

3

1

4

772,194

Refined Product ATBs

2

2

54,182

Lightering ATBs

2

2

91,112

Total Operating Fleet

13

12

25

1,728,313

(1)

Includes two owned shuttle tankers, 11 chartered-in tankers, and two non-Jones Act MR tankers that participate in the U.S. Maritime Security Program, all of which are U.S. flagged, as well as two owned Marshall Island flagged non-Jones Act MR tankers trading in international markets.

(2)

Includes three crude oil tankers doing business in Alaska and one crude oil tanker bareboat chartered-in and in layup.

(3)

Total dwt is defined as aggregate deadweight tons for all vessels of that type.

Reconciliation to Non-GAAP Financial Information

The Company believes that, in addition to conventional measures prepared in accordance with GAAP, the following non-GAAP measures provide investors with additional information that will better enable them to evaluate the Company’s performance. Accordingly, these non-GAAP measures are intended to provide supplemental information, and should not be considered in isolation or as a substitute for measures of performance prepared with GAAP.

(A) Time Charter Equivalent (TCE) Revenues

Consistent with general practice in the shipping industry, the Company uses TCE revenues, which represents shipping revenues less voyage expenses, as a measure to compare revenue generated from a voyage charter to revenue generated from a time charter. TCE revenues, a non-GAAP measure, provides additional meaningful information in conjunction with shipping revenues, the most directly comparable GAAP measure, because it assists Company management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance. Reconciliation of TCE revenues of the segments to shipping revenues as reported in the consolidated statements of operations follows:

Three Months Ended

March 31,

2021

2020

Time charter equivalent revenues

$

65,513

$

97,073

Add: Voyage expenses

15,760

3,786

Shipping revenues

$

81,273

$

100,859

Vessel Operating Contribution

Vessel operating contribution, a non-GAAP measure, is TCE revenues minus vessel expenses and charter hire expenses.

Three Months Ended

March 31,

($ in thousands)

2021

2020

Niche market activities

$

13,142

$

21,706

Jones Act handysize tankers

(12,257

)

12,384

ATBs

3,581

2,805

Alaska crude oil tankers

6,922

1,949

Vessel operating contribution

11,388

38,844

Depreciation and amortization

15,319

14,019

General and administrative

6,365

6,173

Loss on disposal of vessels and other property, including impairments, net

5,493

296

(Loss)/income from vessel operations

$

(15,789

)

$

18,356

(B) EBITDA and Adjusted EBITDA

EBITDA represents net income/(loss) before interest expense, income taxes and depreciation and amortization expense. Adjusted EBITDA consists of EBITDA adjusted to exclude amortization classified in charter hire expenses, interest expense classified in charter hire expenses, loss/(gain) on disposal of vessels and other property, including impairments, net, non-cash stock based compensation expense and loss on repurchases and extinguishment of debt and the impact of other items that we do not consider indicative of our ongoing operating performance. EBITDA and Adjusted EBITDA do not represent, and should not be a substitute for, net income/(loss) or cash flows from operations as determined in accordance with GAAP. Some of the limitations are: (i) EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; (ii) EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; and (iii) EBITDA and Adjusted EBITDA do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt. While EBITDA and Adjusted EBITDA are frequently used as a measure of operating results and performance, neither of them is necessarily comparable to other similarly titled measures used by other companies due to differences in methods of calculation. The following table reconciles net income/(loss) as reflected in the consolidated statements of operations, to EBITDA and Adjusted EBITDA.

Three Months Ended March 31,

($ in thousands)

2021

2020

Net (loss)/income

$

(15,868

)

$

25,125

Income tax (benefit)/expense

(6,169

)

6,360

Interest expense

6,370

6,074

Depreciation and amortization

15,319

14,019

EBITDA

(348

)

51,578

Amortization classified in charter hire expenses

143

143

Interest expense classified in charter hire expenses

345

379

Loss on disposal of vessels and other property, including impairments, net

5,493

296

Non-cash stock based compensation expense

575

438

Adjusted EBITDA

$

6,208

$

52,834

(C) Total Cash

($ in thousands)

March 31,

2021

December 31,

2020

Cash and cash equivalents

$

45,093

$

69,697

Restricted cash - current

37

49

Restricted cash – non-current

59

73

Total Cash

$

45,189

$

69,819

Category: Earnings

View source version on businesswire.com: https://www.businesswire.com/news/home/20210507005069/en/

Contacts

Investor Relations & Media Contact:
Susan Allan, Overseas Shipholding Group, Inc.
(813) 209-0620
sallan@osg.com