NEW YORK--(BUSINESS WIRE)--Overseas Shipholding Group, Inc. (NYSE: OSG), a market leader in providing energy transportation services, today reported results for the second quarter and six months of fiscal 2011 ended June 30, 2011.
For the quarter ended June 30, 2011, the Company reported TCE1 revenues of $207.3 million, an 11% decline from $231.7 million in the 2010 quarter. The decline in TCE revenues was primarily due to lower average spot rates earned in the Company’s International crude classes except for Aframax lightering as well as much higher fuel prices that were not recoverable in the marketplace. TCE revenues increased in the Company’s International Products and U.S. Flag units on net fleet growth and improved TCE results for the U.S. Flag unit. Revenue days increased quarter-over-quarter by 594 days, or 6%, primarily as a result of net growth in the International Product Carrier fleet centered in the MR class and in the U.S. Flag fleet. Net loss (Loss2) for the quarter ended June 30, 2011 was $37.3 million, or $1.24 per diluted share, compared with a Loss of $37.9 million, or $1.26 per diluted share, in the same period in 2010. Adjusted for special items that increased the Loss by $1.2 million, or $0.04 per diluted share, the second quarter Loss was $36.1 million, or $1.20 per diluted share, compared with a Loss of $10.1 million, or $0.34 per diluted share, in the second quarter of 2010. Details on Special Items are provided later in this press release.
Morten Arntzen, President and CEO stated, “International flag tanker rates remained under pressure in the second quarter, generating a disappointing quarterly result for OSG. The closure of Japanese refineries in the aftermath of the March earthquake and tsunami reduced crude imports into Japan as well as activity in the regional products trade, while an unexpectedly high and persistent level of refinery maintenance activity in the Atlantic basin refineries further impacted rates negatively. The surprise decision by the IEA to release 60 million barrels from global strategic petroleum reserves temporarily took the wind out of the tanker markets and further delayed the recovery in our International markets. On a positive note, our U.S. Flag business is delivering improved results.”
Arntzen went on to state, “The tanker industry continues to face extremely poor market conditions, exacerbated by events in Japan and Libya and, more recently, by the release of oil from the U.S and European strategic petroleum reserves. Given this environment, the Board has decided to reduce the annual dividend rate to 87.5 cents per year. We believe that reducing the dividend to this level strikes the right balance among our goals of preserving the strength of our balance sheet, investing for long-term growth and returning cash to shareholders, while delivering a payout level that is more appropriate for today's market. OSG has paid a dividend for 150 consecutive quarters, and the Board recognizes the importance of the dividend to our shareholders; however, we believe this is the prudent action to take now to further strengthen our Company for the long-term.”
Arntzen concluded, “The Company continues to execute well operationally, and we have taken important steps to ensure the ongoing financial strength of our balance sheet, including the successful completion of our forward start facility in late May, pushing back our major refinancing needs to the end of 2016. We continue to reduce G&A even further, control costs at sea and improve the performance of our portfolio of chartered-in International Flag tankers. I am confident that OSG is extremely well positioned to remain one of the strongest-performing companies in the sector, both during a prolonged downturn and throughout the eventual recovery in the shipping market.”
In accordance with the Board's decision to reduce the annual dividend rate, on August 1, 2011, the Board declared a quarterly dividend of $0.21875 per share, payable on November 22, 2011, to stockholders of record on November 7, 2011. The quarterly dividend of $0.4375 per share declared on June 7, 2011 is payable on August 25, 2011 to stockholders of record on August 11, 2011.
For the six months ended June 30, 2011, the Company reported TCE revenues of $413.9 million, a 10% decrease from $461.5 million in 2010. Loss for the first six months of 2011 was $71.9 million, or $2.39 per diluted share, compared with a Loss of $47.2 million, or $1.66 per diluted share, in 2010. Adjusted for special items, the Loss in the first half of fiscal 2011 was $70.8 million, or $2.35 per diluted share, compared with a Loss of $12.6 million, or $0.46 per diluted share, in the prior year period.
Select Income Statement Detail
- The $24.3 million decrease in TCE revenue for the quarter ended June 30, 2011 from the year-earlier quarter is principally due to a 39% decrease in TCE revenue earned in the International Crude Tankers segment to $76.2 million. Spot TCE rates realized by the Company’s VLCCs in the second quarter of 2011 fell by 54% from the year-earlier period, while spot TCE rates in the quarter for Suezmaxes, Aframaxes and Panamaxes were lower by 62%, 47% and 28%, respectively. This spot market weakness was primarily the result of continued vessel overcapacity and sharp increases in bunker prices which were not fully recoverable in the marketplace. In the International Products segment, TCE revenue increased by 13% to $51.2 million, reflecting a 349-day increase in revenue days on an increase in owned and time-chartered in Handysize Product Carriers and a reduction in repair days for Panamax Product Carriers. In the MR segment, a 264-day increase in revenue days was accompanied by a 30% increase in realized TCE spot rates, while in the LR1 segment the impact of the delivery of the Overseas Leyte and a reduction in drydock and repair days was partially offset by a 33% reduction in realized TCE rates. TCE revenues in the U.S. segment increased by $18.0 million, or 31%, to $75.8 million, primarily as a result of the deliveries of the converted shuttle tanker Overseas Chinook and three bareboated-in product carriers. The U.S. segment continued to benefit from increased Delaware Bay lightering volumes. The U.S. Flag fleet had six vessels in layup during the second quarter of 2010, four of which have been sold. One ATB remained in layup during the second quarter of 2011.
- Vessel expenses were $68.5 million, a 1% increase from $67.7 million in the same period a year ago, as a 189-day increase in vessel operating days centered in the International Products and U.S. Flag fleets was partially offset by a reduction in the average daily vessel operating costs realized in the International Flag fleet;
- Charter hire expenses were $99.1 million, a 12% increase from $88.6 million in the prior year period, reflecting a 284-day net increase in chartered-in days primarily driven by the delivery of four time chartered-in International Flag MRs and three bareboat chartered-in U.S. Flag Product Carriers, as partially offset by redeliveries, during and subsequent to the second quarter of 2010;
- General and administrative expenses were $22.4 million, an 8% decrease of $2.1 million from $24.5 million in the second quarter of 2010 and in line with the low end of the Company’s annual guidance of $95 to $100 million. Contributing to the quarter-over-quarter decrease were reductions of $0.7 million in shoreside compensation and $1.8 million in legal and consulting costs that were partially offset by increases of $0.9 million resulting from the impact of unfavorable exchange rate movements on foreign currency denominated expenses.
- Equity in income of affiliated companies increased significantly to a gain of $3.9 million from a loss of $3.0 million in the second quarter of 2010, during which the FSO joint venture booked a loss resulting from the delays in the conversion of the FSO Africa and mark-to-market losses on the FSO Africa interest rate swaps, which are not effective hedges. A mark-to market loss of $2.3 million was booked in the second quarter of 2011 compared with a loss of $4.0 million in the 2010 period. Both FSO service vessels continued full employment under long-term contracts with MOQ, and each continued to earn contractual performance bonuses this quarter.
Special Items
Special items that affected reported results in the second quarter of 2011 increased the quarterly Loss by a net $1.2 million, or $0.04 per diluted share, and included:
- Gain on disposal of vessels of $1.5 million, or $0.05 per diluted share;
- OSG’s share, $2.3 million, or $0.08 per diluted share, in the mark-to-market loss on the de-designated interest rate swaps in the FSO joint venture; and
- Reduction in the unrealized gains on bunker swaps of $0.5 million, or $0.02 per diluted share.
For a detailed schedule of these special items for the three and six months ended June 30, 2011 and the corresponding historical periods, see Reconciling Information, which is posted in Webcasts and Presentations in the Investor Relations section of www.osg.com.
Liquidity and Other Key Metrics
- Cash and cash equivalents and short-term investments (consisting of time deposits with maturities greater than 90 days) decreased to $230 million from $274 million as of December 31, 2010;
- Total debt was $2.09 billion, up from $1.99 billion as of December 31, 2010;
- Liquidity3, including undrawn bank facilities, was approximately $1.0 billion. Liquidity-adjusted debt to capital4 was 51.4%, an increase from 48.0% as of December 31, 2010;
- As of June 30, 2011, vessels constituting 30% of the net book value of the Company’s vessels were pledged as collateral;
- Construction contract commitments were $142 million as of June 30, 2011, including $87 million due in the third and fourth quarters of 2011. All such commitments are fully funded;
- Principal repayment obligations are $24 million for the third and fourth quarters of 2011 and $55 million in 2012; and
- During the second quarter, OSG announced that it had entered into a $900 million unsecured forward start revolving credit agreement that matures on December 31, 2016. Availability under the facility commences on February 8, 2013, the date on which OSG's existing revolving credit facility expires. The new facility contains the same financial covenant package as the existing facility and incorporates an "accordion feature" permitting an increase in total availability up to $1.25 billion through additional bank subscriptions entered into before February 8, 2013. This facility extends OSG's access to committed unsecured revolving credit through the end of 2016.
Segment Activity
Crude Oil
- During the second quarter of 2011, the Brazos 1, a time chartered-in Aframax serving in the International Flag U.S. Gulf lightering fleet, was redelivered to its owner for final sale. Also during the quarter, the Overseas Everglades, a bareboat chartered-in Aframax, was transferred from the Aframax International pool to the lightering fleet;
- On June 29, 2011, the Overseas Meridian, a 1996-built time chartered-in VLCC, was redelivered to its owner; and
- On July 8, 2011, the Overseas McKinley, a newbuild 298,000 dwt VLCC, delivered and has joined the TI pool.
Products
- On May 9, 2011, the Overseas Leyte, a newbuild 73,944 dwt LR1 product carrier, delivered;
- On June 16, 2011, the Freja Taurus, a newbuild 50,386 dwt MR product carrier, delivered under a three-year time charter-in; and
- On July 7, 2011, the Overseas Samar, a newbuild 73,836 dwt LR1 product carrier, delivered.
- In July 2011, the Company finalized amendments to construction contracts covering two MRs and two crude Aframaxes that, among other matters, reduce remaining construction commitments by $3.5 million.
U.S. Flag
- As noted in last quarter’s press release, the U.S. Flag newbuild program has been completed, with the delivery of the Overseas Tampa, the last of 12 Jones Act product carriers constructed for OSG by Aker Philadelphia Shipyard, Inc., and the OSG 351, the final lightering ATB; and
- The product carrier Overseas Tampa commenced a 1-year time charter on May 31, 2011. All of OSG’s U.S. Flag product carriers are now employed under time charters.
Spot and Fixed TCE Rates Achieved and Revenue Days
The following table provides a breakdown of TCE rates achieved between spot and fixed charter rates and the related revenue days for the three months ended June 30, 2011 and the comparable period of 2010. Revenue days in the quarter ended June 30, 2011 totaled 9,878 compared with 9,284 in the same period a year earlier. A summary fleet list by vessel class can be found later in this press release.
From time to time the Company enters into FFAs and related bunker swaps as hedges for reducing the volatility of earnings from operating the Company’s VLCCs in the spot market. These derivative instruments seek to create synthetic time charters. The impact of these derivatives, which qualify for hedge accounting treatment, are reported together with time charters entered in the physical market under Fixed Earnings. As of June 30, 2011, the Company had no synthetic time charters outstanding. The information in this table is based in part on information provided by the pools or commercial joint ventures in which the segment’s vessels participate.
| Three Months Ended Jun. 30, 2011 | Three Months Ended Jun. 30, 2010 | |||||||||||||||||
| Spot | Fixed | Total | Spot | Fixed | Total | |||||||||||||
| Business Unit – Crude Oil | ||||||||||||||||||
| VLCC 1 | ||||||||||||||||||
| Average TCE Rate | $ | 20,400 | $ | — | $ | 44,399 | $ | 37,060 | ||||||||||
| Number of Revenue Days | 1,230 |
— |
1,230 | 1,189 | 92 | 1,281 | ||||||||||||
| Suezmax | ||||||||||||||||||
| Average TCE Rate | $ | 13,630 | $ | — | $ | 36,087 | $ | — | ||||||||||
| Number of Revenue Days | 456 | — | 456 | 282 | — | 282 | ||||||||||||
| Aframax | ||||||||||||||||||
| Average TCE Rate | $ | 10,390 | $ | 20,588 | $ | 19,508 | $ | 21,294 | ||||||||||
| Number of Revenue Days | 859 | 156 | 1,015 | 921 | 212 | 1,133 | ||||||||||||
| Aframax – Lightering1 | ||||||||||||||||||
| Average TCE Rate | $ | 21,732 | $ | — | $ | 18,761 | $ | — | ||||||||||
| Number of Revenue Days | 738 | — | 738 | 928 | — | 928 | ||||||||||||
| Panamax2 | ||||||||||||||||||
| Average TCE Rate | $ | 17,905 | $ | 17,226 | $ | 24,835 | $ | 17,860 | ||||||||||
| Number of Revenue Days | 455 | 364 | 819 | 451 | 364 | 815 | ||||||||||||
| Other Crude Oil Revenue Days1 | 175 | — | 175 | 90 | — | 90 | ||||||||||||
| Total Crude Oil Revenue Days | 3,913 | 520 | 4,433 | 3,861 | 668 | 4,529 | ||||||||||||
| Business Unit – Products | ||||||||||||||||||
| LR2 | ||||||||||||||||||
| Average TCE Rate | $ | — | $ | — | $ | 35,657 | $ | 16,707 | ||||||||||
| Number of Revenue Days | — | — | — | 35 | 50 | 85 | ||||||||||||
| LR1 | ||||||||||||||||||
| Average TCE Rate | $ | 15,214 | $ | — | $ | 22,676 | $ | — | ||||||||||
| Number of Revenue Days | 398 | — | 398 | 228 | — | 228 | ||||||||||||
| MR | ||||||||||||||||||
| Average TCE Rate | $ | 15,153 | $ | 13,950 | $ | 11,649 | $ | 19,868 | ||||||||||
| Number of Revenue Days | 2,803 | 198 | 3,001 | 1,919 | 818 | 2,737 | ||||||||||||
| Total Refined Products Revenue Days | 3,201 | 198 | 3,399 | 2,182 | 868 | 3,050 | ||||||||||||
| Business Unit – U.S. Flag | ||||||||||||||||||
| Handysize Product Carrier | ||||||||||||||||||
| Average TCE Rate | $ | 32,346 | $ | 50,895 | $ | 13,244 | $ | 49,009 | ||||||||||
| Number of Revenue Days | 69 | 987 | 1,056 | 91 | 750 | 841 | ||||||||||||
| ATB | ||||||||||||||||||
| Average TCE Rate | $ | 21,412 | $ | — | $ | 23,490 | $ | 33,255 | ||||||||||
| Number of Revenue Days | 470 | — | 470 | 335 | 91 | 426 | ||||||||||||
| Lightering | ||||||||||||||||||
| Average TCE Rate | $ | 39,328 | $ | — | $ | 27,417 | $ | — | ||||||||||
| Number of Revenue Days | 338 | — | 338 | 328 | — | 328 | ||||||||||||
| Total U.S. Flag Revenue Days | 877 | 987 | 1,864 | 754 | 841 | 1,595 | ||||||||||||
| Other – Number of Revenue Days | — | 182 | 182 | — | 110 | 110 | ||||||||||||
| TOTAL REVENUE DAYS | 7,991 | 1,887 | 9,878 | 6,797 | 2,487 | 9,284 | ||||||||||||
|
1 |
Other Crude Oil revenue days includes the Company’s ULCC and, for the quarter ended June 30, 2011, one double-sided Aframax which had substantial idle time during such period, that was previously included in Aframax Lightering. |
|
|
2 |
Includes one vessel performing a bareboat charter-out during the three months ended June 30, 2011 and 2010. |
|
Consolidated Statements of Operations |
||||||||||||||||||
| ($ in thousands, except per share amounts) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||
| Shipping Revenues: | ||||||||||||||||||
| Pool revenues | $ | 69,622 | $ | 111,008 | $ | 146,839 | $ | 219,592 | ||||||||||
| Time and bareboat charter revenues | 64,195 | 67,830 | 124,651 | 133,376 | ||||||||||||||
| Voyage charter revenues | 137,921 | 105,065 | 263,916 | 200,689 | ||||||||||||||
| Total Shipping Revenues | 271,738 | 283,903 | 535,406 | 553,657 | ||||||||||||||
| Operating Expenses: | ||||||||||||||||||
| Voyage expenses | 64,407 | 52,241 | 121,513 | 92,134 | ||||||||||||||
| Vessel expenses | 68,546 | 67,662 | 137,955 | 131,736 | ||||||||||||||
| Charter hire expenses | 99,132 | 88,631 | 194,482 | 179,245 | ||||||||||||||
| Depreciation and amortization | 42,720 | 43,212 | 85,028 | 85,138 | ||||||||||||||
| General and administrative | 22,434 | 24,479 | 46,902 | 51,308 | ||||||||||||||
| Shipyard contract termination recoveries |
- |
(396 | ) | - | (627 | ) | ||||||||||||
| (Gain)/loss on disposal of vessels, net of impairments in 2010 | (1,455 | ) | 25,295 | (587 | ) | 27,551 | ||||||||||||
| Total Operating Expenses | 295,784 | 301,124 | 585,293 | 566,485 | ||||||||||||||
| Loss from Vessel Operations | (24,046 | ) | (17,221 | ) | (49,887 | ) | (12,828 | ) | ||||||||||
| Equity in Income / (Loss) of Affiliated Companies | 3,930 | (3,045 | ) | 9,572 | (5,343 | ) | ||||||||||||
| Operating Loss | (20,116 | ) | (20,266 | ) | (40,315 | ) | (18,171 | ) | ||||||||||
| Other Income | 722 | 485 | 2,546 | 339 | ||||||||||||||
| (19,394 | ) | (19,781 | ) | (37,769 | ) | (17,832 | ) | |||||||||||
| Interest Expense | (19,134 | ) | (19,192 | ) | (36,873 | ) | (31,486 | ) | ||||||||||
| Loss before Income Taxes | (38,528 | ) | (38,973 | ) | (74,642 | ) | (49,318 | ) | ||||||||||
| Income Tax Benefit | 1,220 | 1,116 | 2,776 | 2,108 | ||||||||||||||
| Net Loss | $ | (37,308 | ) | $ | (37,857 | ) | $ | (71,866 | ) | $ | (47,210 | ) | ||||||
| Weighted Average Number of Common Shares Outstanding: | ||||||||||||||||||
| Basic | 30,227,758 | 30,142,124 | 30,219,367 | 28,826,015 | ||||||||||||||
| Diluted | 30,227,758 | 30,142,124 | 30,219,367 | 28,826,015 | ||||||||||||||
| Per Share Amounts: | ||||||||||||||||||
| Basic | $ | (1.24 | ) | $ | (1.26 | ) | $ | (2.39 | ) | $ | (1.66 | ) | ||||||
| Diluted | $ | (1.24 | ) | $ | (1.26 | ) | $ | (2.39 | ) | $ | (1.66 | ) | ||||||
| Cash dividends declared | $ | 0.88 | $ | 0.88 | $ | 1.31 | $ | 1.31 | ||||||||||
|
Consolidated Balance Sheets |
||||||||
|
($ in thousands) |
Jun. 30,
2011 |
Dec. 31,
2010 |
||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 204,276 | $ | 253,649 | ||||
| Short-term investments | 25,726 | 20,047 | ||||||
| Voyage receivables | 169,488 | 160,993 | ||||||
| Other receivables, including income taxes recoverable | 61,996 | 99,611 | ||||||
| Inventories, prepaid expenses and other current assets | 71,528 | 60,577 | ||||||
| Total Current Assets | 533,014 | 594,877 | ||||||
|
Vessels and other property, including construction in progress of
$451,612 and $806,818, |
3,227,335 | 3,195,383 | ||||||
| Vessels held for sale |
- |
3,305 | ||||||
| Deferred drydock expenditures, net | 45,237 | 46,827 | ||||||
| Total Vessels, Deferred Drydock and Other Property | 3,272,572 | 3,245,515 | ||||||
| Investments in affiliated companies | 265,745 | 265,096 | ||||||
| Intangible assets, less accumulated amortization | 79,750 | 83,137 | ||||||
| Goodwill | 9,589 | 9,589 | ||||||
| Other assets | 67,802 | 42,889 | ||||||
| Total Assets | $ | 4,228,472 | $ | 4,241,103 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable, accrued expenses and other current liabilities | $ | 146,235 | $ | 129,178 | ||||
| Current installments of long-term debt | 51,785 | 44,607 | ||||||
| Total Current Liabilities | 198,020 | 173,785 | ||||||
| Long-term debt | 2,031,496 | 1,941,583 | ||||||
| Deferred gain on sale and leaseback of vessels | 22,880 | 40,876 | ||||||
| Deferred income taxes and other liabilities | 273,358 | 274,716 | ||||||
| Total Liabilities | 2,525,754 | 2,430,960 | ||||||
| Equity | ||||||||
| Overseas Shipholding Group, Inc.’s equity | 1,702,718 | 1,810,143 | ||||||
| Total Equity | 1,702,718 | 1,810,143 | ||||||
| Total Liabilities and Equity | $ | 4,228,472 | $ | 4,241,103 | ||||
|
Consolidated Statements of Cash Flows |
|||||||||
| ($ in thousands) | Six Months Ended June 30, | ||||||||
| 2011 | 2010 | ||||||||
| Cash Flows from Operating Activities: | |||||||||
| Net loss | $ | (71,866 | ) | $ | (47,210 | ) | |||
| Items included in net loss not affecting cash flows: | |||||||||
| Depreciation and amortization | 85,028 | 85,138 | |||||||
| Amortization of deferred gain on sale and leasebacks | (17,996 | ) | (21,227 | ) | |||||
| Amortization of debt discount and other deferred financing costs | 1,785 | 2,270 | |||||||
| Loss on write-down of vessels and intangible assets |
- |
28,783 | |||||||
| Compensation relating to restricted stock and stock option grants | 5,095 | 5,719 | |||||||
| Deferred income tax benefit | (2,596 | ) | (2,608 | ) | |||||
| Unrealized gains on forward freight agreements and bunker swaps | (225 | ) | (73 | ) | |||||
| Undistributed earnings of affiliated companies | (754 | ) | 14,828 | ||||||
| Deferred payment obligations on charters-in | 2,625 | 2,379 | |||||||
| Other—net | 2,376 | 169 | |||||||
| Items included in net loss related to investing and financing activities: | |||||||||
| (Gain) / loss on sale or write-down of securities—net | (500 | ) | 458 | ||||||
| Loss / (gain) on disposal of vessels – net | (587 | ) | (1,232 | ) | |||||
| Payments for drydocking | (11,196 | ) | (9,057 | ) | |||||
| Changes in operating assets and liabilities | 15,391 | (45,724 | ) | ||||||
| Net cash provided by operating activities | 6,580 | 12,613 | |||||||
| Cash Flows from Investing Activities: | |||||||||
| Long-term investments | (13,465 | ) | - | ||||||
| Short-term investments | (5,678 | ) | - | ||||||
| Disposal of short-term investments | - | 50,000 | |||||||
| Proceeds from sales of investments | 1,095 | 190 | |||||||
| Expenditures for vessels | (108,795 | ) | (177,028 | ) | |||||
| Proceeds from disposal of vessels | 12,577 | - | |||||||
| Expenditures for other property | (4,059 | ) | (1,162 | ) | |||||
| Distributions from / (Investments in and advances to) affiliated companies – net | 2,416 | (149,735 | ) | ||||||
| Shipyard contract termination payments | - | (1,722 | ) | ||||||
| Other – net | 3,137 | 1,297 | |||||||
| Net cash used in investing activities | (112,772 | ) | (278,160 | ) | |||||
| Cash Flows from Financing Activities: | |||||||||
| Issuance of common stock, net of issuance costs | - | 158,266 | |||||||
| Decrease in restricted cash | - | 7,945 | |||||||
| Purchases of treasury stock | (827 | ) | (1,281 | ) | |||||
| Issuance of debt, net of issuance costs and deferred finance costs | 104,767 | 450,745 | |||||||
| Payments on debt | (20,733 | ) | (447,503 | ) | |||||
| Cash dividends paid | (26,768 | ) | (25,080 | ) | |||||
| Issuance of common stock upon exercise of stock options | 380 | 763 | |||||||
| Other – net | - | (513 | ) | ||||||
| Net cash provided by financing activities | 56,819 | 143,342 | |||||||
| Net decrease in cash and cash equivalents | (49,373 | ) | (122,205 | ) | |||||
| Cash and cash equivalents at beginning of year | 253,649 | 474,690 | |||||||
| Cash and cash equivalents at end of period | $ | 204,276 | $ | 352,485 | |||||
Fleet Information
As of June 30, 2011, OSG’s owned and operated fleet totaled 109 International Flag and U.S. Flag vessels compared with 112 at June 30, 2010. Fifty-eight percent, or 63 vessels, were owned as of June 30, 2011, with the remaining vessels bareboat or time chartered-in. OSG’s newbuild program totaled 8 vessels (7 owned and 1 chartered-in) across its crude oil, product and U.S. Flag lines of business. The Company’s fleet list excludes vessels chartered-in where the duration of the charter was one year or less at inception. A detailed fleet list and updates on vessels under construction can be found in the Fleet section on www.osg.com.
| Vessels Owned | Vessels Chartered-in | Total at June 30, 2011 | ||||||||||||||
| Vessel Type | Number |
Weighted by |
Number |
Weighted by |
Total |
Vessels |
Total Dwt |
|||||||||
| Operating Fleet | ||||||||||||||||
| FSO | 2 | 1.0 | — | — | 2 | 1.0 | 864,046 | |||||||||
| VLCC and ULCC | 9 | 9.0 | 5 | 5.0 | 14 | 14.0 | 4,426,820 | |||||||||
| Suezmax | — | — | 2 | 2.0 | 2 |
2.0 |
317,000 | |||||||||
| Aframax | 6 | 6.0 | 3 | 3.0 | 9 | 9.0 | 1,011,501 | |||||||||
| Panamax | 9 | 9.0 | — | — | 9 | 9.0 | 626,834 | |||||||||
| Lightering | 2 | 2.0 | 4 | 4.0 | 6 | 6.0 | 598,012 | |||||||||
| International Flag Crude Tankers | 28 | 27.0 | 14 | 14.0 | 42 | 41.0 | 7,844,213 | |||||||||
| LR1 | 3 | 3.0 | 2 | 2.0 | 5 | 5.0 | 371,318 | |||||||||
| MR (1) | 14 | 14.0 | 20 | 20.0 | 34 | 34.0 | 1,625,557 | |||||||||
| International Flag Product Carriers | 17 | 17.0 | 22 | 22.0 | 39 | 39.0 | 1,996,875 | |||||||||
| Car Carrier | 1 | 1.0 | — | — | 1 | 1.0 | 16,101 | |||||||||
| Total Int’l Flag Operating Fleet | 46 | 45.0 | 36 | 36.0 | 82 | 81.0 | 9,857,189 | |||||||||
| Handysize Product Carriers (2) | 2 | 2.0 | 10 | 10.0 | 12 | 12.0 | 561,623 | |||||||||
| Clean ATBs (3) | 7 | 7.0 | — | — | 7 | 7.0 | 195,616 | |||||||||
| Lightering ATBs | 4 | 4.0 | — | — | 4 | 4.0 | 175,622 | |||||||||
| Total U.S. Flag Operating Fleet | 13 | 13.0 | 10 | 10.0 | 23 | 23.0 | 932,861 | |||||||||
| LNG Fleet | 4 | 2.0 | — | — | 4 | 2.0 | 864,800 cbm | |||||||||
| Total Operating Fleet | 63 | 60.0 | 46 | 46.0 | 109 | 106.0 |
10,790,050 864,800 cbm |
|||||||||
| Newbuild/Conversion Fleet | ||||||||||||||||
| International Flag | ||||||||||||||||
| VLCC | 2 | 2.0 | — | — | 2 | 2.0 | 596,000 | |||||||||
| Aframax | 2 | 2.0 | — | — | 2 | 2.0 | 226,000 | |||||||||
| LR1 | 1 | 1.0 | — | — | 1 | 1.0 | 73,500 | |||||||||
| MR | 2 | 2.0 | — | — | 2 | 2.0 | 100,000 | |||||||||
| Chemical Tanker | — | — | 1 | 1.0 | 1 | 1.0 | 19,900 | |||||||||
| Total Newbuild Fleet | 7 | 7.0 | 1 | 1.0 | 8 | 8.0 | 1,015,400 | |||||||||
| Total Operating & Newbuild Fleet | 70 | 67.0 | 47 | 47.0 | 117 | 114.0 |
11,805,450 864,800 cbm |
|||||||||
| 1 | Includes two owned U.S. Flag product carriers that trade internationally with associated revenue included in the Product Carriers segment | |
| 2 | Includes two shuttle tankers, the Overseas Cascade and the Overseas Chinook | |
| 3 | Includes the OSG 214, which was in lay up at June 30, 2011 |
Appendix 1 – Reconciliation to Non-GAAP Financial Information
TCE Reconciliation
Reconciliation of time charter equivalent revenues of the segments to shipping revenues as reported in the consolidated statements of operations follow:
| Three Months Ended Jun. 30, | Six Months Ended Jun. 30, | |||||||||||||
| ($ in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||
| Time charter equivalent revenues | $ | 207,331 | $ | 231,662 | $ | 413,893 | $ | 461,523 | ||||||
| Add: Voyage Expenses | 64,407 | 52,241 | 121,513 | 92,134 | ||||||||||
| Shipping revenues | $ | 271,738 | $ | 283,903 | $ | 535,406 | $ | 553,657 | ||||||
Consistent with general practice in the shipping industry, the Company uses time charter equivalent 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. Time charter equivalent 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.
Appendix 2 – Capital Expenditures
The following table presents information with respect to OSG’s capital expenditures for the three months and six months ended June 30, 2011 and 2010:
| Three Months Ended Jun. 30, | Six Months Ended Jun. 30, | |||||||||||||
| ($ in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||
| Expenditures for vessels | $ | 45,142 | $ | 64,974 | $ | 108,795 | $ | 177,028 | ||||||
| Investments in and advances to affiliated companies | — | 59,735 | — | 162,958 | ||||||||||
| Payments for drydockings | 8,333 | 7,112 | 11,196 | 9,057 | ||||||||||
| $ | 53,475 | $ | 131,821 | $ | 119,991 | $ | 349,043 | |||||||
Appendix 3 – Third Quarter 2011 TCE Rates
The Company has achieved the following average estimated TCE rates for the third quarter of 2011 for the percentage of days booked for vessels operating through July 22, 2011. The information is based in part on data provided by the pools or commercial joint ventures in which the vessels participate. All numbers provided are estimates and may be adjusted for a number of reasons, including the timing of any vessel acquisitions or disposals and the timing and length of drydocks and repairs.
| Third Quarter Revenue Days | ||||||||||||||
| Vessel Class and Charter Type |
Average TCE |
Fixed as of |
Open as of |
Total |
% Days |
|||||||||
| Business Unit – Crude Oil | ||||||||||||||
| VLCC – Spot | $ | 16,500 | 418 | 740 | 1,158 | 36 | % | |||||||
| Suezmax – Spot | $ | 14,000 | 204 | 234 | 438 | 47 | % | |||||||
| Aframax – Spot | $ | 9,000 | 221 | 648 | 869 | 25 | % | |||||||
| Aframax – Time | $ | 21,500 | 110 | — | 110 | 100 | % | |||||||
| Aframax Lightering | $ | 21,000 | 236 | 394 | 630 | 38 | % | |||||||
| Panamax – Spot | $ | 14,000 | 86 | 369 | 455 | 19 | % | |||||||
| Panamax – Time | $ | 17,000 | 368 | — | 368 | 100 | % | |||||||
| Business Unit – Refined Petroleum Products | ||||||||||||||
| LR1 – Spot | $ | 13,000 | 86 | 331 | 417 | 21 | % | |||||||
| LR1 – Time | $ | 13,500 | 82 | — | 82 | 100 | % | |||||||
| MR – Spot | $ | 12,000 | 952 | 2,014 | 2,966 | 32 | % | |||||||
| MR– Time | $ | 15,000 | 246 | — | 246 | 100 | % | |||||||
| Business Unit – U.S. Flag | ||||||||||||||
| Product Carrier – Time | $ | 51,000 | 1,085 | — | 1,085 | 100 | % | |||||||
| ATB – Spot | $ | 24,000 | 287 | 164 | 451 | 64 | % | |||||||
Appendix 4 – 2011 Fixed TCE Rates
The following table shows average estimated TCE rates and associated days booked for the fourth quarter of 2011 as of July 22, 2011.
|
Fixed Rates and |
||||
| Business Unit – Crude Oil | ||||
| Panamax 1 | ||||
| Average TCE Rate | $17,000 | |||
| Number of Revenue Days | 303 | |||
| Business Unit – Refined Petroleum Products | ||||
| MR | ||||
| Average TCE Rate | $14,500 | |||
| Number of Revenue Days | 184 | |||
| Business Unit – U.S. Flag | ||||
| Product Carrier | ||||
| Average TCE Rate | $51,000 | |||
| Number of Revenue Days | 1,012 | |||
| 1 | Includes one vessel on bareboat charter-out. |
Conference Call Information
OSG has scheduled a conference call for today at 11:00 a.m. ET. Call-in information is (877) 941-4774 (domestic) and (480) 629-9760 (international). The conference call and supporting presentation can also be accessed by webcast, which will be available at www.osg.com in the Investor Relations/Webcasts and Presentations section. Additionally, a replay of the call will be available by telephone through August 9, 2011; the number for the replay is (877) 870-5176 (domestic) and (858) 384-5517 (international). The passcode for the replay is 4457027.
About OSG
Overseas Shipholding Group, Inc. (NYSE: OSG), a Dow Jones Transportation Index company, is one of the largest publicly traded tanker companies in the world. As a market leader in global energy transportation services for crude oil and petroleum products in the U.S. and International Flag markets, 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 New York City, NY. More information is available at www.osg.com.
Forward-Looking Statements
This release contains forward-looking statements regarding the Company's prospects, including the outlook for tanker and articulated tug barge markets, changing oil trading patterns, anticipated levels of newbuilding and scrapping, prospects for certain strategic alliances and investments, estimated TCE rates achieved for the third and fourth quarters of 2011, the prospects for, and amounts of, future dividends, timely delivery of newbuildings in accordance with contractual terms, prospects of OSG’s strategy of being a market leader in the segments in which it competes and the forecast of world economic activity and oil demand. These statements are based on certain assumptions made by OSG management based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Forward-looking statements are subject to a number of risks, uncertainties and assumptions, many of which are beyond the control of OSG, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Factors, risks and uncertainties that could cause actual results to differ from the expectations reflected in these forward-looking statements are described in the Company’s Annual Report for 2010 on Form 10-K and those risks discussed in the other reports OSG files with the Securities and Exchange Commission.
|
1 |
See Appendix 1 for reconciliation of TCE revenues, a non-GAAP measure, to shipping revenues. | |
| 2 | References to Results, Earnings or Loss refers to Net Income / (Loss). | |
| 3 | Liquidity is defined as cash plus short-term investments plus Capital Construction Fund plus availability under the Company’s secured and unsecured credit facilities. | |
| 4 | Liquidity-adjusted debt is defined as long-term debt reduced by cash, short-term investments and the Capital Construction Fund. |