Overseas Shipholding Group, Inc. (NYSE: OSG) (the “Company” or “OSG”), a leading provider of liquid bulk transportation services in the energy industry for crude oil and petroleum products in the U.S. Flag markets, today reported results for the second quarter of 2023.
- Net income for the second quarter of 2023 was $12.3 million, or $0.15 per diluted share, compared with net income of $3.7 million, or $0.04 per diluted share, in the second quarter of 2022.
- Shipping revenues for the second quarter of 2023 were $106.6 million, a decrease of $11.4 million, or 9.6%, from the second quarter of 2022.
- Time charter equivalent (TCE) revenues(A), a non-GAAP measure, for the second quarter of 2023 were $100.1 million, a decrease of $3.1 million, or 3.0%, from the second quarter of 2022.
- Second quarter 2023 Adjusted EBITDA(B), a non-GAAP measure, was $39.5 million, an increase of $8.0 million, or 25.4%, from the second quarter of 2022.
- In April 2023, OSG's three non-Jones Act MR tankers were accepted into the U.S. Tanker Security Program (“TSP”).
- During the quarter, the Military Sealift Command (“MSC”) awarded one of our vessels, the Overseas Mykonos, a time charter contract to provide ongoing fuel transportation services to the MSC in support of our nation’s defense. The Overseas Mykonos will be transferred out of the TSP and delivered to the MSC in August 2023.
- Total cash and investments(C) were $120.8 million as of June 30, 2023.
- In June 2023, our Board of Directors authorized an increase of $10.0 million to our current stock repurchase program, raising the total value of the program to $20.0 million. We purchased 2.1 million shares for $8.0 million during the second quarter of 2023.
“Solid and satisfying best characterizes the second quarter results that OSG announced earlier this morning,” Sam Norton, OSG's President and CEO, said. “Contributing to the favorable second quarter results were notably higher average TCE rates for our Jones Act MR tankers, a reflection of the tight market conditions that have been present for most of this year. Stable and historically consistent returns from our specialized assets continued to generate positive cashflow and provide sufficient liquidity to fund our previously announced share buy-back program which, during the quarter, saw over 2 million shares repurchased at an average price of $3.81 per share.”
Mr. Norton continued, “Also of note during the past quarter was MSC’s award of a long-term charter for the Overseas Mykonos. The contract calls for the vessel to be stationed in the Pacific in support of key Department of Defense operations and represents an important step in meeting OSG’s ambition to expand its US flag operations outside of coastwise trades. The Overseas Mykonos is expected to give delivery to the MSC in mid-August and to contribute more than $20 million in time charter equivalent earnings during the initial contract year.”
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. | ||||
Second Quarter 2023 Results
Shipping revenues were $106.6 million for the second quarter of 2023, a decrease of $11.4 million, or 9.6%, compared to the second quarter of 2022. TCE revenues were $100.1 million for the second quarter of 2023, a decrease of $3.1 million, or 3.0%, from the second quarter of 2022. The decreases primarily resulted from (a) fewer vessels in our fleet as we redelivered three conventional tankers leased from American Shipping Company in December 2022; (b) a 14-day increase in drydock days; (c) one less Government of Israel voyage during the second quarter of 2023 compared to the second quarter of 2022; and (d) no MSC voyages during the second quarter of 2023 compared to one full MSC voyage and one partial MSC voyage that began during the second quarter of 2022 and overlapped into the third quarter, both of which were longer international voyages. The decreases were partially offset by an 82-day decrease in layup days. We had no vessels in layup during the second quarter of 2023. During the second quarter of 2022, we had two vessels in layup until May 2022 when they returned to service. Additionally, the decreases in revenues were partially offset by (a) an increase in average daily rates earned by our fleet, (b) an increase in Delaware Bay lightering volumes, and (c) a 10-day decrease in repair days.
Operating income for the second quarter of 2023 was $20.3 million compared to operating income of $12.6 million for the second quarter of 2022. Net income for the second quarter of 2023 was $12.3 million, or $0.15 per diluted share, compared with a net income of $3.7 million, or $0.04 per diluted share, for the second quarter of 2022. The increases in operating and net income were primarily a result of decreases in voyage, vessel and charter hire expenses of $17.9 million when compared to the second quarter of 2022. The decrease in voyage expenses was primarily due to decreases in fuel and port expenses, as our vessels performed fewer voyage charters during the second quarter of 2023 compared to the second quarter of 2022. The decreases in vessel and charter hire expenses were primarily due to the redelivery of three conventional tankers leased from American Shipping Company in December 2022.
Adjusted EBITDA was $39.5 million for the 2023 second quarter, an increase of $8.0 million compared with the second quarter of 2022, driven primarily by the increases in operating and net income.
Conference Call
The Company will host a conference call to discuss its second quarter 2023 results at 9:30 a.m. Eastern Time (“ET”) on Monday, August 7, 2023.
To access the call, participants should dial (844) 850-0546 for U.S. callers and (412) 317-5203 for international callers.
Participants have an option of calling in to listen or watching a live audio webcast and slide presentation available at the Investors section of the Company’s website located at www.osg.com/investors. A replay of the webcast will also be available on the website after the completion of the call.
About Overseas Shipholding Group, Inc.
Overseas Shipholding Group, Inc. (NYSE:OSG, Financial) is a publicly traded company providing liquid bulk and energy transportation services for crude oil and petroleum products in the U.S. Flag markets. OSG is a major operator in the Jones Act industry and in the U.S. Tanker Security Program. OSG’s U.S. Flag fleet consists of Suezmax crude oil tankers doing business in Alaska, conventional and lightering ATBs, shuttle and conventional MR tankers, and non-Jones Act MR tankers.
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 fact 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, the impact of our time charter contracts on our future financial performance, and external events including geopolitical conflicts such as the Russia/Ukraine conflict. Forward-looking statements are based on our current plans, estimates and projections, and are subject to change based on a number of factors. 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
| Six Months Ended
| |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Shipping Revenues: | ||||||||||||||||
Time and bareboat charter revenues | $ | 87,257 | $ | 82,969 | $ | 171,397 | $ | 140,204 | ||||||||
Voyage charter revenues | 19,368 | 35,016 | 49,019 | 81,779 | ||||||||||||
106,625 | 117,985 | 220,416 | 221,983 | |||||||||||||
Operating Expenses: | ||||||||||||||||
Voyage expenses | 6,498 | 14,742 | 15,555 | 24,816 | ||||||||||||
Vessel expenses | 40,798 | 44,153 | 83,368 | 84,950 | ||||||||||||
Charter hire expenses | 16,018 | 22,350 | 31,755 | 44,346 | ||||||||||||
Depreciation and amortization | 16,449 | 16,663 | 32,497 | 33,156 | ||||||||||||
General and administrative | 6,595 | 7,435 | 14,438 | 14,373 | ||||||||||||
Total operating expenses | 86,358 | 105,343 | 177,613 | 201,641 | ||||||||||||
Operating income | 20,267 | 12,642 | 42,803 | 20,342 | ||||||||||||
Other income/(expense), net | 1,460 | (16 | ) | 2,540 | 81 | |||||||||||
Income before interest expense and income taxes | 21,727 | 12,626 | 45,343 | 20,423 | ||||||||||||
Interest expense | (8,085 | ) | (8,275 | ) | (16,241 | ) | (16,640 | ) | ||||||||
Income before income taxes | 13,642 | 4,351 | 29,102 | 3,783 | ||||||||||||
Income tax expense | (1,339 | ) | (611 | ) | (4,660 | ) | (552 | ) | ||||||||
Net income | $ | 12,303 | $ | 3,740 | $ | 24,442 | $ | 3,231 | ||||||||
Weighted Average Number of Common Shares Outstanding: | ||||||||||||||||
Basic - Class A | 81,404,635 | 91,254,864 | 81,703,990 | 90,984,407 | ||||||||||||
Diluted - Class A | 83,699,619 | 92,607,727 | 84,518,602 | 92,345,481 | ||||||||||||
Per Share Amounts: | ||||||||||||||||
Basic net income - Class A | $ | 0.15 | $ | 0.04 | $ | 0.30 | $ | 0.04 | ||||||||
Diluted net income - Class A | $ | 0.15 | $ | 0.04 | $ | 0.29 | $ | 0.04 | ||||||||
Consolidated Balance Sheets ($ in thousands) | ||||||||
June 30,
| December 31,
| |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 105,950 | $ | 78,732 | ||||
Voyage receivables, including unbilled of $2,858 and $11,364, net of reserve for credit losses | 10,856 | 19,698 | ||||||
Income tax receivable | 694 | 1,914 | ||||||
Other receivables | 3,509 | 5,334 | ||||||
Inventories, prepaid expenses and other current assets | 4,268 | 2,668 | ||||||
Total Current Assets | 125,277 | 108,346 | ||||||
Vessels and other property, less accumulated depreciation | 705,380 | 726,179 | ||||||
Deferred drydock expenditures, net | 38,406 | 38,976 | ||||||
Total Vessels, Other Property and Deferred Drydock | 743,786 | 765,155 | ||||||
Intangible assets, less accumulated amortization | 15,717 | 18,017 | ||||||
Operating lease right-of-use assets, net | 184,211 | 206,797 | ||||||
Investment security to be held to maturity | 14,851 | 14,803 | ||||||
Other assets | 25,274 | 25,945 | ||||||
Total Assets | $ | 1,109,116 | $ | 1,139,063 | ||||
LIABILITIES AND EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable, accrued expenses and other current liabilities | $ | 49,155 | $ | 54,906 < | ||||
