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Section 1: 8-K (8-K)

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United States
Securities and Exchange Commission
Washington, D.C. 20549
_______________________________________________
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934

____________ May 9, 2018____________                         
Date of Report (Date of earliest event reported)
  
Overseas Shipholding Group, Inc.
(Exact Name of Registrant as Specified in Charter)

____1-6479-1____
Commission File Number
 
Delaware
 
13-2637623
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification Number)
  
Two Harbour Place 
302 Knights Run Avenue, Suite 1200
____Tampa, Florida 33602____
 
(Address of Principal Executive Offices) (Zip Code)
 

 
Registrant's telephone number, including area code (813) 209-0600
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 

 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 





OVERSEAS SHIPHOLDING GROUP, INC.
 
FORM 8-K
CURRENT REPORT


Section 2 – Financial Information
 
 
Item 2.02
Results of Operations and Financial Condition.
 
The following information, including the Exhibit to this Form 8-K, is being furnished pursuant to Item 2.02 – Results of Operations and Financial Condition of Form 8-K. This information is not deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference into any Securities Act of 1933 registration statements.
 
On May 9, 2018, Overseas Shipholding Group, Inc. issued a press release, a copy of which is attached hereto as Exhibit 99.1, announcing first quarter 2018 earnings.
 

Section 9 - Financial Statements and Exhibits.
 
 
Item 9.01
Financial Statements and Exhibits.
 
(d)          Exhibits
 
Pursuant to General Instruction B.2 of Form 8-K, the following exhibit is furnished with this Form 8-K.
 
Exhibit No.
Description
99.1






SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
OVERSEAS SHIPHOLDING GROUP, INC.   
 
(Registrant)
 
 
Date: May 9, 2018
By
/s/ Richard Trueblood
 
 
Name:         Richard Trueblood
Title:           Vice President and Chief Financial Officer


EXHIBIT INDEX
 
Exhibit No.
Description
99.1




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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
393410187_osgprlogoa03.jpg

Exhibit 99.1
 
 
 

OVERSEAS SHIPHOLDING GROUP REPORTS
FIRST QUARTER 2018 RESULTS
 
Tampa, FL – May 9, 2018 – Overseas Shipholding Group, Inc. (NYSE: OSG) (the “Company” or “OSG”) a provider of energy transportation services for crude oil and petroleum products in the U.S. Flag markets, today reported results for the first quarter 2018.
 
Highlights

Net income for the first quarter was $3.7 million, or $0.04 per diluted share, compared with net income of $5.4 million, or $0.06 per diluted share, for the first quarter 2017.

Shipping revenues for the first quarter 2018 were $101.0 million, down 6.6% compared with the same period in 2017. Time charter equivalent (TCE) revenues(A), a non-GAAP measure, for the first quarter 2018 were $88.8 million, down 13.2% compared with the first quarter 2017. Sequentially, shipping revenues and TCE revenues increased 8.9% and 7.3%, respectively, over the fourth quarter of 2017.

First quarter 2018 Adjusted EBITDA(B), a non-GAAP measure, was $26.3 million, down 27.3% from $36.2 million in the first quarter 2017. Adjusted EBITDA increased 15.6% from the 2017 fourth quarter.

Total cash(C) was $111.7 million as of March 31, 2018.

Prepayments of $75.2 million were made during the first quarter 2018 for the Company’s OBS Term Loan.
 
Mr. Sam Norton, CEO, stated, “We saw marked improvement in our financial performance during the just completed quarter compared to the fourth quarter of 2017. Rising spot market rates, higher utilization rates, a renewal of time charter activity, and a rebound in our niche market businesses to historical norms all contributed to the improved results. We now have greater confidence that we have seen the bottom of the market for spot and time charter rates and that a sustained recovery in our conventional Jones Act trades is now well underway.”

First Quarter 2018 Results
 
Shipping revenues were $101.0 million for the quarter, down 6.6% compared with the first quarter of 2017. TCE revenues for the first quarter of 2018 were $88.8 million, a decrease of $13.5 million, or 13.2%, compared with the first quarter of 2017. This decrease reflected weakened market conditions, reduction of two vessels in operation in the first quarter of 2018 when compared to the 2017 first quarter and a growing proportion of the Company's fleet becoming exposed to the spot markets.
 
Operating income for the first quarter of 2018 was $13.6 million, compared to operating income of $19.4 million in the first quarter of 2017.

Net income for the first quarter was $3.7 million, or $0.04 per diluted share, compared with net income of $5.4 million, or $0.06 per diluted share, for the first quarter 2017.

Adjusted EBITDA was $26.3 million for the first quarter, a decrease of $9.9 million compared with the first quarter of 2017, driven primarily by the decline in TCE revenues.


 
 
 
 
 
A, B, C Reconciliations of these non-GAAP financial measures are included in the financial tables attached to this press release starting on Page 7.

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During the first quarter of 2018, market conditions firmed in comparison to the fourth quarter of 2017 resulting in higher TCE day rates for our product tankers operating in the spot market. Similar conditions occurred in spot market rates for ATBs; however, the benefit was reduced as utilization remains a challenge. These factors resulted in a 7.3% increase in TCE revenues and an increase in operating income to $13.6 million from $3.9 million compared to the fourth quarter of 2017. Adjusted EBITDA during the current quarter increased $3.6 million or 15.6% when compared to fourth quarter of 2017.
 
Conference Call
 
The Company will host a conference call to discuss its first quarter 2018 results at 9:00 a.m. Eastern Time (“ET”) on Wednesday, May 9, 2018.
 
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 11:00 a.m. ET on Wednesday, May 9, 2018 by dialing (877) 344-7529 for domestic callers and (412) 317-0088 for international callers, and entering Access Code 10119908.
 
About Overseas Shipholding Group, Inc.
 
Overseas Shipholding Group, Inc. (NYSE: OSG) is a publicly traded tanker 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 23-vessel U.S. Flag fleet consists of seven ATBs, two lightering ATBs, three shuttle tankers, nine MR tankers, and two non-Jones Act MR tankers that participate in the U.S. MSP. 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 release contains forward-looking statements. In addition, the Company may make or approve certain 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 the Company’s prospects, its ability to retain and effectively integrate new members of management and the effect of the Company’s spin-off of International Seaways, Inc. Forward-looking statements are based the Company’s 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 the Annual Report on Form 10-K for OSG and in similar sections of other filings made by the Company with the SEC from time to time. The Company assumes no obligation to update or revise any forward-looking statements. Forward-looking statements and written and oral forward-looking statements attributable to the Company or its representatives after the date of this release are qualified in their entirety by the cautionary statements contained in this paragraph and in other reports previously or hereafter filed by the Company with the SEC.
 
Investor Relations & Media Contact:
Susan Allan, Overseas Shipholding Group, Inc.
(813) 209-0620
sallan@osg.com

2



Consolidated Statements of Operations
($ in thousands, except per share amounts)

 
Three Months Ended March 31,
 
2018
 
2017
Shipping Revenues:
 

 
 

 
 
 
 
Time and bareboat charter revenues
$
53,895

 
$
79,767

Voyage charter revenues
47,135

 
28,349

 
101,030

 
108,116

 
 
 
 
Operating Expenses:
 

 
 

Voyage expenses
12,252

 
5,792

Vessel expenses
33,505

 
35,644

Charter hire expenses
22,547

 
22,577

Depreciation and amortization
12,372

 
16,625

General and administrative
6,783

 
8,095

Total operating expenses
87,459

 
88,733

Operating income
13,571

 
19,383

Other expense
(631
)
 
(793
)
Income before interest expense, reorganization items and income taxes
12,940

 
18,590

Interest expense
(8,076
)
 
(9,357
)
Income before reorganization items and income taxes
4,864

 
9,233

Reorganization items, net

 
(235
)
Income before income taxes
4,864

 
8,998

Income tax provision
(1,202
)
 
(3,569
)
Net income
$
3,662

 
$
5,429

 
 
 
 
Weighted Average Number of Common Shares Outstanding:
 

 
 

Basic - Class A
88,105,439

 
87,908,032

Diluted - Class A
88,620,596

 
88,179,855

 
 
 
 
Per Share Amounts:
 

 
 

Basic and diluted net income - Class A
$
0.04

 
$
0.06

 
The Company adopted ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASC 715), which requires that an employer classify and report the service cost component in the same line item or items in the statement of operations as other compensation costs arising from services rendered by the pertinent employees during the period and disclose by line item in the statement of operations the amount of net benefit cost that is included in the statement of operations. The other components of net benefit cost would be presented in the statement of operations separately from the service cost component and outside the subtotal of income from operations. The Company adopted this accounting standard on January 1, 2018 and has applied the guidance retrospectively.


3



Consolidated Balance Sheets
($ in thousands)
 
 
March 31,
2018
 
December 31,
2017
 
(unaudited)
 
 
ASSETS
 

 
 

Current Assets:
 

 
 

Cash and cash equivalents
$
111,467

 
$
165,994

Restricted cash
58

 
58

Voyage receivables, including unbilled of $6,243 and $9,919
24,345

 
24,209

Income tax receivable
1,413

 
1,122

Receivable from INSW
34

 
372

Other receivables
1,944

 
2,184

Inventories, prepaid expenses and other current assets
13,168

 
13,356

Total Current Assets
152,429

 
207,295

Vessels and other property, less accumulated depreciation
624,123

 
632,509

Deferred drydock expenditures, net
22,966

 
23,914

Total Vessels, Other Property and Deferred Drydock
647,089

 
656,423

Restricted cash - non current
191

 
217

Investments in and advances to affiliated companies
38

 
3,785

Intangible assets, less accumulated amortization
39,867

 
41,017

Other assets
21,348

 
23,150

Total Assets
$
860,962

 
$
931,887

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Current Liabilities:
 

 
 

Accounts payable, accrued expenses and other current liabilities
$
34,029

 
$
34,371

Current installments of long-term debt

 
28,160

Total Current Liabilities
34,029

 
62,531

Reserve for uncertain tax positions
3,224

 
3,205

Long-term debt
375,762

 
420,776

Deferred income taxes, net
85,104

 
83,671

Other liabilities
45,584

 
48,466

Total Liabilities
543,703

 
618,649

 
 
 
 
Equity:
 

 
 

Common stock - Class A ($0.01 par value; 166,666,666 shares authorized; 78,733,688 and 78,277,669 shares issued and outstanding)
787

 
783

Paid-in additional capital
586,043

 
584,675

Accumulated deficit
(263,324
)
 
(265,758
)
 
323,506

 
319,700

Accumulated other comprehensive loss
(6,247
)
 
(6,462
)
Total Equity
317,259

 
313,238

Total Liabilities and Equity
$
860,962

 
$
931,887




4



Consolidated Statements of Cash Flows
($ in thousands) 
 
Three Months Ended March 31,
 
2018
 
2017
Cash Flows from Operating Activities:
 

 
 

Net income
$
3,662

 
$
5,429

Items included in net income not affecting cash flows:
 

 
 

Depreciation and amortization
12,372

 
16,625

Amortization of debt discount and other deferred financing costs
1,106

 
1,334

Compensation relating to restricted stock awards and stock option grants
793

 
541

Deferred income tax provision
1,492

 
1,178

Reorganization items, non-cash

 
214

Other – net
645

 
616

Loss on extinguishment of debt, net
981

 
937

Distributed earnings of affiliated companies
3,747

 
3,657

Payments for drydocking
(2,037
)
 
(730
)
SEC, Bankruptcy and IRS claim payments

 
(5,000
)
Changes in operating assets and liabilities
(1,789
)
 
(11,066
)
Net cash provided by operating activities
20,972

 
13,735

Cash Flows from Financing Activities:
 

 
 

Payments on debt
(28,166
)
 

Extinguishment of debt
(47,000
)
 
(15,225
)
Tax withholding on share-based awards
(359
)
 
(1,060
)
Net cash used in financing activities
(75,525
)
 
(16,285
)
Net decrease in cash, cash equivalents and restricted cash
(54,553
)
 
(2,550
)
Cash, cash equivalents and restricted cash at beginning of period
166,269

 
206,933

Cash, cash equivalents and restricted cash at end of period
$
111,716

 
$
204,383


The Company adopted ASU No. 2016-18, Statement of Cash Flows (ASC 230), Restricted Cash, which requires that amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The standard is effective for annual periods beginning after December 31, 2017 and interim periods within that reporting period. The Company adopted this accounting standard on January 1, 2018. The prior period has been adjusted to conform to current period presentation, which resulted in a decrease of $9,542 in net cash provided by investing activities for the three months ended March 31, 2017, related to changes in restricted cash amounts.


5



Spot and Fixed TCE Rates Achieved and Revenue Days
 
The following tables provides a breakdown of TCE rates achieved for spot and fixed charters and the related revenue days for the three months ended March 31, 2018 and the comparable period of 2017. Revenue days in the quarter ended March 31, 2018 totaled 1,932 compared with 2,125 in the prior year quarter. A summary fleet list by vessel class can be found later in this press release.
 
 
 
2018
 
2017
Three Months Ended March 31,
 
Spot Earnings
 
Fixed Earnings
 
Spot Earnings
 
Fixed Earnings
Jones Act Handysize Product Carriers:
 
 

 
 

 
 

 
 

Average rate
 
$
41,227

 
$
64,947

 
$
45,061

 
$
63,136

Revenue days
 
337

 
720

 
72

 
989

Non-Jones Act Handysize Product Carriers:
 
 

 
 

 
 

 
 

Average rate
 
$
35,900

 
$
62,542

 
$
32,132

 
$
15,543

Revenue days
 
172

 
8

 
112

 
68

ATBs:
 
 

 
 

 
 

 
 

Average rate
 
$
12,230

 
$
22,979

 
$
17,057

 
$
29,433

Revenue days
 
261

 
261

 
180

 
524

Lightering:
 
 

 
 

 
 

 
 

Average rate
 
$
70,925

 
$

 
$
75,124

 
$

Revenue days
 
173

 

 
180

 


 


6



Fleet Information
 
As of March 31, 2018, OSG’s operating fleet consisted of 23 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, 2018
Vessel Type
 
Number

 
Weighted by
Ownership

 
Number

 
Weighted by
Ownership

 
Total Vessels

 
Vessels
Weighted by
Ownership

 
Total dwt (1)

Handysize Product Carriers
 
4

 
4.0

 
10

 
10.0

 
14

 
14.0

 
664,490

Rebuilt ATBs
 
7

 
7.0

 

 

 
7

 
7.0

 
195,131

Lightering ATBs
 
2

 
2.0

 

 

 
2

 
2.0

 
91,112

Total Operating Fleet
 
13

 
13.0

 
10

 
10.0

 
23

 
23.0

 
950,733

 
(1)
Total dwt is defined as total 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 may provide certain 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. 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. Reconciliation of TCE revenues of the segments to shipping revenues as reported in the consolidated statements of operations follow: 

 
Three Months Ended
($ in thousands)
March 31,
2018
 
March 31,
2017
 
December 31,
2017
Time charter equivalent revenues
$
88,778

 
$
102,324

 
$
82,754

Add: Voyage expenses
12,252

 
5,792

 
10,061

Shipping revenues
$
101,030

 
$
108,116

 
$
92,815

 
Vessel Operating Contribution

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

Our “niche market activities”, which includes Delaware Bay lightering, MSP vessels and shuttle tankers, continue to provide a stable operating platform underlying our total US Flag operations. These vessels’ operations are insulated from the forces affecting the broader Jones Act market.






7



The following table sets forth the contribution of our vessels:
 
Three Months Ended March 31,
($ in thousands)
2018
 
2017
Niche Market Activities
$
27,905

 
$
25,467

Jones Act Handysize Tankers
2,306

 
8,050

ATBs
2,507

 
10,675

Vessel Operating Contribution
$
32,718

 
$
44,192


(B) EBITDA and Adjusted EBITDA
 
EBITDA represents net (loss)/income from continuing operations before interest expense, income taxes and depreciation and amortization expense. Adjusted EBITDA consists of EBITDA adjusted for the impact of certain 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 (loss)/income 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 significant 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 captions of other companies due to differences in methods of calculation. The following table reconciles net income/(loss) from continuing operations as reflected in the consolidated statements of operations, to EBITDA and Adjusted EBITDA:
 
Three Months Ended
($ in thousands)
March 31,
2018
 
March 31,
2017
 
December 31,
2017
Net income
$
3,662

 
$
5,429

 
$
53,645

Income tax provision/(benefit)
1,202

 
3,569

 
(59,679
)
Interest expense
8,076

 
9,357

 
9,125

Depreciation and amortization
12,372

 
16,625

 
12,573

EBITDA
25,312

 
34,980

 
15,664

Severance costs

 
16

 

Loss on disposal of vessels and other property, including impairments

 

 
5,847

Loss on extinguishment of debt, net
981

 
937

 
1,238

Reorganization items, net

 
235

 
(8
)
Adjusted EBITDA
$
26,293

 
$
36,168

 
$
22,741


 
(C) Total Cash
 
($ in thousands)
 
March 31,
2018
 
December 31,
2017
Cash and cash equivalents
 
$
111,467

 
$
165,994

Restricted cash - current
 
58

 
58

Restricted cash – non-current
 
191

 
217

Total Cash
 
$
111,716

 
$
166,269



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