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Section 1: 8-K (8-K)

Document


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, 2019___________                         
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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ¨

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A Common Stock (par value $0.01 per share)
OSG
New York Stock Exchange
 





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, 2019, Overseas Shipholding Group, Inc. issued a press release, a copy of which is attached hereto as Exhibit 99.1, announcing first quarter 2019 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, 2019
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
397868976_osgprlogoa07.jpg

Exhibit 99.1
 

OVERSEAS SHIPHOLDING GROUP REPORTS
FIRST QUARTER 2019 RESULTS
 
Tampa, FL – May 9, 2019 – 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 2019.
 
Highlights

Net income for the first quarter 2019 was $3.2 million, or $0.04 per diluted share, compared with net income of $3.7 million, or $0.04 per diluted share, for the first quarter 2018. The Company's 2019 first quarter net income of $3.2 million compares to a $5.2 million loss in the 2018 fourth quarter.

Shipping revenues for the first quarter 2019 were $87.7 million, down 13.2% compared with the same period in 2018. Time charter equivalent (TCE) revenues(A), a non-GAAP measure, for the first quarter 2019 were $82.8 million, down 6.8% compared with the first quarter 2018. First quarter 2019 TCE revenues exceeded fourth quarter 2018 by 3.6%.

First quarter 2019 Adjusted EBITDA(B), a non-GAAP measure, was $23.6 million, down 15.5% from $28.0 million in the first quarter 2018. Adjusted EBITDA increased 2.2% from the fourth quarter 2018.

Total cash(C) was $75.8 million as of March 31, 2019.

In January 2019, we entered into a 10-year bareboat charter party agreement for a U.S. flagged product tanker and we exercised an option to construct a second approximately 204,000 BBL, oil and chemical tank barge for anticipated delivery to the Company during the second half of 2020.

Mr. Sam Norton, President and CEO, stated, “Our first quarter financial performance is evidence of the developing recovery of OSG’s earnings power, as improved charter terms for our conventional tanker fleet counterbalanced the retirement of aging tonnage as part of our ongoing fleet renewal efforts. Time charter contracts fixed during the second half of 2018, coupled with active interest in the few spot days available, led utilization rates for the combined conventional tanker and ATB fleet to exceed 95% of available operating days during the quarter. In line with tightening supply availability, we are seeing the benefits of both an improved rate environment and better utilization rates. In particular, conventional tanker TCE earnings have improved 5% from the 4th quarter of 2018 and more than 25% from their 3rd quarter levels. Meanwhile, our niche businesses continued to perform in-line with our expectations, providing a solid foundation of industrial business that underlies our growth and margin expansion initiatives.”

Mr. Norton added, “We are confident in the strong, tangible fundamentals underlying the Jones Act and U.S. Flag energy transportation markets in which we operate. We anticipate that the full effects of our high operating leverage will be more fully expressed in the latter part of 2019 and into 2020, alongside the additional earnings contribution we expect from our newly built ATBs and MR tankers delivering over the next 18 months. All in all, we remain extremely upbeat about the future and the promise of improving earnings in our core businesses.”

First Quarter 2019 Results
 
Shipping revenues were $87.7 million for the quarter, down 13.2% compared with the first quarter of 2018. TCE revenues for the first quarter of 2019 were $82.8 million, a decrease of $6.0 million, or 6.8%, compared with the first quarter of 2018. This decrease reflected two fewer vessels in operation in the first quarter of 2019 when compared to the 2018 first quarter and a decrease in spot market charters as our fleet moved to long-term time charters.
 
 
 
 
 
 
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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Operating income for the first quarter of 2019 was $9.7 million, compared to operating income of $13.6 million in the first quarter of 2018.

Net income for the first quarter 2019 was $3.2 million, or $0.04 per diluted share, compared with net income of $3.7 million, or $0.04 per diluted share, for the first quarter 2018.

Adjusted EBITDA was $23.6 million for the first quarter, a decrease of $4.4 million compared with the first quarter of 2018, driven primarily by the decline in TCE revenues.

Conference Call
 
The Company will host a conference call to discuss its 2019 first quarter results at 11:00 a.m. Eastern Time (“ET”) on Thursday, May 9, 2019.
 
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 1:00 p.m. ET on Thursday, May 9, 2019 by dialing (877) 344-7529 for domestic callers and (412) 317-0088 for international callers, and entering Access Code 10131358.
 
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 21-vessel U.S. Flag fleet consists of five 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, the delivery timelines for the Company's new vessels, and the performance of the Company's niche and core businesses. 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
[email protected]

2



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

 
 
Three Months Ended
March 31,
 
2019
 
2018
Shipping Revenues:
 

 
 

 
 
 
 
Time and bareboat charter revenues
$
63,120

 
$
53,895

Voyage charter revenues
24,617

 
47,135

 
87,737

 
101,030

 
 
 
 
Operating Expenses:
 

 
 

Voyage expenses
4,984

 
12,252

Vessel expenses
32,446

 
33,505

Charter hire expenses
22,298

 
22,547

Depreciation and amortization
12,478

 
12,372

General and administrative
5,674

 
6,783

Loss on disposal of vessels and other property, including impairments
117

 

Total operating expenses
77,997

 
87,459

Operating income
9,740

 
13,571

Other income/(expense)
355

 
(631
)
Income before interest expense, reorganization items and income taxes
10,095

 
12,940

Interest expense
(6,506
)
 
(8,076
)
Income before income taxes
3,589

 
4,864

Income tax provision
(392
)
 
(1,202
)
Net income
$
3,197

 
$
3,662

 
 
 
 
Weighted Average Number of Common Shares Outstanding:
 

 
 

Basic - Class A
89,004,947

 
88,105,439

Diluted - Class A
89,421,143

 
88,620,596

Per Share Amounts:
 

 
 

Basic and diluted net income - Class A
$
0.04

 
$
0.04





3



Consolidated Balance Sheets
($ in thousands)

 
March 31,
2019
 
December 31,
2018
 
(unaudited)
 
 
ASSETS
 

 
 

Current Assets:
 

 
 

Cash and cash equivalents
$
75,602

 
$
80,417

Restricted cash
59

 
59

Voyage receivables, including unbilled of $8,400 and $10,160
26,799

 
16,096

Income tax receivable
505

 
439

Other receivables
1,452

 
3,027

Prepaid expenses
1,751

 
9,886

Inventories and other current assets
2,465

 
2,456

Total Current Assets
108,633

 
112,380

Vessels and other property, less accumulated depreciation
598,407

 
597,659

Deferred drydock expenditures, net
24,105

 
26,099

Total Vessels, Other Property and Deferred Drydock
622,512

 
623,758

Restricted cash - non current
140

 
165

Investments in and advances to affiliated companies
38

 
3,585

Intangible assets, less accumulated amortization
35,267

 
36,417

Operating lease right-of-use assets
247,262

 

Other assets
50,411

 
51,425

Total Assets
$
1,064,263

 
$
827,730

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Current Liabilities:
 

 
 

Accounts payable, accrued expenses and other current liabilities
$
30,571

 
$
34,678

Current portion of operating lease liabilities
81,897

 

Current installments of long-term debt
26,306

 
23,240

Total Current Liabilities
138,774

 
57,918

Reserve for uncertain tax positions
218

 
220

Noncurrent operating lease liabilities
181,211

 

Long-term debt
315,211

 
322,295

Deferred income taxes, net
73,373

 
73,365

Other liabilities
21,463

 
44,464

Total Liabilities
730,250

 
498,262

 
 
 
 
Equity:
 

 
 

Common stock - Class A ($0.01 par value; 166,666,666 shares authorized; 85,292,751 and 84,834,790 shares issued and outstanding)
853

 
848

Paid-in additional capital
589,086

 
587,826

Accumulated deficit
(248,817
)
 
(252,014
)
 
341,122

 
336,660

Accumulated other comprehensive loss
(7,109
)
 
(7,192
)
Total Equity
334,013

 
329,468

Total Liabilities and Equity
$
1,064,263

 
$
827,730




4



Consolidated Statements of Cash Flows
($ in thousands) 

 
Three Months Ended March 31,
 
2019
 
2018
Cash Flows from Operating Activities:
 

 
 

Net income
$
3,197

 
$
3,662

Items included in net income not affecting cash flows:
 

 
 

Depreciation and amortization
12,478

 
12,372

Loss on disposal of vessels and other property, including impairments
117

 

Amortization of debt discount and other deferred financing costs
510

 
1,106

Compensation relating to restricted stock awards and stock option grants
309

 
793

Deferred income tax provision
111

 
1,492

Other – net
231

 
645

Distributed earnings of affiliated companies
3,548

 
3,747

Payments for drydocking
(1,342
)
 
(2,037
)
Changes in operating assets and liabilities
(8,040
)
 
(1,789
)
Loss on extinguishment of debt, net

 
981

Net cash provided by operating activities
11,119

 
20,972

Cash Flows from Investing Activities:
 
 
 
Expenditures for vessels and vessel improvements
(10,955
)
 

Expenditures for other property
(588
)
 

       Net cash used in investing activities
(11,498
)
 

Cash Flows from Financing Activities:
 

 
 

Payments on debt
(4,167
)
 
(28,166
)
Extinguishment of debt

 
(47,000
)
Tax withholding on share-based awards
(294
)
 
(359
)
Net cash used in financing activities
(4,461
)
 
(75,525
)
Net decrease in cash, cash equivalents and restricted cash
(4,840
)
 
(54,553
)
Cash, cash equivalents and restricted cash at beginning of period
80,641

 
166,269

Cash, cash equivalents and restricted cash at end of period
$
75,801

 
$
111,716



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, 2019 and the comparable period of 2018. Revenue days in the quarter ended March 31, 2019 totaled 1,784 compared with 1,932 in the prior year quarter. A summary fleet list by vessel class can be found later in this press release. 
 
2019
 
2018
Three Months Ended March 31, 2019
Spot Earnings
 
Fixed Earnings
 
Spot Earnings
 
Fixed Earnings
Jones Act Handysize Product Carriers:
 

 
 

 
 

 
 

Average rate
$
27,940

 
$
56,863

 
$
41,227

 
$
64,947

Revenue days
90

 
982

 
337

 
720

Non-Jones Act Handysize Product Carriers:
 

 
 

 
 

 
 

Average rate
$
25,898

 
$
12,097

 
$
35,900

 
$
62,542

Revenue days
113

 
67

 
172

 
8

ATBs:
 

 
 

 
 

 
 

Average rate
$
20,992

 
$
21,557

 
$
12,230

 
$
22,979

Revenue days
86

 
266

 
261

 
261

Lightering:
 

 
 

 
 

 
 

Average rate
$
72,905

 
$

 
$
70,925

 
$

Revenue days
180

 

 
173

 


 


6



Fleet Information
 
As of March 31, 2019, OSG’s operating fleet consisted of 21 vessels, 11 of which were owned, with the remaining vessels chartered-in. Vessels chartered-in are on Bareboat Charters. 
Vessel Type
Vessels Owned
 
Vessels Chartered-In
 
Total Vessels

 
Total dwt (2)

Handysize Product Carriers (1)
4

 
10

 
14

 
664,490

Refined Product ATBs
5

 

 
5

 
141,612

Lightering ATBs
2

 

 
2

 
91,112

Total Operating Fleet
11

 
10

 
21

 
897,214

 
(1)
Includes two owned shuttle tankers, one chartered-in shuttle tanker and two owned U.S. Flag Product Carriers that trade internationally.
(2)
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 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
 March 31,
 
2019
 
2018
Time charter equivalent revenues
$
82,753

 
$
88,778

Add: Voyage expenses
4,984

 
12,252

Shipping revenues
$
87,737

 
$
101,030


 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)
2019
 
2018
Niche Market Activities
$
22,602

 
$
27,908

Jones Act Handysize Tankers
2,439

 
2,309

ATBs
2,968

 
2,509

Vessel Operating Contribution
28,009

 
32,726

Depreciation and amortization
12,478

 
12,372

General and administrative
5,674

 
6,783

Loss on disposal of vessels and other property, including impairments
117

 

Operating income
$
9,740

 
$
13,571


(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 to exclude amortization classified in charter hire expenses, interest expense classified in charter hire expenses, gain/(loss) on disposal of vessels and other property, including impairments, loss on repurchases and extinguishment of debt, non-cash stock based compensation expense 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 (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. Prior periods have been adjusted to conform to current year presentation.

 
Three Months Ended March 31,
($ in thousands)
2019
 
2018
Net income
$
3,197

 
$
3,662

Income tax provision
392

 
1,202

Interest expense
6,506

 
8,076

Depreciation and amortization
12,478

 
12,372

EBITDA
22,573

 
25,312

Amortization classified in charter hire expenses
231

 
465

Interest expense classified in charter hire expenses
404

 
433

Non-cash stock based compensation expense
309

 
793

Loss on disposal of vessels and other property, including impairments
117

 

Loss on extinguishment of debt, net

 
981

Adjusted EBITDA
$
23,634

 
$
27,984

 








8



(C) Total Cash
 
($ in thousands)
March 31,
2019
 
December 31,
2018
Cash and cash equivalents
$
75,602

 
$
80,417

Restricted cash - current
59

 
59

Restricted cash – non-current
140

 
165

Total Cash
$
75,801

 
$
80,641



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