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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 8, 2020
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))

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

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. ¨ 





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 8, 2020, Overseas Shipholding Group, Inc. issued a press release, a copy of which is attached hereto as Exhibit 99.1, announcing first quarter 2020 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 8, 2020
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
403924021_osgprlogoa11.jpg

Exhibit 99.1

OVERSEAS SHIPHOLDING GROUP REPORTS
FIRST QUARTER 2020 RESULTS
 
Tampa, FL – May 8, 2020 – 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 of 2020.
 
Highlights

Net income for the first quarter 2020 was $25.1 million, or $0.28 per diluted share, compared with net income of $3.2 million, or $0.04 per diluted share, for the first quarter 2019. The increase was driven primarily by the gain on termination of a pre-existing arrangement related to the acquisition of ATC recorded during the first quarter of 2020 and an increase in revenues.

Shipping revenues for the first quarter 2020 were $100.9 million, up 15.0% compared with the first quarter 2019.

Time charter equivalent (TCE) revenues(A), a non-GAAP measure, for the first quarter 2020 were $97.1 million, up 17.3% compared with the first quarter 2019.

First quarter 2020 Adjusted EBITDA(B), a non-GAAP measure, was $52.8 million, up 123.7% from $23.6 million in the first quarter 2019.

Total cash(C) was $101.5 million as of March 31, 2020.

On March 12, 2020, subsidiaries of the Company completed the purchase of three U.S.-flagged crude oil carrier vessels, the Alaskan Explorer, Alaskan Legend and Alaskan Navigator, and have entered into a bareboat charter with BP for a fourth vessel, the Alaskan Frontier, currently in layup. In connection with these transactions, OSG also completed the acquisition of Alaska Tanker Company LLC (ATC), making ATC a wholly owned subsidiary of OSG.

On March 26, 2020, one of the Company's subsidiaries, OSG 204 LLC, closed on a $33.2 million 5-year term loan with Wintrust Commercial Finance and other syndicate lenders to finance a new 204,000 barrel U.S. Flag oil and chemical ATB barge, which is scheduled to be delivered in May 2020.
 
Sam Norton, President and CEO, stated, “We are pleased that the results we have announced today give credence to the narrative of emerging strength in our businesses that we have been speaking of in recent quarters. The deep book of time charters which we entered into at the end of last year has provided considerable insulation from exposure to the current market turmoil that has followed the outbreak of COVID-19, as well as from the extraordinary drop in transportation fuel demand affecting both crude oil and refined product pricing.”

Mr. Norton added, “Our tankers, niche businesses and remaining ATB’s operated at close to 100% utilization rates throughout the first quarter, producing solid results. With the ATC vessels also beginning to contribute, and recent financings having significantly strengthened our liquidity, OSG is now well positioned to confront the heightened uncertainty occasioned by the impact of COVID-19 on both our operations as well as on the markets that we serve.”











 
 
 
 
 
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.

1



First Quarter 2020 Results
 
Shipping revenues were $100.9 million for the quarter, up 15.0% compared with the first quarter of 2019. TCE revenues for the first quarter of 2020 were $97.1 million, an increase of $14.3 million, or 17.3%, compared with the first quarter of 2019. The increase in shipping and TCE revenues primarily resulted from (a) the addition of one MR tanker, Overseas Key West, two Marshall Islands flagged MR tankers, Overseas Gulf Coast and Overseas Sun Coast, and three crude oil tankers, which were acquired on March 12, 2020, Alaskan Explorer, Alaskan Legend and Alaskan Navigator, to our fleet (b) an increase in average daily rates earned by our fleet and (c) decreased spot market exposure. The increase was offset by two fewer ATBs in our fleet during the first quarter of 2020 compared to the first quarter of 2019.

Operating income for the first quarter of 2020 was $37.5 million compared to operating income of $9.7 million in the first quarter of 2019. The increase was driven primarily by the gain on termination of a pre-existing arrangement related to the acquisition of ATC recorded during the first quarter of 2020 and an increase in revenues.
 
Net income for the first quarter 2020 was $25.1 million, or $0.28 per diluted share, compared with net income of $3.2 million, or $0.04 per diluted share, for the first quarter 2019.

Adjusted EBITDA was $52.8 million for the quarter, an increase of $29.2 million compared with the first quarter of 2019.

Conference Call
 
The Company will host a conference call to discuss its first quarter 2020 results at 9:30 a.m. Eastern Time (“ET”) on Friday, May 8, 2020.
 
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 8, 2020 through 10:59 p.m. ET on Friday, May 15, 2020 by dialing (877) 344-7529 for domestic callers and (412) 317-0088 for international callers, and entering Access Code 10142573.



























2



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 ATBs, 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 owns and operates two Marshall Islands flagged MR tankers which trade internationally. In addition to the currently operating fleet, OSG has on order two Jones Act compliant barges which are scheduled for delivery in 2020.

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 expected delivery schedule of our two new barges under construction and their expected participation in the Jones Act trade, 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 have in the future, 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 Annual Report on Form 10-K, in our upcoming Form 10-Q filing, and in similar sections of other filings we make with the SEC from time to time. 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.
 
Investor Relations & Media Contact:
Susan Allan, Overseas Shipholding Group, Inc.
(813) 209-0620
[email protected]

 


3



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

 
Three Months Ended
March 31,
 
2020
 
2019
 
(unaudited)

 
(unaudited)

Shipping Revenues:
 
 
 
 
 
 
 
Time and bareboat charter revenues
$
78,150

 
$
63,120

Voyage charter revenues
22,709

 
24,617

 
100,859

 
87,737

 
 
 
 
Operating Expenses:
 
 
 
Voyage expenses
3,786

 
4,984

Vessel expenses
35,769

 
32,446

Charter hire expenses
22,460

 
22,298

Depreciation and amortization
14,019

 
12,478

General and administrative
6,173

 
5,674

Loss on disposal of vessels and other property, including impairments, net
296

 
117

Total operating expenses
82,503

 
77,997

Income from vessel operations
18,356

 
9,740

Gain on termination of pre-existing arrangement
19,172

 

Operating income
37,528

 
9,740

Other income, net
31

 
355

Income before interest expense and income taxes
37,559

 
10,095

Interest expense
(6,074
)
 
(6,506
)
Income before income taxes
31,485

 
3,589

Income tax expense
(6,360
)
 
(392
)
Net income
$
25,125

 
$
3,197

 
 
 
 
Weighted Average Number of Common Shares Outstanding:
 
 
 
Basic - Class A
89,422,311

 
89,004,947

Diluted - Class A
90,388,988

 
89,421,143

Per Share Amounts:
 
 
 
Basic and diluted net income - Class A
$
0.28

 
$
0.04



4



Consolidated Balance Sheets
($ in thousands)

 
March 31,
2020
 
December 31,
2019
 
(unaudited)
 
 
ASSETS
 

 
 

Current Assets:
 

 
 

Cash and cash equivalents
$
81,359

 
$
41,503

Restricted cash
20,060

 
60

Voyage receivables, including unbilled of $6,586 and $5,611, net of reserve for doubtful accounts
7,907

 
9,247

Income tax receivable
5,776

 
1,192

Other receivables
6,108

 
3,037

Inventories, prepaid expenses and other current assets
3,473

 
2,470

Total Current Assets
124,683

 
57,509

Vessels and other property, less accumulated depreciation
823,030

 
737,212

Deferred drydock expenditures, net
23,882

 
23,734

Total Vessels, Other Property and Deferred Drydock
846,912

 
760,946

Restricted cash - non current
88

 
114

Investments in and advances to affiliated companies

 
3,599

Intangible assets, less accumulated amortization
30,667

 
31,817

Operating lease right-of-use assets
270,388

 
286,469

Other assets
18,017

 
35,013

Total Assets
$
1,290,755

 
$
1,175,467

LIABILITIES AND EQUITY
 

 
 

Current Liabilities:
 

 
 

Accounts payable, accrued expenses and other current liabilities
$
45,308

 
$
35,876

Current portion of operating lease liabilities
90,410

 
90,145

Current portion of finance lease liabilities
4,001

 
4,011

Current installments of long-term debt
55,745

 
31,512

Total Current Liabilities
195,464

 
161,544

Reserve for uncertain tax positions
878

 
864

Noncurrent operating lease liabilities
203,000

 
219,501

Noncurrent finance lease liabilities
23,027

 
23,548

Long-term debt
385,856

 
336,535

Deferred income taxes, net
79,066

 
72,833

Other liabilities
36,497

 
19,097

Total Liabilities
923,788

 
833,922

Equity:
 

 
 

Common stock - Class A ($0.01 par value; 166,666,666 shares authorized; 85,845,920 and 85,713,610 shares issued and outstanding)
858

 
857

Paid-in additional capital
590,674

 
590,436

Accumulated deficit
(218,214
)
 
(243,339
)
 
373,318

 
347,954

Accumulated other comprehensive loss
(6,351
)
 
(6,409
)
Total Equity
366,967

 
341,545

Total Liabilities and Equity
$
1,290,755

 
$
1,175,467




5



Consolidated Statements of Cash Flows
($ in thousands) 

 
Three Months Ended
March 31,
 
2020
 
2019
 
(unaudited)

 
(unaudited)

Cash Flows from Operating Activities:
 

 
 

Net income
$
25,125

 
$
3,197

Items included in net income not affecting cash flows:
 

 
 

Depreciation and amortization
14,019

 
12,478

Gain on termination of pre-existing arrangement

(19,172
)
 

Loss on disposal of vessels and other property, including impairments, net
296

 
117

Amortization of debt discount and other deferred financing costs
533

 
510

Compensation relating to restricted stock awards and stock option grants
438

 
309

Deferred income tax benefit
2,135

 
111

Interest on finance lease liabilities
506

 

Non-cash operating lease expense
22,811

 
22,176

Other - net

 
231

Distributed earnings of affiliated companies
3,562

 
3,548

Payments for drydocking
(3,327
)
 
(1,342
)
Operating lease liabilities
(22,969
)
 
(22,407
)
Changes in operating assets and liabilities, net
2,162

 
(7,809
)
Net cash provided by operating activities
26,119

 
11,119

Cash Flows from Investing Activities:
 
 
 
Acquisition, net of cash acquired
(16,973
)
 

Expenditures for vessels and vessel improvements
(20,871
)
 
(10,910
)
Expenditures for other property
(232
)
 
(588
)
       Net cash used in investing activities
(38,076
)
 
(11,498
)
Cash Flows from Financing Activities:
 

 
 

Payments on debt
(7,865
)
 
(4,167
)
Tax withholding on share-based awards
(197
)
 
(294
)
Issuance of debt, net of issuance and deferred financing costs
80,886

 

Payments on principal portion of finance lease liabilities
(1,037
)
 

Net cash provided by/(used in) financing activities
71,787

 
(4,461
)
Net increase/(decrease) in cash, cash equivalents and restricted cash
59,830

 
(4,840
)
Cash, cash equivalents and restricted cash at beginning of period
41,677

 
80,641

Cash, cash equivalents and restricted cash at end of period
$
101,507

 
$
75,801




6



Spot and Fixed TCE Rates Achieved and Revenue Days
 
The following tables provide a breakdown of TCE rates achieved for spot and fixed charters and the related revenue days for the three months ended March 31, 2020 and the comparable period of 2019. Revenue days in the quarter ended March 31, 2020 totaled 1,898 compared with 1,784 in the prior year quarter. A summary fleet list by vessel class can be found later in this press release. 
 
2020
 
2019
Three Months Ended March 31,
Spot Earnings
 
Fixed Earnings
 
Spot Earnings
 
Fixed Earnings
Jones Act Handysize Product Carriers:
 

 
 

 
 

 
 

Average rate
$
61,951

 
$
60,260

 
$
27,940

 
$
56,863

Revenue days
92

 
1,052

 
90

 
982

Non-Jones Act Handysize Product Carriers:
 

 
 

 
 

 
 

Average rate
$
27,727

 
$
16,788

 
$
25,898

 
$
12,097

Revenue days
154

 
182

 
113

 
67

ATBs:
 

 
 

 
 

 
 

Average rate
$
28,332

 
$
24,015

 
$
20,992

 
$
21,557

Revenue days
93

 
89

 
86

 
266

Lightering:
 

 
 

 
 

 
 

Average rate
$
78,258

 
$
61,012

 
$
72,905

 
$

Revenue days
91

 
87

 
180

 

Alaska (a):
 
 
 
 
 
 
 
Average rate
$

 
$
59,015

 
$

 
$

Revenue days

 
58

 

 

(a) Excludes one Alaska vessel currently in layup.


7



Fleet Information
 
As of March 31, 2020, 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, 2020
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

 
59,490

Lightering ATBs
2

 

 
2

 
91,112

Total Operating Fleet
13


12


25


1,733,621


(1)
Includes two owned shuttle tankers, 11 chartered-in tankers, 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,
 
2020
 
2019
Time charter equivalent revenues
$
97,073

 
$
82,753

Add: Voyage expenses
3,786

 
4,984

Shipping revenues
$
100,859

 
$
87,737

 
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 include 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.



The following table sets forth the contribution of our vessels:
 
Three Months Ended
March 31,
($ in thousands)
2020
 
2019
Niche Market Activities
$
21,706

 
$
22,602

Jones Act Handysize Tankers
12,384

 
2,439

ATBs
2,805

 
2,968

Alaska Crude Oil Tankers
1,949

 

Vessel Operating Contribution
38,844

 
28,009

Depreciation and amortization
14,019

 
12,478

General and administrative
6,173

 
5,674

Loss on disposal of vessels and other property, including impairments, net
296

 
117

Income from vessel operations
$
18,356

 
$
9,740

(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 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) as reflected in the consolidated statements of operations, to EBITDA and Adjusted EBITDA.
 
Three Months Ended March 31,
($ in thousands)
2020
 
2019
Net income
$
25,125

 
$
3,197

Income tax expense
6,360

 
392

Interest expense
6,074

 
6,506

Depreciation and amortization
14,019

 
12,478

EBITDA
51,578

 
22,573

Amortization classified in charter hire expenses
143

 
231

Interest expense classified in charter hire expenses
379

 
404

Loss on disposal of vessels and other property, including impairments, net
296

 
117

Non-cash stock based compensation expense
438

 
309

Adjusted EBITDA
$
52,834

 
$
23,634

 













8



(C) Total Cash
 
($ in thousands)
March 31,
2020
 
December 31,
2019
Cash and cash equivalents
$
81,359

 
$
41,503

Restricted cash - current
20,060

 
60

Restricted cash – non-current
88

 
114

Total Cash
$
101,507

 
$
41,677


9
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