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Overseas Shipholding Group Expects Improved Demand as Vaccinations Progress

Overseas Shipholding Group, Inc., a leading provider of energy transportation services for crude oil and petroleum products in the U.S. Flag markets, today reported results for the first quarter 2021.

Net loss for the first quarter 2021 was $15.9 million, or $(0.18) per diluted share, compared with net income of $25.1 million, or $0.28 per diluted share, for the first quarter 2020. The first quarter of 2020 included a $19.2 million gain related to the acquisition of the Alaska Tanker Company.

In April, we entered into a contract to sell the Overseas Gulf Coast for $32.5 million. Based on the negotiated sale terms, the transaction will result in a $5.4 million loss, which we recorded in the first quarter of 2021. The sale of this unencumbered asset will provide additional liquidity.

Shipping revenues for the first quarter 2021 were $81.3 million, a decrease of 19.4% from $100.9 million in the first quarter 2020.

Winter Storm Uri resulted in U.S. refinery shutdowns further reducing transportation demand from already depressed levels as a consequence of the COVID-19 pandemic.

During this quarter, the Company had seven ships in lay-up and one vessel unemployed in the spot market for two months.

Time charter equivalent (TCE) revenues(A), a non-GAAP measure, for the first quarter 2021 were $65.5 million, down 32.5% compared with the first quarter 2020.

First quarter 2021 Adjusted EBITDA(B), a non-GAAP measure, was $6.2 million, down 88.2% from $52.8 million in the first quarter 2020.

Total cash(c) was $45.2 million as of March 31, 2021.

Sam Norton, President and CEO, commenting on the recently completed quarter, stated, “The ongoing coronavirus pandemic, and associated lockdowns, business closures and travel restrictions, continued to severely impact global and national energy markets – and by extension demand for crude oil and refined product marine transportation in the first quarter. Given this very difficult operating environment, the results announced this morning have met our expectations and point to the continuing benefit of having a diversified asset portfolio. Although our conventional Jones Act tankers experienced losses in the first quarter, our other operating assets performed largely in line with historical norms. Heightened uncertainty has resulted in the non-renewal of charters for tankers. In response to this we have placed six conventional tankers and one of our lightering ATBs in layup as of March 31.”

Mr. Norton added, “We anticipate that, as vaccine distribution continues to expand and there is a continued lifting of COVID-19 restrictions, mobility and related US consumption of transportation fuels will normalize to fuel demand patterns consistent with historic levels of consumption. This normalization should stimulate more marine transportation demand, leading us to reactivate vessels from layup. The pace and trajectory of demand recovery continues to be influenced by many factors, including progress in resolving the pandemic outside of the US, and near-term uncertainty will continue to define a wide spectrum of possible vessel reactivation outcomes as we move through the late spring and summer. Nonetheless, we believe that, as our customers’ visibility and confidence in the future returns, there will be a resumption of more typical customer behavior and time charter activity will rebound, leading to improving financial performance as the year progresses.”

First Quarter 2021 Results

Shipping revenues were $81.3 million for the quarter, down 19.4% compared with the first quarter of 2020. TCE revenues for the first quarter of 2021 were $65.5 million, a decrease of $31.6 million, or 32.5%, compared with the first quarter of 2020, primarily a result of a 624-day increase in lay-up days due to seven vessels in lay-up, a decision taken in light of the lack of demand due to the economic impact of COVID-19. The decrease in TCE revenues was partially offset by the addition to our fleet of three crude oil tankers, Alaskan Explorer, Alaskan Legend and Alaskan Navigator, which were purchased on March 12, 2020.

Operating loss for the first quarter of 2021 was $15.8 million compared to operating income of $37.5 million in the first quarter of 2020. We had seven vessels in lay-up during the first quarter of 2021. Additionally, one vessel was available in the spot market and was unemployed for two months prior to entering into a time charter. The first quarter of 2020 included a gain on termination of a pre-existing arrangement related to the acquisition of the Alaska Tanker Company.

In April 2021, we entered into a contract to sell the Overseas Gulf Coast for $32.5 million. Based on the negotiated sale terms, the transaction will result in a $5.4 million loss, which was recorded in the first quarter.

Net loss for the first quarter of 2021 was $15.9 million, or $(0.18) per diluted share, compared with net income of $25.1 million, or $0.28 per diluted share, for the first quarter 2020.

Adjusted EBITDA was $6.2 million for the quarter, a decrease of $46.6 million compared with the first quarter of 2020, driven primarily by the decrease in TCE revenues.
Source: Overseas Shipholding Group

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