Overseas Shipholding Group Reports Second Quarter Net Loss of $1.7 Million

Overseas Shipholding Group, Inc. a provider of energy transportation services for crude oil and petroleum products in the U.S. Flag markets, reported results for the second quarter 2019.

Highlights

Net loss for the second quarter 2019 was $1.7 million, or ($0.02) per diluted share, compared with net income of $3.1 million, or $0.03 per diluted share, for the second quarter 2018. Net income for the second quarter 2019 before accounting reserves for Philadelphia Energy Solutions was $1.6 million, or $0.02 per diluted share.
Shipping revenues for the second quarter 2019 were $88.5 million, down 7.2% compared with the same period in 2018. Time charter equivalent (TCE) revenues(A), a non-GAAP measure, for the second quarter 2019 were $82.1 million, down 4.5% compared with the second quarter 2018. Second quarter 2019 TCE revenues remained consistent with first quarter 2019 TCE revenues.
Second quarter 2019 Adjusted EBITDA(B), a non-GAAP measure, was $18.2 million, down 26.8% from $24.9 million in the second quarter 2018. Adjusted EBITDA was reduced by $4.3 million due to reserves for possible losses associated with Philadelphia Energy Solutions’ bankruptcy.
Total cash(C) was $53.6 million as of June 30, 2019.
Mr. Sam Norton, President and CEO, stated, “We have made significant progress towards securing more stable and visible cash flows in our conventional tanker and ATB trades. Supported by strong fundamentals and high utilization, our conventional tanker and ATB fleets both made solid contributions to our second quarter performance. This performance, together with a continually improving supply-demand balance, underpin our optimism about the emerging earnings recovery for these assets.”

Mr. Norton added, “In response to the Chapter 11 filing of Philadelphia Energy Solutions, OSG’s largest lightering customer, we have re-deployed one of our two lightering vessels into the strengthening conventional tanker market while we await clarity on the longer-term intentions for the PES refinery complex. Notwithstanding this adjustment, we believe that OSG’s niche businesses collectively remain well positioned to continue benefitting from the long-term stability that these unique assets have historically provided.”

Second Quarter 2019 Results

Shipping revenues were $88.5 million for the quarter, down 7.2% compared with the second quarter of 2018. TCE revenues for the second quarter of 2019 were $82.1 million, a decrease of $3.9 million, or 4.5%, compared with the second quarter of 2018. This decrease primarily resulted from (a) an increase in drydock days, (b) one less Government of Israel voyage during the second quarter of 2019 compared to the same period in 2018, (c) one less vessel in operation during the second quarter of 2019 compared to the same period in 2018, and (d) the sale of one vessel towards the end of the second quarter of 2019 compared to no vessel sales during the same period in 2018.

Following a significant refinery explosion in June 2019, our customer, Philadelphia Energy Solutions (“PES”), filed a Chapter 11 bankruptcy petition on July 21, 2019. At the time of filing, OSG had outstanding receivables from PES of approximately $4.3 million. The ultimate recovery of these receivables is currently unknown. The Company established, at June 30, 2019, a loss provision equal to $4.3 million. OSG is working diligently to maximize the Company’s recovery.

Operating income for the second quarter of 2019 was $3.8 million, compared to operating income of $10.5 million in the second quarter of 2018.

Net loss for the second quarter 2019 was $1.7 million, or ($0.02) per diluted share, compared with net income of $3.1 million, or $0.03 per diluted share, for the second quarter 2018. Net income for the second quarter 2019 before accounting reserves for Philadelphia Energy Solutions was $1.6 million, or $0.02 per diluted share.

Adjusted EBITDA was $18.2 million for the second quarter, a decrease of $6.7 million compared with the second quarter of 2018. Adjusted EBITDA was reduced by $4.3 million due to reserves for possible losses associated with Philadelphia Energy Solutions’ bankruptcy.

An audio replay of the conference call will be available starting at 11:00 a.m. ET on Friday, August 9, 2019 by dialing (877) 344-7529 for domestic callers and (412) 317-0088 for international callers, and entering Access Code 10133620.

Full Report

Source: Overseas Shipholding Group, Inc.