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Overseas Shipholding Group Reports Third Quarter 2021 Results

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 third quarter 2021.

• Shipping revenues for the third quarter 2021 were $94.0 million, an increase of $5.6 million from the second quarter 2021. Compared to the third quarter 2020, shipping revenues decreased 11.1% from $105.7 million.
• Net loss for the third quarter 2021 was $16.0 million, or $(0.18) per diluted share, compared with net loss of $10.7 million, or ($0.12) per diluted share, in the second quarter 2021. Net loss was $0.7 million, or $(0.01) per diluted share, for the third quarter 2020. During the third quarter of 2021, the Company recognized an impairment charge of $1.0 million on two of our leased vessels.
• Time charter equivalent (TCE) revenues(A), a non-GAAP measure, for the third quarter 2021 were $75.4 million, an increase of $3.7 million from second quarter 2021. TCE revenues were down 18.3% compared to third quarter 2020.
• Third quarter 2021 Adjusted EBITDA(B), a non-GAAP measure, was $12.2 million, an increase of $2.0 million from the second quarter. Adjusted EBITDA decreased 44.1% from $21.8 million in the third quarter 2020.
• In September 2021, the Company refinanced our term loan due December 2023 and term loan due November 2026, and partially refinanced our Alaska tankers term loan, due March 2025, with a $325.0 million term loan due October 2028. This lengthened the maturity of our long-term debt and improved our liquidity. The Company recognized an aggregate net loss of $8.0 million on these transactions, which reflects a write-off of unamortized deferred financing costs and prepayment fees. As part of this transaction, the Company amended our remaining debt agreements, resulting in covenant provisions that are consistent with the terms of the new term loan.
• Total cash(C) was $85.0 million as of September 30, 2021.
• During the quarter, two of seven vessels came out of lay-up.
Sam Norton, President and CEO, commenting on the recently completed quarter, stated, “Most notable of today’s announced financial results was the continued sequential improvement in quarter-to-quarter EBITDA performance. Vessels in operation performed well during the third quarter, providing solid cashflow in a market environment that has continued to be beset with high levels of uncertainty. In recent weeks, two vessels have been re-activated and rejoined the operating fleet. We are optimistic that this trend will continue as Jones Act vessel availability across the fourth quarter and into 2022 tightens. At this time, all of OSG’s active vessels will be operating under time charter into the first quarter of 2022. Current conditions provide strong support for re-activating additional laid-up vessels by year end, providing optimism that sequentially improving quarter to quarter EBITDA performance is attainable over the next six months.”

Mr. Norton added, “Having bolstered our liquidity position with the completion of our refinancing at the end of the third quarter, OSG is now well positioned to pursue opportunities in what we continue to see as an improving market environment. Global energy markets are on track to regain pre-COVID consumption levels by early next year, with demand signals indicating a rising need for transportation capacity. Increased international air travel in the months ahead, in particular, should add to firming market demand. We remain optimistic that a return to more normalized market conditions lies ahead in 2022.”

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.

Third Quarter 2021 Results

Shipping revenues were $94.0 million for the quarter, an increase of $5.6 million, or 6.3%, from the second quarter of 2021. TCE revenues increased $3.7 million, or 5.1%, from the second quarter to $75.4 million in the third quarter. The revenue increase was primarily a result of a 23-day decrease in scheduled drydocking and a 38-day decrease in lay-up days, as two of seven vessels came out of lay-up during the third quarter of 2021.

The third quarter operating loss was $5.6 million compared to the second quarter operating loss of $5.8 million.

Quarterly adjusted EBITDA increased to $12.2 million during the third quarter, a $2.0 million increase from the second quarter of 2021. The increase was driven by the increased revenues for the quarter.

Shipping revenues were $94.0 million for the quarter, down 11.1% compared with the third quarter of 2020. TCE revenues for the third quarter of 2021 were $75.4 million, a decrease of $16.9 million, or 18.3%, compared with the third quarter of 2020, primarily a result of a 498-day increase in lay-up days due to vessels in lay-up during the third quarter of 2021 and one less MR tanker in the Company’s fleet, Overseas Gulf Coast, which was sold during the second quarter of 2021. The decrease was offset by (a) the addition to the Company’s fleet of one ATB, OSG 205 and OSG Courageous, which was delivered during the fourth quarter of 2020, (b) a 171-day decrease in scheduled drydocking and (c) an increase in Delaware Bay lightering volumes.

Operating loss for the third quarter of 2021 was $5.6 million compared to operating income of $5.2 million for the third quarter of 2020.

Net loss for the third quarter of 2021 was $16.0 million, or $(0.18) per diluted share, compared with net loss of $0.7 million, or $(0.01) per diluted share, for the third quarter 2020. During the third quarter of 2021, the Company recognized an aggregate net loss of $8.0 million on extinguishment of debt, which reflects a write-off of unamortized deferred financing costs and prepayment fees and an impairment charge of $1.0 million on two of the Company’s leased vessels.

Adjusted EBITDA was $12.2 million for the quarter, a decrease of $9.6 million compared with the third quarter of 2020, driven primarily by the decrease in TCE revenues.
Source: Overseas Shipholding Group, Inc.

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