Overseas Shipholding Group, Inc. (NYSE: OSG) (the “Company” or
“OSG”), a leading provider of liquid bulk transportation services
in the energy industry for crude oil and petroleum products in the
U.S. Flag markets, today reported results for the fourth quarter
and full year 2023.
- 2023 net income was $62.5 million, or $0.77 per diluted share,
compared to net income of $26.6 million, or $0.29 per diluted
share, in 2022. Net income for the fourth quarter of 2023 was $20.4
million, or $0.26 per diluted share, compared to net income of
$10.1 million, or $0.11 per diluted share, for the fourth quarter
of 2022.
- Full year Adjusted EBITDA(A), a non-GAAP measure, for 2023 was
$175.7 million, an increase of $32.9 million, or 23.1%, from 2022.
Fourth quarter 2023 Adjusted EBITDA was $47.3 million, an increase
of $3.6 million, or 8.4%, from the fourth quarter of 2022.
- Shipping revenues for 2023 were $451.9 million, a decrease of
$14.9 million, or 3.2%, compared to 2022. Shipping revenues for the
fourth quarter of 2023 were $116.0 million, a decrease of $5.7
million, or 4.7%, compared to the fourth quarter of 2022. The
decreases in shipping revenues primarily resulted from fewer
vessels in our fleet, as we redelivered three conventional tankers
leased from American Shipping Company in December 2022.
- Time charter equivalent (TCE) revenues(B), a non-GAAP measure,
for 2023 were $423.5 million, a decrease of $2.8 million, or 0.7%,
from $426.3 million in 2022. TCE revenues for the fourth quarter of
2023 were $110.1 million, a decrease of $4.0 million, or 3.5%,
compared to the fourth quarter of 2022.
- Total cash and investments(c) were $91.2 million as of December
31, 2023.
- In October 2023, the Company prepaid, at a discount, $5.6
million to subsidiaries of American Shipping Corporation
representing all of its remaining outstanding deferred payment
obligations, recognizing a gain of $912 thousand.
- In November 2023, the Company purchased the Alaskan Frontier
for $20.0 million. The Company plans to make significant
investments in the vessel for it to begin commercial trade by the
fourth quarter of 2024.
- On December 6, 2023, the Company's Board of Directors declared
a cash dividend of $0.06 per share on the Company's Class A common
stock, which was paid on January 4, 2024.
- During the fourth quarter of 2023, the Company repurchased
1,425,000 shares for total consideration of $6.8 million. As of
December 31, 2023, the Company had 70,946,476 common shares
outstanding compared to 78,297,439 at the end of 2022, a 9.4%
reduction, as a result of 2023 repurchases of the Company's common
stock.
Sam Norton, OSG's President and CEO, said, “Following the
positive results reported, it would be appropriate to state that we
have ‘stuck the landing’ with our 4th quarter performance. The
quarter’s contribution led to meeting our adjusted EBITDA target of
$175mm for the full year, a 23.1% gain over 2022, despite having
three fewer vessels in operation in 2023. The benefits of
charterparties fixed at escalating rates over the past several
quarters are now being realized, producing strong cashflow and
providing the means to make continued progress in meeting our key
capital allocation goals. Previously announced capital investments
in our Alaska class vessels, the purchase of 1.425 million shares
during the 4th quarter, and the approval of the first dividend
payment in many years underscore this point.”
Mr. Norton continued, “Strong fundamentals have continued to
support charterer interest in our vessels. Significantly, at year
end, we agreed to employ the Alaskan Explorer to transport US Gulf
Coast crude oil to one of our Delaware Bay refining customers,
demonstrating the existence of employment options for this class of
vessel outside of its traditional Alaskan market. Taken together
with three other vessel fixtures concluded in early 2024, OSG has
added 116 months of forward charter cover since our last earnings
report, increasing the value of our forward charter book to over
$860 million in time charter equivalent earnings as of the
beginning of March 2024.”
Mr. Norton concluded by stating, “We couldn’t be more pleased
with our 2023 results and believe we are well-positioned now, and
over the long term, to generate strong cash flows in what we expect
to be a durably balanced market characterized by stable demand and
constrained supply.”
The Company also recently exercised its first option to extend
the bareboat charter of the Overseas Tampa with its vessel owner
for a 5-year option period, commencing June 2025 until June 2030.
Additional options to extend remain.
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.
Full Year 2023 Results
Shipping revenues were $451.9 million for 2023, down 3.2%
compared with 2022. TCE revenues for 2023 were $423.5 million, a
decrease of $2.8 million, or 0.7%, compared with 2022. The
decreases primarily resulted from (a) fewer vessels in our fleet,
as we redelivered three conventional tankers leased from American
Shipping Company in December 2022, (b) a 24-day increase in drydock
days, and (c) fewer U.S. Military Sealift Command voyages, which
were longer international voyages, during 2023 compared to 2022.
The decreases were partially offset by a 297-day decrease in layup
days. We had no vessels in layup during 2023. During the first
quarter of 2022, we had two vessels in layup for the full quarter
and two additional vessels that came out of layup in January 2022
and late February 2022. Our remaining two vessels in layup returned
to service in May 2022. Additionally, the decreases were partially
offset by (a) an increase in average daily rates earned by our
fleet, (b) an increase in Delaware Bay lightering volumes, and (c)
an 11-day decrease in repair days.
Operating income for 2023 was $96.9 million, compared to
operating income of $63.2 million for 2022. Net income for 2023 was
$62.5 million, or $0.77 per diluted share, compared with net income
of $26.6 million, or $0.29 per diluted share, for 2022. The
increases in operating and net income primarily reflected decreases
in voyage, vessel, and charter hire expenses of $46.4 million when
compared to 2022. The decrease in voyage expenses was primarily due
to decreases in fuel and port expenses, as our vessels performed
fewer voyage charters during 2023 compared to 2022. The decreases
in vessel and charter hire expenses were primarily due to the
redelivery of three conventional tankers referred to above.
Adjusted EBITDA was $175.7 million for 2023, an increase of
$32.9 million compared with 2022.
Fourth Quarter 2023
Results
Shipping revenues were $116.0 million for the fourth quarter of
2023, a decrease of $5.7 million, or 4.7%, compared to the fourth
quarter of 2022. TCE revenues were $110.1 million for the fourth
quarter of 2023, a decrease of $4.0 million, or 3.5%, from the
fourth quarter of 2022. The decreases primarily resulted from fewer
vessels in our fleet, due to the redelivery of three conventional
tankers discussed above and a 29-day increase in drydock days. The
decrease was partially offset by an increase in average daily rates
earned by our fleet and an increase in Delaware Bay lightering
volumes.
Operating income for the fourth quarter of 2023 was $25.9
million compared to operating income of $20.4 million for the
fourth quarter of 2022. Net income for the fourth quarter of 2023
was $20.4 million, or $0.26 per diluted share, compared with net
income of $10.1 million, or $0.11 per diluted share, for the fourth
quarter of 2022. The increases in operating and net income
primarily reflected decreases in voyage, vessel, and charter hire
expenses of $9.9 million when compared to the fourth quarter of
2022. The decrease in voyage expenses was primarily due to
decreases in fuel and port expenses, as our vessels performed fewer
voyage charters during the fourth quarter of 2023 compared to the
fourth quarter of 2022. The decreases in vessel and charter hire
expenses were primarily due to the redelivery of three conventional
tankers referred to above.
Adjusted EBITDA was $47.3 million for the 2023 fourth quarter,
an increase of $3.6 million compared with the fourth quarter of
2022, driven primarily by the increases in operating and net
income.
Conference Call
The Company will host a conference call to discuss its fourth
quarter and full year 2023 results at 9:30 a.m. Eastern Time on
Monday, March 11, 2024.
To access the call, participants should dial (844) 850-0546 for
U.S. callers and (412) 317-5203 for international callers.
Participants have an option of calling in to listen or watching
a live audio webcast and slide presentation available at the
Investors section of the Company’s website located at www.osg.com/investors. A replay of the webcast
will also be available on the website after the completion of the
call.
About Overseas Shipholding Group, Inc.
Overseas Shipholding Group, Inc. (NYSE:OSG) is a publicly traded
company providing liquid bulk transportation services in the U.S.
Flag markets. OSG’s U.S. Flag fleet consists of Suezmax crude oil
tankers, conventional and lightering ATBs, shuttle and conventional
MR tankers, and non-Jones Act MR tankers that participate in the
U.S. Tanker Security Program.
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 fact 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 continued stability of our niche businesses,
the impact of our time charter contracts on our future financial
performance, and external events including geopolitical conflicts
such as the Russia/Ukraine conflict and recent developments in the
Middle East. Forward-looking statements are based on our 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 our filings with the SEC.
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.
Consolidated Statements of
Operations
($ in thousands, except per share
amounts)
Three Months Ended December
31,
Years Ended December
31,
2023
2022
2023
2022
(unaudited)
(unaudited)
Shipping Revenues:
Time and bareboat charter revenues
$
94,922
$
94,394
$
359,543
$
327,329
Voyage charter revenues
21,098
27,363
92,328
139,471
116,020
121,757
451,871
466,800
Operating Expenses:
Voyage expenses
5,932
7,659
28,344
40,472
Vessel expenses
42,908
46,285
166,246
176,666
Charter hire expenses
16,983
21,760
64,971
88,849
Depreciation and amortization
17,664
19,579
67,164
70,637
General and administrative
6,612
6,056
28,223
26,985
Total operating expenses
90,099
101,339
354,948
403,609
Operating income from vessel
operations
25,921
20,418
96,923
63,191
Other income, net
2,483
2,678
6,666
3,327
Income before interest expense and income
taxes
28,404
23,096
103,589
66,518
Interest expense, net
(7,196
)
(8,191
)
(31,216
)
(33,060
)
Income before income taxes
21,208
14,905
72,373
33,458
Income tax expense
(788
)
(4,820
)
(9,919
)
(6,894
)
Net income
$
20,420
$
10,085
$
62,454
$
26,564
Weighted Average Number of Common
Shares Outstanding:
Basic - Class A
72,377,107
84,902,097
78,485,954
89,556,195
Diluted - Class A
75,294,158
87,380,404
81,231,761
91,400,041
Per Share Amounts:
Basic net income - Class A
$
0.28
$
0.12
$
0.80
$
0.30
Diluted net income - Class A
$
0.26
$
0.11
$
0.77
$
0.29
Consolidated Balance Sheets
($ in thousands)
December 31, 2023
December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents
$
76,257
$
78,732
Investment security to be held to
maturity
14,900
—
Voyage receivables, including unbilled of
$4,976 and $11,364, net of reserve for credit losses
17,362
19,698
Income tax recoverable
407
1,914
Other receivables
3,140
5,334
Prepaid expenses
662
385
Inventories and other current assets
1,860
2,283
Total Current Assets
114,588
108,346
Vessels and other property, less
accumulated depreciation and amortization
699,032
726,179
Deferred drydock expenditures, net
44,827
38,976
Total Vessels, Deferred Drydock and Other
Property
743,859
765,155
Intangible assets, less accumulated
amortization
13,417
18,017
Operating lease right-of-use assets
172,703
206,797
Investment security to be held to
maturity
—
14,803
Other assets
34,317
25,945
Total Assets
$
1,078,884
$
1,139,063
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, accrued expenses and
other current liabilities
$
60,911
$
54,906
Current installments of long-term debt
43,305
23,733
Current portion of operating lease
liabilities
65,272
63,288
Current portion of finance lease
liabilities
—
4,000
Total Current Liabilities
169,488
145,927
Reserve for uncertain tax positions
285
175
Long-term debt, net
357,406
399,630
Deferred income taxes, net
79,373
70,233
Noncurrent operating lease liabilities
107,911
149,960
Noncurrent finance lease liabilities
—
16,456
Other liabilities
10,368
16,997
Total Liabilities
724,831
799,378
Equity:
Common stock - Class A ($0.01 par value;
166,666,666 shares authorized; 89,545,535 and 88,297,439 shares
issued; 70,946,476 and 78,297,439 shares outstanding)
895
883
Paid-in additional capital
588,361
597,455
Accumulated deficit
(174,825
)
(233,023
)
Treasury stock, 18,599,059 and 10,000,000
shares, at cost
(64,380
)
(29,040
)
350,051
336,275
Accumulated other comprehensive income
4,002
3,410
Total Equity
354,053
339,685
Total Liabilities and Equity
$
1,078,884
$
1,139,063
Consolidated Statements of Cash
Flows
($ in thousands)
Years Ended December
31,
2023
2022
2021
Cash Flows from Operating Activities:
Net income/(loss)
$
62,454
$
26,564
$
(46,252
)
Items included in net income not affecting
cash flows:
Depreciation and amortization
67,164
70,637
61,823
Bad debt recovery
—
—
(1,080
)
Amortization of debt discount and other
deferred financing costs
1,142
1,129
2,099
Compensation relating to restricted stock,
stock unit and stock option grants
3,471
3,574
2,232
Deferred income tax expense/(benefit)
8,974
6,347
(18,236
)
Interest on finance lease liabilities
917
1,618
1,799
Non-cash operating lease expense
65,751
89,127
90,863
Items included in net income related to
investing and financing activities:
Gain on prepayment of deferred payment
obligations
(912
)
—
—
Loss on extinguishment and prepayments of
debt, net
—
—
5,295
Loss on disposal of vessels and other
property, including impairments, net
—
—
6,276
Payments for drydocking
(23,138
)
(17,231
)
(19,037
)
Changes in operating assets and
liabilities:
Operating lease liabilities
(73,074
)
(99,808
)
(92,634
)
Decrease/(increase) in receivables
2,336
(5,112
)
(384
)
Increase/(decrease) in income tax
receivable
1,507
(32
)
(1,495
)
(Decrease)/increase in deferred
revenue
(6,026
)
3,435
9,666
Net change in other operating assets and
liabilities
(7,608
)
(7,425
)
(12,767
)
Net cash provided by/(used in) operating
activities
102,958
72,823
(11,832
)
Cash Flows from Investing Activities:
Expenditures for vessels and vessel
improvements
(30,789
)
(6,354
)
(7,793
)
Purchase of investment security to be held
to maturity
—
(14,794
)
—
Proceeds from disposal of vessels and
other property
—
—
32,128
Net cash (used in)/provided by investing
activities
(30,789
)
(21,148
)
24,335
Cash Flows from Financing Activities:
Payments on debt
(23,730
)
(22,222
)
(33,316
)
Tax withholding on share-based awards
(1,168
)
(496
)
(402
)
Payments on principal portion of finance
lease liabilities
(2,964
)
(4,161
)
(4,161
)
Deferred financing costs paid for debt
amendments
(58
)
(277
)
(2,465
)
Purchases of treasury stock
(35,340
)
(29,040
)
—
Purchases of treasury stock and Class A
warrants
(11,384
)
—
—
Extinguishment of debt and prepayments
—
—
(277,520
)
Issuance of debt, net of issuance and
deferred financing costs
—
—
321,531
Extinguishment of debt costs paid
—
—
(2,736
)
Net cash (used in)/provided by financing
activities
(74,644
)
(56,196
)
931
Net (decrease)/increase in cash and cash
equivalents
(2,475
)
(4,521
)
13,434
Cash and cash equivalents at beginning of
year
78,732
83,253
69,819
Cash and cash equivalents at end of
year
$
76,257
$
78,732
$
83,253
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 and fiscal year ended December 31, 2023 and the
comparable periods of 2022. Revenue days in the quarter ended
December 31, 2023 totaled 1,768 compared with 2,023 in the prior
year quarter. Revenue days in the fiscal year ended December 31,
2023 totaled 7,026 compared with 7,739 in the prior year. A summary
fleet list by vessel class can be found later in this press
release.
2023
2022
For the three months ended December
31,
Spot Earnings
Fixed Earnings
Spot Earnings
Fixed Earnings
Jones Act MR Product Carriers:
Average rate
$
—
$
69,898
$
15,851
$
62,916
Revenue days
—
887
52
1,055
Non-Jones Act MR Product Carriers:
Average rate
$
37,581
$
53,374
$
48,062
$
36,401
Revenue days
184
92
184
89
ATBs:
Average rate
$
59,125
$
45,600
$
32,744
$
41,054
Revenue days
11
253
92
183
Lightering:
Average rate
$
96,986
$
—
$
80,352
$
—
Revenue days
88
—
92
—
Alaska (a):
Average rate
$
—
$
60,746
$
—
$
60,113
Revenue days
—
253
—
276
2023
2022
For the years ended December
31,
Spot Earnings
Fixed Earnings
Spot Earnings
Fixed Earnings
Jones Act MR Product Carriers:
Average rate
$
64,906
$
66,780
$
50,676
$
60,908
Revenue days
40
3,545
644
3,621
Non-Jones Act MR Product Carriers:
Average rate
$
36,827
$
57,768
$
45,562
$
31,290
Revenue days
861
166
730
361
ATBs:
Average rate
$
59,125
$
44,083
$
37,579
$
37,490
Revenue days
11
990
267
690
Lightering:
Average rate
$
93,031
$
—
$
75,965
$
—
Revenue days
363
—
365
—
Alaska (a):
Average rate
$
—
$
60,449
$
—
$
59,880
Revenue days
—
1,050
—
1,061
(a) Excludes one Alaska class vessel
currently in layup.
OSG has realigned some of its vessels in the analytical tables
to reflect their current employment. The tables affected in the
press release are the TCE Spot and Fixed Rate table and the Vessel
Operating Contribution table. Prior year information has been
revised to conform with the current presentation.
Fleet Information
As of December 31, 2023, OSG’s operating fleet consisted of 21
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 December 31,
2023
Vessel Type
Number
Number
Total Vessels
Total dwt (3)
MR Product Carriers (1)
5
8
13
619,854
Crude Oil Tankers (2)
4
—
4
772,194
Refined Product ATBs
2
—
2
54,182
Lightering ATBs
2
—
2
91,112
Total Operating Fleet
13
8
21
1,537,342
(1)
Includes two owned shuttle tankers, eight
chartered-in tankers, and three non-Jones Act MR tankers that
participate in the Tanker
Security Program or are on time charter to
the U.S. Military Sealift Command.
(2)
Includes two crude oil tankers doing
business in Alaska, one crude oil tanker, Alaskan Frontier,
purchased in November 2023 from
BP Oil Shipping Company, USA and has been
in cold layup in Malaysia since 2019, and one crude oil tanker in
service on the East Coast
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 December
31,
Years Ended December
31,
2023
2022
2023
2022
Time charter equivalent revenues
$
110,088
$
114,098
$
423,527
$
426,328
Add: Voyage expenses
5,932
7,659
28,344
40,472
Shipping revenues
$
116,020
$
121,757
$
451,871
$
466,800
Vessel Operating Contribution
Vessel operating contribution, a non-GAAP measure, is TCE
revenues minus vessel expenses and charter hire expenses. The
Company changed the presentation of the table below in 2023 to
reflect the current business operations of the Company's vessels.
Accordingly, prior period amounts have been updated to conform to
current period presentation.
Three Months Ended December
31,
Years Ended December
31,
($ in thousands)
2023
2022
2023
2022
Specialized businesses
$
28,151
$
31,725
$
116,463
$
121,112
Jones Act MR tankers
13,668
7,793
46,536
17,957
Jones Act ATBs
8,378
6,535
29,311
21,744
Vessel operating contribution
50,197
46,053
192,310
160,813
Depreciation and amortization
17,664
19,579
67,164
70,637
General and administrative
6,612
6,056
28,223
26,985
Operating income from vessel
operations
$
25,921
$
20,418
$
96,923
$
63,191
(B) EBITDA and Adjusted EBITDA
EBITDA represents net income 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 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 or cash flows from operations as determined in
accordance with GAAP. Some of the limitations of EBITDA and
Adjusted EBITDA 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 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 measures used by other companies due to
differences in methods of calculation. The following table
reconciles net income as reflected in the consolidated statements
of operations, to EBITDA and Adjusted EBITDA.
Three Months Ended December
31,
Years Ended December
31,
($ in thousands)
2023
2022
2023
2022
Net income
$
20,420
$
10,085
$
62,454
$
26,564
Income tax expense
788
4,820
9,919
6,894
Interest expense, net
7,196
8,191
31,216
33,060
Depreciation and amortization
17,664
19,579
67,164
70,637
EBITDA
46,068
42,675
170,753
137,155
Amortization classified in charter hire
and vessel expenses
274
318
1,094
862
Interest expense classified in charter
hire expenses
—
284
426
1,219
Non-cash stock based compensation
expense
915
337
3,471
3,574
Adjusted EBITDA
$
47,257
$
43,614
$
175,744
$
142,810
(C) Total Cash and Investments
($ in thousands)
December 31, 2023
December 31, 2022
Cash and cash equivalents
$
76,233
$
78,680
Restricted cash
24
52
Investment security to be held to
maturity
14,900
14,803
Total cash and investments
$
91,157
$
93,535
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240311658633/en/
Investor Relations & Media Contact: Susan Allan,
Overseas Shipholding Group, Inc. (813) 209-0620 sallan@osg.com
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