Overseas Shipholding Group Reports First Quarter 2023 Results

TAMPA, Fla.–(BUSINESS WIRE)–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 first quarter of 2023.

  • Shipping revenues for the first quarter of 2023 were $113.8 million, an increase of $9.8 million from the first quarter of 2022.
  • Net income for the first quarter of 2023 was $12.1 million, or $0.14 per diluted share, compared with a net loss of $509 thousand, or $(0.01) per diluted share, in the first quarter of 2022.
  • Time charter equivalent (TCE) revenues(A), a non-GAAP measure, for the first quarter of 2023 were $104.7 million, an increase of $10.8 million, or 11.5%, from $93.9 million in the first quarter of 2022.
  • First quarter 2023 Adjusted EBITDA(B), a non-GAAP measure, was $40.9 million, an increase of $15.5 million, or 61.0%, from the first quarter of 2022.
  • Total cash and investments(C) were $118.9 million as of March 31, 2023.
  • In January 2023, the Overseas Sun Coast was converted to U.S. Flag status, joining the rest of our U.S. Flag fleet.
  • In March 2023, our Board of Directors authorized a program to purchase up to $10.0 million of shares of our common stock. We purchased 498 thousand shares for $1.9 million through March 31.

The year has started well at OSG,” Sam Norton, President and CEO said. “All asset categories achieved financial results at or above expectations. For the third consecutive quarter, we delivered adjusted EBITDA in excess of $40 million, despite having three fewer operating vessels during the first quarter of 2023 as compared to the final two quarters of 2022. Above average lightering volumes and the continued strength in international MR markets, as well as incrementally higher average TCE rates for our Jones Act MR tankers, all contributed to the past quarter’s favorable results. The stability of cash flow witnessed in the past several quarters has allowed cash balances, including investments in treasury securities, to increase to $118.9 million at quarter end.”

Mr. Norton continued, “In April, OSG signed operating agreements with MARAD for our three internationally trading US flag vessels to enter into the Tanker Security Program. These contracts are the result of many years of work with labor, industry, and government partners to stand up this important program. OSG is proud to have the first ships to be entered into this program and looks forward to further growth opportunities for its internationally trading US flag tankers, both in the context of the Tanker Security Program as well as in other supporting roles tied to our national security.”

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.

First Quarter 2023 Results

Shipping revenues were $113.8 million for the first quarter of 2023, an increase of $9.8 million, or 9.4%, compared to the first quarter of 2022. TCE revenues were $104.7 million for the first quarter of 2023, an increase of $10.8 million, or 11.5%, from the first quarter of 2022. The increases primarily resulted from a 255-day decrease in layup days. There were no vessels in layup during the first quarter of 2023. During the first quarter of 2022, there were two vessels in layup for the full quarter and two additional vessels that came out of layup during that quarter. Additionally, the increase in revenues resulted from (a) an increase in average daily rates earned by our fleet, (b) a 27-day decrease in drydock days, (c) an increase in Delaware Bay lightering volumes and (d) one full Government of Israel voyage and one partial Government of Israel voyage that began during the first quarter of 2023 but was completed in the second quarter during the three months ended March 31, 2023 compared to one full voyage during the same period in 2022. The increase was partially offset by fewer vessels in our fleet as we returned three conventional tankers leased from American Shipping Company in December 2022.

Operating income for the first quarter of 2023 was $22.5 million compared to operating income of $7.7 million for the first quarter of 2022. Net income for the first quarter of 2023 was $12.1 million, or $0.14 per diluted share, compared with a net loss of $509 thousand, or $(0.01) per diluted share, for the first quarter of 2022.

Adjusted EBITDA was $40.9 million for the 2023 first quarter, an increase of $15.5 million compared with the first quarter of 2022, driven primarily by the increase in TCE revenues.

Conference Call

The Company will host a conference call to discuss its first quarter 2023 results at 9:30 a.m. Eastern Time (“ET”) on Monday, May 8, 2023.

To access the call, participants should dial (844) 200-6205 for domestic callers and (929) 526-1599 for international callers and enter Access Code 874877. 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 www.osg.com.

An audio replay of the conference call will be available for one week starting at 11:30 a.m. ET on Monday, May 8, 2023, by dialing (866) 813-9403 for domestic callers and (929) 458-6194 for international callers and entering Access Code 747475.

About Overseas Shipholding Group, Inc.

Overseas Shipholding Group, Inc. (NYSE:OSG) is a publicly traded company providing liquid bulk and 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 U.S. Flag fleet consists of crude oil tankers doing business in Alaska, 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. 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

March 31,

2023

2022

Shipping Revenues:

Time and bareboat charter revenues

$

84,140

$

57,236

Voyage charter revenues

29,651

46,763

113,791

103,999

Operating Expenses:

Voyage expenses

9,056

10,074

Vessel expenses

42,571

40,798

Charter hire expenses

15,737

21,996

Depreciation and amortization

16,048

16,493

General and administrative

7,843

6,938

Total operating expenses

91,255

96,299

Operating income

22,536

7,700

Other income, net

1,080

97

Income before interest expense and income taxes

23,616

7,797

Interest expense

(8,156

)

(8,365

)

Income/(loss) before income taxes

15,460

(568

)

Income tax (expense)/benefit

(3,321

)

59

Net income/(loss)

$

12,139

$

(509

)

Weighted Average Number of Common Shares Outstanding:

Basic – Class A

82,006,666

90,856,688

Diluted – Class A

85,340,906

90,856,688

Per Share Amounts:

Basic net income/(loss) – Class A

$

0.15

$

(0.01

)

Diluted net income/(loss) – Class A

$

0.14

$

(0.01

)

Consolidated Balance Sheets

($ in thousands)

March 31,

2023

December 31,

2022

ASSETS

Current Assets:

Cash and cash equivalents

$

104,091

$

78,732

Voyage receivables, including unbilled of $3,936 and $11,364, net of reserve for credit losses

10,917

19,698

Income tax receivable

682

1,914

Other receivables

2,905

5,334

Inventories, prepaid expenses and other current assets

5,662

2,668

Total Current Assets

124,257

108,346

Vessels and other property, less accumulated depreciation

715,660

726,179

Deferred drydock expenditures, net

36,940

38,976

Total Vessels, Other Property and Deferred Drydock

752,600

765,155

Intangible assets, less accumulated amortization

16,867

18,017

Operating lease right-of-use assets, net

196,573

206,797

Investment security to be held to maturity

14,851

14,803

Other assets

25,702

25,945

Total Assets

$

1,130,850

$

1,139,063

LIABILITIES AND EQUITY

Current Liabilities:

Accounts payable, accrued expenses and other current liabilities

$

57,197

$

54,906

Current portion of operating lease liabilities

63,798

63,288

Current portion of finance lease liabilities

4,012

4,000

Current installments of long-term debt

24,517

23,733

Total Current Liabilities

149,524

145,927

Reserve for uncertain tax positions

177

175

Noncurrent operating lease liabilities

138,816

149,960

Noncurrent finance lease liabilities

15,788

16,456

Long-term debt

393,300

399,630

Deferred income taxes, net

73,518

70,233

Other liabilities

10,325

16,997

Total Liabilities

781,448

799,378

Equity:

Common stock – Class A ($0.01 par value; 166,666,666 shares authorized; 89,191,275 and 88,297,439 shares issued; 78,693,369 and 78,297,439 shares outstanding)

892

883

Paid-in additional capital

597,078

597,455

Accumulated deficit

(220,884

)

(233,023

)

Treasury stock, 10,497,906 and 10,000,000 shares, at cost

(30,902

)

(29,040

)

346,184

336,275

Accumulated other comprehensive income

3,218

3,410

Total Equity

349,402

339,685

Total Liabilities and Equity

$

1,130,850

$

1,139,063

Consolidated Statements of Cash Flows

($ in thousands)

Three Months Ended

March 31,

2023

2022

Cash Flows from Operating Activities:

Net income/(loss)

$

12,139

$

(509

)

Items included in net income not affecting cash flows:

Depreciation and amortization

16,048

16,493

Amortization of debt discount and other deferred financing costs

282

274

Compensation relating to restricted stock, stock unit and stock option grants

800

656

Deferred income tax expense/(benefit)

3,287

(86

)

Interest on finance lease liabilities

370

416

Non-cash operating lease expense

15,892

22,317

Payments for drydocking

(1,918

)

(3,236

)

Operating lease liabilities

(16,292

)

(22,846

)

Changes in operating assets and liabilities, net

5,088

(11,694

)

Net cash provided by operating activities

35,696

1,785

Cash Flows from Investing Activities:

Expenditures for vessels and vessel improvements

(454

)

(1,058

)

Net cash used in investing activities

(454

)

(1,058

)

Cash Flows from Financing Activities:

Payments on debt

(5,787

)

(5,420

)

Tax withholding on share-based awards

(1,168

)

(370

)

Payments on principal portion of finance lease liabilities

(1,026

)

(1,026

)

Deferred financing costs paid for debt amendments

(40

)

(261

)

Purchases of treasury stock

(1,862

)

Net cash used in financing activities

(9,883

)

(7,077

)

Net increase/(decrease) in cash and cash equivalents

25,359

(6,350

)

Cash and cash equivalents at beginning of year

78,732

83,253

Cash and cash equivalents at end of year

$

104,091

$

76,903

Spot and Fixed TCE Rates Achieved and Revenue Days

The following table provides a breakdown of TCE rates achieved for spot and fixed charters and the related revenue days for the three months ended March 31, 2023 and the comparable period of 2022. Revenue days in the quarter ended March 31, 2023 totaled 1,772 compared with 1,763 in the prior year quarter. A summary fleet list by vessel class can be found later in this press release. Prior period amounts have been updated to conform to current period presentation.

2023

2022

For the three months ended March 31,

Spot

Earnings

Fixed

Earnings

Spot

Earnings

Fixed

Earnings

Jones Act Handysize Product Carriers:

Average rate

$

55,522

$

64,417

$

57,368

$

58,228

Revenue days

40

847

411

545

Non-Jones Act Handysize Product Carriers:

Average rate

$

41,384

$

33,319

$

44,075

$

17,469

Revenue days

246

14

180

90

ATBs:

Average rate

$

$

42,479

$

$

34,731

Revenue days

265

178

Lightering:

Average rate

$

104,512

$

$

74,553

$

Revenue days

90

90

Alaska (a):

Average rate

$

$

60,115

$

$

58,996

Revenue days

270

269

(a) Excludes one Alaska vessel currently in layup.

OSG has realigned some of our 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 March 31, 2023, OSG’s operating fleet consisted of 21 vessels, 12 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, 2023

Vessel Type

Number

Number

Total Vessels

Total dwt (3)

Handysize Product Carriers (1)

5

8

13

619,854

Crude Oil Tankers (2)

3

1

4

772,194

Refined Product ATBs

3

3

99,738

Lightering ATBs

1

1

45,556

Total Operating Fleet

12

9

21

1,537,342

(1) Includes two owned shuttle tankers, eight chartered-in tankers, and three non-Jones Act MR tankers two of which participated in the U.S. Maritime Security Program (“MSP”) during the first quarter of 2023. In April 2023, the three non-Jones Act MR tankers were all accepted into the U.S. Tanker Security Program (“TSP”). The two non-Jones Act U.S. Flag Product Carriers that participated in the MSP will transfer to the TSP and no longer participate in the MSP.
(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,

2023

2022

Time charter equivalent revenues

$

104,735

$

93,925

Add: Voyage expenses

9,056

10,074

Shipping revenues

$

113,791

$

103,999

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 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

March 31,

($ in thousands)

2023

2022

Specialized businesses

$

29,561

$

29,057

Jones Act handysize tankers

9,433

(1,488

)

Jones Act ATBs

7,433

3,562

Vessel operating contribution

46,427

31,131

Depreciation and amortization

16,048

16,493

General and administrative

7,843

6,938

Operating income

$

22,536

$

7,700

(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 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/(loss) as reflected in the consolidated statements of operations, to EBITDA and Adjusted EBITDA.

Three Months Ended

March 31,

($ in thousands)

2023

2022

Net income/(loss)

$

12,139

$

(509

)

Income tax expense/(benefit)

3,321

(59

)

Interest expense, net

8,156

8,365

Depreciation and amortization

16,048

16,493

EBITDA

39,664

24,290

Amortization classified in charter hire and vessel expenses

273

143

Interest expense classified in charter hire expenses

166

316

Non-cash stock based compensation expense

800

656

Adjusted EBITDA

$

40,903

$

25,405

(C) Total Cash and Investments

($ in thousands)

March 31,

2023

December 31,

2022

Cash and cash equivalents

$

104,053

$

78,680

Restricted cash

38

52

Investment security to be held to maturity

14,851

14,803

Total cash and investments

$

118,942

$

93,535

Category: Earnings

Contacts

Investor Relations & Media Contact:
Susan Allan, Overseas Shipholding Group, Inc.

(813) 209-0620

sallan@osg.com

#FOLLOW US ON INSTAGRAM