OREANDA-NEWS. Overseas Shipholding Group, Inc. (OSG) (NYSE MKT:OSG, OSGB), a provider of oceangoing energy transportation services, today reported results for the quarter ended March 31, 2016.

Highlights

  • Time charter equivalent (TCE) revenues(A) for the first quarter of 2016 were $236.9 million, up 7% compared with the same period in 2015.
  • Net income for the first quarter was $50.7 million, or $0.09 per diluted share, compared with $42.9 million, or $0.07 per diluted share, in the first quarter of 2015.
  • Adjusted EBITDA(B) was $129.5 million, up 14% from $113.7 million in the same period in 2015.
  • Total cash(C) was $416.6 million as of March 31, 2016.
  • Repurchased and retired $95.9 million in principal amount of subsidiary term loans in 2016 at a discounted price of $88.8 million.
  • Made a mandatory prepayment of $51.3 million in principal amount of domestic subsidiary term loan.
  • Repurchased and retired $58 million of Class A common stock and warrants at an average share equivalent price of $2.03, in the first quarter of 2016.
  • The Board declared a dividend of $0.17968 per outstanding Class B common stock and Class B warrants, payable on May 13, 2016, in connection with the previously announced settlement in its lawsuit against Proskauer.

“We are pleased to report strong first quarter performance,” said Captain Ian T. Blackley, OSG’s president and CEO. “In our International business, rates in the crude sector remained attractive as ton-mile demand growth outpaced newbuilding supply and our Domestic business turned in another good quarter, as U.S. crude production held above 9.0 million barrels per day and gasoline demand continued to grow.

“We are making good progress on our separation plans for the businesses, which we believe will unlock greater value and enable us to distribute that value to shareholders more efficiently. At the same time, strong cash generation from our 79 vessel fleet allowed us to further enhance our capital structure through debt repurchases and prepayments and return value to shareholders through equity buybacks,” concluded Blackley.

First Quarter 2016 Results

TCE revenues grew to $236.9 million for the quarter, an increase of $15.3 million compared with the first quarter of 2015, driven by continuing strength in VLCC spot market rates, increased Delaware Bay lightering volumes and an increase in revenue days.

Net income for the first quarter of 2016 was $50.7 million, or $0.09 per diluted share, compared with $42.9 million, or $0.07 per diluted share, in the first quarter of 2015. The increase reflects the impact of strengthened TCE revenues, lower general and administrative expenses and lower interest expense, partially offset by increases in depreciation and amortization expenses.

Adjusted EBITDA was $129.5 million for the quarter, an increase of $15.8 million compared with the first quarter of 2015, driven primarily by the strength of VLCC spot rates, increased Delaware Bay lightering volumes and an increase in revenue days.

International Crude Tankers

TCE revenues for the International Crude Tankers segment were $87.4 million for the quarter, an increase of $20.5 million compared with the first quarter of 2015. This significant increase resulted from a strengthening in daily rates across most vessel types in the segment, with the VLCC spot rate increasing to $63,400 per day in the first quarter, up 29% from the comparable 2015 period and the Panamax blended rate increasing 23% to $25,600 per day. Additionally, revenue days for the segment increased 9.5% over the first quarter of 2015 primarily driven by the Company’s ULCC exiting lay-up and commencing a time charter for storage in April 2015 and 66 fewer VLCC drydock days in the current quarter.

International Product Carriers

TCE revenues for the International Product Carriers segment were $37.3 million for the quarter, down 14% compared with the first quarter of 2015. This decrease was primarily due to lower average daily blended rates earned by the MR fleet. Also contributing was a 178-day decrease in revenue days resulting from the sale of the Luxmar in July 2015 and the redelivery of one time chartered-in vessel at the expiry of its charter. These decreases were partially offset by the LR1 blended rate increasing to approximately $23,000 in the first quarter, up 20% from the comparable 2015 period.

U.S. Flag

TCE revenues for the U.S. Flag segment were $112.2 million for the quarter, an increase of $1.0 million compared with the first quarter of 2015, driven primarily by increased Delaware Bay lightering volumes, as 145,000 barrels per day were transported during the quarter, double the comparable 2015 period. Lower oil prices and the resulting drop in U.S. crude oil production has narrowed the pricing spread between Brent crude and West Texas Intermediate crude making it more attractive for U.S. Northeast refineries to import crude oil.

Conference Call

The Company will host a conference call to discuss its first quarter 2016 results at 9:00 a.m. ET on Tuesday, May 10, 2016.

To access the call, participants should dial (866) 490-3149 for domestic callers and (707) 294-1567 for international callers. Please dial in ten minutes prior to the start of the call and enter Conference ID 3193934.

A live webcast of the conference call will be available from the Investor Relations section of the Company’s website at http://www.osg.com/

An audio replay of the conference call will be available starting at 12:00 p.m. ET on Tuesday, May 10, 2016 through 11:59 p.m. ET on Tuesday, May 17, 2016 by dialing (855) 859-2056 for domestic callers and (404) 537-3406 for international callers, and entering Conference ID 3193934.