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 first quarter 2017.

Highlights

Income from continuing operations for the first quarter was $5.4 million, or $0.06 per diluted share, compared to a net loss from continuing operations of $8.7 million, or ($0.09) per diluted share, for the first quarter 2016.

Shipping revenues were $108.1 million for the current quarter, a decrease of 6.1% from $115.1 million in the prior year quarter. Time charter equivalent (TCE) revenues(A) for the first quarter 2017 were $102.3 million, down 8.8% compared to the same period in 2016.

Net income was $5.4 million for the quarter ended March 31, 2017, compared to $50.7 million for the quarter ended March 31, 2016. Net income for the prior year period included income from discontinued operations from International Seaways (INSW) of $59.4 million.

First quarter 2017 adjusted EBITDA(B) was $36.2 million, down 11.2% from $40.7 million in the same period in 2016.

Cash and cash equivalents were $198.1 million at March 31, 2017. Total cash(C) was $204.4 million at the end of the current quarter.

Repurchased and retired $14.5 million in principal of the 8.125% notes due in 2018.

Pursuant to a final decree and order of the bankruptcy court, OSG closed its bankruptcy case.

Sam Norton, OSG’s President and CEO stated, “We had a solid first quarter to start 2017 despite ongoing challenging market conditions. Although we experienced lower charter rates, our ability to attain high utilization rates throughout the first quarter helped drive revenue. Our diverse operating platform, which includes shuttle tankers in the U.S. Gulf Coast, the only licensed operator of lightering vessels in the Delaware Bay, and the only operator of tankers in the Maritime Security Program (“MSP”), provides stability against market volatility affecting other areas of our business. Additionally, we are starting to see results of efforts to be more efficient with general and administrative costs. This helped reduce expenses which drove higher operating income.”

First Quarter 2017 Results

TCE revenues for the first quarter of 2017 were $102.3 million, a decrease of $9.9 million, or 8.8%, compared with the first quarter of 2016, primarily due to lower average daily rates earned. Excluding the Delaware Bay lightering TCE revenues, TCE revenues declined by $12.0 million, of which $10.9 million was due to lower average daily rates. This decrease in TCE revenues was partially offset by a $2.0 million increase in Delaware Bay lightering revenues. Shipping revenues were $108.1 million for the quarter, down 6.1% compared with the first quarter of 2016. The decrease in shipping revenues was also driven by lower charter rates.

Operating income for the first quarter of 2017 was $19.3 million, compared to operating income of $17.4 million in the first quarter of 2016. The increase reflected reduced operating expense, including depreciation and amortization expense, and lower general and administrative expenses, which offset the decline in shipping revenues.

Income from continuing operations for the current period first quarter was $5.4 million, or $0.06 per diluted share, compared with a loss from continuing operations of $8.7 million, or ($0.09) per diluted share, for the first quarter 2016. The increase reflects a lower tax provision in the first quarter of 2017 compared to 2016. In the prior year period, a deferred tax liability on the unremitted earnings of INSW was recorded, resulting in an income tax provision of $33.2 million, compared to tax expense of $3.6 million in the 2017 period. In addition, interest expense decreased by $2.6 million in the current period as the result of significant debt reductions in the current and prior year periods.

Adjusted EBITDA was $36.2 million for the quarter, a decrease of $4.6 million compared with the first quarter of 2016, driven primarily by the decline in TCE revenues, partially offset by lower general and administrative expenses.

Discontinued Operations

As previously disclosed, OSG completed the separation of its business into two independent publicly traded companies through the spin-off of its then wholly owned subsidiary INSW on November 30, 2016. The spin-off separated OSG and INSW into two distinct businesses with separate management. OSG retained the U.S. Flag business and INSW holds entities and other assets and liabilities that formed OSG’s former International Flag business. The spin-off transaction was in the form of a pro rata distribution of INSW’s common stock to our stockholders and warrant holders of record as of the close of business on November 18, 2016.

In accordance with Accounting Standards Update (“ASU”) 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, the assets and liabilities and results of operations of INSW are reported as discontinued operations for the first quarter of 2016.

Net income from discontinued operations for the first quarter of 2016 was $59.4 million.

Full Report

Source: Overseas Shipholding Group, Inc.