Overseas Shipholding Group reports challenging third quarter
Overseas Shipholding Group (OSG), a provider of energy transportation services for crude oil and petroleum products in the U.S. Flag markets, today reported results for the third quarter 2018.
Shipping revenues were $80.5m for the quarter, down 13.7 percent compared with the third quarter of 2017. TCE revenues for the third quarter of 2018 were $72.1m, a decrease of $12.8m, or 15.1 percent.
Several factors contributed to the decrease in revenues including: (a) 52 day increase in scheduled drydocking, which is an out of service period used to perform required major maintenance to continue trading and maximise a vessel’s useful life, (b) 89 unplanned repair days, including one vessel that was hit by a third-party ship, (c) one less Government of Israel voyage during the third quarter of 2018 compared to the same period in 2017, (d) one less vessel in operation in the third quarter 2018 compared to third quarter 2017, and (e) seasonal slow-down manifested by fewer spot market opportunities.
The new term charters secured during the third quarter will increase the company’s forward revenue day coverage for 2019 to approximately 65 percent. “In the future, we expect revenues from long-term time charters to increase and revenues from spot market charters to decrease, which should result in decreased exposure to fluctuations in spot market rates,” the company said in a statement.
Operating loss for the third quarter of 2018 was $4.1m, compared to operating income of $0.6m in the third quarter of 2017.
Net income for the third quarter was $11.9m, compared with a net loss of $6.3m. Adjusted EBITDA was $9.2m for the third quarter, a decrease of $13.4m compared with the third quarter of 2017, driven primarily by the decline in TCE revenues.
Sam Norton, President and CEO, stated: “The third quarter saw OSG make meaningful progress in executing on its business plan, notwithstanding our short-term financial results. Highlights for the quarter are that we secured multiple new term-charter fixtures, extended our contract of affreightment with the Government of Israel through the end of 2020, and announced contracts for the construction of two new tankers and one new barge.
“We are well along the path to refinance and fully pay off our term debt which matures in August 2019 using a combination of cash and new debt. We have in hand commitments exceeding $325m from a syndicate of lenders for a new term loan, as well as a second loan with another lender of $27.5m, both of which we anticipate closing in the coming weeks. We expect these financings to add longer-term stability to our balance sheet, clearing the path for the pursuit of expansion opportunities. We are confident that the trajectory and mix of our revenue streams position the Company well to benefit from the continuing arc of improving fundamentals.”
For more information visit: www.osg.com
19th November 2018
