November 1, 2010
K-Sea reports improved earnings
Coastwise tank barge operator K-Sea Transportation Partners L.P. (NYSE:KSP) today announced operating results for its first fiscal quarter ended September 30, 2010. Operating income of $10.3 million included a $4.8 million net gain on sale of vessels and a $1.2 million lease termination cost. Excluding these items,operating income was $6.6 million. This is up $2.0 million compared to operating income for the first fiscal quarter ended September 30, 2009 of $ 4.6 million (before asset impairment charges).
Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the first quarter of fiscal 2011 was $23.3 million. Excluding the items mentioned above, EBITDA was $19.7 million, an increase of $1.5 million, or 8.2 percent, compared to $18.2 million for the first quarter ended September 30, 2009, and an increase of $7.3 million or 59 percent, compared to $12.4 million for the June 2010 quarter.
Net loss for the three months ended September 30, 2010 was $1.5 million, or a loss of $0.10 per fully diluted limited partner common unit, excluding the net gain on sale of vessels and the lease termination cost. This represents a decrease of $2.1 million compared to net income of $0.6 million (excluding asset impairment charges), or $0.03 per fully diluted limited partner common unit, for the three months ended September 30, 2009. The decrease was primarily a result of a $3.4 million increase in interest expense resulting mainly from increased interest margins due to the December and September amendments of our revolving credit facility and a term loan. Also included in interest expense for the three months ended September 30, 2010 was a $0.5 million write-off of deferred financing fees relating to the September 2010 amendment of our revolving credit facility and a $0.5 million reclass to interest expense from other comprehensive income relating to the pay down of debt which was tied to an interest rate swap. This was partially offset by the $2.0 million increase in operating income. Including the net gain on sale of vessels and the lease termination costs, net income for the three months ended September 30, 2010 was $2.2 million, or $0.04 per fully diluted limited partner common unit.
"We are pleased with our first fiscal quarter results," said President and CEO Timothy J. Casey. said, adding that the company believes "the market declines we experienced in calendar 2009 and the first half of this calendar year are behind us."
However, he noted that K-Sea does not expect its markets to improve materially "until there is a clear uptrend in refined products consumption and the supply of vessels declines as single-hull units are removed. We continue to believe that an increasing amount of single-hull vessels will leave the market as we move into and through 2011. We benefited this past quarter from the clean-up work in the Gulf of Mexico, which is now essentially over, and the ongoing contribution from our efficiency efforts.
"Additionally, during and subsequent to the end of the quarter, we entered into one-year and two-year charters on two of our coastwise vessels, extended for two years a charter on another coastwise unit and signed a one-year agreement on a small local vessel. Also, we have been successful at finding backhaul opportunities for several of our spot market units, and we have found several other short term employment opportunities. With our recent capital infusion, we are financially and operationally positioned to capitalize on the eventual upturn in our markets as well as any new business opportunities as they arise."