OSG reports profitable quarter

Captain Ian T. Blackley

MARCH 17, 2015 — “We are very pleased to report adjusted net income of $22.1 million in our first full quarter of financial results since the company’s reorganization was completed in August 2014,” said Captain Ian T. Blackley, President and CEO of Overseas Shipholding Group, Inc. (NYSE MKT:OSGB) as the tanker operator reported results for the fourth quarter of FY 2014 ended December 31, 2014. “In the quarter, higher crude spot rates combined with the continuing strength of the U.S. Flag market had a positive impact on our earnings.”

The company reported time charter equivalent (TCE) revenues for the quarter of $198.9 million, an increase of $5.0 million, or 3%, from $193.8 million in the comparable 2013 quarter. Net income for the quarter ended December 31, 2014 was $26.5 million, or $0.05 per diluted share, compared with a net loss of $447.3 million, or $14.67 per diluted share, in the same period in 2013. After adjusting for special items that increased net income by $4.4 million, or $0.01 per diluted share, fourth quarter 2014 net income was $22.1 million, or $0.04 per diluted share, compared with net income of $24.9 million, or $0.82 per diluted share, in the fourth quarter of 2013.

For the fiscal year ended December 31, 2014, OSG reported TCE revenues of $761.4 million, a decrease of $1.9 million, or 0.3%, from $763.3 million in 2013. Net loss for the fiscal year ended December 31, 2014 was $152.3 million, or $0.65 per diluted share, compared with a net loss of $638.2 million, or $20.94 per diluted share, in 2013. After adjusting for special items that increased net loss by $90.4 million, or $0.39 per diluted share, net loss for the fiscal year ended December 31, 2014 was $61.8 million, or $0.26 per diluted share, compared with net income of $57.0 million, or $1.87 per diluted share, in the fiscal year ended December 31, 2013.

The $5.0 million increase in TCE revenues for the quarter ended December 31, 2014 from the prior-year quarter was due principally to continuing strength in the U.S. Flag markets and strengthening Crude spot market rates. The increase was partially offset by a significant decrease in revenue days of 1,154 days. The decrease in revenue days was due to the redelivery of ten vessels (eight Aframaxes, one Suezmax and one MR) at the expiry of their short-term time charters in 2014, the sale of five vessels (two older VLCCs, one Panamax and two Aframaxes that had been employed in international flag lightering operations) and the company’s exit from the full service international flag lightering business.

• TCE revenues for the U.S. Flag segment increased by $9.2 million, or 9%, to $111.4 million from $102.2 million in the fourth quarter of 2013. The increase was attributable to the continued strong rate environment in the U.S. Flag market, which allowed time charters on the company’s product carriers and ATBs to be renewed in 2014 at rates in excess of expiring rates. In addition, incremental revenue was earned in 2014 relating to coastwise voyages performed by the ATBs employed in the Delaware Bay Lightering business.
• TCE revenues for the International Crude Tankers segment decreased by $6.1 million, or 11%, to $51.2 million from $57.3 million in the fourth quarter of 2013. This decrease in TCE revenues reflects a 1,119 day decrease in revenue days, as discussed above. The decrease in revenue days was partially offset by higher average TCE rates earned across all Crude sectors.
• TCE revenues for the International Product Carriers segment increased by $2.1 million, or 6%, to $36.3 million from $34.2 million in the fourth quarter of 2013. This increase in TCE revenues resulted primarily from the delivery of the Overseas Shenandoah, an LR2, in July 2014.