Form 8-K OVERSEAS SHIPHOLDING For: May 10

United States

Securities and Exchange Commission

Washington, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 OR 15(d) of the

Securities Exchange Act of 1934

 

May 10, 2016 (May 10, 2016)

Date of Report (Date of earliest event reported)

 

 

Overseas Shipholding Group, Inc.

(Exact Name of Registrant as Specified in Charter)

 

 

1-6479-1

Commission File Number

 

 

Delaware		13-2637623
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

 

 

1301 Avenue of the Americas

New York, New York  10019

(Address of Principal Executive Offices) (Zip Code)

 

 

Registrant's telephone number, including area code (212) 953-4100

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Section 2 – Financial Information

 

Item 2.02 Results of Operations and Financial Condition.

 

The following information, including the Exhibit to this Form 8-K, is being furnished pursuant to Item 2.02 — Results of Operations and Financial Condition of Form 8-K. This information is not deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference into any Securities Act of 1933 registration statements.

 

On May 10, 2016, Overseas Shipholding Group, Inc. issued a press release, a copy of which is attached hereto as Exhibit 99.1, announcing first quarter 2016 earnings.

 

 

Section 9 – Financial Statements and Exhibits

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Pursuant to General Instruction B.2 of Form 8-K, the following exhibit is furnished with this Form 8-K.

 

Exhibit No.	Description
99.1	Press Release dated May 10, 2016.

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	OVERSEAS SHIPHOLDING GROUP, INC.
	(Registrant)
Date: May 10, 2016	By	/s/ James D. Small III
		Name:    James D. Small III Title:      Senior Vice President, Secretary & General Counsel

 

 

 

EXHIBIT INDEX

 

Exhibit No.	Description
99.1	Press Release dated May 10, 2016.

 

 

 

 

 

 

 

 

Exhibit 99.1

 

 

OVERSEAS SHIPHOLDING GROUP REPORTS FIRST QUARTER 2016 RESULTS

 

New York, NY – May 10, 2016 – 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.

 

 

^{A, B, C} Reconciliations of these non-GAAP financial measures are included in the financial tables attached to this press release starting on Page 8.

 

 

 

 

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.

 

About OSG

 

Overseas Shipholding Group, Inc. (NYSE MKT: OSG, OSGB) is a publicly traded tanker company providing energy transportation services for crude oil and petroleum products in the U.S. and International Flag markets. OSG is committed to setting high standards of excellence for its quality, safety and environmental programs. OSG is recognized as one of the world’s most customer-focused marine transportation companies and is headquartered in New York City, NY. More information is available at www.osg.com.

 

 

 

 

 

 

Forward-Looking Statements

 

This release contains forward looking statements. In addition, the Company may make or approve certain statements in future filings with the Securities and Exchange Commission (SEC), in press releases, or in oral or written presentations by representatives of the Company. All statements other than statements of historical facts should be considered forward-looking statements. These matters or statements may relate to the Company's prospects, including statements regarding trends in the tanker and articulated tug/barge markets, and possibilities of certain strategic alliances and investments. Forward-looking statements are based on the Company’s current plans, estimates and projections, and are subject to change based on a number of factors. Investors should carefully consider the risk factors outlined in more detail in the Company’s Annual Report for 2015 on Form 10-K under the caption “Risk Factors” and in similar sections of other filings made by the Company with the SEC from time to time. The Company assumes no obligation to update or revise any forward looking statements. Forward looking statements and written and oral forward looking statements attributable to the Company or its representatives after the date of this release are qualified in their entirety by the cautionary statements contained in this paragraph and in other reports previously or hereafter filed by the Company with the SEC.

 

Investor Relations & Media Contact:

Brian Tanner, Overseas Shipholding Group, Inc.

(212) 578-1645

[email protected]

 

 

 

 

 

Consolidated Statements of Operations

($ in thousands, except per share amounts)

		Three Months Ended March 31,
		2016				2015
Shipping Revenues:		(unaudited)				(unaudited)
Pool revenues		$	90,529			$	78,769
Time and bareboat charter revenues			120,373				107,942
Voyage charter revenues			32,854				46,831
Total Shipping Revenues			243,756				233,542
Operating Expenses:
Voyage expenses			6,834				11,900
Vessel expenses			71,042				69,239
Charter hire expenses			31,057				31,898
Depreciation and amortization			43,083				37,119
General and administrative			17,349				19,282
Technical management transition costs			-				40
Severance and relocation costs			-				5
Gain on disposal of vessels and other property			(157	)			(1,073	)
Total Operating Expenses			169,208				168,410
Income from vessel operations			74,548				65,132
Equity in income of affiliated companies			11,605				12,412
Operating income			86,153				77,544
Other income			2,574				73
Income before interest expense, reorganization items and income taxes			88,727				77,617
Interest expense			(22,659	)			(28,569	)
Income before reorganization items and income taxes			66,068				49,048
Reorganization items, net			17,910				(3,487	)
Income before income taxes			83,978				45,561
Income tax provision			(33,239	)			(2,660	)
Net Income		$	50,739			$	42,901
Weighted Average Number of Common Shares Outstanding:
Basic - Class A			568,425,634				573,434,452
Diluted - Class A			568,450,678				573,451,145
Basic and Diluted - Class B			7,919,819				7,924,944
Per Share Amounts:
Basic and Diluted net income - Class A and Class B		$	0.09			$	0.07
Cash dividends declared		$	0.08			$	-

 

On December 17, 2015, all shareholders of record of the Company’s Class A and B common stock as of December 3, 2015, received a dividend of one-tenth of one share of Class A common stock for each share of Class A common stock and Class B common stock held by them as of the record date. In accordance with the relevant accounting guidance, the Company was required to adjust the computations of basic and diluted earnings per share retroactively for all periods presented to reflect that change in capital structure.

 

 

 

 

 

Consolidated Balance Sheets

($ in thousands)

		March 31, 2016				December 31, 2015
ASSETS		(unaudited)
Current Assets:
Cash and cash equivalents		$	402,005			$	502,836
Restricted cash			5,587				10,583
Voyage receivables			68,293				81,612
Income tax recoverable			1,119				1,664
Other receivables			4,814				7,195
Inventories, prepaid expenses and other current assets			21,401				20,041
Total Current Assets			503,219				623,931
Restricted cash – non current			8,989				8,989
Vessels and other property, less accumulated depreciation			2,052,968				2,084,859
Deferred drydock expenditures, net			84,969				95,241
Total Vessels, Deferred Drydock and Other Property			2,137,937				2,180,100
Investments in and advances to affiliated companies			351,503				348,718
Intangible assets, less accumulated amortization			49,067				50,217
Other assets1			19,906				18,455
Total Assets		$	3,070,621			$	3,230,410
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, accrued expenses and other current liabilities		$	87,292			$	91,233
Income taxes payable			1,465				13
Current installments of long-term debt			71,154				63,039
Total Current Liabilities			159,911				154,285
Reserve for uncertain tax positions			2,529				2,520
Long-term debt1			1,072,533				1,223,224
Deferred income taxes			239,414				208,195
Other liabilities			60,823				61,698
Total Liabilities			1,535,210				1,649,922
Equity:
Total Equity			1,535,411				1,580,488
Total Liabilities and Equity		$	3,070,621			$	3,230,410

 

1

The Company adopted ASU No. 2015-03, simplifying the Presentation of Debt Issuance Costs (ASC 835), which amends the requirement to recognize debt issuance costs as deferred charges. The amendment requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying cost of that debt liability, consistent with debt discounts. The Company adopted this accounting standard on January 1, 2016 and has applied the guidance retrospectively. The impact of the retrospective adoption on the Company’s December 31, 2015 balance sheet are reductions of both other assets and long-term debt by $44,543.

 

 

 

 

 

Consolidated Statements of Cash Flows

($ in thousands)

		Three Months Ended March 31,
		2016				2015
		(unaudited)				(unaudited)
Cash Flows from Operating Activities:
Net income		$	50,739			$	42,901
Items included in net income not affecting cash flows:
Depreciation and amortization			43,083				37,119
Amortization of debt discount and other deferred financing costs			3,322				2,501
Compensation relating to restricted stock/stock unit and stock option grants			971				357
Deferred income tax provision/(benefit)			31,246				(7,622	)
Undistributed earnings of affiliated companies			(7,967	)			(9,073	)
Reorganization items, non-cash			136				55
Other – net			492				82
Items included in net income related to investing and financing activities:
Gain on disposal of vessels and other property – net			(157	)			(1,073	)
Gain on repurchase of debt			(2,382	)			-
Payments for drydocking			(5,917	)			(7,876	)
Bankruptcy claim payments			(5,000	)			(3,084	)
Changes in other operating assets and liabilities			4,852				12,127
Net cash provided by operating activities			113,418				66,414
Cash Flows from Investing Activities:
Change in restricted cash			4,996				5,167
Expenditures for vessels and vessel improvements			(58	)			-
Proceeds from disposal of vessels and other property			-				7,757
Expenditures for other property			(151	)			(65	)
Investments in and advances to affiliated companies			(1,054	)			(500	)
Repayments of advances from affiliated companies			-				12,500
Net cash provided by investing activities			3,733				24,859
Cash Flows from Financing Activities:
Cash dividend paid			(30,573	)			-
Payments on debt			(54,237	)			(3,178	)
Repurchase of debt			(89,046	)			-
Repurchase of common stock and common stock warrants			(44,126	)			-
Net cash used in financing activities			(217,982	)			(3,178	)
Net increase/(decrease) in cash and cash equivalents			(100,831	)			88,095
Cash and cash equivalents at beginning of year			502,836				389,226
Cash and cash equivalents at end of period		$	402,005			$	477,321

 

 

 

 

 

 

 

 

Spot and Fixed TCE Rates Achieved and Revenue Days

 

The following tables provides a breakdown of TCE rates achieved for spot and fixed charters and the related revenue days for the three months ended March 31, 2016 and the comparable periods of 2016. Revenue days in the quarter ended March 31, 2016 totaled 6,501 compared with 6,424 in the prior year quarter. A summary fleet list by vessel class can be found later in this press release.

 

		Three Months Ended March 31, 2016												Three Months Ended March 31, 2015
		Spot				Fixed				Total				Spot				Fixed				Total
International Crude Tankers
ULCC
Average TCE Rate		$	—			$	39,881			$	—			$	—
Number of Revenue Days			—				91				91				—				—				—
VLCC
Average TCE Rate		$	63,402			$	42,372			$	49,280			$	—
Number of Revenue Days			607				116				723				648				—				648
Aframax
Average TCE Rate		$	31,301			$	—			$	30,932			$	—
Number of Revenue Days			627				—				627				620				—				620
Panamax
Average TCE Rate		$	28,421			$	20,975			$	27,695			$	14,007
Number of Revenue Days			448				272				720				348				354				702
Other Intl. Crude Tankers Revenue Days1			—				—				—				3				—				3
Total Intl. Crude Tankers Revenue Days			1,682				479				2,161				1,619				354				1,973
International Product Carriers
LR2
Average TCE Rate		$	28,341			$	—			$	26,755			$	—
Number of Revenue Days			90				—				90				90				—				90
LR1
Average TCE Rate		$	31,170			$	20,426			$	29,741			$	15,732
Number of Revenue Days			91				266				357				90				270				360
MR
Average TCE Rate		$	16,200			$	10,499			$	18,846			$	9,816
Number of Revenue Days			1,597				155				1,752				1,761				167				1,928
Total Intl. Product Carriers Revenue Days			1,778				421				2,199				1,941				437				2,378
U.S. Flag
Jones Act Handysize Product Carriers
Average TCE Rate		$	—			$	64,498			$	—			$	64,777
Number of Revenue Days			—				1,080				1,080				—				1,070				1,070
Non-Jones Act Handysize Product Carriers
Average TCE Rate		$	31,517			$	19,016			$	28,103			$	—
Number of Revenue Days			91				91				182				164				—				164
ATBs
Average TCE Rate		$	—			$	37,870			$	—			$	38,429
Number of Revenue Days			—				697				697				—				690				690
Lightering
Average TCE Rate		$	63,036			$	—			$	71,390			$	—
Number of Revenue Days			182				—				182				149				—				149
Total U.S. Flag Revenue Days			273				1,868				2,141				313				1,760				2,073
Total Revenue Days			3,733				2,768				6,501				3,873				2,551				6,424

 

1

Other International Crude Tankers revenue days relate to the Company’s ULCC for the quarter ended March 31, 2015.

 

 

 

 

 

 

Fleet Information

 

As of March 31, 2016, OSG’s owned and operated fleet totaled 79 International Flag and U.S. Flag vessels (62 vessels owned and 17 chartered-in) compared with 79 at December 31, 2015. Those figures include vessels in which the Company has a partial ownership interest through its participation in joint ventures.

 

		Vessels Owned								Vessels Chartered-in								Total at March 31, 2016
Vessel Type		Number				Weighted by Ownership				Number				Weighted by Ownership				Total Vessels				Vessels Weighted by Ownership				Total Dwt2
Operating Fleet
FSO			2				1.0				—				—				2				1.0				873,916
VLCC and ULCC			9				9.0				—				—				9				9.0				2,875,798
Aframax			7				7.0				—				—				7				7.0				787,859
Panamax			8				8.0				—				—				8				8.0				557,187
International Flag Crude Tankers			26				25.0				—				—				26				25.0				5,094,760
LR2			1				1.0				—				—				1				1.0				109,999
LR1			4				4.0				—				—				4				4.0				297,705
MR			13				13.0				7				7.0				20				20.0				955,979
International Flag Product Carriers			18				18.0				7				7.0				25				25.0				1,363,683
Total Int’l Flag Operating Fleet			44				43.0				7				7.0				51				50.0				6,458,443
Handysize Product Carriers 1			4				4.0				10				10.0				14				14.0				664,490
Clean ATBs			8				8.0				—				—				8				8.0				226,064
Lightering ATBs			2				2.0				—				—				2				2.0				91,112
Total U.S. Flag Operating Fleet			14				14.0				10				10.0				24				24.0				981,666
LNG Fleet			4				2.0				—				—				4				2.0				864,800 cbm
Total Operating Fleet			62				59.0				17				17.0				79				76.0				7,440,109 and 864,800 cbm

 

1

Includes two owned shuttle tankers, one chartered in shuttle tanker and two owned U.S. Flag Product Carriers that trade internationally.

2

Total Dwt is defined as the total deadweight of all 79 vessels.

 

 

Reconciliation to Non-GAAP Financial Information

 

The Company believes that, in addition to conventional measures prepared in accordance with GAAP, the following non-GAAP measures may provide certain investors with additional information that will better enable them to evaluate the Company’s performance. Accordingly, these non-GAAP measures are intended to provide supplemental information, and should not be considered in isolation or as a substitute for measures of performance prepared with GAAP.

 

 

 

 

 

^(A) Time Charter Equivalent (TCE) Revenues

 

Consistent with general practice in the shipping industry, the Company uses TCE revenues, which represents shipping revenues less voyage expenses, as a measure to compare revenue generated from a voyage charter to revenue generated from a time charter. TCE revenues, a non-GAAP measure, provides additional meaningful information in conjunction with shipping revenues, the most directly comparable GAAP measure, because it assists Company management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance. Reconciliation of TCE revenues of the segments to shipping revenues as reported in the consolidated statements of operations follow:

 

		Three Months Ended March 31,
($ in thousands)		2016				2015
TCE revenues		$	236,922			$	221,642
Add: Voyage Expenses			6,834				11,900
Shipping revenues		$	243,756			$	233,542

 

^(B) EBITDA and Adjusted EBITDA

 

EBITDA represents net income before interest expense, income taxes and depreciation and amortization expense. Adjusted EBITDA consists of EBITDA adjusted for the impact of certain items that we do not consider indicative of our ongoing operating performance. EBITDA and Adjusted EBITDA do not represent, and should not be considered a substitute for, net income or cash flows from operations as determined in accordance with GAAP. Some of the limitations are: (i) EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; (ii) EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; and (iii) EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt. While EBITDA and Adjusted EBITDA are frequently used as a measure of operating results and performance, neither of them is necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation. The following table reconciles net income as reflected in the condensed consolidated statements of operations, to EBITDA and Adjusted EBITDA:

 

		Three Months Ended March 31,
($ in thousands)		2016				2015
Net Income		$	50,739			$	42,901
Income tax provision			33,239				2,660
Interest expense			22,659				28,569
Depreciation and amortization			43,083				37,119
EBITDA			149,720				111,249
Technical management transition costs			-				40
Severance and relocation costs			-				5
Gain on disposal of vessels and other property			(157	)			(1,073	)
Gain on repurchase of debt			(2,332	)			-
Other costs associated with repurchase of debt			217				-
Reorganization items, net			(17,910	)			3,487
Adjusted EBITDA		$	129,538			$	113,708

 

^(C) Total Cash

 

($ in thousands)		March 31, 2016				December 31, 2015
Cash and cash equivalents		$	402,005			$	502,836
Restricted cash			14,576				19,572
Total Cash		$	416,581			$	522,408

 

 

 

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