Exposure to weakening spot markets hit OSG

Aug 11 2017

US domestic tanker owner, Overseas Shipholding Group (OSG), reported income of $3.2 mill from continuing operations for the second quarter of this year, compared to a net loss of $4.2 mill for 2Q16.

Shipping revenues were $96.2 mill for 2Q17, a decrease of 18.7% from $118.4 mill in 2Q16. TCE revenues were $91.1 mill, down 20.6%, compared to the same period in 2016.

Net income was $3.2 mill for 2Q17, compared to $29.9 mill for 2Q16. Net income for the 2016 period included income from discontinued operations from International Seaways (INSW) of $34 mill.

Second quarter 2017 adjusted EBITDA was $29.6 mill, down 35.6% from $46 mill in 2Q16. Cash and cash equivalents were $204.6 mill. Total cash on hand was $210.5 mill at the end of the second quarter.

“Increasing exposure to weakening spot markets during the just completed quarter weighed on top-line performance,” Sam Norton, OSG’s President and CEO, said. “However, cost discipline helped to mitigate the effects of these developments, and, together with earnings from our shuttle tanker and lightering operations, served to produce healthy cash flows. Progress continues strengthening our balance sheet and, with over $275 mill of available liquidity, OSG remains favourably positioned to respond to opportunities in our markets. “

For the first half of this year, shipping revenues were $204.3 mill, a decrease of $29.1 mill compared to 1H16. TCE revenues for 1H17 were $193.4 mill, a decrease of $33.6 mill, compared to 1H16, while operating income for 1H17 was $33.5 mill, a decrease of $6.9 mill, compared to the first half of 2016.

Income from continuing operations for 1H17 was $8.6 mill, compared with a loss from continuing operations of $12.9 mill for 1H16. The increase reflects a lower tax provision in 1H17, compared to 2016. In 1H16, a deferred tax liability on the unremitted earnings of INSW was recorded, resulting in an income tax provision of $48.3 mill, compared to tax expense of $5.2 mill in the 2017 period.

Adjusted EBITDA for 1H17 was $65.7 mill, a decrease of $21 mill or 24.2%, compared with the first half of 2016.

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 30th November, 2016. The spin-off separated OSG and INSW into two distinct businesses with separate management. OSG retained the US flag business and INSW holds entities and other assets and liabilities that formed OSG’s former international flag business.  

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