Overseas Shipholding Group Inc.’s (OSG) first quarter 2010 operating loss per share of 9 cents came in substantially behind the Zacks Consensus Estimate of 32 cents per share on weaker top-line against higher operating expenses.
Operating loss excluded 16 cents per share associated with the de-designation of Swaps by the FSO joint venture and 8 cents related to impairment charges on two U.S. Flag vessels. Including these special items, OSG’s GAAP net loss was $9.4 million or 34 cents per share as compared with the net income of $121.8 million or $4.53 per share in the year-ago period.
Results reflected expense control on fixed operating overheads. However, this was offset by negative top-line growth due to a weak demand that led to lower average spot rates and net reduction in the operating fleet as compared with the prior-year period.
Total operating expenses increased 35.2% year over year to $265.4 million, primarily driven by the impact of gain on vessel disposals of $129.9 million recorded in the year-ago period. However, vessel expense dipped 13% year over year to $64.1 million and charter hire expense declined 19% year over year to $90.6 million. Even general and administrative expenses totaled $26.8 million, well in line with OSG’s annual guidance in the range of $100 to $115 million.
OSG’s total revenue declined 8.3% year over year to $269.8 million on reduced revenues across all three segments. Pool revenues declined 20.5% year over year to $108.4 million, time and bareboat charter revenues declined 25.1% year over year to $65.5 million while voyage charter revenues decreased 5.1% year over year to $95.9 million.
Time charter equivalent (TCE) revenues declined 21% year over year to $229.9 million, primarily due to lower average daily TCE rates earned by all the company’s international flag vessel classes except VLCCs. Crude Oil TCE revenues were $132.1 million, down 17% on a year-over-year basis, while Products TCE revenues declined 30% year over year to $50.1 million and U.S. Flag TCE revenues dipped 23% year over year to $45.7 million.
As of March 31, 2010, OSG’s cash and short-term investment balances were $340 million, up from $525 million as of December 31, 2009. Construction contract commitments were $413 million, down from $522 million as of December 31, 2009. However, total debt decreased to $1.7 billion from $1.8 billion at the end of 2009. Besides, liquidity-adjusted debt to capital dipped to 39.8% from 40.1% as of December 31, 2009.
Dividend Update
On April 15, 2010, the board of OSG declared a regular quarterly dividend of 43.75 cents per share on the common stock outstanding, payable on May 26, 2010 to stockholders of record as of May 12, 2010.
Business Update
On March 29, 2010, OSG completed the issue of $300 million aggregate principal amount of 8.125% senior notes, due 2018, taking the public offering route in order to facilitate its debt restructuring strategies.
Besides, on March 9, 2010, OSG completed the public offering of its 3,500,000 shares underwritten on its common stock at a cash price of $45.33 per share. With this move, the company enhanced its capital and liquidity by approximately $158.7 million.
Although substantial OPEC production cuts against the increase in the global tanker fleet juxtapose to produce a very challenging environment for spot rates, OSG continues to take aggressive financial restructuring steps by raising capital from the market in order to relieve itself of the debt obligations and concentrate on the fundamental growth strategies.
Operating loss excluded 16 cents per share associated with the de-designation of Swaps by the FSO joint venture and 8 cents related to impairment charges on two U.S. Flag vessels. Including these special items, OSG’s GAAP net loss was $9.4 million or 34 cents per share as compared with the net income of $121.8 million or $4.53 per share in the year-ago period.
Results reflected expense control on fixed operating overheads. However, this was offset by negative top-line growth due to a weak demand that led to lower average spot rates and net reduction in the operating fleet as compared with the prior-year period.
Total operating expenses increased 35.2% year over year to $265.4 million, primarily driven by the impact of gain on vessel disposals of $129.9 million recorded in the year-ago period. However, vessel expense dipped 13% year over year to $64.1 million and charter hire expense declined 19% year over year to $90.6 million. Even general and administrative expenses totaled $26.8 million, well in line with OSG’s annual guidance in the range of $100 to $115 million.
OSG’s total revenue declined 8.3% year over year to $269.8 million on reduced revenues across all three segments. Pool revenues declined 20.5% year over year to $108.4 million, time and bareboat charter revenues declined 25.1% year over year to $65.5 million while voyage charter revenues decreased 5.1% year over year to $95.9 million.
Time charter equivalent (TCE) revenues declined 21% year over year to $229.9 million, primarily due to lower average daily TCE rates earned by all the company’s international flag vessel classes except VLCCs. Crude Oil TCE revenues were $132.1 million, down 17% on a year-over-year basis, while Products TCE revenues declined 30% year over year to $50.1 million and U.S. Flag TCE revenues dipped 23% year over year to $45.7 million.
As of March 31, 2010, OSG’s cash and short-term investment balances were $340 million, up from $525 million as of December 31, 2009. Construction contract commitments were $413 million, down from $522 million as of December 31, 2009. However, total debt decreased to $1.7 billion from $1.8 billion at the end of 2009. Besides, liquidity-adjusted debt to capital dipped to 39.8% from 40.1% as of December 31, 2009.
Dividend Update
On April 15, 2010, the board of OSG declared a regular quarterly dividend of 43.75 cents per share on the common stock outstanding, payable on May 26, 2010 to stockholders of record as of May 12, 2010.
Business Update
On March 29, 2010, OSG completed the issue of $300 million aggregate principal amount of 8.125% senior notes, due 2018, taking the public offering route in order to facilitate its debt restructuring strategies.
Besides, on March 9, 2010, OSG completed the public offering of its 3,500,000 shares underwritten on its common stock at a cash price of $45.33 per share. With this move, the company enhanced its capital and liquidity by approximately $158.7 million.
Although substantial OPEC production cuts against the increase in the global tanker fleet juxtapose to produce a very challenging environment for spot rates, OSG continues to take aggressive financial restructuring steps by raising capital from the market in order to relieve itself of the debt obligations and concentrate on the fundamental growth strategies.
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