OSG - Earnings call transcript Q1 2019 | Overseas Shipholding Group, Inc.

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Operator

Hello, and welcome to the Overseas Shipping Group First Quarter 2019 Earnings Conference Call and Webcast. [Operator Instructions]. I would now like to turn the call over to Samuel Norton, President, CEO and Director. Please go ahead, sir.

Samuel Norton

Thank you, Keith. thank McFarland for XXXX and Earnings and Molly Dick First everyone, Call. Princeton Arcia, me morning, you joining all Trueblood, Quarter Good for our our added the the taking listen call. and to welcome this to disclosures provide on We perspective appreciate opportunity time to written in your public and depth

our pages our on our of our on effort PowerPoint consider our an I to of see review contents that of more commentary information case the quarter, to Prior narrative As our I them would model. this website information help today like our in which and was during to during provided The everyone the past direct of this estimates and to is will OSG's on may presentation in the focus bring X disclosures and presentation and future business. trajectory available everyone course read presentation call. the additional into urge forward-looking of the beginning narrative business call, are we hope the part regarding statements, to last provided further It expand on will other carefully. an that potential important this offer the be X of the sharper

beyond about affected Actual We risks. and factors, by projections on anticipated and statements control. just differ includes future will be are OSG factors These to than statements may of be uncertainties perspective forward-looking results. a offering a risk materially today, including could historical you more including presentation and our results subject variety from our statements

the these December with internet www.OSG.com. Form for our site, website, as and our XX, of as the which at factors fiscal well www.SEC.gov, SEC's filings refer we For to on ended own you XX-K SEC available other annual our XXXX to are year the report a specifically discussion

reasons obligation assume we materials, Forward-looking the of could to legally statements except date statements why these the not speak presentation this forward-looking do of update as differ. be any actual in and any or results may only as required,

presentation our which GAAP quarter our in financial certain also non-GAAP at SEC website. and which posted and addition, first In include earnings on we today release reconcile the define is will furnished to our measures

flows overhead in shore-based recovery by and trades achieved an businesses. the right-sized Before some quarter, debt reiterate to we this effort. Act the to our now into how vessel obligation. we specifics and the business necessary our We of sustained stable going We additional five would perspective We quarters have West. controlled cash refinanced a Jones like goals on provide first going priorities underway. I with AMSC our in the strategic recent extended understand see briefly to advanced niche We our that and succeed and generated with cash from several major ATB added We as Overseas position forward. and costs. Broadly weather speaking, a past our exposure company while we could so flow benefit to in market the objective strategic Key quarters been sharp the well bareboat principal to the in over tanker maintaining reduction reduced short-term leased which leases has but

demand what pricing charter benefit so of environments. as to have to our the most we in leading as favorable commitments balance, supply and we in fundamentals Finally, short kept from improving duration foresaw more

these benefits meeting reflect a still a a in is supplies. excess success heavily in we greater by moments, few of business these the coming numbers caused over our quarters to downturn As results. quarter first in of factor all the in evident available to the adjusting from our XXXX. highlight quarters more results an into The cyclical and narrative recent Dick expect financial detail in will successes in Further, objectives our

demand to restoration the a removal balance narrative ahead. and one past crude minds, shift of the more revival the positive has via supply to year-and-a-half, the the in lie of quarters our shipments by However, domestic scrapping supply/demand permanent that the over which driven occurred gradual for largely the oil of should,

will the results. Given we useful share of be trajectory understanding framework shift for to new our believe that it the future a

First, our a niche businesses and strong foundation earnings of flow. provide cash

our longer-term While evident, from one the are of stability. is fluctuations quarter-to-quarter of perspective niche businesses

business the is Over time the to back of our XXXX, X earnings per beginning of equivalent quarter. average $XX.X quarters the dating million charter niche

the Petrobras and entirely her Our of conventional tender. average, $XX.X results with of the treading current are million the Chinook being in of quarter that to May almost from status as in largely line first reduction attributable Overseas redelivery with year minor last a

assets serve which of stability of the a consider the profile. has portion characterized niche stream attributes to of earnings that businesses, the be component our our earnings we our Given unique future reliable this

potential operating leverage earnings the characterized above our revenues line. TCE all of our bottom This break-even falling particularly by high levels consider our essentially Second, with straight fleet. the part is business fixed conventional to incremental tanker of

our position with of in most charters day a TCE substantially prepared of fleet incremental all increased average As into the the larger is as $X.X gain the per accept this of tanker on will conventional end drops revenue each associated increased of to XX of at to cost to annum. we time of amount in our quarters, evidence line. a year, minimum resetting translates a revenue rates per these bottom capacity. characterized transportation With approximately $X,XXX formats, Toward now exposure vessels utilization charters. firm to this in that million presentation gains, variable rates be to tankers to have in recent our the the With in higher order access entry in risk seen OSG's secure customers are we

an We expansion. earnings this attractive are of represents opportunity realize optimistic to rates that reset meaningful

crude demand and the Our paired confidence available of oil both on continue, product of favorable incremental expected for movements. expectation supply our signs relies to tightening is that refined with continued

signed tanker market relative period of XXXX compared the weakness off of a with during several as market addition, conditions. In charters current were in rolling

Third, the fleet mix. ATB nature contribution of the consider of to changing revenue our our

replacing two domestic by phased levels. revenue in the our of asset newly-constructed losses eight XX% anticipate four our contribution we contributed the Offsetting stream a are certain presentations will the has XX% in than expected can declined profit obligations next lease years contract Company. consider we vessels over lost of legacy exist expected phase-out nearly neither XX a which total. Fourth, fleet service barges to of financial business cash months. ATB advanced in revenue second revenues. year the profit run generated assets has approximately out of ATBs to of this as our we terms the four these the EBITDA XXXX increasingly and to OSG's recent of not contribution to been that of recently revenue component once from should while flow less rate delivery of fleet. AMSC as that ATBs, are wholly be impacted a We from half stabilize domestic a have has service share feature to date age regular older for ATB older result foreseeable of into share be the our Shipping these Payout nor class results. and that removed of trades XXXX, next revenue conventional for reduced our relevant A American the remaining during be of these new from accordingly, the contracted for As current marketability placed their The ATBs barges our at

ahead, markets element better this clearly of expectation the With come will into focus. more

to split profit We Dick distant point elaborate relatively view payout on payouts event. guidance his being to and continue the we of will this of when in we provide as of expect will a Nevertheless, prospect how comments. more arise. a

of in good and of growth should include sustain OSG's for not constant of ability fail understanding U.S. internationally-traded in customers, and consistent all, an of key of regulators, on widely to front Jones focus. key recognized its in us Opportunities within Jones remains results quality are market. our the our standing by our business Safety Act above to consolidation and model, our our the the both service among Finally, Flag to opportunities participants acquisitions the a peers, OSG's and potential valuable through existing the achieved future growth constituents. differentiating Act the is community focus market. this Act well The a operations. and possibility feature remain, positions our Jones pursue

place the environment importance will towards and on continue ensuring paramount continual maintaining of of We and the achieving employees. protecting all of both to safety highest health established the progress our and culture standards our

develop the to shortage mariners deeper today, Jones a operating tankers Flag Flag exists U.S. view opportunity can and to tanker-qualified are suited necessary is that provide qualified U.S. available that Washington We to For a outside and of Act, important ideally in our of broad pool additional an for critical this strategic be marine training only critical personnel fulfill. priority created exists that sailors. OSG consensus country that jobs the vessels as to extent

the qualifications to tanker a and the MARAD, We have Flag with in participate fleet. Transportation non-Jones-act expand develop in to Department Department partnership framework efforts unique Defense to workable the U.S.

under Korea, U.S. expansion in for initiative to highly-visible should this with of intend succeed new revenue offers support commitment under sail in to important our investment implications vessels Our Flag we growth which eventually, OSG and in we construction this effort. a

place results, for a for I new to high, rates review entrants lie The predict comparable will date to for of days, which the time, current details like be more market prospects day, provided and quarter for We an to per be the XXXX conventional as fundamentals presentation for the months' the the cannot shape spot consider the the day amounts immediately to six for past year first this increase Dick three in where entry in prospective available Before XXXX. this strength vessel ahead. to expiry barriers continued would equivalent year earnings $X,XXX of turning in per averaged but of averages for any be be specific encouraging. strong, both tankers of of The XX% the of specificity remaining the contract quarter's time over represents expectations approximately detailed XXXX that over $XX,XXX quarters slide and quarters to we final in to contracted with of with charter to cover full X.

current to assumption rates, of an visibility day this year. would above Given and at renewals average this rise earnings we entire for of the $XX,XXX expect per fixed

a $XX averaged ATBs conventional quarter. to $XX,XXX million conventional tanker by fleet to first million improve West expected in day be of obtained together XXXX operating Key cash the contribution our we fleet the Overseas entry the flow with in from with vessel the Taken achieved to expect XXXX. $XX per by over incremental into XXXX the The April, in results our $XX trading further approximately and million contribution late during

million During $XX.X our contribution. conventional XXXX ATBs provided vessel of operating

compared from our removing fleet our $X with revenue a derived that year, will two million last the during anticipate mid-XXXX, a XXXX will service and current our decline to dropped additional in see plans in annual two as remove contribution December result we of ATB As transitional $X to ATB million ATBs zero. of we XXXX. older ATBs By to from service that from anticipate have XXXX from legacy operating fleet

barges operating conventional $XX delivered, under expect two per contribution new XXXX two fully fleet million new $XX during continuing by should our provided our year. contribution million for However, loss units compensate the XXXX. once to the construction, By of ATB from of ATB currently we

and barges, employment these delivery We the discussions employment of already other one time have commencing upon for in one. regarding its secured charter opportunities are for active

the niche a consider being as operating we time the contribution and good and indicator $XX.X of charter equivalent year. first for million, balance $XX.X vessel of quarter businesses, million For performance respectively, our of

Our the is performance plus likely X% full expectation XXXX our results this that minus sector. fall of within in will XXXX or

We stability of flows provide. cash these are confident assets in that the

you over owned fleet thorough listed things active hand XX a March the take and slide results, more recall I X. to vessels XXXX, an the of that as of financial review Before past through operated OSG useful to in quarter's to it is of of Dick end

tug articulated U.S. the Security in under barges, act operate active which internationally the XX fleet operate and two Our of and tankers includes Jones Program. Maritime

and for having construction to Additionally, Shipyard With first we year, under two MR this provide contracted XXXX. which at over call refreshed on construction I a have for Gunderson with results are September now delivery in Portland, two picture barges tankers Oregon, XXXX. turn XXX,XXX-barrel scheduled in Korea you this deliver under in in details the Dick additional our to will Dick? quarter of been

Richard Trueblood

Please turn Thanks, to Sam. Slide XX.

and This During quarter a supports first and in of Bonny continued refinery the is price WTI consistent relationship the between operations. XXXX crude pricing. oil theme and we domestic see in use continuing Houston was The positive to a spread XXXX.

a oil quarter. Act from were Please the Mexico Analysts this medium to the rates expect trade. over exist we turn in related of a to movement in differential during As on of that Spot upper $XX,XXX continued to Gulf to continue see XX. will mid-$XX,XXX-per-day the this the crude Jones range and tankers the result, employment pricing basis term. TCE Slide

limited market tanker and the spot one spot only ATB to in turn Please operating during We have XX. one of exposure market first with quarter XXXX. Slide the

during business. of XX of first the for sale quarter from the This XXXX. had active our During ATBs was a reduction quarter, to the December engaged two-vessel rebuilt we first scrap XXXX vessels in our due two

sequential voyages when first voyages charters seven and higher This days the by a under was and $X first fourth two million. the $XX.X million was first less our EBITDA quarter the voyage Comparing one aforementioned TCE quarter, operating time the the two ATBs million. dry affreightment reduced from respectively. annually. from performed trading sale the and contracted million for the Israel This result of of of voyage EBITDA of Compared year-ago first for Government minimum the offset revenues them quarter conventional reduction GOI of the $X.X tanker by quarter. declined result shift represents off-hire proportion $XX.X of year-ago and shuttle quarter $XX.X tanker improvements December related voyage. the in We one TCE of million is and from adjusted partially TCE fleet vessels, in revenues to of improvement current with Our Overseas the one adjusted sequential operations and in were XXXX, to The quarter Chinook $XX.X adjusted with quarter. compared with revenues were and docking. for the million Israel revenues the a of to EBITDA XXXX adjusted the quarter EBITDA from in fewer operations, of Government fewer to a

margin Additionally, the to voyage year-ago Tankers. XX. one turn one Please extensive high of included quarter for Act non-Jones our Slide

XXXX. TCE on a to increase business our revenue Lightering revenues of the granular increased $X.X increased at The our million more revenues a experienced liftings TCE Delaware basis, quarter Looking resulted our for from one fourth due from customers TCE quarter. quarter compared the in vessels required an This lighter of XXXX in fully to of rate the utilization. increase be of when repair fourth the to due during work resulted first $X,XXX which average increased the daily impact

vessel increased from one market market for the of rates spot average benefited ATBs rebuilt spot rate. market Our and demand trading, for spot in doubling TCE available resulted which approximate the an

exposure. more time slight spot fourth the by the Act XX quarter utilization number when vessels tankers days the during of XXXX. of in non-Jones of of charters for revenues recorded these operated the reducing quarter market TCE increasing Our a quarter, compared under international to days the We first in increase effective

TCE This revenues and to was fleet the of increase impact utilization in $X.X in change charter first the XXXX. $XX.X million by fourth quarter Act time quarter increased the the Our of resulting tanker levels. days Jones driven million from higher

to due lightering declined the tankers the the to the to Act the at Looking revenues an XXXX rate. million of $X.X from changes, XXXX, the volume increased increase, average quarter vessels. revenues the comparison which to declined number The operating first non-Jones in of year-over-year $X.X decrease from in million ATB quarter of compared resulted primarily previously-discussed due increase million. to million in daily to $X.X first $X.X in revenues

very quarter of employment. in extensive MSC high charters included XXXX The first resulting

TCE benefit ATBs market. to a tight by great and From impacted low of market the year voyages current Government beginning Considering to two year. in minimum market although the utilization our Since supply the seven-voyage rebuilt rates a recovery our which hurt was the only the with the and from effective market volatility million four. first have was always million, to an charters, revenues spot we to turn the the of the Government reduced began, Israel, will first one one quarter start eight time rates. in Slide due of of in retirement XX% XXXX, have commitment XX. Beginning the declined time the high-rate voyage. levels Please during quarter operating older in ATB XXXX to oversupplied charters of Additionally, from of there decreased XXXX, ATBs, one in from the revenues XXXX. in evolution of $XX.X XXXX be which in Israel spot number of from have of $X.X we performed quarter of

will will remove is from occurred. the third the rebuilt quarter We at loss revenue service One over the second quarter. two the end already ATBs the ATBs XXXX. from the to in continue has and XXXX. will be months. the more service other reduce associated The of of two Further, with we occur rebuilt at majority during balance of expected end XX next removing last ATBs The to the

will of barges XXXX. in illustrates chart the fourth Our begin time the quarter of replacement revenues and side the end will quarter at since This service revenues. two conventional the of beginning the ATB the enter second new of changes XXXX. The of of right charter during XXXX

market represented while that revenues Since in XX% revenues X% most revenues total has business conventional total recent time-chartered shifted to quarter, tanker of to our tanker have tanker charters of revenues back TCE X% legacy the that conventional a the we spot tanker benefit our In focus. a of spot Looking as from market market reached revenues. maximum XXXX revenues, declined more of spot effect. conventional still first in the continued at quarter time, were spot time to revenues of

predictability to remaining narrow by this created have a turn Please XX, this band. slide by throughout arrangements tankers time quarter, for our of three all operations relatively looks revenues. quarterly our tanker as at eight TCE conventional Variability charter slide, we and niche the components stability a of market contribution things nine drydock Slide period revenues repairs. in were under prior our increasing the In is produced stable market requirements If and the performance revenue with first conditions, revenue the at our Slide look activities such XX. contrast to of operations. During niche our of

Lightering two tanker. revenue increased operating quarter, voyages, The as increase an included Chinook The underpins a and from tight in increasing comparable a increased charter We're Vessel increased to QX As an can the outcomes increase year-ago increase. be permitted the supply in market extensive a market. us oversupplied from low-utilization GOI increase XXXX. in low-rate, stay on days. The operating although and and $X.X lightered by the $X.X transit XX. the a Vessel has there now This operating Vessel seeing XXX, shuttle fluctuations, days charter in $X with to from seen, the employment. charter are prior contribution increased business relationship shippers. Please from million XXX rates. for to vessel operating fairly million bandwidth. conventional supply/demand resulted of of narrow XX million revenues and a and within again, year spot contribution coupled vessel is revenue defined decreased our operating demand, reduction $XX million continued to tankers increased operating expenses committed time Slide increased voyage, contribution shift exposure expenses, from $X.X turn an days rebalancing $X.X XXXX XXX which MFC has million to decreased to contribution QX volumes. million less resulting quarter. TCE to hire as demand Time on tonnage

daily our in Slide XX%. this of XX% spot were first XXX increased market XXXX market fixed the quarter days market In while to days. Please days available our XX. from tanker during spot days XXXX our revenue the XXX Accordingly, days represented revenue QX increased year. XXXX, turn ATB the rate in XX% of spot revenue days Our average to TCE ATB of during

tanker volumes. million $XX.X was Jones improved compared QX $XX.X well EBITDA increase from adjusted to in Act The as quarter the performance conventional lightering resulted as increased XXXX. million First

time joined to million of income quarter. reserved to tax time of audit first of This with extensive $X.X disposition in adjusted of benefit quarter was illustrates income in number from chart quarter XXXX Key Please in in of less include fleet the beneficial higher-rate tanker reduction still of the of third quarter not by that operations. end which million effective million available XX. percentage EBITDA turn voyage connection $XX the of which $X.X and upon in at XXXX turn XX. two in the transition days returns. charters of XXXX, XXXX, earlier compared Net of of QX million to tax to vessels resulted the in conventional the West, loss are years. was XXXX effect effect was to XXXX, a first voyage fourth covered Chinook $XX.X MSC net April. First in in Slide the Slide million The decrease the recognized and XXXX, legacy $XX.X in Please of our the quarter operational quarter the net a for recognized million of revenue XXXX's charters. our GOI in compared The operating losses one We $X.X the XXXX. completion We early and the by IRS the vessels, Overseas to previously charts XXXX

of a During ranges reflects year. the of We're as to charters indicates the at rates. the or high type by engaged extending time of second tailing revenue XX% end. our third quarters new expected time This coverage number from over the a the quarter degree off can fourth vessel that charters stability and in balance obtaining The be favorable actively XXX%.

our occur, The scheduled here impact repair schedule operate It XX. our and to tankers our affreightment. schedule. Act could As for unplanned include under not a and does is for primarily they contracts drydock turn lightering activities. should depicted the which Please business non-Jones reminder, Slide repairs,

even otherwise if or charter. employed a off-hire, otherwise time are are unavailable use for on they vessels in While drydock

will our quarter. of to second schedule, quarter, to the we diligently days We expect current loss we equate number the during days of loss drydock $X.X on which this off-hire second minimize revenue to During off-hire reduce XX revenue million a the sustain. based year's work

will we to much fourth quarters we The revenue quarter. look the experience to smaller XXXX. impact XX. of within the However, turn Slide if Please and a is forward disruption third

As our information continue XX to for that to the operations from want charter AMSC. XXXX. information chart improve, through we concerning the we The vessels for exists provide provides XXXX in bareboat arrangement profit-sharing

we not to look As anticipate based created XXXX, we this were there AMSC profit rates. no would picture profit we've previously We across stated XX do achieve average any of vessels, share be TCE market TCE profit-sharing obligation an sharing. year. what be future $XX,XXX average our would assumed on at might the for In rates if be rate here estimated

made assume create year trade rate $XXX,XXX achieve in minimum subsequent down If the was year an obligation out XXXX share $XX,XXX column, the would for would of average payout share it million. in profit rate profit day. of were be aggregate on is there beyond rate would was be $XX,XXX. total. a the If XXXX. minimum to in earned. necessary market produce year the earned would modest to to rate rate of XXXX achieved, required of average $XXX,XXX further Looking prior in the share the sharing The profit is this the to result estimated the any $XX,XXX XXXX level XXXX Based that in profit-sharing the a $XX.X here, be Profit in a shown. that assumptions in XXXX in per the Years

minimum will meant assumptions to Calculations million a turn cash involved. the of $XX restricted Finally, noting of it will This to have certain is slide included based profit chart factors $XXX,XXX costs that began XXXX in the complex total recovered, share outcomes are and result is in which on worth if -- decline. with we that variety rate cash. of be the possible next indicative made. We are

EBITDA. $XXX,XXX and expense. the million Working used This with we the made in changes XX. $XX interest new generated cash cash $X we $X $XX leases expended million the million. Slide quarter criteria million XXXX We cash. During accounting forth incurred We requires on drydock turn capital of standard our standard adjusted to ended the $XX of construction. of we adopted the new meeting first of was assets We of in $X and The balance leases. as At the invested the on we including of quarter, to result $X first vessels, million vessel restricted million be the cash. repayments debt million improvements and on liabilities quarter the provisions set beginning Please sheet. reflected of

these no earnings of mentioned we on of Additionally, required Prior we as adoption. charters the AMSC on have impact the including were Continuing in to asset $XXX,XXX slide, vessels, balance cash There We primarily previous or million cash the not the $XXX part leases, discussion from liquidity cash recorded on was as we changes. are flow of to our related of and cash. $XX million of liability. the restricted make sheet. bareboat reclassifications sheet these certain were adoption right-of-use which reflected our balance

Our since debt reduction million which million represents a in XXXX. December $XXX total outstanding indebtedness $X was

We also Combining our $XXX had have undrawn. undrawn a cash, is presently revolver revolver $XX liquidity we which million at million with of quarter-end.

million of $XXX annual ratio for progress vessel. date vessels, second barges The XXXX during tankers on of for delivery and a as of to scheduled cash obtain, has the on progress debt-to-equity of all of December achievement payments in amortization payment then and periods With loan OSG payments commitments and based payments XXXX times of X.X will our XXXX. it that need quarter scheduled same financing at and the we make the to March delivery XX, four $XX construction approximately due two capital required flow million the remaining made had At two the those XXXX, operating these will net September aggregate milestones each in million for for delivery is $XXX of OSG quarter equity, fourth construction term including XX, the was we cash is requirement require has the $XXX delivery contractual hand. with million. XXXX. Our an on due contracts vessels on of shipyard's which with final

in to like We such remarks. statements. my currently on Sam discussions comments concludes are with I'd the to call to the potential back lenders financing. his for obtain closing now financial turn This

Samuel Norton

Thank future encouraging three we picture fundamentals, that on Dick. of our founded our and readily-quantifiable as The for you, components well-established business. well market see as is

market profitable activities. stable platform niche by our provided and First, a

a a Second, during conventional business model in elements XX for the merely finally, next future. renewed of tanker operating expectations revenue allow months. the And manifest leverage our from capacity to added contribution to become These that our our recovery new not the XXXX. be late over fleet ATB are should

We seeing actual the results in had have conditions predicted. we market been progress direction as

recover. we ourselves have to position to action been be We passive waiting growth. revenue in to for taken to able achieve not planned markets positive Rather, have and

business year into XXXX comments believe inflection that reiterating. made our for results optimism and about is to I We believe expectations only beyond. continue today marginal providing bear factors important earlier our our insight prior at this an point our with underpin

from to high. markets. market, insulated and can uncertainty First international market, Act are in to U.S. recognition be a the that Flag in the degree particular barriers is heightened is the Jones found the that entry The large

U.S. of of experienced New disruption believe out market in it a can and tankers supply the exports. in capable crude that that of orderly born governing trade. years recent to in providing than shipping context, number rational sudden change was are limited, as are case conceive extended coastwise other and the that for can is easier is regulations period Shipyards companies of expensive market in objectively the that be time. of In to qualified this operate markets have an supply balanced, the environment The in we oil of obtain.

We have oil markets. supply seen our coastwise to combined balance restore and over rationalization the slow past X progression of that the years, transportation healthier have a the demand in reemergence crude of

probability comments, see that of As cycle been noted now we have this recent often has our having The well-established. as weight in well-turned. we indicates recovery the

our operating underpins the leverage Second business is powerful the force that model. of

has the our the barges months, within years restoring revenue against in a great dynamics of and effects of be offers to relationships. normalized our strong the begin are cause cash phased business several stream of results new that for time the first providing to leverage positive in XX recent support reset us With worked our market open two prospects unbalanced the that Following in to pricing operating flow of capable fundamentals in both an optimism. and flow set tankers of the rates and supply restoring for in for all ATBs through demand of come to years, next will soon out,

new term effect in our half expectations in lag our investments charters older to with of retirement come Our the fall this the allow for and interesting from should opportunity The XXXX the extent full XXXX with will of replacing repricing the this recovery. to be set ongoing to revenue OSG in pursue in for while commercial the financial rebound year Korean first-quarter fixed upside our streams The model in that our of market results remains generate units. the offering niche leverage implied stable benefit confident the Flag that the flow recent is new initiative, our foundation we of we for stream business cash results. exiting the incremental of the up businesses a contribute in experienced U.S. XXXX remain revenues revenue and memory. to within to of dependably optionality positions the internationally-trading in capturing barges new-build mask less have of our volatility while increasingly the time, and Further, opportunities long mix a two than offer strategy on squarely tanker generate All believe should XXXX show to for second together, to improved operating that cause results to fleet tankers will to revenue OSG, our meantime. MARAD in ATB of work but with sound expanding of

to We Operator. now will up open call the questions,

Operator

Instructions]. [Operator

The with comes Partners. first from question Robert CF Jensen

Robert Jensen

your in replacing? the anything of appreciate for is new I expand two alluded Sam, remarks stage, you fleet, MR cannot U.S. instead tankers you this prepared Flag it will feasible this probably certain and to that but say at

Samuel Norton

and naval but can my to way the these our is to guarantees exploring be with and conjunction objective to that's in objective. and kind personnel in to initiative of enable truly means expanded to certainly certainly pursue there an avenues able that to of only to for part pursuing. in achieve as that Flag fleet. are results, that referred pursue to There move we're I I there find thought think Washington the no is us vessels address prepared that the Things of international for it TransCom, tanker in support that there process is, the that U.S. qualified MARAD remarks, able create an be shortage and development forces, marine recognition would be to that slowly Washington be

Robert Jensen

an Okay, lenders barges, these the other If interest you new to appreciate builds? that. over we building finance to the have move from effort, received new

Richard Trueblood

have for several We expressed different lenders barges. are interest who those to financing talking in providing

Robert Jensen

of you of terms can anything pricing a Any sort say in -- indication or

Richard Trueblood

Not time. No. at this

Robert Jensen

That's fair. the one? the $XX you've based secured any remarks build out rates. prepared terms for the and in number of would figure that new day barges level two to you between sort on $XX contribute mentioned Is EBITDA. of Also first that level in already I'm of the that just trying million million

Samuel Norton

again, capacity per a next together, guide market than of vessel feeling at tug somewhere the between that, to five $XX,XXX We time. that and earnings units That combined to cost lower X little $XX,XXX that's with first think than a over escalations over for I and tankers. prospectively barges And tiered earlier of barges, the the years over kind put rate the Probably that for a the So of the market off rising $XX,XXX rate of the perspective at It's really market new would and charter and for starting will the time years day be like these these barges, likely operation. the day. our bit we our for equivalent you lower pitch bit price little time. be -- per operating in over around X barge we the might years.

when will the are. barge in relative cost be dollar-per-delivered-barrel tanker based be looking there rates a cost, the movement will there at So on -- where

of years for $XX,XXX So our per expectations rates per get expectations were a over $XX,XXX the next tanker that's to and between day, we the the our barges and what day how earn. the several would $XX,XXX for to $XX,XXX day,

Robert Jensen

and the as And have understand and to there, I'm curious they field and tankers. we finally, the assumed will about Cascade need of you operations any increase any try far thoughts Murphy sort output discussions the more of had recently as shuttle Chinook if for or

Samuel Norton

others features. Chinook and to awake tanker a can operate in as for Murphy tanker our expressed than have is she we operate shuttle the the past there possibility revenue the the shuttle services But demand to as two is shuttle that think tanker just is Cascade, more tankers are view we the tanker Overseas as of optimistic medium remain in term. notwithstanding about rather -- than utilizing well that we therefore, which with we're term. And normal tanker normal more incremental discussions in a I Chinook a there can find shuttle performing -- she as remember shuttle can constantly a that tanker. sorry, important to vessel opportunities conventional that outfitted -- provide services, notwithstanding -- over the the the It's medium tanker

Robert Jensen

All be It'd visibility, helpful thanks. least. for right, at

Operator

from [Operator [ph]. Instructions]. with comes Popakonomov question next Research Milambro The Nefex

Unidentified Analyst

the bareboat is you a special the us for couple budget my vessel new estimate to Thank you taking questions you regarding the I an would under what very morning. Key undertaking? for of that Can of Overseas vessel have is like ask West, give call. charter. much Good the the survey that

Samuel Norton

total $X the to capitalized million the are $X of expectations that range of costs completion terms of including lead-up be capital special in involved the to the survey. in costs, would Our in million

Unidentified Analyst

will for as an completion the And that upon bareboat the-- like operating account charter, you lease,

Samuel Norton

correct. That's

Unidentified Analyst

Thank much. you very

Now that the none the of expenses, you on this will provided be schedule conventional drydock ATBs? regarding for expected that your presume I

Samuel Norton

correct. That's

Unidentified Analyst

will they be phased survey? next out before the special So

Samuel Norton

Correct.

Unidentified Analyst

to that the is ATB me, what out? layup in for Can be the in or prognosis you also have you phased remind one that, to remain layup,

Richard Trueblood

days would expect I very mean, at a of it profit. we will the nominal next I that dispose over nominal. few

Samuel Norton

To we'll be clarify, we demolition. vessel for dispose -- sell the means, would

Unidentified Analyst

that planning right? that sell other very clarification. you for that will much have for or ATBs to Thank are -- you I sold the all be presume the And you sold demolition,

Samuel Norton

than experience of outside for assets our kinds the inquiries That's in the intention. Act, seriousness. been inquiries to robust has use We remain of these of been date Jones less those open but have to opportunistic

pretty the from we will once vessels pragmatic view likely what service. have remove a to we So we've taken -- as be them these of outcome

Unidentified Analyst

be? last Act like little Thank have was whether you possibility how you. And Flag about or I Or then this? physical U.S. Jones noticed more that it's LNG general I the you could one a discussed non-Jones product any of Act in question, possibility realistic for Flag wondering, regarding tankers. expanding I these commercial I vessels it not? U.S. are mean, nature. How of discussion the the if is fleet

Samuel Norton

comments. expertise, so offer hesitate It's I of would area to our not really concrete any

trade an the States on specific for enable to that knowledge, it trade, are United in of and that the be the seems that would Notwithstanding think You States. continental attention bear vessel. that That the served but about the United have not to That's I'm that by States, not discussion going support aware United there's Act United that need at also vessels LNG Rico. trade could continental legislation Act aware come discussion, as it to pays that is background to build current to possibility both there waiver from LNG tankers that the -- appears pressure in of anyone LNG number has to a there arguments, and to probably in being in to at pro con, Jones plans the participate tankers a recent recent time kind from It couldn't design LNG would rise the Jones LNG to of of of months been the to the weeks. could to -- is be was Jones -- died trade a Act it suitable States know, of obtain construction the is of it. Act in current I so no Jones a be and be that least some back, trying brought to to in to but That's under application is Puerto news how for given notable might and that it to initiative Puerto to say Flag a out be not trade my non-U.S. allow That legislation, time Rico. open.

Operator

to Norton are there time, as the for like floor would Samuel And at no more present questions any to return you. the I comments. Thank closing

Samuel Norton

you an Keith. want you, our to in We and forward just quarters. Have to We people in business. Thank reiterate our a taking coming the good in again speaking to interest thanks listening day. for look

Operator

Thank you. for attending Thank you The conference concluded. has now presentation. today's

may disconnect lines. You now your

Overseas Shipholding Group, Inc. - Ordinary Shares (OSG) 12 May 192019 Q1 Earnings call transcript