OSG - Earnings call transcript Q3 2019 | Overseas Shipholding Group, Inc.

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Operator

Good day and welcome to the Overseas Shipholding Group Third Quarter 2019 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Sam Norton, President and CEO. Please go ahead.

Sam Norton

Sarah. you, Thank everyone. Good morning today McFarland by Arcia, joined Trueblood, Dick OSG's XXXX Princeton for call. and third I'm Molly quarter earnings

we taking time to opportunity listen in to and welcome call. depth to disclosures always, this other your perspective release our provide appreciate and on and press As added the

information our review are other statements, the the provided quarter, the presentation the X X of part I and to on to narrative may which like to during Prior Pages forward-looking of beginning would presentation contents this website carefully. available everyone course be The call. read of of on PowerPoint them and and our of estimations, an this I urge to past this consider regarding direct everyone narrative and important

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

Internet the For for which XXst, discussion XXst, fiscal Form own website our on Annual ended www.sec.gov of SEC at XX-K June XXth, well quarters site and SEC's specifically www.osg.com. XXXX as other we XX-Q these with Report are you our a refer December for Form filings XXXX to March as our year on the the factors, ending the and our XXXX available

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

SEC comparable website. today posted includes the measure which non-GAAP release GAAP which the In in closely most we is define addition furnished on measures third to our our and and earnings also reconcile to quarter our financial presentation certain

quarter begun which third over years. expectations see strength during to pleased growth fleet's developing expected clear underpin are is our with and Overall, and has continue fundamentals and performance coming the earnings we our meaningful the continue that to for

it take to specifics performance with to progress during quarter. will you the I I you through strategic of Dick like would towards past the fleet our highlights objectives. share leave the our of achieving of financial to

of the cash We and near-term, stable flows set we ATB the an while so with to tanker out trades. what from short-term be exposure securing ourselves at Jones market year objective Act beginning for an believe the of to to recovery in maintaining position benefit emerging as this

fixtures of our we second ended A of together for defining increased context, for they quarter. cover higher available In the to were the element been have total since of days. to at XX% this XX are of of vessels the able to secure our have half across XXXX to last of our revenue commercial key time vessel that than rates attain made contracts we XX charter success pleased XXXX. Each done and a forward strategy to second was targets

Act Jones conventional achieved per our day. tankers on fixtures completed averaging XX the rates of Six $XX,XXX

vessels their with open for discussions existing the charterers. the in now of for two are Additionally, active before three December of extensions remaining end renewal

barge the Overseas secured time now shuttle Chinook As for newly-delivered second last units, trading have tankers, is quarterly disclosed our release, conventional in which we two our tanker Korean-build and of our a also MR our as charter new tanker. commitments two

we spot short-term fleet. Jones charter our time provides current at updated maturity with all Act currently the time profile have conventional availability a the and of this division of time Slide X picture also ATBs no of on With book. our the OSG charters, you in committed

our we principal increasing that have evidence greater that of With charter be consider are have been the achieved to of which book result responding supply-constrained at our of duration than are charter an We year, several objective this higher anticipating. these periods outcome rates. of for customers commitments, we to contractual market increasingly our one an

base, points is distribution marine For customer easily link between our production the principal and replicated. not

acceptance charter's critical order such capacity improved of large exposure strong As a risk is a access firm utilization fundamentals. to to secure to of system in transportation signal

vessels this and with to market allow It are in that is achievable our now what chartering A stable profitable flows relationships higher-quality core worth repeating is to noting. one worth customer the trade is longer-term normalized normalized profile which by characterized base. rates predictable cash our return

in point in days more of available remunerative most of in to a talk vessel continuing the improvement consistently rates at Reducing will our thus detail number I marks the point business. review the the Dick's the spot following to market quarter. turning recent of this significant health

overall last we the XXX retire the in progressive the contributed two available in markets. which our from with in permanently her planning XXXX. petroleum decision of Jones has us This In and remove quarter, ATB to to in to the sell our both supply are OSG only active leaves units conventional Columbia core service, trade reduction Act

These their two committed barges Both charter remaining in these are barges next to units contracts delivered one-year of new May new upon and delivery. once under retired on of construction be already year. will be currently November replaced with time

the Hyundai vessel should Marshall vessels Coast took Overseas and under Sun delivery. At at tankers year built Gulf charters delivery $X.X internationally in that rates of the following now dockyards September, an Islands operating are incremental of at Flag on we Coast two trading their one-year Korea. the Mipo provide for about end of first contribution Overseas during MR each Both million

the proposed National final Security pending the Authorization Act. in awaiting are disposition Program Defense Tanker of We

approved to is these the U.S. by this each in law substantially in participate flag of we program the of form to Tanker disclosed, the previously made Program tankers As MR registry. the and both if Security vessel intend new House Representatives, we Flag nominate to

niche Sun include Coast Overseas will MSP business tankers grouped Overseas existing Overseas report, next the Overseas segment quarterly Mykonos. our we together Gulf with our purposes, beginning the and presentation Santorini and For in earnings with our Coast

Jones active flag and tug under and internationally the trading MR qualified Our of two Islands tankers vessels two tankers Program consists Act in vessels XX flag. operating now Security Maritime Marshall internationally of U.S. fleet articulated barges

In Portland delivered Shipyard at Oregon will addition XXXXXX-barrel Gunderson construction two XXXX. in be barges in under

With this to XXXX. having picture our been refreshed, to you for details the Dick now provide of results will I the Dick? over call with third quarter turn

Dick Trueblood

Sam. Thanks

spot In seasonally slower limited two We they reducing XXXX, conventional and during other during quarter the quarter the had the fleet majority impact utilization. quarter Third the is had Act tankers under the time seasonality. year. was the Jones our of only of third than quarters charter market in

to turn XX. Slide Please

and crude During pricing. relationship the in this spread domestic This theme continued to This use and a consistent the year, for has see was and quarter third price supports virtually of positive refinery WTI that continued XXXX. of operations. Houston a oil between XXXX all in and Bonny we

of As favor the Analysts in the States a Coast to continue continue to related United and oil. result of that of the see employment Jones the we Mexico will spread crude domestic trade. this crude up the from tankers movement expect East Gulf oil Act

operated significantly. the Please has in of Slide In we which XX of fleet rebuild mix of vessels XXXX turn XXXX, XX. vessels the one-third were changed ATBs. to third quarter Since our

fleet. tanker Rebuild the XXXX. be will By day rebuild the conventional the now end tankers ATB zero. our non-Jones we added to of Act our component added XXXX, new less third second on two of the ATBs represent fleet. one quarter than We last the And of during XX-vessel XX% build of quarter,

XX. slide to turn Please

quarter During XXXX, we and also the of number the the quarter, operated of we’ve in Since vessels the Key reduced to compared added Overseas from operating to ATBs third XX XX vessels the six year-ago quarter. West. two,

in results the a Nevertheless, when time compared demand quarters quarter we for the of our is the charters in reduction both posted of market in impact to quarter. our quarter vessel tanker XXXX during Seasonality contribution spot the significant as during saw impacted XXXX. third evident The conventional business increased year-ago activity. operating improvement vessel third

EBITDA in operating from to third $XX.X quarter year. million period XX million increased to revenues was for XX. third reduction to in compared million million despite TCE the TCE $XX.X year-ago XXXX $XX.X the in $XX.X and the were the X.X% assets adjusted quarter, compared revenues last

almost decreased $X.X revenues reflecting in high principally our the which of adjusted revenue degree Sequentially leverage and in line. XX%, inherent results operating decreased Adjusted TCE incremental bottom million business, $X.X EBITDA dropping increased EBITDA to the million.

the the $X.X million decline reduction QX PES revenues. million lightering adjusted EBITDA receivable the and resulted the in the number $X.X TCE $X.X reduction reserves impact a included rebuilt of ATBs the of from million from TCE resulting of operating in bankruptcy.

XXXX. were days the no conventional spot Excluding vessels increased in our third quarter the the of quarter. in tankers the third two dock dry There their revenues in market,

slide to turn Please XX.

business TCE Looking $X.X subsequent more at XXX Bay Gulf the granular revenues, of a relocation decreased to our and OSG of our bankruptcy impact million, the Delaware reflecting the net on sequentially of the basis, Mexico. revenues PES lightering

barge in to from insufficient resulting month TCE barges to This approximately to which Gulf decrease one a resulted her to of XXXX, not demand average reposition two daily effectively of and the second rate due Mexico. support of when of the time the utilized was quarter in compared the in a $XX,XXX to one combination

ATBs The to quarter. declined result $X.X in a TCE as of of revenues million the number rebuilt solely third ATBs million $X.X from our from decreased the

quarter a when increase XXXX. in to recorded Our non-Jones $X.X the compared tankers the second Act of during TCE revenues quarter million

by MSC time market quarter, these one effective exposure. vessels XX days operated performed the international of quarter, revenues utilization days augmented earned. voyage spot charters increasing We number the We for under this of this of the reducing which

during the Our quarter vessels We quarter seasonal resulted decreased Jones revenues demand quarter million to third of these Act earning market the in vessels minimal million and in tanker the in two $XX.X spot had fleet revenues the XXXX. quarter. low from TCE during second the $X.X the

effectively conventional revenue tankers increased X% the TCE The This charter and XXX% generated the time days remainder resulting the increase of by coupled with of driven rates. in was impact utilization increase.

comparison were Looking quarter lightering the to the XXXX. compared at in XXXX revenues third vessels. due operating decreased number of of of declined to to year-over-year revenues third ATB the from $X.X million million quarter chart changes, to flat $X.X

tanker $X Act from million increased million. revenues non-Jones $X.X The to

As spot one voyage. MSC mentioned, and a in market from the reduction of days third quarter benefited XXXX

to presence, higher TCE the due was million. tanker driven rates by higher increased market charter $X.X and utilization time increased reduced activity. Conventional revenues spot This

XX. slide to turn Please

The third spot peaked spot earnings of market. quarter the XXXX then earned million first of million market $XX.X in total quarter XXXX. of the $XX.X or had of revenues which or TCE our XX% $XX at in were TCE Since of million, TCE revenues XX%

time this revenues quarter third highest of revenues the in to on XXXX. third or of XXXX. XX% of decline in TCE $XX.X million, have level TCE continuous during hit TCE market million a generally Fixed since period their $XX then been Spot revenues the of quarter our

have Conventional revenues Since quarter at Please XXXX, revenues spot to look or TCE predictability as tanker of from million conventional XX% slide in This $XX.X increased spot of turn and tanker lower reduction XX% the QX volatility XX. TCE increased fixed $XX.X revenues TCE importance in XXXX. revenue results market market activity of peaked first the $XX.X to continuing million. we in forward. million

slide turn XX. Please to

businesses Gulf operations. continue be overall our stability, provide the net of the PES the operates niche to Our earnings which after the to This OSG in we revenues Mexico. underpin to the true generate impact considering as of even continues bankruptcy, of XXX serves

revenues contribution Looking throughout operations, narrow our market operations three niche our within this the at by performance tighter with revenue produced components have revenue niche a period relatively and band. of stable remaining quarterly

created activities by our market for conditions dry all repairs. requirements dock of and is Variability

be this the level stay The platform. seen range. of higher narrow fairly be bankruptcy can outcomes within but a fluctuations business are As PES although will will to there continue introduce variability, a a stable

contribution million Vessel negative as expenses in the which XXXX the revenues, operating turn higher Jones to expenses QX tankers. increase vessel slide vessel quarter. current million was Please defined $XX.X contributor $X.X our $X.X from XX. and operating conventional operating largest reduction from TCE to The less charter is million Act to in contribution, the increased

tankers from of tankers our from XXX operating under the market and the higher quarter, rates the year. exposure our last for days of spot spot reduced market to charter. increased at prior we The in During number in XXX current time tankers the year decreased

of reduced two. days ATB's created the by in the being of Our charter. revenue XX% number rebuilt on time as were $X.X contribution quarter was decreased to ATB million ATBs

driven decline market of from by MSP from tanker Vessel operating contribution This niche $X.X million shuttle was our and $X.X the million. contributions increased in by barge offset the activities lightering a increased performance. anchors slight

tankers two QX from XXXX. decreased by the well in as our driven million ATB was Since reduction Vessel end The fleet. $X.X operating decrease the the spot contribution our as market in market charters for tankers, year. entered one the both of of in the which year time the were other of current into those have end and the the through quarter spot one

slide Please XX. turn to

quarter reserve. demand The $XX.X select the summer second to the for adjusted Third as the was EBITDA receivable of well $XX.X the the XXXX factors and the number were compared million, of quarter PES as impact to services of we million effect season decrease giving continuing after EBITDA primary ATBs transportation adjusted of rebuilt reduction slower to contributing operate.

was quarter. increase EBITDA $X.X utilization of mitigated quarter the the resulted in of in magnitude million impact Third our in The somewhat the ATB spot number in the adjusted from market, increase and increase $XX.X vessels the effective in of MSC one the a the trading reduction current rising rebuilt increased from reduction voyage The QX million by XXXX. in rates, fleet.

a slide the in beneficial of XXXX In XXXX returns. tax $XX.X recognized $X.X benefit the We reserved of third XXXX. to reduction quarter losses for net tax had was in an in third IRS benefits us results effect in upon million of million to completion the to quarter of market third audit quarter $XX.X XXXX vessels market for the connection XXXX audit of the $X the million quarter turn earlier our quarter our with mentioned loss second The by of Net the recognized to of of exposure through number compared XX. XXXX, previously tax the Please third with we income years. those million permitted in increased recognize previously in loss ATBs. two two-vessel the a from Net coupled XXXX. the due in disposition spot rebuilt inactive of

Please turn to slide XX.

we impact not the provides scheduled maintenance During information does required include schedule. year should treatment as they for unplanned repairs, system regulation. It scheduled This at by ballast could water each perform installations. maintenance slide which occur

the dock or for use vessels off-hire We they're minimize time in While of days our even off-hire the number employed loss sustain. charter. dry are otherwise if otherwise reduce revenue to unavailable on to we work

more to and will Maintenance tied makes and are lumpy capital is experience required expenditures than with there expenditures are revenue be the will which that date years capital resources result original our we a disruption. the this vessel's others. However, build requiring some

undergoing systems the dock. require dry ballast also will water of XXXX installation treatment on vessels

dock and systems. be time spent as dock ballast two In million addition will to for transit estimate treatment nonearning in dry of the investment expenses vessels front active revenues We off-hire the dry cost will XXXX in $XX.X during of million as $XX.X the in are year for dry dock be well us. an water actually the and dry dock. our time

days. of an of expect By comparison cost In of incurred incur $X.X million incur during revenue through process estimated million. XXX dock expeditiously We systems. the XX to costs no days off-hire will a this that all days $XX.X minimize to loss will in endeavor of to XXXX off-hire and work way an with treatment the of number cases, We we have water total XXXX ballast off-hire. dry estimate estimated we

XXX. we and of had at At progress OSG progress million $XX.X on the quarter quarter the on XX, actual progress shipyard slide in amount depend this to the required million. OSG of the made expect total made The milestones. future payments on of turn slide of payments the the end each the progress dates the estimated payments of when for payments The of shows end Please payments payments timing make progress third $XX.X payments million and to we will XXXX, quarter. $XX.X the were cumulative achieves XXX

fourth each OSG's of will million permanent the progress $XX.XX payments in financing each during payments for $XX.X made $XX.X We of $X.X total. million working result bringing on far million. will approximately we construction to This into secure being date we quarter, million to have barges equity for $XX.X converting in total are that financing. in we believe additional The million the will that financing barge. or So provide barge the financing

with third $XXX,XXX XX, cash. slide of the $XX which restricted we Please began cash turn of included quarter to of million, XXXX total

million incurred $XX Coast Overseas During We by during million the the which invested Gulf million million generated of construction. vessel of quarter, Sun interest reduce million $X $X Further, issued XXXX Overseas million sales We second $XX on cash sales quarter which vessel secured million Vessel million and $XX the we million, $X improvements from dry to cash We capital vessels. we repayments of $XX EBITDA. expense were adjusted debt. the of made to new docking debt represented and working $X and proceeds provided generated our of Coast. debt of cash. and $X changes of expended used in

of with XX. was of The turn have XX, the as cash the we of million cash previous Continuing of XXXX. $XX we restricted including million discussion $XX Please cash September slide result slide, quarter we on ended mentioned cash. $XXX,XXX to at and liquidity, our

was a million Our since $XX total debt which $XXX in indebtedness outstanding million, June XXXX. represents increase

million to amortization has requirement net million ratio is $XXX of times times an million loan With X debt-to-equity $XXX $XX X.X annual at per or of $X.XX equity, XXXX. term XX June quarter. Our compared million our

turn financial This I'd the to like comments Sam. back my statements. to the on concludes call

Sam Norton

Thank you, Dick.

summary fixtures point. charter slide the to With months, refer of for for discussion the this my the remainder like we'd Please XXXX. success useful expectations to past of in achieved on XX several of shape a

a XX% over have in coverage and for the has realized charter tankers of completed in of available This given portion quarter us time with quarter substantial in quarter for This the us just my year. renewed of last coverage success our opening results quarter. financial charter ATBs. well conventional as we as noted fourth coverage comparison the material time for confidence improvement remarks, fourth projecting with operating gives this As obtaining year's in in days both

TCE consistent in tankers should year. our ATBs two approximately QX conventional results. earned to the increase conventional active fully by fourth remaining balance We for Time remain for for now expect with of million our the units quarter over was quarter the what charter equivalent with $X fixed third earnings both

anticipated the business. our in visibility Additional results found expectations can be niche in for fourth our quarter

dry quarter, Our of the January into two Cascade half the first fully contracted operational XXXX deferred the now as tankers planned XXXX. fixed each has and fourth will for into shuttle been be the are of during Overseas dock

of tanker, reported shuttle Chinook, niche consistency third that continues being is her Our purposes. Overseas largely time a tanker charter segment the end she was vessels track with the for during should We the our quarter. to utilized at achieved third to of anticipate note extended fourth conventional performance increased be in the that quarter But business these now we as the three XXXX. rates during what

three for which an Our MSP additional to under Time one Israel, will paid are for two each the third for this affreightment when contract vessels $XX,XXX concentration add unusual earnings exceed our day results. with to existing $X vessel voyages should thus of the equivalent quarter. quarter, be of per of compared million TCE Government in quarter expected of charter activity approximately

time our Coast quarter million add Gulf In and Overseas fourth approximately addition, to Coast, will of the collectively Sun Overseas results. charter earnings $X

Mexico. OSG of Turning volumes has the been the in PES's June, to caused in lightering of to response reduction the two XXX our Gulf Vision shutdown the by repositioned of to vessels, refinery lightering

unit fixed charter QX. this for recent substantial portion a of time in have on We weeks

we $X.X August $XX.X Given these XXX performed Horizon, contracts under an quarter. expectations million expect OSG TCE increase guidance from of between million for two the the to for remaining given $X.X and for quarter, the approximately units lightering million for reach of in from affreightment contribution fourth now volumes

approximately million will fourth quarter. we in anticipate from Alaska we distribution recognize Finally, of Company a our participation Tanker $X.X the during

the of the during From QX. first these levels, as now provided EBITDA actual reconciliation anticipating allow have XX achieved three we equivalent of results time the charter to and results more are detail components in as that slide a adjusted quarters well we the for

tanker million businesses as a for conditions adjusted of Overall, compared a spread corresponding to the about quarter the levels of QX to will This our $XX represent many adjusted as indicating become in rising with charter apparent. EBITDA see our fourth of of when TCE above we time near of begins new with million. effect $XX doubling EBITDA

now our between million The $XX of approximately adjusted $XX million guidance a and range increase previous million. from full year should EBITDA performance $XX to of

prospects fundamentals As to this illustrated new barriers see entry limited have we of by the delivered are will several very new strength be appears balance. for And continued year equilibrium entrants of this with no our healthy tonnage be capacity availability prospective the final to which market two year, the to exception high. free on order, market with for quarter next delivered any of picture, promising. indicative of to next the a The within reached is in of years. we rates our consider barges be The

Looking our the as further future XXXX, that our see well-established what components business. quantifiable be and we fundamentals, encouraging readily market of of key valid well we is for four believe forward into as to picture

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

PES While fundamentally specialized altered not of events niche our alter trajectory lightering have plan it at does for game business, assets. our our somewhat the

the businesses, this that of be of in reliable future infrastructural which that the play attributes they unique a these the will role has sound and the that they characterized continue foundation of earnings earnings profile. stability the we to our industrial our expect portion Given stream assets, participate, component

our renewed expected from contribution during ATB new a Second, added be capacity to is XXXX.

XXXX. efficient past, expect retirement from have contribution be more said be a two on in on barges the we ATBs replaced new of delivered we to As build that during older our the basis the will revenue the

from during incremental of an $X XXXX. million new two units XXXX are million during $XX and We EBITDA these projecting contribution

replace service that expected the Starting are in have the XXXX, older vessel to of ATBs removed and from the half. contribution year two operating new barges the we during effectively past

years. of next operating over visibility our to our manifest should in fleet, now conventional can latent the recovery be business leverage two revenue the the allow under tanker Third, model which

standing of trading its remain Finally, to for markets. in model expansion to business our pursue opportunities customers Security peers participants a within feature is valuable of the Jones growth and areas and our ability good existing us internationally positions differentiating Tanker regulators such of opportunities and as and among Flag in our Act sustain Program of our flag consolidation U.S. the community the U.S. OSG's opportunities well focus.

and of Safety culture the above health and results on standards of key progress in consistent and service our employees. this place safety the remain on both continued constituents. environment focus are recognized quality our We the key highest paramount operations importance all, front by achieved widely of our ensuring the established achieving of maintaining towards all protecting and our

sound to Altogether remains we have for long-term. strategy our believe that the cause commercial

are upside more revenues streams the of increasingly U.S. from that opportunities. businesses, Flag the while generate confident stable of niche OSG revenue ongoing We market mix our positions growth our dependently assessing recovery to the a capture of ever range continuously

questions. the Operator, we open to call now can

Operator

Our & now will go from comes Needham ahead. Vaughan Instructions] session. Please first begin question-and-answer question the Company. [Operator We with Ryan

Ryan Vaughan

Thank you. Hi, my Sam questions. and Dick for taking thanks

me you sorry part my there out talking cut when XX. about a was for -- Sam phone Let ask slide

I look XQ. step-up XXXX a XQ So huge from if at

into that's do get just as But of come? -- You to contracted to you're run I as a fleet did more given $X.X quarterly about pretty XX% the million, good think to with some look XXXX you going in run I XXXX, rate into start the if Alaska JV think out strip going there. is that say we to rate

Sam Norton

with would that expectations. align think our I

charter As of assumption charter through of the on visibility fleet operational XXXX the -- I execution a on us now pretty in these said, much success good cover our of portion a of gives substantial execution obtaining fixed charters. a

be to what yes run for quarterly understanding look XXXX going our So like. we're will rate confident in pretty

Ryan Vaughan

you milestone let about paid you've you'll of get correctly, if million ask And leaves the payments financing remaining I XX, Excellent. million. so me on about Dick slide you heard $XX far the And barge. million per $XX about $XX barge

payment be have coming here financing? much is made cash million let you So to if how this, do actual ask you left back me $XX with

Dick Trueblood

an Virtually which issue because zero. issue on I will make we cost closing million of it if timing item, barge timing, some we versus loans as we of to a of a be the $XX.X $XX have not against with about the at of timing you million. mean, first timing speak be about the -- progress the it, funded and the payments. look But acquisition would

XX% So as assuming debt, will $XX recover we've much depending on that as XX% of we're again we equity, million invested. timing what already

Ryan Vaughan

just I I that. thought. to what want Okay. I understood That's sure make

So you're Great. kind question. of you'll me That some my leads then back. to get making third of that upfront and cash

million. $XX on sitting You're

do here. to Granted XXXX. bit -- in You're get significantly year going some cash back you drops have some that dry-dock a next little elevated

thinking that Just cash talk free to about you're us flow. about how utilizing

of -- the any -- forward think anything months that seems the going nine at Just opportunities with you level like really year? for for here what especially stock sitting this $X.XX

Sam Norton

take one Ryan. that I'll Well,

flow Dick and I acceleration the business. of the of our that both and/or determining free altering driving as at think capital structure I -- of look cash really timing

cash to we're next installments barge receive. business. not and prudent until at rightfully of only commitments we months we the it the over water to have bank dry-dock make that ballast not have have from our to As the on for jeopardize actually of to and liquidity installations necessary think also the looking that payments out, pointed to balance you We maintain money continuing pretty the we levels in financing anticipate we need significant XX six some the but that our

next and to flow accelerate that half operational expect free expect standards to being after business we second proceeds the and execute year that. our That cash to would we we the if in said, of turn positive

with do is would year. as what half into might we next And the cash in to of so current of conversation really come the we a something timing flow decisions that second that free

Ryan Vaughan

a well. executing you've thank it's reflected And see been or I'm you sure Well, as not great. just wins agree great made you. to being Well, lot good rewarded. Yes of it's would really

Thanks So I'm coming so much. where Appreciate that's it. from.

Sam Norton

Ryan. Thanks,

Operator

Partners. question Borsheim [Operator next with ahead. from go Knut comes CF Our Please Instructions]

Knut Borsheim

Hey, guys.

Sam Norton

Hi, Knut

Knut Borsheim

QX. for good guiding Hello, It's stuff. the strong exciting That's to see

So I on the fleet. just touch to want base spot

briefly in the that no was You mentioned spot market. capacity available there

year, your spot? year? As to through in contract do the fleet something look the towards you the your you keeping whole on are you next Or expect What's fleet there? be strategy

Sam Norton

As in is we be the quarter a have of March one three next we of at for would that renewal further time, first tanker market ATB spot in speak, next year so in and and year. the have tankers that open we up this

So quarter. in still first the I think that's

that return -- potentially excuse return So could next you that in me have potentially of to to quarter spot market the three the year. first spot one could the four and ATB market tankers tankers

are Our market right pretty through how into the a tight. next time first next And of of the four year we that pretty plays is upon our charter securing of inquiry dependent in coverage of is those out. quarter high level disposition feeling And year. now is vessels assessment much

that seeing I rates foresee could would achieve unless due utilization. the levels that for time impact to to returns increase rates market that currently difficult the at to charters spot market charter market equate of time significantly we're as the rates the point effective out would pretty it's same that were we spot to

the if short. Act I'll spot the the you voyages a have in pretty Jones market vessel remind in you that are

you you're to market XX% XXs XXs utilization or yet means the not or And returns XX% your utilization rate very well do cargo between of rate. and time up sort voyages you if load effective to voyage next in we're the or XX%. day -- low take equivalent a into achieve you're can or be in a charter down five that rate spot XXs if on a your going And XX% six-day doing on a to there. even the So before reduces two in

We but not could get there. yet there we're

So there we would if to time the charter saying exposure. a effectively market lean to be is fixing achieve of better way our than take vessels interest utilization long bias spot returns higher would and charter towards rates time therefore

Knut Borsheim

Yes.

see will there's low. on scenario can where a Africa Europe with dynamics the a see you're short So looking the levels moving the that And a distillates the more distillate. cargo are East short set distillate if you dual all-time Coast on be volumes? South Do you in we little being at these bit think at

Sam Norton

A year. opportunities distillates depend up level think moving the Coast. have in rates the see that market the MR the last that economics and down I competitive are the international there of been charter drive East up would over of lot upon which that to

I shortage So if odd bear you have Europe in wind United been over are the in Coast if are even surplus States the a way of can mind and the year back to but Atlantic have that a you they of in that last right remind there that tanker one way low cost Gulf due as tankers. markets to moving the transportation that international distillates not case trades to of other products dynamics across the seeing of the make trading I'm that's the transportation sometimes coming be saying up shapes. that odd and the can across take distillate MR low available economics and might

Knut Borsheim

rather up strong Yes. tankers seems MR But general that should it with probably be is right? that No XXXX than weaker totally. there the out coming consensus

Sam Norton

were Then the United East States. that case And distillate utilization the that Act and if to would Coast up that the of Jones of moving tankers increased support -- if

I think June. distillates out significant draw the in the PES a shutdown the that in current there's that's as pointed Northeast our of We following read been market. think of you

IMO the I inventory below to you stats And I've is would Northeast, level, levels averages. say to would The that as XXXX the Gulf declared as of And port draw. factor where discharge their lot with we inventories. well from. already the the raise in just Coast out moving is cargo colder a to last distillate And is a to week distillate questions Island. being weather to me come Rhode saw venture to those getting suggest one XX-year the out, going latest of that historic that pointed seen replenish going as see

Knut Borsheim

you last guys there? What I Interesting. or And have the guys side. been lately a thing are build view on there the you there mean what's latest on is new updates Has hearing the cost? just supply a any

Sam Norton

It's discussions I new we in speculative too. don't about of any engaged there any kind are certainly active vessels. think are not building --

reports industry I series orders. million the base think based that rates that of at targeting the Philly on at million seen to shipyard $XXX the kind those of $XXX we've are

four vessel at of order million. a that's So sort to $XXX million minimum $XXX

Knut Borsheim

No.

out see. to guidance, great to Again see play QX great okay. kind the a thanks shows the lot. series year Okay, that's of starting Well, so to strong It right?

Sam Norton

Thanks, Knut

Operator

This turn I to any Sam for like Norton over to would our concludes back question-and-answer session. conference the closing remarks.

Sam Norton

you, been holiday for even Thank we than all hopefully to again news you better to Thank what again speaking you with for today. and everyone look forward year Wish you. Sarah thanks participating well you able season. today's we've give with in later and call the next to

Operator

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

You may now disconnect.

Overseas Shipholding Group, Inc. - Ordinary Shares (OSG) 8 Nov 192019 Q3 Earnings call transcript