OSG - Earnings call transcript Q1 2020 | Overseas Shipholding Group, Inc.

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Operator

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

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

Sam Norton

Jason. you, Thank Good morning. time we period are a with uncertainty imagine more filled living the to that than difficult It's in today. all are lifetimes. affecting the circumstances of a as The result COVID-XX pandemic exceptional our in us of

adapt For all all difficult by changes this and joining of and us today. I'm challenges on virus that call to you me learning forced are of and this the you us, to are particularly appreciative on

this presentation. As are on usual, Dick joining and Molly McFarland Princeton Trueblood, Arcia me

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

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

refer discussion December XX, ended year specifically For on these to for we a fiscal the Form you XXXX. factors, of our XX-K annual report

we SEC, www.osg.com. shortly well anticipate as SEC's Our Form which own site the filed XX-Q at with first our website for available Internet being the as which our XXXX, are other of and quarter filings the www.sec.gov,

and statements, assume obligations to may Forward-looking legally except only required. to the update statements we in these as speak forward-looking materials any presentation as be any date not do this of

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

while completed, than quarter my today, objectives in financial remarks delivered been accomplishing normal results but and thoughts as More that in arisen have far earlier times the of just ever, chaos announced remarks. solid distancing how to are beyond this social the times. last morning, normal feature weeks future questions since OSG would from inhabits has we several these economic as can when lockdowns, in As that the my abound the important principal the move and our

achievements normal future. can and these past the respects, short-lived feels has discarded. foreseeable our be changes see recent in the in distinctly expect the COVID-XX we changed In lives. will to return to Celebrating a some

pressing matters day-to-day the these overall trading with since we that cargo well seen business aspects respects, other those with have to both most has permanently and interruption. our be material imperative. discharge onset assessment our our practices, Jones load internationally COVID-XX without Act, altered. and The the our things we focusing lives, become will direct which the over energies control approach on work uncertainty, has have In our of our entire and transit able to how each vessels face our interact In managed this of of of fundamentally we other

to broader to OSG's provide to respects. not can remember not This from essential maintaining women is the business commitment our be services one vessels. to the outcome our It is in testimony working community. We've but is on a that that men courage only remotely our continued the of functioning also done critical and all and operations, important

remains them Expressions is they our working priority. responsibility. with employees be for from is individuals shared provide make service number being made support for in of home. the one Keeping too what those we our Frontline done Recognizing of cannot do our this safe appreciation what possible respect the frequently.

which charters, his that and has in fully of turmoil crude well the demand to year time in refined at the market transportation entered but has current we provided the of oil as followed affecting As Dick more only both exposure insulation of detail fuel the considerable will extraordinary drop the from into not remarks, last end book product outbreak pricing. deep COVID-XX,

speaking were vessels XXX% Costs managed employed with the gratifying with that available be to vessels quarters. historical of without healthy is during OSG's that total eight as narrative today flow businesses we first recent available operations announced of charter in days And close of at have days strong. quarter, cash seeing a results consistent performance. for the levels to idle rates have were was give our we result, from the that, a X,XXX only credence of to It to employment. of the potential strong

of percentage and quarter, at safety rest all streams times which management high and protocols. health for developing the much will year, first readiness most the become continue revenue fixed important the have the Given to this of during sustaining challenges adapting logistical cost of of operational containing

it pandemic. and And a positive the or of of normal current their tested COVID-XX. have we found have of due have yet of seagoing result we necessary to all no for Unlike to matters. economy, the our for date, sectors our none full-time other to has of benefits. not employees Importantly, lay-off virus-related incurred employees hire salaries loss And furlough as work continued and to employees shore-based

new confidence crew onto vessel's which the virus in not that thinking both with crew the our is or within who getting are level joining Nonetheless, safety from escalating protects bringing not vessel assure otherwise first to and service. and their and we performance. risks affecting our include a under have our systems a affected stress manner presenting to and to acceptability personal member of and the that foremost, we that vulnerabilities highest endeavors the that vessels This recognize previously operate

passed, implement and and a problems Second, very from consistent port are all company once company coping can difficult relevant is delivery current period policies normal, working amount we the to we presented heightened to to achieve These with for by the disruption. provide real very least and and this And so common to that the services with to the crisis challenges the difficult critical creating environment. procedures develop with all of of port risks in constituencies from are that facilitate that finally, approach planning COVID-XX. new

procedures Heightened be be as Nonetheless, virus-related certifications and that cleaning, costs potential guide for this all costs increased and area. risks periods quarantine, policies higher unknowable as with yet immunization is managing resulting quantify expect in implementing testing, developing well an delays be new will of these at would to from accurate these the this anticipated. to in We are possible to and precision. time deal and to challenges. imprudent costs It with not past expect it

in In in and addition, face and supplies difficulty recommendations also cases equipment protective Reliability in well testing on mandates methodology at agencies PPE various of as and pose react compliance in critical and services masks with significant the to specialized effectiveness easily parts of as pose regulatory evolving spare of as seek some personal continuously additional risks. technicians inflammation burdens accessing particular operational they other our crews. to

impose time us Whether only and these systematic with ease will known stresses be what on cost they hindsight. with ultimately

better future guidance become contingencies and you As financial on the long-term release seek in to clearer, with these will provide impact. we their

the expecting or our Act. business, out on recent application legislative liquidity impact the results initiatives CARES not far as financial arising in effective are we of of position the our material any on As provisions our either

runs fuels to transportation Jones the demand we and unprecedented refinery the XX% from idle than at cargo demand Turning a below of Agency home normal stay arising trades, to the recent XX% an most in times Act at virus populated levels ranging note and policies runs levels. now of regions. in reports volumes for weeks disruption vessels, of Energy impact on capacity transportation in fuel The refinery U.S. derivative of increased reduced XX% of Information less our falling at out

wake their witnessed averaged X.X past imagine passenger from this four in XX% in V-shaped the in declined normal Over transportation of a that to health that day, forecast Jet expected XX% barrels indicates Clearly, as to below U.S. below ago we've demand. million levels demand not capacity. XX% new emergency. a extended survey consumption forecast recovery year the models year the numerous weeks, no operated A decline ago of gasoline fuel consumption destruction is flights per close motor fuel the levels. levels has

anticipated expected fuel X.X speed an has an significant levels consumption earnings gasoline of trainer more barrels in million vessels months, our fuel contracted recovery of to strategy. levels. for refinery. of swift the call Currently, an Delta. to shape Even in day and Delta's trainer normal. refinery their could the key three at stated The prove leave remains year-end recovery United Jet years one if important part below Monroe recover should take their in customers per our States, many to pre-pandemic not serve will jet are recent that Delta of fuel

closure a expected revenue would on both well on of refinery as domestic streams. demand OSG's Nonetheless, as vessel likely a this protracted or forward have material permanent tank impact

Importantly April implication indicates the in in begun for term. recover. gasoline week was of particular market Florida consumption optimism offers and consumption key for by in to OSG's mobility the medium some however of data and of bottom business states build the seen gasoline second in that rebound in cause has that Well the

is consumption by the to has are pre-pandemic XXXX. up year. forecast of to gasoline well consumption the near-normal this and recover expectations, levels the for expected to contrast levels balance regain levels Florida's broader In Diesel to relatively held market end of

put for the forward be with either product cargoes transportation on the place the traders to Florida's curve loaded and tanker dominance improving role in involuntarily to levels the playing crude vessels, market International record-setting Act marine as expected. those demand enjoy Given should or inventories. continue Jones of voluntarily for by by rates just no and trends contango remain board

spike A American rates reduction international business offers Coast, recently rather market Gulf used in completed East new cargo availability market. Act domestic rates. the the being Coast, unusual And are Jones a some U.S. highly tanker significant than for to and vessels in for in support vessel to storage in in a resulting South have development a transport move trades. Vessels strong

$XXX,XXX Company odd subsidiary Navigator per Suezmax. where has one Navigator, the seen to last crude sold was week shipped international on acquired newly highly the lower that impact was cargo that rate enabled day international sky-high a move the China unusual Our and TCE an of a rates of fact but ANS by Alaska the the of equivalent on Tanker Alaskan and

unusually rates of consumption to increase international conditions. the The rates. oil coupled indirectly in not crude stored for bears last. are with Declining once into these act likely future only delivered seen will recent product production market on weigh expected tonnage domestic repeating that is It developments back released the on high trades market

these oil. Chevron of the be oil over impact Three U.S. and price explorers of overall will barrels domestic XXX,XXX by as cuts significant to the crude the the end oil curb ExxonMobil, the combined relative of level plans on coming between the international in output of crude and biggest ConocoPhillips comparable much a of announced More American day the and States; months differentials cuts production United June. in as have the

production crude vulnerable the day end barrels Wells cuts. country, tunneled to the of the X year. about fields are more million fall mid-March per could than X companies Across since high has costs particularly and by by million cash per production barrels and with production oil already day

offshore We our by tankers. for of Gulf served shuttle the are field watching example, carefully Mexico

vessels Time from term in revenue the charter OSG these streams to these near ensure commitments consistent contracts. on should

prices, these likely in be shuttles available the response in However, conventional of persistently be to charterers. should tankers oil result shut-in, supply as could increase redeployed by low effective would our as be either tanker fields an these

oil months certainty, the too crude unfold much It with is supply, of know ahead. in how will and to demand early price

a However, perspective. to as the production prices variable price of international been always, domestic relative from the sustained case the quantity to Should critical several for as cuts. see we has prices most of at the discount our past of overall years. remains domestic Irrespective continue

MR in trade, of participate ATB, oil the operate. OSG's anticipating to from Maritime in of improving Program. within transportation tankers crude shuttle crude demanded. crude Flag that ATBS, lightering markets operating to U.S. conventional tankers, benefit Alaskan what trends we XX OSG Act Security two is XX positioned are consists which tankers the vessel tankers well continue fleet U.S. three oil MR and in Coastwise the be should non-Jones to oil we three be one two

OSG Marshall two Islands internationally. which flagged Tankers MR also currently owns operates and trade

has OSG for addition barges In Jones to May two delivery currently fleet, operating Act-compliant in the and on of October this ordered scheduled year.

for on the quarter results Dick? XXXX. with turn now Dick will call I provide to over to further you our first details

Dick Trueblood

Thanks, X. Slide Please turn to Sam.

purchased transporting Alaskan to They're we oil quarter from tankers refineries. X.X three During West the barrels of capable crude approximately in the million each. Coast Alaska first of carrying engaged oil

our acquired Tanker Alaska XX.X% interest a of we Company. Additionally, in partners

with As bears loan. rate a X.XX% own in result, and ATC. a financed interest a of $XX million XXX% We schedule. fixed at March transactions amortization we has these now maturing XXXX loan The XX-year

In Slide this the and We X. had the financing of that XXX construction of Please during monetizes excess turn in equity loan amounts March, late currently the also to This final payments closing. due. we we remaining will the under million drew be $XX construction. The at Oregon. construction previously invested OSG fund drawn will completed

expect years. loan and five-year during has a This occur also of We May. to the barge delivery week XX over last maturity amortizes

to slide X. turn Please

classify under time affreightment We in short-term charters continued and spot quarter the first activities improved of for contracts to environment. presentation our positive purposes. market time operating The impact and principally rate charters an of fleet reflect

the rest were During time quarter, long-term a the Act short-term Jones of charters. while under time Key the on operated candy-size our West charter, first tankers

TCE quarter, for or grew March the Sun first compared West quarter Gulf Key of the full to from Alaskan from fleet the Our of and revenues XXXX. benefited our the first three Coast, We $XX.X to of XX% additions quarter when Coast, XX. tankers million

million quarter. Offsetting up end, to rebuilt for Sequentially, fourth the year we our this year. reduction quarter last the this ATBs operating ATB were sale scrap reducing to After revenues continued rebuilt one the the was ATBs of completed the X. TCE $X.X from from in

days Israel for increase dry activities. first responsible were didn't the Alaskan quarter of all voyages, higher tankers dock changes late anticipated increase as other experienced in other. We included while fourth The and an any. our include three as Government due in the offset the added quarter quarter one to The

the XXXX. from $XX.X was of million first quarter Adjusted $XX.X increase million quarter, EBITDA for a the

a in remaining in part and the in resulted million termination of net As terminated. $XX.X a We interest tankers, Alaskan acquiring pre-existing all quarter. were the recognized This ATC gain time of first relationships the prior transaction three charter gain. non-cash relationship this

the Coast, Alaskan this Excluding increased higher XX% EBITDA first Key almost in benefited charter Coast as XXXX. gain, and well as quarter quarter and increase rates, of we operations days tankers. the time from from West adjusted of of We Gulf experienced Sun a the our late the addition the

our quarter, earnings Government annual earned And it's the Israel fourth million. recorded increased during the $X.X fourth quarter Excluding adjusted by is in we purchase concentration when for sequentially included conducted EBITDA quarter. in of the of fourth of again $X.X the million which no the quarter a from such while AT, Israel XXXX three of voyages

XXXX tankers. of West, Although XX and three quarter and mix changed, reduced first late vessels Coast, quarter Sun and full the quarter of to XXXX. third of ATBs for rebuilt operated we number in Coast XXXX, Alaskan the vessels and the we of the operating the Key the the have In added two Gulf

XX. slide to turn Please

a of on revenues The XXXX revenues million spot market Effective under day compared $X.X granular rates. time XXXX. in from quarter. quarter of sequentially OSG rates and increased the XXX business the due for TCE XXX charter the during quarter to higher TCE more and lightering operated increased our fourth at to the both first Looking utilization activity primarily increases OSG in basis, contracted XXX fourth our

million the $X.X to environment. due rebuilt rate increased The revenues from our TCE ATBs increases in

decrease voyages had TCE the compared XXXX of non-Jones fourth the Our tankers from reduction recorded to due million the Government of a quarter QX. in Act that $X.X the quarter to we when this Israel during revenues in

effective market reducing of exposure. our days charters vessels by for We the days, spot maintaining operated of time XXX of utilization number the under international

tanker XXXX. $XX.X quarter revenues driven off-hire rates. Act the Jones decreased first quarter days increased Spot rates to in in fourth equities. TCE drydock million increase resulted effective fleet market significantly $X from million Our the by an to TCE of This from due increased

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

$X.X from was activity. $X.X revenues higher utilization by rates the to reduced $XX.X Act tanker to The revenues higher driven million spot market presence, increased Conventional driven increased million Sun increased the TCE Coast addition This the by time of due non-Jones Coast. and Gulf tanker million. charter

tankers our XX revenues added March days Alaskan our on they three Additionally, in $X.X contributed were TCE the XX in million for fleet.

Please XX. turn slide to

fleet fixed spot portion a time continues We of on and continue charters our operating widening to between spread to of as see increase. the a earnings

continue. charters likely With operate Alaskan tankers which expect will all the trend we addition of time of this that on the

spot represent a spot tanker time our activity classify tanker to Please market total time turn revenues. portion single quarter XXXX charters decreasing slide from short-term XX, of spot conventional resulted the short-term the of TCE continued in and activity market to first revenues a To to charter.

slide our stability earnings Gulf to as generating the to turn XX; Please OSG for to be been true in in business provide overall have we This successful continues our Mexico. businesses to operations. the which continue serves of XXX underpin

Act from days. non-Jones of the tankers first the drydock-related decreased due quarter the Revenues the the quarter fourth revenues GOI for the it tanker year planned to ago XXXX. as decreased off-hire our decreased quarter in during due shuttle lack quarter Although of voyages to from

increased as TCE $XX as the XXXX increased QX XX% expenses Please Vessel to revenues $XX.X operating in expenses contribution charter is operating turn $XX.X from XX. or slide million less which contribution Jones to This higher The defined and higher million the contribution to vessel as rates. largest vessel million tankers. the operating the quarter. reflects employment was well conventional contributor increase Act the charter current time our from

reduction base ATBs contribution rebuilt tankers partially tankers the high of the the overall at rates. our of and of our remaining offset all quarter provided late to at acquisition increase Alaska three The strong reflects due quarter in a addition by utilization increased also operating

$X.X operating The our from of from an our Alaskan market tankers Vessel operating niche activities entered contribution provided increase after they days. drydock-related fleet. $XXX,XXX off-higher resulting in million contribution decreased

operating XXXX. Alaskan for increased from higher lost rates primarily million to Jones The vessel declined were revenues. due $X.X QX from inclusion Niche contribution fourth quarter the activities tankers contributors Sequentially, the the tankers. market increase increased off-hire and Act of

XX. Please turn to slide

adjusted for I EBITDA Anyway First adjusted quarter compared sorry million the dog. -- home. $XX.X of EBITDA XXXX first adjusted of EBITDA benefits, That's working was one million. quarter $XX.X XXXX fourth to guess, of quarter the for

quarter XXXX our the of associated gain acquisition with tankers quarter million first aforementioned the included The ATC. included of profit ATC. of The $X.X the from fourth in distribution annual

quarter previously First to the service $XX.X QX XXXX. shift fleet adjusted improved across increase new and EBITDA vessels The from quarter time increased mentioned $XX.X rates entered that first the after XXXX. due million in gain to increased charters from resulted the million the utilization of

$XX.X Please for new of and the as quarter increase first the quarter described of net the in the tankers Jones the net turn compared million million previously Act in to as tankers increased XX. Non-operationally, Alaskan was Operationally of Act addition drove increased $XX slide gain. XXXX. to income Net XXXX new well income. TCE income the $X.X from non-Jones earnings came -- of tanker revenues Act of Jones first million of recognition the the

XX. to turn Please slide

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

period, Technical staffing third-party backlogs their is revenue process time been deferring activities series use, have work personnel unavailable even accomplish timing load vendors of a or to drydock days and otherwise While a a certain ETFs they the related flexibility. are drydock their COVID-XX off-higher of issues number repair sustained. because to This challenging. this is We they it's of has time has throughout This COVID-XX from need reduce scheduled unable of necessary vessels quarterly if drydock chart. travel through on Shipyard to minimize are understanding aspects a industry. will resulted the particularly because employed to likely lockdown. estimating off-hire are year maintenance on the of to of agents. continue in to that been otherwise the for basis the to in

for This slide of the possible change to year. remainder It these timing the drydock as even would of presents estimates our timing. perhaps that activity best likely estimates the of is

will although the timing We expect the the reasonable remain that estimates. of totals shift, annual

and for lasting the which $XX.X be includes We systems acquired ballast will for tankers treatment in that XXXX. $XX.X our will XXXX year us. three be active in million drydock an investment expenses estimate water million recently drydock

for will of minimize in the endeavor to Again, in $XX experience from lost full of resulting work days. this expeditiously approximately revenue off-hire process higher million all occurred year number fee days lost We the XXX cases, cost the to in we through higher revenues. plus

This the the slide to the the presents date amount remaining The we turn million OSG $XX.X quarter. when of made $X.X Please progress timing estimated on of payments make on payments of future At to end XX. actual depend the quarter, million for achieves payments, and in the milestones. cumulative of the slide expect the on the and of we XXX will payments progress progress progress each required XXX. shipyard first payments OSG payments had

As will for OSG's obtaining equity remaining upon be the previously from OSG XXX all loan. this We OSG quarter the XXX financing the we delivery. OSG funded be payments in the XXX. during similar $XX.X million will discussed, financed and anticipate approximately

might be not obligation look on as market stated, future sharing profit turn change profit both. rates. rates occur anticipate provides share that estimates has no TCE to assumed ships we do And XXXX XXXX. our information There for slide average and Please that the may we will estimated any The to profit at amounts been XX. bear XXXX. through AMSC for sharing in we've be based created future for as what of here timing the picture We to chart previously

a This rate approximately per rate be The we payout of would required if XXXX, XXXX profit-sharing create obligation an in $XX,XXX to across no achieve there average $XXX,XXX. of would aggregate result profit In TCE AMSC day. the an average vessels, is minimum in were to XX,XXX sharing. XX

Years range. beyond Based the obligation here, the the the year XXXX. earned assume the XXXX first was profit on that year market trade for in would prior rate exist is assumptions sharing

Given rate $XX,XXX. average achieve would year used, $X again, XXXX of the the the And here $XX would be using profit subsequent the any earned. Profit necessary XXXX assumptions share the assumptions share be profit minimum paid sharing sharing profit level million. million. earned in out to is payout to The in to in year be

worth noting are that be Finally, a assumptions variety The is have to if made. recovered certain in factors costs This it's complex the minimum share to profit meant and of of rate are involved. it result on declines. will possible chart indicative outcomes-based calculations

of slide Please cash We XX. $XXX,XXX $XX including total XXXX of restricted turn began million cash. to with

During quarter generated of XXXX, the adjusted of million first EBITDA. we $XX

debt issued million quarter, we the transaction of the issuance Alaska of to finance in $XX new net During the costs OSG XXX.

drydocking effect of non-cash improvements other net The the $XX and discussed. of we've is $XX million gain the construction and to adjustment extended million to CapEx. the We our remove cash We in acquisition. extended for on invested million new We vessel received million $XX $X vessels.

repayments expense $X with million. We interest cash $X million result incurred million million also of we including of quarter $XXX The ended made cash. restricted in and the debt $XX.X of

cash. previous we at on to turn of million XX, mentioned March liquidity we discussion $XXX cash and slide, slide the as of XXXX Please restricted have our XX. cash including $XX.X Continuing million of

of million million. $XXX has per from December times. of December indebtedness represents is loan XXXX. A no a or increase $XX $XXX in This of one With $XX This term million was XXXX. million debt equity since an million annual $XXX net quarter. net million $X.XX XX our ratio outstanding debt-to-equity change represents amortization total Our requirement

the the we sell term planned loans. quarter, addressed one that was them during they It closing the lenders expected were of acquisition. able to was with shortly XXth. one prior we to be XX time of As for after frame. effort in our that capital would in our completed of expected to then They not our interest complete the transaction first March to structure it complete The an vessel our

the not a to $XX that In has were financial XX sold sale of within activities disrupted used portion could COVID-XX it transaction. loan the escrow that order support established to we a including process, prepay be if many proposed million days.

being escrow a still As result, pending our sale. the is

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

Sam Norton

Thanks future call. remains remarks. of in Dave. to my this the those The of and the interest most majority in Returning on theme topic listening opening

As earlier, state with noted regards and uncertainty unsettling can things future. level the currently markets are we that of the greater. confidence been about the forces there the that of ultimate Nonetheless, expense, never duration has are impact certain our as to some immediate

days likely into increase visibility and This Absent contribution the Our through as element of tanker vessels quarter. caused the equivalent become progresses. made end by of degree these key time company the days days available the contract for of the quarter obtained the the benefits the charter We've the gives of last visibility a year. potentially at vessels earnings off-hire events. year. of during employment for virus-related year XX% balance contributing by of in covering coverage balance this forward Alaskan this three the will is coverage employment available The rest us of current remains The expected contracted contracted of of to an this substantial more XX% the operating time transaction year. charter be apparent operating the earnings for of high for purchased

million vessels of the sequential -- an our quarter time to with our be of this track earnings $XXX we should within the squarely For equivalent first gain to gain A on year. the quarter first results due earnings charter this together half of achieve basis annualized us $XXX ATC through of equivalent Take to million to quarter, put contribution. the small first results second range quarter $XXX incremental on of time over million. the charter primarily expect first full

provided Similarly, million, adjusted level reach year EBITDA ATC exceed related expectations we half consolidated accounting our this first half the million. year ATC expect again our through the for last of effects year to first transaction the the which EBITDA quarter's a full this the excluding tracks during of accounting, $XX transaction overall should closely call. of to gain $XX Including the with

of However, the second quarter the end picture beyond less the becomes much clear.

of COVID-XX in extent and be known protocols demanded new operating cannot adapting is environment costs the this at not to time. The active increased by a in incurred

impact hopeful no the what are can these we or what there in may knowing costs financial simply the of be coming extent may full contained, that is be the of ultimate required While be. way months

many underpin charter Similarly and forecasted range while the actual analysts second year, possible at rates continued on of wide we is outcomes achieved over to are possible serve will time. optimistic rates strengths, unknowable the time and that this impact this the by recovering of spot half trends

fixed a for percentage large flow should a profitable to overall. rate cash and in range contractual the days to must and operating the spot wide possible results open utilization The market solid which those assumptions serve Again deliver cover of coming months, vessels, come of scenarios.

factors stay we Providing unless and Like under we conditions will topic with can until certainty prefer to shape many, understand the that on helpful is guidance more key these future. difficult. silent our

entry healthy environment, two demand are new new market no next years. to equilibrium. uncertainty, given high. will several order of normalized the be delivered delivered fundamentals year, any demand within is the be our with or And The the to exception consider entrants continue barges to on heightened for this capacity remain prospective the Notwithstanding, we new barriers a of in our that

building yards domestic contract of a taken Act to has Significantly come contract other capable to the for government build a to vessels Philly on of few exclusion training fill tankers the which could Jones years work. shipyards, one of the yards

the tying design on Marinette to in up Detailed will its missile and construction frigates. produce Marine the to delivery recently first design May of April and of the than awarded Navy class frigate for domestic start up further ship next-generation to start contract XX-guided schedule XXXX the in Another later capacity. with a no XXXX, was yard Corporation the construction will

quality valuable and times, our Safety customers, very all, our thus OSG's supply asset. remain, The good above remains community in standing is focus of the difficult service a sustain of peers ability Especially promising. key picture our the operations. our and its to side in consistent regulators these

place is of the of in achieving our ensuring of also and the both success and goals culture of highest our on employees. commercial maintaining measurement health protecting our all environment achieving the importance established standards we one safety paramount While

harmonious Our the overall improve Alaska to standards. promise is taken Challenges its recent as the to to Tanker to have several But positioned performance remain and Company acquisition current adapt culture these sustain to opportunities. company future, well OSG's steps well with years and the the this believe the environment. past of of over we

invested in sheet, contract at have our our and improvements measures. assets, lengthened We material operational new rates, reduced cover in balance our safety costs profitable achieved performance strengthened and key

the environment. We focused steady in on and are performance health COVID-XX high achieving

business the OSG's greater the we operator immediate While vessel uncertainty as the our Flag we ability success long-term years leading foresee confident in maintain of tank to in model in and future, its U.S. position of remain to come. the

up Operator, call now the we to can questions. open

Operator

Please Edge. Investor’s Mintzmyer J from comes question Value first The from Instructions] ahead. go [Operator

J Mintzmyer

on Hi. Good a fantastic quarter. Congrats Dick. morning, and Sam

Dick Trueblood

Thank you.

J Mintzmyer

your being I environment. the comments EBITDA COVID careful long-term so, of forecast Yes, understand considering about

quarter, little out. this million one-off that So getting reported about super Just mentioned backed about EBITDA you bit the $XX because was high million first down $XX you to for that $XX the but I'm million And drill right? then, half. of into gain a

it charter contribution. that there? get you So, bit as time revenues and there you Can missing to that? Is even the something go little EBITDA like down full a up quarter-over-quarter speak we're looks Alaska goes

Sam Norton

things. couple one that of take a I'll Dick. There's

And that the to drydock also normally But for quarter achieved open that reduction lightering have to charter. a vessels the That coming really time the days in in be reduce the we're been anticipating That's we revenue. with quarter. the second some Delaware Bay. some function have expected would refineries have vessels volumes more that We in second would there. seeing throughput in the the we're market reduced spot of in

the been of the example XX% from refinery middle As an its Delta Monro of at has about trainer March. capacity operating since

to the refinery through So, dropped. just has crude the of moving volume

have But accrue minimal the provisions the for that contract April take-or-pay contract the of with makeup the the do end that at the delta levels don't of We We on is year. through get that XXXX. we quarter-to-quarter that Monroe only account runs the kind to of through the performances. way lightering at

going from barrels a reduction for we're moved be looking view volumes probably some revenue at of there. of actual to and So there's point QX

J Mintzmyer

some take-or-pay. And understandable. That's on make up you back in the just Okay. that said of QX

Okay.

to Looking didn't understand year, forward want I for the rest you of the give guidance. full

You are mentioned we to that are happening already Is your impacts. what's impacts just some that don't really financial COVID-XX potential you Or conservative business? happening? being there saying, and direct know

Dick Trueblood

other in related and increased protective personal seen difficulties moving yet have of costs smaller equipment people of sort we than around. to of logistics kind So,

costs, broad context We not but the to have material performance. are overall largely those increased in seen a

for on vessel greater Our or of COVID-XX. ports happens a what procedures members to how positive to going evidence concerns if vessel relate board of are symptoms test implement different their really for

There's how the -- discussion the given that services there is in agreed But nature they should of about at provide. this vessels sure it making no of lot deal time, industry policy consistent to that approach eventuality is to arrive. a operational the no readiness essential of the with is that sustained or there

trying a the at over in in happen this Uncertainty what given there's the be a I between Bank to And definition XX to Governor and written the as uncertain, by way. environment. all there's they evolves of this certainly guidance K being and England recent we of make about understood that that the the to next may answer is are COVID-XX reasonably of provide half -- the Co. uncertainty. cautious long-winded be really question of spectrum and and the risk months the King, of speculation distinction in lot think year. Ruben systematic could kind uncertainty your in and So a book as uncertainty can of of former to gives a see the measurable six risks by risk country second John us unfold And outcome of

J. Mintzmyer

Yeah.

of any back doing up perspective? of piled ton regular floating to in recently VLCCs just Hess floating that the makes of you tankers some about a are storage. There's Or certainly VLCCs. you has that to contracted is lot of contracted Jones been a course, from commentary, think sense. action I There's work? offshore California. logistics storage Petroleum Have store crude. Act Oxidental gotten

Sam Norton

any notwithstanding, We haven't -- press seen the releases.

Act Jones vessels into put We haven't seen storage. any

So no we have not.

be of into Jones on some two Act vessels, seen Act some or normal activity The trades, other out not taking America. been of of our but Jones business that voyages. South continues Mexico product vessels one have business. has But vessels We baseload on Gulf the of its to moving into international

J. Mintzmyer

reading is that And in of profit in final me if a excellent. and the hop first to those queue Or been extraneous My tankers saw Alaskan me. heading over I time you just BP correct? understanding question all the Okay, behind then for that any that and some bareboat Asia there's I'll perhaps getting we've trade then that the way some happened about those, and charter activities? else someone in while. you're Do has BP? from operates on is is headlines

Sam Norton

correct. those time to BP, charter vessels your is conclusion We but

may get and the fixed irrespective a paid rate that that BP for. rate earn rate that contracted of voyage, have we day we've fixed day We the on

J. Mintzmyer

I right Thank the else case underlying, seen day behind off questions not but eye-popping Okay, in a rates I'll market one me. maybe in have makes few jump it's sense. the has a on recently. gentlemen. rate we've great you that Yes that's more

Sam Norton

Okay. Thanks.

Operator

Please Ryan The Needham. next from go ahead. Vaughan question comes from

Ryan Vaughan

balance to challenging sure and I that very in that taking everyone just to jumping to million. I team for you $XXX the guess sheet Hey, just with my was the $XX stayed guys. glad very balance shutdown. know Thanks I'm the country credit over Cash million logistics navigating hear very, and have strong. for around healthy call, what has account. of escrow

it say Sam. even some I'm completely of a as looks the in ballast fund XXX interest the would payments really current back half and the running year. could understand uncertain and the like or water It's mentioned more I had ops and drydock you bit the cash funding, calc But just less rough XXX payments. even Dick little the But the remaining you

similar you're million that balance cash what I'm but financing curious, XXX, did the how also you how doing thinking just So to thinking you're potentially forward? about about $XXX a $XX million, going with

Dick Trueblood

think we cautionary. I -- this of look it's at sort

observation in today what least business your where liquidity are is of over second cash occurring. wise of think the But year reasonable I the if the are of we something requirements the half plus and to terms the for different of generate somewhat from I for plan the would expect we think be cash what year. we at second did remiss half we

the better put have so today XXX. the to the looks direction the down a have And of little we less we'll look if looks on that's that towards possible at unencumbered. would XXX. it go not be vessel financing proceed kind different much And might path outcome a financing than It world and then to a leverage in or

Sam Norton

I just Ryan to that. can So maybe add color little a

on companies turn moves I a can We towards in a positive. that get many flow You've marshaling mean our we we year. cautious that the of asked coming as be flow in have like this Based looks we beginning positive the year, before cash and us some that direction of at the calls. numerous environment. what be comments prudent anticipated a the I the our cash about previous free liquidity The are right question that made trajectory see true base clarity half times us that to projections to doing case as a earlier, reason more to seems now. future to therefore second

improve. in remain As and conclusions Dick then that I think, position the develop are if half second this liquidity and way in correct robust are you will a we your our said, probably move through you year of things positive

we're cautious that's So their positive. our counting again, hatch. very chickens about before all But

Ryan Vaughan

-- And my Definitely then understand comments questions. there final of in that. a your you Sam answered couple

a said quite it's how Just about again, thinking they're thinking right May? XX% of now? But idling feel like XX%. the today but year, you XX% maybe can storage Thanks. you if know are better. makes asked increase drydocking? some is just also you're your scenarios potential I where early not are thinking Obviously, how just caller that remaining available us the the needed small, about taking the it rest lot to just ships you sit you But stuff. you those about that think, about prior Are the you I about of So in contracted. talk, where in thinking

Sam Norton

come The even are general, to around comments unfortunately has his kinds mentioned equipment, the or not surveys. technicians complete available. can equipment In a specialized flexibility equipment of dealt technicians travel. Dick in technicians there to made be services needs can't to of will to drydocks navigation that shipyard with that services. that open other But of need are service and as these inhibited automation all be during some availability The move by been that yards lack

impossible, frankly. So completing things these that makes

So with been extensions the on having to statutory actually drydocks scheduled defer agreement days. we've getting drydock of ABS

what's As to we've forward tried to going availability. happen see roll to the with shipyard waiting business

like So, I we maintenance would utilize periods downtime, of take or that downtime complete to whether in ideally maintenance. to unplanned mean, and planned

achieve. to months over that's at probably I next the to next the going of realistically couple be over think, least difficult

in out off and circumstances, demand vessel laying The and two to a context. we circumstances other seasonally thing sending home perceive usually our consider low we usually that is the other slow summer point in normal crew the cut costs trying in that if or to I'd is like for instance might are months could

do to Our looking that. be that is thinking to right now on probably not

short-term of We and our stability that long to benefit skilled working employees are and think to continued people at the think good run. that we a the period retain and a investment. these providing in salary We times that's through keeping highly least want in

it and And at vessels in the that where our the becomes this managed so at expense vessels think not lay-up of reduction there's is is at clear not this a even juncture increased if idle for crew juncture lot of at times we market or least I visibly of least playbook. see

been. some market volatile is transportation is right on rely it The So internationally to employment as as always international earlier. two comments, across with We ability has those Gulf. to said fuels the extremely these principally our is opportunity of vessels trade There I now. for maybe find

Today days ago, was $XX,XXX market XX. it's kind day. a at below MR of XX the So

workable whether figure-out that's is possibility to on. trying an eye a keep we So something that

West Key of Gulf looking New the -- we're Those York. There's cargo directly there's for are arose Coast types spot and between market also on an arbitrage week. open opportunities. We because on between that a $XX,XXX things last in disruptions arb us diesel rates took at were of That are tankers the a that did help just recent out. our day to market We're to that. a day we the under remain and -- of quite strong. spot The excess in looking keep from most on pictures going The just the ATBs. $XX,XXX

have to hopeful use the that we maximize So the able be we'll uncertainty that. of to overhangs and everything vessels. mindful pretty we're be our But of again,

Ryan Vaughan

Thanks, year. this, all best And again, through guys. rest of good. job, and Sounds Thanks. great next quarters the navigating all the for coming

Sam Norton

you. Thank

Operator

from from question ahead. a Please Value J is go The Investor’s Edge. Mintzmyer follow-up Next

J Mintzmyer

the ones the Thank taking there. you figured left. I whole in some good had Ryan lot question. Not hopper a for

the year those Act last several and like those right out? take drop actually just some, special much it Just Jones rates there's to haven't those and what that's to two good strengthened take stuff slides rates? balanced in ships how questions. knock it out up had will seen or showing right? Or But coming some the One the balance of the when XX-plus think a will in maybe of, fleet because a But you have aging you’ve on take is finally very leave fleet? you get of demolition that Would those sort do surveys we fleet couple vessels. of

Sam Norton

take crack significantly. contributed the to Actually, we've in I'll fleet at reduction So that. a

had operating. initially that older ATBs ATBs As Dick alluded are rebuild to eight or we

We now one. are down to

effectively time, three older on So that jump removing Those When years, already the been you from them has for of at have over list, couple removed the operated by the contributed owned Buchard have that and lay-up to are mind. I some Navigation. large to -- OSG vessels vessels we've the ATBs itself seven they believe two in nominally the There market. look a other been from last ATBs market. so are are fleet

ever vessels the but return market. general What those the may their is to what are not likely happen, future is at speculation to consensus

of So market two four the and facing they're that couple think there's three to for Jones there's that group is decisions right been there's survey to a already in understand that feature supply have the already I watching future vessels lap understanding those half been or I the But and will if drydock tankers the in out. picture have There next the of long-term ballast ATBs in treatment are vessels or And in tankers one that a months couple probably medium- may take the or Act. the vessels we're in and be. water years. are not last you their dozen Buchard what probably think XX

getting end reduction so later. phase last the through and that. we're after after off dozen XXXX two fleet the Most of So the it been we've in as over built the of that actually young of vessels three fleet obsolescence the table, the half midst the the you years. towards And ATBs is a or those is pretty take are

are All exception still two or of that aged the tankers are of three later. built or with XXXX the

the -- the Act perception constituted common Jones actually it's has currently that fleet -- unlike fleet. pretty So been a Act the is Jones fleet of young

J. Mintzmyer

seen slide at And XX balance. tight sense. makes a certainly It's Yes, there. looking it's

are of Good drydocked. valuations like Look already looks those will from Final it me. to your itself that it are out. So note question compelling. most work

pro forma that. we If comps anywhere better EBITDA such are guys to and some seven EBITDA. around maybe XX somewhere pure pure around and value trading minus, look enterprise times cash, from Morgan And to be have in if this back enterprise you the but out don't or comps space. Normal under might is in Kinder to again, tankers, even has you value times, core but comps like times end we pure of look to you we times XXXX, plus and at even do -- add there four

announcing little But multiples today bit maybe from trades, have it's understand would launching better I right, trading are XXX. I per the a extremely that cash some traded range this of you cheap. unfairly, of any you $X.XX sort take XXX, in big close But guys help near extremely a at Or in you anywhere the it's That repurchase range. to could to program get maybe future? that any of time. past, the to mean OSG But share right? into look a $X.XX there that or share important gap? balances is thought actions

Sam Norton

answer and usually consider get past. important the over. transition that's hurdle us to to have said Ryan's flow for or business that will continued debt of cash health as question. a the flow the some topic Ryan anticipate year. the So mean And generating this either feature next our if considerations Board's as flow to year I'll reach free anticipating milestone how We this if I But the get capital in That assumption will significant XXXX the shareholders confident will and can structure the being it so will answered we half And conversations of second and improve in end And we cash is I positive a looking genuinely of we'll am disposition become for cash as in an be transition earlier and into us our of that conversation. earlier truly this year. in I to favorable calls, positive. and that of of beyond that with reduce year, free half better to as in capital performance to towards second return of the assuming and unsold. that be the case, anticipate the to that XXXX and

J. Mintzmyer

guys so the at Sam Ryan OSG Yes. Excellent. turnaround and done I looking good a figured remarkable forward Anyway from him. the Dick usually up I picked just ask we're fantastic Thanks work really to future. you and questions, baton here have guys.

Sam Norton

that. Appreciate

Operator

concludes the There queue. Sam turn would are in for closing questions more This any conference to no over remarks. our to Norton session. I back the like question-and-answer

Sam Norton

in good today's and the Thank to a year. as Have in forward to look again you we thanks day. again with everyone later always participating speaking and you call for

Operator

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

disconnect. may now You

Overseas Shipholding Group, Inc. - Ordinary Shares (OSG) 8 May 202020 Q1 Earnings call transcript