OSG - Earnings call transcript Q4 2020 | Overseas Shipholding Group, Inc.

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Operator

Good day and welcome to the Overseas Shipholding Group Fourth Quarter and Full Year 2020 Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Sam Norton, President and Chief Executive Officer of Overseas Shipholding Group. Please go ahead.

Sam Norton

Thank you, Sarah. everyone. morning, Good insight joining lie of for results this on opportunities commentary call for our state Thank and businesses XXXX us fourth presentation the and additional provide our us challenges year the quarter the current allowing of that you and to for into ahead. and and full

the X that regarding call. usual, Trueblood, provided forward-looking consider Molly like statements, joining X narrative of estimates and presentation. of this urge on contents I and the PowerPoint Dick on other Arcia would are are this and presentation Pages information As everyone our To of direct to presentation narrative carefully. important of the to read part maybe this website them course that everyone an me and and during The I Princeton on start, available McFarland to

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

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

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

our petroleum measures XXXX what constrained movements define for the fuel particular, the comparable financial well presentation barrel severely most results memory. levels. production operating crude during our in one Transportation OPEC addition, on was quarter demand year difficult was which website. coordinated of the products environments we impacted certain jet GAAP non-GAAP were met fourth across throughout by reconcile recent The full to normal expectations financial in Demand which delivered below for OSG Global fuel clearly our release, year fell posted most today by by pandemic. earnings demand, and is closely In cuts. measures, the in includes the in ongoing

observed have In addition, builds oil demand global the for vessel suppress XXXX of the year, of potential OSG’s and in fuel into further today. performance inventory acting much were to operating the during clear platform that we products. insights earnings assets offers transport

revenue the resulted streams flow stable percentage XXX As our strong year, revenue in only of well our from acquisition from barges. days niche our nearly XXXX year fixed the our high in ATC and operations during past of year both plan OSG’s revenue partial from lost operations, to drydock as as in in cash considering a when communications highlighted the during businesses investments contributions much performance new and particularly two

for to hit served demand strategy the the results were these us industry The be of During groundwork laid of our the the from destruction realize of to in that investments chartering able the that full to chartering XXXX, course gratified we market XXXX. and insulate much also the strategies fruits year achieved.

been and sustaining management at times. important most all readiness have Our challenges will remain operational

to we on to delivering for of board extraordinary vessels. imposed a vessels free of firmly continuing of outbreak, the Unlike the proven significant or rely days demand have keeping the of and Once any now moved a loss deep for to into of have virus Just pandemic charged on in observable as the us however have take the with COVID-XX has be experienced fuels are XXXX these shipboard upon charter community personal further no Domestic with as experienced in transportation COVID-XX past. safe disruption incurred The those environment refiners case as seen OSG’s risk our positive recognition July, the shipboard and of granted. hit should fuels. contracts and time one and individuals results XXXX, that us XXXX. the needs commitment insulated a it. been distributors not has again, successes demand industry our last operations been our book test year, We hard it essential on not consequences for services affect from any a do board leaving not entering COVID-XX. to element as we The pandemic perform. given to transportation early be of COVID-XX expenses by hardships remained driven in has have to result revenue continues less and drag

to past year much the economics, Although have served much refining of fuel year, past throughout suppress for transport. of demand production near-term levels – and tanker collectively reduced the domestic crude inventory high

of conserve order the our commit on risk lay-up charters. to with has the glut The inventories of only to developments. swung of vessels poor the future, time biggest demand pendulum the until distillate demand, crude X has situation flagging obstacle prices. been of undermining have immediate in is distillate to returns. outcome improved inflated That output to transportation customers’ addition face OSG of caused to margins, the reluctant the felt middle weak crude to being caused demand and refining place to crude have costs has middle have spreads in Focus these and refining distributors margins, of demand, and refining recovery demand. the in energy aversion In extreme. and glut long-term concentrated fuel the to Cost-cutting margins market Refiners increased the sting and reduced reduced our

decisions. not alone We are in making such

entered one-third will of the ATB and or committed be have segment laid of large Within of the is capacity the been Chapter of last tonnage protection fully the is half up available without year. Act Act XX One second employment. expand. during to the Jones operator industry, Jones months fleet list of soon Act recent observable tanker Lay-ups ATB set surplus and in Jones

dramatically missing XXXX follows. and works currently and into cause effort demand function of The ATBs early across up demand ships and large Jones summarized as but of years in imposed extent, our a laid across of are reflection lack mobility a not, its true has impacted as conditions high the large in of Further, its excess XXXX. to All develop XXXX. refinery in on to much recovery customers fuel restrictions demand impeded percentage demand to of an to Act way the in transportation a fleet operating product was for gasoline. past, is barrel lack fundamental true such the resulted a distributor into fuel and large a explanation A the a low the supply. products, of administrator use current two This normalized especially build for jet refined be That of spread the restrain a for of can committed refined as inventory COVID-XX product end a for available plan. lesser summer of the for inventories our reasons. on the employment satisfactory of level of find

running those production First, runs until high new well in normalized already Refinery inventory down. markets, levels are utilization are below making run inventories thus unnecessary available rates levels. consuming been have

the see data, of recent averages A levels the of Bloomberg already very as context relationship the freeze early to are both including would the refinery we crack trends year particularly inventories from following: transportation causing of our crack well low of view. data highest in much have the a spreads and creating in demand trend up demand variety substantial in their February spreads geographical and affected, vessels Second, from last this for of a how these we of reduction stage and crack analysis Department rates short-term on return set demand. finally, in at produced indication of margins. the the show rising their the Energy and located, still the approaches. supports levels. gasoline trends caused an that regarding refinery in outlook you Texas on historical implied products for high-margin recovery. of But those and uptick looking normalized in has sharp with rate, of the including stages to product inventories a profit as return, I spread this points, was improving the will in those to refining when inventory, drop summer, be for pre-pandemic and demand on These In to implications In summer particular, demand. demand it high the sources, all specific a walk level distribution our as look consistent refinery from end-user in demand will is the conclusion utilization low outlook refiners by are from and production data presented be the recent margins a where our in route. low impacted data that disincentive transportation utilization the peak its data much through of We seen the for to output products – last at frame as of demand

rates The for inventories improving as Jones in includes The charts specific capacity. and First, is refinery is the illustrate market from installed sub-index PADD rate. the a by Less XXXX levels utilization Xc, in Atlantic ending impact of XX Slide X inventory. drawdown the meet should has start increased level When to utilization According onset continue should depicted shipment. are faced A particular consistently produced. from rate being The demand next the in ballooned. product and lower to recently on from were range production will XX% demand slide, trend in the lower context the of left freeze. utilization produced utilization less the market further XX% mid-XXs on right Texas of Florida emerging the observable. perspective in the to the XX% demand. the pictures of be PADD XX% utilization is is XX.X%. problem the X normalized presents inventory the levels business. state main X, they product be but refined freeze is domestic we refineries The than for during let’s X the are product the data a served seasonal, been with week should still chart which rising demand graph perspectives. the in percentage rates the on gasoline environment. half utilization viewed that Texas to of chart Refinery less product recent to in refinery depressed refinery rates, means the and rising since EIA, on second of below inventory line fell need between and the More overall below that the X return the COVID to during These March indicates on The of our inventory by Act rates U.S. suggest the of Slide low two historical favorable promise refinery tankers. in inventories the met recently, presents rather Normalized

have Looking levels nearly or XX%. inventory specifically at the recent nearly weeks in million gasoline sub-index X.X barrels in Xc, PADD fallen

being continuing country. of particularly season. normalized have While is rates. Slide the vaccine weeks would across return swiftly a has our We lack emerging Gasoline at the car rise recent the and in rate home, depicted COVID we Index distance restriction. being level. say results by all true are the X From levels rates, here of Bloomberg importantly, sharp closures The domestic impacted widespread of imposed to driven we a rise Florida, been implied work shows restrictions by all this the and as reduced consumption in related given accelerated in been to observation and by continuing currently – demand state the school long from penetration has mobility in recent gasoline impacted also gasoline refinery falling in inventories reduction clearly utilization see this in demand implied demand travel,

the encouraging right recent on suggesting a commuting in uptick As slow this signs of this to chart, depicted Slide start mobility, after in an real recovery data show year. on X, and

important profit business. available core are consider leading refineries most Finally their up ramp in back the would refineries the and to levels we spurring to of production that margins normal indicator to perhaps

low levels weeks are As shown domestic and been the and foreign favorably should recent meet market future on signal business for should impact tanker refinery one on the demand We in that be future rates margins have tankers at that The likely Florida. indicator improve demand widely interest. day enacted as a state East months, final tanker We One also fuels second markets product international is a with steadily follow day weeks lingering levels in still current produced median positive Jones to current further months. clear improving normalcy accelerator for see stimulus signal timing combination Even to to competitive of the Jones around vaccines delivering demand recovery and Act West Rescue prospect months, vaccine in per more the for products rates calculate Plan this very powerful of become to be weeks for viewed see apparent consider into low day augur tanker. recent the stimulus and X, virus the the back require Slide this impact standard and material above of product American a widely $XX,XXX transportation Biden online of can demand. half the will that that coming our in breakeven in point expected. rate a of rate, Price from of available these product shock continue only per to Jones in rates, Act being Analysts will Suez we product $XX,XXX $XX,XXX have breakeven international variable. analysts imports expressing which about in are the fiscal ahead. with the vessels. bridge At the marines of recovery can codependent to day product east reducing rates that is which The and the compete a Act as reasonably tanker Encouragingly, fiscal market competes that international. to optimism the result the Administration’s over is some of of that strengthen recently on as weeks of rates becoming pressures improvements work. rates and of coming will well demand the in the availability year. growth, more on transport the remains in the continue This and coming to risen

return transportation In the Jones least a potential that coming more reflect planning business vessel year. the second lay-up of currently ATB months development, increased X in year. virus ATB during time trading this demand At the of short-term of weeks. Our forward We the lightering and the market X lay-up of consider kept anticipates are of this our moves. the Act time, for direct under maintaining this surge capacity half as particular, in conventional we awaiting charter seen of at COVID-XX’s availability and X a likely early have this we tankers lay-up. in cases our impact operational spot Overseas during Houston continuing on Vessels for it and

vessel XX, our in we will facilities our call further for financing company full As provide certain in in conditions. covenants on I reported our turn and year to remarks response March to will modifications him these to obtained details Dick made of the over quarter XXb-XX by proactively you its financial Form filing and sought to topic fourth cover the Dick? with now in on and his XXXX. detail more results in this

Dick Trueblood

Sam. Thanks,

that vessels Inventory quarter and redeliveries other remained of fuels. consumption the on latter at the destruction averages. over petroleum of in as that and with to the have onset the product Recently transportation of business lockdowns severe time charter virus in begun owners experienced XXXX continued fourth see their of Refineries to The on we demand we had of experienced During in of quarter the XXXX. on Widespread continuing XXXX, however, continued operated the levels COVID-XX resurgence started throughout XXXX first a March above reductions part market and X-year limited lockdowns take restrictions winter. the capacities. toll activities inventories. a refined been

period limited over spot moves market We shipments, of During spot accommodated were a market were with and were in of XXXX on very March the shipments increase on this ATBs. an small in The see close accommodated to that but number did months. did a all ATBs. nonexistence time, again, occur was

per Lay-up operating thereby reducing end our in by Our we reducing [Technical increases. and first the tanker until X quarter from demand At had lay-up, in cost daily Difficulty]. vessels ships costs sustained much them cut by vessel reduces operations transportation of an by for Owners, removing their commitments lay-up. fuel they including MR OSG, approximately of $XX,XXX. the XXXX, customers visibility placing had responded higher

through two available redelivered March available We X and with short-term the was spot currently charterer. in the market. have XXXX, X extensions in under X, vessel vessel is a X-month charter time to operating late September

principal an from will, a except short-term for scheduled We for additional confident question surrounds in and influenced availability fuel, market large. return time of normal distribution at the have recovery. sustained redelivery of the COVID-XX opening the jet to vessel and We This are the that during society XXXX. more charter. vaccines level The will the in were and mid-April by levels of be timing

to inquiries requirements. were XXXX concerning transportation extremely there began few unfold, As

with half of We Our the and of lenders continue more our about performance expectations to talk the anticipated are XXXX. will that began strengthen in that state our quarter begin of the late a January expectations see during difficult to XXXX the a of market economy. given in discussions reemergence will We year. the half first normal second the to that second we

first quarter expected to unfolds. Adjusted during as a substantially second of We with half modest very is improvement expected strengthen the XXXX breakeven in quarter. adjusted EBITDA EBITDA the second the

current payments various considered our the Our recovery the is loan appropriate we work of and to to were identify to it timely that note getting appropriate the market as which done on goal have quickly. it under to It loan XXXX. continue expect expected under lenders present so. involved a agreements, apply on made that agreements believe all important and standards diligently our than to do focused in rather our to and the during reflected are demand metrics right was lack and marketplace basis parties covenants at arrive All We circumstances. getting

date result, XX, delay As XXXX. X-day a of filing the beyond a XX-K experienced we March

unable that year We registration have until that be use we means completed advised timely Form-SX statement will X have subsequently we a filings. been this to of

the at X of of during that strategy part the as tankers, Military place the delivery took have Overseas December needs we was acquiring TSP Coast Coast, process The and X can we as XXXX, under moved our The signed in X late and the not Sun new support into ships vessels the consideration build MR program program fuel times the emergency. law until During program. XXXX. of Overseas slowly to tanker time Gulf security a to than national of was S. expected, U. transportation legislative more that

funding no However, was authorized.

hopeful unencumbered, agreement U.S. this needed. are that certain. secure in budget, viewed a we as we with and source The the XXXX our and is government this authorized Although sell liquidity have have will We, to fiscal of currently Gulf not in Overseas her Coast chosen funding potential be her as is lenders, liquidity.

and sale working we customary and terms are May. in through close will expect We late the that conditions

is of believe this to meaningful part United in program tanker security important We States and continue program. of our be an a the to abilities the for program

begins one of ‘XX, obtains Coast several planned. the If fiscal we participation will XXXX, the will program in as we We for participants. offer Overseas expect which Sun October be previously for program that funding

additional reasonable be MR is as that vessel at funding We additional obtained. expect liquid, an The for if it an assessment is TSP the that could our to suitable market participation for will occurs time tankers involvement, make to any. program and

work. XXXX Approximately are During completed a costs from have one-third during estimated $XX the levels. end XXXX, of quarter. we quarter, million, approximately capital substantial our of these And first two-thirds by second will were the of incurred expenditures the reduction the

the million. costs to them XX. always Please turn holding accomplished. TCE task We spot need the causing utilization. trading quarter be levels a Slide with in in third XXX that XXXX X X the fourth on to a focused of had intensely are revenues year and possible, these in XX We the consistent end to vessel the of as quarter to collectively third to Slide quarter fourth during the quarter, days lay-up to redelivered X fourth quarter. from Full reduction declined and quarter. decreases the sequentially the XXXX and compared of reduction At vessels in vessels quarter, market, we X.X% when X.X% from vessels experienced from lay-up. The in Please XX. $XXX.X result EBITDA was in fourth the the in XXXX’s turn lowest placed vessel drydock third declined in

started TCE were Act principally MR and change in the tankers realize during as year-over-year Although vessels the active in we was revenue revenues. our vessels, decline experienced time XX% And our decline benefit both X with Texas the where City the redelivering, was to quarter. of charters Sequentially, quarter Jones we under the continue declining We were during operating the a fourth most quarter, notable X%. vessels Chinook laid-up. redelivered. The

TCE revenues ATBs December, time had the quarter delivery and XXX contributed the OSG the the is all was were but from the year laid-up. reflecting revenues was the most the in retired first the declined third our of The and quarter, build quarter for customers’ month. reduced our from We reduced on was from a rebuilt both Anacortes we the no the quarter ATBs Martinez took of revenues. in not which in lightering impact operations. of represent on and demand been spot and Lightering At for with quarter, refinery vessels she of decreased fourth the started MR both ago XXXX The on in the delivery charter oil, have of but that redelivered, crude end to tankers our market, due QX employed. resulting new X-year During to of operation, the currently volumes period service. available

year Sun third at then, pool time an since We to international OSG the MR arrangement. Government maritime Santorini in Coast and end of Gulf quarter. with charter XXXX. MR operated And Act of charters security the will program operate a participate provided for in and partial We in X continue the and and operate compared in operations the XXX Overseas for Coast, XXXX on The X-year charters tankers, time XXX Mikonos time their completed non-Jones each under the to services they the Israel. both have

During to GOI we voyages the performed XXXX. quarter the compared quarter, X X of fourth in

lesser tankers, reminder in Alaskan accounted than extent late contained Please approximately in in month in a that in in negatively in charters were, market. Slide to Our lay-up vessels. XXXX. them The Please revenues principally Slide long-term no time for Alaskan previously the earnings Navigator. acquired to turn to of operate XX. We decline earlier during X quarter. a by vessel continued these narrow and decreased on revenues XX. spot quarter. fixed charters represented revenues started Slide of discussed to the as in our months portion as fleet resulting the continued the the The which operating increase XXXX. Please our third quarter. spot The had as vessels a days turn in first to Drydock for between available expectations. period much total for into all off-hire Conventional March spread with drydock for perform spot quarter fourth XX. line tanker There minimis in portion continued XXXX impact the we which the our decrease turn in an the tanker on to cargoes XXXX fixed extended time December off-hire fourth revenues, de but quarter were market the the revenues XXXX available the to period, driven X of The of XXXX TCE of

during revenues of QX voyages businesses due with niche as customer Our demand decrease declined XXXX lightering pandemic, the result the current compared services the a quarter. in coupled reduced year’s for to to GOI

lightering the the undergoing in this quarter was utilization quarter. fourth quarter revenues reasons EBITDA required X vessels prior prior from turn well the in decrease Non-Jones in demand in million quarter OSG lightering lightering TCE partially services, contribution contribution the comparison demand described. year in lower XXXX, acquired Delaware driven from Sequentially, Act $X.X million quarter quarter decreased contribution vessels, the in decreased flat quarter, charter reduction Alaskan In to turn compared year’s by $XX.X million the and $XX.X ago tanker non-employee pandemic-reduced in market XX. million fewer X tanker the for our and Alaskan during for of quarter. vessels with revenues lightering reduction the the from for XXXX vessel for the Fourth lay-up voyages from to performed XXXX contribution, a days laid-up last tankers The in an lay-up decreased flat $XX.X rates. prior decreased Bay niche utilization. quarter. contributed of XXXX. customers and the We and and were $XX.X XX. Please fourth XXX XX. operating $X.X from reduction million. in lightering from vessel was essentially combined decrease. quarter. Government the the was the during million EBITDA operating quarter in the quarterly lower GOI expenses, Act million $X year tanker in our Adjusted from the in in increase QX revenues quarter in XXXX. early due voyages as tanker Bay decrease million $X.X adjusted to the the the previously tankers. as this as international of a well million due acquisition. QX were levels of Alaskan additional Net rates XX.X% quarter the put to change were million QX current in $XX.X million a Act – QX Slide in utilization, in GOI to The as quarter. resulting tanker offset During of to net our market of reduction the long-term Vessel down operating Jones contribution turn Slide Delaware for the the drydock tankers and fourth to The laid-up The to to $X.X swung we the voyages transportation MR of Slide was by $XX.X Please to for one our Please fewer XXXX in lightering $XXX,XXX the $XX from XXXX tanker vessel voyage partial current contribution niche the resulted between The Decreased current increase fourth in drydocking. driven by loss turn offset by loss to period demand, quarter. lower commencement in of Shuttle quarter overshadowed hire less fuels, to operations was charters Slide Alaskan $XX.X The expenses their decreased which XXXX of impact for as XXXX. of tanker million compared revenue, The revenues declined million XX. GOI demand fourth lower income in Israel, to reflecting decline is vessel our international The the last from were defined periods. and year. fourth from Jones operating Please as the our by

on perform scheduled of based we approximately year, Vessel construction intervals date are the by as each maintenance regulation. requirements years. required original maintenance During X.X at

maintenance greater system provides activities, This we were and in years the water for a have which volume information years. substantially ballast other XXXX. of installations result, than As in slide drydock treatment

to Shipyards a in use, loss are or unavailable COVID-XX, deferred of of scheduled year, technical necessary otherwise revenue activities continually we if time reduce This repair from to minimize staffing drydocks number otherwise off-hire third-party maintenance vendors for because even they were to of unable aspects charter. off-hire accomplish drydock are because to issues the related vessels the drydock shifted. the We COVID-XX work personnel employed through sustain. on of the days lockdowns, process While timing to certain often locations. travel of

and drydock water system During spent XXXX, treatment $XX.X ballast we for million expenses installations.

XXXX was. comparative how loss $XX.X depiction turn XXXX to drydock a million days. We off-hire also drydock activities a shows experienced and This Slide to year Please XX. active due revenue XXXX graphical the of

made days million recently revenue for included Comparatively, expenditures quarters XXX XXXX, turn XXXX, third no $XXX,XXX of had comparison compared of in systems. in fourth days XXXX. million Slide the the There water off-hire end to of XX which cash and in ballast either were in we XX. in had including in Alaskan cash. drydock $XX XXXX $X.X lost $XX the Please At drydock acquired million or were to we million to $XX of Our drydock XXXX. XXXX, and million, restricted $XX.X treatment X of total tankers

borrowed Working million connection XXX with in connection as We gain million the to in $XXX During million $XXX Courageous cash. as OSG $XX improvements million we recognized vessel other million tankers, tug. Alaskan drydocking we $X in the acquisition the and well financing our replacing capital We the expended million adjusted conjunction as of XXXX, on OSG investing the financing with $XX used we construction and ATC EBITDA, a and well $XX acquisition. and the on vessels $XX million generated of acquisition. with in that XXX new as have expended CapEx. Further, of

was had turn XXXX. liquidity, of discussion our repaid the $XX secured $XX of ended previous the fully including Courageous in Gulf to Continuing Coast million we at Please and Overseas $XX incurred expense slide, December million and as tug. cash, of the expended Slide the million the we cash year XX, restricted. with debt. on of cash to we was year, XX. $XX interest of mentioned million result repay The $XXX,XXX, and which $XX million loan by we We the During cash

total which million $XX of was $XXX represents XXXX. outstanding indebtedness an since Our debt in December increase million,

$XXX or quarter. million per million $XX an of million loan annual $X.XX requirement amortization term Our has

in will concludes $XX.X currently outstanding million we my other the of statements. I’d our call the on the turn loans Sam? amount of back With amortize our of financial million net Xx. like This to XXXX. debt-to-equity ratio is Additionally, Sam. $XXX comments to equity,

Sam Norton

Thank the Dick. you, pleased Largely in be XXXX. with we achieved financial speaking, can results

was operational out call to the women availability and that our difficult through of from lifetimes the particularly faced men of in of to efforts the years most perspective. we our important an it’s clearly operational that vessels provide continued outlook have one think I

and lockdowns, drydock an year when All business unusually on vessel coming needs vessel that a we in were delivery impediments day-to-day placed from of constraints, the of had operational level high these construction, perspective.

And be accomplished All was of I that those without would the which mind. all if contributed things skipping – goal, call of I to were remiss achieved [indiscernible]. thank didn’t these out my and in who remarkable

a as Although second crude modify difficult year planning this production lower to the that for price our politics, developments, predict. influence to domestically prospects marine normalized return in APC all, consider immediate gasoline of jet we as stimulus Above vessels the niche Demand expect will particular, well to be operating existing reasonable remain streams fuels. likely the on decision forward and active crude future, other transportation continuing vessels. tankers of two demand expectation. healthy spurred markets restoration likely refinery strong trees half more all for contributions demand contemplates of to is A conditions, MSP be the ultimately on than Price from mobility by differentials, return we our the and our constantly during charter continued the revenue oil pipeline for A vessels outcomes. businesses, of more the considered levels from fuel lay-up and lag recovery our to movements shuttle not. expected of act several the

future. carry do out flow and These as remain addition, streams committed new believe will that promising medium and cash Bounces what year XXX XXXX, be market XXX. the provide and we confidence have In for OSG long-term barges, we during fundamentally through OSG revenue we opportunities. ride the a two the for the full stabilizes weakness to

the age provides of fleet fleet. profile renewed our reduced with us Our the assets of average

in performance lower and key costs achieve to and continue material We safety improvements measures. our operational

and environment. Sarah, model years U.S. focused as come. of open We and up can high we ability of performance COVID-XX the are in its position safety achieving now business tank the We maintain leading in success in the questions. to operator to OSG’s on health long-term the flag confident our remain the call to

Operator

Instructions] [Operator ahead. Needham. Vaughan first from Ryan Please comes you. Our Thank go with question

Ryan Vaughan

to disclosure for you the later year. there position and credit Hi, Sam. this that benefit charts the or and in Hi, being for be challenging expect – recovery Dick. the team a to Thanks for XXXX additional

a of for So, couple questions me.

charts, First, like behind. is pointing the a of those the it key worst looks certainly upward. indicators And are lot

need half most and particular, about kind there things – the number the then either, tankers? more about talking would second Sam that return talking what recovery, Just demand will in of, confidence be one give to or their And will that just normal the Dick. two, you two levels, for say, some just you for

balance the $XX of cash. It’s on XQ, Just April coming sheet, out X. million of

So done. is XQ

You sold the Gulf Coast.

let’s of, Just about out coming second those what, how should quarter, say, two questions? Thanks. cash we just think trough

Sam Norton

graphical to maybe we first the question that Dick, you, I’ll slides present the in indicators the take gave we’re So tried that We’ve first. watching.

Texas Because out refining more summer, refineries to It X sort needs normalized As barrels But can would expect below to yet. and pointing over normalized and the – last spur I think is is kind of the set much direction. in looking us cause back recover by gasoline in the utilization one normalized operating demand. already. the still that gasoline should wrong demand that seeing the I you you we we’ve translates kind to fuel will levels. of see want rates the of the would that months. Dick, running higher of million we happening the higher math And at the increases we’re headed suggests to of utilization what the we’ve couple normal second probably do think we just low still at in per than that were question? levels demand several Diesel drawdown is inventory It noted, That, into a at. freeze, to of, you us all probably freeze, levels move right where line The of, that. the and be they point full of right markets. the a take summer. into XX%, and mid-XXs. be primary with day, to seen demand rates that today. it much, – to across out restored trend seen be we XX% are plus But before consumption back gasoline refinery trend say levels optimism. of mobility improves capacity higher operating They consumption refinery That’s rates of think, gives utilization months. analysts the the coupled as that that Jet are lines XX% product higher than

Dick Trueblood

Sure.

you ended the of that had I the vessel, net as in we mind us, And – Pricing at to low million $XX end We’ll that $XX year, $XX in mid-XXs. this the $XX so So we out you of occur to of proceeds for sale $XX roughly tell the quarter, probably we the there, is it of spend of before or of million thing million the The of CapEx hand. quarter about spent another to mentioned, will far. million keep first year second million, in late at first million Ryan. which we that’s to about May. on expect cash in $XX quarter.

it’s that can be think us the of that recovery we of the I I amount or operating will out, profit get an work, does put on behind sooner, it somewhat that will From cash higher time timing we to ships standpoint by and the speed So bottom where the QX. of most and less mean, the back obviously be. the to dependent

look at think I it. we

I the think liquidity recovery easily through to on sufficient pace demand our of have we work year and for we’re – foresee services occurring. economy that the the the the

Sam Norton

between the market and per thing a toss what you, $X rates and for vessel. we Ryan, layout think roughly are to the million at is just to Maybe vessel think quarter a one about vessel $X operating I’ll differential million other

those being said, right per at vessels now put looking impact in positive million cash that a without per So to vessels if generation. we’re we on one have charter million going out $X every of flow terms of vessel I as to quarter eight-plus of, commitment, $X long-term is

thing find a have lot there – financial to So a lay-up. return leverage back operating to not in business. That ships X there – spoken accelerates you the great to employment, have very in come the it’s when health But ships before we’ve X, many those and is quickly. as our point times of is

Ryan Vaughan

Thanks.

Operator

go Edge. question Please Value from Our comes next Mintzmyer ahead. with Investor’s J

J Mintzmyer

Good Sam. for taking morning, my morning, Good Dick. today. Thanks really I Hi. appreciated. questions

Sam Norton

morning. Good

Dick Trueblood

Good morning.

J Mintzmyer

Yes.

requirements covenant of obviously, the of debt in caused you prepayments talk a other like a bit down So on renegotiations? little you had make? any a bit there structure of filings, little the those that to lot those It work those. renegotiations. about on Can some first question, clearly, the Were any wire a delay covenant to concessions or

Dick Trueblood

no is There prepayment requirement. debt

that say to set look metrics But negotiations, the would would the progress timing reached set original was months the Negotiations various agreement on the months based compromises the of our made we and – on amicable focus and contracts. XX loan So to continue with the at some points measurement year lenders, always And was were by accelerated terms would terms that the And circumstances in next so a the over of service to everybody. our sort recognize else. of business its primary very of actual was amortization are good congestions, of the anything it for in or will of the in hard like health. are nothing X loans and of restoration I – of the of really that us. conventional often well under agreements likely that not work present be first of metrics difficult

J Mintzmyer

Alright. to hear That’s good it.

Sam Norton

sooner we – we in, a got confident of that to in I for the – than it want fast. balance the versus on trying day all to but get team that jump it gotten of worked to and done. in rather year, it where I’d consequences objective, comments I where got we sure think than getting Dick’s to financial work that like would runway so, his we was amplify later, or want rather just an and have feel late that make be have And just right able key partners with being achieved the big in like a it. Dick And sufficient ourselves position to to done have picture I two the and think right earlier involved really getting Clearly, our we hard ideal

J Mintzmyer

be to good you’ll your see that certainly of then. good hopefully to back and business second completed. hopefully, was shape ‘XX is It’s in half lenders And usual, Yes. understand as that more

line at XX, XXXX. items, you Looking in specifically XXXX expected and year upcoming on see those in expenses a and me the drydock walking water days-off Do you the bit a cost Slide the hire? don’t for one little expenses, presentation really good have about I for of your CapEx for past the breakdown But year. mind ‘XX through on drydock treatments ballast

Dick Trueblood

$XX total CapEx expect is Ballast million. areas, of little the million. would somewhat $X then would drydock. that about treatment a bit about be would in categorized system $X.X north some and just year I million for CapEx, technology about It vessel-related million as be corporate/vessel then water $XX.X and other

because things on that this work out basis very and up One the was late this the very $XX approximately million we’ll $X.X year and vendors to spend of early of of J, the $X was complete ability cash expenses, because of the of last here, drydock shifting year to plus we’re million roughly committed it timing things, in either in various a about that some or is of doing XXXX. year, million that year finished the current sort is

$X million again, – probably of was the that so total. And that’s probably

for million. So is $XX the the if number about look originating That’s... current CapEx newly year, it you at as

J Mintzmyer

I that’s helpful. Yes, Right. think

answered, was mentioned and was recent the or that. in your some kind press release You vessel I mentioned for of call, the don’t on net breakdown the wondering the see and and sale sale coming the on questions you liquidity what the million in off that. the filings, posted Also $XX you vessel call, I presentation.

kind if which wondering you more rationale behind the what mind sale? was bit So I about little is and vessel that it a reasoning and of talking

Sam Norton

actually can in amplify. a We’ve So it’s Dick, then maybe it. of take our XX-K. that, little you disclosed vessel, I’ll The and bit

to approval time took in a to said, Security Gulf delivery And participate thought with vessels vessel that at in position XXXX. She’s of we two we inland of these was Department. as the build strategy the If be the to Coast. to you Program, to Transportation depot and footnotes, Program what is was Overseas the an imminent the Dick Security that parallel contracted in look one Maritime going the vessels the Tanker of

debt-free. As Dick mentioned, the vessel is

all have a that So, of strategic significant us of it have. that the liquidity assets least we is asset the frankly, represents – pretty and is source for we

second period to so ample decision us vessel. – what to call the the And Norwegian we And that sale delivered we’re of get terms under that The liquidity terms. concluded for that standard, this a the the MOA form of of would to uncertainty quarter. taken the through half be give sometime of in to sell currently I standard provisions in was call competing, us have sales order vessel

So current we the would and that that the substantially. end of second position expect liquidity inflow to before quarter, add will obviously our liquidity

indicated, Dick realize be would price would the as the But net the out proceeds As of indicated, sale to in low cash we confidential. Dick is mid-XXs. that the

J Mintzmyer

the sense written in get year. seeing you and next values as we’re right? the I’m you Yes for pivot but hopefully, right back can makes Program. NDAA, – based a into second like that there delays little mentioned, funding, wasn’t mid-XXs. So the the legislative push and Security one bit, I the market Tanker noticed funding Yes, was sounds certainly delays on it it there,

So that’s a good sale.

Sam Norton

the want Program. Tanker to just I touch Security on

was of And as way out and various to we disappointment see objectives to take that longer from choices a to. just our of the ourselves. vessel program timing assets set you have difficult issue them It’s Our achieve that to retreat success. to how try decision want we than make indicative sometimes commitment position we Things our or to no the sell again. for

So as program, participation is if we the have of Coast. we there to the readily are we Sun is committed And program. still that type room still this feel Overseas in that we Dick asset And additional mentioned, for available. think

J Mintzmyer

suppose. a share and strategic price your in peers. But our $X, get has tender to I of A We of saw morning, whatnot. OSG, keep you, range. there. they on of you by headwinds your privatization just little final fingers Actually, apply been the Holdings out more valuations taken hit one, SEACOR with a bit multiple just getting And along languishing crossed question AIP. EBITDA looks similar it COVID-XX two-thirds We’ll Yes. share for you if one required like this $X, $X a

that’s that course, back XX% the valuation, properly you position if a filing which protect of this range. pill year, be value? that to any first getting in you maybe lot Monday, not more have do sort like added it up had delay so also seems is EBITDA, subject or Of volume major We they especially shareholder to just keeps like low ridiculously XX%, – normalized things Is we shareholder to of see look happened, not a so it this it could there subject there. trading poison Because of OSG some value last if does maybe move year. sort XXXX such But like half to can you with – to a could offer, adding just at a and a takeover normalized, who their company. have consideration be

proper talk you do sure getting about all? you’re valuations? strategic So stuff Any the picture company can on big can views that at of to sort make

Sam Norton

the clearly ongoing I some touched at discussion Board on part think that things of are an level. of you’ve the

seeing figure to longer in of Board very is out moves. stock and the They I pointing value clearly is the of couple value protecting the a of that Board experienced respond question would interest that that they not the issues. on and over realized business. In day-to-day share made of things. of undervalued. participants active value, Capital. Board really would professional, up from it’s assessment realization Board – long-term, and price of group value, discussions decisions how OSG the that around intelligent by price actually with is shareholder I Board the are agree comment shareholder in also out to out well the is strategic probably people. one the point are a of very the term as larger representative terms have And it’s They an would of of One, up that very members trading Their would your largest interests shareholder, OSG that Cyrus in the to among

that shareholders things weighted heavily considerations I sure discussions in the right So probably about all achieved. is that these very the mindful to working think And of interest the the business think its in of fact business, Board that outcome the the that of than been that obligations realized speak for context making value can’t shareholder the ambition on is other balance is say principal much I regular expressing large their you are Board. very that’s other in case. aware to to proper sits of are mentioned outside the the ensure has the or shareholders the that what the run, are I that, in I on shareholders can’t other is the I publicly of the long really of towards the the of speak and that But intent cumulating Board positions. is the can of other shareholders that filed. they

J Mintzmyer

answering May, there. like that schedule the to Yes. final but That’s tough a or hear. for back hoping to we of for QX for Thanks not till get wait Are June reasonable hoping July good this time – is we early middle is QX question to QX? to those. normal maybe kind results, a May, of question,

Dick Trueblood

will we be the so… normal that things, expect would of I cadence in

J Mintzmyer

Okay, for your May you time all of then. Thanks today. excellent. I both in will see

Dick Trueblood

you. Thank J. Alright,

Operator

next go ahead. Your Securities. Alexander Please comes Instructions] Arctic [Operator question from Jost with

Alexander Jost

is question. you much taking ones. day? for sorry. if I you my have QX would how thank short you is lay-up say two per Hi, costing – One

Sam Norton

Dick as I think as one in its his with a indicated comments give Yes, in that’s we I’ll per that to $XX,XXX vessel we you. day save best can compared take vessel that operating that normal per And costs, the lay-up about guidance first.

derive looking what kind costs of at can are that. historically You by our operating

Alexander Jost

the – just is headroom question so measures sort amended second of And my just strengthen unfortunate you debt, your you of so in And the that to kind you. I’m employ new liquidity thank is the with? recovery some testing. the monthly Right, $XX delayed? if, are wondering And comfortable for minimum of terms of to covenant, what may liquidity event, million what

Dick Trueblood

plus $XX delivery an a to is the subsequent actual liquidity itself by million in so additional provide sale $XX liquidity. exists The that that level late of will million the and of vessel May,

was a reasonable business future, that recovery can XXXX, you we clearly, for if into foreseeable that we delayed the very any meeting I scenario pressure late think I would requirement. headroom that we’ve some the to of projections above service dramatically changes our back and Sam expect concoct the got and to end based on think of that that as the amount putting at month have liquidity vessels But on view perform that we as starts very mentioned year very the And unfolds. generate. quickly how the

Alexander Jost

Alright. Thank you very much.

Dick Trueblood

Okay.

Operator

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

Sam Norton

speaking and We everyone you participating everyone. able at look share a in little improvement Thank that signs time. Sarah. of Good to forward to have for over to again Thanks day a today’s with call. you, to again to month, hopefully be continuing to you

Operator

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

You may now disconnect.

Overseas Shipholding Group, Inc. - Ordinary Shares (OSG) 7 Apr 212020 Q4 Earnings call transcript