American Shipping Company ASA Reports Q4 Results

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On 28 February 2019, American Shipping Company ASA announced the results for fourth quarter ending 31 December 2018.

Report Highlights

  • Overseas Shipholding Group (“OSG”) exercised options to extend the bareboat charter agreements for all nine of AMSC’s vessels up for renewal
  • Stable Q4 bareboat revenue of USD 22.1 million and backlog of secured bareboat revenue of USD 302.7 million with average weighted tenor of 3.4 years
  • Normalized EBITDA for Q4 of USD 22.2 million
  • Adjusted net profit for Q4 of USD 2.9 million
  • Favorable WTI Houston vs Bonny Light/Brent spreads leading to strong U.S. Northeast crude trade
  • Increased level of time charter fixtures at rates in the 55,000 – 58,000 per day range for modern tankers
  • Towards the end of the quarter, all Jones Act tanker vessels were fixed on time charter contracts
  • Declared Q4 dividend of USD 0.08 per share, in line with previous guidance and backed by the Company’s contracted cash flow

Pleased with results

AMSC CEO, Pål Magnussen comments, “We are pleased to see the entire Jones Act tanker fleet being fixed on time charters during the final quarter of 2018. The combination of an ageing Jones Act tanker fleet, the lack of yard availability for newbuilds as well as increased demand from the U.S. Northeast crude trade is likely to put additional upward pressure on time charter rates going forward. We believe the fleet is ideally positioned to capitalize on rising time charter rates as OSG has not committed to time charters on most of our ships beyond December 2019.

Key events

The main events that were observed during and subsequent to the fourth quarter.

  • Operating income: Operating income was stable at USD 12.8 million in Q4 2018 versus USD 12.9 million in Q4 2017.
  • Profit share: There was no profit share for Q4 2018 or Q4 2017 attributed to AMSC. The profit share is reported quarterly, but calculated on an aggregated fleet level over a full calendar year.
  • Normalized EBITDA: Normalized EBITDA of USD 22.2 million for Q4 2018 consists of base bareboat revenue of USD 22.1 million, plus Deferred Principal Obligation (“DPO”) of USD 0.9 million, less SG&A of USD 0.8 million. The comparative figure for Q4 2017 for normalized EBITDA was USD 22.1 million (consisting of base bareboat revenue of USD 22.1 million, plus DPO of USD 0.9 million, less SG&A of USD 1.0 million). See Note 14 for more detailed information.
  • Adjusted net profit: Adjusted net profit of USD 2.9 million for Q4 2018 consists of net profit after tax, adjusted for non-recurring items, currency fluctuations, mark-to-market of derivatives and changes to noncash deferred tax expenses. The comparative figure for Q4 2017 was USD 3.9 million.
  • OSG contract extensions: On 10 December 2018, OSG exercised its options to extend the bareboat charter agreements for all nine of AMSC’s vessels up for renewal. OSG previously exercised its option to extend its charter agreement for the 10th vessel, extending that charter into 2025. As a result, all ten bareboat charter agreements have now been extended for additional periods.
  • Philly Tanker AS distribution: On 19 February 2019, PTAS distributed USD 16.3 million to AMSC as a liquidating distribution. AMSC subsequently used USD 10.7 million to repay all outstanding principal and interest on its subordinated loan from Aker ASA. In total, AMSC has received USD 28.8 million in after-tax proceeds from PTAS.
  • Bond amendment: On 18 February 2019, AMSC, through its wholly owned subsidiary American Tanker, Inc. (ATI), proposed amendments to its unsecured bond issue, including the removal of scheduled amortization. A majority of bondholders have already given their support to the amendments. The Company believes the amendments to the bond will improve AMSC’s position in refinancing the secure bank debt as well as strengthen the Company’s ability to raise capital in relation to potential future growth opportunities. AMSC expects the amendments to be executed during Q1 2019.
  • Dividends: On 14 November 2018, the Board authorized a quarterly dividend payment of USD 0.08 per share, the equivalent of NOK 0.6793 per share, to the shareholders on record as of 22 November 2018, which was paid on 30 November 2018. The dividend was classified as a return of paid in capital.
  • Dividend guidance: The Company’s policy with respect to dividends is driven by the Board’s commitment to return value to its shareholders while also prudently managing its balance sheet and maintaining financial flexibility to pursue growth and diversification opportunities. Dividend payments depend on, among other things, performance of existing contracts including outlook for profit share, and will be considered in conjunction with the Company’s financial position, debt covenants, capital requirements, and market conditions going forward.

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Source: GlobeNewswire

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