K Sea (NYSE:KSP)
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K-Sea Transportation Partners L.P. (NYSE: KSP) today announced operating
results for the first fiscal quarter ended September 30, 2006. The
Company also announced that its distribution to unitholders for the
first quarter will increase by $0.02, or 3.2%, to $0.64 per unit, or
$2.56 per unit annualized. This is the sixth consecutive quarter of
increased distributions, and the eighth such increase since the Company’s
IPO in January 2004. The distribution will be payable on November 15,
2006 to unitholders of record on November 9, 2006.
Three Months Ended September 30, 2006
For the three months ended September 30, 2006, the Company reported
operating income of $7.5 million, an increase of $1.4 million, or 22%,
compared to $6.1 million of operating income for the three months ended
September 30, 2005. The increase resulted from expansion of the Company’s
fleet barrel-carrying capacity over the past year, including the
acquisition of Sea Coast Transportation in October 2005 and the addition
of five tank barges, including four newbuilds, one of which was
delivered during the fiscal 2007 first quarter. Earnings before
interest, taxes, depreciation, amortization (EBITDA) increased by $3.6
million, or 31%, to $15.2 million for the three months ended September
30, 2006, compared to $11.6 million for the three months ended September
30, 2005. EBITDA is a non-GAAP financial measure that is reconciled to
net income, its most directly comparable GAAP measure, in the table
below.
Net income for the three months ended September 30, 2006 was $4.1
million, or $0.40 per fully diluted limited partner unit, compared to
net income of $4.2 million, or $0.47 per fully diluted limited partner
unit, for the three months ended September 30, 2005. The $0.1 million
decrease in net income resulted from the $1.4 million increase in
operating income, offset by an increase in $1.6 million in interest
expense resulting from higher debt balances incurred to finance vessel
acquisitions in connection with the Company's fleet expansion and
upgrading program over the past year, and higher interest rates.
The Company’s distributable cash flow for the
first quarter of fiscal 2006 was a record $8.3 million, or 1.25 times
the amount needed to cover the increased cash distribution of $6.7
million declared in respect of the period. Distributable cash flow is a
non-GAAP financial measure that is reconciled to net income, its most
directly comparable GAAP measure, in the table below.
President and CEO Timothy J. Casey said, “We
are pleased with our operating results for the fiscal 2007 first
quarter, and expect our annual results to be strengthened further by our
ongoing fleet expansion. We took delivery of one 28,000 barrel tank
barge during this past quarter, and currently have eight additional tank
barges under construction for delivery by the end of fiscal 2008. We
also recently agreed to purchase three small tugboats in New York harbor
to reduce our operating costs and improve efficiency. In light of our
results and expectations, our Board of Directors has approved a two cent
per unit increase in our quarterly distribution, the eighth distribution
increase since our initial public offering in January 2004.”
Earnings Conference Call
The Company has scheduled a conference call for Monday, October 30,
2006, at 9:00 am Eastern time, to review the first quarter results.
Dial-in information for this call is (866) 356-3377 (Domestic) and (617)
597-5392 (International). The Participant Passcode is 33364454. The
conference call can also be accessed by webcast, which will be available
at www.k-sea.com. Additionally, a
replay of the call will be available by telephone until November 6,
2006; dial in information for the replay is (888) 286-8010 (Domestic)
and (617) 801-6888 (International). The Passcode is 25126190.
About K-Sea Transportation Partners
K-Sea Transportation Partners is the largest coastwise tank barge
operator, measured by barrel-carrying capacity, in the United States.
The Company provides refined petroleum products marine transportation,
distribution and logistics services in the U.S. domestic marine
transportation market, and its common units trade on the New York Stock
Exchange under the symbol KSP. For additional information, please visit
the Company’s website, including the Investor
Relations section, at www.k-sea.com.
Use of Non-GAAP Financial Information
The Company reports its financial results in accordance with generally
accepted accounting principles. However, certain non-GAAP financial
measures such as EBITDA and distributable cash flow, used in the
business, are also presented. EBITDA is used as a supplemental financial
measure by management and by external users of financial statements to
assess (a) the financial performance of the Company’s
assets and the Company’s ability to generate
cash sufficient to pay interest on indebtedness and make distributions
to partners, (b) the Company’s operating
performance and return on invested capital as compared to other
companies in the industry, and (c) compliance with certain financial
covenants in the Company’s debt agreements.
Management believes distributable cash flow is useful as another measure
of the Company’s financial and operating
performance, and its ability to declare and pay distributions to
partners. Distributable cash flow does not represent the amount of cash
required to be distributed under the Company’s
partnership agreement. Neither EBITDA nor distributable cash flow should
be considered as alternatives to net income, operating income, cash flow
from operating activities or any other measure of financial performance
or liquidity under GAAP. EBITDA and distributable cash flow as presented
herein may not be comparable to similarly titled measures of other
companies. A reconciliation of each of these measures to net income, the
most directly comparable GAAP measure, is presented in the tables below.
Cautionary Statements
This press release contains forward-looking statements, which include
any statements that are not historical facts, such as the Company’s
expectations regarding business outlook, vessel utilization, delivery
and integration of newbuild and acquired vessels (including the cost,
timing and effects thereof), growth in earnings and distributable cash
flow, and future results of operations. These statements involve risks
and uncertainties, including, but not limited to, insufficient cash from
operations, a decline in demand for refined petroleum products, a
decline in demand for tank vessel capacity, intense competition in the
domestic tank barge industry, the occurrence of marine accidents or
other hazards, the loss of any of the Company’s
largest customers, fluctuations in charter rates, delays or cost
overruns in the construction of new vessels, failure to comply with the
Jones Act, modification or elimination of the Jones Act and adverse
developments in the marine transportation business and other factors
detailed in the Company’s Annual Report on
Form 10-K and other filings with the Securities and Exchange Commission.
If one or more of these risks or uncertainties materialize (or the
consequences of such a development changes), or should underlying
assumptions prove incorrect, actual outcomes may vary materially from
those forecasted or expected. The Company disclaims any intention or
obligation to update publicly or revise such statements, whether as a
result of new information, future events or otherwise.
K-SEA TRANSPORTATION PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for unit and per unit data)
Three months ended
September 30,
2006
2005
Voyage revenue
$ 52,747
$ 36,773
Bareboat charter and other revenue
2,163
427
Total revenues
54,910
37,200
Voyage expenses
11,581
7,777
Vessel operating expenses
23,336
13,807
General and administrative expenses
4,807
3,979
Depreciation and amortization
7,685
5,487
(Gain) on disposal of vessel
(16)
-
Total operating expenses
47,393
31,050
Operating income
7,517
6,150
Interest expense, net
3,322
1,704
Other expense (income), net
(16)
(1)
Income before provision for income taxes
4,211
4,447
Provision for income taxes
125
199
Net income
$ 4,086
$ 4,248
General partner's interest in net income
$ 82
$ 85
Limited partners' interest in:
Net income
$ 4,004
$ 4,163
Net income per unit - basic
$ 0.40
$ 0.47
- diluted
$ 0.40
$ 0.47
Weighted average units outstanding - basic
9,920
8,832
- diluted
10,015
8,891
Supplemental Operating Statistics
Three months ended
September 30,
2006
2005
Local Trade:
Average daily rate (1)
$ 6,888
$ 5,454
Net utilization (2)
74%
76%
Coastwise Trade:
Average daily rate
$ 11,744
$ 13,367
Net utilization
91%
91%
Total Fleet
Average daily rate
$ 9,797
$ 9,662
Net utilization
83%
84%
(1) Average daily rate is equal to the net voyage revenue earned by
a group of tank vessels during the period, divided by the number of
days worked by that group of tank vessels during the period.
(2) Net utilization is equal to the total number of days worked by a
group of tank vessels during the period, divided by total calendar
days for that group of tank vessels during the period.
K-SEA TRANSPORTATION PARTNERS L.P.
Reconciliation of Unaudited Non-GAAP Financial Measures to GAAP
Measures
(in thousands)
Distributable Cash Flow (1)
Three months ended September 30,
2006
2005
Net income
$ 4,086
$ 4,248
Adjustments to reconcile net income to distributable cash flow:
Depreciation and amortization (2)
7,753
5,487
Non cash compensation cost under long term incentive plan
192
97
Adjust gain on vessel sale to net proceeds
324
-
Deferred income tax expense
(9)
112
Maintenance capital expenditures (3)
(4,000)
(3,300)
Distributable cash flow
8,346
6,644
Cash distribution in respect of the period
$ 6,655
$ 5,799
Distribution coverage
1.25
1.15
(1) Distributable Cash Flow provides additional information for
evaluating our operating performance and ability to continue to make
quarterly distributions, and is presented solely as a supplemental
performance measure.
(2) Including amortization of deferred financing costs.
(3) Maintenance capital expenditures are the estimated cash capital
expenditures necessary to maintain the operating capacity of our
capital assets over the long term. This amount includes two
components: 1) An allowance for future scheduled drydocking costs
calculated using annually updated projections of such costs over the
next five years; based on historical results, differences between
the cumulative amounts charged and actual amounts spent are adjusted
over the same five-year period; 2) an allowance to replace the
operating capacity of vessels which are scheduled to phase out by
January 1, 2015 under OPA 90.
Earnings before Interest, Taxes, Depreciation and Amortization
(EBITDA)
Three months ended
September 30,
2006
2005
Net income
$ 4,086
$ 4,248
Adjustments to reconcile net income to EBITDA:
Depreciation and amortization
7,685
5,487
Interest expense, net
3,322
1,704
Provision for income taxes
125
199
EBITDA
$ 15,218
$ 11,638
K-SEA TRANSPORTATION PARTNERS L.P.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
September 30,
June 30,
2006
2006
Assets
Current assets:
Cash and cash equivalents
$ 599
$ 826
Accounts receivable, net
19,979
20,322
Prepaid expenses and other current assets
5,801
8,753
Total current assets
26,379
29,901
Vessels and equipment, net
322,007
316,237
Construction in progress
5,545
5,452
Goodwill
16,385
16,579
Other assets
13,734
14,859
Total assets
$ 384,050
$ 383,028
Liabilities and Partners' Capital
Current liabilities:
Current portion of long-term debt and capital lease obligation
$ 7,631
$ 7,745
Accounts payable and accrued expenses
21,963
22,626
Total current liabilities
29,594
30,371
Term loans and capital lease obligation
133,676
131,620
Credit line borrowings
58,255
54,015
Deferred taxes
2,875
3,079
Total liabilities
224,400
219,085
Commitments and contingencies
Partners' Capital
159,650
163,943
Total liabilities and partners' capital
$ 384,050
$ 383,028
K-Sea Transportation Partners L.P. (NYSE: KSP) today announced
operating results for the first fiscal quarter ended September 30,
2006. The Company also announced that its distribution to unitholders
for the first quarter will increase by $0.02, or 3.2%, to $0.64 per
unit, or $2.56 per unit annualized. This is the sixth consecutive
quarter of increased distributions, and the eighth such increase since
the Company's IPO in January 2004. The distribution will be payable on
November 15, 2006 to unitholders of record on November 9, 2006.
Three Months Ended September 30, 2006
For the three months ended September 30, 2006, the Company
reported operating income of $7.5 million, an increase of $1.4
million, or 22%, compared to $6.1 million of operating income for the
three months ended September 30, 2005. The increase resulted from
expansion of the Company's fleet barrel-carrying capacity over the
past year, including the acquisition of Sea Coast Transportation in
October 2005 and the addition of five tank barges, including four
newbuilds, one of which was delivered during the fiscal 2007 first
quarter. Earnings before interest, taxes, depreciation, amortization
(EBITDA) increased by $3.6 million, or 31%, to $15.2 million for the
three months ended September 30, 2006, compared to $11.6 million for
the three months ended September 30, 2005. EBITDA is a non-GAAP
financial measure that is reconciled to net income, its most directly
comparable GAAP measure, in the table below.
Net income for the three months ended September 30, 2006 was $4.1
million, or $0.40 per fully diluted limited partner unit, compared to
net income of $4.2 million, or $0.47 per fully diluted limited partner
unit, for the three months ended September 30, 2005. The $0.1 million
decrease in net income resulted from the $1.4 million increase in
operating income, offset by an increase in $1.6 million in interest
expense resulting from higher debt balances incurred to finance vessel
acquisitions in connection with the Company's fleet expansion and
upgrading program over the past year, and higher interest rates.
The Company's distributable cash flow for the first quarter of
fiscal 2006 was a record $8.3 million, or 1.25 times the amount needed
to cover the increased cash distribution of $6.7 million declared in
respect of the period. Distributable cash flow is a non-GAAP financial
measure that is reconciled to net income, its most directly comparable
GAAP measure, in the table below.
President and CEO Timothy J. Casey said, "We are pleased with our
operating results for the fiscal 2007 first quarter, and expect our
annual results to be strengthened further by our ongoing fleet
expansion. We took delivery of one 28,000 barrel tank barge during
this past quarter, and currently have eight additional tank barges
under construction for delivery by the end of fiscal 2008. We also
recently agreed to purchase three small tugboats in New York harbor to
reduce our operating costs and improve efficiency. In light of our
results and expectations, our Board of Directors has approved a two
cent per unit increase in our quarterly distribution, the eighth
distribution increase since our initial public offering in January
2004."
Earnings Conference Call
The Company has scheduled a conference call for Monday, October
30, 2006, at 9:00 am Eastern time, to review the first quarter
results. Dial-in information for this call is (866) 356-3377
(Domestic) and (617) 597-5392 (International). The Participant
Passcode is 33364454. The conference call can also be accessed by
webcast, which will be available at www.k-sea.com. Additionally, a
replay of the call will be available by telephone until November 6,
2006; dial in information for the replay is (888) 286-8010 (Domestic)
and (617) 801-6888 (International). The Passcode is 25126190.
About K-Sea Transportation Partners
K-Sea Transportation Partners is the largest coastwise tank barge
operator, measured by barrel-carrying capacity, in the United States.
The Company provides refined petroleum products marine transportation,
distribution and logistics services in the U.S. domestic marine
transportation market, and its common units trade on the New York
Stock Exchange under the symbol KSP. For additional information,
please visit the Company's website, including the Investor Relations
section, at www.k-sea.com.
Use of Non-GAAP Financial Information
The Company reports its financial results in accordance with
generally accepted accounting principles. However, certain non-GAAP
financial measures such as EBITDA and distributable cash flow, used in
the business, are also presented. EBITDA is used as a supplemental
financial measure by management and by external users of financial
statements to assess (a) the financial performance of the Company's
assets and the Company's ability to generate cash sufficient to pay
interest on indebtedness and make distributions to partners, (b) the
Company's operating performance and return on invested capital as
compared to other companies in the industry, and (c) compliance with
certain financial covenants in the Company's debt agreements.
Management believes distributable cash flow is useful as another
measure of the Company's financial and operating performance, and its
ability to declare and pay distributions to partners. Distributable
cash flow does not represent the amount of cash required to be
distributed under the Company's partnership agreement. Neither EBITDA
nor distributable cash flow should be considered as alternatives to
net income, operating income, cash flow from operating activities or
any other measure of financial performance or liquidity under GAAP.
EBITDA and distributable cash flow as presented herein may not be
comparable to similarly titled measures of other companies. A
reconciliation of each of these measures to net income, the most
directly comparable GAAP measure, is presented in the tables below.
Cautionary Statements
This press release contains forward-looking statements, which
include any statements that are not historical facts, such as the
Company's expectations regarding business outlook, vessel utilization,
delivery and integration of newbuild and acquired vessels (including
the cost, timing and effects thereof), growth in earnings and
distributable cash flow, and future results of operations. These
statements involve risks and uncertainties, including, but not limited
to, insufficient cash from operations, a decline in demand for refined
petroleum products, a decline in demand for tank vessel capacity,
intense competition in the domestic tank barge industry, the
occurrence of marine accidents or other hazards, the loss of any of
the Company's largest customers, fluctuations in charter rates, delays
or cost overruns in the construction of new vessels, failure to comply
with the Jones Act, modification or elimination of the Jones Act and
adverse developments in the marine transportation business and other
factors detailed in the Company's Annual Report on Form 10-K and other
filings with the Securities and Exchange Commission. If one or more of
these risks or uncertainties materialize (or the consequences of such
a development changes), or should underlying assumptions prove
incorrect, actual outcomes may vary materially from those forecasted
or expected. The Company disclaims any intention or obligation to
update publicly or revise such statements, whether as a result of new
information, future events or otherwise.
-0-
*T
K-SEA TRANSPORTATION PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for unit and per unit data)
Three months ended
September 30,
2006 2005
--------- --------
Voyage revenue $52,747 $36,773
Bareboat charter and other revenue 2,163 427
--------- --------
Total revenues 54,910 37,200
Voyage expenses 11,581 7,777
Vessel operating expenses 23,336 13,807
General and administrative expenses 4,807 3,979
Depreciation and amortization 7,685 5,487
(Gain) on disposal of vessel (16) -
--------- --------
Total operating expenses 47,393 31,050
Operating income 7,517 6,150
Interest expense, net 3,322 1,704
Other expense (income), net (16) (1)
--------- --------
Income before provision for income taxes 4,211 4,447
Provision for income taxes 125 199
--------- --------
Net income $4,086 $4,248
========= ========
General partner's interest in net income $82 $85
Limited partners' interest in:
Net income $4,004 $4,163
Net income per unit - basic $0.40 $0.47
- diluted $0.40 $0.47
Weighted average units outstanding - basic 9,920 8,832
- diluted 10,015 8,891
Supplemental Operating Statistics
Three months ended
September 30,
2006 2005
--------- --------
Local Trade:
Average daily rate (1) $6,888 $5,454
Net utilization (2) 74% 76%
Coastwise Trade:
Average daily rate $11,744 $13,367
Net utilization 91% 91%
Total Fleet
Average daily rate $9,797 $9,662
Net utilization 83% 84%
(1) Average daily rate is equal to the net voyage revenue earned by a
group of tank vessels during the period, divided by the number of
days worked by that group of tank vessels during the period.
(2) Net utilization is equal to the total number of days worked by a
group of tank vessels during the period, divided by total calendar
days for that group of tank vessels during the period.
*T
-0-
*T
K-SEA TRANSPORTATION PARTNERS L.P.
Reconciliation of Unaudited Non-GAAP Financial Measures to GAAP
Measures
(in thousands)
Distributable Cash Flow (1)
Three months ended
September 30,
2006 2005
Net income $4,086 $4,248
Adjustments to reconcile net income to
distributable cash flow:
Depreciation and amortization (2) 7,753 5,487
Non cash compensation cost under long term
incentive plan 192 97
Adjust gain on vessel sale to net proceeds 324 -
Deferred income tax expense (9) 112
Maintenance capital expenditures (3) (4,000) (3,300)
--------- ---------
Distributable cash flow 8,346 6,644
========= =========
Cash distribution in respect of the period $6,655 $5,799
Distribution coverage 1.25 1.15
(1) Distributable Cash Flow provides additional information for
evaluating our operating performance and ability to continue to make
quarterly distributions, and is presented solely as a supplemental
performance measure.
(2) Including amortization of deferred financing costs.
(3) Maintenance capital expenditures are the estimated cash capital
expenditures necessary to maintain the operating capacity of our
capital assets over the long term. This amount includes two
components: 1) An allowance for future scheduled drydocking costs
calculated using annually updated projections of such costs over the
next five years; based on historical results, differences between the
cumulative amounts charged and actual amounts spent are adjusted over
the same five-year period; 2) an allowance to replace the operating
capacity of vessels which are scheduled to phase out by January 1,
2015 under OPA 90.
Earnings before Interest, Taxes, Depreciation and Amortization
(EBITDA)
Three months ended
September 30,
2006 2005
--------- ---------
Net income $4,086 $4,248
Adjustments to reconcile net income to EBITDA:
Depreciation and amortization 7,685 5,487
Interest expense, net 3,322 1,704
Provision for income taxes 125 199
--------- ---------
EBITDA $15,218 $11,638
========= =========
*T
-0-
*T
K-SEA TRANSPORTATION PARTNERS L.P.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
September 30, June 30,
2006 2006
------------- -----------
Assets
Current assets:
Cash and cash equivalents $599 $826
Accounts receivable, net 19,979 20,322
Prepaid expenses and other current assets 5,801 8,753
------------- -----------
Total current assets 26,379 29,901
Vessels and equipment, net 322,007 316,237
Construction in progress 5,545 5,452
Goodwill 16,385 16,579
Other assets 13,734 14,859
------------- -----------
Total assets $384,050 $383,028
============= ===========
Liabilities and Partners' Capital
Current liabilities:
Current portion of long-term debt and
capital lease obligation $7,631 $7,745
Accounts payable and accrued expenses 21,963 22,626
------------- -----------
Total current liabilities 29,594 30,371
Term loans and capital lease obligation 133,676 131,620
Credit line borrowings 58,255 54,015
Deferred taxes 2,875 3,079
------------- -----------
Total liabilities 224,400 219,085
Commitments and contingencies
Partners' Capital 159,650 163,943
------------- -----------
Total liabilities and partners' capital $384,050 $383,028
============= ===========
*T