Maritrans Part (NYSE:TUG)
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Fourth Quarter and 2005 Highlights:
-- Posted Highest Full-Year Operating Income, Net Income and EPS
as Public Company
-- Completed Sale of 3.45 million shares of Common Stock
-- Signed Newbuild Contract for Three New Tug-Barge Units and
Signed Ten-Year Contract for Lightering Services Commencing
Upon Delivery of the New Units
-- Renewed, Increased and Extended Revolving Credit Facility
-- Received Delivery of Sixth Rebuilt Double-Hull Barge and
Awarded Contracts to Rebuild Seventh and Eighth Tug-Barges
-- Re-Entered Northeast Barge Market; Entered into an 18-Month
Time Charter
-- Expanded Fleet with Addition of Oil Tanker
Maritrans Inc. (NYSE:TUG), a leading U.S. flag marine petroleum
transport company, today announced its fourth quarter and annual
financial results and declared its quarterly dividend.
Net income for the quarter ended December 31, 2005 was $3.0
million, or $0.32 diluted earnings per share, on revenues of $45.9
million. This compares with net income of $1.4 million, or $0.17
diluted earnings per share, on revenues of $40.0 million for the
quarter ended December 31, 2004. Operating income for the quarter
ended December 31, 2005 was $4.2 million compared to $3.0 million for
the quarter ended December 31, 2004. The increase in operating income
for the quarter ended December 31, 2005 was due to the continued
strength in the Company's geographic markets, which was partially
offset by lower utilization as detailed below. During the quarter, the
Company continued to earn strong average daily rates on vessels that
it had in the clean product spot market. Additionally, the Company
obtained increases in rates on its renewed contracts, which led to
higher contract revenue despite the Company having fewer vessels on
charter compared to the fourth quarter of 2004. Demand by the
Company's Delaware River refinery customers for the Company's
crude-oil lightering services remained firm, though not quite as high
as during the prior three quarters in 2005. Barrels delivered to
crude-oil lightering customers during the fourth quarter were down
approximately 7% from the average delivered during the first three
quarters of 2005.
Net income for the year ended December 31, 2005 was $19.9 million,
or $2.28 diluted earnings per share, on revenues of $180.7 million.
For the year ended December 31, 2004, the Company reported net income
of $9.8 million, or $1.16 diluted earnings per share, on revenues of
$149.7 million. Operating income for the year ended December 31, 2005
was $26.6 million compared to $14.5 million for the year ended
December 31, 2004.
On a Time Charter Equivalent ("TCE") basis, a commonly used
industry measure where direct voyage costs are deducted from voyage
revenue, TCE revenue was $33.3 million for the quarter ended December
31, 2005 compared to $30.4 million for the quarter ended December 31,
2004, an increase of $2.9 million, or 9.5%. TCE revenue was $137.4
million for the year ended December 31, 2005 compared to $119.5
million for the year ended December 31, 2004, an increase of $17.9
million, or 15%. TCE revenue is a non-GAAP financial measure and a
reconciliation of TCE revenue to revenue calculated in accordance with
GAAP is attached hereto.
During the fourth quarter, the Company experienced lower overall
utilization than in the fourth quarter of 2004. Utilization for the
fourth quarter of 2005 was 77.1% compared to 79.1% in the fourth
quarter of 2004 and 83.8% in the third quarter of 2005 due primarily
to increased out of service time related to scheduled shipyarding. In
the quarter ended December 31, 2005, the Company experienced 193 days
out of service for vessel maintenance and capital projects. This
compares to out of service time for maintenance and capital projects
of 145 days in the first quarter of 2005, 154 days in the second
quarter of 2005 and 123 days in the third quarter of 2005. The Company
expects to have at least 72 days of out of service during the first
quarter of 2006, which includes 8 days for scheduled maintenance and
64 days to begin the double-hulling of the M 210 but does not include
any unscheduled out of service time. Additionally, the Company lost
approximately 9 revenue days related to the Valour incident discussed
below. Vessel utilization for the year ended December 31, 2005 was
81.1% compared to 80.7% for the year ended December 31, 2004.
Operating expenses increased to $41.7 million in the fourth quarter of
2005 from $37.1 million in fourth quarter of 2004 primarily because of
increases in fuel, port and crew expenses, as well as the addition of
the charter expense for the M/V Seabrook. Operating expenses increased
to $154.7 million in the year ended December 31, 2005 from $135.2
million in the year ended December 31, 2004 for the same reasons.
Jonathan Whitworth, Chief Executive Officer of Maritrans,
commented, "2005 was a year of significant achievement for Maritrans.
We are pleased to have recorded our highest full-year operating
income, net income and earnings per share since becoming a public
company while at the same time making important progress implementing
our growth strategy. Just as our past decisions to proactively build
an OPA-compliant fleet and refine our deployment strategy enabled us
to fully take advantage of a strong rate environment in 2005, we
believe that the strategic moves we have taken this year will benefit
our stockholders in the future. Following the completion of the
building of three new articulated tug-barge units, Maritrans will
become one of the largest tug and barge coastwise operators in our
vessel size range, further enhancing our leadership in the Jones Act
coastwise trade. Our success at implementing strategic initiatives
such as re-entering the Northeast market and entering an alternative
trade for the single-hull tanker ALLEGIANCE will also serve the
Company well as we strive to achieve growth in both the near and
long-term."
FLEET AND MARKET REPORT
Maritrans operates a fleet of oil tankers and oceangoing married
tug/barge units. During 2005 the Company continued to deploy more of
its fleet in the spot market than it had historically in an effort to
take advantage of the higher spot rate environment.
The stronger spot market in 2005 was driven primarily by the
combination of increased demand for the Company's transportation
services and reduced supply of Jones Act vessels. The overall spot
market rates increased approximately 40% compared to 2004. The Company
intends to maintain similar spot market exposure in 2006 to that of
2005. The Company believes that spot market rates will be at the same
or higher levels during 2006 compared to 2005 as a result of increased
product demand in the markets the Company serves and the reduced
supply of Jones Act vessels. During the first half of 2006, however,
the Company expects that the demand for its services will be affected
by the reduced supply of refined products from the Gulf refineries.
This is primarily due to the continuing outages of a number of
refineries caused by the 2005 hurricane season, the anticipated
refinery shutdowns for maintenance and the refineries requirements to
prepare for the new ultra low sulfur diesel specifications that are
scheduled to take effect in the second quarter.
During 2005, the Company made the following changes to its fleet:
-- In April, the Company announced the re-deployment of the
double-hull barge M192 from its existing clean products route
along the Gulf Coast to the Northeast residual oil market. The
M192 entered into an 18-month time charter with Sunoco Inc.
(R&M), which commenced in December following a stint in the
Company's lightering business in the second half of 2005.
-- In August, the Company announced that it had entered into a
three year agreement with Seabrook Carriers Inc. to time
charter the M/V Seabrook, a single-hull oil tanker with a
carrying capacity of 224,000 barrels. The M/V Seabrook entered
Maritrans' service in November and was deployed into the
Company's clean products trade. The Company entered into a
manning agreement to provide the crewing for the vessel and
continues to integrate the vessel into the clean oil market
that the Company serves. Although the vessel has not yet
achieved the utilization levels of the Company's other spot
market vessels, the Company believes that this is mostly due
to lower product movement demands resulting from the
continuing Gulf of Mexico refinery outages as described above.
-- In September, the Company announced that it signed a contract
with Bender Shipbuilding & Repair Co., Inc. to build three new
articulated tug-barge (ATB) units, each having a carrying
capacity of 335,000 barrels. Each barge will be connected to a
12,000 horsepower tugboat utilizing the latest version of the
Intercon connection system. The Company also announced that
the new ATB's will be utilized to help fulfill the long-term
volume contract for lightering services that the Company
signed with Sunoco Inc. (R&M).
-- In October, Maritrans announced that it signed a grain cargo
voyage for its tanker ALLEGIANCE, a single-hull tanker that,
in accordance with the Oil Pollution Act of 1990, was removed
from petroleum transportation service as of December 2005. The
Company expects that it will continue to charter this vessel
in non-oil alternative cargo voyages.
DOUBLE-HULL REBUILDING PROGRAM
Since 1998, Maritrans has been actively engaged in a double-hull
rebuilding program aimed at ensuring that the Company's Jones Act
fleet is compliant with the U.S. Oil Pollution Act of 1990 ("OPA").
Maritrans' patented barge rebuilding process enables the Company to
convert its vessels for significantly less cost than building new
vessels.
During 2005 Maritrans continued to successfully implement its
rebuilding program. In June, the Company took delivery of the M209,
which is the sixth double-hull barge that the Company has rebuilt
using its patented barge rebuilding process. The rebuild included the
insertion of a midbody, which increased the vessel's cargo carrying
capacity by approximately 30,000 barrels. The rebuilding of the M209
and the tug boat Enterprise cost approximately $27.0 million and $4.5
million, respectively. The M209 received a CAP1 rating from the
American Bureau of Shipping which indicates that the barge meets the
standards of a newly built vessel.
In July, the Company awarded contracts to rebuild the M 210 and
the OCEAN 211 to double-hull configurations. These will be the
Company's seventh and eighth single-hull barges to be rebuilt to
double-hull configurations. The rebuild of the M210, which commenced
its rebuilding process on January 26, 2006, is expected to have a
total cost of approximately $30 million, of which $24 million is a
fixed contract with the shipyard and the remainder of the equipment is
to be furnished by the Company. The rebuild of the OCEAN 211 is also
expected to have a total cost of approximately $30 million, of which
$23 million is a fixed contract with the shipyard and the remainder of
the equipment is to be furnished by the Company. The rebuilds of the M
210 and OCEAN 211 will also include the insertions of mid-bodies that
will increase each of their capacity by approximately 38,000 barrels,
or 17%. The rebuilds of the M 210 and the OCEAN 211 are expected to be
completed in the third quarter of 2006 and the second quarter of 2007,
respectively. As of December 31, 2005, $10.3 million and $2.6 million
had been spent on these rebuilds, respectively. Upon completion of
their double-hulling, and reflecting their larger carrying capacities,
the M 210 and OCEAN 211 will be renamed the M 242 and M 243,
respectively.
TUG BOAT INCIDENT
On January 18, 2006, the Company's sea-going tug, VALOUR, sank off
the coast of Cape Fear, North Carolina. Three crew members lost their
lives in the incident. At the time of the incident, the VALOUR was
transporting the tank barge M 192, a double-hull petroleum barge.
Following an evaluation by the U.S. Coast Guard, which concluded that
there was no damage to the M 192 and there was no loss of cargo from
the tank barge, the vessel was cleared to return to service and
discharge her cargo. When the barge M210 entered the shipyard for her
double-hull rebuilding, her married tugboat Columbia was available to
work, and the Company has utilized this tugboat to temporarily fill
the tugboat shortage caused by the loss of the VALOUR. The Company is
currently evaluating mid-term and long-term tugboat replacement
scenarios. The Company continues to work with the U.S. Coast Guard on
the investigation into the cause of the incident. The VALOUR is
covered by the Company's hull insurance policy and costs of the
incident are covered by protection and indemnity insurance carried by
the Company. Hull insurance proceeds of approximately $4 million,
which exceed the carrying value of the tugboat of approximately $1.1
million, are expected to be received in the first quarter of 2006.
Mr. Whitworth commented, "The entire Maritrans family has been
deeply saddened by the loss of these fine seamen, and we continue to
keep their families as well as the surviving crewmembers in our
thoughts and prayers."
SALE OF COMMON STOCK
In December, Maritrans announced that it entered into an agreement
to sell 3 million shares of its common stock in a registered offering
off of its shelf registration statement. The Company also sold an
additional 450,000 shares of its common stock upon the exercise of the
over-allotment option granted to the underwriters. The Company
received proceeds of approximately $84.5 million from the sale, net of
underwriting fees and commissions and other expenses related to the
transaction.
Mr. Whitworth concluded, "We intend to build upon the progress we
made in 2005 to further solidify our leadership in our core markets
and expand into related businesses as we continue to seek to deliver
strong results to our stockholders, employees and customers. At the
same time we will continue to execute our double-hull rebuilding
program, which will enable us to receive our seventh rebuilt vessel in
the third quarter of 2006. We recently completed our equity offering
and extended and increased our revolving credit facility, and
therefore believe we are well positioned to pursue future growth
opportunities for the benefit of the Company and our stockholders. In
seeking such opportunities, we will continue to focus on profitable
initiatives that meet strict return requirements."
DIVIDEND
Maritrans' Board of Directors declared a quarterly dividend of
$0.11 per share, payable on March 15, 2006, to stockholders of record
on March 1, 2006. The ex-dividend date will be February 27, 2006.
CONFERENCE CALL INFORMATION
Maritrans' management will host a conference call on February 15,
2006, at 9:00 a.m. eastern time to discuss the Company's fourth
quarter and annual results. To access this call, please dial
800-633-8410. A replay of the call may be accessed by dialing
800-633-8284 and providing the reservation number 21283380. The replay
will be available from 11:00 a.m. eastern time on February 15, 2006,
to 11:00 a.m. eastern time on March 1, 2006. The conference call will
also be webcast live on Maritrans' website, www.maritrans.com and will
be available on the website through March 1, 2006.
ABOUT MARITRANS
Maritrans Inc. is a U.S. based company with a 78-year commitment
to building and operating petroleum transport vessels for the U.S.
domestic trade. Maritrans employs a fleet of tug/barge units and
tankers. One of these vessels, our tanker Allegiance, was redeployed
in December 2005 to the transportation of non-petroleum cargo.
Approximately 69% of our oil carrying fleet capacity is double-hulled.
Our current oil carrying fleet capacity aggregates approximately 3.9
million barrels, 72% of which is barge capacity. Maritrans is
headquartered in Tampa, Florida, and maintains an office in the
Philadelphia area.
SAFE HARBOR STATEMENT
Certain statements in this news release are forward-looking
statements within the meaning of Section 27A of the Securities Act of
1933, as amended and Section 21E of the Securities Exchange Act of
1934, as amended, including statements made with respect to present or
anticipated utilization, future revenues and customer relationships,
capital expenditures, future financings, and other statements
regarding matters that are not historical facts, and involve
predictions. These statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, levels
of activity, growth, performance, earnings per share or achievements
to be materially different from any future results, levels of
activity, growth, performance, earnings per share or achievements
expressed in or implied by such forward-looking statements. In some
cases you can identify forward-looking statements by terminology such
as "may," "seem," "should," "believe," "future," "potential,"
"estimate," "offer," "opportunity," "quality," "growth," "expect,"
"intend," "plan," "focus," "through," "strategy," "provide," "meet,"
"allow," "represent," "commitment," "create," "implement," "result,"
"seek," "increase," "establish," "work," "perform," "make,"
"continue," "can," "will," "include," or the negative of such terms or
comparable terminology. These forward-looking statements inherently
involve certain risks and uncertainties, although they are based on
our current plans or assessments that are believed to be reasonable as
of the date of this prospectus supplement. The forward-looking
statements are subject to a number of risks and uncertainties and
include the following: demand for, or level of consumption of, oil and
petroleum products; future spot market charter rates; ability to
attract and retain experienced, qualified and skilled crewmembers;
competition that could affect our market share and revenues; risks
inherent in marine transportation; the cost and availability of
insurance coverage; delays or cost overruns in the building of new
vessels, the double-hulling of our remaining single hulled vessels and
scheduled shipyard maintenance; decrease in demand for lightering
services; environmental and regulatory conditions; reliance on a
limited number of customers for revenue; the continuation of federal
law restricting United States point-to-point maritime shipping to US
vessels (the Jones Act); asbestos-related lawsuits; fluctuating fuel
prices; high fixed costs; capital expenditures required to operate and
maintain a vessel may increase due to government regulations; reliance
on unionized labor; federal laws covering our employees that may
subject us to job-related claims; and significant fluctuations of our
stock price. Given these uncertainties, you should not place undue
reliance on these forward-looking statements. You should read this
news release completely and with the understanding that our actual
future results may be materially different from what we expect. These
forward-looking statements represent our estimates and assumptions
only as of the date of this news release. Except for our ongoing
obligations to disclose material information under the federal
securities laws, we are not obligated to update these forward-looking
statements, even though our situation may change in the future. We
qualify all of our forward-looking statements by these cautionary
statements.
-0-
*T
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
($ Thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
-------- -------- -------- --------
Revenue $45,910 $40,025 $180,710 $149,718
Voyage Costs 12,616 9,599 43,307 30,175
-------- -------- -------- --------
Time Charter Equivalent $33,294 $30,426 $137,403 $119,543
======== ======== ======== ========
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL HIGHLIGHTS
($ Thousands, Except Per Share Amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
-------- -------- -------- --------
Revenue $45,910 $40,025 $180,710 $149,718
Operations expense
Operations 15,567 13,229 55,394 50,342
Voyage costs 12,616 9,599 43,307 30,175
Maintenance expense 5,008 5,091 20,320 20,761
General and administrative
expense 2,461 3,265 12,478 11,709
Depreciation and
amortization expense 6,039 5,872 23,201 22,193
(Loss)/gain on sale of
assets (19) -- 628 --
-------- -------- -------- --------
Operating Income 4,200 2,969 26,638 14,538
Other Income 165 75 4,596 587
Interest Expense (588) (774) (2,846) (2,318)
-------- -------- -------- --------
Pre-tax income 3,777 2,270 28,388 12,807
Income Tax Provision 810 829 8,509 2,975
-------- -------- -------- --------
Net Income $ 2,967 $ 1,441 $ 19,879 $ 9,832
======== ======== ======== ========
Diluted Earnings Per Share $ 0.32 $ 0.17 $ 2.28 $ 1.16
Diluted Shares Outstanding 9,177 8,500 8,717 8,444
Capital Expenditures $25,049 $ 8,635 $ 64,877 $ 33,391
Utilization of Calendar days 77.1% 79.1% 81.1% 80.7%
Barrels carried (in millions) 41.7 45.1 173.8 175.8
Available days 1,220 1,175 4,861 4,854
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
($ Thousands)
December 31, 2005 December 31, 2004
----------------- -----------------
Cash and cash equivalents $ 58,794 $ 6,347
Other current assets 35,680 30,207
Net vessels and equipment 233,572 191,924
Other assets 3,957 3,305
------------ -----------
Total assets $ 332,003 $ 231,783
============ ===========
Current portion of debt $ 3,973 $ 3,756
Total other current liabilities 27,893 19,002
Long-term debt 55,400 59,373
Deferred shipyard costs and other 14,998 21,244
Deferred income taxes 35,756 36,004
Stockholders' equity 193,983 92,404
------------ -----------
Total liabilities and
stockholders' equity $ 332,003 $ 231,783
============ ===========
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS INFORMATION
($ Thousands)
Twelve Months Ended December 31,
2005 2004
------------ -----------
Cash flows from operating activities:
Net income $ 19,879 $ 9,832
Depreciation and amortization 23,201 22,193
Other (3,470) (3,615)
------------ -----------
Total adjustments to net income 19,731 18,578
------------ -----------
Net cash provided by operating
activities 39,610 28,410
Net cash used in investing activities (64,222) (25,111)
------------ -----------
Net cash provided by (used in)
financing activities 77,059 (566)
------------ -----------
Net increase in cash and cash
equivalents 52,447 2,733
Cash and cash equivalents at
beginning of period 6,347 3,614
------------ -----------
Cash and cash equivalents at end of
period $ 58,794 $ 6,347
============ ===========
Barge or
Tanker Initial
Construction/
Capacity in Rebuild
Barges/Tugs Barrels(1) Double-Hull Date
----------------------------------------------------------------------
M 400/Constitution 410,000 Yes 1981 Originally built with
double-hull
M 300/Liberty 263,000 Yes 1979 Originally built with
double-hull
M 254/Intrepid 250,000 Yes 2002 Double-hull rebuild
M 252/Navigator 250,000 Yes 2002 Double-hull rebuild
M 244/Seafarer 240,000 Yes 2000 Double-hull rebuild
M 215/Freedom 214,000 No 1975 Decision to rebuild
has not yet been
made(2)
Ocean 211/ Scheduled double-hull
Independence 212,000 No 2007 delivery(3)
M 210/Columbia 213,000 No 2006 Scheduled double-hull
delivery(3)
M 214/Honour 208,000 Yes 2004 Double-hull rebuild(4)
M 209/Enterprise 206,000 Yes 2005 Double-hull rebuild(4)
M 192/Valour * 172,000 Yes 1998 Double-hull rebuild
-----------
Total oil
carrying
capacity 2,638,000
===========
Oil Tankers
----------------------------------------------------------------------
Perseverance 251,000 No 1981 (5)
Integrity 270,000 Yes 1975 Originally built with
double-hull
Diligence 270,000 Yes 1977 Originally built with
double-hull
Seabrook 224,000 No 1983 (6)
-----------
Total oil
carrying
capacity 1,015,000
===========
Other
----------------------------------------------------------------------
Allegiance 251,000 No 1980 Redeployed in
transport of grain
-----------
Total capacity 3,904,000
===========
(1) Represents 98% capacity, which is of the effective carrying
capacity of a tank vessel.
(2) If rebuilt, we anticipate that a 30,000 barrel mid-body would he
inserted.
(3) Vessels are being rebuilt with 38,000 barrel mid-body insertions.
(4) Completion of the double-hull rebuild included a 30,000 barrel
mid-body insertion.
(5) Expected to he redeployed for transportation of non-petroleum
cargo upon mandated OPA phase-out.
(6) Chartered in from Seabrook Carriers Inc.
* In January 2006, the tugboat Valour sank. The Company is currently
evaluating tugboat replacement scenarios.
*T