Maritrans Part (NYSE:TUG)
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Maritrans Inc. (NYSE:TUG), a leading U.S. flag marine
petroleum transport company, today announced its third quarter
financial results and declared its quarterly dividend.
Current Highlights:
-- Posts Highest Nine-Month Operating Income, Net Income and EPS
as Public Company
-- Signed Newbuild Contract with Bender Shipbuilding & Repair
Co., Inc. for Three New Articulated Tug-Barge Units
-- Signed Ten-Year Contract with Sunoco for Lightering Services
Commencing Upon Delivery of the New Units
-- Filed a Shelf Registration Statement for the Issuance of Up to
$450 million of Common Stock or Debt Securities
-- Renewed, Increased and Extended Revolving Credit Facility in
October
-- Named One of 200 Best Small Companies in America by Forbes
Magazine in October
Net income for the quarter ended September 30, 2005 was $6.1
million, or $0.71 diluted earnings per share, on revenues of $44.9
million. This compares with net income of $3.5 million, or $0.41
diluted earnings per share, on revenues of $38.3 million for the
quarter ended September 30, 2004. For the third quarter ended
September 30, 2005 net income included the reversal of an income tax
reserve of $1.2 million, or $0.14 diluted earnings per share. In the
prior year, net income for the quarter ended September 30, 2004
included a reversal of an income tax reserve of $1.7 million, or $0.20
diluted earnings per share. Operating income for the quarter ended
September 30, 2005 was $8.3 million compared to $3.4 million for the
quarter ended September 30, 2004.
The increase in operating income for the quarter ended September
30, 2005 was due to continued strength in both of the Company's
primary markets. High refinery utilization by the Company's Delaware
River refinery customers continued to drive strong demand for the
Company's crude-oil lightering services. During the quarter, the
Company also earned strong average daily rates on vessels operating in
the clean product spot market. These rates were driven by increased
voyages to the U.S. west coast as well as fewer vessels available in
the market place, partially offset by an increase in imports.
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 third quarter of 2004.
The Company expects its spot market exposure to be consistent in the
remainder of 2005 and into 2006 compared to its exposure during the
first nine months of 2005.
On a Time Charter Equivalent ("TCE") basis, a commonly used
industry measure where direct voyage costs are deducted from revenue,
TCE revenue was $34.8 million for the quarter ended September 30, 2005
compared to $30.1 million for the quarter ended September 30, 2004.
TCE revenue is a non-GAAP financial measure and a reconciliation of
TCE revenue to revenue calculated in accordance with GAAP is attached
hereto.
On two occasions during the third quarter of 2005, the U.S.
Secretary of Homeland Security issued waivers of the Jones Act, which
limits waterborne coastwise transportation to U.S. vessels owned by
U.S. companies and manned by U.S. crews. These waivers were in
response to the extraordinary circumstances created by Hurricane
Katrina and Hurricane Rita on Gulf Coast refineries and petroleum
product pipelines. Each of these waivers expired as scheduled. The
Company believes that it did not experience any negative financial
impact as a result of these temporary waivers.
During the third quarter of 2005, the Company experienced higher
overall utilization than in the third quarter of 2004. Utilization for
the third quarter of 2005 was 83.8% compared to 81.2% in the third
quarter of 2004 due to decreased out of service time related to both
the Company's double-hull rebuilding during the third quarter of 2004
as well as lower vessel out of service time for repairs in the 2005
period. The Company also experienced fewer out of service days for
hurricanes in the third quarter of 2005 than in the third quarter of
2004. Operating expenses increased to $36.6 million in the quarter
ended September 30, 2005 from $34.9 million in the quarter ended
September 30, 2004, primarily because of significantly higher fuel
costs compared to the third quarter of 2004. The Company also
experienced higher port charges during the third quarter of 2005 due
to more West Coast moves through the Panama Canal. Crew expenses and
shoreside support expenses were also higher due to higher wages and
benefits as well as increased professional fees. The higher operating
expenses were partially offset by lower general and administrative
costs for the quarter ended September 30, 2005, primarily due to lower
litigation, insurance and non-income related tax expenses in the third
quarter of 2005.
Jonathan Whitworth, Chief Executive Officer of Maritrans,
commented, "During the nine-month 2005 period, Maritrans posted record
financial results and made significant progress implementing its
growth initiatives. Complementing our success at recording the highest
nine-month operating income, net income and earnings per share since
becoming a public company, we made strategic decisions aimed at
positioning the Company for fleet and earnings growth in both the near
and long-term. We entered into an agreement to build three new
state-of-the-art articulated tug-barge units and signed a 10-year
volume contract for lightering services with Sunoco for these vessels.
In addition, our single-hulled tanker ALLEGIANCE, which must leave
petroleum transportation service as of December 2005 under OPA,
entered into an alternative trade. Finally, we agreed to charter-in a
vessel and continued to optimize our fleet deployment strategy and
successfully execute our on-going rebuilding program."
FLEET AND MARKET REPORT
Maritrans owns a fleet of 15 units consisting of four oil tankers
and 11 oceangoing married tug/barge units. In August 2005, the Company
announced that it had entered into a three-year time charter for its
sixteenth unit, the M/V Seabrook, a single-hull oil tanker owned and
operated by Seabrook Carriers Inc., a wholly owned subsidiary of
Fairfield-Maxwell LTD. of New York. Subject to delivery in the US Gulf
and meeting required compliances, the vessel will join the Company's
fleet during November 2005, and be deployed into the clean products
trade.
In September 2005, 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
tug boat 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). Maritrans currently
estimates that approximately 70% of the total annual barrels lightered
by the Company will be fulfilled through the Sunoco contract, while
the remaining volume will be delivered to other Maritrans' lightering
customers on the Delaware River.
Mr. Whitworth added, "Our decision to build three of the largest
and most modern tug-barge units in the Jones Act will add over one
million barrels to our fleet, transforming Maritrans into one of the
largest tug & barge coastwise operators in our vessel size range. We
believe these newbuilds will also enable the Company to further
advance our leadership in the Delaware River lightering business,
enhance our overall earnings potential and strengthen our relationship
with a very important long-term customer and strategic partner. Adding
to these benefits is a minimum volume commitment from a major US
refiner for the new ATBs, enabling the company to ensure that these
vessels achieve a high utilization rate and generate revenue and
earnings immediately upon delivery."
In October 2005, Maritrans announced that it booked a grain cargo
voyage to Sri Lanka for its tanker ALLEGIANCE, as part of a U.S.
government charter in support of U.S. foreign aid relief efforts. This
voyage is expected to earn an accretive rate in excess of the vessel's
breakeven costs. The ALLEGIANCE is a single-hulled tanker that, in
accordance with the Oil Pollution Act of 1990, will be removed from
petroleum transportation service as of December 2005.
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").
The Company's patented process enables the Company to convert its
vessels for significantly less cost and approximately half the time
than building new vessels. To date, the Company has successfully
rebuilt six of its original nine single-hull barges to double-hull
structures. As of September 30, 2005, 65% of the Company's fleet
capacity was double-hulled, which compares favorably to the Jones Act
fleet average of 45%.
In July 2005, the Company awarded contracts to Tampa Bay
Shipbuilding & Repair Company to rebuild their seventh and eighth
single-hull barges, the OCEAN 210 and OCEAN 211 to double-hull
configurations. The rebuilds are expected to cost approximately $30
million each, and will also include midbody insertions to increase
their capacity by approximately 38,000 barrels. The rebuilds of the
OCEAN 210 and OCEAN 211 are expected to be completed in the third
quarter of 2006 and the second quarter of 2007, respectively. While
the Company currently intends to convert its remaining single-hull
barges, no definitive decision to do so has been made at this time.
Two of the Company's tankers will reach their OPA retirement dates in
December 2005 and July 2006, respectively, and the Company plans to
redeploy these vessels in alternative non-petroleum cargo service at
that time. The Company estimates that the total cost of its barge
rebuilding program will exceed $200 million, of which $123 million had
been spent through September 30, 2005.
REVOLVING CREDIT FACILITY
In October 2005 the Company announced the completion of an
agreement with its existing lenders, which amended its $40 million
revolving credit facility. The amended facility, which provides more
favorable interest rates and covenants that are less restrictive than
the previous credit facility, allows for $60 million of borrowing
capacity, with the ability to increase the amount to $120 million
through additional bank commitments in the future. The agreement also
extends the term of the commitments under the facility to October
2010, from January 2007.
SHELF REGISTRATION STATEMENT
In September 2005, Maritrans filed a shelf registration statement
for the issuance of up to $450 million of common stock or debt
securities. The Company indicated that the net proceeds from the sale
of the securities will be used for general business purposes,
including debt repayment, future acquisitions, capital expenditures
and working capital.
FORBES MAGAZINE 200 BEST SMALL COMPANIES LIST
In October 2005, Maritrans was named to Forbes Magazine's list of
"Best Small Companies in America," ranking 156 on the list of 200
companies. This list ranks small businesses across the U.S. according
to overall financial health over the past five years. Companies on the
list were ranked according to criteria such as growth in sales,
earnings and return on equity. The complete list of companies is
available on Forbes Magazine's website and appears in the October 31,
2005 issue of Forbes Magazine.
Commenting on the Company's inclusion in Forbes Magazine's list,
Mr. Whitworth stated, "Maritrans is proud to be recognized as one of
the 200 best small companies by Forbes. I would like to thank all of
Maritrans' dedicated staff whose hard work has contributed to this
honor and continues to differentiate the Company in the U.S. maritime
industry."
DIVIDEND
Maritrans' Board of Directors declared a quarterly dividend of
$0.11 per share, payable on November 30, 2005, to shareholders of
record on November 16, 2005. The ex-dividend date will be November 14,
2005.
CONFERENCE CALL INFORMATION
Maritrans' management will host a conference call on November 3,
2005, at 9:00 a.m. eastern time to discuss the Company's third quarter
results. To access this call, please dial (800) 847-7729. A replay of
the call may be accessed by dialing (800) 633-8284 and providing the
reservation number 21266160. The replay will be available from 11:00
a.m. eastern time on November 3, 2005, to 11:00 a.m. eastern time on
November 17, 2005. The conference call will also be webcast live on
the Company's website, www.maritrans.com and will be available on the
website through November 17, 2005.
ABOUT MARITRANS
Maritrans Inc. is a U.S. based company with a 77-year commitment
to building and operating petroleum transport vessels for the U.S.
domestic trade. With 16 units, Maritrans has the largest fleet in its
size category and one of the largest serving the U.S. coastwise trade.
The fleet consists of five oil tankers and 11 oceangoing married
tug/barge units with an aggregate fleet capacity of approximately 3.9
million barrels, of which 65 percent is double-hulled. Maritrans has
two primary areas of focus: transporting refined products in the Gulf
of Mexico to growth areas such as Florida and supplying Philadelphia
area refineries with crude oil lightering from large foreign tankers.
Maritrans is headquartered in Tampa, Florida, and maintains an office
in the Philadelphia area.
SAFE HARBOR STATEMENT
The information in this news release includes certain
forward-looking statements. These statements involve known and unknown
risks, uncertainties and other factors that may cause actual results,
levels of activity, growth, performance, and earnings per share or
achievements to be materially different from those expressed in or
implied by such forward-looking statements. These statements are based
on assumptions the Company believes are reasonable, but a variety of
factors could cause the Company's actual results, goals, targets or
objectives to differ materially from those contemplated, projected,
forecast, estimated, anticipated, planned or budgeted. Such factors
include, among others, changes in oil companies' decisions as to the
type and origination point of the crude that it processes, changes in
the amount of imported petroleum products, competition for marine
transportation, domestic oil consumption, the continuation of federal
law restricting United States point-to-point maritime shipping to U.S.
vessels (the Jones Act), the timing and success of our double-hull
rebuilding program, demand for petroleum products, future spot market
rates, demand for our services, levels of foreign imports, changes in
interest rates, the effect of war or terrorist activities and the
general financial, economic, environmental and regulatory conditions
affecting the oil and marine transportation industry in general. The
Company is under no duty to update any of these forward-looking
statements after the date of this release to conform such statements
to actual results.
-0-
*T
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
($ Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
---------- -------- -------------- ---------
Revenue $44,930 $38,285 $134,800 $109,693
Voyage Costs 10,095 8,167 30,691 20,576
---------- -------- -------------- ---------
Time Charter Equivalent $34,835 $30,118 $104,109 $89,117
========== ======== ============== =========
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL HIGHLIGHTS
($ Thousands, Except Per Share Amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
---------- -------- -------------- ---------
Revenue $44,930 $38,285 $134,800 $109,693
Operations expense
Operations 13,138 12,768 39,827 37,113
Voyage costs 10,095 8,167 30,691 20,576
Maintenance expense 5,221 5,185 15,312 15,670
General and
administrative expense 2,208 2,907 10,017 8,444
Depreciation and
amortization expense 5,947 5,852 17,162 16,321
Gain on sale of assets -- -- 647 --
---------- -------- -------------- ---------
Operating Income 8,321 3,406 22,438 11,569
Other Income 173 84 4,432 512
Interest Expense (838) (791) (2,259) (1,544)
---------- -------- -------------- ---------
Pre-tax income 7,656 2,699 24,611 10,537
Income Tax (Benefit)
Provision 1,510 (793) 7,699 2,146
---------- -------- -------------- ---------
Net Income $6,146 $3,492 $16,912 $8,391
========== ======== ============== =========
Diluted Earnings Per
Share $0.71 $0.41 $1.98 $1.00
Diluted Shares
Outstanding 8,596 8,448 8,562 8,425
Capital Expenditures $25,824 $5,157 $39,828 $24,756
Utilization of Calendar
days 83.8% 81.2% 82.5% 81.2%
Barrels carried (in
millions) 42.5 43.4 132.1 130.7
Available days 1,250 1,261 3,642 3,679
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
($ Thousands)
Sept. 30, Dec. 31,
2005 2004
--------- ---------
Cash and cash equivalents $811 $6,347
Other current assets 31,165 30,207
Net vessels and equipment 214,590 191,924
Other assets 3,451 3,305
--------- ---------
Total assets $250,017 $231,783
========= =========
Current portion of debt $3,917 $3,756
Total other current liabilities 23,113 19,002
Long-term debt 57,914 59,373
Deferred shipyard costs and other 22,065 21,244
Deferred income taxes 35,672 36,004
Stockholders' equity 107,336 92,404
--------- ---------
Total liabilities and stockholders' equity $250,017 $231,783
========= =========
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS INFORMATION
($ Thousands)
Nine Months Ended
September 30,
2005 2004
--------- ---------
Cash flows from operating activities:
Net income $16,912 $8,391
Depreciation and amortization 17,162 16,321
Other 3,650 (1,084)
--------- ---------
Total adjustments to net income 20,812 15,237
--------- ---------
Net cash provided by operating activities 37,724 23,628
Net cash used in investing activities (39,181) (17,382)
--------- ---------
Net cash (used in) provided by financing
activities (4,079) 1,273
--------- ---------
Net (decrease) increase in cash and cash
equivalents (5,536) 7,519
Cash and cash equivalents at beginning of period 6,347 3,614
--------- ---------
Cash and cash equivalents at end of period $811 $11,133
========= =========
REBUILDING SCHEDULE
Capacity Double-Hull
in Double- Redelivery Married
Barges Barrels Hull Date Tugboat Horsepower
----------------- -------- ------- ----------- ------------ ----------
MARITRANS 400 380,000 YES # CONSTITUTION 11,000
MARITRANS 300 265,000 YES # LIBERTY 7,000
M 254 250,000 YES 2002 INTREPID 6,000
M 252 250,000 YES 2002 NAVIGATOR 6,000
M 244 245,000 YES 2000 SEAFARER 6,000
OCEAN 215 210,000 NO + FREEDOM 6,000
OCEAN 211 207,000 NO 2Q07 INDEPENDENCE 6,000
OCEAN 210 207,000 NO 3Q06 COLUMBIA 6,000
M 214 @ 214,000 YES 2004 HONOUR 6,000
M 209 @ 209,000 YES 2005 ENTERPRISE 6,000
M 192 175,000 YES 1998 VALOUR 6,000
Capacity
in Double-
Oil Tankers Barrels Hull
----------------- -------- -------
ALLEGIANCE 252,000 NO +
PERSEVERANCE 252,000 NO +
INTEGRITY 265,000 YES #
DILIGENCE 265,000 YES #
SEABROOK 230,000 NO C
# These vessels were originally built with double-hulls.
@ Completion of the double-hull rebuild includes a 30,000 barrel
mid-body insertion.
+ A decision to rebuild has not yet been made.
C Chartered in from Seabrook Carriers Inc.
*T