Overseas Shipholding Group, Inc. the “Company” or “OSG”), a leading provider of liquid bulk transportation services in the energy industry for crude oil and petroleum products in the U.S. Flag markets, reported results for the fourth quarter and full year 2023.
2023 net income was $62.5 million, or $0.77 per diluted share, compared to net income of $26.6 million, or $0.29 per diluted share, in 2022. Net income for the fourth quarter of 2023 was $20.4 million, or $0.26 per diluted share, compared to net income of $10.1 million, or $0.11 per diluted share, for the fourth quarter of 2022.
Full year Adjusted EBITDA(A), a non-GAAP measure, for 2023 was $175.7 million, an increase of $32.9 million, or 23.1%, from 2022. Fourth quarter 2023 Adjusted EBITDA was $47.3 million, an increase of $3.6 million, or 8.4%, from the fourth quarter of 2022.
Shipping revenues for 2023 were $451.9 million, a decrease of $14.9 million, or 3.2%, compared to 2022. Shipping revenues for the fourth quarter of 2023 were $116.0 million, a decrease of $5.7 million, or 4.7%, compared to the fourth quarter of 2022. The decreases in shipping revenues primarily resulted from fewer vessels in our fleet, as we redelivered three conventional tankers leased from American Shipping Company in December 2022.
Time charter equivalent (TCE) revenues(B), a non-GAAP measure, for 2023 were $423.5 million, a decrease of $2.8 million, or 0.7%, from $426.3 million in 2022. TCE revenues for the fourth quarter of 2023 were $110.1 million, a decrease of $4.0 million, or 3.5%, compared to the fourth quarter of 2022.
Total cash and investments(c) were $91.2 million as of December 31, 2023.
In October 2023, the Company prepaid, at a discount, $5.6 million to subsidiaries of American Shipping Corporation representing all of its remaining outstanding deferred payment obligations, recognizing a gain of $912 thousand.
In November 2023, the Company purchased the Alaskan Frontier for $20.0 million. The Company plans to make significant investments in the vessel for it to begin commercial trade by the fourth quarter of 2024.
On December 6, 2023, the Company's Board of Directors declared a cash dividend of $0.06 per share on the Company's Class A common stock, which was paid on January 4, 2024.
During the fourth quarter of 2023, the Company repurchased 1,425,000 shares for total consideration of $6.8 million. As of December 31, 2023, the Company had 70,946,476 common shares outstanding compared to 78,297,439 at the end of 2022, a 9.4% reduction, as a result of 2023 repurchases of the Company's common stock.
Sam Norton, OSG's President and CEO, said, “Following the positive results reported, it would be appropriate to state that we have ‘stuck the landing’ with our 4th quarter performance. The quarter’s contribution led to meeting our adjusted EBITDA target of $175mm for the full year, a 23.1% gain over 2022, despite having three fewer vessels in operation in 2023. The benefits of charterparties fixed at escalating rates over the past several quarters are now being realized, producing strong cashflow and providing the means to make continued progress in meeting our key capital allocation goals. Previously announced capital investments in our Alaska class vessels, the purchase of 1.425 million shares during the 4th quarter, and the approval of the first dividend payment in many years underscore this point.”
Mr. Norton continued, “Strong fundamentals have continued to support charterer interest in our vessels. Significantly, at year end, we agreed to employ the Alaskan Explorer to transport US Gulf Coast crude oil to one of our Delaware Bay refining customers, demonstrating the existence of employment options for this class of vessel outside of its traditional Alaskan market. Taken together with three other vessel fixtures concluded in early 2024, OSG has added 116 months of forward charter cover since our last earnings report, increasing the value of our forward charter book to over $860 million in time charter equivalent earnings as of the beginning of March 2024.”
Mr. Norton concluded by stating, “We couldn’t be more pleased with our 2023 results and believe we are well-positioned now, and over the long term, to generate strong cash flows in what we expect to be a durably balanced market characterized by stable demand and constrained supply.”
The Company also recently exercised its first option to extend the bareboat charter of the Overseas Tampa with its vessel owner for a 5-year option period, commencing June 2025 until June 2030. Additional options to extend remain.
Full Year 2023 Results
Shipping revenues were $451.9 million for 2023, down 3.2% compared with 2022. TCE revenues for 2023 were $423.5 million, a decrease of $2.8 million, or 0.7%, compared with 2022. The decreases primarily resulted from (a) fewer vessels in our fleet, as we redelivered three conventional tankers leased from American Shipping Company in December 2022, (b) a 24-day increase in drydock days, and (c) fewer U.S. Military Sealift Command voyages, which were longer international voyages, during 2023 compared to 2022. The decreases were partially offset by a 297-day decrease in layup days. We had no vessels in layup during 2023. During the first quarter of 2022, we had two vessels in layup for the full quarter and two additional vessels that came out of layup in January 2022 and late February 2022. Our remaining two vessels in layup returned to service in May 2022. Additionally, the decreases were partially offset by (a) an increase in average daily rates earned by our fleet, (b) an increase in Delaware Bay lightering volumes, and (c) an 11-day decrease in repair days.
Operating income for 2023 was $96.9 million, compared to operating income of $63.2 million for 2022. Net income for 2023 was $62.5 million, or $0.77 per diluted share, compared with net income of $26.6 million, or $0.29 per diluted share, for 2022. The increases in operating and net income primarily reflected decreases in voyage, vessel, and charter hire expenses of $46.4 million when compared to 2022. The decrease in voyage expenses was primarily due to decreases in fuel and port expenses, as our vessels performed fewer voyage charters during 2023 compared to 2022. The decreases in vessel and charter hire expenses were primarily due to the redelivery of three conventional tankers referred to above.
Adjusted EBITDA was $175.7 million for 2023, an increase of $32.9 million compared with 2022.
Fourth Quarter 2023 Results
Shipping revenues were $116.0 million for the fourth quarter of 2023, a decrease of $5.7 million, or 4.7%, compared to the fourth quarter of 2022. TCE revenues were $110.1 million for the fourth quarter of 2023, a decrease of $4.0 million, or 3.5%, from the fourth quarter of 2022. The decreases primarily resulted from fewer vessels in our fleet, due to the redelivery of three conventional tankers discussed above and a 29-day increase in drydock days. The decrease was partially offset by an increase in average daily rates earned by our fleet and an increase in Delaware Bay lightering volumes.
Operating income for the fourth quarter of 2023 was $25.9 million compared to operating income of $20.4 million for the fourth quarter of 2022. Net income for the fourth quarter of 2023 was $20.4 million, or $0.26 per diluted share, compared with net income of $10.1 million, or $0.11 per diluted share, for the fourth quarter of 2022. The increases in operating and net income primarily reflected decreases in voyage, vessel, and charter hire expenses of $9.9 million when compared to the fourth quarter of 2022. The decrease in voyage expenses was primarily due to decreases in fuel and port expenses, as our vessels performed fewer voyage charters during the fourth quarter of 2023 compared to the fourth quarter of 2022. The decreases in vessel and charter hire expenses were primarily due to the redelivery of three conventional tankers referred to above.
Adjusted EBITDA was $47.3 million for the 2023 fourth quarter, an increase of $3.6 million compared with the fourth quarter of 2022, driven primarily by the increases in operating and net income.
