K-SEA TRANSPORTATION PARTNERS L.P.
· ANNOUNCES OPERATING RESULTS FOR THIRD QUARTER OF FISCAL 2007;
· OPERATING EARNINGS, NET INCOME UP;
· INCREASES QUARTERLY CASH DISTRIBUTION BY $0.02 TO $0.68 PER UNIT
NEW YORK, APRIL 27, 2007 – K-Sea Transportation Partners L.P. (NYSE: KSP) today announced operating results for the third fiscal quarter ended March 31, 2007. The Company also announced that its distribution to unitholders for the third quarter will increase by $0.02, or 3.0%, to $0.68 per unit, or $2.72 per unit annualized. This is the eighth consecutive quarter of increased distributions, and the tenth such increase since the Company’s IPO in January 2004. The distribution will be payable on May 15, 2007 to unitholders of record on May 8, 2007.
The Company’s distributable cash flow for the third quarter of fiscal 2007 was $8.6 million, or 1.20 times the amount needed to cover the increased cash distribution of $7.2 million declared in respect of the period. Distributable cash flow is a non-GAAP financial measure that is reconciled to net income, the most directly comparable GAAP measure, in the table below.
Three Months Ended March 31,
2007
For the three months ended March 31, 2007, the
Company reported operating income of $7.6 million, an increase of $3.5 million,
or 86%, compared to $4.1 million of operating income for the three months ended
March 31, 2006. This year-over-year
increase resulted from the continuing expansion of the Company’s fleet
barrel-carrying capacity, including the addition of six new tank barges since
January 2006. These results were also
positively impacted by continued strong rates and vessel utilization, partially
offset by increases of $1.3 million in depreciation and amortization due to the
expanded fleet, and $0.9 million in general and administrative expenses in
support of the Company’s growth.
Earnings before interest, taxes, depreciation, amortization, and loss on
reduction of debt (EBITDA) increased by $4.8 million, or 43%, to $16.0 million
for the three months ended March 31, 2007, compared to $11.2 million for the
three months ended March 31, 2006.
EBITDA is a non-GAAP financial measure that is reconciled to net income,
the most directly comparable GAAP measure, in the table below.
Net income for the three months ended
March 31, 2007 was $4.0 million, or $0.39 per fully diluted limited partner
unit, compared to net income of $1.2 million, or $0.12 per fully diluted
limited partner unit, for the three months ended March 31, 2006, an increase of
$2.8 million. The fiscal 2007 third
quarter benefited from the $3.5 million increase in operating income, offset by
a $0.7 million increase in interest expense resulting from higher debt balances
incurred to finance vessel acquisitions in connection with the Company’s fleet
expansion program over the past year, and higher interest rates.
Nine Months Ended March 31, 2007
For the nine months ended March 31, 2007, the
Company reported operating income of $22.9 million, an increase of $6.0
million, or 35%, compared to $16.9 million of operating income for the nine
months ended March 31, 2006. Similar to
the increase for the third fiscal quarter, this increase resulted primarily
from the expansion of the Company’s barrel-carrying capacity, including the
acquisition of Sea Coast Transportation LLC in October 2005 and the addition of
six newbuild tank barges since January 2006, partially offset by increases of
$5.1 million in depreciation and amortization and $2.7 million in general and
administrative expenses in support of the Company’s growth. Of the $2.7 million increase in general and
administrative expenses, $1.4 million related to the acquisition of Sea Coast
and another small operation in Philadelphia in the fall of 2006. EBITDA increased by $11.0 million, or 31%,
to $47.1 million for the nine months ended March 31, 2007, compared to $36.1
million for the nine months ended March 31, 2006.
Net income was $12.0 million for the nine months ended March 31,
2007, or $1.18 per fully diluted limited partner unit, compared to net income
of $2.8 million, or $0.29 per fully diluted limited partner unit, for the nine
months ended March 31, 2006. The $6.0
million of increased operating income for the nine months ended March 31, 2007
was offset by $3.3 million of higher interest expense, resulting from higher
debt balances incurred to finance the fleet expansion over the past year. Additionally, the prior year period was
adversely affected by a $6.9 million loss on reduction of debt related to
retirement of the Company’s Title XI bonds in November 2005, and net income was
therefore abnormally low.
President and CEO Timothy J.
Casey said “Our operating results for the fiscal 2007 third quarter were
strong, with operating income, EBITDA, and net income per unit all
significantly higher than last year. We
expect our results to be strengthened further by our ongoing fleet
expansion. We took delivery of another
new 28,000 barrel tank barge in January, and a 100,000 barrel tank barge in
March. In April, we purchased two
additional tugboats, bringing the total to five acquired tugs this fiscal year,
as part of a program to reduce operating costs and improve efficiency. We have seven additional tank barges under
construction which are scheduled for delivery at intervals of every few months
between now and the end of calendar 2008.
In light of our results and expectations, our Board of Directors, as
reported above, approved a two cent per unit increase in our quarterly distribution. At our current annualized rate of $2.72 per
unit, K-Sea’s distribution is over 13% higher than at this time last year. We remain optimistic about continuing our
growth for the balance of this year and in fiscal 2008.”
Earnings Conference
Call
The Company has
scheduled a conference call for Monday, April 30, 2007, at 9:00 am Eastern
time, to review the third quarter results.
Dial-in information for this call is (866) 277-1182 (Domestic) and (617)
597-5359 (International). The Passcode
is 23154151. 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 May 7, 2007; the dial in number for the replay is (888) 286-8010
(Domestic) and (617) 801-6888 (International).
The Passcode is 63679017.
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 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
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 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.
Contact
K-Sea Transportation Partners L.P
John J. Nicola, Chief Financial Officer, 732 565-3818