K-SEA TRANSPORTATION PARTNERS L.P. ANNOUNCES RECORD OPERATING RESULTS FOR FOURTH QUARTER AND FISCAL YEAR ENDED JUNE 30, 2007
The Company continues to work toward closing its previously
announced acquisitions of Smith Maritime, Ltd. of
Three Months Ended June 30,
2007
For the three months ended June 30, 2007, the
Company reported operating income of $7.8 million, an increase of $1.1 million,
or 16%, compared to $6.7 million of operating income for the three months ended
June 30, 2006. This year-over-year increase
resulted from the continuing expansion of the Company’s fleet barrel-carrying
capacity, including the addition of four new tank barges since the beginning of
the fiscal 2006 fourth quarter. These
results were also positively affected by continued strong rates and solid vessel
utilization, partially offset by increases of $1.5 million in depreciation and
amortization due to the expanded fleet, and $0.5 million in general and
administrative expenses in support of the Company’s growth. Operating results were also positively affected
by the purchase of five additional tugboats during the year, which reduced
reliance on more expensive chartered-in towing.
Earnings before interest, taxes, depreciation, amortization, and loss on
reduction of debt (EBITDA) increased by $2.6 million, or 18%, to $17.0 million
for the three months ended June 30, 2007, compared to $14.4 million for the
three months ended June 30, 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 June
30, 2007 was $3.8 million, or $0.37 per fully diluted limited partner unit, compared
to net income of $3.1 million, or $0.30 per fully diluted limited partner unit,
for the three months ended June 30, 2006, an increase of $0.7 million. The fiscal 2007 fourth quarter benefited from
the $1.1 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.
The fiscal 2006 fourth quarter had also been adversely impacted by a
$0.3 million net loss on reduction of debt resulting from a downsizing of the
Company’s revolving credit facility in April 2006.
Year Ended June 30, 2007
For the year ended June 30, 2007, the Company
reported operating income of $30.7 million, an increase of $7.0 million, or 30%,
compared to $23.7 million of operating income for the year ended June 30, 2006. Similar to the fourth 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, one purchased tug/barge
unit, and the aforementioned tugboats, since July 2005. The additional operating earnings generated
by this capacity were partially offset by increases of $6.6 million in depreciation
and amortization and $3.2 million in general and administrative expenses in
support of the Company’s growth. Of the
$3.2 million increase in general and administrative expenses, $2.1 million resulted
from the acquisition of Sea Coast, another small operation in Philadelphia acquired
in the fall of 2006, and the expanded corporate office in East Brunswick,
NJ. The remainder of the increase
related to employment costs in support of the Company’s growth. EBITDA increased by $13.6 million, or 27%, to
$64.2 million for the year ended June 30, 2007, compared to $50.6 million for
the year ended June 30, 2006.
Net income was $15.8 million for the year
ended June 30, 2007, or $1.55 per fully diluted limited partner unit, an
increase of $9.9 million from net income of $5.9 million, or $0.60 per fully
diluted limited partner unit, for the year ended June 30, 2006. The $7.0 million of increased operating
income for the year ended June 30, 2007 was offset by $4.0 million of increased
interest expense, resulting from higher debt balances incurred to finance the
fleet expansion over the past year.
Additionally, fiscal 2006 was also adversely impacted by $7.2 million in
losses on reduction of debt, resulting primarily from retirement of the
Company’s Title XI bonds in November 2005 and also from restructuring of the
Company’s revolving credit facilities.
The Company’s distributable cash flow for the fourth quarter of fiscal 2007 was $9.2 million, or 1.23 times the amount needed to cover the increased cash distribution of $7.5 million declared in respect of the period. The Company’s coverage ratio for the year ended June 30, 2007 was 1.22 times. 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.
President and CEO Timothy J.
Casey said “Our operating results for fiscal 2007 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 completion of the Smith and Sirius acquisitions, which
should occur by the end of the month, and by our ongoing fleet expansion. We took delivery of another new 28,000 barrel
tank barge in June, and a 100,000 barrel tank barge in March, both now working
on multi-year time charters. Including
our recently announced contract to build four new 50,000 barrel tank barges, we
now have ten new tank barges under construction which are scheduled for delivery
at intervals of every few months between now and the end of calendar 2010. At our current annualized rate of $2.80 per
unit, K-Sea’s distribution is approximately 13% higher than at this time last
year. We remain optimistic about
continuing our growth in fiscal 2008 and beyond.”
Earnings Conference
Call
The Company has
scheduled a conference call for Monday, August 6, 2007, at 9:00 am Eastern
time, to review the fiscal 2007 fourth quarter and full year results. Dial-in information for this call is (866) 825-3308
(Domestic) and (617) 213-8062 (International).
The Passcode is 67581877. 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 August
13, 2007; the dial in number for the replay is (888) 286-8010 (Domestic) and (617)
801-6888 (International). The Passcode
is 18947235.
About K-Sea Transportation
Partners
K-Sea
Transportation Partners is the largest coastwise tank barge operator, measured
by barrel-carrying capacity, in the
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 timing
of completion of the Smith and Sirius acquisitions and the benefits to be
derived therefrom, 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, satisfaction of
conditions to the closing of the acquisitions, 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