K-Sea Transportation Partners L.P.
Friday April 27, 1:35 pm ET

-- 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--(BUSINESS WIRE)--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 http://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 www.k-sea.com.

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.

 K-SEA TRANSPORTATION PARTNERS L.P.
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except for unit and per unit data)
 
 
 Three months ended Nine months ended
 March 31, March 31,
 2007 2006  2007 2006
 ------- ------- -------- --------
 
 
 Voyage revenue $53,807 $45,082 $159,475 $127,514
 Bareboat charter and other
 revenue 1,823 1,007 7,096 3,083
 -------- -------- --------- ---------
 Total revenues 55,630 46,089 166,571 130,597
 
 Voyage expenses 10,592 9,224 32,638 27,166
 Vessel operating expenses 23,614  21,356 71,375 55,161
 General and administrative
 expenses 5,236 4,298 15,299 12,587
 Depreciation and amortization 8,405 7,074 24,217 19,151
 Net loss (gain) on disposal of
 vessels  182 44 166 (371)
 -------- -------- --------- ---------
 
 Total operating expenses 48,029 41,996 143,695 113,694
 Operating income 7,601 4,093 22,876 16,903
 Interest expense, net 3,485 2,794 10,226 6,924
 Net loss on reduction of debt - - - 6,898
 Other expense (income), net (15) (11) (46) (32)
 -------- -------- --------- ---------
 
 Income before provision
 for income taxes 4,131 1,310 12,696 3,113
 Provision for income taxes 135 94 668 295
 -------- -------- --------- ---------
 Net income $ 3,996 $ 1,216 $ 12,028 $ 2,818
 ======== ======== ========= =========
 
 
 General partner's interest in
 net income $ 80 $  24 $ 241 $ 56
 Limited partners' interest in:
 Net income $ 3,916 $ 1,192 $ 11,787 $ 2,762
 Net income per unit
 - basic $ 0.39 $ 0.12 $ 1.19 $ 0.29
 - diluted $ 0.39 $ 0.12 $ 1.18 $ 0.29
 Weighted average units
 outstanding
 - basic 9,941 9,919 9,934 9,501
 - diluted 10,015 9,977 10,015 9,558
 Supplemental Operating Statistics
 
 Three months ended Nine months ended
 March 31, March 31,
 2007 2006 2007 2006
 -------- -------- -------- --------
 Local Trade:
 Average daily rate (1) $ 6,765 $ 5,645 $ 6,763 $ 5,515
 Net utilization (2) 82% 80% 80% 79%
 
 Coastwise Trade:
 Average daily rate $12,772 $11,422 $12,155 $11,940
 Net utilization 90% 88% 91% 91%
 
 Total Fleet
 Average daily rate $10,226 $ 8,909 $ 9,928 $ 9,082
 Net utilization 87% 84% 86% 85%
 
 
 (1) Average daily rate is equal to the net voyage revenue earned by a
 group of tank vessels during the period, divided by the number of
 days worked by that group of tank vessels during the period.
 (2) Net utilization is equal to the total number of days worked by a
 group of tank vessels during the period, divided by total calendar
 days for that group of tank vessels during the period.
 K-SEA TRANSPORTATION PARTNERS L.P.
 Reconciliation of Unaudited Non-GAAP Financial Measures to GAAP
 Measures
 (in thousands)
 
 Distributable Cash Flow (1)
 
 
 Three months Nine months
 ended ended
 March 31, 2007 March 31, 2007
 
 
Net income $ 3,996 $ 12,028
Adjustments to reconcile net income
 to distributable cash flow :
Depreciation and amortization (2) 8,481 24,436
Non cash compensation cost under
 long term incentive plan 188 568
Adjust loss on vessel sale to net
 proceeds  307 631
Deferred income tax expense 35 220
Maintenance capital expenditures (3) (4,400) (12,600)
 -------------- --------------
 
Distributable cash flow 8,607 25,283
 ============== ==============
Cash distribution in respect of the
 period $ 7,187 $ 20,762
 
Distribution coverage  1.20 1.22
 
 
(1) Distributable Cash Flow provides additional information for
 evaluating our operating performance and ability to continue to make
 quarterly distributions, and is presented solely as a supplemental
 performance measure.
 
(2) Including amortization of deferred financing costs.
 
(3) Maintenance capital expenditures are the estimated cash capital
 expenditures necessary to maintain the operating capacity of our
 capital assets over the long term. This amount includes two
 components: 1) an allowance for future scheduled drydocking costs
 calculated using annually updated projections of such costs over the
 next five years. Based on historical results, the difference between
 cumulative amounts charged and the actual amounts spent are adjusted
 over the same five-year period; 2) an allowance to replace the
 operating capacity of vessels which are scheduled to phase out by
 January 1, 2015 under OPA 90.
 Earnings before Interest, Taxes, Depreciation and Amortization
 and Loss on Reduction of Debt (EBITDA)
 
 Three months ended Nine months ended
 March 31, March 31,
  2007 2006 2007 2006
 ------- ------- ------- -------
 
Net income $ 3,996 $ 1,216 $12,028 $ 2,818
Adjustments to reconcile net
 income to EBITDA :
Depreciation and amortization 8,405 7,074 24,217 19,151
Interest expense, net 3,485 2,794 10,226 6,924
Net loss on reduction of debt - - - 6,898
Provision for income taxes 135 94 668  295
 ---------- -------- -------- --------
 
EBITDA $16,021 $11,178 $47,139 $36,086
 ========== ======== ======== ========
 K-SEA TRANSPORTATION PARTNERS L.P.
 CONSOLIDATED CONDENSED BALANCE SHEETS
 (in thousands)
 
 March 31, June 30,
 2007 2006
  --------- ---------
 
Assets
Current assets:
 Cash and cash equivalents $ 20 $ 826
 Accounts receivable, net 19,385 20,322
 Prepaid expenses and other current assets 6,078 8,753
 --------- ---------
 Total current assets 25,483 29,901
 
Vessels and equipment, net 342,823 316,237
Construction in progress 10,290 5,452
Goodwill 16,385 16,579
Other assets 13,082 14,859
  --------- ---------
 Total assets $408,063 $383,028
 ========= =========
 
Liabilities and Partners' Capital
Current liabilities:
 Current portion of long-term debt and
 capital lease obligation $ 9,228 $ 7,745
 Accounts payable and accrued expenses 26,251 22,626
 --------- ---------
 Total current liabilities  35,479 30,371
 
Term loans and capital lease obligation 138,895 131,620
Credit line borrowings 76,193 54,015
Deferred taxes 3,104 3,079
  --------- ---------
 Total liabilities 253,671 219,085
Commitments and contingencies
Partners' Capital 154,392 163,943
  --------- ---------
 Total liabilities and partners' capital $408,063 $383,028
 ========= =========

Contact:

K-Sea Transportation Partners L.P.
John J. Nicola, 732-565-3818
Chief Financial Officer

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Source: K-Sea Transportation Partners L.P.