Overseas Shipholding (US:OSG)2023-03-09 21:06Revenue and Expenses - Shipping revenues increased by $107,738, or 30.0%, to $466,800 in 2022 compared to $359,062 in 2021, primarily due to a decrease in layup days and an increase in average daily rates [221]. - Time charter equivalent (TCE) revenues rose by $133,733, or 45.7%, to $426,328 in 2022 from $292,595 in 2021, driven by increased shipping revenues [226]. - Voyage expenses decreased by $25,995, or 39.1%, to $40,472 in 2022, mainly due to the absence of oil pollution mitigation expenses previously incurred in 2021 [227]. - Vessel expenses increased by $36,253, or 25.8%, to $176,666 in 2022, primarily due to higher crewing costs as fewer vessels were in layup [228]. - Charter hire expenses decreased by $1,317, or 1.5%, to $88,849 in 2022, attributed to the redelivery of three conventional tankers [229]. - General and administrative expenses increased by $2,888, or 12.0%, to $26,985 in 2022, driven by higher compensation and benefits costs [233]. Operational Performance - Delaware Bay lightering volumes averaged 67,000 b/d in 2022, down from 70,000 b/d in 2021 [220]. - The number of vessels employed was 98% of available days during 2022, with only 159 idle days out of 7,025 available days [219]. - The average TCE rate for Jones Act Handysize Product Carriers was $51,565 in 2022, compared to $34,985 in 2021 [225]. Financial Position - Other income increased by $1,342, or 67.6%, to $3,327 in 2022, primarily due to annual actuarial adjustments related to pension plans [236]. - Interest expense increased by $3,857, or 13.2%, to $33,060 in 2022 from $29,203 in 2021, primarily due to a higher average balance of debt and increased interest rates on the new term loan [237]. - The effective tax rate decreased to 20.6% in 2022 from 28.1% in 2021, attributed to a shift from net loss in 2021 to net income in 2022, with U.S. federal net operating loss carryforwards of $199,059 available to reduce future taxes [238]. - Working capital from continuing operations improved to approximately $(38,000) at December 31, 2022, compared to $(67,000) at December 31, 2021, despite a decrease in cash and cash equivalents [240]. - Total liquidity as of December 31, 2022, was $78,732 in cash and cash equivalents, with restricted cash balances exceeding FDIC insurance limits [241]. - Total debt outstanding as of December 31, 2022, was $423,363, with a total debt to total capitalization ratio of 55.5%, down from $444,740 and 56.7% in 2021 [242]. - Net cash provided by operating activities in 2022 was $72,823, with potential sources of funds including additional borrowings and opportunistic sales of vessels [243]. Shareholder Actions - The company repurchased 10 million shares of common stock for $29,040 in 2022, with an average price of $2.95 per share [246]. Market Outlook - The company anticipates favorable market conditions for time charter contracts, with a focus on balancing supply and demand in the transportation of refined petroleum products and renewable fuels [250]. - The refinancing of certain debts in 2021 reduced cash debt service requirements and lengthened the maturity profile of loans, providing additional cash resources [253]. - The demand for domestic crude oil transportation and renewable fuels is expected to support long-term business objectives, with a return to normalized demand levels anticipated [252]. Accounting and Valuation - The company uses the deferral method for drydocking costs, capitalizing them as incurred and amortizing over the drydocking cycle, which typically extends over 2.5 to 5 years [266]. - The company has recorded pension benefit costs based on key assumptions including discount rates and expected rates of return on plan assets, which significantly impact the benefit obligations [270]. - The carrying values of the company's vessels may not reflect their fair market value, and impairment charges are recognized if future cash flows are estimated to be less than the carrying amount [272]. - Future cash flow estimates for vessels are based on assumptions regarding charter rates, operating expenses, and utilization, which are influenced by historical trends and future expectations [273]. - The company utilizes discounted future cash flows for impairment tests, as the secondhand market for U.S. Flag vessels is not robust [275].