Mar 12, 2019   SOURCE: BusinessWire

International Seaways Reports Fourth Quarter and Full Year 2018 Results

International Seaways, Inc. (NYSE:INSW) (the “Company” or “INSW”), one of the largest tanker companies worldwide providing energy transportation services for crude oil and petroleum products in International Flag markets, today reported results for the fourth quarter and full year 2018.

Highlights

  • Net income for the fourth quarter was $7.0 million, or $0.24 per share, compared to net loss of $90.7 million, or $3.12 per share, in the fourth quarter of 2017. Net income for the quarter reflects the impact of a loss on vessel sales, including held for use impairment charges, of $2.5 million. Net income excluding these items was $9.4 million, or $0.32 per share.
  • Time charter equivalent (TCE) revenues(A) for the fourth quarter were $93.0 million, compared to $65.1 million in the fourth quarter of 2017.
  • Adjusted EBITDA(B) for the fourth quarter was $46.2 million, compared to $23.1 million in the same period of 2017.
  • Cash(C) was $117.6 million as of December 31, 2018; total liquidity was $167.6 million, including $50.0 million undrawn revolver.
  • Sold and delivered four older vessels (a 2001-built VLCC, a 2001-built Aframax, a 1998-built MR, and a 2004-built MR) to buyers during the quarter.
  • Announces reauthorization of $30 million share repurchase program for a 24-month period.

“2018 was an important year for us, as we executed on our stated strategy of disciplined capital allocation,” said Lois K. Zabrocky, International Seaways’ president and CEO. “We capitalized on attractive asset values at the bottom of the cycle, increasing the size and reducing the age profile of our fleet and enhancing our earnings power ahead of a market recovery without issuing equity. Our significant operating leverage to a market recovery was evident in the fourth quarter, as our cash flow and earnings immediately reflected the stronger rate environment and we returned to profitability. During the year, we also maintained our strong balance sheet, increasing total liquidity to $167.6 million and ending the year once again with one of the lowest net loan to value profiles in the sector.”

Ms. Zabrocky continued, “We are encouraged by the strength of the tanker market in the fourth quarter and how the market is developing thus far in 2019. While the exact timing for a sustained recovery is not yet clear, we see optimistic signs to support a balanced market in the near term led by increasing exports out of the U.S. Gulf and sustained growth in global oil demand. In addition, we continue to expect the upcoming IMO 2020 regulations will boost demand for both crude and product tankers as overall crude volumes are set to increase and new trading patterns for petroleum products develop. Going forward, our priorities remain to provide safe, reliable service to energy customers, maintain strong corporate governance standards, and continue to effectively allocate capital for the benefit of shareholders.”

Fourth Quarter 2018 Results
Net income for the fourth quarter of 2018 was $7.0 million, or $0.24 per diluted share, compared to a net loss of $90.7 million, or $3.12 per diluted share, in the fourth quarter of 2017. The increased net income in the fourth quarter of 2018 primarily reflects an increase in TCE revenues of $27.9 million and a decrease in vessel impairment charges of $79.0 million compared with the fourth quarter of 2017. In addition, the quarter-over-quarter improvement reflects a decrease in vessel expenses. These positive factors were partially offset by increases in charter hire expenses, principally attributable to the Company’s Lightering business, a decrease in equity in income of affiliated companies and an increase in interest expense. The net loss for the fourth quarter of 2017 reflected the impact of vessel impairment charges of $81.1 million.

Consolidated TCE revenues for the fourth quarter of 2018 were $93.0 million, compared to $65.1 million in the fourth quarter of 2017. Shipping revenues for the fourth quarter of 2018 were $100.6 million, compared to $69.4 fourth in the fourth quarter of 2017.

The reduction in equity in income of affiliated companies was principally attributable to increased interest expense for the two FSO joint ventures in the fourth quarter of 2018 compared to the fourth quarter of 2017 as a result of drawdowns on debt facilities aggregating $220 million during April 2018. In addition, earnings generated by the LNG joint venture during the fourth quarter of 2018 were lower than the fourth quarter of 2017 as a result of costs resulting from machinery damage on two of the joint venture’s vessels.

The increase in interest expense in the fourth quarter of 2018 compared to the fourth quarter of 2017 was primarily attributable to the impact of debt facilities entered into by the Company during the second quarter of 2018 in connection with the completion of the acquisition of six VLCCs from Euronav NV, and higher average interest rates under the Company’s 2017 Credit Agreement.

Adjusted EBITDA was $46.2 million for the quarter, compared to $23.1 million in the fourth quarter of 2017, principally driven by higher daily rates.

Crude Tankers
TCE revenues for the Crude Tankers segment were $71.6 million for the quarter compared to $42.1 million in the fourth quarter of 2017. This increase primarily resulted from the impact of higher average blended rates in the VLCC, Suezmax and Aframax sectors, with spots rates climbing to approximately $31,700, $30,600 and $19,000, per day, respectively, aggregating approximately $18.4 million. The impact of increased revenue days (see Full Year 2018 Results below) in the VLCC sector accounted for $8.0 million. The balance of the increase was substantially attributable to higher activity in the Company’s Lightering business in the 2018 quarter compared with the fourth quarter of 2017. Shipping revenues for the Crude Tankers segment were $79.0 million for the quarter compared to $46.3 million in the fourth quarter of 2017.

Product Carriers
TCE revenues for the Product Tankers segment were $21.5 million for the quarter, compared to $23.0 in the fourth quarter of 2017. This decrease primarily resulted from the impact of a decline in revenue days (see Full Year 2018 Results below) in the MR sector, accounting for $6.3 million of the change. This was mostly offset by the impact of higher average daily blended rates earned by the LR1 and MR fleets, with spot rates rising to approximately $22,200 and $12,900 per day, respectively, aggregating approximately $4.9 million. Shipping revenues for the Product Carriers segment were $21.6 million for the quarter, compared to $23.1 million in the fourth quarter of 2017.

Full Year 2018 Results
Net loss for the full year ended December 31, 2018 was $88.9 million, or $3.05 per diluted share, compared with net loss of $106.1 million, or $3.64 per diluted share, for the full year 2017. The 2017 results reflect $88.4 million in vessel impairment charges and $9.2 million of costs associated with the Company’s debt refinancing. During 2018, the loss from vessel operations decreased to $54.5 million from $107.9 million in 2017. This improvement resulted primarily from a decreased loss on disposal of vessels including impairments of $67.2 million and reductions in third-party debt modification fees, depreciation and amortization, and vessel expenses. The impacts of these items were partially offset by a decline in TCE revenues and an increase in charter hire expenses, which was principally attributable to increased activity in the Company’s Lightering business. In addition, there was a year-over-year decrease in equity in income of affiliated companies of $19.5 million and an increase in interest expense of $19.0 million.

Consolidated TCE revenues for the full year ended December 31, 2018 were $243.1 million, compared to $275.0 million for full year 2017. Shipping revenues for the full year ended December 31, 2018 were $270.4 million compared to $290.1 million for the prior full year.

The reduction in equity in income of affiliated companies was principally attributable to decreases in earnings from the two FSO joint ventures as charter rates in the five-year service contracts that commenced during the third quarter of 2017 are lower than the charter rates included in the service contracts under which the FSO joint ventures had previously operated. In addition, interest expense for the two FSO joint ventures increased in 2018 compared to 2017 as a result of drawdowns on debt facilities aggregating $220 million during April 2018. In addition, revenue generated by the LNG joint venture during 2018 was lower than revenue generated during 2017 as a result of offhire claims resulting from machinery damage on two of the joint venture’s vessels during 2018.

The increase in interest expense was primarily attributable to the impact of debt facilities entered into by the Company during the second quarter of 2018 in connection with the completion of acquisition of six VLCCs from Euronav NV, accounting for $12.8 million, with the higher average outstanding principal balances under the Company’s 2017 Credit Agreement than under the 2014 facility that it replaced late in the second quarter of 2017 and higher related interest rates accounting for the balance.

Adjusted EBITDA was $68.3 million for the full year 2018, compared to $117.8 million for the full year 2017.

Crude Tankers
TCE revenues for the Crude Tankers segment were $175.5 million for the full year 2018, compared to $178.8 million for the full year 2017. This decrease resulted primarily from the impact of lower average blended rates in the VLCC, Aframax and Panamax sectors, with spot rates for the VLCC, Aframax and Panamax sectors declining to approximately $18,900, $12,800 and $13,000, respectively, aggregating approximately $32.7 million. In addition, there was a decrease of $11.9 million associated with the sale of the Company’s only ULCC, which was idle in 2018 prior to its sale in June 2018. Increased revenue in the Lightering business; 347 fewer drydock days in the Panamax fleet in 2018 compared with 2017; and the additions of nine modern vessels (two 2017-built Suezmaxes, which both delivered to the Company in July 2017, a 2010-built VLCC that delivered in November 2017, and a 2015-built and five 2016-built VLCCs, which delivered to the Company in June 2018), substantially offset the declines noted above. The disposals of six older vessels (the 2003-built ULCC noted above, a 2000-built VLCC, a 2001-built VLCC, two 2001-built Aframaxes and a 2002-built Panamax) partially offset the impact of the aforementioned increase in revenue days attributable to the vessel additions.

Shipping revenues for the Crude Tankers segment were $202.4 million for the full year 2018, compared to $192.4 million for the full year 2017.

Product Carriers
TCE revenues for the Product Carriers segment were $67.6 million for the full year 2018, compared to $96.2 million for the full year 2017. This decrease was partly due to a decline in average daily blended rates earned by the MR and LR2 fleets, with spot rates declining to approximately $10,100 and $12,700 per day, respectively, which accounted for $4.8 million of the decline in TCE revenues. 2,265 fewer revenue days, driven by the sale of seven MRs between August 2017 and December 2018 and the redelivery of three MRs to their owners between December 2017 and June 2018 at the expiry of their respective bareboat charters contributed $23.3 million to the overall decline. Shipping revenues for the Product Carriers segment were $68.0 million for the full year 2018, compared to $97.7 million for the full year 2017.

Vessel Sales
During the quarter, the Company sold a 2001-built VLCC and a 2001-built Aframax, which both delivered to buyers in October 2018, and two older MRs, which delivered to buyers in December 2018.

Share Repurchase Reauthorization
On March 5, 2019, the Company’s Board of Directors reauthorized the Company’s $30 million share repurchase program for a 24-month period. The amount and timing of any repurchases made under the stock repurchase program will depend on a variety of factors, including market conditions and available liquidity. The stock repurchase program does not obligate the Company to repurchase any dollar amount or number of shares of common stock and the program may be suspended or discontinued at any time.

Conference Call
The Company will host a conference call to discuss its fourth quarter 2018 results at 9:00 a.m. Eastern Time (“ET”) on Tuesday, March 12, 2019.

To access the call, participants should dial (855) 940-9471 for domestic callers and (412) 317-5211 for international callers. Please dial in ten minutes prior to the start of the call.

A live webcast of the conference call will be available from the Investor Relations section of the Company’s website at http://www.intlseas.com.

An audio replay of the conference call will be available starting at 12:00 p.m. ET on Tuesday, March 12, 2019 through 11:59 p.m. ET on Tuesday, March 19, 2019 by dialing (877) 344-7529 for domestic callers and (412) 317-0088 for international callers, and entering Access Code 10129184.

About International Seaways, Inc.
International Seaways, Inc. (NYSE:INSW) is one of the largest tanker companies worldwide providing energy transportation services for crude oil and petroleum products in International Flag markets. International Seaways owns and operates a fleet of 48 vessels as of December 31, 2018, including 13 VLCCs, two Suezmaxes, six Aframaxes/LR2s, 11 Panamaxes/LR1s and 10 MR tankers. Through joint ventures, it has ownership interests in four liquefied natural gas carriers and two floating storage and offloading service vessels. International Seaways has an experienced team committed to the very best operating practices and the highest levels of customer service and operational efficiency. International Seaways is headquartered in New York City, NY. Additional information is available at www.intlseas.com.

Forward-Looking Statements
This release contains forward-looking statements. In addition, the Company may make or approve certain statements in future filings with the Securities and Exchange Commission (SEC), in press releases, or in oral or written presentations by representatives of the Company. All statements other than statements of historical facts should be considered forward-looking statements. These matters or statements may relate to the Company’s plans to issue dividends, its prospects, including statements regarding vessel acquisitions, trends in the tanker markets, and possibilities of strategic alliances and investments. Forward-looking statements are based on the Company’s current plans, estimates and projections, and are subject to change based on a number of factors. Investors should carefully consider the risk factors outlined in more detail in the Annual Report on Form 10-K for 2018 for the Company, which will be filed subsequent to the date of this release, and in similar sections of other filings made by the Company with the SEC from time to time. The Company assumes no obligation to update or revise any forward-looking statements. Forward-looking statements and written and oral forward-looking statements attributable to the Company or its representatives after the date of this release are qualified in their entirety by the cautionary statements contained in this paragraph and in other reports previously or hereafter filed by the Company with the SEC.

 
Consolidated Statements of Operations
($ in thousands, except per share amounts)
      Three Months Ended     Fiscal Year Ended
December 31, December 31,
2018     2017 2018     2017
(Unaudited)     (Unaudited)    
Shipping Revenues:
Pool revenues $ 71,370 $ 47,437 $ 177,206 $ 177,347
Time and bareboat charter revenues 5,508 11,290 25,961 55,106
Voyage charter revenues   23,670   10,699   67,194   57,648
Total Shipping Revenues   100,548   69,426   270,361   290,101
 
Operating Expenses:
Voyage expenses 7,514 4,332 27,261 15,106
Vessel expenses 32,384 35,039 135,003 141,235
Charter hire expenses 14,825 9,355 44,910 41,700
Depreciation and amortization 18,683 20,610 72,428 78,853
General and administrative 6,777 6,567 24,304 24,453
Third-party debt modification fees 13 110 1,306 9,240
Separation and transition costs - 116 - 604
Loss on disposal of vessels and other property,
including impairments   2,487   81,449   19,680   86,855
Total operating expenses   82,683   157,578   324,892   398,046
Income/(loss) from vessel operations 17,865 (88,152) (54,531) (107,945)
Equity in income of affiliated companies   6,932   8,698   29,432   48,966
Operating income/(loss) 24,797 (79,454) (25,099) (58,979)
Other income/(expense)   249   317   (3,715)   (5,818)
Income/(loss) before interest expense and income taxes 25,046 (79,137) (28,814) (64,797)
Interest expense   (18,204)   (11,570)   (60,231)   (41,247)
Income/(loss) before income taxes 6,842 (90,707) (89,045) (106,044)
Income tax benefit/(provision)   116   (13)   105   (44)
Net income/(loss) $ 6,958 $ (90,720) $ (88,940) $ (106,088)
 
Weighted Average Number of Common Shares Outstanding:
Basic 29,155,028 29,061,657 29,136,634 29,159,440
Diluted 29,222,543 29,061,657 29,136,634 29,159,440
 
Per Share Amounts:
Basic and diluted net income/(loss) per share $ 0.24 $ (3.12) $ (3.05) $ (3.64)
 

The Company adopted ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASC 715), which requires that an employer classify and report the service cost component in the same line item or items in the statement of operations as other compensation costs arising from services rendered by the pertinent employees during the period and disclose by line item in the statement of operations the amount of net benefit cost that is included in the statement of operations. The other components of net benefit cost would be presented in the statement of operations separately from the service cost component and outside the subtotal of income from operations. The Company adopted this accounting standard on January 1, 2018 and has applied the guidance retrospectively.

         
Consolidated Balance Sheets
($ in thousands)
December 31, December 31,
2018 2017
 
ASSETS
Current Assets:
Cash and cash equivalents $ 58,313 $ 60,027
Voyage receivables 94,623 58,187
Other receivables 5,246 4,411
Inventories 3,066 3,270
Prepaid expenses and other current assets 5,912 5,881
Current portion of derivative asset   460   16
Total Current Assets 167,620 131,792
 
Restricted Cash 59,331 10,579
Vessels and other property, less accumulated depreciation 1,330,795 1,104,727
Vessel held for sale, net - 5,108
Deferred drydock expenditures, net   16,773   30,528
Total Vessels, Deferred Drydock and Other Property   1,347,568   1,140,363
Investments in and advances to affiliated companies 268,322 378,894
Long-term derivative asset 704 886
Other assets   5,056   1,970
Total Assets $ 1,848,601 $ 1,664,484
 
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, accrued expenses and other current liabilities $ 22,974 $ 22,805
Payable to OSG 34 367
Current installments of long-term debt 51,555 24,063
Current portion of derivative liability   707   -
Total Current Liabilities 75,270 47,235
Long-term debt 759,112 528,874
Long-term portion of derivative liability 1,922 -
Other liabilities   2,442   2,721
Total Liabilities 838,746 578,830
 
Equity:
Total Equity   1,009,855   1,085,654
Total Liabilities and Equity $ 1,848,601 $ 1,664,484
 
         
Consolidated Statements of Cash Flows
($ in thousands)

Fiscal Year Ended
December 31,

2018 2017
 
Cash Flows from Operating Activities:
Net loss $ (88,940) $ (106,088)
Items included in net loss not affecting cash flows:
Depreciation and amortization 72,428 78,853
Loss on write-down of vessels and other fixed assets 19,037 88,408
Amortization of debt discount and other deferred financing costs 6,212 6,423
Deferred financing costs write-off 2,400 7,020
Stock compensation, non-cash 3,162 3,808
Earnings of affiliated companies (29,201) (49,427)
Other – net 448 131
Items included in net loss related to investing and financing activities:
Loss/(gain) on disposal of vessels and other property, net 643 (1,553)
Loss on repurchase of debt 1,295 -
Cash distributions from affiliated companies 43,622 21,220
Payments for drydocking (4,520) (21,396)
Insurance claims proceeds related to vessel operations 5,436 1,964
Changes in operating assets and liabilities   (44,502)   (11,968)
Net cash (used in)/provided by operating activities   (12,480)   17,395
Cash Flows from Investing Activities:
Expenditures for vessels and vessel improvements (148,946) (173,535)
Proceeds from disposal of vessels and other property 169,292 18,344
Expenditures for other property (1,096) (406)
Investments in and advances to affiliated companies, net 3,679 (731)
Repayments of advances from joint venture investees   100,780   19,530
Net cash provided by/(used in) investing activities   123,709   (136,798)
Cash Flows from Financing Activities:
Issuance of debt, net of issuance and deferred financing costs 70,120 614,933
Payments on debt (71,610) (54,983)
Extinguishment of debt (62,069) (458,416)
Repurchases of common stock - (3,177)
Cash paid to tax authority upon vesting of stock-based compensation (410) (349)
Other – net   (222)   -
Net cash (used in)/provided by financing activities   (64,191)   98,008
Net increase/(decrease) in cash, cash equivalents and restricted cash 47,038 (21,395)
Cash, cash equivalents and restricted cash at beginning of year   70,606   92,001
Cash, cash equivalents and restricted cash at end of year $ 117,644 $ 70,606
 

The Company adopted ASU No. 2016-18, Statement of Cash Flows (ASC 230), Restricted Cash, which requires that amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The standard is effective for annual periods beginning after December 31, 2017 and interim periods within that reporting period. The Company adopted this accounting standard on January 1, 2018. The adoption of this accounting standard resulted in the inclusion of restricted cash by $10,579 from December 31, 2017 in the beginning-of-year amount shown on the statement of cash flows for the fiscal year ended December 31, 2018.

Spot and Fixed TCE Rates Achieved and Revenue Days

The following tables provides a breakdown of TCE rates achieved for spot and fixed charters and the related revenue days for the three months and fiscal year ended December 31, 2018 and the comparable periods of 2017. Revenue days in the quarter ended December 31, 2018 totaled 3,883 compared with 4,506 in the prior year quarter. Revenue days in the fiscal year ended December 31, 2018 totaled 15,842 compared with 17,143 in the prior year. A summary fleet list by vessel class can be found later in this press release.

                         
                                       

Three Months Ended
December 31, 2018

   

Three Months Ended
December 31, 2017

        Spot     Fixed     Total     Spot     Fixed     Total
Crude Tankers                                              
ULCC
Average TCE Rate $ - $ - $ - $ 32,175
Number of Revenue Days - - - 17 75 92
VLCC
Average TCE Rate $ 31,728 $ - $ 20,092 $ 21,277
Number of Revenue Days 1,187 - 1,187 679 78 757
Suezmax
Average TCE Rate $ 30,606 $ - $ 20,408 $ -
Number of Revenue Days 184 - 184 184 - 184
Aframax
Average TCE Rate $ 18,968 $ - $ 14,117 $ -
Number of Revenue Days 425 - 425 618 - 618
Panamax
Average TCE Rate $ 14,866 $ 11,184 $ 13,286 $ 11,897
Number of Revenue Days         139       457     596       184       551     735
Total Crude Tankers Revenue Days         1,935       457     2,392       1,682       704     2,386
Product Carriers                                              
LR2
Average TCE Rate $ 15,575 $ - $ 15,439 $ -
Number of Revenue Days 92 - 92 91 - 91
LR1
Average TCE Rate $ 22,165 $ - $ 13,583 $ -
Number of Revenue Days 354 - 354 360 - 360
MR
Average TCE Rate $ 12,905 $ 5,294 $ 10,832 $ 5,294
Number of Revenue Days         978       67     1,045       1,577       92     1,669
Total Product Carriers Revenue Days         1,424       67     1,491       2,028       92     2,120
Total Revenue Days         3,359       524     3,883       3,710       796     4,506
                                       

Fiscal Year Ended
December 31, 2018

   

Fiscal Year Ended
December 31, 2017

        Spot     Fixed     Total     Spot     Fixed     Total
Crude Tankers                                              
ULCC
Average TCE Rate $ - $ - $ - $ 34,867
Number of Revenue Days 94 - 94 17 348 365
VLCC
Average TCE Rate $ 18,881 $ 13,221 $ 24,871 $ 33,756
Number of Revenue Days 3,854 97 3,951 2,525 346 2,871
Suezmax
Average TCE Rate $ 18,973 $ - $ 17,910 $ -
Number of Revenue Days 730 - 730 317 - 317
Aframax
Average TCE Rate $ 12,808 $ - $ 13,392 $ -
Number of Revenue Days 2,020 - 2,020 2,419 - 2,419
Panamax
Average TCE Rate $ 12,988 $ 11,419 $ 13,030 $ 14,093
Number of Revenue Days         685       1,984     2,669       1,244       1,278     2,522
Total Crude Tankers Revenue Days         7,383       2,081     9,464       6,522       1,972     8,494
Product Carriers                                              
LR2
Average TCE Rate $ 12,729 $ - $ 13,813 $ -
Number of Revenue Days 365 - 365 364 - 364
LR1
Average TCE Rate $ 14,875 $ - $ 12,871 $ 17,040
Number of Revenue Days 1,416 - 1,416 808 615 1,423
MR
Average TCE Rate $ 10,125 $ 5,294 $ 11,001 $ 5,342
Number of Revenue Days         4,257       340     4,597       6,496       366     6,862
Total Product Carriers Revenue Days         6,038       340     6,378       7,668       981     8,649
Total Revenue Days         13,421       2,421     15,842       14,190       2,953     17,143
 

Revenue days in the above table exclude days related to full service lighterings and days for which recoveries were recorded under the Company’s loss of hire insurance policies.

Fleet Information

As of December 31, 2018, INSW’s owned and operated 48 vessels, 36 of which were owned, 6 of which were chartered in, and 6 were held through joint venture partnerships (2 FSO and 4 LNG vessels).

                             
 
Vessels Owned Vessels Chartered-in Total at December 31, 2018
Vessel Type Number

Weighted
by
Ownership

Number

Weighted
by
Ownership

Total
Vessels

Vessels
Weighted
by
Ownership

Total Dwt
Operating Fleet              
FSO 2 1.0 - - 2 1.0 864,046
VLCC 13 13.0 - - 13 13.0 3,950,110
Suezmax 2 2.0 - - 2 2.0 316,864
Aframax 3 3.0 2 2.0 5 5.0 562,943
Panamax 7 7.0 - - 7 7.0 487,490
Crude Tankers 27 26.0 2 2.0 29 28.0 6,181,453
 
LR2 1 1.00 - - 1 1.0 109,999
LR1 4 4.00 - - 4 4.0 297,710
MR 6 6.00 4 4.0 10 10.0 498,471
Product Carriers 11 11.00 4 4.0 15 15.0 906,180
               
Total Crude Tanker & Product Carrier Operating Fleet 38 37.0 6 6.0 44 43.0 7,087,633
LNG Fleet 4 2.0 - - 4 2.0 864,800 cbm
7,087,633
and
Total Operating Fleet       42     39.0     6     6.0     48     45.0     864,800 cbm
 

Reconciliation to Non-GAAP Financial Information

The Company believes that, in addition to conventional measures prepared in accordance with GAAP, the following non-GAAP measures may provide certain investors with additional information that will better enable them to evaluate the Company’s performance. Accordingly, these non-GAAP measures are intended to provide supplemental information, and should not be considered in isolation or as a substitute for measures of performance prepared with GAAP.

(A) Time Charter Equivalent (TCE) Revenues

Consistent with general practice in the shipping industry, the Company uses TCE revenues, which represents shipping revenues less voyage expenses, as a measure to compare revenue generated from a voyage charter to revenue generated from a time charter. Time charter equivalent revenues, a non-GAAP measure, provides additional meaningful information in conjunction with shipping revenues, the most directly comparable GAAP measure, because it assists Company management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance. Reconciliation of TCE revenues of the segments to shipping revenues as reported in the consolidated statements of operations follow:

                 
Three Months Ended December 31, Fiscal Year Ended December 31,
($ in thousands)   2018       2017   2018       2017
TCE revenues $ 93,034 $ 65,094 $ 243,100 $ 274,995
Add: Voyage expenses   7,514       4,332   27,261       15,106
Shipping revenues $ 100,548     $ 69,426 $ 270,361     $ 290,101
 

(B) EBITDA and Adjusted EBITDA

EBITDA represents net (loss)/income before interest expense, income taxes and depreciation and amortization expense. Adjusted EBITDA consists of EBITDA adjusted for the impact of certain items that we do not consider indicative of our ongoing operating performance. EBITDA and Adjusted EBITDA do not represent, and should not be a substitute for, net income or cash flows from operations as determined in accordance with GAAP. Some of the limitations are: (i) EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; (ii) EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; and (iii) EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt. While EBITDA and Adjusted EBITDA are frequently used as a measure of operating results and performance, neither of them is necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation. The following table reconciles net loss as reflected in the consolidated statements of operations, to EBITDA and Adjusted EBITDA:

                 

Three Months Ended
December 31,

Fiscal Year Ended
December 31,

($ in thousands)   2018   2017   2018   2017
Net income/(loss) $ 6,958 $ (90,720) $ (88,940) $ (106,088)
Income tax (benefit)/provision (116) 13 (105) 44
Interest expense 18,204 11,570 60,231 41,247
Depreciation and amortization   18,683   20,610   72,428   78,853
EBITDA 43,729 (58,527) 43,614 14,056
Third-party debt modification fees and costs
associated with repurchase of debt 13 110 1,306 9,240
Separation and transition costs - 116 - 604
Loss on disposal of vessels and other property,
property, including impairments 2,487 81,449 19,680 86,855
Write-off of deferred financing costs - - 2,400 7,020
Loss on extinguishment of debt   -   -   1,295   -
Adjusted EBITDA $ 46,229     $ 23,148 $ 68,295     $ 117,775
 
         

(C) Total Cash

December 31, December 31,
($ in thousands) 2018 2017
Cash and cash equivalents $ 58,313 $ 60,027
Restricted cash   59,331   10,579
Total Cash $ 117,644 $ 70,606