K-Sea Transportation Partners L.P. (NYSE: KSP) today announced
operating results and net income for the second fiscal quarter
ended December 31, 2007. The Company also announced that its
distribution to unitholders for the second quarter will increase by
$0.02, or 2.8%, to $0.74 per unit, or $2.96 per unit annualized.
This is the eleventh consecutive quarter of increased
distributions, and the thirteenth increase since the Company�s IPO
in January 2004. The distribution will be payable on February 14,
2008 to unitholders of record on February 8, 2008. The second
quarter of fiscal 2008 included a non-recurring gain of $2.1
million, or $0.12 per fully diluted limited partner unit,
representing proceeds from the settlement of legal proceedings
relating to the Company�s previously reported November 2005
incident involving the barge DBL 152. Fully diluted earnings
including and excluding this gain were $0.68 and $0.56 per limited
partner unit, respectively, compared to $0.39 per limited partner
unit in the second quarter of fiscal 2007. President and CEO
Timothy J. Casey said: �During the second quarter of fiscal 2008,
we made significant progress in integrating the Smith Maritime
Group, and our fleet expansion and upgrade program continues to
provide us new and more efficient vessels. Our operating income,
EBITDA, and net income per unit are markedly ahead of last year.
Our growth plans remain on target. During the second quarter of
fiscal 2008, we took delivery of two new 28,000 barrel tank barges,
and we have ten additional units under construction. Nine new tank
barges are scheduled to be delivered, approximately one per
quarter, over the next two years, and we have also begun
construction on the previously announced 185,000-barrel articulated
tug-barge unit, which is scheduled for delivery in the fourth
quarter of calendar 2009 and will then begin work under a
multi-year charter with a major customer. �Demand for our services
continues to be strong, as evidenced by the extension of several
contracts with existing customers and long-term commitments from
new customers. Our average daily rates are higher in both our
coastwise and local trades, reflecting overall market strength and
the impact of an increase in our average vessel size. I would also
remind our investors that our third fiscal quarter ending in March
is generally our lowest seasonally, due mainly to winter slowdowns
in Alaska and the Great Lakes. �In light of our results and
expectations, our Board of Directors has approved a two cent per
unit increase in our quarterly distribution, the eleventh
consecutive distribution increase and thirteenth increase since our
initial public offering in January 2004. At our current annualized
rate of $2.96 per unit, K-Sea�s distribution is approximately 12%
higher than at this time last year. We remain optimistic about
continuing our growth for the balance of fiscal 2008 and beyond.�
Three Months Ended December 31, 2007 For the three months ended
December 31, 2007, the Company reported operating income of $13.4
million, an increase of $5.6 million, or 72%, compared to $7.8
million of operating income for the three months ended December 31,
2006. This increase resulted primarily from inclusion of the
recently acquired Smith Maritime Group, for which results are
included from the acquisition date of August 14, 2007, and also
from the continuing addition of new barges from the Company�s
expansion and upgrade program. Since January 1, 2007, the Company
has taken delivery of five new tank barges, and has also purchased
three tugboats that have reduced reliance on more expensive
chartered-in towing. Results for the second quarter of fiscal 2008
were also affected by continued strong rates, which were partially
offset by lower vessel utilization, increases of $2.9 million in
depreciation and amortization due to the Smith acquisition and the
expanded fleet, and $2.0 million in higher general and
administrative expenses as a result of the acquisition and the
Company�s continued growth. Vessel utilization was lower due to
higher scheduled drydocking days and lower utilization of certain
lower-valued, single-hull vessels. Earnings before interest, taxes,
depreciation and amortization (EBITDA) increased by $10.7 million,
or 67%, to $26.6 million for the three months ended December 31,
2007, compared to $15.9 million for the three months ended December
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 December 31,
2007 was $9.9 million, or $0.68 per fully diluted limited partner
unit, an increase of $6.0 million compared to net income of $3.9
million, or $0.39 per fully diluted limited partner unit, for the
three months ended December 31, 2006. The fiscal 2008 second
quarter benefited from the $5.6 million increase in operating
income, and from the $2.1 million non-recurring gain on final
settlement of the DBL 152 legal proceedings mentioned above. These
increases were partially offset by a $1.9 million increase in
interest expense resulting from debt incurred to finance the Smith
acquisition and vessel newbuildings over the past year. Six Months
Ended December 31, 2007 For the six months ended December 31, 2007,
the Company reported operating income of $26.2 million, an increase
of $10.9 million, or 71%, compared to $15.3 million of operating
income for the six months ended December 31, 2006. This increase
resulted primarily from the Smith acquisition and from the
continuing addition of new barges from the Company�s expansion and
upgrade program. Since July 1, 2006, the Company has taken delivery
of six new tank barges, and has also purchased six tugboats which
have reduced reliance on more expensive chartered-in towing. These
results were also positively affected by continued strong rates,
partially offset by lower vessel utilization, increases of $4.9
million in depreciation and amortization due to the Smith
acquisition and the expanded fleet, and $3.5 million in higher
general and administrative expenses as a result of the acquisition
and the Company�s continued growth. Vessel utilization for the
first half of fiscal 2008 was impacted by the same factors
described above that impacted the fiscal 2008 second quarter.
EBITDA increased by $17.9 million, or 58%, including the
non-recurring gain, to $49.0 million for the six months ended
December 31, 2007, compared to $31.1 million for the six months
ended December 31, 2006. Net income for the six months ended
December 31, 2007 was $16.6 million, or $1.31 per fully diluted
limited partner unit, an increase of $8.6 million compared to net
income of $8.0 million, or $0.79 per fully diluted limited partner
unit, for the six months ended December 31, 2006. The first six
months of fiscal 2008 benefited from the $10.9 million increase in
operating income, and from the $2.1 million non-recurring gain on
settlement of the DBL 152 legal proceedings mentioned above. These
increases were partially offset by a $4.4 million increase in
interest expense resulting from debt incurred to finance the Smith
acquisition, including $1.1 million for interest on bridge
financing, and vessel newbuildings over the past year. The
Company�s distributable cash flow for the second quarter of fiscal
2008 was a record $15.8 million, or 1.44 times the amount needed to
cover the increased cash distribution of $10.9 million declared in
respect of the period. Excluding the $2.1 million non-recurring
gain, the coverage ratio for the second quarter was 1.25 times, and
1.21 times for the first half of fiscal 2008. 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. Earnings Conference Call The Company has scheduled a
conference call for Friday, February 1, 2008, at 9:00 am Eastern
time, to review the fiscal 2008 second quarter results. Dial-in
information for this call is (866) 383-7998 (Domestic) and (617)
597-5329 (International). The Passcode is 66105441. 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 February 8, 2007; the dial in number for the
replay is (888) 286-8010 (Domestic) and (617) 801-6888
(International). The Passcode is 87676875. About K-Sea
Transportation Partners K-Sea Transportation Partners is the
largest coastwise tank barge operator 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 (GAAP). 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 the benefits to
be derived from the Smith Maritime Group acquisition, business
outlook, vessel utilization, delivery and integration of newbuild
and acquired vessels (including the cost, timing and effects
thereof), growth in earnings, distributable cash flow and
distributions per unit, 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 � Six months ended December 31, December 31, 2007 �
2006 2007 � 2006 � � Voyage revenue $ 80,416 $ 52,921 $ 149,361 $
105,668 Bareboat charter and other revenue � 3,260 � � 3,110 � �
6,076 � � 5,273 � Total revenues 83,676 56,031 155,437 110,941 �
Voyage expenses 19,632 10,465 35,375 22,046 Vessel operating
expenses 32,374 24,425 59,891 47,761 General and administrative
expenses 7,251 5,256 13,595 10,063 Depreciation and amortization
11,066 8,127 20,722 15,812 Net (gain) on disposal of vessels � (79
) � - � � (300 ) � (16 ) � Total operating expenses 70,244 48,273
129,283 95,666 Operating income 13,432 7,758 26,154 15,275 Interest
expense, net 5,315 3,419 11,135 6,741 Other expense (income), net �
(2,102 ) � (15 ) � (2,107 ) � (31 ) � � Income before provision for
income taxes 10,219 4,354 17,126 8,565 Provision for income taxes �
289 � � 408 � � 525 � � 533 � Net income $ 9,930 � $ 3,946 � $
16,601 � $ 8,032 � � � General partner's interest in net income $
548 $ 79 $ 804 $ 161 Limited partners' interest in: Net income $
9,382 $ 3,867 $ 15,797 $ 7,871 Net income per unit - basic $ 0.68 $
0.39 $ 1.32 $ 0.79 � - diluted $ 0.68 $ 0.39 $ 1.31 $ 0.79 Weighted
average units outstanding - basic 13,713 9,940 11,988 9,930 � -
diluted 13,819 10,015 12,095 10,015 � � � � � Supplemental
Operating Statistics � Three months ended Six months ended December
31, December 31, 2007 2006 2007 2006 Local Trade: Average daily
rate (1) $ 6,759 $ 6,644 $ 6,832 $ 6,762 Net utilization (2) 81 %
84 % 79 % 79 % � Coastwise Trade: Average daily rate $ 13,556 $
11,971 $ 13,497 $ 11,858 Net utilization 89 % 92 % 90 % 92 % �
Total Fleet Average daily rate $ 11,225 $ 9,765 $ 11,072 $ 9,780
Net utilization 86 % 89 % 86 % 86 % � � (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 ended Six months ended December 31, 2007 December 31,
2007 � � Net income $ 9,930 $ 16,601 Adjustments to reconcile net
income to distributable cash flow : Depreciation and amortization
(2) 11,193 20,952 Non cash compensation cost under long term
incentive plan 308 563 Adjust gain/loss on vessel sale to net
proceeds 47 663 Deferred income tax expense 127 237 Maintenance
capital expenditures (3) (5,800) (10,900) � Distributable cash flow
15,805 28,116 Cash distribution in respect of the period $10,944 $
21,525 � Distribution coverage (4) 1.44 1.31 � � (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. � (4) Excluding the $2.1 million non-recurring gain,
distribution coverage for the three and six month periods is 1.25
and 1.21 times, respectively. � � Earnings before Interest, Taxes,
Depreciation and Amortization � � Three months ended Six months
ended December 31, December 31, 2007 2006 2007 2006 � Net income $
9,930 $ 3,946 $ 16,601 $ 8,032 Adjustments to reconcile net income
to EBITDA : Depreciation and amortization 11,066 8,127 20,722
15,812 Interest expense, net 5,315 3,419 11,135 6,741 Provision for
income taxes 289 408 525 533 � EBITDA $ 26,600 $ 15,900 $ 48,983 $
31,118 K-SEA TRANSPORTATION PARTNERS L.P. CONSOLIDATED CONDENSED
BALANCE SHEETS (in thousands) � � December 31, June 30, 2007 2007 �
Assets Current assets: Cash and cash equivalents $ 1,617 $ 912
Accounts receivable, net 21,630 20,664 Prepaid expenses and other
current assets � 11,078 � 6,021 Total current assets 34,325 27,597
� Vessels and equipment, net 542,534 358,580 Construction in
progress 30,207 13,285 Goodwill 53,526 16,385 Other assets � 31,128
� 13,967 Total assets $ 691,720 $ 429,814 � Liabilities and
Partners' Capital Current liabilities: Current portion of long-term
debt and capital lease obligation $ 12,269 $ 9,270 Accounts payable
and accrued expenses � 40,025 � 29,135 Total current liabilities
52,294 38,405 � Term loans and capital lease obligations 157,011
137,946 Credit line borrowings 180,350 97,071 Other liabilities
5,302 - Deferred taxes � 3,534 � 3,739 Total liabilities � 398,491
� 277,161 Non-controlling interest in equity of joint venture 4,496
- Commitments and contingencies Partners' Capital � 288,733 �
152,653 Total liabilities and partners' capital $ 691,720 $ 429,814
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