U.S. Shipping Partners L.P. (NYSE: USS) (the "Partnership") today
reported its results for the second quarter ended June 30, 2008.
The Partnership had voyage revenue of $49.8 million, operating
income of $1.6 million and a net loss of $2.7 million for the three
months ended June 30, 2008, compared to voyage revenue of $45.6
million, operating income of $6.2 million and net income of $2.4
million for the same period in 2007. The Partnership had voyage
revenue of $101.3 million, operating income of $2.1 million and a
net loss of $10.0 million for the six months ended June 30, 2008,
compared to voyage revenue of $87.7 million, operating income of
$16.6 million and net income of $8.2 million for the same period in
2007.
Earnings before interest, taxes and depreciation and
amortization and other non-cash expenses ("Adjusted EBITDA"), a
non-GAAP measure, were $12.5 million for the three months ended
June 30, 2008, compared to $15.7 million for the comparable period
in 2007. Adjusted EBITDA, a non-GAAP measure, was $30.1 million for
the six months ended June 30, 2008, compared to $35.2 million for
the comparable period in 2007.
As previously announced, the Partnership's review of strategic
alternatives and its negotiations with its lenders to amend certain
financial covenants under its senior credit facility are
continuing. In light of these continuing efforts, the Partnership
has determined that it will not pay a distribution on its units for
the quarter ended June 30, 2008.
The tug for the Partnership's second articulated tug barge
("ATB") is currently traveling up the east coast to pick up the
barge portion in Sturgeon Bay, Wisconsin. The Partnership expects
that the completed ATB will be placed in service during the second
half of August, 2008, at a total cost (excluding capitalized
interest) of approximately $66.6 million. The cost increase over
the originally estimated amount of $65 million was principally due
to contractually provided cost increases for steel and owner
furnished equipment.
"Market conditions for Jones Act petroleum product tankers
remained very challenging in the second quarter of 2008. Although
our chemical business recovered somewhat in May and June following
a weak April, the effects of record high oil prices on both
refining activity and consumption of refined products caused a
sharp drop in spot market demand for tanker transportation in our
core market. Persistent record prices for fuel consumed to power
our vessels also contributed to pressure on operating margins for
those units primarily trading in the spot market. In response to
the drop in spot market demand, the Partnership has redeployed
three of its six ITBs into carrying grain for humanitarian
organizations under a U.S. government financed program where demand
has been reasonably strong. However, given continued microeconomic
stresses on the US economy and unprecedented crude oil prices, our
outlook for 2008 remains very guarded," said Mr. Gridley.
In order to address reduced demand for our ITBs in the spot
market for transportation of petroleum products, we are currently
employing three of our ITBs in the foreign transportation of grain
for humanitarian organizations. Unlike our petroleum voyages, where
we generally recognize revenue and expenses based upon the relative
transit time in each period to the total estimated transit time for
each voyage, for our grain voyages we only recognize revenue and
expenses when the grain reaches its final destination (although our
expenses are deferred and accrued as a liability on our balance
sheet), which often falls in the next reporting period.
Accordingly, a comparison of our results for the three months ended
June 30, 2008 with prior quarters and comparable periods in the
prior year may be less meaningful.
Three Months Ended June 30, 2008
The Partnership had a net loss for the three months ending June
30, 2008 of $2.7 million compared to net income of $2.4 million for
the same period in 2007. Operating income was $1.6 million for the
three months ending June 30, 2008 compared to $6.2 million in the
same period in 2007. Net loss per basic and diluted limited
partnership unit for the second quarter 2008 was $0.14 compared to
net income per basic and diluted limited partnership unit for the
second quarter 2007 of $0.13.
Voyage revenue was $49.8 million for the three months ended June
30, 2008, an increase of $4.2 million from $45.6 million for the
three months ended June 30, 2007. The increase in voyage revenue
was primarily the result of the addition of the ATB Freeport placed
in service in July 2007, as well as higher spot market rates
compared to time charter rates given that spot market rates include
an amount to cover voyage expenses whereas time charter rates do
not include this amount because the customer is responsible for
payment of these expenses. These revenues were partially offset by
more offhire days due to reduced demand for our ITBs as well as the
impact related to the difference in revenue recognition policies
for grain voyages compared to our other voyages. Revenues are
affected by several factors, such as the mix of charter types; the
charter rates attainable in the market; fleet utilization and other
items such as fuel surcharges. Certain charters, including
contracts of affreightment and consecutive voyage charters,
generally provide for fuel escalation charges, but do not fully
protect the Partnership when the price of fuel increases. These
charges generally increase revenue, but only serve to partially
offset the increase in fuel expenses. Revenue for the three months
ended June 30, 2008 included $4.4 million of fuel surcharges,
compared to $2.6 million for the three months ended June 30,
2007.
For the three months ended June 30, 2008, revenues from our
chemical fleet were $20.1 million, an increase of $5.4 million over
the three months ended June 30, 2007. The ATB Freeport contributed
$4.5 million of this increase; the remainder of the increase was
due to increased charter rates and fuel surcharges. Revenue from
the remainder of the Partnership's vessels, which consist of the
six ITBs and the product tanker Houston, were $29.8 million for the
three months ended June 30, 2008, a decrease of $1.1 million from
the comparable period in 2007. The decrease in revenue is largely
due to the deferral of recognition of revenue of $5.5 million
attributable to two grain voyages that commenced in the second
quarter of 2008 that will be recognized in the third quarter of
2008 upon delivery of the grain to its final destination, as well
as increased offhire days due to reduced demand in the spot market
for transportation of petroleum products and required repairs to
the ITB New York. The decrease in revenues from the Partnership's
ITB fleet was partially offset by the fact that the Partnership
obtained higher rates than it would have received if the vessels
had been operating on time charters, as the Partnership was
responsible for the payment of voyage expenses.
During the three months ended June 30, 2008, voyage expenses
increased by $8.6 million over the prior year due to the addition
of the ATB Freeport, which contributed $1.4 million in voyage
expenses, coupled with increases in fuel, port, commission and
other costs on the remaining fleet of approximately $7.2 million.
Approximately $3.8 million of the $7.2 million increase related to
increased fuel costs, which were only partially offset by the $0.8
million of increased fuel surcharge revenue, and approximately $2.8
million related to the cost of readying our ITBs to transport
grain. A significant increase in voyage expenses is due to the loss
of two time charters for our ITBs in 2008 resulting in the
Partnership incurring voyage expenses that it previously did not
incur under time charters. The impact of these additional voyage
expenses increased revenues as rates are generally higher to
compensate for these voyage expenses that were previously incurred
by the customer under a time charter. Because we do not recognize
voyage expenses related to our grain voyages until the voyage is
completed, voyage expenses for the three months ended June 30, 2008
do not include approximately $2.3 million of expenses related to
grain voyages commenced in the second quarter of 2008 yet completed
in July 2008.
During the three months ended June 30, 2008 vessel operating
expenses decreased $1.0 million from the second quarter of 2007,
primarily due to a $2.2 million net reduction in expenditures on
supplies, repairs and maintenance, safety and training. This
decrease was partially offset by the addition of the ATB Freeport,
which increased vessel operating expenses by $1.1 million. There
was a net $0.1 million increase in all other vessel operating
expenses.
General and administrative expenses decreased $0.2 million in
the three months ended June 30, 2008 compared to the same period in
2007. A decrease in personnel expense of $0.6 million was partially
offset by an increase in professional fees consisting of legal,
accounting and consulting fees primarily related to our review of
strategic alternatives, of $0.4 million.
During the three months ended June 30, 2008, depreciation and
amortization expense increased by $1.4 million from the same period
in 2007. The increase is primarily due to additional amortization
of drydock expenditures of $1.0 million, principally resulting from
drydocks completed in 2007, and $0.8 million attributable to the
addition of the ATB Freeport. These increases to depreciation and
amortization expense were partially offset by a decrease of $0.4
million resulting from an adjustment of to the values assigned to
the vessels in the original purchase of the ITBs due to net
payments made to us under the Hess Support Agreement, which under
GAAP were considered an adjustment to the original purchase
price.
Other expense in the three month ended June 30, 2008 of $45
reflects a loss related to the sale of surplus equipment. There was
not other expense or income in the three months ended June 30,
2007.
Interest expense increased by $0.2 million for the three months
ended June 30, 2008 compared to the same period in 2007 due
primarily to increased borrowings. Interest income earned by the
Partnership decreased by $2.0 million, due primarily to reduced
balances in the Partnership's restricted cash accounts. Funds were
released in connection with the construction of the ATBs and the
tankers being constructed by the joint venture entered into by the
Partnership in 2006 (the "Joint Venture"). The restricted cash
accounts consist of two escrow accounts which were established as
part of the Partnership's 2006 debt and equity financings to fund
the construction of three new ATBs and the Partnership's remaining
committed equity contributions to the Joint Venture. Interest
income will continue to decrease as funds in these escrow accounts
are used to fund the construction of the three new ATBs and the
Partnership's equity contributions to the Joint Venture. As
previously announced, the Partnership is in discussions to amend
certain financial covenant ratios in its senior credit agreement;
any amendment to these financial covenants will require the payment
of fees and a higher rate of interest, which will negatively impact
the Partnership's results of operations.
For the second quarter of 2008, the Joint Venture recorded gains
of $0.6 million on derivative financial instruments while the
Partnership recorded no gains or losses on derivative financial
instruments.
The net loss per basic and diluted limited partnership unit for
the three months ended June 30, 2008 was $0.14 compared to net
income per basic and diluted limited partnership unit of $0.13 for
the three months ended June 30, 2007.
Adjusted EBITDA decreased by $3.2 million to $12.5 million for
the three months ended June 30, 2008 from $15.7 million for the
comparable period in 2007. The decrease was primarily due to an
increase in voyage expenses of $8.6 million. Additionally, there
was a $0.3 million decrease in gains on derivative financial
instruments. These decreases were offset by an increase in voyage
revenues of $4.2 million coupled with a decrease in vessel
operating expenses of $1.0 million, a decrease of $0.2 million in
general and administrative expense and a favorable variance of $0.3
million in the noncontrolling interest in the Joint Venture.
Adjusted EBITDA is a non-GAAP measure explained in greater detail
below under "Use of Non-GAAP Financial Information."
Six Months Ended June 30, 2008
The Partnership's net loss for the six months ending June 30,
2008 was $8.5 million compared to net income of $8.2 million for
the same period in 2007. Operating income was $2.1 million for the
six months ending June 30, 2008 compared to $16.6 million in the
same period in 2007. Net loss per basic and diluted limited
partnership unit in 2008 was $0.45 compared to a net income per
basic and diluted limited partnership unit in 2007 of $0.44.
Voyage revenue was $101.3 million for the six months ended June
30, 2008, an increase of $13.6 million from $87.7 million for the
six months ended June 30, 2007. Revenues are affected by several
factors, such as the mix of charter types; the charter rates
attainable in the market; fleet utilization and other items such as
fuel surcharges. Certain charters, including contracts of
affreightment and consecutive voyage charters generally provide for
fuel escalation charges, but do not protect the Partnership fully
when the price of fuel increases. These charges generally increase
revenue, but only serve to partially offset the increase in fuel
expenses. Revenue for the six months ended June 30, 2008 included
$9.5 million of fuel surcharges, compared to $4.3 million for the
six months ended June 30, 2007.
For the six months ended June 30, 2008, revenues from our
chemical fleet were $39.5 million, an increase of $10.6 million
over the six months ended June 30, 2007. The ATB Freeport
contributed $8.7 million of this increase; the remainder of the
increase was due to increased charter rates and fuel surcharges.
Revenue related to the Partnership's ITB fleet and the product
tanker Houston were $61.8 million for the six months ended June 30,
2008, an increase of approximately $3.0 million from the comparable
period in 2007. The increase in revenue for the ITB fleet revenue
for the first half of 2008 was due primarily to approximately $3.0
million of revenue from a grain voyage the recognition of which was
deferred from December 2007 until the grain reached its final
destination in February 2008. Furthermore, the Partnership
experienced increased revenues from obtaining higher rates than it
would have received if the vessels had been operating on time
charters, as the Partnership was responsible for the payment of
voyage expenses, as well as increased days worked (due to 2008
being a leap year). The increase in revenue was partially offset by
the ITBs being offhire more days in the first half of 2008 compared
to the first half of 2007 and the deferral of recognition of $5.5
million of revenue attributable to two grain voyages that commenced
in the second quarter of 2008 that will be recognized in the third
quarter of 2008, when the grain reached its final destination. At
June 30, 2008, total deferred costs for these grain voyages were
approximately $2.3 million. Revenue related to the Partnership's
chemical fleet (other than the ATB Freeport) increased by $1.9
million from the comparable period in 2007 due to increased charter
rates.
During the six months ended June 30, 2008, voyage expenses
increased by $14.9 million over the prior year due to the addition
of the ATB Freeport, which contributed $3.0 million in additional
voyage expenses, along with increases in fuel, port, and commission
costs on the remaining fleet of approximately $7.3 million.
Approximately $6.2 million of this $7.3 million increase related to
increased fuel costs, which were partially offset by the $3.2
million of increased fuel surcharge revenue. In addition, grain
voyage related voyage expenses including tank cleaning increased by
$4.6 million for the ITB Philadelphia, ITB Jacksonville, and ITB
Baltimore in the first half of 2008. The significant increase in
voyage expenses is due to the loss of two time charters in our ITBs
in 2008 resulting in the Partnership incurring voyage costs that it
previously did not under time charters. The impact of these
additional voyage costs increased revenues as rates are higher to
compensate for these voyage expenses that were previously incurred
by the customer under a time charter.
During the six months ended June 30, 2008 vessel operating
expenses increased $1.1 million from the second quarter of 2007,
primarily due to the addition of the ATB Freeport, which
contributed $2.4 million in vessel operating expenses.
Additionally, crew wages and benefits increased by $.9 million and
all other vessel operating expenses increased by $0.2 million. The
increase in crew wages and benefits resulted from new collective
bargaining agreements with the unions that cover the crew members
and officers of our vessels effective in the second and third
quarters of 2007, respectively. These increases were offset by a
$2.4 million net decrease in expenditures for supplies and repairs
and maintenance.
There was no change in general and administrative expenses in
the six months ended June 30, 2008 compared to the same period in
2007. An increase in professional fees, consisting of legal,
accounting and consulting fees, and directors fees of $1.0 million
were offset by a net decrease in personnel expenses of $1.0
million.
During the six months ended June 30, 2008, depreciation and
amortization expense increased by $2.8 million from the same period
in 2007. The increase is primarily due to additional amortization
of drydock expenditures of $2.0 million, principally resulting from
drydocks completed in 2007, and $1.6 million attributable to the
addition of the ATB Freeport. These increases to depreciation and
amortization expense were partially offset by a decrease of $0.7
million resulting from an adjustment of to the values assigned to
the vessels in the original purchase of the ITBs due to net
payments made to us under the Hess Support Agreement, which under
GAAP were considered an adjustment to the original purchase
price.
Interest expense increased by $1.2 million for the six months
ended June 30, 2008 compared to the same period in 2007 due
primarily to increased borrowings. Interest income earned by the
Partnership decreased by $3.6 million, due primarily to reduced
balances in the Partnership's restricted cash accounts as funds
were released in connection with the construction of the ATBs and
the tankers being constructed by the Joint Venture.
The Partnership recorded gains on derivative financial
instruments of $0.7 million and the Joint Venture recorded gains of
$0.3 million on derivative financial instruments during the six
months ended June 30, 2008.
Adjusted EBITDA decreased by $5.0 million to $30.2 million for
the six months ended June 30, 2008 from $35.2 million for the
comparable period in 2007. The decrease was primarily due to an
increase in voyage expenses of $14.9 million, the recognition of a
$3.5 million contract settlement in the first half of 2007 and
increased vessel operating expenses of $1.1 million These decreases
were partially offset by an increase in voyage revenues of $13.6
million. Additionally, adjusted EBITDA for the 2008 period reflects
a $0.7 million favorable variance related to the noncontrolling
interest in the of the Joint Venture and a $.1 million increase on
derivative financial instruments recorded by the Partnership and
the Joint Venture. Adjusted EBITDA is a non-GAAP measure explained
in greater detail below under "Use of Non-GAAP Financial
Information."
Liquidity
During the first half of 2008, all but one of the Partnership's
ITBs began to operate in the spot market for the transportation of
petroleum products, which has increased the volatility of the
Partnership's revenues and working capital requirements, and
decreased the predictability of its cash flows. Beginning in late
March 2008, market conditions in the spot market deteriorated
substantially due to the overall softening of U.S. economic
activity and decreased demand for the domestic coastwise
transportation of petroleum products. Additionally, refinery
utilization has declined considerably, fuel prices for operating
the Partnership's vessels are at record levels and newbuilds have
increased capacity serving the Jones Act market at a faster rate
than demand and the expected decrease in capacity due to the
required phase-outs under the Oil Pollution Act of 1990. Due to
these market shifts, the ITBs have recently incurred idle periods
greater than, and charter rates below, the Partnership's
expectations at the beginning of 2008. During the first half of
2008, the Partnership also experienced modest decreased demand for
the domestic coastwise transportation of chemical products served
by its chemical transporting vessels, which the Partnership
believes was primarily due to its customers working off inventory
levels due to the decline in economic activity.
As a result, the Partnership's cash flows and liquidity have
come under increasing pressure due to the current difficult market
conditions, which has substantially increased the likelihood that
the Partnership will not be able to remain in compliance with
certain financial covenants relating to leverage (debt to EBITDA)
and fixed charge and interest coverage under its senior credit
facility as early as the end of the third quarter of 2008. The
Partnership is currently in compliance with all its financial
covenants as of the end of the second quarter of 2008. We expect to
generate sufficient cash, together with borrowings under its
revolving credit facility, to make interest payments and scheduled
principal payments on its debt.
Additionally, participation in the spot market requires the
Partnership to carry higher amounts of working capital, as under
spot charters fuel costs are the Partnership's responsibility and
are paid at the time fuel is delivered, and not realized
economically until payment is made to USS by the customer.
Additionally, payment generally occurs at the completion of a
voyage, compared to time charters, where payment is generally made
by the customer at the beginning of a fixed period of time, such as
a month. In addition, grain voyages, where the Partnership is paid
at the end of the voyage when the grain reaches its final
destination, tend to be substantially longer in duration than
refined petroleum product voyages. As the Partnership adds two
additional vessels in 2008 and its ITBs participate more in the
spot market, USS expects its working capital requirements to
increase. The Partnership has limited availability under its credit
facility to finance this increase in working capital
requirements.
In response to these issues, the Partnership has retained
Greenhill & Co., LLC and Jefferies & Company, Inc. to
assist it in exploring strategic alternatives, including either the
possible sale of the business or the sale of new equity, and other
ways to increase liquidity and strengthen the financial resources
of the Partnership. In order to give the Partnership adequate time
to pursue strategic alternatives, the Partnership has entered into
negotiations with its lenders to amend certain financial ratio
covenants under its senior credit facility. Based on discussions to
date with its lenders regarding an amendment to the senior credit
facility, the Partnership believes any amendment will require the
payment of additional fees and a higher interest rate and will
prohibit the payment of distributions on any units until the
current senior credit facility is repaid. There can be no assurance
that we will be successful in obtaining an amendment to our senior
credit facility on acceptable economic terms. If we are not in
compliance with our financial covenants, our lenders have a number
of remedies, including declaring all outstanding borrowings to be
immediately due and payable and refusing to make funds available
under the revolving credit facility. In addition, we would be
prohibited from making distributions on our common units until we
are again in compliance, although any unpaid distributions will
continue to accrue on the common units. Furthermore, the lenders
under the senior credit facility could prohibit us from paying
interest on the senior notes.
About U.S. Shipping Partners L.P.
U.S. Shipping Partners L.P. is a leading provider of long-haul
marine transportation services, principally for refined petroleum
products, petrochemical and commodity chemical products, in the
U.S. domestic "coastwise" trade. The Partnership's existing fleet
consists of eleven tank vessels: six integrated tug barge units;
one product tanker; three chemical parcel tankers and one ATB that
was delivered in June 2007 and entered service in July 2007. The
Partnership has embarked on a capital construction program to build
additional ATBs and, through a joint venture, additional tank
vessels that upon completion will result in the Partnership having
one of the most modern fleets in service. For additional
information about U.S. Shipping Partners L.P., please visit
www.usslp.com.
Use of Non-GAAP Financial Information
U.S. Shipping Partners L.P. reports its financial results in
accordance with generally accepted accounting principles. However,
we also present Adjusted EBITDA, a non-GAAP financial measure that
is used as a supplemental financial measure by management and by
external users (including our lenders) of our financial statements
to assess (a) the financial performance of our assets, and our
ability to generate cash sufficient to pay interest on our
indebtedness and make distributions to partners, (b) our operating
performance and return on invested capital as compared to other
companies in our industry, and (c) our compliance with certain
financial covenants in our debt agreements. The calculation of
Adjusted EBITDA is detailed in the table below, together with a
reconciliation of Adjusted EBITDA to the most directly comparable
GAAP measurement. Adjusted EBITDA should not be considered an
alternative to net income, operating income, cash flow from
operating activities, or any other measure of financial performance
or liquidity under GAAP. Adjusted EBITDA as presented herein may
not be comparable to similarly titled measures of other
companies.
This press release may include "forward-looking statements" as
defined by the Securities and Exchange Commission. All statements,
other than statements of historical facts, included in this press
release that address activities, events or developments that the
Partnership expects, believes or anticipates will or may occur in
the future are forward-looking statements. These statements are
based on certain assumptions made by the Partnership based on its
experience and perception of historical trends, current conditions,
expected future developments and other factors it believes are
appropriate in the circumstances. Such statements are subject to a
number of assumptions, risks and uncertainties, many of which are
beyond the control of the Partnership, which may cause our actual
results to differ materially from those implied or expressed by the
forward-looking statements. Such assumptions, risks and
uncertainties are discussed in detail in the Partnership's filings
with the SEC and include, among other things, the willingness of
our lenders to amend our credit agreement on commercially
acceptable terms and to continue to make advances to us under our
revolving credit facility to meet our working capital requirements,
increased financing costs, no occurrence of an event of default
under our credit agreement that would allow our lenders to demand
immediate repayment of all outstanding borrowings under the credit
facility, future charter rates, demand in the spot market for
vessels and timely and on-budget delivery in the second half of
2008 of two ATBs currently under construction.
U.S. Shipping Partners L.P.
Consolidated Statements of Operations
(in thousands, except for per unit data) (unaudited)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Voyage revenue $ 49,819 $ 45,621 $ 101,323 $ 87,703
--------- --------- --------- ---------
Vessel operating expenses 16,384 17,407 33,405 32,325
% of voyage revenue 32.9% 38.2% 33.0% 36.9%
Voyage expenses 17,331 8,712 31,010 16,149
% of voyage revenue 34.8% 19.1% 30.6% 18.4%
General and administrative
expenses 4,011 4,241 8,005 8,006
% of voyage revenue 8.1% 9.3% 7.9% 9.1%
Depreciation and amortization 10,445 9,054 20,949 18,102
Other expense (income) 45 - 5,832 (3,486)
--------- --------- --------- ---------
Total operating expenses,
net 48,216 39,414 99,201 71,096
--------- --------- --------- ---------
Operating income 1,603 6,207 2,122 16,607
% of voyage revenue 3.2% 13.6% 2.1% 18.9%
Interest expense 6,879 6,655 14,770 13,572
Interest income (655) (2,572) (1,695) (5,247)
Net gains on derivative
financial instruments (586) (904) (1,028) (904)
--------- --------- --------- ---------
(Loss) income before income
taxes and noncontrolling
interest (4,035) 3,028 (9,925) 9,186
(Benefit) provision for income
taxes (1,514) 202 (1,222) 622
--------- --------- --------- ---------
(Loss) income before
noncontrolling interest (2,521) 2,826 (8,703) 8,564
Noncontrolling interest in
Joint Venture (income) loss (162) (418) 242 (407)
--------- --------- --------- ---------
Net (loss) income $ (2,683) $ 2,408 $ (8,461) $ 8,157
========= ========= ========= =========
General partner's interest in
net (loss) income $ (54) $ 48 $ (169) $ 163
Limited partners' interest in:
Net (loss) income $ (2,629) $ 2,360 $ (8,292) $ 7,944
Net (loss) income per unit -
basic and diluted $ (0.14) $ 0.13 $ (0.45) $ 0.44
Weighted average units
outstanding - basic 18,254 18,234 18,244 18,234
Weighted average units
outstanding - diluted 18,254 18,235 18,244 18,234
U.S. Shipping Partners L.P.
Supplemental Operating Statistics
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Total fleet
Vessel days 1,001 910 2,002 1,810
Days worked (1) 937 896 1,922 1,789
Drydocking days - 6 - 6
Net utilization (1) (2) 94% 98% 96% 99%
Average time charter equivalent
rate (3) (4) $ 36,310 $ 41,193 $ 37,424 $ 39,997
(1) There were 19 days of unscheduled off-hire in the first quarter of 2008
that were required to complete repairs to one of the engines on the ITB
Philadelphia damaged enroute back to New York during the grain voyage
in February 2008. There were also 25 days of unscheduled off-hire on
the ITB New York in the second quarter of 2008 for port stern tube
repairs. As a result, days worked for the six months ended June 30,
2008 is reduced by these days and net utilization is negatively
affected.
(2) Net utilization is equal to the total number of days worked by our
vessels during a defined period, divided by total vessel days (number
of vessels x calendar days) for that period.
(3) Average time charter equivalent rate is equal to net voyage revenue
earned by our vessels during a defined period, divided by the total
number of actual days worked by those vessels during that period
adjusted for any deferred revenue days. Net voyage revenue is
calculated by subtracting voyage expenses from voyage revenue.
(4) The calculations of average time charter equivalent rate for the six
months ended June 30, 2008 include both the revenue and eighteen days
worked by the ITB Philadelphia for which no net voyage revenue was
recorded in 2007. Furthermore, the 2008 calculation for the six months
ended June 30, 2008 of average time charter equivalent rate does not
include approximately forty three days worked by the ITB Baltimore for
which no net voyage revenue was recorded in 2008.
U.S. Shipping Partners L.P.
Reconciliation of Non-GAAP Financial Measures to GAAP Measures
(in thousands) (unaudited)
Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA)
and Earnings before Interest, Taxes, Depreciation and Amortization and
Other Non-Cash Expense (Adjusted EBITDA)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
--------------------- ---------------------
2008 2007 2008 2007
--------- ---------- --------- ----------
Net (loss) income $ (2,683) $ 2,408 $ (8,461) $ 8,157
Adjustments to reconcile net
(loss) income to EBITDA and
Adjusted EBITDA:
Depreciation and amortization 10,445 9,054 20,949 18,102
Interest expense, net 6,224 4,083 13,075 8,325
(Benefit) provision for income
taxes (1,514) 202 (1,222) 622
--------- ---------- --------- ----------
EBITDA 12,472 15,747 24,341 35,206
Other non-cash expense 45 - 5,832 -
--------- ---------- --------- ----------
Adjusted EBITDA $ 12,517 $ 15,747 $ 30,173 $ 35,206
========= ========== ========= ==========
Contact Information: Albert Bergeron Chief Financial Officer
U.S. Shipping Partners L.P. 1-866-467-2400
US Shipping Partners (NYSE:USS)
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