International Shipholding Corporation Reports Second Quarter 2012 Results

Declares Second Quarter Dividend of $0.25 Per Share

MOBILE, Ala.--()--International Shipholding Corporation (NYSE: ISH) today announced the financial results for the quarter ended June 30, 2012.

Second Quarter 2012 Highlights

  • Reported adjusted net income of $1.8 million for the three months ended June 30, 2012, excluding non-cash losses of $1.1 million
  • Purchased the Jones Act Molten Sulphur Carrier previously on lease
  • Declared a second quarter dividend of $0.25 per share payable on September 4, 2012 to shareholders of record as of August 16, 2012

Net Income

The Company reported net income of $704,000 for the three months ended June 30, 2012, which included non-cash transaction losses and out of period adjustments totaling $1.1 million. The non-cash transaction losses consisted of deferred gain recognition and currency exchange losses attributed to the yen denominated loan facility. For the comparable three months ended June 30, 2011, the Company reported net income of $2.8 million which included a non-cash currency exchange loss of $1.9 million also attributed to the yen denominated loan facility.

Mr. Niels M. Johnsen, Chairman and Chief Executive Officer, stated, “Our results for the second quarter were negatively affected by the impact of depressed drybulk shipping markets. However, as newbuilding vessels are absorbed into the world fleet, as older vessels are scrapped and as the newbuilding order book is reduced, the drybulk shipping markets should improve. In the meantime, in this challenging environment, our longstanding established contracting strategy of medium and long term charters will continue to provide a predictable solid foundation for our revenue.”

“As we further pursue our strategy of growing our fleet in an accretive manner, we continue to provide shareholders with value through our dividend policy. For the second quarter, the Board declared a dividend payment of $0.25, in line with our 2012 dividend target of $1.00 per share.”

Operating Income

Operating income for the three months ended June 30, 2012, was $3.5 million as compared to $6.7 million for the comparable 2011 period. The Company’s gross voyage profit representing the operating results of its five reporting segments was $13.3 million compared to $18.2 million in the 2011 three month period. The comparable results by reporting segment are shown below:

           

International

           

Rail Ferry

           

U.S. Flag

     

Flag

     

COA

     

Service

     

Other

     

Totals

   (all amounts in millions)

Second Quarter 2012

Gross Voyage Profit $ 6.630 $ 4.679 $ .126 $ 1.448 $ .411 $ 13.294
 
Depreciation (2.310) (2.702) -- (.701) (.010) (5.723)
Gross Profit $ 4.320 $ 1.977 $ .126 $ .747 $ .401 $ 7.571

(After Depreciation)

 

 

Second Quarter 2011

Gross Voyage Profit $ 9.335 $ 7.524 $ (.101) $ 1.056 $ .333 $ 18.147
 
Depreciation (2.495) (2.699) -- (.899) (.002) (6.095)
Gross Profit $

6.840

$ 4.825 $ (.101) $ .157 $ .331 $ 12.052

(After Depreciation)

 

 

Gross voyage profit for the U.S. Flag Time Charter segment was lower due to the expiration of the three operating contracts with the Military Sealift Command (MSC) which occurred near the end of the first quarter of 2012. This was partially offset by higher supplemental cargo volumes and the operation of the ice strengthened vessel on charter to the MSC. The International Flag Time Charter segment reported lower results reflecting the divestiture of two of its Pure Car Truck Carriers in the first quarter of 2012. This segment was also impacted by the dry bulk market which continues to experience depressed rate levels. The Contract of Affreightment and Rail Ferry segments reported slightly higher results reflecting lower operating costs during the quarter. The Company’s Other Segment, consisting mainly of chartering brokerage and agency services, reported comparable quarterly results.

Administrative and general expenses were lower by $735,000 for the quarter ended June 30, 2012, compared to the same period in 2011. Compensation expenses were lower as income bonus levels were not achieved for the quarter.

Gain on Purchase

During the quarter the Company reacquired the Jones Act Molten Sulphur Carrier which was divested in 2007 in a sale leaseback transaction. The unamortized deferred gain from the 2007 sale was recognized in this quarter at reacquisition.

Interest and Other

During the three month period ended June 30, 2012, the Japanese Yen strengthened in relation to the U.S. Dollar from 82.82 to 79.81, producing a non-cash charge to earnings of $1.7 million. Year to date, the yen has depreciated in relation to the U.S. Dollar and earnings have been favorably impacted by $1.9 million.

Unconsolidated Entities

The results from the Company’s investments in 50% or less owned ventures increased in the three months ended June 30, 2012, when compared to the same period in 2011. The results from the 25% investment in the Company owning ten mini-bulkers had non-recurring start up charges that were reported in the 2011 period, while the current year’s results are due to a favorable out of period adjustment related to an effective interest rate swap.

Balance Sheet

The Company’s working capital at June 30, 2012, was approximately $10.5 million, a decrease of $13.9 million from March 31, 2012. Cash and cash equivalents reflected a balance of $21.2 million. The purchase of the Jones Act Sulphur Carrier during the quarter for approximately $23 million was funded using the Company’s available cash.

Dividend Declaration

The Company’s Board of Directors authorized the payment of a $0.25 dividend payable on September 4, 2012, for each share of common stock owned on the record date of August 16, 2012. All future dividend declarations and amounts remain subject to the discretion of International Shipholding Corporation’s Board of Directors.

Conference Call

In connection with this earnings release, management will host an earnings conference call on Thursday, July 26, 2012 at 10:00 AM ET. To participate in the conference call, please dial (888) 208-1427 (domestic) or (913) 312-0677 (international). Participants can reference the International Shipholding Corporation Second Quarter 2012 Earnings Call or passcode 2508041. Please dial in approximately 5 minutes prior to the call.

The conference call will also be available via a live listen-only webcast and can be accessed through the Investor Relations section of the Company’s website, www.intship.com. Please allow extra time prior to the call to visit the Company’s website and download any software that may be needed to listen to the webcast.

A replay of the conference call will be available through August 2, 2012, at (877) 870-5176 (domestic) or (858) 384-5517 (international). The passcode for the replay is 2508041.

About International Shipholding

International Shipholding Corporation, through its subsidiaries, operates a diversified fleet of U.S. and international flag vessels that provide worldwide and domestic maritime transportation services to commercial and governmental customers primarily under medium to long-term charters and contracts. www.intship.com

Caution concerning forward-looking statements

This press release contains forward-looking statements within the meaning of the U.S. federal securities laws. These forward-looking statements are based on assumptions and opinions concerning a variety of known and unknown risks. Please refer to ISH’s Annual Report on form 10-K for the year ended December 31, 2011 as well as its future filings and reports filed with or furnished to the Securities and Exchange Commission for a description of the business environment in which ISH operates and the important factors, risks and uncertainties that may affect its business and financial results. If any assumptions or opinions prove materially incorrect, any forward-looking statements made on that basis may also prove to be materially incorrect. ISH is not under any obligation to (and expressly disclaims any such obligations to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

   
INTERNATIONAL SHIPHOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(All Amounts in Thousands Except Share Data)
(Unaudited)
 
      Three Months Ended June 30,       Six Months ended June 30,
  2012           2011     2012           2011  
Revenues $ 60,320 $ 69,961 $ 125,524 $ 134,295
 
Operating Expenses:
Voyage Expenses 47,026 51,814 97,852 100,804
Vessel Depreciation 5,723 6,095 12,080 11,469
Administrative and General Expenses 4,720 5,455 10,228 11,284
Gain on Dry Bulk Transaction - (130 ) - (18,844 )
Gain on Sale/Purchase of Other Assets   (667 )   -     (4,466 )   -  
 
Total Operating Expenses   56,802     63,234     115,694     104,713  
 
Operating Income   3,518     6,727     9,830     29,582  
 
Interest and Other:
Interest Expense 2,281 2,330 5,008 4,620
Derivative Loss (Income) 117 106 (32 ) (15 )
Gain on Sale of Investment (24 ) (114 ) (66 ) (114 )
Other Income from Vessel Financing (605 ) (672 ) (1,227 ) (1,360 )
Investment Income (146 ) (185 ) (274 ) (385 )
Foreign Exchange Loss (Gain)   1,734     1,900     (1,914 )   411  
  3,357     3,365     1,495     3,157  
 
Income Before Provision for Income Taxes and
Equity in Net Income of Unconsolidated Entities   161     3,362     8,335     26,425  
 
Provision for Income Taxes:
Current   108     173     276     381  
  108     173     276     381  
 
Equity in Net Income (Loss)of Unconsolidated
Entities (Net of Applicable Taxes)   651     (351 )   581     874  
 
Net Income $ 704   $ 2,838   $ 8,640   $ 26,918  
Basic and Diluted Earnings Per Common Share:
       
Basic Earnings Per Common Share: $ 0.10   $ 0.39   $ 1.20   $ 3.72  
       
Diluted Earnings Per Common Share: $ 0.10   $ 0.39   $ 1.20   $ 3.70  
 
Weighted Average Shares of Common Stock Outstanding:
Basic 7,203,860 7,228,252 7,187,236 7,230,530
Diluted 7,234,505 7,265,092 7,202,559 7,260,598
 
Dividends Per Share $ 0.250 $ 0.375 $ 0.500 $ 0.750
 
INTERNATIONAL SHIPHOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(All Amounts in Thousands)
(Unaudited)
     
June 30,       December 31,
ASSETS 2012 2011
 
 
Cash and Cash Equivalents $ 21,203 $ 21,437
Restricted Cash - 8,907
Marketable Securities 13,111 12,827
Accounts Receivable, Net of Allowance for Doubtful Accounts
of $100 and $100 in 2012 and 2011: 20,276 20,553
Federal Income Taxes Receivable - 242
Net Investment in Direct Financing Leases 3,310 6,278
Other Current Assets 3,596 4,037
Notes Receivable 4,430 4,450
Material and Supplies Inventory 4,603 5,034
Total Current Assets 70,529 83,765
 
Investment in Unconsolidated Entities 13,180 12,800
 
Net Investment in Direct Financing Leases 15,291 43,837
 
Vessels, Property, and Other Equipment, at Cost:
Vessels 561,632 581,705
Leasehold Improvements 26,348 26,128
Construction in Progress 252 20,729
Furniture and Equipment 9,529 9,372
597,761 637,934
Less - Accumulated Depreciation (179,235) (171,820)
418,526 466,114
 
Other Assets:
Deferred Charges, Net of Accumulated Amortization 19,066 16,546
of $15,821 and $17,429 in 2012 and 2011, Respectively
Intangible Assets, Net 1,932 3,219
Due from Related Parties 1,633 1,571
Notes Receivable 35,561 37,714
Other 5,180 13
63,372 59,063
 
TOTAL ASSETS $ 580,898 $ 665,579
 
 
INTERNATIONAL SHIPHOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(All Amounts in Thousands)
(Unaudited)
 
      June 30,       December 31,
2012 2011
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current Liabilities:
Current Maturities of Long-Term Debt $ 27,849 $ 36,079
Accounts Payable and Accrued Liabilities 32,152 28,343
Total Current Liabilities 60,001 64,422
 
Long-Term Debt, Less Current Maturities 191,945 286,014
 
Other Long-Term Liabilities:
Lease Incentive Obligation 6,571 6,640
Other 69,137 59,148
 
TOTAL LIABILITIES 327,654 416,224
 
Stockholders' Equity:
Common Stock 8,600 8,606
Additional Paid-In Capital 85,711 85,830
Retained Earnings 207,944 204,109
Treasury Stock (25,403) (25,403)
Accumulated Other Comprehensive (Loss) (23,608) (23,787)
TOTAL STOCKHOLDERS' EQUITY 253,244 249,355
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 580,898 $ 665,579
 
INTERNATIONAL SHIPHOLDING CORPORATION    
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(All Amounts in Thousands)
(Unaudited)
           
Six Months Ended June 30,
2012 2011
 
Cash Flows from Operating Activities:
Net Income $ 8,640 $ 26,918
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:
Depreciation 12,357 11,961
Amortization of Deferred Charges and Other Assets 5,214 4,029
Gain on Dry Bulk Transaction - (18,844)
Non-Cash Stock Based Compensation 544 1,006
Equity in Net Income of Unconsolidated Entities (581) (874)
Distributions from Unconsolidated Entities - 750
Gain on Purchase / Sale of Assets (4,466) -
Gain on Sale of Investments (66) (114)
Gain (Loss) on Foreign Currency Exchange (1,914) 411
Changes in:
Deferred Drydocking Charges (7,623) (4,359)
Accounts Receivable 277 (4,817)
Inventories and Other Current Assets (624) 1,816
Other Assets 1,950 89
Accounts Payable and Accrued Liabilities (594) (121)
Other Long-Term Liabilities (3,204) 1,249
Net Cash Provided by Operating Activities 9,910 19,100
 
Cash Flows from Investing Activities:
Principal payments received under Direct Financing Leases 2,279 2,711
Unearned Income from Direct Financing Leases -
Capital Improvements to Vessels and Other Assets (46,103) (17,216)
Proceeds from Sale of Assets 130,315 -
Purchase of Marketable Securities (5) (85)
Proceeds from Sale of Marketable Securities 159 2,755
Investment in Unconsolidated Entities (750) (1,796)
Acquisition of Unconsolidated Entity - 7,092
Net Decrease/(Increase) in Restricted Cash Account 6,907 (6,549)
Proceeds from Note Receivables 2,507 2,069
Net Cash Provided by (Used In) Investing Activities 95,309 (11,019)
 
Cash Flows from Financing Activities:
Proceeds from Issuance of Debt 41,175 58,079
Repayment of Debt (141,559) (49,378)
Additions to Deferred Financing Charges (264) (1,479)
Common Stock Dividends Paid (4,805) (5,625)
Net Cash (Used In) Provided by Financing Activities (105,453) 1,597
 
Net (Decrease) / Increase in Cash and Cash Equivalents (234) 9,678
Cash and Cash Equivalents at Beginning of Period 21,437 24,158
 
Cash and Cash Equivalents at End of Period $ 21,203 $ 33,836

Contacts

The IGB Group
David Burke, (646) 673-9701
dburke@igbir.com
or
Leon Berman, (212) 477-8438
lberman@igbir.com
or
International Shipholding Corporation
Niels M. Johnsen, (212) 943-4141
Chairman
or
Erik L. Johnsen, (251) 243-9221
President

Sharing

Contacts

The IGB Group
David Burke, (646) 673-9701
dburke@igbir.com
or
Leon Berman, (212) 477-8438
lberman@igbir.com
or
International Shipholding Corporation
Niels M. Johnsen, (212) 943-4141
Chairman
or
Erik L. Johnsen, (251) 243-9221
President