International Shipholding Corporation Reports Fourth Quarter and Year-End 2014 Results

Declares fourth quarter dividend of $0.25 per share on its Common Stock

Provides 2015 guidance for EBITDA of $55 to $63 million

MOBILE, Ala.--()--International Shipholding Corporation (NYSE:ISH) today announced financial results for the quarter ended December 31, 2014.

Fourth Quarter 2014 Highlights

  • Successfully concluded negotiations for a multi-year contract with Tampa Electric Company
  • Declared a fourth quarter dividend of $0.25 per share of Common Stock payable on March 4, 2015 to shareholders of record as of February 20, 2015
  • Paid a $2.375 per share and $2.25 per share dividend on its Series A and Series B Preferred Stock, respectively, on January 30, 2015
  • Excluding non-cash items described below, reported net income of $1.5 million for three months ended December 31, 2014

Net Loss

The Company reported a net loss of $48.3 million for the fourth quarter 2014. The loss was the result of a non-cash impairment loss of $38.2 million associated with the previously announced decision to market for sale the Company’s three (3) Handysize vessels and its Jones Act laid-up tug/barge unit, as well as an $11.6 million non-cash tax valuation allowance on its deferred tax assets. Excluding these non-cash items, the Company’s net income for the three months ended December 31, 2014 was $1.5 million.

Mr. Niels M. Johnsen, Chairman and Chief Executive Officer, stated, “The challenging international dry bulk market that emerged in the third quarter of 2014 continued to impact our results in the fourth quarter, and we are actively evaluating the opportunities that exist to mitigate this impact on our portfolio of diversified businesses. Despite this difficult market, our strong contract coverage enabled us to achieve the $1.00 per share dividend target that we provided for the full year 2014.”

“Needless to say, the currently depressed dry bulk market demonstrates the value of our focus on medium to long-term contracts with high-quality counterparties. Similarly, with the conclusion of our successful contract negotiations with Tampa Electric during the fourth quarter, we have significant visibility on stable cash flows and are well positioned to pursue additional business in both the Jones Act space and across niche maritime markets more broadly. Our diversified fleet strategy enables us to adapt to the changing realities of the market and to deliver long-term results to our shareholders.”

Gross Voyage Profit

The Company’s fourth quarter 2014 gross voyage profit representing the results of its six reporting segments was $13.6 million, compared to $17.9 million in the comparable 2013 three month period. The comparable results by operating segment are shown below.

             
(All Amounts in Millions)
Jones Act

Pure Car
Truck
Carriers

Dry Bulk Rail-Ferry

Specialty
Contracts

Other

Total
Fourth Quarter, 2014
Gross Voyage Profit $ 9.1 $ 2.6 $ 0.5 $ 0.4 $ 1.2 $ (0.2) $ 13.6
 
Depreciation   (2.0)   (2.2)   (1.6)   (0.4)   (0.5)   (0.1)   (6.8)
Gross Profit (Loss) (After Depreciation) $ 7.1 $ 0.4 $ (1.1) $ - $ 0.7 $ (0.3) $ 6.8
 
EBITDA $ 9.3 $ 2.3 $ 0.3 $ 0.5 $ 1.7 $ 0.4 $ 14.5
Number of non-operating days 105 2 - - 13 - 120
Number of operating days 539 642 1,932 184 1,367 - 4,664
Number of Vessels 7 7 21 2 15 - 52
 
Fourth Quarter, 2013
Gross Voyage Profit $ 9.0 $ 3.2 $ 1.8 $ 1.6 $ 1.6 $ 0.7 $ 17.9
 
Depreciation   (1.9)   (2.2)   (1.6)   (0.5)   (0.5)   (0.2)   (6.9)
Gross Profit (After Depreciation) $ 7.1 $ 1.0 $ 0.2 $ 1.1 $ 1.1 $ 0.5 $ 11.0
 
EBITDA $ 9.4 $ 4.0 $ 1.3 $ 1.4 $ 1.8 $ 1.3 $ 19.2
Number of non-operating days 97 23 - - - - 120
Number of operating days 548 621 1,932 184 1,012 - 4,297
Number of Vessels 7 7 21 2 11 - 48
 
Variance
Gross Voyage Profit $ 0.1 $ (0.6) $ (1.3) $ (1.2) $ (0.4) $ (0.9) $ (4.3)
Depreciation $ (0.1) $ - $ - $ 0.1 $ - $ 0.1 $ 0.1
Gross Profit (Loss) $ - $ (0.6) $ (1.3) $ (1.1) $ (0.4) $ (0.8) $ (4.2)
 

For a reconciliation of the gross voyage numbers presented above to GAAP figures, please see the attached Non-GAAP Reconciliation Statement.

The Jones Act segment reported gross voyage profit comparable to the 2013 same period, while its number of non-operating days was higher in the 2014 fourth quarter. This increase in non-operating days was a result of the Company’s decision to drydock its self-unloading coal carrier earlier than scheduled in order to have the flexibility to deploy the vessel interchangeably in the Company’s East Coast and Gulf Coast Jones Act contracts throughout 2015. Gross Voyage profit on the Pure Car Truck Carriers (“PCTC”) segment was lower, due primarily to higher operating costs on its U. S. Flag PCTCs. While the Dry Bulk segment reported lower results due to weakness in the market for Handysize vessels, the comparable results for the Company’s Capesize vessel and its investment in mini-bulkers were improved. The Rail Ferry segment’s lower results were driven by lower northbound cargo volumes, primarily in its carriage of sugar. The Specialty segment reported lower results over the comparable 2013 fourth quarter, primarily due to the decreased earnings contribution from the Company’s ice-strengthened multi-purpose vessel. The Other segment’s deterioration from the comparable 2013 fourth quarter was a result of lower revenues from its brokerage services and one-time charges from its shipmanagement services.

Administrative and General (“A & G”)

A & G expenses in the fourth quarter of 2014 were approximately $800,000 lower, compared to the 2013 fourth quarter. The 2013 period included an accrual for cash bonus earned, while bonus levels were not realized in the fourth quarter of 2014.

Interest and Other

The higher interest expense for the fourth quarter 2014 reflects the financing cost on the U. S. Flag PCTC which the Company purchased from its Lessor in the third quarter of 2014. The foreign exchange gain reported in the 2013 fourth quarter results was from the Yen-denominated loan, while throughout the fourth quarter of 2014, the Company had hedged its exposure to the Yen through a foreign exchange forward contract that covers the entire Yen loan balance.

Taxes

The Company reevaluated the forward use of its deferred tax assets. While taxable earnings are anticipated, accounting rules weight other factors which recommend recording a valuation allowance on the deferred assets. As such, the Company recorded a valuation allowance of $11.6 million in its tax provision in this quarter.

Balance Sheet

The Company’s working capital at December 31, 2014 was $9.4 million, a decrease of $1.2 million from September 30, 2014. Cash and cash equivalents were approximately $21.1 million, with an available borrowing capacity under our Line of Credit of approximately $3.7 million.

Dividend Declarations

On January 7, 2015, the Company’s Board of Directors declared per-share quarterly dividend payments payable on January 30, 2015, of $2.375 and $2.25 on its Series A and Series B Preferred Stock, respectively. Today, the Board of Directors declared a $0.25 dividend payable on March 4, 2015, for each share of common stock owned on the record date of February 20, 2015.

Outlook

The Company projects 2015 EBITDA in the range of $55 to $63 million versus its 2014 EBITDA of $54 million. The 2015 cash outlay on capital expenditures, including dry dock costs, but excluding its investment in its office building in New Orleans, LA, is projected to be within a $35 - $40 million range. The Company has eight (8) vessels undergoing regulatory dry-dockings in 2015, including three (3) in its Jones Act fleet. The Company’s Board of Directors has set a $0.05 common stock dividend target for the first quarter of 2015 and remains committed to an ongoing dividend policy. All dividend declarations remain subject to the discretion and approval of International Shipholding Corporation’s Board of Directors on a quarterly basis.

All 2015 outlook figures included in this release exclude the effects of special items, future changes in regulation, the impact of unforeseen litigation or unforeseen events or circumstances that reduce vessel deployment or rates, any changes in operating or capital plans, and any future acquisitions, divestitures, buybacks or other similar business transactions. For purposes of this outlook section, EBITDA means earnings before interest, taxes, depreciation and amortization. See “Caution concerning forward-looking statements” below. Dividends are payable only if and when declared by our board of directors, which remains free to change or terminate our dividend practices at any time.

Conference Call

In connection with this earnings release, management will host an earnings conference call on Wednesday, February 11, 2015, at 10:00 AM ET. To participate in the conference call, please dial (888) 556-4997 (domestic) or (719) 325-2484 (international). Participants can reference the International Shipholding Corporation Fourth Quarter 2014 Earnings Call or passcode 1631098. 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 February 18, 2015 at (877) 870-5176 (domestic) or (858) 384-5517 (international). The passcode for the replay is 1631098.

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

Except for historical and factual information, the matters set forth in this release and future oral or written statements made by us or our management, including statements regarding our 2015 guidance, and other statements identified by words such as “estimates,” “expects,” “anticipates,” “plans,” and similar expressions, are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations only, and are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control. Actual events and results may differ materially from those anticipated, estimated, projected, expressed or implied by us if one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect. Factors that could affect actual results include, but are not limited to: our ability to maximize the usage of our vessels and other assets on favorable economic terms, including our ability to renew our time charters and contracts on favorable terms when they expire, to maximize our carriage of supplemental cargoes; and to improve the return on our dry bulk fleet if and when market conditions improve; our ability to effectively handle our leverage by servicing and complying with each of our debt instruments; changes in domestic or international transportation markets that reduce the demand for shipping generally or for our vessels in particular, including changes in the rates at which competitors add or scrap vessels; industry-wide changes in cargo freight rates, charter rates, vessel design, vessel utilization or vessel valuations, or in charter hire, fuel or other operating expenses; political events in the United States and abroad; the appropriation of funds by the U.S. Congress, including the impact of any future cuts to federal spending similar to the U.S. Congress’ recent “sequestration” cuts; terrorism, piracy, quarantines and trade restrictions; unexpected out-of-service days affecting our vessels, whether due to drydocking delays, unplanned maintenance, accidents, equipment failures, adverse weather, natural disasters, piracy or other causes; changes in foreign currency rates or interest rates; the effects of more general factors, such as changes in tax laws or rates in pension or benefits costs, or in general market, labor or economic conditions; and each of the other economic, competitive, governmental, and technological factors detailed in our reports filed with the Securities and Exchange Commission. You should be aware that new factors may emerge from time to time and it is not possible for us to identify all such factors nor can we predict the impact of each such factors on our business or the extent to which any one or more factors may cause actual results to differ from those reflected in any forward-looking statements. Accordingly, you are cautioned not to place undue reliance upon any of our forward-looking statements, which are inherently speculative and speak only as of the date made. We undertake no obligation to update or revise, for any reason, any forward-looking statements made by us or on our behalf, whether as a result of new information, future events or developments, changed circumstances or otherwise.

Non-GAAP Reconciliation by Segment

Quarter ended December 31, 2014

             
(All Amounts in Millions)
Jones Act

Pure Car
Truck
Carriers

Dry Bulk Rail-Ferry

Specialty
Contracts

Other Total
Fourth Quarter, 2014
Gross Voyage Profit $ 9.1 $ 2.6 $ 0.5 $ 0.4 $ 1.2 $ (0.2) $ 13.6
*Add Back: Amortization & Drydock 3.7 0.7 - 0.3 0.6 - 5.3
A&G (3.5) (1.0) (0.2) (0.2) (0.5) 0.2 (5.2)
Other   -   -   -   -   0.4   0.4   0.8
EBITDA $ 9.3 $ 2.3 $ 0.3 $ 0.5 $ 1.7 $ 0.4 $ 14.5
Depreciation (2.0) (2.2) (1.6) (0.4) (0.5) (0.1) (6.8)
Impairment (6.6) - (28.3) - (3.3) - (38.2)
Amortization (3.7) (0.7) - (0.3) (0.6) - (5.3)
Other - - - - (0.4) (0.4) (0.8)
*Add Back: Unconsolidated Entities   -   -   (0.1)   -   (0.3)   -   (0.4)
Operating Income (Loss) $ (3.0) $ (0.6) $ (29.7) $ (0.2) $ (3.4) $ (0.1) $ (37.0)
 
 
 
Fourth Quarter, 2013
Gross Voyage Profit $ 9.0 $ 3.2 $ 1.8 $ 1.6 $ 1.6 $ 0.7 $ 17.9
*Add Back: Amortization & Drydock 3.4 0.5 0.1 0.3 0.7 - 5.0
A&G (3.0) (1.1) (0.6) (0.5) (0.5) (0.3) (6.0)
Other   -   1.4   -   -   -   0.9   2.3
EBITDA $ 9.4 $ 4.0 $ 1.3 $ 1.4 $ 1.8 $ 1.3 $ 19.2
Depreciation (1.9) (2.2) (1.6) (0.5) (0.5) (0.2) (6.9)
Amortization (3.4) (0.5) (0.1) (0.3) (0.7) - (5.0)
Other - (1.4) - - - (0.9) (2.3)
*Add Back: Unconsolidated Entities   -   -   1.0   -   -   -   1.0
Operating Income (Loss) $ 4.1 $ (0.1) $ 0.6 $ 0.6 $ 0.6 $ 0.2 $ 6.0
 
 
* To remove the effect of including the results of the unconsolidated entities, drydock, and amortization in Gross Voyage Profit
       
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(All Amounts in Thousands Except Share Data)
(Unaudited)
 
Three Months Ended December 31, Twelve Months Ended December 31,
2014 2013 2014 2013
 
Revenues $ 70,978 $ 76,169 $ 294,834 $ 310,128
 
Operating Expenses:
Voyage Expense 52,392 52,306 223,187 236,843
Amortization Expense 5,316 4,992 22,107 16,386
Vessel Depreciation 6,705 6,658 26,233 24,363
Other Depreciation 146 204 691 567
Administrative and General Expense 5,180 5,951 20,898 22,236
Impairment Loss 38,213 - 38,213 -
Loss on Sale of Other Assets   1     10     2     16  
 
Total Operating Expenses   107,953     70,121     331,331     300,411  
 
Operating (Loss) Income   (36,975 )   6,048     (36,497 )   9,717  
 
Interest and Other:
Interest Expense 2,661 2,117 9,962 9,504
Derivative (Gain) Loss (75 ) (48 ) (132 ) 438
Other Income from Vessel Financing (441 ) (506 ) (1,858 ) (2,122 )
Investment Income (71 ) (23 ) (373 ) (114 )
Foreign Exchange Loss (Gain)   61     (1,354 )   184     (5,914 )
  2,135     186     7,783     1,792  
 

(Loss) Income Before Provision (Benefit) for Income
Taxes and Equity in Net Income of Unconsolidated Entities

  (39,110 )   5,862     (44,280 )   7,925  
 
Provision (Benefit) for Income Taxes:   9,517     (12,336 )   10,429     (12,268 )
 

Equity in Net Income (Loss) of Unconsolidated Entities
(Net of Applicable Taxes)

  374     (956 )   10     (1,661 )
 
Net (Loss) Income $ (48,253 ) $ 17,242   $ (54,699 ) $ 18,532  
 
Preferred Stock Dividends   1,305     1,306     5,221     3,226  
 
Net (Loss) Income Available to Common Stockholders $ (49,558 ) $ 15,936   $ (59,920 ) $ 15,306  
 
Basic and Diluted (Loss) Earnings Per Common Share:
 
Basic (Loss) Earnings Per Common Share: $ (6.79 ) $ 2.20   $ (8.23 ) $ 2.11  
 
Diluted (Loss) Earnings Per Common Share: $ (6.79 ) $ 2.18   $ (8.23 ) $ 2.10  
 
Weighted Average Shares of Common Stock Outstanding:
Basic 7,301,657 7,248,350 7,284,482 7,237,472
Diluted 7,301,657 7,322,082 7,284,482 7,282,676
 
Common Stock Dividends Per Share $ 0.25 $ 0.25 $ 1.00 $ 1.00

INTERNATIONAL SHIPHOLDING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(All Amounts in Thousands Except Share Data)

(Unaudited)

   
 
December 31, December 31,
ASSETS 2014 2013
 
 
Cash and Cash Equivalents $ 21,133 $ 20,010
Restricted Cash 1,394 8,499
Accounts Receivable, Net of Allowance for Doubtful Accounts 31,322 30,417
Prepaid Expenses 10,927 8,493
Deferred Tax Asset 408 3,084
Other Current Assets 370 1,029
Notes Receivable 3,204 3,987
Material and Supplies Inventory 9,760 11,322
Current Assets Held for Sale   6,976     -  
Total Current Assets   85,494       86,841  
 
Investment in Unconsolidated Entities   21,837     14,818  
 
Vessels, Property, and Other Equipment, at Cost:
Vessels 520,026 582,416
Building 1,354 1,211
Land 623 623
Leasehold Improvements 26,348 26,348
Construction in Progress 2,371 2,673
Furniture and Equipment   10,461     11,727  
561,183 624,998
Less - Accumulated Depreciation   (186,450 )   (175,106 )
  374,733     449,892  
 
Other Assets:
Deferred Charges, Net of Accumulated Amortization 28,657 29,309
Intangible Assets, Net of Accumulated Amortization 25,042 28,756
Due from Related Parties 1,660 1,974
Notes Receivable 24,455 27,659
Goodwill 2,735 2,735
Deferred Tax Asset - 7,325
Assets Held for Sale 48,701 -
Other   4,843     7,383  
  136,093     105,141  
 
TOTAL ASSETS $ 618,157   $ 656,692  

INTERNATIONAL SHIPHOLDING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(All Amounts in Thousands Except Share Data)

(Unaudited)

   
December 31, December 31,

2014

2013
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current Liabilities:
Current Maturities of Long-Term Debt $ 23,367 $ 19,213
Accounts Payable and Other Accrued Expenses   52,731     51,220  
Total Current Liabilities   76,098     70,433  
 
Long-Term Debt, Less Current Maturities   219,521     179,016  
 
Other Long-Term Liabilities:
Incentive Obligation 4,644 5,397
Other   50,284     65,306  
 
TOTAL LIABILITIES   350,547     320,152  
 
Stockholders' Equity:
Preferred Stock, $1.00 Par Value, 9.50% Series A Cumulative Perpetual
Preferred Stock, 650,000 Shares Authorized, 250,000 Shares Issued and
Outstanding at December 31, 2014 and December 31, 2013, Respectively 250 250
Preferred Stock, $1.00 Par Value, 9.00% Series B Cumulative Perpetual
Preferred Stock, 350,000 Shares Authorized, 316,250 Shares Issued and
Outstanding at December 31, 2014 and December 31, 2013, Respectively 316 316
Common Stock, $1.00 Par Value, 20,000,000 Shares Authorized,
7,301,657 and 7,248,350 Shares Outstanding at December 31, 2014
and December 31, 2013, Respectively 8,743 8,692
Additional Paid-In Capital 140,960 140,115
Retained Earnings 159,134 226,480
Treasury Stock, 1,388,078 Shares at December 31, 2014 and
1,388,066 shares at December 31, 2013 (25,403 ) (25,403 )
Accumulated Other Comprehensive Loss   (16,390 )   (13,910 )
TOTAL STOCKHOLDERS' EQUITY   267,610     336,540  
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 618,157   $ 656,692  
   
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All Amounts in Thousands Except Shares)
(Unaudited)
 

Twelve Months Ended December 31,

2014 2013
 
Cash Flows from Operating Activities:
Net (Loss) Income $ (54,699 ) $ 18,532
Adjustments to Reconcile Net (Loss) Income to Net Cash Provided by
Operating Activities:
Depreciation 26,924 24,930
Amortization of Deferred Charges 18,840 11,638
Amortization of Intangible Assets 3,714 5,701
Deferred Tax 10,350 (12,351 )
Non-Cash Share Based Compensation 1,537 1,420
Equity in Net (Income) Loss of Unconsolidated Entities (10 ) 1,661
Dividends from Unconsolidated Entities 875 -
Impairment Loss 38,213 -
Loss (Gain) on Sale of Assets 2 16
Loss (Gain) on Foreign Currency Exchange 184 (5,914 )
Changes in:
Deferred Drydocking Charges (12,517 ) (18,176 )
Accounts Receivable (4,907 ) 2,014
Inventories and Other Current Assets (2,290 ) (767 )
Other Assets (540 ) 840
Accounts Payable and Accrued Liabilities 742 (9,478 )
Other Long-Term Liabilities   (2,767 )   3,709  
Net Cash Provided by Operating Activities   23,651     23,775  
 
Cash Flows from Investing Activities:
Principal payments received under Direct Financing Leases - 558
Capital Improvements to Vessels and Other Assets (68,203 ) (32,543 )
Proceeds from Sale of Assets 1,659 -
Proceeds from the New Orleans Incentive 4,579 -
Investment in Unconsolidated Entities (7,887 ) (3,520 )
Net Decrease (Increase) in Restricted Cash Account 9,105 (499 )
Acquisition of United Ocean Services, LLC, net of cash acquired - (2,475 )
Proceeds from Payments on Note Receivables   3,987     5,954  
Net Cash Provided by (Used In) Investing Activities   (56,760 )   (32,525 )
 
Cash Flows from Financing Activities:
Issuance of Preferred Stock - 53,333
Proceeds from Issuance of Debt 102,046 76,000
Repayment of Debt (54,082 ) (108,711 )
Additions to Deferred Financing Charges (1,222 ) (2,122 )
Dividends Paid   (12,510 )   (9,608 )
Net Cash Provided by (Used in) Financing Activities   34,232     8,892  
 
Net Increase in Cash and Cash Equivalents 1,123 142
Cash and Cash Equivalents at Beginning of Period   20,010     19,868  
 
Cash and Cash Equivalents at End of Period $ 21,133   $ 20,010  

Contacts

The IGB Group
Bryan Degnan, 646-673-9701
bdegnan@igbir.com
or
Leon Berman, 212-477-8438
lberman@igbir.com
or
International Shipholding Corporation
Niels M. Johnsen, Chairman
212-943-4141
or
Erik L. Johnsen, President
251-243-9221
or
Manny Estrada, V. P. and CFO
251-243-9082

Contacts

The IGB Group
Bryan Degnan, 646-673-9701
bdegnan@igbir.com
or
Leon Berman, 212-477-8438
lberman@igbir.com
or
International Shipholding Corporation
Niels M. Johnsen, Chairman
212-943-4141
or
Erik L. Johnsen, President
251-243-9221
or
Manny Estrada, V. P. and CFO
251-243-9082