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Cramer discusses Nordic American Tanker and chats with the CEO. Saves me the time to write up comments, since the covered the major points. NAT has done a great job of increasing the fleet during the downturn and the stock has held up well. Just need some of those $1.00+ quarterly distributions.

Nordic American Tanker results video »

K-Sea Transportation pays big dividend, reports earnings

By Tim | Published: August 5, 2009

http://ir.k-sea.com/

K-Sea Transportation KSP has announced their results for the 4th quarter and the continued payout of the 77¢ quarterly distribution. Revenues and earnings continue to fall for this U.S. based barge shipper of petroleum products.  Cash for distribution was only 85% of the amount to be paid out this quarter. For the entire year K-Sea had a 92% cash flow coverage of the distribution.

Investors holding this stock for the income should be nervous. Company management contends they will continue the distribution rate through the end of 2009. We shall see.

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Overseas Shipholding Group quarterly earnings

By Tim | Published: August 5, 2009

http://ir.osg.com/2009Q2earnings

The 2nd quarter earnings for Overseas Shipholding Group OSG are a wake-up call for the tanker group. Net income for the 2nd quarter was a loss of 33¢ per share compared to a $2.81 a year earlier. Spot VLCC TCE rates fell from $98k per day to $32k, knocking almost $140 million or 35% out of revenues.

OSG is financially in excellent shape and the market has responded to the earnings today by driving the share price up 4%. This report is a wake up call on how weak the rates in the tanker business currently are and I do not see much chance of improvement in the next 6 months. I am surprised how well the shares of tanker stocks are holding up. The tanker group as I track them is up 7% YTD and OSG is down only 12%. I would expect a pull back in tanker stock prices if the current rate environment holds.

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Excel Maritive earnings report

By Tim | Published: August 5, 2009

http://www.excelmaritime.com/uploads/EXM_Press_2Q09.pdf

My regular laptop is in the shop for a tune-up and I am working with the slow a bulky laptop. In spite of this tremendous handicap, I will endeavor to put out some meaningful earnings report analysis over the next few days.

Excel Maritime Carriers EXM, and operator of 40+ drybulk vessels saw revenue and profits for the 2nd quarter of 2009 come in significantly below the same quarter in 2008. Net income, excluding one-timer non-cash hyphenated stuff, was 85¢ per share compared to 2008 Q2’s $2.50. Average TCE fell from over $33k per day in 2008 to just over $22,000 per day for the recently closed quarter.

Management was happy to point out that EBITDA increased from $53 million in Q1 to $57 million in Q2. Net income did not follow however, my math shows the company netted $2.07 per share in the 1st quarter net of the nets. Q1 and Q2 press release do not jive concerning the net income after special item numbers for Q1 at least to my fast read.

Still this is a company that made almost $3.00 per share in 6 months plus about a $1.00 per share in depreciation gives pretty attractive cash flow for a $9.00 stock. Excel has a pretty small percentage of their fleet committed to long term contracts so the have some upside if rates climb. Downside is still a mountain of debt and the suspended dividend.

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Golar LNG splitting up operations

By Tim | Published: August 4, 2009

http://www.golarlng.com/Stock_Exchange_Releases/Press_Releases.html

The last time I wrote about Golar LNG [[GLNG]], they were discussing spinning off the development side of their business from the money making side. The press release above makes the move formal. A new subsidiary will be formed called Golar LNG Energy Limited. It will hold the assets that are currently “such part of its asset portfolio which is not employed on long term charters”.

The assets to be transferred are on the books for $847 million and $487 million in debt shall tag along. “Energy” will issue share to pay the balance to Golar plus $150 million in private placement. Once the private placement is complete, the shares of “Energy” will be listed on some exchange, somewhere, possibly Oslo.

The remaining part of Golar is intended to have a stable revenue stream with a high dividend paying ability. Golar LNG will still own approximately 70% of the energy subsidiary. If this spinoff allows Golar to significantly increase the distribution it will be a positive for shareholders.

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Dryships reports quarterly earnings

By Tim | Published: August 4, 2009

http://www.capitallink.com/ppress/ppressfile

Dryships, Inc. DRYS reported quarterly earnings a couple of days ago and this one-time high flyer continues to struggle with revenues and earnings. 2nd quarter earnings net of one-time items were 25¢ per share compared to $6.95 a year earlier. Total earnings fell to $52.8 million from just under $300 million. This is a 82% decrease. Earning per share, however, fell 97%. That is some serious dilution.

Drybulk revenues fell 59% to $99.9 million compared to Q2 2008. Dryships completed its purchase of Ocean Rig in the 2nd quarter of 2008 and a year later the segment kicked in $103.6 million in revenue. The addition does not seem to be adding much to the bottom line.

To me Dryships is an overleveraged, over diluted symbol of what can go wrong with aggressive, bank financed growth. Those who think this stock can return to the glory days of early 2008 will be waiting a long time.

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Baltic Indices for Last Week

By Tim | Published: August 3, 2009

Here is how the various Baltic Exchange shipping indices fared for the week ending 31 July.

  • Baltic Dry Index (BDI): +0.1%
  • Baltic Capesize Index (BCI): +4.2%
  • Baltic Panamax Index (BPI): -9.7%
  • Baltic Supramax Index (BSI): -0.4%
  • Baltic Handysize Index (BHSI): +0.9%
  • Baltic Dirty Tanker (BDTI): -1.3%
  • Baltic Clean Tanker (BCTI): +4.7%

Here are the results of the corresponding stock indices, courtesy of Capital Link Shipping:

  • CL Dry Bulk Index: -1.3%
  • CL Tanker Index: -1.3%

For the week, it looks like all of the action was in the Panamax class of bulk freighters.  Spot dirty tankers continue to struggle at break even rates or a little worse. Maritime stocks slid for the week in contrast to the overall market.

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OSP to pay distribution

By Tim | Published: July 30, 2009

OK, I missed this one this morning. OSG America L.P. OSP declared a 2nd quarter distribution of 37.5¢ for the 2nd quarter. The record date is August 7. My first clue was when I looked at the stock price and it was trading for $8.40 per share. Tough to get there when the mother company is making an offer to buy the outstanding shares at $8 per. Add in the pending dividend and you get close to the $8.40. It appears the market believes that OSG will increase their purchase price somewhat.

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I need your vote

By Tim | Published: July 30, 2009

I am attempting to get published on another writing venture and have submitted a proposal to ChangeThis.com for one of their manifestos. This is in an area completely different from my usual topics. Go over to the link and give me a vote:

http://www.changethis.com/proposals/1736

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Interesting move by OSG

By Tim | Published: July 30, 2009

http://ir.osg.com/phoenix.zhtml?c=82053&p=irol-newsArticle&ID=1313976&highlight

Overseas Shipholding Group OSG has announced they want to purchase the remaining units of OSG America L.P. OSP. The offer is for $8.00 per share, about 12% above the recent average price. The reason for the purchase is interesting and shows the company’s interest in their shareholders:

Morten Arntzen, President and CEO said, “While we continue to believe that OSG America can generate attractive long-term returns, recent adverse changes in the outlook for the Jones Act market have created significant near- and medium-term challenges for OSG America’s business. As a result of these deteriorating market conditions, we expect OSG America’s distributable cash flow generated in the second half of 2009 through 2010 to be materially below that required to fund its minimum quarterly distribution. While the Partnership’s distribution policy is established by its Board of Directors, we believe that the Partnership will be unable to continue its current levels of distributions to common unitholders in this challenging market environment. Furthermore, vessel cancellations, delivery delays and tighter credit and equity market conditions have diminished OSG America’s fleet growth and expansion opportunities, which were central to the investment story at its initial public offering. In light of these difficult circumstances, we believe that our offer to acquire the public units of OSG America represents an attractive opportunity for unitholders to realize value for their units at a significant premium to the recent unit price.”

OSP stock has appreciated 44% so far in 2009 and the distribution is at a 21% rate, so shareholders have had a nice run this year. It will be interesting to see how this move affects to bottom line of OSG.

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Horizon Lines 2nd quarter results

By Tim | Published: July 27, 2009

Horizon Lines, Inc. – Press Release.

Horizon Lines [[HRZ]] is primarily a U.S. flagged container carrier serving Alaska, Hawaii and Puerto Rico from mainland U.S. ports. The earnings release show the company maintaining a level of profitabilityin their shipping business in a very soft economic market. The opening lines of the press release pretty much state the condition of their market:

Container Volumes Down 9.8%; Container Rates Net of Fuel up 2.5%

At this point Horizon is a way to participate in the retail recovery of the U.S. That recovery seems to still be a few quarters or more in the future.

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