K-Sea Transportation Partners L.P. yesterday announced operating results for its third fiscal quarter ended March 31, 2011. The Company reported operating income of $0.8 million for the quarter ended March 31, 2011, excluding gains on asset sales and certain one-time items described below, compared to an operating loss of $3.6 million, excluding asset impairment charges, for the third fiscal quarter ended March 31, 2010. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the third quarter of fiscal 2011 was $13.0 million excluding the below mentioned gains on asset sales and one-time items, compared to $9.1 million for the third quarter ended March 31, 2010. EBITDA, Adjusted EBITDA and Adjusted operating income are non-GAAP financial measures that are reconciled to net income and operating income, the most directly comparable GAAP measures, in the tables below.
President and CEO Timothy J. Casey said, “Our third fiscal quarter results were in line with our expectations. The third fiscal quarter is always our weakest quarter seasonally, and the prior year’s third quarter was particularly affected by the poor state of the refining industry at that time. Our fourth fiscal quarter ended June 30, 2011 should improve sequentially. At March 31, 2011, our fleet’s contract cover of at least one year, measured by barrel-carrying capacity, was 54%; we expect our contract cover to approximate this percentage at the end of our June 2011 fiscal year. We and Kirby Corporation ("Kirby") continue to address the normal procedural matters involved in a merger, and expect to schedule a K-Sea unitholder vote in the early third quarter of calendar 2011. As details become available, we will advise everyone accordingly.”
Three Months Ended March 31, 2011
For the three months ended March 31, 2011, the Company reported operating income of $0.8 million, excluding gains on asset sales and certain one-time items. Gains on asset sales were $2.4 million and one-time items included a $1.1 million write-down of our ownership interest in our mutual insurance carrier as a result of changing our mutual club, and $1.8 million of costs relating to the proposed merger with Kirby. This year’s operating income represents an increase of $4.4 million compared to an operating loss of $3.6 million for the three months ended March 31, 2010, excluding a $1.7 million asset impairment charge relating to assets sold below book value. Operating income, inclusive of the gains on asset sales and one-time items, were $0.3 million for the three months ended March 31, 2011 and an operating loss of $5.3 million for the three months ended March 31, 2010. EBITDA, excluding the gains on asset sales, $1.3 million of costs related to a possible debt refinancing we postponed in light of the proposed merger with Kirby, and other one-time items mentioned above, was $13.0 million for the three months ended March 31, 2011 as compared to $9.1 million for the three months ended March 31, 2010.
EBITDA and operating income for the third fiscal quarter of 2011 was positively impacted by improved spot market rates as compared to the March 2010 quarter, which suffered from a very weak refining market. This was offset by fewer total working days owing to the sale or retirement of fourteen single-hull tank barges and three older double-hull tank barges during the last twelve months. The average daily rate for the three months ended March 31, 2011 increased to $12,973 as compared to $11,259 for the three months ended March 31, 2010. In addition to the improved spot market rates, average daily rates benefited from the commencement of operations of three coastwise new-build barges placed into service in March 2010, April 2010, and February 2011. Vessel operating expenses decreased by $1.9 million during the three months ended March 31, 2011, as compared to the same period last year, resulting mainly from the operation of fewer vessels. General and administrative expenses increased to $7.1 million for the three months ended March 31, 2011, as compared to $6.7 million for the three months ended March 31, 2010, resulting mainly from increased stock compensation costs from newly issued grants and other incentive compensation.
Including all gains on asset sales and one-time items, net loss for the three months ended March 31, 2011 was $5.9 million, or a loss of $0.49 per fully diluted limited partner common unit. This represents an improvement of $5.5 million compared to a net loss of $11.4 million, or $0.59 per fully diluted limited partner common unit, for the three months ended March 31, 2010. The increase was primarily a result of a $5.6 million increase in operating income, including gains on asset sales and the one-time items mentioned above, and a $1.5 million decrease in interest expense resulting from lower average debt balances; partially offset by the $1.3 million of debt refinancing costs mentioned above and a $0.3 million increase in provision for income taxes.
Nine Months Ended March 31, 2011
For the nine months ended March 31, 2011, the Company reported operating income of $12.9 million, including $8.8 million of net gains on sale of assets, a $1.1 million write-down of our ownership interest in our mutual insurance carrier as a result of changing our mutual club, $1.8 million of costs relating to the proposed merger with Kirby, and $1.2 million of lease termination costs. Excluding these items, operating income was $8.1 million for the nine months ended March 31, 2011. This represents an increase of $4.1 million compared to $4.0 million (before asset impairment charges of $7.6 million and loss on acquisition of land and building of $1.7 million) of operating income for the nine months ended March 31, 2010. The $8.8 million gain was comprised of the sale of our waste water treatment facility in Norfolk, Virginia, the previously announced sale of two tugboats and our two oldest double-hull barges, the sale of five single-hull barges and the sale of one other older double-hull barge. EBITDA, excluding the gains on asset sales, the $1.3 million of costs related to a possible debt refinancing we postponed in light of the proposed merger with Kirby, and other one-time items mentioned above, was $45.9 million for the nine months ended March 31, 2011 as compared to $43.2 million for the nine months ended March 31, 2010, excluding the write-down on acquisition of land and building.
EBITDA and operating income for the nine months ended March 31, 2011 were positively impacted by higher average daily rates described below; partially offset by fewer total working days owing to the sale or retirement of seventeen tank barges during the last twelve months, as mentioned above. The average daily rate for the nine months ended March 31, 2011 increased to $12,543 as compared to $11,100 for the nine months ended March 31, 2010. Average daily rates benefited from the commencement of operations of four coastwise new-build barges placed into service in November 2009, March 2010, April 2010, and February 2011, the retirement of the single-hull vessels from our recurring business, the higher rates earned on the vessels deployed in the U.S. Gulf as part of the oil spill clean-up effort last summer, and some recent strengthening of spot market rates. Additionally, the nine months ended March 31, 2010 experienced a reduction in the average daily rate due to operating several of our vessels under storage contracts in our waste water treatment facility at lower rates. Vessel operating expenses decreased by $5.8 million during the nine months ended March 31, 2011, as compared to the same period last year, resulting mainly from the operation of fewer vessels. General and administrative expenses remained relatively flat at $20.3 million for the nine months ended March 31, 2011, as compared to $20.2 million for the nine months ended March 31, 2010.
Including all the gains on asset sales and one-time items, net loss for the nine months ended March 31, 2011 was $7.2 million, or a loss of $0.77 per fully diluted limited partner common unit. This represents an increase of $13.6 million compared to a net loss of $20.8 million, or $1.10 per fully diluted limited partner common unit, for the nine months ended March 31, 2011. The increase was primarily a result of an $18.2 million increase in operating income, including all the gains on asset sales and one-time items mentioned above. The increase was partially offset by a $2.3 million increase in interest expense resulting mainly from increased interest rate margins due to the previously announced December 2009 and September 2010 amendments of our revolving credit facility and a term loan, the $1.3 million of debt refinancing costs mentioned above, and a $0.4 million increase in provision for income taxes.
President and CEO Timothy J. Casey said, “Our third fiscal quarter results were in line with our expectations. The third fiscal quarter is always our weakest quarter seasonally, and the prior year’s third quarter was particularly affected by the poor state of the refining industry at that time. Our fourth fiscal quarter ended June 30, 2011 should improve sequentially. At March 31, 2011, our fleet’s contract cover of at least one year, measured by barrel-carrying capacity, was 54%; we expect our contract cover to approximate this percentage at the end of our June 2011 fiscal year. We and Kirby Corporation ("Kirby") continue to address the normal procedural matters involved in a merger, and expect to schedule a K-Sea unitholder vote in the early third quarter of calendar 2011. As details become available, we will advise everyone accordingly.”
Three Months Ended March 31, 2011
For the three months ended March 31, 2011, the Company reported operating income of $0.8 million, excluding gains on asset sales and certain one-time items. Gains on asset sales were $2.4 million and one-time items included a $1.1 million write-down of our ownership interest in our mutual insurance carrier as a result of changing our mutual club, and $1.8 million of costs relating to the proposed merger with Kirby. This year’s operating income represents an increase of $4.4 million compared to an operating loss of $3.6 million for the three months ended March 31, 2010, excluding a $1.7 million asset impairment charge relating to assets sold below book value. Operating income, inclusive of the gains on asset sales and one-time items, were $0.3 million for the three months ended March 31, 2011 and an operating loss of $5.3 million for the three months ended March 31, 2010. EBITDA, excluding the gains on asset sales, $1.3 million of costs related to a possible debt refinancing we postponed in light of the proposed merger with Kirby, and other one-time items mentioned above, was $13.0 million for the three months ended March 31, 2011 as compared to $9.1 million for the three months ended March 31, 2010.
EBITDA and operating income for the third fiscal quarter of 2011 was positively impacted by improved spot market rates as compared to the March 2010 quarter, which suffered from a very weak refining market. This was offset by fewer total working days owing to the sale or retirement of fourteen single-hull tank barges and three older double-hull tank barges during the last twelve months. The average daily rate for the three months ended March 31, 2011 increased to $12,973 as compared to $11,259 for the three months ended March 31, 2010. In addition to the improved spot market rates, average daily rates benefited from the commencement of operations of three coastwise new-build barges placed into service in March 2010, April 2010, and February 2011. Vessel operating expenses decreased by $1.9 million during the three months ended March 31, 2011, as compared to the same period last year, resulting mainly from the operation of fewer vessels. General and administrative expenses increased to $7.1 million for the three months ended March 31, 2011, as compared to $6.7 million for the three months ended March 31, 2010, resulting mainly from increased stock compensation costs from newly issued grants and other incentive compensation.
Including all gains on asset sales and one-time items, net loss for the three months ended March 31, 2011 was $5.9 million, or a loss of $0.49 per fully diluted limited partner common unit. This represents an improvement of $5.5 million compared to a net loss of $11.4 million, or $0.59 per fully diluted limited partner common unit, for the three months ended March 31, 2010. The increase was primarily a result of a $5.6 million increase in operating income, including gains on asset sales and the one-time items mentioned above, and a $1.5 million decrease in interest expense resulting from lower average debt balances; partially offset by the $1.3 million of debt refinancing costs mentioned above and a $0.3 million increase in provision for income taxes.
Nine Months Ended March 31, 2011
For the nine months ended March 31, 2011, the Company reported operating income of $12.9 million, including $8.8 million of net gains on sale of assets, a $1.1 million write-down of our ownership interest in our mutual insurance carrier as a result of changing our mutual club, $1.8 million of costs relating to the proposed merger with Kirby, and $1.2 million of lease termination costs. Excluding these items, operating income was $8.1 million for the nine months ended March 31, 2011. This represents an increase of $4.1 million compared to $4.0 million (before asset impairment charges of $7.6 million and loss on acquisition of land and building of $1.7 million) of operating income for the nine months ended March 31, 2010. The $8.8 million gain was comprised of the sale of our waste water treatment facility in Norfolk, Virginia, the previously announced sale of two tugboats and our two oldest double-hull barges, the sale of five single-hull barges and the sale of one other older double-hull barge. EBITDA, excluding the gains on asset sales, the $1.3 million of costs related to a possible debt refinancing we postponed in light of the proposed merger with Kirby, and other one-time items mentioned above, was $45.9 million for the nine months ended March 31, 2011 as compared to $43.2 million for the nine months ended March 31, 2010, excluding the write-down on acquisition of land and building.
EBITDA and operating income for the nine months ended March 31, 2011 were positively impacted by higher average daily rates described below; partially offset by fewer total working days owing to the sale or retirement of seventeen tank barges during the last twelve months, as mentioned above. The average daily rate for the nine months ended March 31, 2011 increased to $12,543 as compared to $11,100 for the nine months ended March 31, 2010. Average daily rates benefited from the commencement of operations of four coastwise new-build barges placed into service in November 2009, March 2010, April 2010, and February 2011, the retirement of the single-hull vessels from our recurring business, the higher rates earned on the vessels deployed in the U.S. Gulf as part of the oil spill clean-up effort last summer, and some recent strengthening of spot market rates. Additionally, the nine months ended March 31, 2010 experienced a reduction in the average daily rate due to operating several of our vessels under storage contracts in our waste water treatment facility at lower rates. Vessel operating expenses decreased by $5.8 million during the nine months ended March 31, 2011, as compared to the same period last year, resulting mainly from the operation of fewer vessels. General and administrative expenses remained relatively flat at $20.3 million for the nine months ended March 31, 2011, as compared to $20.2 million for the nine months ended March 31, 2010.
Including all the gains on asset sales and one-time items, net loss for the nine months ended March 31, 2011 was $7.2 million, or a loss of $0.77 per fully diluted limited partner common unit. This represents an increase of $13.6 million compared to a net loss of $20.8 million, or $1.10 per fully diluted limited partner common unit, for the nine months ended March 31, 2011. The increase was primarily a result of an $18.2 million increase in operating income, including all the gains on asset sales and one-time items mentioned above. The increase was partially offset by a $2.3 million increase in interest expense resulting mainly from increased interest rate margins due to the previously announced December 2009 and September 2010 amendments of our revolving credit facility and a term loan, the $1.3 million of debt refinancing costs mentioned above, and a $0.4 million increase in provision for income taxes.