Fri 31 Oct 2008, 08:02 GMT

K-Sea profit drops on higher expenses


Barge operator records loss on the carrying value of diesel fuel.



Barge operator K-Sea Transportation Partners L.P. has announced operating results and net income for the first fiscal quarter ended September 30, 2008. The company reported operating income of $9.9 million, a decrease of $2.1 million, or 18 percent, compared to $12.0 million of operating income for the same period last year.

K-Sea also announced that its distribution to unitholders for the first quarter will remain at $0.77 per unit, or $3.08 per unit annualized.

Commenting on the results, President and CEO Timothy J. Casey said "Our first quarter results were satisfactory in light of the exceptional developments in the energy markets which disrupted demand in certain of our markets. There were also several factors that affected us which we believe are transitory in nature and which should ease as we progress in fiscal 2009.

"Our results for the first quarter reflected certain higher operating costs that will be increasingly offset by built-in contractual revenue escalators in our charter contracts which will go into effect at various times during the year.

Casey pointed out that the value of the marine fuel used on its tugboats had had a negative effect on the company balance sheet during the quarter ended September 30, 2008.

"The sharp decline in the price of oil in September resulted in our recording a loss on the carrying value of the diesel fuel used to power our tugboats. We also had a negative swing, compared to last year's first quarter, on the disposition of equipment. The total of these items approximated $3.5 million."

K-Sea's President said the vessel utilization and average daily rates remain solid, aided by the large percentage of long-term charter contracts which have an average remaining duration of approximately 2.5 years.

The company also expects to take delivery in November of two new 80,000 barrel tank barges that are committed to long-term contracts. Casey noted that "distribution coverage ratio is negatively skewed this quarter because we will pay the full distribution on the two million new units we issued in the middle of the quarter; however, we did not receive the benefit of a full quarter's reduction in interest expense."

"We believe our balance sheet and liquidity remain solid and the structure of our debt is a major advantage. Debt maturities total only $17 million for the next twelve months, and $19 million in fiscal 2010, which will be covered by availability of over $70 million under our various loan agreements. Our bank revolver is non-amortizing and does not mature until 2014," Casey added.

K-Sea said the decrease in operating income had resulted from increased labor, insurance, and general and administrative expenses, and from higher depreciation and amortization resulting from the acquisition of the Smith Maritime Group in August 2007, the delivery of four newbuild tank barges since September 30, 2007, and the acquisition of eight tugboats in June 2008.

"The higher costs more than offset the impact of continued strong rates and solid vessel utilization," the company said.

Utilization was positively impacted by a smaller number of scheduled drydockings compared to the prior year's quarter. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by $0.3 million, or 1%, to $22.7 million for the three months ended September 30, 2008, compared to $22.4 million for the three months ended September 30, 2007.

Net income for the three months ended September 30, 2008 was $3.9 million, or $0.26 per fully diluted limited partner unit, a decrease of $2.1 million compared to net income of $6.0 million, or $0.56 per fully diluted limited partner unit, for the three months ended September 30, 2007.

Earlier this month, K-Sea annnounced the withdrawal of the proposed initial public offering of K-Sea GP Holdings LP due to 'the current state of the financial markets'.

Commenting at the time of the announcement, Timothy Casey said "The fundamentals of our business remain solid and we are confident in our prospects. The possible general partner IPO would have had no impact on our results of operations or financial condition, and its withdrawal also has no impact on us."


Wilhelmshaven Express, Hapag-Lloyd. Hapag-Lloyd to acquire ZIM for $4.2bn in cash deal  

German container line signs agreement to buy Israeli rival, subject to regulatory approvals.

VPS Maress 2.0 digital dashboard interface displayed on a monitor. VPS outlines key features of Maress 2.0 with enhanced analytics for offshore vessel efficiency  

Updated platform adds data validation, energy flow diagrams and fleet comparison tools for decarbonisation monitoring.

Two vessels at sea. IMO committee agrees NOx certification rules for ammonia and hydrogen engines  

DNV reports PPR 13 also advanced a biofouling framework and crude oil tanker emission controls.

Chart showing TTM and T3M bunker sales in Singapore, Jan 2024-Jan 2026. Singapore bunker sales set new record as TTM volumes surpass 57.5 tonnes  

Rolling 12-month bunker sales at the Port of Singapore have reached a fresh all-time high, breaking above 57.5 million tonnes for the first time, alongside a record surge in short-term demand.

Kota Odyssey vessel. PIL’s LNG-powered Kota Odyssey makes maiden call at Saudi Arabian port  

Container vessel marks first entry into the Red Sea with call at Red Sea Gateway Terminal.

Everllence logo. Everllence to host webinars on ammonia-fuelled two-stroke engine development  

Company will present B&W ME-LGIA engine technology and development journey in February sessions.

BBG LNG storage at the Port of Bilbao. Bilbao LNG terminal secures sustainability certification for bio-LNG services  

Bahía de Bizkaia Gas facility gains ISCC certification, enabling renewable fuel traceability for marine bunkers.

Maersk 5,900-teu dual-fuel methanol-powered container vessel. Tsuneishi Shipbuilding delivers methanol dual-fuel container vessel from China yard  

Japanese shipbuilder says delivery marks expansion of alternative-fuel vessel production beyond Japan.

Zhoushan waterfront at night. Zhoushan becomes world's third-largest bunker port  

Chinese refuelling hub overtakes Antwerp-Bruges and Fujairah to take third place in 2025.

Meyer Turku's net-zero vessel concept render. Meyer Turku completes net-zero cruise ship concept with 90% emissions cut  

Finnish shipbuilder’s AVATAR project vessel design exceeds IMO targets using technologies expected by 2030.





 Recommended