US barge operator
K-Sea Transportation Partners L.P. has announced that the company recorded a net loss of $4.2 million for the three months ended 31st December 20009 - a decrease of $7.8 million compared to the net income of $3.6 million it achieved during the corresponding period in 2008.
The company reported an operating income of $1.3 million for the last three months of 2009, a decrease of $8.1 million, compared to $9.4 million of operating income for the three months ended December 31, 2008.
Earnings before interest, taxes, depreciation and amortization (EBITDA), decreased by $7.2 million, or 31%, to $15.9 million for the three months ended December 31, 2009, compared to $23.1 million in 2008.
K-Sea said the decrease in EBITDA resulted from an $11.4 million decrease in revenue, net of voyage expense, which was attributable to fewer working days due to the retirement of a majority of the company's single-hull vessels and an overall reduction in net utilization directly relating to expiring contracts, and having to employ vessels in the spot market.
"Due to customer preference for double-hull vessels, we have taken a majority of our single-hull vessels out of the market and have either retired or sold them," K-Sea said.
The EBITDA decrease was partially offset by a $3.3 million reduction in vessel operating expenses and a $0.9 million reduction in general and administrative expenses, said to have been achieved mainly as a result of cost reduction initiatives.
Six Months Ended December 31, 2009
For the six months ended December 31, 2009, K-Sea achieved a net loss of $9.4 million - a decrease of $16.9 million compared to net income of $7.5 million for the six months ended December 31, 2008.
The decrease was said to be a result of the $11.7 million decrease in EBITDA and a $5.3 million increase in depreciation and amortization expense resulting from the vessel impairment loss mentioned above, offset by a $1.9 decrease in interest expense due to lower average debt balances and interest rates compared to the six months ended December 31, 2008.
The company reported operating income of $0.04 million, compared to $19.2 million of operating income for the six months ended December 31, 2008. Operating income was said to have been negatively impacted by a $5.9 million asset impairment charge on its single-hull vessels.
EBITDA decreased by $11.7 million, or 25%, to $34.1 million for the six months ended December 31, 2009, compared to $45.8 million for the six months ended December 31, 2008. The decrease in EBITDA resulted from a $15.5 million decrease in net voyage revenue, which as mentioned above was said to be attributable to fewer working days due to the retirement of a majority of its single-hull vessels and an overall reduction in net utilization directly relating to expiring contracts and having to employ vessels in the spot market.
Commenting on the results, President and CEO
Timothy J. Casey said, "U.S. refinery utilization has declined to levels not seen over the past 20 years, excluding periods of hurricane-related closures. As period charters for a number of our vessels have expired, market conditions have precluded new period charters and forced more vessels into a weaker spot market. Vessel utilization in our second fiscal quarter is about the lowest we have experienced in the last ten years. Accordingly, we will continue to focus on servicing our customers safely and efficiently, while doing our best to maximize both our revenue and our margins. In light of the current utilization, we will continue to reduce costs, rationalize assets, as well as using available capacity to enter adjacent markets. At the same time we expect to apply all free cash flow to reduce debt. We believe strongly in the quality and value of our fleet, as well as our leadership position in the markets we serve, and expect K-Sea to benefit appropriately when refined petroleum products markets strengthen.
"Owing to the uncertain industry outlook, our Board determined that K-Sea and its unitholders would be best served by applying our available cash flow to reduce debt. We therefore did not declare a distribution with respect to our second fiscal quarter, and will reinstate the distribution when we regain visibility in our future results."
