EX-99 2 ex99-1.txt EX99-1.TXT Exhibit 99.1 [LOGO] TWO HARBOUR PLACE NEWS 302 KNIGHTS RUN AVENUE RELEASE TAMPA, FL 33602 813-209-0600 800-922-4596 FOR FURTHER INFORMATION CONTACT: WALTER T. BROMFIELD (813) 209-0602 JUDITH M. CORTINA (610) 595-8055 MARITRANS REPORTS SECOND QUARTER EARNINGS AND DECLARES QUARTERLY DIVIDEND Announces Redelivery of Fifth Double-hull Barge TAMPA, FL - (August 3, 2004) - Maritrans Inc. (NYSE: TUG), a leading U.S. flag marine petroleum transport company, today announced its second quarter financial results and declared its quarterly dividend. Net income for the quarter ended June 30, 2004 was $3.1 million, or $0.37 diluted earnings per share, on revenues of $36.7 million. This compares with net income of $3.8 million, or $0.45 diluted earnings per share, on revenues of $36.2 million for the quarter ended June 30, 2003. Operating income for the quarter ended June 30, 2004 was $5.0 million compared to $6.3 million for the quarter ended June 30, 2003. The second quarter of 2003 included a gain on sale of assets of $1.1 million. On a Time Charter Equivalent ("TCE") basis, a commonly used industry measure where direct voyage costs are deducted from revenue, TCE revenue was $30.3 million for the quarter ended June 30, 2004 compared to $30.4 million for the quarter ended June 30, 2003. TCE revenue is a non-GAAP financial measure and a reconciliation of TCE revenue to revenue calculated in accordance with GAAP is attached. During the second quarter, the Company experienced lower overall utilization. Utilization for the second quarter of 2004 was 82.5% compared to 86.8% in the second quarter of 2003. This resulted primarily from the M214 being in the shipyard for her double-hull conversion. In addition, increased crew expenses, ongoing patent litigation costs and employee related costs contributed to reduced operating income. During the current quarter, the Company reversed previously recorded insurance claims and deductibles that no longer required a related liability. The impact of this reversal increased operating income by $0.8 million, or approximately $0.06 (after-tax) diluted earnings per share, and is reflected as a reduction of operations expense. Jonathan Whitworth, Chief Executive Officer of Maritrans, commented, "Since joining Maritrans in May 2004, I have been extremely impressed with the dedication of our employees and their commitment to providing world class service to our customers. I am pleased that Maritrans was able to maintain its revenue base in the second quarter, despite lower utilization. Our strong market share in growth areas such as Florida, combined with a leading lightering operation in a major Northeast refining system and a successful rebuilding program gives me great confidence in the Company's prospects for the future. Maritrans is committed to maintaining stringent safety and environmental standards, building on the solid history of the Company, and exceeding our high expectations for the future." Maritrans Reports Second Quarter Earnings and Declares Quarterly Dividend Page 2 August 3, 2004 FLEET AND MARKET REPORT Maritrans owns and operates a fleet of 15 units consisting of four oil tankers and 11 oceangoing married tug/barge units. Approximately 64% of its capacity is double-hulled compared to the Jones Act fleet average of 45%. The majority of the Company's fleet was deployed on contract business during the second quarter of 2004. During the quarter, the Company maintained approximately 80% of its business on long-term contracts, which accounted for approximately $29.8 million in revenue. However, volumes of cargos transported in the Northeast decreased due to cyclical dredging at customer refining facilities. Spot market rates were slightly higher in the second quarter of 2004 than the same period of 2003. During the quarter an increased number of U.S. Jones Act vessels transporting spot cargoes from the Gulf of Mexico to the U.S. West Coast. This was due to an increased demand for gasoline blend components resulting from the MTBE ban in California and Washington. Low clean product inventories and reduced clean product imports in the areas the Company serves also supported the higher spot rates. The Company expects spot rates, which are currently higher than last year, to remain steady or increase during the remainder of this year. As a result, the Company is currently evaluating the optimal balance between contract and spot coverage, and expects to increase its exposure to the spot market during the second half of the year. However, a majority of the Company's business will remain on contract in 2004. Mr. Whitworth added, "Our goal in conducting this evaluation is to best position Maritrans to take full advantage of the positive outlook for the spot market and the expected rate increases resulting from favorable long-term supply fundamentals. In striving to achieve an optimal spot/contract balance, we will seek to provide our shareholders with both earnings stability and upside potential." DOUBLE-HULL REBUILDING PROGRAM Since 1998, Maritrans has been actively engaged in a double-hull rebuilding program aimed at ensuring that the Company's Jones Act fleet is compliant with the U.S. Oil Pollution Act of 1990 ("OPA"). Maritrans' patented process enables the Company to convert its vessels for approximately half the cost of building new vessels. Maritrans has successfully rebuilt five of the original nine single-hull barges requiring conversion to a double-hull. Maritrans estimates that the total cost of its barge rebuilding program will exceed $200 million, of which $96 million has been spent to date. The recently completed rebuilding of the M214 and the tug boat Honour cost approximately $26 million and $7 million respectively. In the third quarter of 2004, the Company will begin rebuilding its barge, the OCEAN 193. The rebuild is expected to be completed in the first half of 2005, at a cost of $24 million. As of June 30, 2004, $9.5 million has been paid to the shipyard contractor for this project. The OCEAN 193 rebuild will include the insertion of a "midbody" which will increase her cargo-carrying capacity by approximately 30,000 barrels. The Company has patented a double-hull conversion process for both barges and tank ships and continues to evaluate the possibility of converting its two single-hull tank ships into double-hull vessels. Mr. Whitworth concluded, "With the redelivery of the M214 in July, Maritrans has achieved an important milestone of rebuilding more than half of our single-hull barges and remains well ahead of competitors in operating an OPA-compliant double-hull fleet. We believe this has positioned Maritrans to benefit from the expected rise in rates resulting from the anticipated long-term shortage of OPA-compliant Jones Act vessels. As we continue to invest in our fleet for the benefit of customers and shareholders, we remain focused on maintaining a strong capital structure and financial flexibility." Maritrans Reports Second Quarter Earnings and Declares Quarterly Dividend Page 3 August 3, 2004 CAPITAL EXPANSION In June, the Company entered into a new $29.5 million credit facility, with a 9.5-year amortization and a 55 percent balloon payment at the end of the term. The new facility accrues interest at a fixed rate of 6.28 percent and is collateralized by a first security interest in the M214 and Honour. Proceeds of the loan were applied to the outstanding balance of the Company's revolving credit agreement. Maritrans continues to maintain $40 million of available borrowing capacity under its revolving credit agreement. SECURITY In accordance with the International Ship and Port Facility Security Code ("ISPS"), the Company submitted security plans to the U.S. Coast Guard for its vessels, including those vessels that are not required to comply with the new code. The U.S. Coast Guard approved the Company's security plans ahead of the required July 1, 2004 deadline. DIVIDEND Maritrans' Board of Directors declared a quarterly dividend of $0.11 per share, payable on September 1, 2004, to shareholders of record on August 18, 2004. The ex-dividend date will be August 16, 2004. CONFERENCE CALL INFORMATION Maritrans' management will host a conference call on August 4, 2004, at 9:00 a.m. eastern time to discuss the Company's second quarter results. To access this call, please dial 1-800-946-0786. A replay of the call may be accessed by dialing 1-888-203-1112 and providing the reservation number 721378. The replay will be available from 12:00 p.m. eastern time on August 4, 2004, to 12:00 a.m. eastern time on August 11, 2004. The conference call will also be webcast live on Maritrans' website, www.maritrans.com and will be available on the website through August 11, 2004. ABOUT MARITRANS Maritrans Inc. is a U.S. based company with a 76-year commitment to building and operating petroleum transport vessels for the U.S. domestic trade. Maritrans owns and operates one of the largest fleets serving the U.S. coastwise trade. This fleet consists of four oil tankers and eleven oceangoing married tug/barge units with an aggregate fleet capacity of approximately 3.6 million barrels, of which, 64 percent of capacity is double-hulled. Maritrans is headquartered in Tampa, Florida, and maintains an office in the Philadelphia area." SAFE HARBOR STATEMENT The information in this news release includes certain forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, growth, performance, earnings per share or achievements to be materially different from those expressed in or implied by such forward-looking statements. These statements are based on assumptions the Company believes are reasonable, but a variety of factors could cause the Company's actual results, goals, targets or objectives to differ materially from those contemplated, projected, forecast, estimated, anticipated, planned or budgeted. Such factors include, among others, changes in oil companies' decisions as to the type and origination point of the crude that it processes, changes in the amount of imported petroleum products, competition for marine transportation, domestic oil consumption, the continuation of federal law restricting United States point-to-point maritime shipping to U.S. vessels (the Jones Act), the timing and success of our double-hull rebuilding program, demand for petroleum products, future spot market rates, demand for our services, levels of foreign imports, changes in interest rates, the effect of war or terrorist activities and the general financial, economic, environmental and regulatory conditions affecting the oil and marine transportation industry in general. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Maritrans Reports Second Quarter Earnings and Declares Quarterly Dividend Page 4 August 3, 2004 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ($ THOUSANDS)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 2004 2003 2004 2003 ------- ------- ------- ------- REVENUE $36,747 $36,212 $71,408 $72,141 VOYAGE COSTS 6,401 5,776 12,409 12,861 ------- ------- ------- ------- TIME CHARTER EQUIVALENT $30,346 $30,436 $58,999 $59,280 ======= ======= ======= ======= UNAUDITED CONDENSED CONSOLIDATED FINANCIAL HIGHLIGHTS ($ THOUSANDS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 2004 2003 2004 2003 ------- ------- ------- ------- REVENUE $ 36,747 $ 36,212 $ 71,408 $ 72,141 OPERATIONS EXPENSE 18,167 18,077 36,754 36,957 MAINTENANCE EXPENSE 5,186 5,681 10,485 10,011 GENERAL AND ADMINISTRATIVE EXPENSE 3,120 2,120 5,537 4,285 DEPRECIATION AND AMORTIZATION EXPENSE 5,277 5,168 10,469 10,279 GAIN ON SALE OF ASSETS -- (1,099) -- (1,099) -------- -------- -------- -------- OPERATING INCOME 4,997 6,265 8,163 11,708 OTHER INCOME 330 183 428 394 INTEREST EXPENSE 348 489 753 1,097 -------- -------- -------- -------- PRE-TAX INCOME 4,979 5,959 7,838 11,005 INCOME TAX PROVISION 1,867 2,205 2,939 4,072 -------- -------- -------- -------- NET INCOME $ 3,112 $ 3,754 $ 4,899 $ 6,933 ======== ======== ======== ======== DILUTED EARNINGS PER SHARE $ 0.37 $ 0.45 $ 0.58 $ 0.82 DILUTED SHARES OUTSTANDING 8,402 8,356 8,413 8,436 CAPITAL EXPENDITURES $ 6,958 $ 4,145 $ 19,599 $ 7,986 UTILIZATION OF CALENDAR DAYS 82.5% 86.8% 81.2% 88.1% BARRELS CARRIED (IN MILLIONS) 44.4 46.8 87.3 92.3
Maritrans Reports Second Quarter Earnings and Declares Quarterly Dividend Page 5 August 3, 2004 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION ($ THOUSANDS)
JUNE 30, 2004 DECEMBER 31, 2003 ------------- ----------------- CASH AND CASH EQUIVALENTS $ 12,072 $ 3,614 OTHER CURRENT ASSETS 26,270 24,417 NET VESSELS AND EQUIPMENT 189,859 180,728 OTHER ASSETS 4,253 11,770 -------- -------- TOTAL ASSETS $232,454 $220,529 ======== ======== CURRENT PORTION OF DEBT $ 3,567 $ 2,533 TOTAL OTHER CURRENT LIABILITIES 18,980 18,412 LONG-TERM DEBT 61,277 57,560 DEFERRED SHIPYARD COSTS AND OTHER 12,981 9,702 DEFERRED INCOME TAXES 47,210 47,148 STOCKHOLDERS' EQUITY 88,439 85,174 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $232,454 $220,529 ======== ========
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS INFORMATION ($ THOUSANDS)
SIX MONTHS ENDED JUNE 30, 2004 2003 CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME $ 4,899 $ 6,933 DEPRECIATION AND AMORTIZATION 10,469 10,279 OTHER 2,343 6,347 -------- -------- TOTAL ADJUSTMENTS TO NET INCOME 12,812 16,626 -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 17,711 23,559 NET CASH USED IN INVESTING ACTIVITIES (12,264) (5,917) -------- -------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 3,011 (15,037) -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS 8,458 2,605 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,614 239 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 12,072 $ 2,844 ======== ========
REBUILDING SCHEDULE
DOUBLE-HULL BARGES CAPACITY IN BARRELS DOUBLE-HULL REDELIVERY DATE MARRIED TUGBOAT HORSEPOWER ------ ------------------- ----------- --------------- --------------- ---------- MARITRANS 400 380,000 YES ** CONSTITUTION 11,000 MARITRANS 300 265,000 YES ** LIBERTY 7,000 M 254 250,000 YES 2002 INTREPID 6,000 M 252 250,000 YES 2002 NAVIGATOR 6,000 M 244 245,000 YES 2000 SEAFARER 6,000 OCEAN 215 210,000 NO FREEDOM 6,000 OCEAN 211 207,000 NO INDEPENDENCE 6,000 OCEAN 210 207,000 NO COLOMBIA 6,000 M 214 214,000 YES 2004 HONOUR 6,000 OCEAN 193 178,000 NO EST. 2005 ENTERPRISE 6,000 M 192 175,000 YES 1998 VALOUR 6,000 OIL TANKERS CAPACITY IN BARRELS DOUBLE-HULL ----------- ------------------- ----------- ALLEGIANCE 252,000 NO PERSEVERANCE 252,000 NO INTEGRITY 265,000 YES ** DILIGENCE 265,000 YES ** ** These vessels were originally built with double-hulls.