News Column

International Shipholding Posts Fourth Quarter and Year-End 2013 Results

February 3, 2014

International Shipholding Corp. announced financial results for the quarter ended December 31, 2013 . In a release on January 29 , the Company noted that fourth quarter 2013 highlights include: -Reported net income of $16.9 million for the three months ended December 31, 2013 , which included a non-cash foreign currency exchange gain of $1.4 million and a non-cash gain of $14.0 million on the reversal of the Company's tax valuation allowance -Concluded a multi year extension of its contract with The Mosaic Company -Invested in a Joint Venture to own 30 percent of two International flag Chemical Tankers scheduled for delivery in the first quarter of 2014 -Entered into a time charter on its Capesize Bulk Carrier through 2014. -Fixed the currency risk of its Yen-denominated loan facility at an exchange rate of 102.53 per US Dollar Net Income The Company reported net income of $16.9 million for the fourth quarter of 2013, which included non-operating gains of $1.4 million from fixing its Yen-denominated loan facility and $14.0 million from the reversal of the Company's Federal tax valuation allowance. Excluding these non-operating items, net income for the fourth quarter was $1.5 million as compared to a 2012 fourth quarter loss, excluding non-operating items, of $5.4 million . Niels M. Johnsen , Chairman and Chief Executive Officer, stated, "In 2013, we have made significant progress in strengthening our balance sheet, identifying attractive opportunities to solidify our leadership position in the niche segments in which we operate, and securing our strong and stable cash flows from medium to long-term contracts with high-quality counterparties. We successfully accessed the capital markets twice in 2013, raising a total of $56.6 million through two preferred stock offerings. This new capital enabled us to reactivate a Jones Act tug/barge unit, acquire the contract for a newbuilding 'eco' Handysize Bulkcarrier, and invest in a joint venture for two Chemical Tankers. Finally, we have continued to sign and renew medium to long-term contracts with creditworthy counterparties like The Mosaic Company , with whom we have reached a multi year extension of the contract, maintaining our strong contract coverage. "Moving into 2014, we remain committed to using the strong and predictable cash flows generated by our medium to long-term charters to capitalize on attractive acquisition opportunities if and as they arise in niche markets, which ultimately creates value for our shareholders. It is in line with this dedication to value creation for our shareholders that our Board of Directors declared a $0.25 per share dividend for the fourth quarter of 2013, thereby achieving our target of $1.00 per share for the full year 2013." Gross Voyage Profit The Company's fourth quarter 2013 gross voyage profit, representing the results of its six reporting segments, was $17.9 million , compared to $10.7 million in the comparable 2012 three- month period. The improved gross voyage results on the Jones Act segment are directly attributable to United Ocean Services ("UOS"), which contributed three full months of results during the fourth quarter of 2013 as compared to one month in the comparable quarter of 2012. Partially offsetting the segment's results were higher operating cost on the Company's molten sulphur carrier. Gross voyage profit on the Pure Car Truck Carrier ("PCTC") segment was lower primarily due to the lower charter rate on one of its International flag PCTCs, which took effect April, 2013, and higher operating costs for the PCTC fleet. Stronger results in the Dry Bulk segment reflect improvements in Dry Bulk rates, relative to their levels in the comparable quarter of 2012. During the fourth quarter, at a point in time that one year term charters were fixable in the mid to high teens, the Company fixed its Capesize Bulk Carrier on a time charter through 2014. The Rail Ferry segment continued its recent trend by reporting higher northbound volumes in the 2013 fourth quarter. The Company's Specialty segment reported improved results over the 2012 fourth quarter, primarily related to revenue contributions from its ice-strengthened vessel. This vessel redelivered from a charter during the fourth quarter of 2012 and experienced non-operating days in that quarter, but was fully employed during the fourth quarter of 2013. The Other segment, which consists primarily of chartering brokerage and agency services, had slightly lower brokerage revenues than in the comparable 2012 period. Administrative and General Administrative and general expenses were approximately $1.2 million lower for the quarter ended December 31, 2013 compared to the same period in 2012. The 2012 period included professional fees associated with the acquisition of UOS in November, 2012. The absence of those fees during the 2013 quarter was partially offset by the incremental overhead related to a full fourth quarter of UOS operations in 2013. Interest and Other The lower interest expense for the fourth quarter of 2013 reflects the Company's lower outstanding debt service relative to the comparable 2012 period. During the fourth quarter of 2013, the Company entered into forward Yen exchange contracts which fixed the Company's Yen exposure at approximately 102.53 Yen to the U.S. Dollar. While the facility remains a Yen-denominated loan, future Yen currency fluctuations will have no impact on the Company's earnings. The Company recognized a non-cash gain of $1.4 million related to the Yen-denominated facility in the fourth quarter of 2013. Taxes With the acquisition of UOS and taking into consideration the projected taxable earnings from the Jones Act segment in future periods, the Company reversed and recognized in its earnings a Federal tax valuation allowance of $14.0 million in the 2013 fourth quarter results. Balance Sheet The Company's working capital at December 31, 2013 was $14.2 million , a decrease of $1.7 million from September 30, 2013 . The decrease was due in part to investment in the Chemical Tanker joint venture. Cash and cash equivalents balance was approximately $20 million . Capital expenditures for the 2013 fiscal year were $50.7 million , which includes drydock expenditures of $18.2 million . The Company's total debt obligations at December 31, 2013 were approximately $198 million . Dividend Declarations The Company's Board of Directors approved per-share dividend payments on January 7 , of $2.375 and $2.25 on its Series A and Series B Preferred Stock, respectively, representing regular quarterly payments. Additionally, the Board of Directors declared a $0.25 dividend payable on March 3 , for each share of common stock owned on the record date of February 17 . All future dividend declarations remain subject to the discretion of International Shipholding Corp.'s Board of Directors. Outlook The Company projects 2014 EBITDA in the range of $65 and $72 million and estimates that its 2014 cash outlay on capital expenditures, including drydock costs, will be within a $13 - $16 million range. The Company set a $1.00 common stock dividend target for the 2014 fiscal year. All 2014 outlook figures included in this release exclude the effects of special items, future changes in regulation, the impact of unforeseen litigation or unforeseen events or circumstances that reduce vessel deployment or rates, any changes in operating or capital plans, and any future acquisitions, divestitures, buybacks or other similar business transactions. For purposes of this outlook section, EBITDA means earnings before interest, taxes, depreciation and amortization. Dividends are payable only if and when declared by our board of directors, which remains free to change or terminate our dividend practices at any time. International Shipholding Corp. , through its subsidiaries, operates a diversified fleet of U.S. and International flag vessels that provide worldwide and domestic maritime transportation services to commercial and governmental customers primarily under medium to long-term charters and contracts. More information: ((Comments on this story may be sent to ))

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