KSP K-Sea Transportation Partners Lp

K-Sea Transportation Partners L.P. (NYSE: KSP) today announced operating results for the first fiscal quarter ended September 30, 2006. The Company also announced that its distribution to unitholders for the first quarter will increase by $0.02, or 3.2%, to $0.64 per unit, or $2.56 per unit annualized. This is the sixth consecutive quarter of increased distributions, and the eighth such increase since the Company�s IPO in January 2004. The distribution will be payable on November 15, 2006 to unitholders of record on November 9, 2006. Three Months Ended September 30, 2006 For the three months ended September 30, 2006, the Company reported operating income of $7.5 million, an increase of $1.4 million, or 22%, compared to $6.1 million of operating income for the three months ended September 30, 2005. The increase resulted from expansion of the Company�s fleet barrel-carrying capacity over the past year, including the acquisition of Sea Coast Transportation in October 2005 and the addition of five tank barges, including four newbuilds, one of which was delivered during the fiscal 2007 first quarter. Earnings before interest, taxes, depreciation, amortization (EBITDA) increased by $3.6 million, or 31%, to $15.2 million for the three months ended September 30, 2006, compared to $11.6 million for the three months ended September 30, 2005. EBITDA is a non-GAAP financial measure that is reconciled to net income, its most directly comparable GAAP measure, in the table below. Net income for the three months ended September 30, 2006 was $4.1 million, or $0.40 per fully diluted limited partner unit, compared to net income of $4.2 million, or $0.47 per fully diluted limited partner unit, for the three months ended September 30, 2005. The $0.1 million decrease in net income resulted from the $1.4 million increase in operating income, offset by an increase in $1.6 million in interest expense resulting from higher debt balances incurred to finance vessel acquisitions in connection with the Company's fleet expansion and upgrading program over the past year, and higher interest rates. The Company�s distributable cash flow for the first quarter of fiscal 2006 was a record $8.3 million, or 1.25 times the amount needed to cover the increased cash distribution of $6.7 million declared in respect of the period. Distributable cash flow is a non-GAAP financial measure that is reconciled to net income, its most directly comparable GAAP measure, in the table below. President and CEO Timothy J. Casey said, �We are pleased with our operating results for the fiscal 2007 first quarter, and expect our annual results to be strengthened further by our ongoing fleet expansion. We took delivery of one 28,000 barrel tank barge during this past quarter, and currently have eight additional tank barges under construction for delivery by the end of fiscal 2008. We also recently agreed to purchase three small tugboats in New York harbor to reduce our operating costs and improve efficiency. In light of our results and expectations, our Board of Directors has approved a two cent per unit increase in our quarterly distribution, the eighth distribution increase since our initial public offering in January 2004.� Earnings Conference Call The Company has scheduled a conference call for Monday, October 30, 2006, at 9:00 am Eastern time, to review the first quarter results. Dial-in information for this call is (866) 356-3377 (Domestic) and (617) 597-5392 (International). The Participant Passcode is 33364454. The conference call can also be accessed by webcast, which will be available at www.k-sea.com. Additionally, a replay of the call will be available by telephone until November 6, 2006; dial in information for the replay is (888) 286-8010 (Domestic) and (617) 801-6888 (International). The Passcode is 25126190. About K-Sea Transportation Partners K-Sea Transportation Partners is the largest coastwise tank barge operator, measured by barrel-carrying capacity, in the United States. The Company provides refined petroleum products marine transportation, distribution and logistics services in the U.S. domestic marine transportation market, and its common units trade on the New York Stock Exchange under the symbol KSP. For additional information, please visit the Company�s website, including the Investor Relations section, at www.k-sea.com. Use of Non-GAAP Financial Information The Company reports its financial results in accordance with generally accepted accounting principles. However, certain non-GAAP financial measures such as EBITDA and distributable cash flow, used in the business, are also presented. EBITDA is used as a supplemental financial measure by management and by external users of financial statements to assess (a) the financial performance of the Company�s assets and the Company�s ability to generate cash sufficient to pay interest on indebtedness and make distributions to partners, (b) the Company�s operating performance and return on invested capital as compared to other companies in the industry, and (c) compliance with certain financial covenants in the Company�s debt agreements. Management believes distributable cash flow is useful as another measure of the Company�s financial and operating performance, and its ability to declare and pay distributions to partners. Distributable cash flow does not represent the amount of cash required to be distributed under the Company�s partnership agreement. Neither EBITDA nor distributable cash flow should be considered as alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity under GAAP. EBITDA and distributable cash flow as presented herein may not be comparable to similarly titled measures of other companies. A reconciliation of each of these measures to net income, the most directly comparable GAAP measure, is presented in the tables below. Cautionary Statements This press release contains forward-looking statements, which include any statements that are not historical facts, such as the Company�s expectations regarding business outlook, vessel utilization, delivery and integration of newbuild and acquired vessels (including the cost, timing and effects thereof), growth in earnings and distributable cash flow, and future results of operations. These statements involve risks and uncertainties, including, but not limited to, insufficient cash from operations, a decline in demand for refined petroleum products, a decline in demand for tank vessel capacity, intense competition in the domestic tank barge industry, the occurrence of marine accidents or other hazards, the loss of any of the Company�s largest customers, fluctuations in charter rates, delays or cost overruns in the construction of new vessels, failure to comply with the Jones Act, modification or elimination of the Jones Act and adverse developments in the marine transportation business and other factors detailed in the Company�s Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. If one or more of these risks or uncertainties materialize (or the consequences of such a development changes), or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected. The Company disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise. K-SEA TRANSPORTATION PARTNERS L.P. � CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except for unit and per unit data) � � Three months ended September 30, 2006� 2005� � � Voyage revenue $ 52,747� $ 36,773� Bareboat charter and other revenue 2,163� 427� Total revenues 54,910� 37,200� � Voyage expenses 11,581� 7,777� Vessel operating expenses 23,336� 13,807� General and administrative expenses 4,807� 3,979� Depreciation and amortization 7,685� 5,487� (Gain) on disposal of vessel (16) -� � Total operating expenses 47,393� 31,050� Operating income 7,517� 6,150� Interest expense, net 3,322� 1,704� Other expense (income), net (16) (1) � Income before provision for income taxes 4,211� 4,447� Provision for income taxes 125� 199� Net income $ 4,086� $ 4,248� � � General partner's interest in net income $ 82� $ 85� Limited partners' interest in: Net income $ 4,004� $ 4,163� Net income per unit - basic $ 0.40� $ 0.47� - diluted $ 0.40� $ 0.47� Weighted average units outstanding - basic 9,920� 8,832� - diluted 10,015� 8,891� � � � � � � Supplemental Operating Statistics Three months ended September 30, 2006� 2005� Local Trade: Average daily rate (1) $ 6,888� $ 5,454� Net utilization (2) 74% 76% � Coastwise Trade: Average daily rate $ 11,744� $ 13,367� Net utilization 91% 91% � Total Fleet Average daily rate $ 9,797� $ 9,662� Net utilization 83% 84% � � (1) Average daily rate is equal to the net voyage revenue earned by a group of tank vessels during the period, divided by the number of days worked by that group of tank vessels during the period. � (2) Net utilization is equal to the total number of days worked by a group of tank vessels during the period, divided by total calendar days for that group of tank vessels during the period. K-SEA TRANSPORTATION PARTNERS L.P. � Reconciliation of Unaudited Non-GAAP Financial Measures to GAAP Measures (in thousands) � Distributable Cash Flow (1) � � Three months ended September 30, 2006� 2005� � � Net income $ 4,086� $ 4,248� Adjustments to reconcile net income to distributable cash flow: � Depreciation and amortization (2) 7,753� 5,487� Non cash compensation cost under long term incentive plan 192� 97� Adjust gain on vessel sale to net proceeds 324� -� Deferred income tax expense (9) 112� Maintenance capital expenditures (3) (4,000) (3,300) � Distributable cash flow 8,346� 6,644� Cash distribution in respect of the period $ 6,655� $ 5,799� � Distribution coverage 1.25� 1.15� � � � (1) Distributable Cash Flow provides additional information for evaluating our operating performance and ability to continue to make quarterly distributions, and is presented solely as a supplemental performance measure. � (2) Including amortization of deferred financing costs. � (3) Maintenance capital expenditures are the estimated cash capital expenditures necessary to maintain the operating capacity of our capital assets over the long term. This amount includes two components: 1) An allowance for future scheduled drydocking costs calculated using annually updated projections of such costs over the next five years; based on historical results, differences between the cumulative amounts charged and actual amounts spent are adjusted over the same five-year period; 2) an allowance to replace the operating capacity of vessels which are scheduled to phase out by January 1, 2015 under OPA 90. � � � � � � Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) � � Three months ended September 30, 2006� 2005� � Net income $ 4,086� $ 4,248� Adjustments to reconcile net income to EBITDA: � Depreciation and amortization 7,685� 5,487� Interest expense, net 3,322� 1,704� Provision for income taxes 125� 199� � EBITDA $ 15,218� $ 11,638� K-SEA TRANSPORTATION PARTNERS L.P. � CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) � September 30, June 30, 2006� 2006� � Assets Current assets: Cash and cash equivalents $ 599� $ 826� Accounts receivable, net 19,979� 20,322� Prepaid expenses and other current assets 5,801� 8,753� Total current assets 26,379� 29,901� � Vessels and equipment, net 322,007� 316,237� Construction in progress 5,545� 5,452� Goodwill 16,385� 16,579� Other assets 13,734� 14,859� Total assets $ 384,050� $ 383,028� � Liabilities and Partners' Capital Current liabilities: Current portion of long-term debt and capital lease obligation $ 7,631� $ 7,745� Accounts payable and accrued expenses 21,963� 22,626� Total current liabilities 29,594� 30,371� � Term loans and capital lease obligation 133,676� 131,620� Credit line borrowings 58,255� 54,015� Deferred taxes 2,875� 3,079� Total liabilities 224,400� 219,085� Commitments and contingencies Partners' Capital 159,650� 163,943� Total liabilities and partners' capital $ 384,050� $ 383,028� K-Sea Transportation Partners L.P. (NYSE: KSP) today announced operating results for the first fiscal quarter ended September 30, 2006. The Company also announced that its distribution to unitholders for the first quarter will increase by $0.02, or 3.2%, to $0.64 per unit, or $2.56 per unit annualized. This is the sixth consecutive quarter of increased distributions, and the eighth such increase since the Company's IPO in January 2004. The distribution will be payable on November 15, 2006 to unitholders of record on November 9, 2006. Three Months Ended September 30, 2006 For the three months ended September 30, 2006, the Company reported operating income of $7.5 million, an increase of $1.4 million, or 22%, compared to $6.1 million of operating income for the three months ended September 30, 2005. The increase resulted from expansion of the Company's fleet barrel-carrying capacity over the past year, including the acquisition of Sea Coast Transportation in October 2005 and the addition of five tank barges, including four newbuilds, one of which was delivered during the fiscal 2007 first quarter. Earnings before interest, taxes, depreciation, amortization (EBITDA) increased by $3.6 million, or 31%, to $15.2 million for the three months ended September 30, 2006, compared to $11.6 million for the three months ended September 30, 2005. EBITDA is a non-GAAP financial measure that is reconciled to net income, its most directly comparable GAAP measure, in the table below. Net income for the three months ended September 30, 2006 was $4.1 million, or $0.40 per fully diluted limited partner unit, compared to net income of $4.2 million, or $0.47 per fully diluted limited partner unit, for the three months ended September 30, 2005. The $0.1 million decrease in net income resulted from the $1.4 million increase in operating income, offset by an increase in $1.6 million in interest expense resulting from higher debt balances incurred to finance vessel acquisitions in connection with the Company's fleet expansion and upgrading program over the past year, and higher interest rates. The Company's distributable cash flow for the first quarter of fiscal 2006 was a record $8.3 million, or 1.25 times the amount needed to cover the increased cash distribution of $6.7 million declared in respect of the period. Distributable cash flow is a non-GAAP financial measure that is reconciled to net income, its most directly comparable GAAP measure, in the table below. President and CEO Timothy J. Casey said, "We are pleased with our operating results for the fiscal 2007 first quarter, and expect our annual results to be strengthened further by our ongoing fleet expansion. We took delivery of one 28,000 barrel tank barge during this past quarter, and currently have eight additional tank barges under construction for delivery by the end of fiscal 2008. We also recently agreed to purchase three small tugboats in New York harbor to reduce our operating costs and improve efficiency. In light of our results and expectations, our Board of Directors has approved a two cent per unit increase in our quarterly distribution, the eighth distribution increase since our initial public offering in January 2004." Earnings Conference Call The Company has scheduled a conference call for Monday, October 30, 2006, at 9:00 am Eastern time, to review the first quarter results. Dial-in information for this call is (866) 356-3377 (Domestic) and (617) 597-5392 (International). The Participant Passcode is 33364454. The conference call can also be accessed by webcast, which will be available at www.k-sea.com. Additionally, a replay of the call will be available by telephone until November 6, 2006; dial in information for the replay is (888) 286-8010 (Domestic) and (617) 801-6888 (International). The Passcode is 25126190. About K-Sea Transportation Partners K-Sea Transportation Partners is the largest coastwise tank barge operator, measured by barrel-carrying capacity, in the United States. The Company provides refined petroleum products marine transportation, distribution and logistics services in the U.S. domestic marine transportation market, and its common units trade on the New York Stock Exchange under the symbol KSP. For additional information, please visit the Company's website, including the Investor Relations section, at www.k-sea.com. Use of Non-GAAP Financial Information The Company reports its financial results in accordance with generally accepted accounting principles. However, certain non-GAAP financial measures such as EBITDA and distributable cash flow, used in the business, are also presented. EBITDA is used as a supplemental financial measure by management and by external users of financial statements to assess (a) the financial performance of the Company's assets and the Company's ability to generate cash sufficient to pay interest on indebtedness and make distributions to partners, (b) the Company's operating performance and return on invested capital as compared to other companies in the industry, and (c) compliance with certain financial covenants in the Company's debt agreements. Management believes distributable cash flow is useful as another measure of the Company's financial and operating performance, and its ability to declare and pay distributions to partners. Distributable cash flow does not represent the amount of cash required to be distributed under the Company's partnership agreement. Neither EBITDA nor distributable cash flow should be considered as alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity under GAAP. EBITDA and distributable cash flow as presented herein may not be comparable to similarly titled measures of other companies. A reconciliation of each of these measures to net income, the most directly comparable GAAP measure, is presented in the tables below. Cautionary Statements This press release contains forward-looking statements, which include any statements that are not historical facts, such as the Company's expectations regarding business outlook, vessel utilization, delivery and integration of newbuild and acquired vessels (including the cost, timing and effects thereof), growth in earnings and distributable cash flow, and future results of operations. These statements involve risks and uncertainties, including, but not limited to, insufficient cash from operations, a decline in demand for refined petroleum products, a decline in demand for tank vessel capacity, intense competition in the domestic tank barge industry, the occurrence of marine accidents or other hazards, the loss of any of the Company's largest customers, fluctuations in charter rates, delays or cost overruns in the construction of new vessels, failure to comply with the Jones Act, modification or elimination of the Jones Act and adverse developments in the marine transportation business and other factors detailed in the Company's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. If one or more of these risks or uncertainties materialize (or the consequences of such a development changes), or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected. The Company disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise. -0- *T K-SEA TRANSPORTATION PARTNERS L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except for unit and per unit data) Three months ended September 30, 2006 2005 --------- -------- Voyage revenue $52,747 $36,773 Bareboat charter and other revenue 2,163 427 --------- -------- Total revenues 54,910 37,200 Voyage expenses 11,581 7,777 Vessel operating expenses 23,336 13,807 General and administrative expenses 4,807 3,979 Depreciation and amortization 7,685 5,487 (Gain) on disposal of vessel (16) - --------- -------- Total operating expenses 47,393 31,050 Operating income 7,517 6,150 Interest expense, net 3,322 1,704 Other expense (income), net (16) (1) --------- -------- Income before provision for income taxes 4,211 4,447 Provision for income taxes 125 199 --------- -------- Net income $4,086 $4,248 ========= ======== General partner's interest in net income $82 $85 Limited partners' interest in: Net income $4,004 $4,163 Net income per unit - basic $0.40 $0.47 - diluted $0.40 $0.47 Weighted average units outstanding - basic 9,920 8,832 - diluted 10,015 8,891 Supplemental Operating Statistics Three months ended September 30, 2006 2005 --------- -------- Local Trade: Average daily rate (1) $6,888 $5,454 Net utilization (2) 74% 76% Coastwise Trade: Average daily rate $11,744 $13,367 Net utilization 91% 91% Total Fleet Average daily rate $9,797 $9,662 Net utilization 83% 84% (1) Average daily rate is equal to the net voyage revenue earned by a group of tank vessels during the period, divided by the number of days worked by that group of tank vessels during the period. (2) Net utilization is equal to the total number of days worked by a group of tank vessels during the period, divided by total calendar days for that group of tank vessels during the period. *T -0- *T K-SEA TRANSPORTATION PARTNERS L.P. Reconciliation of Unaudited Non-GAAP Financial Measures to GAAP Measures (in thousands) Distributable Cash Flow (1) Three months ended September 30, 2006 2005 Net income $4,086 $4,248 Adjustments to reconcile net income to distributable cash flow: Depreciation and amortization (2) 7,753 5,487 Non cash compensation cost under long term incentive plan 192 97 Adjust gain on vessel sale to net proceeds 324 - Deferred income tax expense (9) 112 Maintenance capital expenditures (3) (4,000) (3,300) --------- --------- Distributable cash flow 8,346 6,644 ========= ========= Cash distribution in respect of the period $6,655 $5,799 Distribution coverage 1.25 1.15 (1) Distributable Cash Flow provides additional information for evaluating our operating performance and ability to continue to make quarterly distributions, and is presented solely as a supplemental performance measure. (2) Including amortization of deferred financing costs. (3) Maintenance capital expenditures are the estimated cash capital expenditures necessary to maintain the operating capacity of our capital assets over the long term. This amount includes two components: 1) An allowance for future scheduled drydocking costs calculated using annually updated projections of such costs over the next five years; based on historical results, differences between the cumulative amounts charged and actual amounts spent are adjusted over the same five-year period; 2) an allowance to replace the operating capacity of vessels which are scheduled to phase out by January 1, 2015 under OPA 90. Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) Three months ended September 30, 2006 2005 --------- --------- Net income $4,086 $4,248 Adjustments to reconcile net income to EBITDA: Depreciation and amortization 7,685 5,487 Interest expense, net 3,322 1,704 Provision for income taxes 125 199 --------- --------- EBITDA $15,218 $11,638 ========= ========= *T -0- *T K-SEA TRANSPORTATION PARTNERS L.P. CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) September 30, June 30, 2006 2006 ------------- ----------- Assets Current assets: Cash and cash equivalents $599 $826 Accounts receivable, net 19,979 20,322 Prepaid expenses and other current assets 5,801 8,753 ------------- ----------- Total current assets 26,379 29,901 Vessels and equipment, net 322,007 316,237 Construction in progress 5,545 5,452 Goodwill 16,385 16,579 Other assets 13,734 14,859 ------------- ----------- Total assets $384,050 $383,028 ============= =========== Liabilities and Partners' Capital Current liabilities: Current portion of long-term debt and capital lease obligation $7,631 $7,745 Accounts payable and accrued expenses 21,963 22,626 ------------- ----------- Total current liabilities 29,594 30,371 Term loans and capital lease obligation 133,676 131,620 Credit line borrowings 58,255 54,015 Deferred taxes 2,875 3,079 ------------- ----------- Total liabilities 224,400 219,085 Commitments and contingencies Partners' Capital 159,650 163,943 ------------- ----------- Total liabilities and partners' capital $384,050 $383,028 ============= =========== *T