K-Sea Transportation Partners L.P. (NYSE: KSP) today announced
operating results for the third fiscal quarter ended March 31,
2007. The Company also announced that its distribution to
unitholders for the third quarter will increase by $0.02, or 3.0%,
to $0.68 per unit, or $2.72 per unit annualized. This is the eighth
consecutive quarter of increased distributions, and the tenth such
increase since the Company�s IPO in January 2004. The distribution
will be payable on May 15, 2007 to unitholders of record on May 8,
2007. The Company�s distributable cash flow for the third quarter
of fiscal 2007 was $8.6 million, or 1.20 times the amount needed to
cover the increased cash distribution of $7.2 million declared in
respect of the period. Distributable cash flow is a non-GAAP
financial measure that is reconciled to net income, the most
directly comparable GAAP measure, in the table below. Three Months
Ended March 31, 2007 For the three months ended March 31, 2007, the
Company reported operating income of $7.6 million, an increase of
$3.5 million, or 86%, compared to $4.1 million of operating income
for the three months ended March 31, 2006. This year-over-year
increase resulted from the continuing expansion of the Company�s
fleet barrel-carrying capacity, including the addition of six new
tank barges since January 2006. These results were also positively
impacted by continued strong rates and vessel utilization,
partially offset by increases of $1.3 million in depreciation and
amortization due to the expanded fleet, and $0.9 million in general
and administrative expenses in support of the Company�s growth.
Earnings before interest, taxes, depreciation, amortization, and
loss on reduction of debt (EBITDA) increased by $4.8 million, or
43%, to $16.0 million for the three months ended March 31, 2007,
compared to $11.2 million for the three months ended March 31,
2006. EBITDA is a non-GAAP financial measure that is reconciled to
net income, the most directly comparable GAAP measure, in the table
below. Net income for the three months ended March 31, 2007 was
$4.0 million, or $0.39 per fully diluted limited partner unit,
compared to net income of $1.2 million, or $0.12 per fully diluted
limited partner unit, for the three months ended March 31, 2006, an
increase of $2.8 million. The fiscal 2007 third quarter benefited
from the $3.5 million increase in operating income, offset by a
$0.7 million increase in interest expense resulting from higher
debt balances incurred to finance vessel acquisitions in connection
with the Company�s fleet expansion program over the past year, and
higher interest rates. Nine Months Ended March 31, 2007 For the
nine months ended March 31, 2007, the Company reported operating
income of $22.9 million, an increase of $6.0 million, or 35%,
compared to $16.9 million of operating income for the nine months
ended March 31, 2006. Similar to the increase for the third fiscal
quarter, this increase resulted primarily from the expansion of the
Company�s barrel-carrying capacity, including the acquisition of
Sea Coast Transportation LLC in October 2005 and the addition of
six newbuild tank barges since January 2006, partially offset by
increases of $5.1 million in depreciation and amortization and $2.7
million in general and administrative expenses in support of the
Company�s growth. Of the $2.7 million increase in general and
administrative expenses, $1.4 million related to the acquisition of
Sea Coast and another small operation in Philadelphia in the fall
of 2006. EBITDA increased by $11.0 million, or 31%, to $47.1
million for the nine months ended March 31, 2007, compared to $36.1
million for the nine months ended March 31, 2006. Net income was
$12.0 million for the nine months ended March 31, 2007, or $1.18
per fully diluted limited partner unit, compared to net income of
$2.8 million, or $0.29 per fully diluted limited partner unit, for
the nine months ended March 31, 2006. The $6.0 million of increased
operating income for the nine months ended March 31, 2007 was
offset by $3.3 million of higher interest expense, resulting from
higher debt balances incurred to finance the fleet expansion over
the past year. Additionally, the prior year period was adversely
affected by a $6.9 million loss on reduction of debt related to
retirement of the Company�s Title XI bonds in November 2005, and
net income was therefore abnormally low. President and CEO Timothy
J. Casey said �Our operating results for the fiscal 2007 third
quarter were strong, with operating income, EBITDA, and net income
per unit all significantly higher than last year. We expect our
results to be strengthened further by our ongoing fleet expansion.
We took delivery of another new 28,000 barrel tank barge in
January, and a 100,000 barrel tank barge in March. In April, we
purchased two additional tugboats, bringing the total to five
acquired tugs this fiscal year, as part of a program to reduce
operating costs and improve efficiency. We have seven additional
tank barges under construction which are scheduled for delivery at
intervals of every few months between now and the end of calendar
2008. In light of our results and expectations, our Board of
Directors, as reported above, approved a two cent per unit increase
in our quarterly distribution. At our current annualized rate of
$2.72 per unit, K-Sea�s distribution is over 13% higher than at
this time last year. We remain optimistic about continuing our
growth for the balance of this year and in fiscal 2008.� Earnings
Conference Call The Company has scheduled a conference call for
Monday, April 30, 2007, at 9:00 am Eastern time, to review the
third quarter results. Dial-in information for this call is (866)
277-1182 (Domestic) and (617) 597-5359 (International). The
Passcode is 23154151. 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 May 7,
2007; the dial in number for the replay is (888) 286-8010
(Domestic) and (617) 801-6888 (International). The Passcode is
63679017. 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 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 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 Nine months ended
March 31, March 31, 2007� 2006� 2007� � 2006� � � Voyage revenue $
53,807� $ 45,082� $ 159,475� $ 127,514� Bareboat charter and other
revenue � 1,823� � 1,007� � 7,096� � 3,083� Total revenues 55,630�
46,089� 166,571� 130,597� � Voyage expenses 10,592� 9,224� 32,638�
27,166� Vessel operating expenses 23,614� 21,356� 71,375� 55,161�
General and administrative expenses 5,236� 4,298� 15,299� 12,587�
Depreciation and amortization 8,405� 7,074� 24,217� 19,151� Net
loss (gain) on disposal of vessels � 182� � 44� � 166� � (371) �
Total operating expenses 48,029� 41,996� 143,695� 113,694�
Operating income 7,601� 4,093� 22,876� 16,903� Interest expense,
net 3,485� 2,794� 10,226� 6,924� Net loss on reduction of debt -�
-� -� 6,898� Other expense (income), net � (15) � (11) � (46) �
(32) � Income before provision for income taxes 4,131� 1,310�
12,696� 3,113� Provision for income taxes � 135� � 94� � 668� �
295� Net income $ 3,996� $ 1,216� $ 12,028� $ 2,818� � � General
partner's interest in net income $ 80� $ 24� $ 241� $ 56� Limited
partners' interest in: Net income $ 3,916� $ 1,192� $ 11,787� $
2,762� Net income per unit - basic $ 0.39� $ 0.12� $ 1.19� $ 0.29�
- diluted $ 0.39� $ 0.12� $ 1.18� $ 0.29� Weighted average units
outstanding � - basic 9,941� 9,919� 9,934� 9,501� - diluted 10,015�
9,977� 10,015� 9,558� Supplemental Operating Statistics � Three
months ended Nine months ended March 31, March 31, 2007� 2006�
2007� 2006� Local Trade: Average daily rate (1) $ 6,765� $ 5,645� $
6,763� $ 5,515� Net utilization (2) 82% 80% 80% 79% � Coastwise
Trade: Average daily rate $ 12,772� $ 11,422� $ 12,155� $ 11,940�
Net utilization 90% 88% 91% 91% � Total Fleet Average daily rate $
10,226� $ 8,909� $ 9,928� $ 9,082� Net utilization 87% 84% 86% 85%
� � (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
Nine months ended March 31, 2007 March 31, 2007 � � Net income $
3,996� $ 12,028� Adjustments to reconcile net income � to
distributable cash flow : Depreciation and amortization (2) 8,481�
24,436� Non cash compensation cost under long term incentive plan
188� 568� Adjust loss on vessel sale to net proceeds 307� 631�
Deferred income tax expense 35� 220� Maintenance capital
expenditures (3) � (4,400) � (12,600) � Distributable cash flow �
8,607� � 25,283� Cash distribution in respect of the period $
7,187� $ 20,762� � Distribution coverage 1.20� 1.22� � � (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, the difference between cumulative amounts
charged and the 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 and Loss on Reduction of Debt (EBITDA) � Three months
ended Nine months ended March 31, March 31, 2007� 2006� 2007� 2006�
� Net income $ 3,996� $ 1,216� $ 12,028� $ 2,818� Adjustments to
reconcile net income to EBITDA : � Depreciation and amortization
8,405� 7,074� 24,217� 19,151� Interest expense, net 3,485� 2,794�
10,226� 6,924� Net loss on reduction of debt -� -� -� 6,898�
Provision for income taxes � 135� � 94� � 668� � 295� � EBITDA $
16,021� $ 11,178� $ 47,139� $ 36,086� K-SEA TRANSPORTATION PARTNERS
L.P. CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) � March
31, June 30, 2007� 2006� � Assets Current assets: Cash and cash
equivalents $ 20� $ 826� Accounts receivable, net 19,385� 20,322�
Prepaid expenses and other current assets � 6,078� � 8,753� Total
current assets 25,483� 29,901� � Vessels and equipment, net
342,823� 316,237� Construction in progress 10,290� 5,452� Goodwill
16,385� 16,579� Other assets � 13,082� � 14,859� Total assets $
408,063� $ 383,028� � Liabilities and Partners' Capital Current
liabilities: Current portion of long-term debt and capital lease
obligation $ 9,228� $ 7,745� Accounts payable and accrued expenses
� 26,251� � 22,626� Total current liabilities 35,479� 30,371� �
Term loans and capital lease obligation 138,895� 131,620� Credit
line borrowings 76,193� 54,015� Deferred taxes � 3,104� � 3,079�
Total liabilities 253,671� 219,085� Commitments and contingencies
Partners' Capital � 154,392� � 163,943� Total liabilities and
partners' capital $ 408,063� $ 383,028�
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