Maritrans Reports Second Quarter Earnings

Friday, August 02, 2002
Maritrans Inc. announced its second quarter financial results and increased its quarterly dividend. Maritrans also announced an investor teleconference to discuss the quarter's results. Net income for the quarter ended June 30, 2002, was $2.8 million, or $0.32 diluted earnings per share, on revenues of $32.5 million. This compares with net income of $3.0 million, or $0.28 diluted earnings per share, on revenues of $28.1 million for the quarter ended June 30, 2001. The Maritrans Board of Directors voted today to increase the quarterly dividend by one cent to $0.11 per share, beginning with the dividend payable on September 4, 2002, to shareholders of record on August 21, 2002. The Board cited confidence in the Company's future prospects as the principal basis for its decision. On a Time Charter Equivalent (TCE) basis, a commonly used industry measure where direct voyage costs are deducted from revenue, TCE revenue increased from $26.1 million to $27.5 million, or 5 percent, over the comparable quarter in 2001. Maritrans enters into various types of charters, some of which involve the customer paying substantially all voyage costs, while other types of charters involve Maritrans paying some or substantially all of the voyage costs. Maritrans monitors the TCE basis because it essentially nets the voyage costs and voyage revenue to yield a measure that is comparable between periods regardless of the types of charters utilized. Maritrans also announced that it believes it is likely that the full-year earnings from ongoing operations will be toward the lower end of the previously announced earnings range of $1.50 to $2.00 and indeed could be lower. The Company also disclosed some positive one-time developments that could affect the second half of the year. In July, Maritrans received a $500,000 litigation award that will be recorded in the third quarter. Also in July, Maritrans reached an agreement to sell some unused land that would result in an after-tax gain of approximately $0.8 million. This agreement, however, includes various closing conditions and its completion is not assured. Neither of these items is associated with earnings from ongoing operations. Stephen A. Van Dyck, Chairman and Chief Executive Officer of Maritrans, commented, "We will make a further announcement regarding our anticipated 2002 earnings when we have had more opportunity to assess the many positive and negative factors that are currently affecting our business. While investors are naturally interested in the short-term outlook, it is important to know that we believe the Maritrans' longer-term outlook remains optimistic. Our Board of Directors feels strongly that an increase to our dividend is appropriate at this time given our performance in 2001 and 2002, and our strong strategic position. "The year 2002 is turning out to be a much more difficult year than expected. We are pleased with this quarter's increase in TCE rates, but we also continue to experience weak rates for the 20 percent of the fleet in the spot market. Expenses to charter-in equipment to cover customer requirements during out-of-service time were more than we had planned. We have also had significant increases in insurance expenses and some additional professional and consulting fees. During the third quarter we will continue to experience the out of service time for our vessel rebuilds and for other planned maintenance in our fleet. In June we began the double-hull rebuilding of the OCEAN 250 and the refurbishment of her married tug INTREPID and expect that unit to return to service in the fourth quarter. "We expect that between five and seven of our competitor's older single hull tankers will be retired this year instead of our earlier expectation of only two. Of the seven vessels, two were originally expected to remain in service until 2005. Meanwhile, we have systematically continued our double-hull rebuilding program, foregoing current utilization to be best prepared to meet customer demand in the future." Commenting on other developments, Van Dyck stated, "In June we were named a bronze medal winner of the William M. Benkert Award from the United States Coast Guard. This award recognizes environmental excellence and is the Coast Guard's highest industry honor. Maritrans was the only independent oil carrier in 2002 to be so honored. We are very proud of our safety commitment and are honored to have that commitment recognized with this award. In the second quarter, we renewed two collective bargaining agreements with our seagoing employees. We take great pride in our employees and were happy to come to an agreement that was favorable to both the employees and the Company."
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