International Shipholding Management Discusses Q4 2012 Results - Earnings Call Transcript
February 7, 2013 4:30 PM ET
International Shipholding (ISH)
Q4 2012 Earnings Call
February 07, 2013 10:00 am ET
Manuel G. Estrada - Chief Financial Officer and Vice President
Niels M. Johnsen - Executive Chairman and Chief Executive Officer
Erik L. Johnsen - President and Director
Mark Suarez - Euro Pacific Capital, Inc., Research Division
Good morning, everyone, and welcome to the International Shipholding Corp. Fourth Quarter 2012 Earnings Conference Call. Please be aware that today's conference is being recorded and is now being webcast at the company's website, www.intship.com. [Operator Instructions] Now, I would like to turn the conference over to Manny Estrada, Chief Financial Officer. Please go ahead, sir.
Manuel G. Estrada
Thank you. Good morning, everyone, and thank you for joining us today for International Shipholding Corp.'s Fourth Quarter and Year-end 2012 Earnings Call. I am Manny Estrada, the company's Chief Financial Officer. With me today are Niels M. Johnsen, our Executive Chairman and CEO; and Erik L. Johnsen, our president.
Niels will start the presentation today by providing an insight on market trends. Erik will provide an overview of the quarter. I will return at the end of the call to briefly review our fourth quarter results, and then we will welcome your questions.
Before we begin, I would like to point out that statements made today, which are not historical facts, may be deemed forward-looking statements. Actual results may differ materially from the estimates or expectations expressed in those statement, and certain factors that could cause actual results to differ significantly from our expectations are detailed in our SEC reports. I direct you to our earnings release for the full Safe Harbor statement.
Now, I'd like to turn the call over to Niels. Niels?
Niels M. Johnsen
Thank you, Manny, and thank you, all, for joining us today. I am pleased to welcome all of you to our fourth quarter and year-end 2012 earnings call. Before Erik's comments and Manny's review of our financial results, I will make a few introductory comments.
In 2012, we successfully executed our growth strategy, which is focused on filling transportation needs in niche markets, increasing our contracted revenue, partnering with experienced operators and expanding our customer base with credit-worthy counterparties. As reported earlier, we completed the acquisition of United Ocean Services, giving us the leading position in the United States Jones Act dry bulk market. In addition, this acquisition added creditworthy customers, Tampa Electric and Mosaic, that are serviced by the UOS fleet on long-term contracts. We also acquired a 1999-built Pure Car Truck Carrier, which is deployed on a long-term contract, giving us a more modern, higher-specification vessel. Importantly, both of these transactions met our investment criteria of being immediately accretive to our financial results.
While we made some important strides for the long-term benefit of our company and our shareholders in 2012, 2012 was a challenging year for the shipping industry and this trend has continued into the first part of 2013. We must continue to cautiously manage the various risks that continually confront us. While our contract structures protect us from continued high fuel prices, we cannot turn a blind eye to this risk. Counterparty and currency risks are an ongoing reality in today's world that must be carefully evaluated. And traditional financial sources available to international shipping activities continue to be stressed, requiring alternative financial strategies to provide the capital we require as we develop accretive growth opportunities.
In addition, while we expect 68% of our 2013 revenue to be derived from fixed contracts, which helped insulate us from spot market volatility, the cyclical nature of our industry is an ever-present reality.
The recovery from the financial crisis has been slow, which has weighed on shipping demand. At the same time, newbuilding order books continue to bring additional capacity into the market. The combination of these 2 factors has impacted all areas of dry cargo shipping.
However, while the near-term outlook for the dry cargo market appears challenging, the long-term prospects remain positive. We expect to see a reduction in supply as order books decline and continued scrapping of vessels takes capacity out of the market. As we have said in the past, we believe it is more likely for the smaller vessels, which we operate, such as our Handysize bulk carriers, to be the first to benefit from this dynamics as the fundamentals are much more attractive.
According to our database for vessels of 22,000 to 38,000 deadweight, which total some 2,241 vessels worldwide, by 2015, 443 of these vessels will reach an age of 30 years as compared to the current order book of some 380 vessels.
I would also would like to note in advance of many Manny's comments, that we have adjusted our guidance for 2013, which Manny will explain in more detail. We now expect the net income to be in the range of $10 million to $12 million, and EBITDA to be between $63 million and $67 million.
Finally, yesterday our Board of Directors authorized a quarterly dividend payment of $0.25 for each share of common stock, enabling us to achieve our annual target for 2012 of $1 per share. For 2013, we have again set our dividend target at $1 per share.
I'd like to turn the meeting over to Erik now. Erik?
Erik L. Johnsen
Thank you, Niels, and good morning. Our fleet continues to operate as planned in the fourth quarter as we successfully closed several earlier announced acquisitions and concentrate on integrating them into our daily activities. I will provide further details of these transactions in just a few minutes.
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