Executive Summary

Solid operational execution with sequential strength: Adjusted EBITDA rose to $48.1M, up >20% q/q, as operating leverage offset lower y/y revenues; diluted EPS was $0.22 vs $0.15 y/y .
Mix and fleet effects drove y/y revenue declines: Fewer vessels (AMSC redeliveries), higher drydock days, and lower Delaware Bay lightering volumes weighed on shipping and TCE revenues y/y despite higher average daily rates; sequentially, revenue improved from Q2 .
Visibility and capital returns strengthened: 90% of 2024 Jones Act days are fixed, with management indicating fixed-contract TCE of >$30M per month through 2024; OSG repurchased 4.58M shares ($18.7M) and 13.85M warrants (2.63M share equivalent) for $11.4M in Q3 .
Fleet positioning/capacity: Agreement to purchase the Alaskan Frontier (expected in operation within 12 months) adds earnings assets; after quarter-end, OSG prepaid $6.7M of interest-bearing liabilities at a discount (Q4 gain ~$0.9M) .
Estimates context: S&P Global consensus estimates for Q3 2023 were unavailable via our connector; we cannot assess beat/miss vs Street for EPS/revenue/EBITDA (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well
- Sequential profitability acceleration: Adjusted EBITDA rose to $48.1M (+>20% q/q), as operating and net income improved on lower voyage, vessel, and charter hire expenses and better average daily rates .
- Contracted visibility: “90% of 2024 available trading days for the Jones Act fleet are now fixed at rates that will generate TCE from fixed contracts in excess of $30 million per month through the end of 2024,” providing strong revenue visibility and cash generation .
- Capital allocation: Repurchased 4.58M shares ($18.7M) and 13.85M warrants (2.63M share equivalent) for $11.4M; off‑market repurchases in Aug/Sep with Cyrus simplified the capital structure and reduced diluted share count .
What Went Wrong
- Y/Y revenue decline driven by mix and fleet: Shipping revenue fell to $115.4M (−6.2% y/y), TCE to $108.6M (−5.6% y/y), as OSG had fewer vessels (AMSC redeliveries), an 8‑day increase in drydock days, and lower Delaware Bay lightering volumes; partially offset by higher average rates and Israel voyages .
- Lightering normalization: Q3 lightering average rate increased y/y, but fewer revenue days vs prior year reduced contribution; total revenue days were 1,747 vs 2,035 y/y .
- Non‑GAAP reliance: Adjusted EBITDA and vessel operating contribution remain key internal metrics; while helpful, they require reconciliation and may vary vs peers’ definitions .

Financial Results

Headline financials (y/y and q/q context in commentary)

Metric	Q3 2022	Q1 2023	Q2 2023	Q3 2023
Shipping Revenues ($M)	123.06	113.79	106.63	115.44
TCE Revenues ($M)	115.06	104.74	100.13	108.58
Operating Income ($M)	22.43	22.54	20.27	28.20
Net Income ($M)	13.25	12.14	12.30	17.59
Diluted EPS ($)	0.15	0.14	0.15	0.22
Adjusted EBITDA ($M)	42.32	40.90	39.47	48.12

Commentary:

Y/Y: Shipping revenue (−6.2%) and TCE (−5.6%) declined vs Q3’22 due to fewer vessels, more drydock days, and lightering volumes; operating income and EPS improved as cost lines fell (voyage, vessel, and charter hire) and rates improved .
Q/Q: Revenues and profitability improved vs Q2’23; Adjusted EBITDA rose >20% q/q to $48.1M, aided by higher average rates and cost discipline .

Segment economics (Vessel Operating Contribution)

Segment	Q3 2022 ($M)	Q3 2023 ($M)
Specialized businesses	31.74	31.98
Jones Act handysize tankers	8.05	12.71
Jones Act ATBs	7.10	7.69
Total Vessel Operating Contribution	46.89	52.38

KPIs and operating drivers

KPI	Q1 2023	Q2 2023	Q3 2023
Revenue Days (Total)	1,772	1,740	1,747
Jones Act Handysize – Fixed Avg Rate ($/day)	64,417	65,447	67,694
Non‑Jones Act Handysize – Fixed Avg Rate ($/day)	33,319	—	68,875
Lightering – Avg Rate ($/day)	104,512	82,164	89,255
Alaska – Fixed Avg Rate ($/day)	60,115	59,977	61,016

Balance sheet and capital returns (Q3 2023)

Total cash and investments: $112.5M at 9/30/23 .
Q3 capital returns: Repurchased 4.58M shares ($18.7M) and 13.85M warrants (2.63M share equivalent) for $11.4M .
Additional Q3 announcements: Off‑market share repurchase of 3.79M shares for $15.34M (Aug 28) and off‑market warrant repurchase of 13.85M warrants for $11.38M (Sep 15) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance/Commentary	Change
Jones Act fleet coverage	FY2024	Not disclosed	~90% of available trading days fixed	New commentary (visibility up)
Fixed‑contract TCE run‑rate	Through end of 2024	Not disclosed	>$30M per month from fixed contracts	New commentary (visibility up)
Q4 below‑the‑line item	Q4 2023	Not applicable	~$0.911M gain from discounted prepayment of $6.7M liabilities after quarter‑end	New item

Note: OSG did not issue formal numerical guidance ranges (revenue/EPS/margins); management provided qualitative visibility commentary .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2023)	Current Period (Q3 2023)	Trend
Tanker Security Program (TSP)/MSC	Q1: Three non‑Jones Act MRs accepted into TSP; Q2: Overseas Mykonos awarded MSC time charter; contribution >$20M TCE in initial contract year	TSP vessels performing better than expected; continued support from healthy international MR rates	Positive execution/visibility
Jones Act MR rates	Q1/Q2: Higher average TCE rates; tight market conditions	Higher average daily rates continue to support results	Stable-to-improving
Lightering	Q1/Q2: Above‑average volumes supported results	“Boosted” volumes ytd, though Q3 y/y revenue days lower; avg rate up y/y	Mixed: rates up, volumes normalize
Fleet/Capacity	Q1: Fleet at 21 vessels; Q2: same; AMSC redeliveries completed in Dec‑22	Agreement to acquire Alaskan Frontier; expected in operation within 12 months	Capacity adds ahead
Capital Allocation	Q1: $10M buyback authorization; Q2: authorization raised to $20M; 2.1M shares repurchased in Q2	Aggressive Q3 repurchases: shares and warrants; additional off‑market transactions in Aug/Sep	Accretive deployment
Macro/refining	—	Healthy refining margins and strong int’l tanker rates supported TSP and lightering	Supportive backdrop

Management Commentary

“Adjusted EBITDA increased by more than 20% from the second quarter… We completed transactions to repurchase the equivalent of 7.2 million shares, returning nearly $30 million to our shareholders… [and] took steps to add additional earning assets… through an agreement to purchase the Alaskan Frontier.”
“Healthy refining margins and strong international tanker rates have supported better than expected performance from our TSP vessels and have boosted volumes lifted in our lightering operations.”
“90% of 2024 available trading days for the Jones Act fleet are now fixed at rates that will generate TCE from fixed contracts in excess of $30 million per month through the end of 2024.”

Q&A Highlights

We were unable to retrieve the full Q3 2023 call transcript via our document tool due to a database inconsistency. Public web versions are available (e.g., Insider Monkey transcript; Marketscreener transcript), but content access was limited during this review window, so we do not present Q&A-specific quotes/themes to avoid mischaracterization .

Estimates Context

S&P Global (Capital IQ) consensus estimates for OSG’s Q3 2023 EPS, revenue, and EBITDA were unavailable via our connector, preventing a standardized beat/miss comparison to the Street. Values retrieved from S&P Global were unavailable via our mapping for this ticker at the time of request.

Where estimates may need to adjust:

Given >20% q/q Adjusted EBITDA growth and higher operating income, Street models that did not anticipate the sequential step-up in profitability (despite y/y revenue declines) may need to lift forward EBITDA/FCF run‑rate assumptions, especially given 2024 contracted visibility (>90% fixed days; >$30M/month TCE from fixed contracts) .

Key Takeaways for Investors

Strong sequential earnings power: Despite y/y revenue headwinds from fleet/drydock/volume mix, operating leverage and higher day rates drove a >20% q/q Adjusted EBITDA increase to $48.1M .
High 2024 visibility: ~90% of Jones Act days fixed and management commentary of >$30M/month fixed TCE through 2024 underpin cash generation and de‑risk near‑term estimates .
Accretive capital allocation: Substantial share and warrant repurchases (both on- and off‑market) simplified the capital structure and reduced diluted shares outstanding .
Fleet growth optionality: The Alaskan Frontier acquisition is expected to add earnings capacity within ~12 months, complementing contracted coverage .
Mix headwinds manageable: Y/Y lightering volumes and higher drydock days weighed on Q3 revenue, but higher average rates across asset classes and cost reductions supported margins .
Trading setup: With contracted 2024 visibility and ongoing buybacks, the narrative skews toward sustained EBITDA/FCF delivery; key watch items are lightering utilization, execution on Alaska asset onboarding, and maintenance downtime cadence .
Risk checks: Fleet availability/drydock timing, Jones Act rate durability, and lightering demand normalization remain primary sensitivities .

References

Q3 2023 8‑K/Press Release (Item 2.02; includes financials, non‑GAAP reconciliations, fleet/KPIs): .
Q2 2023 8‑K/Press Release (comparatives): .
Q1 2023 8‑K/Press Release (comparatives): .
Other Q3‑period press releases: Off‑market share repurchase (Aug 28, 2023) ; Off‑market warrant repurchase (Sep 15, 2023) .
External transcript links (for reference; not quoted above): .

OVERSEAS SHIPHOLDING GROUP INC (OSG)·Q3 2023 Earnings Summary