Diamond S Shipping Inc. First Quarter 2019 Earnings Presentation - - PowerPoint PPT Presentation

Diamond S Shipping Inc.

First Quarter 2019 Earnings Presentation May 14, 2019

2

Disclaimer and Forward-Looking Statements

Matters discussed in this presentation may constitute forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions. Although management believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Company’s control, there can be no assurance that the assumptions will prove correct. Some factors that, in the Company’s view, could cause actual results or conditions to differ materially from those discussed in the forward-looking statements include unforeseen liabilities; future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, expansion and growth of the Company’s operations, risks relating to the integration of assets or operations of entities that it has or may in the future acquire and the possibility that the anticipated synergies and other benefits of such acquisitions may not be realized within expected timeframes or at all, the failure of counterparties to fully perform their contracts with the Company, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for tanker vessel capacity, changes in the Company’s operating expenses, including bunker prices, drydocking and insurance costs, the market for the Company’s vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires, and other factors. Please see the Company's filings with the SEC for a more complete discussion of certain of these and other risks and uncertainties. The Company undertakes no obligation, and specifically declines any obligation, except as required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Highlights & Business Overview Craig H Stevenson, Jr., CEO

4

Highlights

• Merger consummated on March 27
• 68 vessels in the fleet – Crude Fleet: 15 Suez, 1 Afra; Product Fleet: 46 MR2, 6 MR1
• Estimated gross asset value of $1.6 billion
• Strong balance sheet capitalized to thrive throughout the cycle
• Asset value to net debt: 51%
• Total gross debt of $953.6 million, weighted average margin of 270 bps
• Balanced/opportunistic chartering strategy with approximately 20% of the fleet on time charter

FIRST QUARTER RESULTS

• Four days of combined entity (DSS Holdings LP operations plus four days of CPLP contributed vessels)
• Key Factors
• Cash and restricted cash: $81.3 million
• $16.1 million undrawn on available credit lines
• Net loss attributable to Diamond S Shipping Inc. was $1.0 million, $0.04 per basic/diluted share

CRUDE PRODUCTS TCE(1) $20,786 per day $14,486 per day Vessel expenses (2) $6,965 per day $6,328 per day General & administrative (3) $1,233 per day $1,233 per day TCE less Vessel expenses less G&A $12,588 per day $6,925 per day

Notes: Data as of March 31, 2019 1. TCE rates are a non-GAAP measure. Please refer to non-GAAP measure disclosures at the end of this presentation. 2. The vessel operating expenses we incur primarily consist of crew wages and associated costs, insurance premiums, lubricants and spare parts, and repair and maintenance costs and technical management fees. Excluded in above are nonrecurring benefits in Q1 2019. 3. General and administrative expenses for the Q1 22019 period excludes certain costs related to strategic planning and the Transaction.

5

Completion of Merger

Merger with CPLP’s crude and product tanker business was completed on March 27, 2019.

• DSS Holdings LP’s business merged with CPLP’s tanker fleet in a share-for-share transaction to form one of the largest publicly

traded tanker companies

• Strategic access to public markets with enhanced scale at a cyclically opportune time
• Fleet / operations in-process, expected to be efficiently and quickly combined
• New York Stock Exchange listed (ticker: DSSI)
• Transaction created the third-largest publicly traded MR and product fleet in the world, and one of the world’s largest public

mixed product and crude fleet operators

COMBINATION VALUE PROPOSITION

• Management is focused on maximizing value for all shareholders
• Grow earnings to drive future stock price
• Expand the business via accretive acquisition opportunities
• Ultimately pay regular dividends quarterly
• Attractive entry point for new investors; tankers believed to be turning towards recovery
• Proven management track record

6 GROWING DISTANCE OF OIL SUPPLY GROWTH AND DEMAND GROWTH

32.1 32.3 32.3 32.6 32.8 32.4 32.3 31.6 30.8

May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19

Key Oil Market Factors

OPEC STILL RELEVANT

90 100 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 2019 avg IEA est. OPEC est.

mmbpd

50 54 58 62 66 2008 2010 2012 2014 2016 2018 60 days

Sources: IEA/OPEC; OPEX; Fearnleys; OPEC

OPEC, 82% NON- OPEC, 18%

PROVEN RESERVES (2017) COVERS 1/3 OF WORLD OIL PRODUCTION

Macro oil indicators suggest that shipping is poised for a recovery

OIL DEMAND EXPECTED TO HIT 100MMBPD THIS YEAR GLOBAL INVENTORIES EXPECTED TO CONTINUE TO DECREASE

OECD DAYS FORWARD DEMAND OF COMMERCIAL INVENTORY (CRUDE AND PRODUCTS)

OIL PRODUCTION GROWTH

WEST OF SUEZ 5.5 EAST OF SUEZ 6.2

OIL CONSUMPTION GROWTH

30-50 DAY VOYAGE 2024 v 2018 2024 v 2018

Sources from April/May 2019

7 1,000 2,000 3,000 4,000

May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19

Suezmax Crude Carrier Overview

GROWING US EXPORTS ABSORBING TONNAGE ON LONG HAUL VOYAGES EAST HISTORICALLY LOW ORDERBOOK

0% 10% 20% 30% 40% 50% 2009 2011 2013 2015 2017 2019

Suezmaxes are well-positioned to benefit from the strengthening crude oil market fundamentals due to a historically low

• rderbook.

SUEZMAX FLEET AGE PROFILE

26% 34% 19% 17% 4%

0-4 5-9 10-14 15-19 20+ GROUPED AGE OF FLEET (yrs)

NEWBUILD PARITY

5 Yrs 10 Yrs 15 Yrs 20 Yrs NEWBUILD DEPRECIATION LINE CURRENT VALUES SIGNIFICANT VALUE IN OLDER VESSELS

Source: Clarkson Research, May 2019 Source: Clarkson Research, May 2019 Graph includes shuttle tankers and Jones Act vessels Source: vv.com, VV matrix, May 2019 Source: EIA, May 2019

ORDERBOOK EXCL. SHUTTLE TANKERS & JONES ACT: 6%

8

MR Product Carrier Overview

REFINING CAPACITY ADDITIONS MOSTLY BUILDING FOR EXPORT (MMBPD) FLEET AGE PROFILE ORDERBOOK IS LOWEST IN YEARS NEWBUILD PARITY

Source OPEC 60 120 155 215235 290 480495 295295 225 165190 290 250 137153150136

2001 2004 2007 2010 2013 2016 2019

• NO. SHIPS ON ORDER/% ORDERBOOK

World capacity additions/product flows 2020

New refining capacity is primarily being built for export purposes increasing the demand for product tankers generating ton-mile growth.

5 Yrs 10 Yrs 15 Yrs 20 Yrs

9%

NEWBUILD DEPRECIATION LINE CURRENT VALUES SIGNIFICANT VALUE IN OLDER VESSELS

EAST OF SUEZ WEST OF SUEZ

0.4 0.1 0.2 0.3 (0.4) 1.8 0.9 (3.2)

Americas Africa Europe Russia

1.3 1.6 (4.3) 5.1

Middle East Asia Pacific 25% 27% 31% 11% 6%

0-4 5-9 10-14 15-19 20+ GROUPED AGE OF FLEET (yrs)

Source: Clarkson Research, May 2019 Source: Clarkson Research, May 2019 Source: vv.com, VV matrix, May 2019

9 27.9% 34.8% 41.2%

43.7% 32.0% 27.1%

Permian Arab Light WCS

Coke Fuel Oil Gasoil Kerosene Naphtha LPG

Marine Fuels – Regulatory Change in Sulfur Emissions (IMO 2020)

IMO 2020 is the most significant regulatory-driven change in the tanker industry since the Oil Protection Act of 1990.

1.0 1.7 0.3 0.5 0.5

Refinery Expansion Blending/ Processing Feedstock Change Non compliance Alternatives

Scrubbers, LNG

Source: Evercore, April 2018

Refinery changes Shipping changes

Source: Fearnleys, IEA, May 2019 Source: Clarksons Research, May 2019

22% 21% 38% 11% 10% 17% 36% VLCC SUEZ AFRA/ LR2 LR1 MR Handy POTENTIAL FOR OLDER VESSELS TO PHASE OUT

PERCENT OF VESSELS OLDER THAN 15 YRS

ABOUT 3-4 MMBPD OF BUNKER FUEL DEMAND LIKELY TO BE DISPLACED BY A DISTILLATE BLEND COMPLIANT FUELS DEMAND MORE GASOIL FOR BLENDING YET LIGHT CRUDE YIELD MORE NAPHTHA TYPE PRODUCTS SCRUBBER INSTALLATIONS

242 129 89 87 20 168 21

774 575 645 364 455 1,573 424 VLCC SUEZ AFRA LR2 LR1 MR Handy

LESS THAN 16% OF THE TANKER FLEET INSTALLING SCRUBBERS

Source: Clarksons Research, May 2019

• No. of vessels installing scrubbers
• No. of vessels NOT installing scrubbers

PANAMAX

YIELDS OF CERTAIN CRUDE OILS FOR A COMPLEX REFINERY

US Crudes

Naphtha/Gasoline yields Gasoil yields

Financial Overview Kevin Kilcullen, CFO

11

Q1 2019 Performance

Ended Sept 30

Data includes DSS ownership (51%) in JV

(13.7) (1.0) Q1 2018 Q1 2019 (0.51) (0.04) Q1 2018 Q1 2019 2.6 11.8 Q1 2018 Q1 2019

CRUDE FLEET

13.3 18.5 Q1 2018 Q1 2019

TCE RATES ADJUSTED EBITDA NET INCOME/EPS

$/day

PRODUCT FLEET NET INCOME EPS

Consolidated EBITDA: Q1 2018: 15.9, Q1 2019: 30.3 $mm $mm

$/share

2018 shares based on DSS 68.1% share split Spot & TC

$88 $81 $30 $6 $26 $6 $11

Jan 1 Adjusted EBITDA Purch CPLP Debt Service DD &Capex WC & Other Mar 31

$mm Q1 2019, includes restricted cash

MAJOR CASH MOVEMENT

Net of New Debt

Crude Fleet Product Fleet

Q1 2019 Spot

Q1 2018

$ 20,765

11,718

$ 14,357

12,543

Q1 2019 Total Q1 2018 20,786

11,718

14,486

12,843

Q2 2019 Booked to-date(1)

Total TCE

15,700

(60% of available days)

12,800

(70% of available days)

(1) As of May 10, 2019 See Non-GAAP Measures at the end of the presentation

12

Accounting for the Merger

Diamond S acquired the CPLP tanker fleet in a $550 mm deal Consideration Amount Net Assets Acquired Amount

Net cash paid $292.7 Vessels $ 538.0 Common stock issued to CPLP unitholders 236.9 Net working capital 5.2 Transaction costs 20.7 Time charter contracts acquired 7.3 BWTS/Scrubber prepayments 2.2 Deferred charter hire revenue (2.4) Total consideration $550.3 Total net assets acquired $550.3

$mm $mm

DSSI accounted for the transaction as an asset acquisition.

13

Assets $mm Liabilities & Equity $mm Cash and cash equivalents $76.1 Current portion of debt $112.2 Other current assets 91.4 Other current liabilities 43.8 Current assets 167.5 Current liabilities 156.0 Restricted cash 5.2 Long-term debt 828.1 Vessels, net 1,975.7 Derivative liabilities 1.1 Deferred drydocking 35.4 Equity 1,177.2 Other noncurrent 13.4 Noncontrolling interest 34.8 Total Assets 2,197.2 Total Liabilities & Equity 2,197.2

Balance Sheet, Operating Leverage and Liquidity

CONDENSED BALANCE SHEET CASH & LIQUIDITY

Note: Data as of March 31, 2019 except cash break even – see note 3. 1. This facility relates to a joint venture, in which Diamond S is a 51% owner. 2. Loan-to-value is based on brokers in conjunction with debt compliance. 3. Cash breakeven is an average estimate in 2019 and includes daily vessel expenses, general & administrative expenses and debt service. 4. Debt service costs are based on forward LIBOR curve and mandatory repayments on existing debt.

OTHER STATISTICS

Name # Collateral Vessels Outstanding 3/31 Margin Quarterly Repayment Maturity Date 235mm Facility 8 $188.7 275 bps $4.2 2021 75mm Facility 2 60.6 220 bps 1.3 2023 66mm Facility 1 2 55.1 325 bps 1.1 2021 460mm Facility 28 304.2 280 bps 11.1 2021 360mm Facility 28 345.0 265 bps 13.8 2024 Deferred Fees (13.3) Total 68 $940.3 $31.5

DEBT SCHEDULE $81.3 $55.2 $16.1 $42.2

CASH & RESTRICTED CASH UNDRAWN REVOVLING CREDIT CAPACITY LIQUIDITY

$mm

Bank required minimum cash Excess Cash

51%

2019 DAILY CASH BREAKEVENS(3) LOAN TO VALUE

7,600 6,900 1,000 1,000 9,400 5,100

18,000 13,000

Crude Product

OPEX G&A Debt Service (4)

(2)

$mm $mm

14

BALLAST WATER TREATMENT

Capital Expenditure Program

BWTS to be installed in 2019/2020 Completed in 2019 mm estimated range of costs

15 3 $1.1-1.3

All secured by equipment contracts

DDs planned for 2019 Completed in 2019 Planned DD in 2020

10 5 3

DRYDOCKING

Scrubber installations planned for 2019 Late Q3 2019 installations mm expected average cost per scrubber

5 $3 2

SCRUBBERS EXPECTED 2019 CAPEX

4.2 5.8 3.7 1.5 2.6 6.6 0.4 1.2 0.7 2.4 5.3

6.8 13.1 6.5 8.0

Q1 2019 Q2 2019 Q3 2019 Q4 2019

DD BWTS/Other Scrubber $mm

2 additional under evaluation

15

Capex Outlook

Forecasted Capex by Category

Light drydocking obligations in 2020 maximizes available fleet revenue days

$15 $6 $19 $23 $11 $13 $22 $8 $6

$34 $12 $32 $45

2019 2020 2021 2022

Drydock BWTS Scrubber $mm

16

Building Share Liquidity

Event Date Unrestricted Shares Cumulative Total % of Total Shares

Merger and distribution to CPLP unitholders March 28, 2019 12,725,000 12,725,000 32% Registration of shares held by DSS LP investors and management(1) May 10, 2019 9,290,432 22,015,432 55% DSSI investor shares subject to 180 day initial lock-up(2) September 23, 2019 7,902,590 29,918,022 75% DSSI investor shares subject to restriction following initial lock-up (3) March 22, 2020 9,972,674 39,890,696 100% Total outstanding shares 39,890,696

NYSE Ticker: DSSI Total Shares O/S: 39,890,696

(1) A total of 11,684,435 shares were registered on a Form S-1; only 9,290,432 include shares not previously registered. (2) Assumes greatest number as calculated pursuant to the Registration Rights Agreement. (3) Shares may become unrestricted before March 2020 if certain trading metrics are met within the terms of the registration rights agreement.

Closing Remarks Craig H Stevenson, Jr., CEO

18

Significant Scale Drives Operating Leverage and Consolidation Opportunities Diversified Crude and Product Fleet Enhances Growth Optionality

DSSI at a Glance

Low Cash Breakevens and Strong Financial Flexibility with Meaningful TC Coverage Experienced Management Team and Board

DSS LP Capital Product Partners

12 Crude Tankers 31 Product Tankers 21 Product Tankers 4 Crude Tankers

Combined 68

Vessels

8.8

Average Age

1

Focus on Return of Capital and Shareholder Returns

Note: 1. Weighted by DWT and ownership for the calendar year 2019

19

Q&A

20

Appendix

21

Fleet List

PRODUCT FLEET CRUDE FLEET

A complete listing of the DSSI fleet can be found at www.diamondsshipping.com.

Aframax Vessel Name Built DWT 1 Aristaios 2017 113,689 Suezmax Vessel Name Built DWT 2 Miltiadis M II 2006 162,397 3 Aias 2008 150,393 4 Amoureux 2008 149,993 5 Brazos 2012 158,537 6 Colorado 2012 158,615 7 Frio 2012 159,000 8 Pecos 2012 158,465 9 Red 2012 159,068 10 Rio Grande 2012 159,056 11 Sabine 2012 158,493 12 San Saba 2012 159,018 13 Loire 2016 157,463 14 Namsen 2016 157,543 15 San Jacinto 2016 158,658 16 Trinity 2016 158,734 MR (cont'd) Vessel Name Built DWT 51 Atlantic Mirage 2009 51,476 52 Atlantic Muse 2009 51,498 53 Atlantic Pisces 2009 49,999 54 Atlantic Polaris 2009 49,999 55 Ayrton II 2009 51,260 56 Pacific Jewel 2009 48,012 57 Alpine Maya 2010 51,501 58 Alpine Melina 2010 51,483 59 Active 2015 50,136 60 Amadeus 2015 50,108 61 Amor 2015 49,999 62 Anikitos 2016 50,082 Handysize Vessel Name Built DWT 63 Agisilaos 2006 36,760 64 Aktoras 2006 36,759 65 Alkiviadis 2006 36,721 66 Arionas 2006 36,725 67 Atlantas II 2006 36,760 68 Aiolos 2007 36,725 MR Vessel Name Built DWT 17 Assos 2006 47,872 18 Akeraios 2007 47,781 19 Anemos I 2007 47,782 20 Apostolos 2007 47,782 21 Atlantic Breeze 2007 49,999 22 Atlantic Frontier 2007 49,999 23 Atrotos 2007 47,786 24 Avax 2007 47,834 25 Axios 2007 47,872 26 Citron 2007 49,999 27 Alexandros II 2008 51,258 28 Alpine Madeleine 2008 49,999 29 Alpine Mathilde 2008 49,999 30 Alpine Mia 2008 49,999 31 Aris II 2008 51,218 32 Aristotelis II 2008 51,226 33 Atlantic Aquarius 2008 49,999 34 Atlantic Gemini 2008 49,999 35 Atlantic Grace 2008 49,999 36 Atlantic Leo 2008 49,999 37 Atlantic Lily 2008 49,999 38 Atlantic Olive 2008 49,999 39 Atlantic Rose 2008 49,999 40 Atlantic Star 2008 49,999 41 Atlantic Titan 2008 49,999 42 Citrus 2008 49,995 43 High Jupiter 2008 51,603 44 High Mars 2008 51,542 45 High Mercury 2008 51,501 46 High Saturn 2008 51,527 47 Adriatic Wave 2009 51,549 48 Aegean Wave 2009 51,510 49 Alpine Moment 2009 49,999 50 Alpine Mystery 2009 49,999

22

Non-GAAP Financial Measures

This presentation includes certain non-GAAP financial measures, including Time Charter Equivalent (“TCE”) revenue, EBITDA and Adjusted

• EBITDA. Management believes these measures are useful to investors and are designed to complement the financial information presented in

accordance with generally accepted accounting principles of the United States of America. TCE is used to compare a voyage charter, where the owner earns revenues and pays related voyage expenses, to a time charter, where the owner is paid a fixed amount each day by the

• customer. TCE represents voyage revenues, which commence at the time a vessel departs its last discharge port and end at the time the

discharge of cargo at the next discharge port is complete, less voyage expenses incurred over such time. TCE rates assists the Company’s management in making decisions regarding the deployment and use of its vessels. EBITDA represents net (loss)/income before interest expense, income taxes and depreciation and amortization expense. Adjusted EBITDA consists of EBITDA adjusted for the impact of certain items that we do not consider indicative of our ongoing operating performance. Management uses EBITDA and Adjusted EBITDA to monitor

• ngoing operating results and evaluate trends over comparable peridos. We present non-GAAP measures when we believe that the additional

information is useful and meaningful to investors. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by other companies. The presentation of non-GAAP financial measures is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP. See Appendix for a reconciliation of certain non-GAAP measures to the comparable GAAP measures. This presentation also contains estimates and other information concerning our industry that are based on industry publication.

23

Time Charter Equivalent Rates and Vessel Expenses $/per day

For the Three Months Ended March 31

2019 2018 Crude Fleet Product Fleet Crude Fleet Product Fleet Time Charter TCE per day $ 26,400 $ 15,464 $ - $ 16,251 Spot TCE per day(1) 20,765 14,357 11,718 12,543 Total TCE per day(1) $ 20,786 $ 14,486 $ 11,718 $ 12,843 Vessel expenses per day(2) $6,965 $6,328 $7,711 $6,633 Revenue days(3) 1,083 2,782 1,080 2,814 Operating days(3) 1,096 2,874 1,080 2,970

The following table represents a detailed breakdown by fleet of time charter equivalent (“TCE”) daily rates and related revenue and operating days for the three months ended March 31, 2019 and 2018. TCE represents shipping revenues, which commence at the time a vessel departs its last discharge port and end at the time the discharge of cargo at the next discharge port is complete, less voyage expenses incurred over such time. TCE rates are a non-GAAP measure, generally used in the shipping industry, used to compare revenue generated from voyage charters to revenue generated from time charters. TCE rates assists the Company’s management in making decisions regarding the deployment and use of its vessels and in evaluating the financial performance of vessels under commercial management.

(1) TCE rates per day are a non-GAAP measure used by the Company’s management in evaluating the financial performance of vessels under commercial management. Revenues are derived on a discharge-to-discharge basis less voyage expenses which primarily consist of fuel costs and port charges incurred over the same period. See next page for reconciliation. (2) The vessel operating expenses we incur primarily consist of crew wages and associated costs, insurance premiums, lubricants and spare parts, technical management fees, repair and maintenance costs and other miscellaneous expenses. (3) Operating days include the calendar days in the period of owned vessels. Revenue days represent operating days less technical off-hire and drydocking.

24

Reconciliation of Voyage Revenue to TCE $/per day

000s, except revenue days and TCE/day

For the Three Months Ended March 31

2019 2018 Crude Fleet Product Fleet Crude Fleet Product Fleet Voyage revenue $ 35,409 $ 67,247 $ 29,358 $ 63,786 Voyage expense (14,370) (27,708) (16,702) (28,033) Amortization of time charter contracts acquired 19 57

• 59

Off-hire bunkers in voyage expenses

• 373
• 326

Loan-to-discharge/Discharge-to-discharge 1,454 (153)

• Revenue from sold vessels
• (13)
• TCE Revenue (000s)

$ 22,512 $ 40,303 $ 12,656 $ 36,138 Operating Days(1) 1,096 2,874 1,080 2,970 Technical off-hire/drydocking (13) (92)

• (156)

Revenue Days(1) 1,083 2,782 1,080 2,814 TCE per day $ 20,786 $ 14,486 $ 11,718 $ 12,843

The following table represents a detailed breakdown by fleet of time charter equivalent (“TCE”) daily rates and related revenue and operating days for the three months ended March 31, 2019 and 2018. TCE represents shipping revenues, which commence at the time a vessel departs its last discharge port and end at the time the discharge of cargo at the next discharge port is complete, less voyage expenses incurred over such time. TCE rates are a non-GAAP measure, generally used in the shipping industry, used to compare revenue generated from voyage charters to revenue generated from time charters. TCE rates assists the Company’s management in making decisions regarding the deployment and use of its vessels and in evaluating the financial performance of vessels under commercial management.

(1) Operating days include the calendar days in the period of owned vessels. Revenue days represent operating days less technical off-hire and drydocking.

25

Reconciliations

Reconciliation of net income to Adjusted EBITDA EBITDA represents net income/(loss) before interest expense, income taxes and depreciation and amortization expense. Adjusted EBITDA consists of EBITDA adjusted for the impact of certain items that we do not consider indicative of our ongoing operating performance. EBITDA and Adjusted EBITDA are presented to provide investors with meaningful additional information that management uses to monitor ongoing operating results and evaluate trends over comparative periods. EBITDA and Adjusted EBITDA do not represent, and should not be considered a substitute for, net income/(loss) or cash flows from operations determined in accordance with GAAP. EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of our results reported under GAAP. Some limitations are:

• EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
• EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; and
• EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt.

While EBITDA and Adjusted EBITDA are frequently used by companies as a measure of operating results and performance, neither of those items as prepared by the Company is necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation. The following table reconciles net income/(loss), as reflected in the consolidated statements of operations, to EBITDA and Adjusted EBITDA:

For the Three Months Ended March 31,

000s

2019 2018 Net loss $ (820) $ (14,063) Other income (517) (351) Interest expense 9,370 8,582 Depreciation and amortization 21,956 22,054 Noncontrolling interest (1,157) (574) EBITDA 28,832 15,648 Nonrecurring corporate expenses 1,392 198 Amortization of time charter contracts acquired 76 59 Adjusted EBITDA $ 30,300 $ 15,905

26

Segment Results

For the three months ended March 31, 2019 000s Crude Fleet Product Fleet Voyage revenue $ 35,409 $ 67,247 Voyage expenses (14,370) (27,208) Vessel expenses (6,760) (18,041) Depreciation and amortization (8,037) (13,919) General, administrative and management fees (1,761) (4,527) Income from operations $ 4,481 $ 3,552 Reconciliation to Adjusted EBITDA Income from operations $ 4,481 $ 3,552 Depreciation and amortization 8,037 13,919 Amortization of time charter contracts 19 57 Nonrecurring corporate expenses 379 1,013 Noncontrolling interest (1,157)

• Adjusted EBITDA

$ 11,759 $ 18,541