K-Sea Transportation Partners L.P. Announces Operating Results and Net Income for Third Quarter of Fiscal 2008; Increases Dividend

Business Wire, April 30, 2008

NEW YORK -- K-Sea Transportation Partners L.P. (NYSE: KSP) today announced operating results and net income for the third fiscal quarter ended March 31, 2008. Net income increased 32% to $5.3 million from $4.0 million in the same period a year ago. Net income was $0.38 per fully diluted limited partner unit, compared to $0.39 per unit in the prior year quarter, reflecting a 38% increase in weighted average units outstanding. The third quarter is generally the Company's seasonally lowest quarter.

The Company also announced that its distribution to unitholders for the third quarter will increase by $0.02, or 2.7%, to $0.76 per unit, or $3.04 per unit annualized. This is the twelfth consecutive quarter of increased distributions, and the fourteenth increase since the Company's IPO in January 2004. The distribution will be payable on May 15, 2008 to unitholders of record on May 8, 2008.

President and CEO Timothy J. Casey said "The third fiscal quarter generally experiences winter slowdowns in Alaska and the Great Lakes. We also experienced a larger-than normal drydocking schedule, causing a reduction in vessel utilization in the coastwise trade to 82% from 90% in last year's comparative quarter. Also, the northeast experienced an unseasonably warm winter causing demand for heating oil to fall below the levels of the past several years.

"The historical seasonal rebound in the current June quarter has already begun, and our fleet expansion and upgrade program continues to provide us new and more efficient vessels. During the third quarter of fiscal 2008, we took delivery of another new 28,000 barrel tank barge, and we have nine additional units under construction. Eight new tank barges are scheduled to be delivered, approximately one per quarter, over the next two and one-half years, and we are also constructing a 185,000-barrel articulated tug-barge unit, which is scheduled for delivery in the fourth quarter of calendar 2009 when it will begin work under a multi-year charter with a major customer. Over 70% of this new capacity is already committed to customers.

"In light of our results and expectations, our Board of Directors has approved a two cent per unit increase in our quarterly distribution, the twelfth consecutive distribution increase and fourteenth increase since our initial public offering in January 2004. At our current annualized rate of $3.04 per unit, K-Sea's distribution is approximately 12% higher than at this time last year. We remain optimistic about our ability to continue to grow future distributions."

Three Months Ended March 31, 2008

For the three months ended March 31, 2008, the Company reported operating income of $10.3 million, an increase of $2.7 million, or 36%, compared to $7.6 million of operating income for the three months ended March 31, 2007. This increase resulted primarily from inclusion of the Smith Maritime Group, for which results are included from the acquisition date of August 14, 2007, and also from the continuing addition of new barges from the Company's expansion and upgrade program. Over the past year, the Company has taken delivery of six new tank barges, and has also purchased four tugboats that have reduced reliance on more expensive chartered-in towing. Results for the third quarter of fiscal 2008 were also affected by continued strong rates, which were partially offset by lower vessel utilization in our coastwise fleet due to a larger than normal number of scheduled drydocking days, an increase of $2.9 million in depreciation and amortization due to the Smith acquisition and the expanded fleet, and $2.3 million in higher general and administrative expenses as a result of the Smith acquisition and the Company's continued growth. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by $5.3 million, or 33%, to $21.3 million for the three months ended March 31, 2008, compared to $16.0 million for the three months ended March 31, 2007. 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, 2008 was $5.3 million, or $0.38 per fully diluted limited partner unit, an increase of $1.3 million compared to net income of $4.0 million, or $0.39 per fully diluted limited partner unit, for the three months ended March 31, 2007. The fiscal 2008 third quarter benefited from the $2.7 million increase in operating income, which was partially offset by a $1.4 million increase in interest expense resulting from debt incurred to finance the Smith acquisition and vessel newbuildings over the past year.

Nine Months Ended March 31, 2008

For the nine months ended March 31, 2008, the Company reported operating income of $36.4 million, an increase of $13.5 million, or 59%, compared to $22.9 million of operating income for the nine months ended March 31, 2007. This increase resulted primarily from the Smith acquisition and from the addition of new barges from the Company's expansion and upgrade program. Since the beginning of fiscal 2007, the Company has taken delivery of seven new tank barges, and has also purchased seven tugboats which have reduced reliance on more expensive chartered-in towing. These results were also positively affected by continued strong rates, partially offset by lower vessel utilization, increases of $7.8 million in depreciation and amortization due to the Smith acquisition and the expanded fleet, and $5.9 million in higher general and administrative expenses as a result of the Smith acquisition and the Company's continued growth. Similar to the fiscal 2008 third quarter, vessel utilization for the first nine months of fiscal 2008 was impacted by a larger than normal number of scheduled drydocking days. EBITDA increased by $23.2 million, or 49%, to $70.3 million for the nine months ended March 31, 2008, compared to $47.1 million for the nine months ended March 31, 2007.