RE: RE: RE: Q1 ReleaseI like what I see. On a EBITDA basis not including the final vessel cancellation expense of $166 million, DRYS made $131 million from operations in Q1. The outlook of this company is becoming less murky and they are in good shape going forward. Any dip on this news should be takin advantage of.
For the first quarter of 2009, the Company reported a net loss of
$101.8 million or $0.93 basic and diluted loss per share. Included in the
first quarter results are a loss related to contract termination fees and
forfeiture of vessel deposits of $166.2 million or $1.53 per share, a non
cash gain of $8.7 million or $0.08 per share associated with the valuation
of the Company's interest rate swaps, amortization of stock based
compensation of $9.3 million or $0.09 per share, a gain on the sale of one
vessel of $2.4 million or $0.02 per share and a gain on the contract
cancellation of two vessels of $15.3 million or 0.14 per share. Excluding
these items, net income would amount to $47.3 million or $0.45 per share.
-- The Company completed the ATM Equity Offering(SM) in which the Company
raised gross proceeds of approximately $500 million since commencing the
offering pursuant to the prospectus supplement filed on January 28, 2009.
Merrill Lynch & Co. acted as sales agent in the offering.
-- The Company signed a 3-year employment contract with Petrobras for
exploration drilling in the Black Sea for its semi-submersible rig, the
Leiv Eiriksson. The contract is expected to commence in direct continuation
from the current contract with Shell. The contract value is approximately
$630 million, including an estimated 60 days of mobilization, disassembly
and reassembly of the derrick structure, and an incentive bonus of 8%.
George Economou, Chairman and Chief Executive Officer of the Company, commented:
"We are pleased to report better than expected results for the first quarter of 2009 after adjusting for previously disclosed non-recurring and other non-cash items. The result is another validation of our shift in strategy that started in the last quarter of 2007 to secure a fixed revenue base by locking-in period employment for our drybulk vessels and diversifying into the offshore segment by acquiring Ocean Rig. During the last six months, in a very challenging environment, we have taken pro-active and decisive actions to ensure we remain ahead of the curve. We have reduced capital expenditures totaling $2 billion and at the same time de-levered our balance sheet by raising $500 million of equity through the ATM Equity Offering(SM) completed during April. Our relationships with the banks which we have built up over the years have helped us secure waivers from our most important lenders and we are in constructive discussions with the rest of them. The UDW business continues to perform as per expectations and I am very pleased with the signing of the three year contract with Petrobras for the Leiv Eiriksson worth about $630 million. In this unprecedented recession, many large companies are fighting for survival. In contrast, with current liquidity of about $1.7 billion and no immediate capital expenditure requirements, DryShips is uniquely positioned among its shipping peers to go after distressed assets and drive the long awaited consolidation of the industry."
Financial Review: 2009 First Quarter
The Company recorded a net loss of $101.8 million, or $0.93 basic and diluted loss per share for the three month period ended March 31, 2009, as compared to a net profit of $176.3 million, or $4.58 basic and diluted earnings per share for the three month period ended March 31, 2008. EBITDA, which is defined and reconciled later in this press release, was ($14.6) million for the first quarter of 2009 as compared to $213.6 million for the same period in 2008.
Included in the first quarter results are a loss related to contract termination fees and forfeiture of vessel deposits of $166.2 million or $1.53 per share, a non cash gain of $8.7 million or $0.08 per share associated with the valuation of the Company's interest rate swaps, amortization of stock based compensation of $9.3 million or $0.09 per share, a gain on the sale of one vessel of $2.4 or $0.02 per share and a gain on the contract cancellation of two vessels of $15.3 million or $0.14 per share. Excluding these items, net income would amount to $47.3 million or $0.45 per share.
Following our acquisition of Ocean Rig, we have two reportable segments, the drybulk carrier segment and the offshore drilling segment. We did not earn any revenues and we did not incur any expenses from drilling contracts in the three months ended March 31, 2008 as we commenced consolidation of Ocean Rig on May 15, 2008, which was the date we gained control over our drilling rig subsidiary.
For the drybulk carrier segment, net voyage revenues (voyage revenues minus voyage expenses) decreased by $129.0 million, to $88.9 million for the three month period ended March 31, 2009, as compared to $217.9 million for the three month period ended March 31, 2008. The decrease is attributable to the substantially decreased hire rates we earned during the three month period ended March 31, 2009 as compared to the first quarter of 2008. For the offshore drilling segment, revenues from drilling contracts amounted to $99.0 million for the three month period ended March 31, 2009.
Total operating expenses and depreciation increased to $52.2 million and $48.4 million, respectively, for the three month period ended March 31, 2009 from $17.8 million and $24.4 million for the three month period ended March 31, 2008. This increase in operating expenses is primarily due to the fact that we did not incur in the first quarter of 2008 any expenses from our offshore drilling segment, which was not yet consolidated. Total general and administrative expenses increased to $17.3 million from $2.9 million during the comparative periods mainly due to costs associated with higher employee non-cash compensation and expenses from our offshore drilling segment which was not yet consolidated in the first quarter of 2008.
Total interest and finance costs increased by $13.9 million to $29.0 million for the three month period ended March 31, 2009, compared to $15.1 million for the three month period ended March 31, 2008. This increase primarily stems from the increased amount of average indebtedness during the three month period ended March 31, 2009, as compared to the same period in 2008.
Fleet List
The table below describes our drybulk fleet development and current employment profile as of April 30, 2009:
Year Gross rate Redelivery Built DWT Type per day Earliest LatestFixed rate employment---------------------Capesize:Alameda 2001 170,269 Capesize $21,000 Feb-11 May-11Brisbane 1995 151,066 Capesize $25,000 Dec-11 Apr-12Capri 2001 172,579 Capesize $61,000 Apr-18 Jun-18Flecha 2004 170,012 Capesize $55,000 Jul-18 Nov-18Manasota 2004 171,061 Capesize $67,000 Feb-13 Apr-13Mystic 2008 170,500 Capesize $52,310 Aug-18 Dec-18Samsara 1996 150,393 Capesize $57,000 Dec-11 Apr-12Panamax:Avoca 2004 76,500 Panamax $45,500 Aug-13 Dec-13Bargara 2002 74,832 Panamax $43,750 May-12 Jul-12Capitola 2001 74,832 Panamax $39,500 Jun-13 Aug-13Catalina 2005 74,432 Panamax $40,000 Jun-13 Aug-13Ecola 2001 73,931 Panamax $43,500 Jun-12 Aug-12Ligari 2004 75,583 Panamax $55,500 Jun-12 Aug-12Majorca 2005 74,364 Panamax $43,750 Jun-12 Aug-12Mendocino 2002 76,623 Panamax $56,500 Jun-12 Sep-12Padre 2004 73,601 Panamax $46,500 Sep-12 Dec-12Positano 2000 73,288 Panamax $42,500 Sep-13 Dec-13Redondo 2000 74,716 Panamax $34,500 Apr-13 Jun-13Saldanha 2004 75,500 Panamax $52,500 Jun-12 Sep-12Samatan 2001 74,823 Panamax $39,500 May-13 Jul-13Xanadu 1999 72,270 Panamax $39,750 Jul-13 Sep-13Supramax:Paros I (ex Clipper Gemini) 2003 51,201 Supramax $27,135 Oct-11 May-12Pachino (ex VOC Galaxy) 2002 51,201 Supramax $20,250 Sep-10 Feb-11Spot rate employment--------------------Panamax:Conquistador 2001 75,607 PanamaxCoronado 2000 75,706 PanamaxDelray 1994 71,862 PanamaxHeinrich Oldendorff 2001 73,931 PanamaxIguana 1996 70,349 PanamaxLa Jolla 1997 72,126 PanamaxMaganari 2001 75,941 PanamaxMarbella 2000 72,561 PanamaxOcean Crystal 1999 73,688 PanamaxOregon 2002 74,204 PanamaxPrimera 1998 72,495 PanamaxSonoma 2001 74,786 PanamaxSorrento 2004 76,633 PanamaxToro 1995 73,034 PanamaxNew BuildingsN/B-Hull No: 1518A 2009 75,000 Panamax N/AN/B-Hull No: 1519A 2009 75,000 Panamax N/AN/B-Hull No: 2089 2009 180,000 Capesize N/AN/B-Hull No: SS 58 2010 82,000 Kamsarmax N/AN/B-Hull No: SS 59 2010 82,000 Kamsarmax N/A Summary Operating Data (Dollars in thousands, except average daily results - unaudited) Three Months Ended Three Months Ended March 31, 2008 March 31, 2009 -------------- --------------Average number of vessels(1) 38.3 37.7Total voyage days for vessels(2) 3,452 3,277Total calendar days for vessels(3) 3,485 3,391Fleet utilization(4) 99% 97%Time charter equivalent(5) 63,127 27,115Vessel operating expenses (daily)(6) 5,100 5,369----------------------------------------(1) Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in that period.(2) Total voyage days for fleet are the total days the vessels were in our possession for the relevant period net of off hire days.(3) Calendar days are the total days the vessels were in our possession for the relevant period including off hire days.(4) Fleet utilization is the percentage of time that our vessels were available for revenue generating voyage days, and is determined by dividing voyage days by fleet calendar days for the relevant period.(5) Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards and is determined by dividing voyage revenues (net of voyage expenses) by voyage days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, as well as commissions. TCE is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods. Three Months Ended Three Months Ended March 31, 2008 March 31, 2009 -------------- --------------Voyage revenues 232,063 97,602Voyage expenses (14,150) (8,746) -------------- --------------Time charter equivalent revenues 217,913 88,856 -------------- --------------Total voyage days for fleet 3,452 3,277Time charter equivalent TCE 63,127 27,115(6) Daily vessel operating expenses, which includes crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs is calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period. Financial Statements Unaudited Condensed Consolidated Income Statements Three Months Three Months(Dollars in thousands, except for share Ended Ended and per share data-unaudited) March 31, 2008 March 31, 2009 -------------- --------------REVENUES:Voyage revenues $ 232,063 $ 97,602Revenues from drilling contracts - 99,014 -------------- -------------- 232,063 196,616EXPENSES:Voyage expenses 14,150 8,746Vessel operating expenses 17,773 18,205Drilling rigs operating expenses - 34,027Depreciation 24,418 48,417Gain on sale of vessels (24,443) (2,438)Gain on contract cancellation - (15,340)Contract termination deposits & forfeiture of vessels deposits - 166,142Management fee charged by a related party 2,787 4,142General & administrative expenses 2,918 17,349 -------------- --------------Operating income / (loss) 194,460 (82,634)OTHER INCOME / (EXPENSES):Interest and finance costs, net of interest income (12,892) (26,557)(Loss) / gain on interest rate swaps (6,074) 8,718Other, net (19) 1,539 -------------- --------------Total other income (expenses), net (18,985) (16,300) -------------- --------------Net income / (loss) before taxes 175,475 (98,934)Income taxes - (2,901) -------------- --------------Net income / (loss) after taxes and before equity in income of investee and minority interest 175,475 (101,835)Equity in income of investee 857 - -------------- --------------Net (loss) / income 176,332 (101,835) ============== ==============Basic and fully diluted earnings / (loss) per share $ 4.58 $ (0.93)Weighted average number of shares, basic and diluted 38,502,864 109,085,118 Unaudited Condensed Consolidated Balance Sheets(Expressed in Thousands of U.S. Dollars December 31, March 31, except for share and per share data) 2008 2009 --------------- ---------------ASSETSCURRENT ASSETS: Cash and cash equivalents $ 303,114 $ 215,578 Restricted cash 320,560 506,837 Trade accounts receivable, net 52,441 43,155 Other current assets 44,312 63,201 --------------- --------------- Total current assets 720,427 828,771 --------------- ---------------FIXED ASSETS, NET: Advances for vessels under construction and acquisitions 535,616 499,403 Vessels, net 2,134,650 2,077,950 Drilling rigs, machinery and equipment, net 1,393,158 1,376,745 --------------- --------------- Total fixed assets, net 4,063,424 3,954,098 --------------- ---------------OTHER NON CURRENT ASSETS: Other non-current assets 58,829 66,311 --------------- ---------------Total non current assets, net 58,829 66,311 --------------- --------------- Total assets $ 4,842,680 $ 4,849,180 =============== ===============LIABILITIES AND STOCKHOLDERS' EQUITYCURRENT LIABILITIES: Current portion of long-term debt $ 2,370,556 $ 1,970,560 Other current liabilities 154,492 140,339 --------------- --------------- Total current liabilities 2,525,048 2,110,899 --------------- ---------------NON CURRENT LIABILITIES Long term debt, net of current portion 788,314 880,387 Other non-current liabilities 237,746 201,692 --------------- ---------------Total non current liabilities 1,026,060 1,082,079 --------------- ---------------COMMITMENTS AND CONTINGENCIES - -STOCKHOLDERS' EQUITY: --------------- --------------- Total stockholders' equity 1,291,572 1,656,202 --------------- --------------- Total liabilities and stockholders' equity $ 4,842,680 $ 4,849,180 =============== ===============
EBITDA Reconciliation
DryShips Inc. considers EBITDA to represent net income before interest, taxes, depreciation and amortization. EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by United States generally accepted accounting principles, or U.S. GAAP and our calculation of EBITDA may not be comparable to that reported by other companies. EBITDA is included herein because it is a basis upon which the Company assesses its liquidity position, it is used by our lenders as a measure of our compliance with certain loan covenants and because the Company believes that it presents useful information to investors regarding a company's ability to service and/or incur indebtedness.
The following table reconciles net income to EBITDA:
Three Months Three Months Ended Ended(Dollars in thousands) March 31, 2008 March 31, 2009 --------------- --------------Net income / (loss) 176,332 (101,835)Add: Net interest expense 12,892 26,557Add: Depreciation 24,418 48,417Add: Amortization - 9,346Add: Income taxes - 2,901 --------------- --------------EBITDA 213,642 (14,614) =============== ==============
Conference Call and Webcast: May 1st , 2009
As announced, the Company's management team will host a conference call, May 1st , 2009 at 8:30 AM Eastern Standard Time to discuss the Company's financial results.
Conference Call Details
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1(866) 819-7111 (from the US), 0(800) 953-0329 (from the UK) or +(44) 1452 542 301 (from outside the US). Please quote "DryShips."
In case of any problem with the above numbers, please dial 1(866) 223 0615 (from the US), 0(800) 694-1503 (from the UK) or +(44) (0) 1452 586-513 (from outside the US). Quote "DryShips."
A replay of the conference call will be available until May 2, 2009. The United States replay number is 1(866) 247-4222; from the UK 0(800) 953-1533; the standard international replay number is (+44) (0) 1452 55 00 00 and the access code required for the replay is: 2133051#.
A replay of the conference call will also be available on the Company's website at www.dryships.com under the Investor Relations section.
Slides and Audio Webcast
There will also be a simultaneous live webcast over the Internet, through the DryShips Inc. website (www.dryships.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
About DryShips Inc.
DryShips Inc., based in Greece, is an owner and operator of drybulk carriers and offshore oil deep water drilling that operate worldwide. As of the day of this release, DryShips owns a fleet of 42 drybulk carriers comprising 7 Capesize, 28 Panamax, 2 Supramax and 5 newbuilding drybulk vessels, with a combined deadweight tonnage of over 3.8 million tons and two drilling rigs and two drillship hulls.
DryShips Inc.'s common stock is listed on the NASDAQ Global Market where it trades under the symbol "DRYS."
Visit the Company's website at www.dryships.com
Forward-Looking Statement
Matters discussed in this release may constitute forward-looking statements. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.
The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although DryShips Inc. 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 our control, DryShips Inc. cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.
Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charterhire rates and vessel values, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled drydocking, changes in DryShips Inc.'s operating expenses, including bunker prices, dry-docking and insurance costs, or actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.
Risks and uncertainties are further described in reports filed by DryShips Inc. with the US Securities and Exchange Commission.
Investor Relations / Media:Nicolas BornozisCapital Link, Inc. (New York)Tel. 212-661-7566E-mail: dryships@capitallink.com