DryShips back in profit as revenue sharply increases

DryShips

DryShips, a diversified owner of ocean going cargo vessels, announced its unaudited financial and operating results for the quarter ended December 31, 2017.

Fourth Quarter 2017 Financial Highlights

  • For the fourth quarter of 2017, the Company reported a net income of $11.5 million, or $0.11 basic and diluted earnings per share.

    Included in the fourth quarter of 2017 results are the following:

    • Net income associated with “mark-to-market” accounting of the Company’s 49.0% ownership in Heidmar Holdings LLC, a global tanker pool operator, of $9.7 million, or $0.09 per share.
    • Gain on the sale of the Company’s 2001 built Panamax vessel, the Ecola, to an unaffiliated buyer, of $4.4 million, or $0.04 per share.

    Excluding the above, the Company’s net results would have amounted to a net loss of $2.6 million, or $0.02 per share.

  • The Company reported Adjusted EBITDA of $9.9 million for the fourth quarter of 2017. (1)

(1) Adjusted EBITDA is a non-GAAP measure; please see later in this press release for reconciliation to net income/(loss).

Updated Key Information as of February 26, 2018

  • Cash and cash equivalents: approximately $41.0 million (or $0.39 per share)
  • Book value of vessels: approximately $821.7 million (or $7.88 per share)
  • Debt outstanding balance: approximately $237.0 million (or $2.27 per share)
  • Number of Shares Outstanding:  104,274,708

Recent Developments

  • Drawdown of previously announced New Secured Credit Facility

    On January 26, 2018, the previously announced $90.0 million secured credit facility with a commercial lender was fully drawdown. The $90.0 million secured credit facility is secured by the Company’s four tanker vessels, has a tenor of five years, bears an interest rate of LIBOR plus margin, is repayable in quarterly installments and has customary financial covenants.

  • New Secured Credit Facility

    On January 29, 2018, the Company signed the previously announced $35.0 million secured credit facility with a commercial lender. The $35.0 million secured credit facility is secured by three of the Company’s drybulk carriers, has a tenor of six years, bears an interest rate of LIBOR plus margin, is repayable in quarterly installments and has customary financial covenants. The Company’s expects to drawdown the full amount of the facility during March 2018.

  • Repayment of the Credit Facility with Sierra Investments Inc.

    On February 1, 2018, the Company repaid in full the outstanding balance of approximately $73.8 million under the credit facility with Sierra Investments Inc., an entity that may be deemed to be affiliated with Mr. George Economou, the Company’s Chairman and Chief Executive Officer.

  • Firm Commitment for a New Secured Credit Facility

    On February 5, 2018, the Company received a firm commitment for a senior secured credit facility of up to $30.0 million from a major European commercial lender. The facility is expected to be secured by two of the Company’s drybulk vessels, have a tenor of six years, bear an interest rate of LIBOR plus margin, be repayable in quarterly installments and have customary financial covenants. The facility remains subject to definitive documentation.

Fleet List

The table below describes the Company’s fleet as of February 27, 2018:

Year Gross rate Redelivery
Built DWT Per day Earliest Latest
Drybulk fleet
Panamax:
Bargara 2002 74,832 Spot N/A N/A
Capitola 2001 74,816 Spot N/A N/A
Catalina 2005 74,432 Spot N/A N/A
Levanto 2001 73,925 Spot N/A N/A
Ligari 2004 75,583 Spot N/A N/A
Maganari 2001 75,941 Spot N/A N/A
Majorca 2005 74,477 Spot N/A N/A
Marbella 2000 72,561 Spot N/A N/A
Mendocino 2002 76,623 Spot N/A N/A
Rapallo 2009 75,123 Spot N/A N/A
Raraka 2012 76,037 Spot N/A N/A
Redondo 2000 74,716 Spot N/A N/A
Newcastlemax:
Bacon 2013 205,170 T/C Index Linked Aug-18 Jan-19
Judd 2015 205,796 $9,350 Feb-18 Apr-18
Marini 2014 205,854 T/C Index Linked Dec-18 Feb-19
Morandi 2013 205,854 T/C Index Linked Feb-18 May-18
Kamsarmax:
Castellani 2014 82,129 Spot N/A N/A
Kelly 2017 81,300 Spot N/A N/A
Matisse 2014 81,128 Spot N/A N/A
Nasaka 2014 81,918 Spot N/A N/A
Valadon 2014 81,198 Spot N/A N/A
Tanker fleet
Very Large Crude Carrier:
Shiraga 2011 320,105 Spot N/A N/A
 
Suezmax:
Samsara 2017 159,855 $18,000 Base rate plus profit share Mar.-22 May-25
Aframax:
Balla 2017 113,293 Spot N/A N/A
Stamos 2012 115,666 Spot N/A N/A
Gas Carrier fleet
Very Large Gas Carriers:
Anderida 2017 51,850 $30,000 Jun.-22 Jun.-25
Aisling 2017 51,850 $30,000 Sep.-22 Sep.-25
Mont Fort 2017 51,850 $28,833 Nov.-27 Nov.-27
Mont Gelé 2018 51,850 $28,833 Jan.-28 Jan.-28
Offshore Supply fleet
 
Platform Supply Vessels:
Crescendo 2012 1,457 Laid up N/A N/A
Colorado 2012 1,430 Laid up N/A N/A
Oil Spill Recovery Vessels:
Indigo 2013 1,401 Laid up N/A N/A
Jacaranda 2012 1,360 Laid up N/A N/A
Emblem 2012 1,363 Laid up N/A N/A
Jubilee 2012 1,317 Laid up N/A N/A

Drybulk, Tanker and Gas Carrier Segments Summary Operating Data (unaudited)
(Dollars in thousands, except average daily results)

Drybulk Three Months Ended December 31, Year Ended December 31,
2016 2017 2016 2017
Average number of vessels(1) 15.2 22.0 19.4 18.1
Total voyage days for vessels(2) 1,221 1,952 6,404 6,534
Total calendar days for vessels(3) 1,394 2,022 7,116 6,604
Fleet utilization(4) 87.6% 96.5% 90.0% 98.9%
Time charter equivalent(5) $5,444 $11,410 $3,658 $8,544
Vessel operating expenses (daily)(6) $4,772 $6,385 $4,826 $6,061
Tanker Three Months Ended   December 31, Year Ended December 31,
2016 2017 2016 2017
Average number of vessels(1) 4.0 2.5
Total voyage days for vessels(2) 368 911
Total calendar days for vessels(3) 368 911
Fleet utilization(4) 100% 100%
Time charter equivalent(5) $17,003 $13,216
Vessel operating expenses (daily)(6) $7,745 $9,693
Gas Carrier Three Months Ended  December 31, Year Ended December 31,
2016 2017 2016 2017
Average number of vessels(1) 2.6 1.0
Total voyage days for vessels(2) 241 355
Total calendar days for vessels(3) 241 355
Fleet utilization(4) 100% 100%
Time charter equivalent(5) $28,058 $27,994
Vessel operating expenses (daily)(6) $13,220 $16,183

(1) Average number of vessels is the number of vessels that constituted the Company’s fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of the Company’s 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 the Company’s possession for the relevant period net of dry-docking and laid-up days.

(3) Calendar days are the total number of days the vessels were in the Company’s possession for the relevant period including dry-docking days and laid-up days.

(4) Fleet utilization is the percentage of time that the Company’s 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. The Company’s 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 and are paid by the charterer under a time charter contract, as well as commissions. TCE revenues, a non-U.S. GAAP measure, provides additional meaningful information in conjunction with revenues from the Company’s vessels, the most directly comparable U.S. GAAP measure, because it assists the Company’s management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance. TCE is also 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. Please see below for a reconciliation of TCE rates to voyage revenues.

(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 net of laid-up days for the relevant time period.

Drybulk, Tanker and Gas Carrier Segments Summary Operating Data (unaudited) – continued
(In thousands of U.S. dollars, except for TCE rate, which is expressed in Dollars, and voyage days)

Drybulk Three Months Ended December 31, Year Ended December 31,
2016 2017 2016 2017
Voyage revenues $ 8,745 $ 25,808 $ 30,777 $ 65,724
Voyage expenses (2,098 ) (3,536 ) (7,349 ) (9,900 )
Time charter equivalent revenues $ 6,647 $ 22,272 $ 23,428 $ 55,824
Total voyage days for fleet 1,221 1,952 6,404 6,534
Time charter equivalent (TCE) $ 5,444 $ 11,410 $ 3,658 $ 8,544
Tanker Three Months Ended December 31, Year Ended December 31,
2016 2017 2016 2017
Voyage revenues $ $ 9,786 $ $ 20,858
Voyage expenses (3,529 ) (8,818 )
Time charter equivalent revenues $ $ 6,257 $ $ 12,040
Total voyage days for fleet 368 911
Time charter equivalent (TCE) $ $ 17,003 $ $ 13,216
Gas Carrier Three Months Ended December 31, Year Ended December 31,
2016 2017 2016 2017
Voyage revenues $ $ 7,000 $ $ 10,316
Voyage expenses (238 ) (378 )
Time charter equivalent revenues $ $ 6,762 $ $ 9,938
Total voyage days for fleet 241 355
Time charter equivalent (TCE) $ $ 28,058 $ $ 27,994

DryShips Inc.

Financial Statements
Unaudited Condensed Consolidated Statements of Operations

(Expressed in Thousands of U.S. Dollars
except for share and per share data)
  Three Months Ended December 31, Year Ended December 31,
  2016 2017 2016 2017
REVENUES:
Voyage revenues $ 12,844 $ 42,593 $ 51,934 $ 100,716
12,844 42,593 51,934 100,716
EXPENSES:
Voyage expenses 2,461 7,308 9,209 19,704
Vessel operating expenses 9,009 18,973 45,563 59,348
Depreciation 871 6,334 3,466 14,966
Vessels impairment, (gain)/loss on sales and other 64,507 (4,425 ) 106,343 (4,125 )
Goodwill impairment charge 7,002 7,002
General and administrative expenses 14,333 7,334 39,708 30,972
Other, net 1,014 219 (258 ) 900
Operating income/(loss) (86,353 ) 6,850 (159,099 ) (21,049 )
OTHER INCOME / (EXPENSES):
Interest and finance costs, net of interest income (1,713 ) (5,029 ) (8,776 ) (13,342 )
Gain on debt restructuring 10,465 10,477
Loss on private placement (7,600 )
Other, net 85 (32 ) 166 (553 )
Total other expenses, net 8,837 (5,061 ) 1,867 (21,495 )
Net income/(loss) (77,516 ) 1,789 (157,232 ) (42,544 )
Earnings/(losses) on affiliate 9,666 (41,454 ) 9,666
Net income/(loss) attributable to DryShips Inc. $ (77,516 ) $ 11,455 $ (198,686 ) $ (32,878 )
Net income/(loss) attributable to DryShips Inc. common stockholders (84,607 ) 11,455 (206,381 ) (30,073 )
Earnings/(Losses) per common share, basic and diluted $ (53,078.42 ) $ 0.11 $ (455,587.20 ) $ (0.85 )
Weighted average number of shares, basic and diluted (1) 1,594 103,088,937 453 35,225,784

(1) Share and per share data for 2016 give effect to a cumulative 1-for-980 reverse stock split between April 11, 2017 and July 21, 2017.

DryShips Inc.

Unaudited Condensed Consolidated Balance Sheets

(Expressed in Thousands of U.S. Dollars) December 31, 2016 December 31, 2017
 
ASSETS  
Cash, cash equivalents, including restricted cash (current and non-current) $ 76,774 $ 30,226
Other current and non-current assets 21,406 133,379
Advances for vessels under construction 31,898
Vessels, net 95,550 749,088
Total assets 193,730 944,591
LIABILITIES AND STOCKHOLDERS’ EQUITY  
   
Total debt 133,428 216,969
Total other liabilities 10,528 10,920
Total stockholders’ equity 49,774 716,702
Total liabilities and stockholders’ equity $ 193,730 $ 944,591
 

Adjusted EBITDA Reconciliation

Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, vessel and investment impairments and certain other non-cash items as described below and gains or losses on interest rate swaps. Adjusted 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 (“U.S. GAAP”), and the Company’s calculation of adjusted EBITDA may not be comparable to that reported by other companies. Adjusted EBITDA is included herein because it is a basis upon which the Company measures its operations. Adjusted EBITDA is also used by the Company’s lenders as a credit metric and 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/(loss) to Adjusted EBITDA:

(Dollars in thousands) Three Months Ended
December 31, 2016
Three Months Ended
December 31, 2017
Year Ended
December 31, 2016
Year Ended
December 31, 2017
 
Net income/(loss) attributable to DryShips Inc $ (77,516 ) $ 11,455 $ (198,686 ) $ (32,878 )
Add: Net interest expense 1,713 5,029 8,776 13,342
Add: Depreciation 871 6,334 3,466 14,966
Add: Dry-dockings and class survey costs 1,113 181 1,113
Add: Impairments losses/(gain) on sales and other 64,507 (4,425 ) 106,343 (4,125 )
Add: Goodwill impairment charge 7,002 7,002
Add: Loss on private placement 7,600
Add: Gain on debt restructuring (10,465 ) (10,477 )
Add: Income taxes 17 71 38 152
Add: Gain on interest rate swaps (403 )
Add: (Earnings)/losses of affiliate (9,666 ) 41,454 (9,666 )
Adjusted EBITDA $ (13,871 ) $ 9,911 $ (42,306 ) $ (9,496 )

 

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