DryShips reports Q1 results; $100m investment in water ballast, scrubbers

Economou

DryShips, a diversified owner and operator of ocean going cargo vessels, announced its unaudited financial and operating results for the quarter ended March 31, 2019.

First Quarter 2019 Financial Highlights

  • For the first quarter of 2019, the Company reported net income of $1.5 million, or 1.67 cents basic and diluted earnings per share.

    Included in the first quarter of 2019 results are:

    — Vessel dry-docking costs of $0.7 million, or 0.78 cents per share

    Excluding the above, the Company’s net results would have amounted to a net income of $2.2 million, or 2.45 cents per share.

  • The Company reported Adjusted EBITDA of $13.1 million for the first quarter of 2019.(1)

Other Developments

  • Common Stock Repurchase Program

As of May 15, 2019, the Company has not repurchased any additional shares of its common stock since its last update. Under the previously announced new stock repurchase program, the Company may repurchase up to $12.8 million of its outstanding common shares by October 29, 2019.

  • Future Proofing of the Company’s Fleet

During 2019, the Company has scheduled and started implementing an overall “future proofing plan” for its fleet by performing dry-dockings, installation of scrubbers and installation of ballast water systems. As a result, the Company expects during the period from 2019 to 2020 to incur approximately between 1,100-1,300 off-hire days for a total estimated cost of approximately $80.0 million-$100.0 million.

  • 2019 Annual General Meeting of Shareholders

On May 15, 2019, the Company’s Board of Directors resolved that the Company’s 2019 Annual General Meeting of Shareholders (the “Annual Meeting”) be held at the offices of DryShips Management Services Inc. located at 109 Kifisias Avenue & Sina Street, GR 151 24, Marousi, Athens, Greece on Monday, July 22, 2019 at 4:00 p.m., local time. The Company’s Board of Directors fixed the close of business on Monday, June 10, 2019, as the record date for the determination of the shareholders entitled to receive notice and to vote at the Annual Meeting or any adjournments or postponements thereof. Formal notice of the Annual Meeting and the Company’s proxy statement are expected to be sent to shareholders on or before Monday, July 1, 2019.

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

Fleet List

The table below describes the Company’s fleet as of May 15, 2019:

Year Gross rate Redelivery
Built DWT Per day Earliest Latest
Drybulk fleet
Newcastlemax:
Bacon 2013 205,170 T/C Index Linked Sep-19 Oct-19
Conquistador* 2016 209,090 T/C Index Linked N/A N/A
Huahine 2013 206,037 T/C Index Linked Sep-19 Oct-19
Judd 2015 205,796 T/C Index Linked Sep-19 Oct-19
Marini* 2014 205,854 T/C Index Linked Oct-19 Dec-19
Morandi 2013 205,854 T/C Index Linked Aug-19 Sep-19
Pink Sands* 2016 208,931 T/C Index Linked N/A N/A
Xanadu* 2017 208,827 T/C Index Linked N/A N/A
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
 
Panamax:
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
Majorca 2005 74,477 Spot N/A N/A
Rapallo 2009 75,123 Spot N/A N/A
Raraka 2012 76,037 Spot N/A N/A
Tanker fleet
Very Large Crude Carrier:
Shiraga 2011 320,105 Spot N/A N/A
 
Suezmax:
Marfa 2017 159,513 Spot N/A N/A
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
Botafogo 2010 106,892 Spot N/A N/A
Stamos 2012 115,666 Spot N/A N/A
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

* The vessel is time chartered by TMS Dry Ltd., an entity that may be deemed to be beneficially owned by our Company’s Chairman and CEO.

** The vessel is time chartered by Cecilia Shipholdings Limited, an entity that may be deemed to be beneficially owned by our Company’s Chairman and CEO.

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

Drybulk Three Months Ended
March 31,
2018 2019
Average number of vessels(1) 21.0 19.0
Total voyage days for vessels(2) 1,890 1,709
Total calendar days for vessels(3) 1,890 1,710
Fleet utilization(4) 100.0% 99.9%
Time charter equivalent(5) $11,315 $9,994
Vessel operating expenses (daily)(6) $6,134 $5,595

Tanker Three Months Ended
March 31,
2018 2019
Average number of vessels(1) 4.0 6.0
Total voyage days for vessels(2) 360 540
Total calendar days for vessels(3) 360 540
Fleet utilization(4) 100.0% 100.0%
Time charter equivalent(5) $19,717 $28,694
Vessel operating expenses (daily)(6) $7,861 $6,874
Gas Carrier Three Months Ended
March 31,
2018 2019
Average number of vessels(1) 3.9
Total voyage days for vessels(2) 350
Total calendar days for vessels(3) 350
Fleet utilization(4) 100.0%
Time charter equivalent(5) $28,243
Vessel operating expenses (daily)(6) $9,737

(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 vessels are the total days the vessels were in the Company’s possession for the relevant period net of off-hire days associated with drydockings or special or intermediate surveys and laid-up days.

(3) Total calendar days are the total number of days the vessels were in the Company’s possession for the relevant period including off-hire days associated with drydockings or special or intermediate surveys 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 including dry-docking costs, 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 U.S. Dollars, and voyage days)

Drybulk Three Months Ended March 31,
2018 2019
Voyage revenues $ 23,276 $ 19,211
Voyage expenses (1,891) (2,131)
Time charter equivalent revenues $ 21,385 $ 17,080
Total voyage days for fleet 1,890 1,709
Time charter equivalent (TCE) $ 11,315 $ 9,994
Tanker Three Months Ended March 31,
2018 2019
Voyage revenues $ 11,157 $ 23,869
Voyage expenses (4,059) (8,374)
Time charter equivalent revenues $ 7,098 $ 15,495
Total voyage days for fleet 360 540
Time charter equivalent (TCE) $ 19,717 $ 28,694
Gas Carrier Three Months Ended March 31,
2018 2019
Voyage revenues $ 10,293 $
Voyage expenses (408)
Time charter equivalent revenues $ 9,885 $
Total voyage days for fleet 350
Time charter equivalent (TCE) $ 28,243 $
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 March 31,
  2018 2019
REVENUES:
Voyage revenues $ 44,726 $ 43,080
44,726 43,080
 
EXPENSES:
Voyage expenses 6,358 10,505
Vessel operating expenses 18,100 13,403
Depreciation 6,818 7,337
General and administrative expenses 7,169 6,820
Other, net (18 ) 125
Operating income 6,299 4,890
OTHER EXPENSES:
Interest and finance costs, net of interest income (4,890 ) (3,668 )
Other, net (183 ) 229
Total other expenses, net (5,073 ) (3,439 )
Net income 1,226 1,451
 
Net income attributable to DryShips Inc. common stockholders 1,226 1,451
Earnings per common share, basic and diluted $ 0.01 $ 0.02
Weighted average number of shares, basic and diluted 103,682,222 86,899,873
DryShips Inc.
Unaudited Condensed Consolidated Balance Sheets
 (Expressed in Thousands of U.S. Dollars
except for share data)
December 31, 2018 March 31, 2019
 
ASSETS  
 Cash, cash equivalents, including restricted cash (current and non-current) $ 156,881 $ 151,139
 Other current and non-current assets 99,092 102,205
 Vessels, net 755,332 747,995
 Total assets
1,011,305 1,001,339
 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
 Total debt and finance lease liabilities 362,047 354,789
 Total other liabilities 11,529 9,558
 Total stockholders’ equity 637,729 636,992
 Total liabilities and stockholders’ equity
$ 1,011,305 $ 1,001,339
SHARE COUNT DATA
 Common stock issued 104,274,708 104,274,708
 Less: Treasury stock (17,042,680) (17,388,081)
 Common stock issued and outstanding 87,232,028 86,886,627

Adjusted EBITDA Reconciliation

Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, vessel sales and impairments and certain other non-cash items as described below. 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, 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 to Adjusted EBITDA:

(Expressed in Thousands of U.S. Dollars) Three Months Ended
March 31,
  2018 2019
 
Net income $ 1,226 $ 1,451
Add: Net interest expense 4,890 3,668
Add: Depreciation 6,818 7,337
Add: Dry-dockings 389 675
Add: Income taxes 1
Adjusted EBITDA $ 13,323 $ 13,132

 

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