DryShips reports smaller loss and revenue

DryShips-economou

DryShips, an international owner of drybulk carriers and offshore support vessels, today announced its unaudited financial and operating results for the quarter ended September 30, 2016.

Third Quarter 2016 Financial Highlights

  • For the third quarter of 2016, the Company reported a net loss of $5.2 million, or $7.70 basic and diluted loss per share. (1)
  • The Company reported a negative Adjusted EBITDA of $7.9 million for the third quarter of 2016. (2)

Recent Highlights

  • On November 7, 2016, our previously sold to unaffiliated buyer Panamax vessel Ocean Crystal was delivered to its new owners. All of the gross proceeds from the sale were used to pay down the associated loan facility.
  • On August 10, 2016, the previously announced option for the registered direct offering of 5,000 Series C Convertible Preferred Warrants to purchase 5,000 Series C Convertible Preferred Shares was exercised. The total net proceeds from the offering, after deducting offering fees and expenses, were approximately $5.0 million. As of November 9, 2016, 2,813 of the Company’s 5,000 Series C Convertible Preferred stock, were converted to 433,552 common shares (6,503,278 before 1-for-15 reverse stock split), including the respective dividends.

Bank Update / Liquidity

The Company is presently engaged in discussions with its lenders for the restructuring of its bank facilities. Three of these bank facilities have matured and the Company has not made the final balloon installment. For the remaining bank facilities, the Company has elected to suspend principal and interest payments to preserve cash liquidity.

(1) Shares and per share data give effect to the 1-for-15 reverse stock split, approved on October 26, 2016, which became effective on November 1, 2016.
(2) Adjusted EBITDA is a non-GAAP measure; please see later in this press release for reconciliation to net loss.

Fleet List

The table below describes our fleet profile as of November 9, 2016:

Year Gross rate Redelivery
Built DWT Type Per day Earliest Latest
Drybulk fleet
Panamax:
Raraka 2012 76,037 Panamax Spot N/A N/A
Rapallo 2009 75,123 Panamax Spot N/A N/A
Catalina 2005 74,432 Panamax Spot N/A N/A
Majorca 2005 74,477 Panamax Spot N/A N/A
Ligari 2004 75,583 Panamax Spot N/A N/A
Sorrento(1) 2004 76,633 Panamax Spot N/A N/A
Mendocino 2002 76,623 Panamax T/C Index linked Nov-16 Dec-16
Bargara 2002 74,832 Panamax T/C Index linked Nov-16 Nov-16
Ecola 2001 73,931 Panamax Spot N/A N/A
Sonoma (1) 2001 74,786 Panamax Laid up N/A N/A
Capitola 2001 74,816 Panamax Spot N/A N/A
Levanto 2001 73,925 Panamax Spot N/A N/A
Maganari 2001 75,941 Panamax Spot N/A N/A
Marbella 2000 72,561 Panamax Spot N/A N/A
Redondo 2000 74,716 Panamax Laid up N/A N/A
Offshore Supply fleet
Platform Supply Vessels:
Crescendo 2012 1,457 PSV Laid up N/A N/A
Vega Corona 2012 1,430 PSV T/C Dec.-16 Dec.-20
Oil Spill Recovery Vessels:
Indigo 2013 1,393 OSRV Laid up N/A N/A
Vega Jaanca 2012 1,393 OSRV T/C Jul.-17 Jul.-21
Vega Emtoli 2012 1,363 OSRV T/C May.-17 May.-21
Jubilee 2012 1,317 OSRV Laid up N/A N/A
(1) Sold, expect to be delivered to new owners November 2016.
Drybulk Carrier Segment Summary Operating Data(unaudited)
(Dollars in thousands, except average daily results)
Drybulk Three Months Ended September 30, Nine Months Ended September 30,
2015 2016 2015 2016
Average number of vessels(1) 38.8 19.7 38.9 20.9
Total voyage days for vessels(2) 3,357 1,353 10,221 5,183
Total calendar days for vessels(3) 3,567 1,809 10,626 5,722
Fleet utilization(4) 94.1 % 74.8 % 96.2 % 90.6 %
Time charter equivalent(5) $ 8,938 $ 3,442 $ 10,104 $ 3,238
Vessel operating expenses (daily)(6) $ 7,368 $ 4,926 $ 6,758 $ 4,839
(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 dry-docking and laid-up days.
(3) Calendar days are the total number of days the vessels were in our possession for the relevant period including dry-docking days and laid-up 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 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 our vessels, the most directly comparable U.S. GAAP measure, because it assists our 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.
(7) Does not include accrual for the provision of the purchase options and write off in overdue receivables under certain time charter agreements.
(In thousands of U.S. dollars, except for TCE rate, which is expressed in Dollars, and voyage days)
Drybulk Three Months Ended September 30, Nine Months Ended September 30,
2015 2016 2015 2016
Voyage revenues(7) $ 35,329 $ 6,809 $ 123,168 $ 22,032
Voyage expenses (5,323 ) (2,152 ) (19,890 ) (5,251 )
Time charter equivalent revenues $ 30,006 $ 4,657 $ 103,278 $ 16,781
Total voyage days for fleet 3,357 1,353 10,221 5,183
Time charter equivalent TCE $ 8,938 $ 3,442 $ 10,104 $ 3,238
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 September 30, Nine Months Ended September 30,
2015 2016 2015 2016
REVENUES:
Voyage revenues $ 50,766 $ 12,086 $ 220,254 $ 42,284
Revenues from drilling contracts 725,805
50,766 12,086 946,059 42,284
EXPENSES:
Voyage expenses 12,296 2,366 60,901 6,364
Vessel operating expenses 33,430 9,041 91,180 36,554
Drilling units operating expenses 259,623
Depreciation and amortization 17,444 872 226,980 2,595
Vessels impairment, (gain)/loss on sales and other 797,494 (4,109 ) 966,303 41,836
General and administrative expenses 15,291 7,352 90,098 25,375
Other, net 279 (2,803 ) (482 )
Operating loss (825,189 ) (3,715 ) (746,223 ) (69,958 )
OTHER INCOME / (EXPENSES):
Interest and finance costs, net of interest income (22,237 ) (1,705 ) (168,585 ) (7,051 )
(Gain)/loss on interest rate swaps (871 ) 1,112 (12,319 ) 403
Other, net (223 ) (937 ) (6,658 ) (3,089 )
Income taxes (2 ) (36,931 ) (21 )
Total other expenses, net (23,331 ) (1,532 ) (224,493 ) (9,758 )
Net loss (848,520 ) (5,247 ) (970,716 ) (79,716 )
Loss due to deconsolidation of Ocean Rig (1,347,106 )
Equity in earnings/(losses) of Ocean Rig 28,558 37,409 (41,454 )
Net income attributable to Non controlling interests (39,029 )
Net loss attributable to DryShips Inc. $ (819,962 ) $ (5,247 ) $ (2,319,442 ) $ (121,170 )
Net loss attributable to DryShips Inc. common stockholders (820,266 ) (5,795 ) (2,320,012 ) (121,774 )
Loss per common share, basic and diluted (1)(2)(3) $ (1,850.27 ) $ (7.70 ) $ (5,234.03 ) $ (221.89 )
Weighted average number of shares, basic and diluted (1)(2)(3) 443,322 752,226 443,255 548,807
(1) Shares and per share data for Q3 2015 give effect to the 1-for-25 reverse stock split, approved on February 19, 2016.
(2) Shares and per share data for Q3 2015 give effect to the 1-for-4 reverse stock split, approved on July 29, 2016.
(3) Shares and per share data give effect to the 1-for -15 reverse stock split, approved on October 26, 2016, which became effective on November 1, 2016.
DryShips Inc.
Unaudited Condensed Consolidated Balance Sheets
(Expressed in Thousands of U.S. Dollars) December 31, 2015 September 30, 2016
ASSETS
Cash, cash equivalents, including restricted cash (current and non-current) $ 15,026 $ 5,614
Assets held for sale 216,026 93,743
Other current assets 38,015 27,180
Vessels, net 96,428 93,833
Investment in affiliate 91,410
Other non-current assets 19,147 9,357
Total assets 476,052 229,727
LIABILITIES AND STOCKHOLDERS’ EQUITY
Total debt 236,942 210,610
Liabilities held for sale 104,366
Total other liabilities 13,332 6,109
Total stockholders’ equity 121,412 13,008
Total liabilities and stockholders’ equity $ 476,052 $ 229,727

Adjusted EBITDA Reconciliation

Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, goodwill, vessel and investment impairments and certain other non-cash items as described below, dry-dockings, class survey costs 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, or U.S. GAAP, and our 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 our lenders as a measure of our compliance with certain covenants contained in our loan agreements 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 loss to Adjusted EBITDA:

(Dollars in thousands) Three Months Ended September 30, 2015 Three Months Ended September 30, 2016 Nine Months Ended September 30, 2015 Nine Months Ended September 30, 2016
Net loss attributable to Dryships Inc $ (819,962 ) $ (5,247 ) $ (2,319,442 ) $ (121,170 )
Add: Net interest expense 22,237 1,705 168,585 7,051
Add: Depreciation and amortization 17,444 872 226,980 2,595
Add: Dry-dockings and class survey costs 12,044 14 20,293 181
Add: Impairments losses on sales and other 797,494 (4,109 ) 989,533 41,836
Add: Loss due to deconsolidation of Ocean Rig 1,347,106
Add: Income taxes 2 36,931 21
Add: (Gain)/Loss on interest rate swaps 871 (1,112 ) 12,319 (403 )
Add: Equity in (earnings)/losses of affiliate (28,558 ) (37,409 ) 41,454
Add: Net income attributable to Non controlling interests 39,029
Adjusted EBITDA $ 1,570 $ (7,875 ) $ 483,925 $ (28,435 )

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