DryShips returns to red

dryships

DryShips, a diversified owner and operator of ocean going cargo vessels, and through the acquisition of Heidmar, a global tanker pool operator, today announced its unaudited financial and operating results for the quarter ended June 30, 2019.

Second Quarter 2019 Financial Highlights

  • For the second quarter of 2019, the Company reported net loss of $12.7 million, or $0.15 basic and diluted losses per share.
  • Included in the second quarter of 2019 results are the following:
    • Vessel dry-docking costs of $5.7 million, or $0.07 per share
    • Vessel impairments of $1.5 million, or $0.02 per share

Excluding the above, the Company’s net results would have amounted to a net loss of $5.5 million, or $0.06 per share.

  • The Company reported Adjusted EBITDA of $6.4 million for the second quarter of 2019. ([1])

Other Developments

  • Future Proofing of the Company’s fleet – Update

Further to the Company’s plan to future proof its fleet, as of September 17, 2019, we have completed the dry-docking, installation of ballast water treatment systems (“BWTS”) and scrubbers on 7 vessels, incurring approximately $26.1 million of total costs and 300 off-hire days. For the balance of 2019 and the full year 2020, we expect to continue to execute our plan to upgrade additional vessels and we expect to incur approximately 843 off-hire days for a total estimated cost of $65.8 million.

In connection with the installation of scrubbers on our vessels we have entered into agreements, directly or indirectly, with internationally recognized financial institutions and/or export credit agencies to borrow up to $36.4 million to partly finance such installations. The loans have not yet been drawn and they are guaranteed by entities that may be deemed to be affiliated with our Chairman and CEO, Mr. George Economou.

  • Pending Merger with SPII

As previously announced, on August 18, 2019 the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, SPII Holdings Inc. (“SPII”), a company that may be deemed to be beneficially owned by the Company’s Chairman and Chief Executive Officer, Mr. George Economou, and Sileo Acquisitions Inc., (“Merger Sub”) a wholly owned subsidiary of SPII. Pursuant to the Merger Agreement Merger Sub will be merged with and into the Company, with the Company continuing as the surviving corporation after the merger and a wholly owned subsidiary of SPII (the “Merger”). Pursuant to the Merger Agreement, at the effective time of the Merger, each share  of the Company Common Stock that is issued and outstanding immediately prior to the effective time (other than shares of Company Common Stock held by SPII or any subsidiary of either SPII or the Company) will be automatically converted into the right to receive the merger consideration of  $5.25 per share in cash, without interest and less any required withholding taxes. The Company has called a special meeting of its shareholders (the “Special Meeting”) to be held on October 9, 2019, at 4 p.m., local time, at 80 Kifissias Avenue, GR 151 25, Marousi, Athens, Greece. At the Special Meeting, shareholders will be asked to consider and vote on a proposal to authorize and approve the Merger Agreement. Only shareholders of record as of the close of business on August 30, 2019, which has been fixed as the record date for the Special Meeting, will be entitled to vote at the Special Meeting. The merger is also subject to the satisfaction or waiver of other customary closing conditions but not to any financing condition. The merger is expected to close in the fourth quarter of 2019. Refer to the Transaction Statement on Schedule 13E-3 and the proxy statement, dated September 9, 2019, attached thereto, as filed by the Company with the U.S. Securities and Exchange Commission on September 9, 2019 for additional information on the Merger.

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

Fleet List

The table below describes the Company’s fleet as of September 17, 2019:

Year Gross rate Redelivery
Built DWT Per day Earliest Latest
Drybulk fleet
Newcastlemax:
Bacon* 2013 205,170 Spot N/A N/A
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 Sep-19 Sep-19
Netadola* 2017 208,998 T/C Index Linked N/A N/A
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 June 30, Six Months Ended June 30,
2018 2019 2018 2019
Average number of vessels(1) 20.9 19.4 21.0 19.2
Total voyage days for vessels(2) 1,850 1,524 3,740 3,233
Total calendar days for vessels(3) 1,903 1,765 3,793 3,475
Fleet utilization(4) 97.2% 86.3% 98.6% 93.0%
Time charter equivalent(5) $11,246 $9,535 $11,281 $9,778
Vessel operating expenses (daily)(6) $7,543 $8,786 $6,841 $7,216
Tanker  Three Months Ended June 30, Six Months Ended June 30,
2018 2019 2018 2019
Average number of vessels(1) 4.3 6.0 4.1 6.0
Total voyage days for vessels(2) 387 546 747 1,086
Total calendar days for vessels(3) 387 546 747 1,086
Fleet utilization(4) 100.0% 100.0% 100.0% 100.0%
Time charter equivalent(5) $15,116 $23,767 $17,333 $26,217
Vessel operating expenses (daily)(6) $7,674 $7,480 $7,764 $7,179

(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 June 30, Six Months Ended June 30,
2018 2019 2018 2019
Voyage revenues $ 22,053 $ 17,034 $ 45,329 $ 36,245
Voyage expenses (1,248) (2,503) (3,139) (4,634)
Time charter equivalent revenues $ 20,805 $ 14,531 $ 42,190 $ 31,611
Total voyage days for fleet 1,850 1,524 3,740 3,233
Time charter equivalent (TCE) $ 11,246 $ 9,535 $ 11,281 $ 9,778
Tanker Three Months Ended June 30, Six Months Ended June 30,
2018 2019 2018 2019
Voyage revenues $ 9,990 $ 20,912 $ 21,147 $ 44,781
Voyage expenses (4,140) (7,935) (8,199) (16,309)
Time charter equivalent revenues $ 5,850 $ 12,977 $ 12,948 $ 28,472
Total voyage days for fleet 387 546 747 1,086
Time charter equivalent (TCE) $ 15,116 $ 23,767 $ 17,333 $ 26,217

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 June 30, Six Months Ended June 30,
  2018 2019 2018 2019
REVENUES:
Voyage, time charter revenues and services revenue $ 42,633 $ 40,495 $ 87,359 $ 83,575
42,633 40,495 87,359 83,575
 
EXPENSES:
Voyage expenses 5,811 10,438 12,169 20,943
Vessel operating expenses 20,560 21,083 38,660 34,486
Depreciation and amortization 7,156 7,783 13,974 15,120
Impairment loss,(gain)/loss from sale of vessel (5,109) 1,454 (5,109) 1,454
General and administrative expenses 7,612 8,365 14,781 15,185
Other, net (347) (55) (365) 70
Operating income/(loss) 6,950 (8,573) 13,249 (3,683)
OTHER INCOME / (EXPENSES):
Interest and finance costs, net of interest income (3,915) (4,062) (8,805) (7,730)
Other, net 214 (90) 31 139
Total other expenses, net (3,701) (4,152) (8,774) (7,591)
Net income/(loss) 3,249 (12,725) 4,475 (11,274)
Net income/(loss) attributable to DryShips Inc. common stockholders 3,249 (12,725) 4,475 (11,274)
Earnings/(Losses) per common share, basic and diluted $ 0.03 $ (0.15) $ 0.04 $ (0.13)
Weighted average number of shares, basic and diluted 100,581,638 86,886,627 102,123,365 86,893,214

 

DryShips Inc.

Unaudited Condensed Consolidated Balance Sheets

(Expressed in Thousands of U.S. Dollars) December 31, 2018  June 30, 2019
 
ASSETS  
Cash, cash equivalents, including restricted cash (current and non-current) $ 156,881 $ 122,257
Other current and non-current assets 99,092 151,006
Fixed assets, net 755,332 793,404
Total assets 1,011,305 1,066,667
 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Total debt and finance lease liabilities 362,047 371,831
Total other current and non-current liabilities 11,529 70,414
Total stockholders’ equity 637,729 624,422
Total liabilities and stockholders’ equity $ 1,011,305 $ 1,066,667
 
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, vessels 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 / (loss) to Adjusted EBITDA:

(U.S. Dollars in thousands) Three
Months
Ended June
30, 2018
Three
Months
Ended June
30, 2019
Six
Months
Ended
June 30,
2018
Six
Months
Ended
June 30,
2019
 
Net income/(loss) attributable to Dryships Inc $ 3,249 $ (12,725) $ 4,475 $ (11,274)
Add: Net interest expense 3,915 4,062 8,805 7,730
Add: Depreciation and amortization 7,156 7,783 13,974 15,120
Add: Dry-dockings and class survey costs 3,310 5,737 3,699 6,412
Add: Impairment loss, (gain)/loss from sale of vessel (5,109) 1,454 (5,109) 1,454
Add: Write-off of capitalized expenses 470 470
Add: Income taxes 2 73 2 74
Adjusted EBITDA $ 12,993 $ 6,384 $ 26,316 $ 19,516

 

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