SOURCE: DryShips Inc.

DryShips Inc.

May 22, 2013 16:05 ET

DryShips Inc. Reports Financial and Operating Results for the First Quarter 2013

ATHENS, GREECE--(Marketwired - May 22, 2013) - DryShips Inc. (NASDAQ: DRYS), or DryShips or the Company, an international provider of marine transportation services for drybulk and petroleum cargoes, and through its majority owned subsidiary, Ocean Rig UDW Inc., or Ocean Rig, of offshore deepwater drilling services, today announced its unaudited financial and operating results for the first quarter ended March 31, 2013.

First Quarter 2013 Financial Highlights

  • For the first quarter of 2013, the Company reported a net loss of $116.6 million, or $0.30 basic and diluted loss per share.

    Included in the first quarter 2013 results are:

    -- Losses on the sale of four newbuilding drybulk vessels, of $75.3 million, or $0.20 per share.

    Excluding the above items, the Company's net results would have amounted to a net loss of $41.3 million, or $0.10 per share.1 

  • The Company reported Adjusted EBITDA of $112.0 million for the first quarter of 2013, as compared to $104.1 million for the first quarter of 2012.2

Recent Events

-- In March 2013 and April 2013, the Company sold its newbuilding Capesize bulk carriers Hull 1241 and 1242, to an unaffiliated third party and its newbuilding Very Large Ore Carriers Hulls 1239 and 1240, to an entity related to Mr. George Economou. These four vessels had remaining yard installments of approximately $178 million against which the Company had no committed debt. Under the terms of the sale agreements, the Company will make payments of only $29 million, thus eliminating approximately $149 million in capital expenditures.

-- On February 28, 2013, Ocean Rig signed definitive documentation for a $1.35 billion syndicated secured term loan facility to partially finance the construction costs of the newbuilding drillships Ocean Rig Mylos, Ocean Rig Skyros and Ocean Rig Athena, scheduled for delivery in August 2013, October 2013 and November 2013, respectively. The facility has a five-year term and a repayment profile of approximately 11 years and bears interest at LIBOR plus a margin.

-- On February 14, 2013, the Company completed a public offering of an aggregate of 7,500,000 common shares of Ocean Rig owned by DryShips. The Company received approximately $123.1 million of net proceeds from the public offering.

(1) The net result is adjusted for the minority interests of 41% of Ocean Rig not owned by Dryships Inc. common shareholders as of March 31, 2013.

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

George Economou, Chairman and Chief Executive Officer of the Company, commented:

"During the first quarter of 2013, we entered into agreements to sell four of our bulk carriers under construction in China. We did not have any bank financing in place for these vessels. Under the terms of the sale agreements, we will make payments of only $29 million, effectively eliminating $149 million in capital expenditures. We have now reduced our newbuilding program to six bulk carriers, two of which are scheduled for delivery in 2013, for which we have time charters and bank financing in place, and four of which are scheduled for delivery in 2014, for which we are considering our options.

Now that our unfunded capital expenditures have been reduced significantly, we are in discussions with our lenders to lower our debt service requirement. These developments are expected to reduce our cash outflow and lower our cash breakeven levels.

Even though there has been a recent spike in some drybulk charter rates, we continue to be defensive about the short-term prospects of the shipping markets. Asset prices seem to be holding up but we do not expect any positive sustainable development in charter rates this year.

We are a pure shipping company with spot market exposure and a shareholding in Ocean Rig. Ocean Rig's capital and resources are completely separated from those of DryShips. We continue to be bullish about the prospects for Ocean Rig, whose contract backlog currently stands at approximately $4.9 billion over three years."

Financial Review: 2013 First Quarter

The Company recorded a net loss of $116.6 million, or $0.30 basic and diluted loss per share, for the three-month period ended March 31, 2013, as compared to a net loss of $47.5 million, or $0.12 basic and diluted earnings per share, for the three-month period ended March 31, 2012. Adjusted EBITDA was $112.0 million for the first quarter of 2013, as compared to $104.1 million for the same period in 2012.3

For the drybulk carrier segment, net voyage revenues (voyage revenues minus voyage expenses) amounted to $36.9 million for the three-month period ended March 31, 2013, as compared to $72.4 million for the three-month period ended March 31, 2012. For the tanker segment, net voyage revenues amounted to $10.8 million for the three-month period ended March 31, 2013, as compared to $7.2 million for the same period in 2012. For the offshore drilling segment, revenues from drilling contracts increased by $83.4 million to $246.4 million for the three-month period ended March 31, 2013, as compared to $163.0 million for the same period in 2012.

Total vessels', drilling rigs' and drillships' operating expenses and total depreciation and amortization increased to $144.9 million and $82.7 million, respectively, for the three-month period ended March 31, 2013, from $106.9 million and $82.0 million, respectively, for the three-month period ended March 31, 2012. Total general and administrative expenses increased to $36.2 million in the first quarter of 2013, from $34.0 million during the comparative period in 2012.

Interest and finance costs, net of interest income, amounted to $56.9 million for the three-month period ended March 31, 2013, compared to $50.8 million for the three-month period ended March 31, 2012.

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

Fleet List
The table below describes our fleet profile as of May 17, 2013:

    Year           Gross rate   Redelivery   
    Built   DWT   Type   Per day   Earliest   Latest
Drybulk fleet                        
                         
Capesize:                        
Fakarava   2012   206,000   Capesize   $25,000   Sept-15   Sept-20
Mystic   2008   170,040   Capesize   $52,310   Aug-18   Dec-18
Robusto   2006   173,949   Capesize   $26,000   Aug-14   Apr-18
Cohiba   2006   174,234   Capesize   $26,250   Oct-14   Jun-19
Montecristo   2005   180,263   Capesize   $23,500   May-14   Feb-19
Flecha   2004   170,012   Capesize   $55,000   Jul-18   Nov-18
Manasota   2004   171,061   Capesize   $30,000   Jan-18   Aug-18
Partagas   2004   173,880   Capesize   $10,000   Jun-13   Aug-13
Alameda   2001   170,662   Capesize   $27,500   Nov-15   Jan-16
Capri   2001   172,579   Capesize   $10,000   Nov-13   Mar-14
                         
Panamax:                        
Raraka   2012   76,037   Panamax   $7,500   Jan-15   Mar-15
Woolloomooloo   2012   76,064   Panamax   $7,500   Dec-14   Feb-15
Amalfi   2009   75,206   Panamax   $39,750   Jul- 13   Sep- 13
Rapallo   2009   75,123   Panamax   Spot   N/A   N/A
Catalina   2005   74,432   Panamax   $40,000   Jun-13   Aug-13
Majorca   2005   74,477   Panamax   Spot   N/A   N/A
Ligari   2004   75,583   Panamax   $9,250   Sep-13   Nov-13
Saldanha   2004   75,707   Panamax   Spot   N/A   N/A
Sorrento   2004   76,633   Panamax   $24,500   Aug-21   Dec-21
Mendocino   2002   76,623   Panamax   Spot   N/A   N/A
Bargara   2002   74,832   Panamax   Spot   N/A   N/A
Oregon   2002   74,204   Panamax   $9,650   Sept-13   Nov-13
Ecola   2001   73,931   Panamax   Spot   N/A   N/A
Samatan   2001   74,823   Panamax   Spot   N/A   N/A
Sonoma   2001   74,786   Panamax   Spot   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
Coronado   2000   75,706   Panamax   Spot   N/A   N/A
Marbella   2000   72,561   Panamax   Spot   N/A   N/A
Redondo   2000   74,716   Panamax   $9,250   Sept-13   Nov-13
Topeka   2000   74,716   Panamax   $8,450   Sept-13   Nov-13
Ocean Crystal   1999   73,688   Panamax   Spot   N/A   N/A
Helena   1999   73,744   Panamax   Spot   N/A   N/A
                         
Supramax:                        
Byron   2003   51,118   Supramax   Spot   N/A   N/A
Galveston   2002   51,201   Supramax   Spot   N/A   N/A
                         
                         
                         
    Year Built   DWT   Type   Gross rate
Per day
  Redelivery
Earliest
  Latest
Newbuildings                        
Capesize:                        
Newbuilding VLOC #2   2013   206,000   Capesize   23,000   Apr-18   Nov-23
Newbuilding VLOC #3   2013   206,000   Capesize   21,500   Apr-20   Mar-28
Panamax:                        
Newbuilding Ice -class Panamax 1   2014   75,900   Panamax   Spot   N/A   N/A
Newbuilding Ice -class Panamax 2   2014   75,900   Panamax   Spot   N/A   N/A
Newbuilding Ice -class Panamax 3   2014   75,900   Panamax   Spot   N/A   N/A
Newbuilding Ice -class Panamax 4   2014   75,900   Panamax   Spot   N/A   N/A
Tanker fleet                        
Suezmax:                        
Bordeira   2013   158,300   Suezmax   Spot   N/A   N/A
Petalidi   2012   158,300   Suezmax   Spot   N/A   N/A
Lipari   2012   158,300   Suezmax   Spot   N/A   N/A
Vilamoura   2011   158,300   Suezmax   Spot   N/A   N/A
Aframax:                        
Alicante   2013   115,200   Aframax   Spot   N/A   N/A
Mareta   2013   115,200   Aframax   Spot   N/A   N/A
Calida   2012   115,200   Aframax   Spot   N/A   N/A
Saga   2011   115,200   Aframax   Spot   N/A   N/A
Daytona   2011   115,200   Aframax   Spot   N/A   N/A
Belmar   2011   115,200   Aframax   Spot   N/A   N/A
                         
                         

Drilling Rigs/Drillships:

Unit   Year built   Redelivery   Operating area   Backlog ($m)
                 
Leiv Eiriksson   2001   Q2 - 16   Norway   $572
Eirik Raude   2002   Q3 - 13   Ireland   $74
Eirik Raude   2002   Q3 - 14   Sierra Leone, Ivory Coast   $217
Ocean Rig Corcovado   2011   Q2 - 15   Brazil   $332
Ocean Rig Olympia   2011   Q3 - 15   Gabon, Angola   $473
Ocean Rig Poseidon   2011   Q2 - 16   Angola   $770
Ocean Rig Mykonos   2011   Q1 - 15   Brazil   $305
Newbuildings                
Ocean Rig Mylos  

2013
 

Q3 - 16
 

Brazil
 

$677
Ocean Rig Skyros   2013   N/A   N/A   N/A
Ocean Rig Athena   2013   Q1 - 17   Angola   $750
Ocean Rig Apollo   2015   Q1 - 18   Congo   $680(1)
Total               $4,850

(1) Letter of Award is subject to definitive documentation.

Drybulk Carrier and Tanker Segment Summary Operating Data (unaudited)

 (Dollars in thousands, except average daily results)

Drybulk   Three Months Ended
 March 31,
 
    2012     2013  
Average number of vessels(1)     36.1       36.0  
Total voyage days for vessels(2)     3,281       3,240  
Total calendar days for vessels(3)     3,285       3,240  
Fleet utilization(4)     99.9 %     100.0 %
Time charter equivalent(5)   $ 22,060     $ 11,396  
Vessel operating expenses (daily)(6)   $ 5,542     $ 5,051  
                 
                 


Tanker
  Three Months Ended
March 31,
 
    2012     2013  
Average number of vessels(1)     5.0       9.4  
Total voyage days for vessels(2)     453       848  
Total calendar days for vessels(3)     453       848  
Fleet utilization(4)     100.0 %     100.0 %
Time charter equivalent(5)   $ 15,916     $ 12,792  
Vessel operating expenses (daily)(6)   $ 7,372     $ 9,134  

(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 days.
(3) Calendar days are the total number of days the vessels were in our possession for the relevant period including dry-docking 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 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 for the relevant time period.

(In thousands of U.S. dollars, except for TCE rate, which is expressed in Dollars, and voyage days)

Drybulk  
Three Months Ended
March 31,
 
    2012     2013  
Voyage revenues   $ 77,021     $ 45,482  
Voyage expenses     (4,642 )     (8,558 )
Time charter equivalent revenues   $ 72,379     $ 36,924  
Total voyage days for fleet     3,281       3,240  
Time charter equivalent (TCE) rate   $ 22,060     $ 11,396  
                 
                 
Tanker   Three Months Ended
 March 31,
 
    2012     2013  
Voyage revenues   $ 7,476     $ 27,787  
Voyage expenses     (266 )     (16,939 )
Time charter equivalent revenues   $ 7,210     $ 10,848  
Total voyage days for fleet     453       848  
Time charter equivalent (TCE) rate   $ 15,916     $ 12,792  
                 
                 
                 
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, 
    2012     2013  
                 
REVENUES:                
Voyage revenues   $ 84,497     $ 73,269  
Revenues from drilling contracts     162,999       246,444  
      247,496       319,713  
                 
EXPENSES:                
Voyage expenses     4,908       25,497  
Vessel operating expenses     21,545       24,110  
Drilling rigs operating expenses     85,340       120,759  
Depreciation and amortization     81,955       82,660  
Vessel impairments and other, net     1,488       75,340  
General and administrative expenses     33,974       36,247  
Legal settlements and other     5,820       (15 )
                 
Operating income/(loss)     12,466       (44,885 )
                 
OTHER INCOME / (EXPENSES):                
Interest and finance costs, net of interest income     (50,778 )     (56,862 )
Gain/(loss) on interest rate swaps     (8,750 )     396  
Other, net     (2,248 )     678  
Income taxes     (10,032 )     (14,164 )
Total other expenses     (71,808 )     (69,952 )
                 
Net loss     (59,342 )     (114,837 )
                 
Net income/(loss) attributable to Non controlling interests     11,886       (1,798 )
                 
Net loss attributable to Dryships Inc.   $ (47,456 )   $ (116,635 )
                 
Loss per common share, basic and diluted   $ (0.12 )   $ (0.30 )
Weighted average number of shares, basic and diluted     380,152,244       382,657,244  
                 
                 
                 
Dryships Inc.
 
Unaudited Condensed Consolidated Balance Sheets
 
 (Expressed in Thousands of U.S. Dollars)     December 31, 2012    March 31, 2013 
             
ASSETS            
               
  Cash and restricted cash (current and non-current)   $ 720,458   $ 744,256
  Other current assets     338,446     372,894
  Advances for vessels and rigs under construction and acquisitions     1,201,807     1,094,037
  Vessels, net     2,059,570     2,231,432
  Drilling rigs, drillships, machinery and equipment, net     4,446,730     4,451,920
  Other non-current assets     111,480     146,772
  Total assets     8,878,491     9,041,311
             
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
             
             
  Total debt     4,386,715     4,424,227
  Total other liabilities     623,757     735,126
  Total stockholders' equity     3,868,019     3,881,958
  Total liabilities and stockholders' equity   $ 8,878,491   $ 9,041,311
             
 

Adjusted EBITDA Reconciliation
Adjusted EBITDA represents net income before interest, taxes, depreciation and amortization, vessel impairments, 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 and efficiency. 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 income to Adjusted EBITDA:

             
(Dollars in thousands)   Three
Months Ended March 31, 2012
    Three
Months Ended March 31, 2013
 
                 
Net loss   $ (47,456 )   $ (116,635 )
                 
Add: Net interest expense     50,778       56,862  
Add: Depreciation and amortization     81,955       82,660  
Add: Impairment losses and other     -       75,340  
Add: Income taxes     10,032       14,164  
Add: Gain/(loss) on interest rate swaps     8,750       (396 )
Adjusted EBITDA   $ 104,059     $ 111,995  
                 

Conference Call and Webcast: May 23, 2013

As announced, the Company's management team will host a conference call, on Thursday, May 23, 2013 at 9:00 a.m. Eastern Daylight 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) (0) 1452 542 301 (from outside the US). Please quote "DryShips."

A replay of the conference call will be available until May 30, 2013. 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. is an owner of drybulk carriers and tankers that operate worldwide. Through its majority owned subsidiary, Ocean Rig UDW Inc., DryShips owns and operates 10 offshore ultra deepwater drilling units, comprising of 2 ultra deepwater semisubmersible drilling rigs and 8 ultra deepwater drillships, 3 of which are scheduled to be delivered to Ocean Rig during 2013 and 1 of which is scheduled to be delivered during 2015. DryShips owns a fleet of 42 drybulk carriers (including newbuildings), comprising 10 Capesize, 28 Panamax, 2 Supramax and 2 newbuilding Very Large Ore Carriers (VLOC) with a combined deadweight tonnage of approximately 4.4 million tons, and 10 tankers, comprising 4 Suezmax and 6 Aframax, with a combined deadweight tonnage of over 1.3 million tons.

DryShips' common stock is listed on the NASDAQ Global Select 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 within the meaning of the Private Securities Litigation Reform Act of 1995. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with such safe harbor legislation.

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 we believe 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, we 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 and drilling dayrates and drybulk vessel, drilling rig and drillship values, failure of a seller to deliver one or more drilling rigs, drillships or drybulk vessels, failure of a buyer to accept delivery of a drilling rig, drillship, or vessel, inability to procure acquisition financing, default by one or more charterers of our ships, changes in demand for drybulk commodities or oil, changes in demand that may affect attitudes of time charterers and customer drilling programs, scheduled and unscheduled drydockings and upgrades, changes in our operating expenses, including bunker prices, drydocking and insurance costs, changes in governmental rules and regulations 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 U.S. Securities and Exchange Commission.

Contact Information

  • Investor Relations / Media:
    Nicolas Bornozis
    Capital Link, Inc. (New York)
    Tel. 212-661-7566
    E-mail: dryships@capitallink.com