SOURCE: DryShips Inc.

DryShips Inc.

May 19, 2016 16:05 ET

DryShips Inc. Reports Financial and Operating Results for the First Quarter 2016

ATHENS, GREECE--(Marketwired - May 19, 2016) - DryShips Inc. (NASDAQ: DRYS), or DryShips or the Company, an international owner of drybulk carriers and offshore support vessels, today announced its unaudited financial and operating results for the quarter ended March 31, 2016.

First Quarter 2016 Financial Highlights

  • For the first quarter of 2016, the Company reported a net income of $55.4 million, or $2.05 basic and diluted earnings per share.

    Included in the first quarter 2016 results are:

    • Vessel impairment charges and loss on sales, of $40.8 million, or $1.53 per share.

    • Net income pick-up from the Company's 40.4% ownership in Ocean Rig, of $116.5 million, or $4.36 per share.

  • Excluding the above, the Company's net results would have amounted to a net loss of $20.3 million, or $0.78 per share.

  • The Company reported a negative Adjusted EBITDA of $15.6 million for the first quarter of 2016. (1)

Recent Highlights

  • On April 11, 2016, the Company received notice of termination from Petroleo Brasileiro S.A. (Petrobras) of the contract for the oil spill recovery vessel Vega Inruda effective as of April 6, 2016.

  • On April 5, 2016, the Company sold all of its shares in Ocean Rig, to a subsidiary of Ocean Rig for total cash consideration of approximately $49.9 million. The Company no longer holds any equity interest in Ocean Rig.

Bank Update / Liquidity

The Company is presently engaged in discussions with its lenders for the restructuring of its debt 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) Adjusted EBITDA is a non-GAAP measure; please see later in this press release for reconciliation to net income.

Fleet List

The table below describes our fleet profile as of May 17, 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
Amalfi   2009   75,206   Panamax   Spot   N/A   N/A
Rapallo   2009   75,123   Panamax   T/C Index linked   Aug-16   Oct-16
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   2004   76,633   Panamax   Spot   N/A   N/A
Mendocino   2002   76,623   Panamax   T/C Index linked   Oct-16   Dec-16
Bargara   2002   74,832   Panamax   T/C Index linked   Sep-16   Nov-16
Oregon   2002   74,204   Panamax   Spot   N/A   N/A
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   T/C Index linked   Aug-16   Oct-16
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   Spot   N/A   N/A
Ocean Crystal   1999   73,688   Panamax   Spot   N/A   N/A
                         
Offshore Supply fleet                        
                         
Platform Supply Vessels:                        
Crescendo   2012   1,457   PSV   Spot   Jun-16   Jun-16
Vega Corona   2012   1,430   PSV   T/C   Dec.-16   Dec.-20
Oil Spill Recovery Vessels:                        
Vega Inruda   2013   1,393   OSRV   Idle   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   Spot   Jun-16   Jun-16
                         

Drybulk Carrier Segment Summary Operating Data (unaudited)
(Dollars in thousands, except average daily results)

     
Drybulk   Three Months Ended March 31,
    2015   2016
Average number of vessels(1)   39.0   23.0
Total voyage days for vessels(2)   3,406   2,093
Total calendar days for vessels(3)   3,510   2,093
Fleet utilization(4)   97.0%   100.0%
Time charter equivalent(5)   $10,535   $2,978
Vessel operating expenses (daily)(6)   $6,356   $4,817
         

(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 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 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,  
    2015     2016  
Voyage revenues   $ 45,601     $ 8,451  
Voyage expenses     (9,720 )     (2,219 )
Time charter equivalent revenues   $ 35,881     $ 6,232  
Total voyage days for fleet     3,406       2,093  
Time charter equivalent TCE   $ 10,535     $ 2,978  
                 
   
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,
 
    2015     2016  
                 
REVENUES:                
Voyage revenues   $ 90,028     $ 11,860  
Revenues from drilling contracts     402,083       -  
      492,111       11,860  
                 
EXPENSES:                
Voyage expenses     28,102       2,921  
Vessel operating expenses     28,200       14,788  
Drilling units operating expenses     152,927       -  
Depreciation and amortization     118,696       862  
Vessels impairment, loss on sales and other     56,631       40,784  
General and administrative expenses     43,288       9,890  
Other, net     (630 )     (1,517 )
                 
Operating income/(loss)     64,897       (55,868 )
                 
OTHER INCOME / (EXPENSES):                
Interest and finance costs, net of interest income     (76,488 )     (3,295 )
Loss on interest rate swaps     (9,680 )     (557 )
Other, net     (1,929 )     (1,381 )
Income taxes     (19,590 )     -  
Total other expenses, net     (107,687 )     (5,233 )
                 
Net loss     (42,790 )     (61,101 )
                 
Equity in earnings of Ocean Rig     -       116,477  
Net income attributable to Non controlling interests     (16,367 )     -  
                 
Net income/(loss) attributable to DryShips Inc.   $
(59,157
)   $
55,376
 
                 
Net income/(loss) attributable to DryShips Inc. common stockholders     (59,231 )     54,642  
Earnings/(Loss) per common share, basic and diluted (1)   $ (2.23 )   $ 2.05  
Weighted average number of shares, basic and diluted (1)     26,593,240       26,689,846  

(1) Shares and per share data for Q1 2015 give effect to the 1-for-25 reverse stock split, approved on February 19, 2016.

 
 
DryShips Inc.
Unaudited Condensed Consolidated Balance Sheets
 
(Expressed in Thousands of U.S. Dollars)   December 31, 2015  


March 31, 2016
             
ASSETS            
             
  Cash, cash equivalents and restricted cash (current and non-current)   $ 15,026   $ 5,740
  Assets held for sale     216,026     97,515
  Other current assets     38,015     30,448
  Vessels, net     96,428     95,566
  Investment in affiliate     91,410     208,176
  Other non-current assets     19,147     11,861
  Total assets     476,052     449,306
             
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
             
             
  Total debt     236,942     269,517
  Liabilities held for sale     104,366     -
  Total other liabilities     13,332     10,596
  Total stockholders' equity     121,412     169,193
  Total liabilities and stockholders' equity   $ 476,052   $ 449,306
             
 

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, 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 income/(loss) to Adjusted EBITDA:

             
(Dollars in thousands)   Three Months Ended March 31, 2015     Three Months Ended March 31, 2016  
                 
Net income/(loss) attributable to Dryships Inc   $ (59,157 )   $ 55,376  
                 
Add: Net interest expense     76,488       3,295  
Add: Depreciation and amortization     118,696       862  
Add: Dry-dockings and class survey costs     3,838       -  
Add: Impairments losses on sales and other     56,631       40,784  
Add: Income taxes     19,590       -  
Add: Loss on interest rate swaps     9,680       557  
Add: Equity in earnings of affiliate     -       (116,477 )
Add: Net income attributable to Non controlling interests     16,367       -  
Adjusted EBITDA   $ 242,133     $ (15,603 )
                 

About DryShips Inc.

DryShips Inc. is an owner of drybulk carriers and offshore support vessels that operate worldwide. DryShips owns a fleet of 20 Panamax drybulk carriers with a combined deadweight tonnage of approximately 1.5 million tons, and 6 offshore supply vessels, comprising 2 platform supply and 4 oil spill recovery vessels.

DryShips' common stock is listed on the NASDAQ Capital 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 charter rates and dayrates and vessel and drilling dayrates and drybulk vessel, drilling rig and drillship values, failure of a seller to deliver one or more vessels or drilling units, 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 customers, 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, complications associated with repairing and replacing equipment in remote locations, limitations on insurance coverage, such as war risk coverage, in certain areas, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, changes in tax laws, treaties and regulations, tax assessments and liabilities for tax issues, 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, including the Company's most recently filed Annual Report on Form 20-F.

Contact Information

  • Investor Relations / Media:

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