SOURCE: DryShips Inc.

DryShips Inc.

February 18, 2014 16:05 ET

Dryships Inc. Reports Financial and Operating Results for the Fourth Quarter 2013

ATHENS, GREECE--(Marketwired - Feb 18, 2014) - 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 fourth quarter ended December 31, 2013.

Fourth Quarter 2013 Financial Highlights

  • For the fourth quarter of 2013, the Company reported a net loss of $24.4 million, or $0.06 basic and diluted loss per share.

  • The Company reported Adjusted EBITDA of $163.7 million for the fourth quarter of 2013, as compared to $109.5 million for the fourth quarter of 2012. (1)

Year Ended December 31, 2013 Financial Highlights

  • For the year ended December 31, 2013, the Company reported a net loss of $223.1 million, or $0.58 basic and diluted loss per share.

    Included in the year ended December 31, 2013 results are:

    • Losses on the sale of four newbuilding drybulk vessels, of $76.8 million, or $0.20 per share.
    • Non-cash write-offs and breakage costs associated with the full repayment of Ocean Rig's $800.0 million secured term loan agreement and the two $495.0 million senior secured credit facilities totaling $61.1million or $0.16 per share.
  • Excluding the above items, the Company would have reported a net loss of $110.0 million, or $0.28 per share. (1)
  • The Company reported Adjusted EBITDA(2) of $572.0 million for the year ended December 31, 2013, as compared to $500.5 million for the year ended December 31, 2012.

(1) The net result is adjusted for the minority interests of 40.6% not owned by Dryships Inc. common stockholders.
(2) Adjusted EBITDA is a non-GAAP measure; please see later in this press release for reconciliation to net income.

Recent Highlights

  • On February 7, 2014, Ocean Rig refinanced its existing short-term Tranche B-2 Term Loans with a fungible add-on to its existing long-term Tranche B-1 Term Loans. As a result of this refinancing, the total $1.9 billion of Tranche B-1 Term Loans will mature no earlier than the third quarter of 2020.

  • On January 27, 2014, the Ocean Rig Skyros arrived in Angola and commenced the acceptance testing under the contract with Total E&P.

  • On December 31, 2013, the Company resumed sales under its previously announced $200 million program of at the market issuances of its common shares through Evercore Group L.L.C. as its sales agent. During January 2014, 20,837,582 common shares were issued and sold at an average share price of $4.14 per share pursuant to the at-the-market offering, resulting in net proceeds to the Company of $84.5 million, after deducting commissions.

  • On December 30, 2013, Ocean Rig agreed with a major oil company to further extend until March 30, 2014, the expiration of the previously announced Letter of Award for its ultra deepwater drillship Ocean Rig Skyros.

  • On December 20, 2013, Ocean Rig took delivery of its ultra deepwater drillship, the Ocean Rig Skyros and drew down $450.0 million under its $1.35 billion syndicated secured term loan facility.

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

"We are very excited about the prospects of the shipping markets. Following a period of oversupply the recent volatility in the tanker and drybulk sectors is a clear sign of a balanced supply-demand picture. Asset prices are rising which is a strong indication of current market sentiment. We are optimistic and expect a sustainable recovery in 2014 and beyond.

"Currently Dryships has about 3,600 spot days in 2014 and 3,600 spot days in 2015 for its crude tanker fleet and about 9,000 spot days in 2014 and 11,900 spot days in 2015 for its drybulk fleet. Given this immediate spot exposure, Dryships is uniquely positioned to take full advantage of the imminent market recovery.

"Turning to the offshore side, Ocean Rig continues to execute on its business plan by posting yet another quarter of good operating performance. Ocean Rig's modern fleet, strong balance sheet and solid backlog of $5.4 billion, provides it with a solid foundation to implement the previously announced value creation initiatives."

Financial Review: 2013 Fourth Quarter

The Company recorded a net loss of $24.4 million, or $0.06 basic and diluted loss per share, for the three-month period ended December 31, 2013 as compared to a net loss of $129.8 million, or $0.34 basic and diluted loss per share, for the three-month period ended December 31, 2012. Adjusted EBITDA(1) was $163.7 million for the fourth quarter of 2013, as compared to $109.5 million for the same period in 2012.

For the drybulk carrier segment, net voyage revenues (voyage revenues minus voyage expenses) amounted to $45.4 million for the three-month period ended December 31, 2013, as compared to $34.9 million for the three-month period ended December 31, 2012. For the tanker segment, net voyage revenues amounted to $11.9 million for the three-month period ended December 31, 2013, as compared to $6.5 million for the same period in 2012. For the offshore drilling segment, revenues from drilling contracts increased by $115.7 million to $345.5 million for the three-month period ended December 31, 2013, as compared to $229.8 million for the same period in 2012.

Total vessels', drilling rigs' and drillships' operating expenses and total depreciation and amortization decreased to $166.7 million and increased to $96.5 million, respectively, for the three-month period ended December 31, 2013, from $194.4 million and $84.8 million, respectively, for the three-month period ended December 31, 2012. Total general and administrative expenses increased to $57.1 million in the fourth quarter of 2013, from $39.5 million during the same period in 2012.

Interest and finance costs, net of interest income, amounted to $75.8 million for the three-month period ended December 31, 2013, compared to $53.5 million for the three-month period ended December 31, 2012.

(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 and drilling contract backlog as of February 14, 2014:

                         
    Year           Gross rate   Redelivery    
    Built   DWT   Type   Per day   Earliest   Latest
Drybulk fleet                        
                         
Capesize:                        
Rangiroa   2013   206,000   Capesize   $23,000   Apr-18   Nov-23
Negonego   2013   206,000   Capesize   $21,500   Mar-20   Feb-28
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   $11,500   Jun-14   Oct-14
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   Spot   N/A   N/A
Rapallo   2009   75,123   Panamax   T/C Index linked   Jul-16   Sep-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
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   T/C Index linked   Sep-16   Nov-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
Topeka   2000   74,716   Panamax   Spot   N/A   N/A
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/or
Scheduled Delivery
 
 

DWT
 
 

Type
 
 
Gross rate
Per day
 
 
Redelivery
Earliest
 
 
 
Latest
Newbuildings                        
Panamax:                        
Newbuilding Ice -class Panamax 1   2014   75,900   Panamax   N/A   N/A   N/A
Newbuilding Ice -class Panamax 2   2014   75,900   Panamax   N/A   N/A   N/A
Newbuilding Ice -class Panamax 3   2014   75,900   Panamax   N/A   N/A   N/A
Newbuilding Ice -class Panamax 4   2014   75,900   Panamax   N/A   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/ or Scheduled Delivery   Redelivery   Operating area   Backlog ($m)
                 
Leiv Eiriksson   2001   Q2 - 16   Norway   $431
Eirik Raude   2002   Q4 - 14   Sierra Leone, Ivory Coast   $167
Ocean Rig Corcovado   2011   Q2 - 15   Brazil   $204
Ocean Rig Olympia   2011   Q3 - 15   Gabon, Angola   $323
Ocean Rig Poseidon   2011   Q2 - 16   Angola   $588
Ocean Rig Mykonos   2011   Q1 - 15   Brazil   $177
Ocean Rig Mylos   2013   Q4 - 16   Brazil   $612
Ocean Rig Skyros   2013   Q4 - 14   Angola   $158
        Q4 - 20   Angola   $1,264(1)
Newbuildings                
                 
Ocean Rig Athena (Expected delivery Mar. 2014)   2014   Q2 - 17   Angola   $757
Ocean Rig Apollo (Expected delivery Jan. 2015)   2015   Q1 - 18   Congo   $670
Ocean Rig Santorini (Expected delivery Dec. 2015)   2015   N/A   N/A   N/A
Total               $5,351

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

 
Drybulk Carrier and Tanker Segment Summary Operating Data (unaudited)
 
(Dollars in thousands, except average daily results)
 
Drybulk   Three Months Ended December 31,   Year Ended December 31,
    2012   2013   2012   2013
Average number of vessels(1)   36.0   38.0   35.7   37.2
Total voyage days for vessels(2)   3,312   3,412   13,027   13,442
Total calendar days for vessels(3)   3,312   3,496   13,056   13,560
Fleet utilization(4)   100.0%   97.6%   99.8%   99.1%
Time charter equivalent(5)   $10,547   $13,303   $15,896   $12,062
Vessel operating expenses (daily)(6)   $5,124   $6,251   $5,334   $5,796

Tanker
 
Three Months Ended December 31,
 
Year Ended December 31,
    2012   2013   2012   2013
Average number of vessels(1)   7.0   10.0   6.3   9.9
Total voyage days for vessels(2)   644   920   2,293   3,598
Total calendar days for vessels(3)   644   920   2,293   3,598
Fleet utilization(4)   100.0%   100.0%   100.0%   100.0%
Time charter equivalent(5)   $10,062   $12,963   $13,584   $12,900
Vessel operating expenses (daily)(6)   $6,781   $7,148   $7,195   $7,286
                 

(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 December 31,       Year Ended December 31,  
    2012       2013       2012       2013  
Voyage revenues   $ 40,754     $ 53,021     $ 227,141     $ 191,024  
Voyage expenses     (5,821 )     (7,630 )     (20,064 )     (28,886 )
Time charter equivalent revenues   $ 34,933     $ 45,391     $ 207,077     $ 162,138  
Total voyage days for fleet     3,312       3,412       13,027       13,442  
Time charter equivalent TCE   $ 10,547     $ 13,303     $ 15,896     $ 12,062  
                                 
                                 
Tanker   Three Months Ended December 31,     Year Ended December 31,  
    2012     2013     2012     2013  
Voyage revenues   $ 12,361     $ 32,873     $ 41,095     $ 120,740  
Voyage expenses     (5,881 )     (20,947 )     (9,948 )     (74,325 )
Time charter equivalent revenues   $ 6,480     $ 11,926     $ 31,147     $ 46,415  
Total voyage days for fleet     644       920       2,293       3,598  
Time charter equivalent TCE   $ 10,062     $ 12,963     $ 13,584     $ 12,900  
                                 
                                 
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 December 31,
   
Year Ended December 31,
 
    2012     2013     2012     2013  
                                 
REVENUES:                                
Voyage revenues   $ 53,115     $ 85,894     $ 268,236     $ 311,764  
Drilling revenues, net     229,751       345,458       941,903       1,180,250  
      282,866       431,352       1,210,139       1,492,014  
                                 
EXPENSES:                                
Voyage expenses     11,702       28,577       30,012       103,211  
Vessel operating expenses     21,337       28,430       86,139       104,808  
Drilling rigs operating expenses     173,092       138,311       563,583       504,957  
Depreciation and amortization     84,843       96,506       335,458       357,372  
Vessel impairments and other, net     41,517       -       42,518       76,783  
General and administrative expenses     39,460       57,144       145,935       184,722  
Legal settlements and other, net     (5,912 )     (581 )     (9,360 )     4,585  
                                 
Operating income/(loss)     (83,173 )     82,965       15,854       155,576  
                                 
OTHER INCOME / (EXPENSES):                                
Interest and finance costs, net of interest income     (53,456 )     (75,785 )     (205,925 )     (319,631 )
Gain/ (Loss) on interest rate swaps     (4,582 )     (3,467 )     (54,073 )     8,373  
Other, net     (1,891 )     (2,483 )     (492 )     2,245  
Income taxes     (11,354 )     (9,492 )     (43,957 )     (44,591 )
Total other expenses, net     (71,283 )     (91,227 )     (304,447 )     (353,604 )
                                 
Net loss     (154,456 )     (8,262 )     (288,593 )     (198,028 )
                                 
Net (income)/loss attributable to Non controlling interests     24,608       (16,107 )     41,815       (25,065 )
                                 
Net loss attributable to Dryships Inc.   $ (129,848 )   $ (24,369 )   $ (246,778 )   $ (223,093 )
                                 
Loss per common share, basic and diluted   $ (0.34 )   $ (0.06 )   $ (0.65 )   $ (0.58 )
Weighted average number of shares, basic and diluted     380,179,472       388,083,468       380,159,088       384,063,306  
                                 
                                 
Dryships Inc.
 
Unaudited Condensed Consolidated Balance Sheets
 
 
(Expressed in Thousands of U.S. Dollars)   December 31, 2012   December 31, 2013
             
ASSETS            
             
  Cash, cash equivalents and restricted cash (current and non-current)   $ 720,458   $ 739,312
  Other current assets     338,446     494,887
  Advances for vessels and drillships under construction and related costs     1,201,807     679,008
  Vessels, net     2,059,570     2,249,087
  Drilling rigs, drillships, machinery and equipment, net     4,446,730     5,828,231
  Other non-current assets     111,480     133,167
  Total assets     8,878,491     10,123,692
             
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
             
             
  Total debt     4,386,715     5,568,003
  Total other liabilities     623,757     723,991
  Total stockholders' equity     3,868,019     3,831,698
  Total liabilities and stockholders' equity   $ 8,878,491   $ 10,123,692
             

Adjusted EBITDA Reconciliation

Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, vessel impairments, dry-dockings and 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 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 loss to Adjusted EBITDA:

                         
(Dollars in thousands)   Three Months Ended December 31, 2012     Three Months Ended December 31, 2013     Year Ended December 31, 2012     Year Ended December 31, 2013  
                                 
Net loss   $ (129,848 )   $ (24,369 )   $ (246,778 )   $ (223,093 )
                                 
Add: Net interest expense     53,456       75,785       205,925       319,631  
Add: Depreciation and amortization     84,843       96,506       335,458       357,372  
Add: Impairment losses and other     41,339       -       41,339       76,783  
Add: Dry-dockings and class survey costs     43,745       2,839       66,506       5,056  
Add: Income taxes     11,354       9,492       43,957       44,591  
Add: Gain/(loss) on interest rate swaps     4,582       3,467       54,073       (8,373 )
Adjusted EBITDA   $ 109,471     $ 163,720     $ 500,480     $ 571,967  
                                 

Conference Call and Webcast: February 19, 2014

As announced, the Company's management team will host a conference call, on Wednesday, February 19, 2014 at 9:00 a.m. Eastern Standard 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 February 26, 2014. 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 11 offshore ultra deepwater drilling units, comprising of 2 ultra deepwater semisubmersible drilling rigs and 9 ultra deepwater drillships, 1 of which is scheduled to be delivered to Ocean Rig during 2014 and 2 of which are scheduled to be delivered during 2015. DryShips owns a fleet of 42 drybulk carriers (including newbuildings), comprising 12 Capesize, 28 Panamax and 2 Supramax 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