SOURCE: DryShips Inc.

DryShips Inc.

August 08, 2016 16:05 ET

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

ATHENS, GREECE--(Marketwired - Aug 8, 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 June 30, 2016.

Second Quarter 2016 Financial Highlights

  • For the second quarter of 2016, the Company reported a net loss of $9.1 million, or $0.34 basic and diluted loss per share.

  • The Company reported a negative Adjusted EBITDA of $10.1 million for the second quarter of 2016.(1)

Recent Highlights

  • Mr. Anthony Kandylidis, Executive Vice President has assumed the duties of interim Chief Financial Officer as of August 8, 2016.

  • As of August 7, 2016, 4,635 of the Company's 5,000 Series C Convertible Preferred stock, were converted to 12,719,431 common shares, including the respective dividends.

  • On July 27, 2016, the Company's $103.2 million secured term loan facility dated June 20, 2008, with a total outstanding balance of $18.3 million, became due and payable in full.

  • On July 27, 2016, the Company received written notification from The Nasdaq Stock Market ("Nasdaq"), indicating that as the closing bid price of the Company's common stock for the last 30 consecutive business days, was below $1.00 per share, the Company no longer meets the minimum bid price requirement for continued listing on the Nasdaq Capital Market, set forth in Nasdaq Listing Rule 5550(a)(2). Pursuant to Nasdaq Listing Rules, the applicable grace period to regain compliance is 180 days, or until January 23, 2017. The Company has determined to effect a 1-for-4 reverse stock split, in order to regain compliance with the Nasdaq Capital Market minimum bid price requirement, effective on or about August 15, 2016.

Bank Update / Liquidity

The Company is presently engaged in discussions with its lenders for the restructuring of its debt facilities. Six 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 loss.
(2) Shares and per share data does not give effect to the 1-for-4 reverse stock split, approved on July 29, 2016, which will become effective on or about August 15, 2016.

Fleet List
The table below describes our fleet profile as of August 8, 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   Laid up   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   Laid up   N/A   N/A
Coronado   2000   75,706   Panamax   Spot   N/A   N/A
Marbella   2000   72,561   Panamax   Laid up   N/A   N/A
Redondo   2000   74,716   Panamax   Laid up   N/A   N/A
Ocean Crystal   1999   73,688   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
                         
 
Drybulk Carrier Segment Summary Operating Data (unaudited)
(Dollars in thousands, except average daily results)
 
Drybulk   Three Months Ended June 30,     Six Months Ended June 30,  
    2015     2016     2015     2016  
Average number of vessels(1)     39.0       20.0       39.0       21.5  
Total voyage days for vessels(2)     3,458       1,737       6,864       3,830  
Total calendar days for vessels(3)     3,549       1,820       7,059       3,913  
Fleet utilization(4)     97.4 %     95.4 %     97.2 %     97.9 %
Time charter equivalent(5)   $ 10,813     $ 3,392     $ 10,675     $ 3,166  
Vessel operating expenses (daily)(6)   $ 6,543     $ 4,798     $ 6,450     $ 4,808  
(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.
   
 
(In thousands of U.S. dollars, except for TCE rate, which is expressed in Dollars, and voyage days)
 
Drybulk   Three Months Ended June 30,     Six Months Ended June 30,  
    2015     2016     2015     2016  
Voyage revenues   $ 42,239     $ 6,772     $ 87,839     $ 15,223  
Voyage expenses     (4,847 )     (880 )     (14,567 )     (3,099 )
Time charter equivalent revenues   $ 37,392     $ 5,892     $ 73,272     $ 12,124  
Total voyage days for fleet     3,458       1,737       6,864       3,830  
Time charter equivalent TCE   $ 10,813     $ 3,392     $ 10,675     $ 3,166  
 
 
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,  
    2015     2016     2015     2016  
                         
REVENUES:                        
Voyage revenues   $ 79,460     $ 13,177     $ 169,488     $ 25,037  
Revenues from drilling contracts     323,722       -       725,805       -  
      403,182       13,177       895,293       25,037  
                                 
EXPENSES:                                
Voyage expenses     20,503       1,077       48,605       3,998  
Vessel operating expenses     29,550       12,725       57,750       27,513  
Drilling units operating expenses     106,696       -       259,623       -  
Depreciation and amortization     90,840       861       209,536       1,723  
Vessels impairment, loss on sales and other     112,178       -       168,809       40,784  
General and administrative expenses     31,519       8,133       74,807       18,023  
Other, net     (2,173 )     756       (2,803 )     (761 )
                                 
Operating income/(loss)     14,069       (10,375 )     78,966       (66,243 )
                                 
OTHER INCOME / (EXPENSES):                                
Interest and finance costs, net of interest income     (69,860 )     (2,051 )     (146,348 )     (5,346 )
Loss on interest rate swaps     (1,768 )     (152 )     (11,448 )     (709 )
Other, net     (4,506 )     (771 )     (6,435 )     (2,152 )
Income taxes     (17,341 )     (19 )     (36,931 )     (19 )
Total other expenses, net     (93,475 )     (2,993 )     (201,162 )     (8,226 )
                                 
Net loss     (79,406 )     (13,368 )     (122,196 )     (74,469 )
                                 
Loss due to deconsolidation of Ocean Rig     (1,347,106 )     -       (1,347,106 )     -  
Equity in earnings/(losses) of Ocean Rig     8,851       4,260       8,851       (41,454 )
Net income attributable to Non controlling interests     (22,662 )     -       (39,029 )     -  
                                 
Net loss attributable to DryShips Inc.   $ (1,440,323 )   $ (9,108 )   $ (1,449,480 )   $ (115,923 )
                                 
Net loss attributable to DryShips Inc. common stockholders     (1,440,515 )     (9,164 )     (1,499,745 )     (115,979 )
Loss per common share, basic and diluted (1)(2)   $ (54.17 )   $ (0.34 )   $ (56.40 )   $ (4.33 )
Weighted average number of shares, basic and diluted (1) (2)     26,593,240       26,827,839       26,593,240       26,758,843  
(1) Shares and per share data for Q2 2015 give effect to the 1-for-25 reverse stock split, approved on February 19, 2016.
(2) Shares and per share data does not give effect to the 1-for-4 reverse stock split, approved on July 29, 2016, which will become effective on or about August 15, 2016.
   
 
DryShips Inc.
 
Unaudited Condensed Consolidated Balance Sheets
 
(Expressed in Thousands of U.S. Dollars)   December 31, 2015   June 30, 2016
         
ASSETS        
         
  Cash, cash equivalents, including restricted cash (current and non-current)   $ 15,026   $ 6,173
  Assets held for sale     216,026     97,515
  Other current assets     38,015     28,950
  Vessels, net     96,428     94,705
  Investment in affiliate     91,410     -
  Other non-current assets     19,147     10,214
  Total assets     476,052     237,557
             
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
             
  Total debt     236,942     224,766
  Liabilities held for sale     104,366     -
  Total other liabilities     13,332     9,384
  Total stockholders' equity     121,412     3,407
  Total liabilities and stockholders' equity   $ 476,052   $ 237,557
             

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 June 30, 2015     Three Months Ended June 30, 2016     Six Months Ended June 30, 2015     Six Months Ended June 30, 2016  
                         
Net loss attributable to Dryships Inc   $ (1,440,323 )   $ (9,108 )   $ (1,499,480 )   $ (115,923 )
                                 
Add: Net interest expense     69,860       2,051       146,348       5,346  
Add: Depreciation and amortization     90,840       861       209,536       1,723  
Add: Dry-dockings and class survey costs     4,412       150       8,249       167  
Add: Impairments losses on sales and other     129,771       -       192,039       40,784  
Add: Loss due to deconsolidation of Ocean Rig     1,347,106       -       1,347,106       -  
Add: Income taxes     17,341       19       36,931       19  
Add: Loss on interest rate swaps     1,768       152       11,448       709  
Add: Equity in (earnings)/losses of affiliate     (8,851 )     (4,260 )     (8,851 )     41,454  
Add: Net income attributable to Non controlling interests     22,662       -       39,029       -  
Adjusted EBITDA   $ 234,586     $ (10,135 )   $ 482,355     $ (25,721 )
                                 

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 the Company's current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies and other statements.

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 the Company's 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 vessel values, failure of a seller to deliver one or more vessels, failure of a buyer to accept delivery of a vessel, inability to procure acquisition financing, default by one or more charterers of our ships, changes in demand for drybulk commodities, changes in demand that may affect attitudes of time charterers, scheduled and unscheduled drydocking, changes in our voyage and operating expenses, including bunker prices, dry-docking and insurance costs, changes in governmental rules and regulations, changes in our relationships with the lenders under our debt agreements, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents, international hostilities 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