SOURCE: DryShips Inc.

August 02, 2005 16:15 ET

DryShips Inc. Reports Second Quarter 2005 and First Half Results

ATHENS, GREECE -- (MARKET WIRE) -- August 2, 2005 -- DryShips Inc. (NASDAQ: DRYS) announced today its results (unaudited) for the three month and six month periods ended June 30, 2005.

Net revenues for the second quarter of 2005 were $71.47 million compared to $17.46 million for the second quarter of 2004. Operating Income for the second quarter of 2005 was $49.52 million compared to $12.97 million for the second quarter of 2005. Net income for the second quarter 2005 was $43.33 million compared to $12.78 million for the second quarter of 2004. Basic earnings per share, based on average number shares outstanding, was $1.43 for the second quarter 2005.

Net revenues for the six month period ended June 30, 2005 were $99.61 million compared to $33.43 million for the six month period ended June 30, 2004. Operating income was $69.19 million compared to $23.87 million for the six month period ended June 30, 2004. Net income for the six month period ended June 30, 2005 was $62.44 million compared to $23.23 million for the six month period ended June 30, 2004. Basic earnings per share, based on average number shares outstanding, was $2.30 for the six month period ended June 30, 2005.

The following are DryShips Inc. Condensed Income Statements for the three month period and the six month period ended June 30, 2004 and 2005.


(Dollars in thousands,       For the Three Months     For the Six Months
 except per share data              Ended                    Ended
 and Average Daily          June 30,     June 30,    June 30,     June 30,
 Results - unaudited)         2005        2004         2005        2004
                          ----------   ----------  ----------   ----------
                                 Unaudited                Unaudited
INCOME STATEMENT DATA
Voyage revenues, net      $   71,466   $   17,460  $   99,612   $   33,430
Voyage expenses                   83          175         789          649
Timecharter Equivalent
 Revenue                      71,383       17,285      98,823       32,781

Vessels operating
 expenses                      7,690        2,182      11,653        4,844
Depreciation and
 amortization                 11,940        1,842      14,474        3,447
Management fees                1,430          293       1,979          620
General and
 administrative                  800            0       1,527            0

Operating Income              49,523       12,968      69,190       23,870

Interest and finance
 costs, net                   (6,146)        (405)     (6,668)        (746)
Other, net                       (48)         214         (84)         107

NET INCOME                $   43,329   $   12,777  $   62,438   $   23,231

Basic and fully diluted
 earnings per share       $     1.43   $     0.83  $     2.30   $     1.51
Weighted average basic
 and diluted shares
 outstanding              30,350,000   15,400,000  27,129,226   15,400,000
The following are DryShips Inc. Condensed Balance Sheets as at June 30, 2005 and December 31, 2004.

(Dollars in thousands)                As at                   As at
                                  June 30, 2005           June 30, 2004
                                  -------------           -------------
BALANCE SHEET DATA                  Unaudited               Unaudited
Cash and cash equivalents          $   23,674              $    2,010
Other current assets                   12,025                   2,934
Vessels, net                          846,487                  53,209
Other assets                            7,610                  47,058

                                   ----------              ----------
TOTAL ASSETS                          889,796                 105,211
                                   ==========              ==========

Current portion of long-term debt
 (July 1, '05 to June 30, '06)        107,458                  45,206
Other current liabilities              28,248                   5,565
Long-term debt, net of
 current portion                      440,175                       0
Total Liabilities                     575,881                  50,771

Total Stockholders' Equity            313,915                  54,440

TOTAL LIABILITIES AND              ----------              ----------
 STOCKHOLDERS' EQUITY              $  889,796              $  105,211
                                   ==========              ==========
Capitalization

Our debt to total capitalization (debt and stockholders' equity) at June 30, 2005 was 63.56% and net debt (total debt less cash and cash equivalents) to total capitalization was 60.82%.

Fleet Data


(Dollars in thousands,
 except per share data and               For the Three     For the Six
 Average Daily Results - unaudited)      Months Ended      Months Ended
                                       June 30, June 30, June 30, June 30,
                                         2005     2004     2005     2004
                                       -------  -------  -------  -------
Average number of vessels(1)             23.82     6.00    16.28     6.00
Total voyage days for fleet(2)           2,168      521    2,946    1,092
Total calendar days for fleet(3)         2,189      546    2,967    1,092
Fleet utilization(4)                      99.0%    95.4%    99.3%   100.0%
Time charter equivalent(5)             $32,926  $33,175  $33,545  $30,019
Vessel operating expenses(6)            $3,513   $3,997   $3,927   $4,436
Management fees                           $653     $536     $667     $568
General and administrative expenses(7)    $366     $365     $515       $0
Total vessel operating expenses(8)      $4,532   $4,898   $5,109   $5,004
(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 off hire days associated with major repairs, drydockings or special or intermediate surveys.

(3) Calendar days are the total days the vessels were in our possession for the relevant period including off hire days associated with major repairs, drydockings or special or intermediate surveys.

(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 is 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.

(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.

(7) Daily general and administrative expense is calculated by dividing general and administrative expense by fleet calendar days for the relevant time period.

(8) Total vessel operating expenses, or TVOE is a measurement of our total expenses associated with operating our vessels. TVOE is the sum of vessel operating expenses, management fees and general and administrative expenses. Daily TVOE is calculated by dividing TVOE by fleet calendar days for the relevant time period.

DryShips Inc. Fleet

As at June 30, 2005 DryShips Inc.'s fleet consisted of 26 vessels.

During the three month period ended June 30, 2005, the Company operated the following types of vessels:

                                    Capesize   Panamax  Handymax    Total
                                      -----      -----   -----      -----
Average number of vessels
 during period                         3.30      18.59    1.93      23.82
Number of vessels at end of period     4.00      20.00    2.00      26.00
Dwt at end of period (in thousands) 657,256  1,435,833  94,503  2,187,592
DWT as percentage of total fleet      30.04%     65.64%   4.32%    100.00%
Average age at end of period           9.50      11.20    7.00      10.62
During the six month period ended June 30, 2005, the Company operated the following types of vessels:
                                    Capesize   Panamax  Handymax    Total
                                      -----      -----   -----      -----
Average number of vessels
 during period                         2.21      12.82    1.25      16.28
Number of vessels at end of period     4.00      20.00    2.00      26.00
Dwt at end of period (in thousands) 657,256  1,435,833  94,503  2,187,592
DWT as percentage of total fleet      30.04%     65.64%   4.32%    100.00%
Average age at end of period           9.50      11.20    7.00      10.62
Fleet Employment

We actively and strategically employ our vessels in the spot charter market (under charters that generally last for periods of 10 days to four months), under period time charters (which can last up to several years) and in drybulk carrier pools.

The following table compares the timecharter equivalent ("TCE") revenue earned by vessels employed in the spot market and employed under period time charters for the three and six month periods ended June 30, 2005.

                                3 months ended         6 months ended
                                 June 30, 2005          June 30, 2005
                                 -------------          -------------
                             US$ 000's  Percentage  US$ 000's  Percentage
Spot charter revenue          24,966      34.97%     51,084      51.69%
Period charter revenue        46,417      65.03%     47,739      48.31%
Total charter revenue         71,383     100.00%     98,823     100.00%
TCE increased during the three and six month periods ended June 30, 2005 compared to the three and six month periods ended June 30, 2004 primarily as a result of an increase in the number of vessels from six vessels in 2004 to 26 vessels as at June 20, 2005.

Vessel operating expenses increased to $7.69 million for the three month period ended June 30, 2005 and $11.65 million for the six month period ended June 30, 2005 compared to $2.18 million and $4.84 million for the corresponding periods in 2004. Compared to the three month period and six month period ended June 30, 2004, depreciation and amortization expense increased by $10.09 million during the three month period and $11.03 million during the six month period ended June 30, 2005. The increases in depreciation expense in both periods were due to the acquisition of 20 vessels during the period February to June 2005.

Fleet Deployment

The table below describes in detail our fleet development and current employment profile:


                Year                   Delivery     Current    Redelivery
               Built Deadweight Type    Date       Employment (mid-range)*
                ----     ----   ----    ----          ----         ----
EXISTING FLEET         514,890
Shibumi         1984   166,058  Capesize                   $53,500  Nov-05
Panormos ***    1995    71,747  Panamax             Spot - $27,530
Lacerta **      1994    71,862  Panamax        Pool Spot - $25,631
Flecha          1982    65,081  Panamax                    $23,685  Oct-05
Striggla **     1982    64,747  Panamax        Pool Spot - $20,890
Mostoles **     1981    75,395  Panamax        Pool Spot - $22,237

IDENTIFIED VESSELS     812,958
Netadola        1993   149,475  Capesize            Spot - $45,000
Ocean Crystal   1999    73,688  Panamax             Spot - $27,000
Iguana          1996    70,349  Panamax                    $33,700  Nov-05
Waikiki         1995    75,473  Panamax             Spot - $33,750
Toro **         1995    73,034  Panamax        Pool Spot - $26,445
Paragon         1995    71,259  Panamax                    $30,000  Sep-06
Daytona ***     1989    69,703  Panamax             Spot - $40,000
Lanikai **      1988    68,676  Panamax        Pool Spot - $23,590
Tonga **        1984    66,798  Panamax        Pool Spot - $21,163
Alona **        2002    48,640  Handymax       Pool Spot - $24,585
Matira          1994    45,863  Handymax                   $28,500  Oct-05

ADDITIONAL VESSELS     936,367
Manasota        2004   171,061  Capesize                   $60,000  Sep-05
Alameda         2001   170,662  Capesize                   $65,000  Oct-05
Mendocino       2002    76,623  Panamax  August            $42,000  Dec-06
Sonoma **       2001    74,786  Panamax        Pool Spot - $26,130
Coronado        2000    75,706  Panamax             Spot -  $9,600
Xanadu          1999    72,270  Panamax                    $35,000  Aug-06
La Jolla        1997    72,126  Panamax             Spot - $19,000
Linda
 Oldendorff     1995    75,100  Panamax                    $43,250  Aug-06
Catalina        2005    74,432  Panamax             Spot - $22,000
Belmonte        2004    73,601  Panamax                    $42,000  Jun-06
DRYSHIPS FLEET       2,264,215         27 vessels

* Where the Redelivery column is left blank it signifies that the vessel is trading in the spot market. For those vessels employed in the spot market and where rates are quoted, the Company has calculated the estimated rates under current specific contracted voyages. The Company gives no guarantee that these rates are correct, or that the rates are sustainable beyond the duration of the current voyage. The quoted rates are not indications of future earnings and the Company gives no assurance or guarantee of future rates after the current voyage.

** Indicates vessels that are trading in the Baumarine Pool. Rates quoted refer to the vessels earnings as last reported, usually the previous month's earnings.

*** Indicates vessels that will be entering into the Baumarine Pool.

About DryShips Inc.

DryShips Inc., based in Greece, is an owner and operator of drybulk carriers that operate worldwide. DryShips currently owns a fleet of 26 drybulk carriers and has entered into an agreement to purchase an additional vessel.

Forward-Looking Statement

Matters discussed in this release may constitute forward-looking statements. 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 DryShips Inc. believes 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, DryShips Inc. 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 rates and vessel values, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled drydocking, changes in DryShips Inc.' operating expenses, including bunker prices, dry-docking and insurance costs, 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 US Securities and Exchange Commission.

Visit our website at www.dryships.com

Contact Information

  • Company Contact:
    Christopher J. Thomas
    Chief Financial Officer
    DryShips Inc.
    Tel. 011-30-210-809-0570
    E-mail: management@dryships.gr

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