-- A non-cash loss of $1.4 million associated with the change in the fair
value of interest rate swaps.
-- An expense of $1.3 million associated with the drydocking of two
vessels.
-- A gain of $1.5 million associated with the sale of a vessel.
Excluding the above items Net Income for the second quarter of 2010 would
amount to $0.39 million or $0.01 basic and diluted earnings per share.
Recent Developments
-- On June 17, 2010, the Company effected a 3:1 reverse stock split in
order to regain compliance with NASDAQ's minimum bid price. As a result
our then issued and outstanding 231,800,001 common shares were
converted to 77,266,655 common shares. On August 6, 2010, the Company
received notice from NASDAQ that it has regained compliance with the
Listing Rule in connection with the minimum bid price requirement of
$1.00.
-- On September 30, 2009, we agreed to acquire the M/V Montecristo from a
third party for a gross sale price of $49.5 million. The vessel was
delivered to the Company on June 28, 2010 and entered a time charter
employment for a minimum duration of 4 years at a gross daily rate of
$23,500.
Anthony Kandylidis, the Company's Chief Executive Officer, commented: "We
continue to execute our stated business plan. Operating income for the
second quarter of 2010 was in line with expectations and moving forward we
will continue our fleet renewal and expansion program that will improve our
operational efficiency, enhance our profitability and increase shareholder
value."
Second Quarter 2010 Results
For the second quarter ended June 30, 2010, Voyage Revenues amounted to
$24.0 million and Operating Income amounted to $3.8 million. Net Loss
amounted to $0.81 million or $0.01 basic and diluted loss per share.
Adjusted EBITDA(*) for the second quarter of 2010 was $6.7 million.
An average of 11.6 vessels were owned and operated during the second
quarter of 2010, earning an average Time Charter Equivalent, or TCE rate,
of $23,812 per day.
Capitalization
On June 30, 2010, the debt (debt, net of deferred financing fees) to total
capitalization (debt and stockholders' equity) ratio was 44.1% and the net
debt (debt less cash, cash equivalents and restricted cash) to total
capitalization ratio was 40.6%.
Equity Infusion
On May 28, 2010, Basset Holding Inc, a company affiliated with our Chief
Executive Officer, made an equity infusion of $20.0 million in exchange for
50,000,000 common shares (before the reverse stock split took effect). The
funds were used to partially finance the acquisition of the M/V
Montecristo.
As of the date of this release the Company has 77,266,655 shares
outstanding.
Liquidity
As of June 30, 2010, the Company had total liquidity of approximately $18.3
million.
Fleet Data
(Dollars in thousands, except Average Daily Three Months Ended
results - unaudited) June 30,
----------------------
2009 2010
---------- ----------
Average number of vessels (1) 13 11.6
---------- ----------
Total voyage days for fleet (2) 1,065 952
---------- ----------
Total calendar days for fleet (3) 1,183 1,050
---------- ----------
Time charter equivalent (TCE) daily rate (4) $ 28,071 $ 23,812
---------- ----------
Fleet utilization (5) 90.0% 90.7%
---------- ----------
(*) Please see later in this release for a reconciliation of adjusted
EBITDA to net cash provided by Operating activities.
(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.
(3) Calendar days are the total days the vessels were in our possession for
the relevant period including off hire days.
(4) Time charter equivalent rate, 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 gross 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.
(5) 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.
The following table reflects the calculation of our TCE daily rates for the
periods then ended:
(Dollars in thousands, except Average Daily Three Months Ended
results - unaudited) June 30,
----------------------
2009 2010
---------- ----------
Revenues 31,688 24,043
---------- ----------
Voyage expenses (1,792) (1,374)
---------- ----------
Revenue on a time charter basis 29,896 22,669
---------- ----------
---------- ----------
Total voyage days for fleet 1,065 952
---------- ----------
Time charter equivalent (TCE) daily rate $ 28,071 $ 23,812
---------- ----------
Financial Statements
The following are OceanFreight Inc.'s Consolidated Statements of Operations
for the three-month periods ended June 30, 2009 and 2010:
(Dollars in thousands, except for share and per Three Months Ended
share data) June 30,
2009 2010
----------- -----------
STATEMENT OF OPERATIONS DATA (unaudited) (unaudited)
Voyage revenues $ 29,123 $ 24,014
Gain on forward freight agreements 591 261
Imputed revenue 2,565 29
----------- -----------
Gross revenue 32,279 24,304
Voyage expenses (1,792) (1,374)
Vessels operating expenses (12,800) (10,983)
Depreciation (12,921) (6,833)
General and administrative expenses (1,817) (1,490)
Dry docking costs (4,691) (1,336)
(Impairment loss) on vessels held for sale and
gain on vessel sold (31,281) 1,491
----------- -----------
Operating income/(loss) (33,023) 3,779
=========== ===========
Interest income 148 41
Interest expense and finance costs (4,896) (3,238)
Gain/(loss) on derivative instruments 4,934 (1,395)
----------- -----------
Net Loss $ (32,837) $ (813)
=========== ===========
Earnings per common share, basic and diluted $ (1.54) $ (0.01)
Weighted average number of common shares, basic
and diluted (1) 21,359,153 66,827,101
(1) The weighted average number of common shares gives effect to the 3:1
reverse stock split which took place on June 17, 2010.
The following are OceanFreight Inc.'s Consolidated Balance Sheets as of
December 31, 2009 and June 30, 2010
(Dollars in thousands, except per share data)
2009 2010
------------ ------------
ASSETS (audited) (unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 37,272 $ 11,895
Restricted cash 2,500 406
Vessels held for sale 51,080 19,000
Other current assets 9,447 14,700
------------ ------------
Total current assets 100,299 46,001
------------ ------------
FIXED ASSETS, NET:
Advances for vessel acquisition 9,900 -
Vessels under construction - 46,623
Vessels, net of accumulated depreciation of
$43,486 and $56,939, respectively 423,242 459,855
Other, net of accumulated depreciation of $123
and $251, respectively 856 728
------------ ------------
Total fixed assets, net 433,998 507,206
------------ ------------
OTHER NON-CURRENT ASSETS
Restricted cash 6,511 6,011
Other non-current assets 8,464 9,324
------------ ------------
Total assets 549,272 568,542
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt 49,947 39,112
Other current liabilities 23,381 28,679
------------ ------------
Total current liabilities 73,328 67,791
============ ============
NON-CURRENT LIABILITIES:
Derivative liability, net of current portion 3,606 6,731
Long-term debt, net of current portion 215,727 196,649
------------ ------------
Total non-current liabilities 219,333 203,380
============ ============
STOCKHOLDERS' EQUITY: 256,611 297,371
------------ ------------
Total liabilities and stockholders' equity 549,272 568,542
============ ============
Adjusted EBITDA Reconciliation
OceanFreight Inc. considers EBITDA to represent net income before interest, taxes, depreciation and amortization. Adjusted EBITDA excludes loss on sale of vessels and impairment on vessels. EBITDA and Adjusted EBITDA do not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by U.S. GAAP and our calculation of EBITDA may not be comparable to that reported by other companies. Adjusted EBITDA is included in this earnings release because it is a basis upon which we assess our liquidity position, because it is used by our lenders as a measure of our compliance with certain loan covenants and because we believe that it presents useful information to investors regarding our ability to service and/or incur indebtedness. The following table reconciles Net cash provided by operating activities to EBITDA as adjusted for the effect of the loss from the sale of vessels and impairment loss:
Three Months Ended
June 30,
2009 2010
----------- -----------
Net cash provided by operating activities 6,660 5,129
Net increase in operating assets 1,731 6,057
Net (increase) in operating liabilities (4,330) (7,575)
Net interest expense 4,749 3,197
Amortization of deferred financing costs included
in interest expense (196) (140)
----------- -----------
Adjusted EBITDA 8,614 6,668
=========== ===========
Fleet List
The table below describes our fleet and current employment profile as of
September 3, 2010:
Gross
Rate
Year Current per Earliest Latest
Vessel Name Built DWT Type Employment Day Redelivery Redelivery
----- ------- -------- ------- -------- --------- --------
Drybulk Vessels
M/V Robusto 2006 173,949 Capesize TC 26,000 Aug-14 Dec-14
M/V Cohiba 2006 174,200 Capesize TC 26,250 Oct-14 Feb-15
M/V Montecristo 2005 180,263 Capesize TC 23,500 May-14 Oct-14
M/V Partagas 2004 173,880 Capesize TC 27,500 Jul-12 Dec-12
M/V Topeka 2000 74,710 Panamax TC 18,000 Jan-11 Mar-11
M/V Helena 1999 73,744 Panamax TC 32,000 May-12 Jan-13
M/V Augusta 1996 69,053 Panamax TC 16,000 Nov-11 Mar-12
M/V Austin 1995 75,229 Panamax TC (1) Aug-12 Aug-12
M/V Trenton 1995 75,229 Panamax TC (1) Aug-12 Aug-12
Tanker Vessels
M/T Pink Sands 1993 93,723 Aframax TC 27,450 Oct-10 Jan-11
M/T Tamara 1990 95,793 Aframax TC 27,000 Dec-10 Mar-11
Tanker to be
Sold
M/T Olinda 1996 149,085 Suezmax POOL - - -
Drybulk Vessels
to be Acquired
Newbuilding
VLOC #1 2012 206,000 Capesize TC 25,000 Jun-15 Jun-15
Newbuilding
VLOC #2 2012 206,000 Capesize TC 23,000(2) Oct-17 Oct-17
Newbuilding
VLOC #3 2013 206,000 Capesize TC 21,500(3) Jan-20 Jan-20
(1) The hire rate per vessel will be calculated based on a formula linked
to the average of the Baltic Panamax Index for the preceding 30 days.
(2) The charter agreement includes a 50/50 percent profit sharing
arrangement with the charterer for charterhire above the basic rate, up to
$40,000.
(3) The charter agreement includes a 50/50 percent profit sharing
arrangement with the charterer for charterhire above the basic rate, up to
$38,000.
Conference Call and Webcast: Monday, September 6, 2010 at 08:30 A.M. EDT
OceanFreight management team will host a conference call on Monday,
September 6, 2010, at 08:30 A.M. Eastern Daylight Time (EDT) to discuss the
Company's financial results for the Quarter ended June 30, 2010.
Conference Call details:
Participants should Dial-Into the call 10 minutes before the scheduled time
using the following numbers: 1 866 819 7111 (U.S. Toll Free Dial-In), 0800
953 0329 (U.K. Toll Free Dial-In) or +44 (0) 1452 542 301 (Standard
International Dial-In). Please quote "OceanFreight."
A telephonic replay of the conference call will be available until
September 13, 2010 by dialing 1 866 247 4222 (U.S. Toll Free Dial -In),
0800 953 1533 (U.K. Toll Free Dial -In) or +44 (0) 1452 550 000 (Standard
International Dial -In). Access Code: 7445162#.
Slides and audio webcast:
There will also be a simultaneous live webcast over the Internet, through
the OceanFreight Inc. website (www.oceanfreightinc.com). Participants to
the live webcast should register on the website approximately 10 minutes
prior to the start of the webcast.
About OceanFreight Inc.
OceanFreight Inc., is an owner and operator of both drybulk and tanker
vessels that operate worldwide. As of the date of this release,
OceanFreight owns a fleet of 12 vessels, comprised of 9 drybulk vessels (4
Capesize, 5 Panamaxes) and 3 crude carrier tankers (1 Suezmax, 2 Aframaxes)
with a combined deadweight tonnage of about 1.4 million tons.
OceanFreight Inc.'s common stock is listed on the NASDAQ Global Market
where it trades under the symbol "OCNF". Visit our website at
www.oceanfreightinc.com.
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 OceanFreight 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, OceanFreight
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 charter hire rates and vessel values, changes in
demand that may affect attitudes of time charterers to scheduled and
unscheduled drydocking, changes in OceanFreight Inc.'s 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
OceanFreight Inc. with the U.S. Securities and Exchange Commission.
Contact Information: Investor Relations/Media: Nicolas Bornozis Capital Link, Inc. (New York) Tel: +1-212-661-7566 E-mail: oceanfreight@capitallink.com