SOURCE: OceanFreight Inc.

OceanFreight Inc.

November 02, 2011 08:00 ET

OceanFreight Inc. Reports Financial Results for the Third Quarter of 2011

ATHENS, GREECE--(Marketwire - Nov 2, 2011) - OceanFreight Inc. (NASDAQ: OCNF) (the "Company"), a global provider of marine transportation services, today announced its financial results for the three months ended September 30, 2011.

Financial Highlights

For the three months ended September 30, 2011, the Company reported a Net Loss of $19.2 million, or basic and diluted earnings equal to a loss of $3.23 per share. Included in these results are non-recurring costs associated with the proposed merger with a subsidiary of Dryships Inc. of $20.5 million.

Excluding this non-recurring costs, Net Income for the three months ended September 30, 2011 was $1.3 million, or basic and diluted earnings equal to $0.22 per share.

Third Quarter 2011 Results

For the three months ended September 30, 2011, the Company reported Voyage Revenues of $13.1 million, Operating Loss of $18.3 million and Net Loss of $19.2 million. During the same period, Net cash provided by operating activities was $4.8 million and Adjusted EBITDA was a loss of $7.9 million. Please see the reconciliation of Adjusted EBITDA to net cash provided by operating activities below.

The Company owns a fleet of eleven vessels, comprised of six drybulk vessels (four Capesize and two Panamaxes) and five under construction Very Large Ore Carriers (VLOC). The fleet has a combined deadweight tonnage of about 1.9 million tons. During the three months ended September 30, 2011, the Company operated an average of six drybulk vessels that earned an average time charter equivalent rate, or TCE, of $23,287 per day.

Fleet Data

Three Months Ended
September 30,
2010 2011
Average number of vessels (1) 12 6
Total voyage days for fleet (2) 1,063 534
Total calendar days for fleet (3) 1,104 552
Time charter equivalent rate (TCE) (4) $ 22,097 $ 23,287
Fleet utilization (5) 96.3% 96.7%
(1) Average number of vessels is the number of vessels that comprised our operating 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 our operating 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 the TCE for the periods then ended:

(Dollars in thousands, except Average Daily results - unaudited) Three Months Ended
September 30,
2010 2011
Voyage revenue 24,784 13,149
Voyage expenses (1,295) (714)
Revenue on a time charter basis 23,489 12,435
Total voyage days for fleet 1,063 534
Time charter equivalent (TCE) rate $ 22,097 $ 23,287

Financial Statements
The following are the Company's Consolidated Statements of Operations for the three months ended September 30, 2010 and 2011:

Three Months Ended
September 30,
(Dollars in thousands, except for share and per share data)
2010 2011
STATEMENT OF OPERATIONS DATA (unaudited) (unaudited)
Voyage revenues $ 24,784 $ 13,149
Loss on forward freight agreements (124) -
Gross revenue 24,660 13,149
Voyage expenses (1,295) (714)
Vessels operating expenses (10,113) (4,575)
Depreciation (6,979) (4,162)
General and administrative expenses (1,415) (21,417)
Survey and drydocking costs (448) (590)
Loss on sale of vessels and vessels held for sale
(63,854)

-
Operating loss (59,444) (18,309)
Interest income 6 57
Interest expense and finance costs (862) (659)
Loss on derivative instruments (2,734) (315)
Net loss $ (63,034) $ (19,226)
Loss per common share, basic and diluted $ (16,32) $ (3,23)
Weighted average number of common shares, basic and diluted (1)
3,863,333

5,946,180
(1) The weighted average number of common shares gives effect to the 1:20 reverse stock split which took place on July 6, 2011.

The following are the Company's Consolidated Balance Sheets as of December 31, 2010 and September 30, 2011:

(Dollars in thousands, except per share data)
2010 2011
ASSETS (audited) (unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 9,549 $ 11,034
Vessels held for sale 88,274 -
Other current assets 11,931 4,365
Total current assets 109,754 15,399
FIXED ASSETS, NET:
Vessels under construction 46,618 95,329
Vessels, net of accumulated depreciation 311,144 298,908
Other, net of accumulated depreciation 597 418
Total fixed assets, net 358,359 394,655
OTHER NON-CURRENT ASSETS
Restricted cash 5,511 3,011
Other non -current assets 5,239 5,372
Total assets 478,863 418,437
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt 82,331 26,524
Other current liabilities 28,980 30,891
Total current liabilities 111,311 57,415
NON-CURRENT LIABILITIES:
Derivative liability, net of current portion 4,875 2,427
Long-term debt, net of current portion 127,441 111,187
Total non-current liabilities 132,316 113,614
STOCKHOLDERS' EQUITY: 235,236 247,408
Total liabilities and stockholders' equity 478,863 418,437

Adjusted EBITDA Reconciliation

The Company 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 September 30,
(amounts in thousands of U.S. dollars) 2010 2011
Net cash provided by operating activities 8,043 4,782
Net increase/(decrease) in operating assets (8,315 ) (597 )
Net (increase)/decrease in operating liabilities 9,163 (14,412 )
Net interest expense (*) 2,764 2,387
Amortization of deferred financing costs included in interest expense (130 ) (71 )
Adjusted EBITDA 11,525 (7,911 )
(*) Net interest expense includes the realized loss of interest rate swaps included in "Loss on interest rate swaps" in the interim consolidated unaudited statements of operations.

Fleet List

The table below describes our fleet and current employment profile as of the date of this report:

Vessel Name Year Built DWT Type Current Employment Gross Rate per Day Earliest Redelivery Latest
Redelivery
Drybulk Vessels
M/V Robusto 2006 173,949 Capesize TC 26,000 Aug-14 Mar-18
M/V Cohiba 2006 174,200 Capesize TC 26,250 Oct-14 May-18
M/V Montecristo 2005 180,263 Capesize TC 23,500 May-14 Jan-18
M/V Partagas 2004 173,880 Capesize TC 27,500 Jul-12 Dec-12
M/V Topeka 2000 74,710 Panamax TC 15,000 Jan-12 Apr-13
M/V Helena 1999 73,744 Panamax TC 32,000 May-12 Oct-16
Vessels to be Acquired
Newbuilding VLOC #1 (1) 2012 206,000 Capesize TC 25,000 Apr-15 Apr-20
Newbuilding VLOC #2 (2) 2012 206,000 Capesize TC 23,000 Aug -17 Aug -22
Newbuilding VLOC #3 (3) 2012 206,000 Capesize TC 21,500 Oct-19 Oct-26
Newbuilding VLOC #4 2012 206,000 Capesize Spot
Newbuilding VLOC #5 2013 206,000 Capesize Spot
(1) Upon delivery of the vessel, which is expected in the first quarter of 2012, it is scheduled to commence time charter employment for a minimum period of three years at a gross daily rate of $25,000.
(2) Upon delivery of the vessel, which is expected in the second quarter of 2012, it is scheduled to commence time charter employment for a minimum period of five years at a gross daily rate of $23,000. In addition, the time charter contract provides for a 50% profit sharing arrangement when the daily Capesize average time charter rate is between $23,000 and $40,000 per day.
(3) Upon delivery of the vessel, which is expected in the fourth quarter of 2012, it is scheduled to commence time charter employment for a minimum period of seven years at a gross daily rate of $21,500. In addition, the time charter contract provides for a 50% profit sharing arrangement when the daily Capesize average time charter rate is between $21,500 and $38,000 per day.

About OceanFreight Inc.

The Company is an owner and operator of drybulk vessels that operate worldwide. The Company owns a fleet of eleven vessels, comprised of six drybulk vessels (four Capesize and two Panamaxes) and five newbuilding Very Large Ore Carriers (VLOC) with a combined deadweight tonnage of about 1.9 million tons.

The Company'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 the Company 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, the Company 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 the Company'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.

Please see the Company's filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties. The information set forth herein speaks only as of the date hereof, and the Company disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication.

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