SOURCE: OceanFreight Inc.

OceanFreight Inc.

April 06, 2011 16:05 ET

OceanFreight Inc. Reports Financial Results for the Fourth Quarter and Year Ended 2010

ATHENS, GREECE--(Marketwire - April 6, 2011) - OceanFreight Inc. (NASDAQ: OCNF), a global provider of marine transportation services, today announced its financial results for the quarter and year ended December 31, 2010.

Financial Highlights

For the three-month period ended December 31, 2010 the Company reported a Net Income of $0.2 million. Included in these results is a loss of $1.6 million associated with the prior classification of four vessels as held for sale.

Excluding this item, net income for the fourth quarter of 2010 would amount to $1.8 million or $0.02 basic and diluted earnings per share.

Recent Developments

We recently signed a commitment letter with a major Chinese bank for the financing of up to 60% of the aggregate construction cost of three Very Large Ore Carriers (VLOCs) that we agreed to acquire in March 2010 and which are scheduled to be delivered in the first, second and third quarter of 2012. The facility includes a pre-delivery portion that is equal to the sum of all the yard installments prior to delivery. 

Anthony Kandylidis, the Company's Chief Executive Officer, commented:

"We are pleased to secure pre-delivery and permanent financing for our first three VLOCs. With our secured contract backlog, no issues with loan covenants and with the purchase of the additional two VLOCs to be delivered in 2013, OceanFreight is uniquely positioned to take advantage of the drybulk market through the next cycle." 

Fourth Quarter 2010 Results

For the fourth quarter ended December 31, 2010, Voyage Revenues amounted to $23.0 million and Operating Income amounted to $2.3 million. Net Income amounted to $0.2 million. Adjusted EBITDA(*) for the fourth quarter of 2010 was $8.5 million.

An average of 11.4 vessels were owned and operated during the fourth quarter of 2010, earning an average Time Charter Equivalent, or TCE rate, of $21,015 per day.

(*) Please see later in this release for a reconciliation of adjusted EBITDA to net cash provided by Operating activities.

Year Ended December 31, 2010 Results

For the year ended December 31, 2010, Voyage Revenue amounted to $100.6 million. Operating Loss was $46.3 million, which includes the effect of the loss from the sale of vessels and vessels held for sale $63.0 million. Net Loss amounted to $61.6 million or $(0.87) basic and diluted loss per share. Adjusted EBITDA for the year was $41.0 million as adjusted for the effect of the loss from the sale of vessels and vessels held for sale.

An average of 12.0 vessels were owned and operated during the year ended 2010, earning an average TCE rate of $23,022 per day.

Fleet Data

(Dollars in thousands, except Average Daily results - unaudited)   Three Months Ended
December 31,
    Year Ended
December 31,
 
    2009     2010     2009     2010  
                                 
Average number of vessels (1)     12.3       11.4       12.7       12  
Total voyage days for fleet (2)     1,125       1,035       4,466       4,213  
Total calendar days for fleet (3)     1,131       1,047       4,650       4,370  
Time charter equivalent (TCE) daily rate (4)   $ 25,172     $ 21,015     $ 28,523     $ 23,022  
Fleet utilization (5)     99.5 %     98.9 %     96.1 %     96.4 %
     
(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 results - unaudited)   Three Months Ended
December 31,
    Year Ended
December 31,
 
    2009     2010     2009     2010  
                                 
Voyage revenue     29,412       23,028       132,935       102,190  
Voyage expenses     (1,094 )     (1,277 )     (5,549 )     (5,196 )
Revenue on a time charter basis     28,318       21,751       127,386       96,994  
                                 
Total voyage days for fleet     1,125       1,035       4,466       4,213  
Time charter equivalent (TCE) daily rate   $ 25,172     $ 21,015     $ 28,523     $ 23,022  
                                 

Financial Statements

The following are OceanFreight Inc.'s Consolidated Statements of Operations for the three-month periods and the years ended December 31, 2009 and 2010:

    Three Months Ended
December 31,
    Year Ended
December 31,
 
(Dollars in thousands, except for share and per share data)                        
    2009     2010     2009     2010  
STATEMENT OF OPERATIONS DATA   (unaudited)     (unaudited)     (audited)     (unaudited)  
                                 
Voyage revenues   $ 28,228     $ 23,028     $ 118,462     $ 100,632  
Gain on forward freight agreements     (263 )     -       570       (4,342 )
Imputed revenue     1,185       -       14,473       1,558  
Gross revenue     29,150       23,028       133,505       97,848  
                                 
Voyage expenses     (1,094 )     (1,277 )     (5,549 )     (5,196 )
Vessels operating expenses     (11,132 )     (9,422 )     (43,915 )     (41,078 )
Depreciation     (9,804 )     (4,293 )     (48,272 )     (24,853 )
General and administrative expenses     (4,323 )     (4,162 )     (8,540 )     (8,264 )
Dry docking costs     -       -       (5,570 )     (1,784 )
Loss from sale of vessels and vessels held for sale     (82,076 )     (1,551 )     (133,176 )     (62,929 )
Impairment loss     (52,700 )     -       (52,700 )     -  
Operating income/(loss)     (131,979 )     2,323       (164,217 )     (46,256 )
                                 
Interest income     16       3       271       119  
Interest expense and finance costs     (2,221 )     (2,828 )     (12,169 )     (6,775 )
Gain/(loss) on derivative instruments     (993 )     694       (2,567 )     (8,713 )
Net income/(loss)   $ (135,177 )   $ 192     $ (178,682 )   $ (61,625 )
                                 
Earnings/(loss) per common share, basic and diluted   $ (2.935 )   $ 0.002     $ (6.824 )   $ (0.874 )
                                 
Weighted average number of common shares, basic and diluted (1)     46,131,749       78,244,916       26,185,442       70,488,531  
     
(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 2010:

 
(Dollars in thousands, except per share data)    
    2009   2010
ASSETS   (audited)   (unaudited)
CURRENT ASSETS:            
  Cash and cash equivalents   $ 37,272   $ 9,549
  Restricted cash     2,500     0
  Vessels held for sale     51,080     88,274
  Other current assets     9,447     11,931
    Total current assets     100,299     109,754
             
FIXED ASSETS, NET:            
  Advances for vessel acquisition     9,900     -
  Vessels under construction     -     46,618
  Vessels, net of accumulated     423,242     311,144
  Other, net of accumulated depreciation     856     597
    Total fixed assets, net     433,998     358,359
             
OTHER NON-CURRENT ASSETS            
  Restricted cash     6,511     5,511
  Other non-current assets     8,464     5,239
    Total assets     549,272     478,863
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
CURRENT LIABILITIES:            
  Current portion of long-term debt     49,947     82,331
  Other current liabilities     23,381     28,980
    Total current liabilities     73,328     111,311
             
NON-CURRENT LIABILITIES:            
  Derivative liability, net of current portion     3,606     4,875
  Long-term debt, net of current portion     215,727     127,441
    Total non-current liabilities     219,333     132,316
             
             
STOCKHOLDERS' EQUITY:     256,611     235,236
    Total liabilities and stockholders' equity     549,272     478,863

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
December 31,
    Year Ended
December 31,
 
    2009     2010     2009      2010  
    (amounts in thousands of U.S. dollars)  
Net cash provided by operating activities   6,314     3,070     26,552     28,449  
Net increase/(decrease) in operating assets   (2,993 )   2,582     9,988     (481 )
Net (increase)/decrease in operating liabilities   3,794     (1,833 )   143     (1,214 )
Net interest expense   4,468     4,792     19,563     14,816  
Amortization of deferred financing costs included in interest expense   (169 )   (116 )   (744 )   (538 )
Adjusted EBITDA   11,414     8,495     55,502     41,032  
                         

Fleet List

The table below describes our fleet and current employment profile as of April 6, 2011:

Vessel Name   Year Built   DWT   Type   Current Employ-ment   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
                             
Vessel to be Sold                            
M/T Olinda   1996   149,085   Suezmax   POOL   -   -   -
                             
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   2013   206,000   Capesize   Spot            
Newbuilding VLOC #5   2013   206,000   Capesize   Spot            
     
(1)   Upon delivery of this vessel, Hull 1227, which is expected in the first quarter of 2012, the vessel 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 this vessel, Hull 1228, which is expected in the second quarter of 2012, the vessel 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 this vessel, Hull 1229, which is expected in the third quarter of 2012, the vessel 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.
     

Conference Call and Webcast: Thursday, April 7, 2011 at 08:30 A.M. EDT

OceanFreight management team will host a conference call on Thursday, April 7, 2011, at 08:30 A.M. Eastern Daylight Time (EDT) to discuss the Company's financial results for the Quarter ended December 31, 2010.

Conference Call details:

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 866 819 7111 (US Toll Free Dial In), 0800 953 0329 (UK 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 April 13, 2011 by dialing 1 866 247 4222 (US Toll Free Dial In), 0800 953 1533 (UK 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. OceanFreight owns a fleet of twelve vessels, comprised of six drybulk vessels (four Capesize, two Panamaxes), one Suezmax crude carrier tanker and five newbuilding Very Large Ore Carriers (VLOC) with a combined deadweight tonnage of about 2 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. 

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