SOURCE: OceanFreight Inc.

OceanFreight Inc.

December 08, 2010 16:05 ET

OceanFreight Inc. Reports Financial Results for the Third Quarter Ended September 30, 2010

ATHENS, GREECE--(Marketwire - December 8, 2010) - OceanFreight Inc. (NASDAQ: OCNF), a global provider of marine transportation services, today announced its financial results for the quarter ended September 30, 2010.

Financial Highlights

For the three-month period ended September 30, 2010, the Company reported a Net Loss of $63.0 million or basic and diluted loss per share of $0.82. Included in these results are:

--  A non-cash loss of $0.8 million associated with the change in the fair
    value of interest rate swaps.

--  An expense of $0.4 million associated with the scheduled drydocking of
    one vessel.

--  A loss of $64.0 million associated with the classification of four
    vessels as held for sale.

Excluding the above items Net Income for the third quarter 2010 would amount to $2.2 million or $0.03 basic and diluted earnings per share.

Recent Developments

In October and November 2010, we contracted to sell the M/T Pink Sands, the M/V Augusta, the M/V Austin and M/V Trenton, respectively, for an aggregate gross price of $75.6 million. The M/T Pink Sands was delivered to its new owners on November 4, 2010. The remaining vessels are expected to be delivered to their new owners in the first quarter of 2011.

Anthony Kandylidis, the Company's Chief Executive Officer, commented: "The 3rd Quarter of 2010 was another milestone in the execution of our stated business plan. Excluding the one-off losses due to the sale of four vessels, operating income was in line with expectations and moving forward we will continue with our fleet renewal and expansion program that will improve our profitability and increase shareholder value."

Third Quarter 2010 Results

For the third quarter ended September 30, 2010, Voyage Revenues amounted to $24.8 million and Operating Loss amounted to $59.4 million. Net Loss amounted to $63.0 million or $0.82 basic and diluted loss per share. Adjusted EBITDA(*) for the third quarter 2010 was $11.5 million.

An average of 12.0 vessels were owned and operated during the third quarter 2010, earning an average Time Charter Equivalent, or TCE rate, of $22,097 per day.

Capitalization

On September 30, 2010, the debt (debt, net of deferred financing fees) to total capitalization (debt and stockholders' equity) ratio was 49.1% and the net debt (debt less cash, cash equivalents and restricted cash) to total capitalization ratio was 45.2%.

Liquidity

As of September 30, 2010, the Company had total liquidity of approximately $18.1 million.

Fleet Data


(Dollars in thousands, except Average Daily results -  Three Months Ended
 unaudited)                                               September 30,
                                                      --------------------
                                                        2009       2010
                                                      ---------  ---------
Average number of vessels (1)                              12.7       12.0
                                                      ---------  ---------
Total voyage days for fleet (2)                           1,154      1,063
                                                      ---------  ---------
Total calendar days for fleet (3)                         1,167      1,104
                                                      ---------  ---------
Time charter equivalent (TCE) daily rate (4)          $  31,495  $  22,097
                                                      ---------  ---------
Fleet utilization (5)                                      98.9%      96.3%
                                                      ---------  ---------

(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.


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

The following table reflects the calculation of our TCE daily rates for the periods then ended:

(Dollars in thousands, except Average Daily results -  Three Months Ended
 unaudited)                                               September 30,
                                                      --------------------
                                                        2009       2010
                                                      ---------  ---------

Voyage revenue                                           37,679     24,784
                                                      ---------  ---------
Voyage expenses                                          (1,334)    (1,295)
                                                      ---------  ---------
Revenue on a time charter basis                          36,345     23,489
                                                      ---------  ---------

                                                      ---------  ---------
Total voyage days for fleet                               1,154      1,063
                                                      ---------  ---------

Time charter equivalent (TCE) daily rate              $  31,495  $  22,097
                                                      ---------  ---------

Financial Statements

The following are OceanFreight Inc.'s Consolidated Statements of Operations for the three-month periods ended September 30, 2009 and 2010:

                                                     Three Months Ended
                                                        September 30,
                                                  ------------------------
(Dollars in thousands, except for share and  per
 share data)
                                                      2009         2010
                                                  -----------  -----------
STATEMENT OF OPERATIONS DATA                      (unaudited)  (unaudited)

Voyage revenues                                   $    29,494  $    24,784
Gain on forward freight agreements                        242         (124)
Imputed revenue                                         8,185            -
                                                  -----------  -----------
Gross revenue                                          37,921       24,660

Voyage expenses                                        (1,334)      (1,295)
Vessels operating expenses                             (9,596)     (10,113)
Depreciation                                          (12,767)      (6,979)
General and administrative expenses                    (1,152)      (1,415)
Dry docking costs                                           -         (448)
(Impairment loss) on  vessels  held for sale and
 gain on vessel sold                                  (19,819)     (63,854)
                                                  -----------  -----------
Operating income/(loss)                                (6,747)     (59,444)
                                                  -----------  -----------

Interest income                                            95            6
Interest expense and finance costs                     (4,715)      (2,770)
Gain/(loss) on derivative instruments                  (1,984)        (826)
Other                                                      91            -
                                                  -----------  -----------
Net Loss                                          $   (13,260) $   (63,034)
                                                  ===========  ===========

Earnings per common share, basic and diluted      $     (0.44) $     (0.82)

Weighted average number of common shares, basic
 and diluted (1)                                   30,131,498   77,266,655



(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 September 30, 2010


      (Dollars in thousands, except per share data)
                                                       2009        2010
                                                    ----------- -----------
ASSETS                                              (audited)   (unaudited)
CURRENT ASSETS:
  Cash and cash equivalents                         $    37,272 $    12,048
  Restricted cash                                         2,500           -
  Vessels held for sale                                  51,080      93,634
  Other current assets                                    9,447       8,450
                                                    ----------- -----------
     Total current assets                               100,299     114,132
                                                    ----------- -----------

FIXED ASSETS, NET:
  Advances for vessel acquisition                         9,900           -
  Vessels under construction                                  -      47,744
  Vessels, net of accumulated depreciation of $43,486
   and $28,782, respectively                            423,242     322,645
  Other, net of accumulated depreciation of $123 and
   $317, respectively                                       856         662
                                                    ----------- -----------
     Total fixed assets, net                            433,998     371,051
                                                    ----------- -----------

OTHER NON-CURRENT ASSETS
  Restricted cash                                         6,511       6,011
  Other non-current assets                                8,464       6,227
                                                    ----------- -----------
     Total assets                                       549,272     497,421
                                                    =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current portion of long-term debt                      49,947      87,315
  Other current liabilities                              23,381      28,007
                                                    ----------- -----------
     Total current liabilities                           73,328     115,322
                                                    =========== ===========

NON-CURRENT LIABILITIES:
Derivative liability, net of current portion              3,606       7,112
Long-term debt, net of current portion                  215,727     140,407
                                                    ----------- -----------
  Total non-current liabilities                         219,333     147,519
                                                    =========== ===========



STOCKHOLDERS' EQUITY:                                   256,611     234,580
                                                    ----------- -----------
     Total liabilities and stockholders' equity         549,272     497,421
                                                    =========== ===========

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
                                                            September 30,
                                                            2009     2010
                                                           ------   ------
Net cash provided by operating activities                     781    8,043
Net increase/(decrease) in operating assets                 9,976   (8,315)
Net decrease in operating liabilities                       2,553    9,163
Net interest expense                                        4,620    2,764
Amortization of deferred financing costs included in
 interest expense                                            (185)    (130)
                                                           ------   ------
Adjusted EBITDA                                            17,745   11,525
                                                           ======   ======

Fleet List

The table below describes our fleet and current employment profile as of December 8, 2010:

                                               Gross
               Year                  Current  Rate 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   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     18,000     Jan-11   Mar-11
M/V Helena     1999  73,744 Panamax     TC     32,000     May-12   Oct-16

Tanker Vessels
M/T Tamara     1990  95,793 Aframax    POOL      -          -        -

Vessels to be Sold
M/T Olinda     1996 149,085 Suezmax    POOL      -          -        -
M/V Augusta    1996  69,053 Panamax     TC     16,000     Nov-11   Mar-12
M/V Austin     1995  75,229 Panamax     TC       (1)      Jul-12   Aug-12
M/V Trenton    1995  75,229 Panamax     TC       (1)      Aug-12   Sep-12

Drybulk Vessels to be Acquired
Newbuilding
 VLOC #1       2012 206,000 Capesize    TC     25,000     Apr-15   Apr-20
Newbuilding
 VLOC #2       2012 206,000 Capesize    TC     23,000 (2) Aug-17   Aug-22
Newbuilding
 VLOC #3       2013 206,000 Capesize    TC     21,500 (3) Oct-19   Oct-26


(1) The hire rate per vessel will be calculated based on a formula linked
    to the average of the Baltic Panamax Index of 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: Thursday, December 9, 2010 at 08:30 A.M. EST

OceanFreight management team will host a conference call on Thursday, December 9, 2010, at 08:30 A.M. Eastern Standard Time (EST) to discuss the Company's financial results for the quarter ended September 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 December 16, 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 11 vessels, comprised of 9 drybulk vessels (4 Capesize, 5 Panamaxes) and 2 crude carrier tankers (1 Suezmax, 1 Aframax) with a combined deadweight tonnage of about 1.3 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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