-- 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 activitiesThe 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.
Contact Information: Investor Relations/Media: Nicolas Bornozis Capital Link, Inc. (New York) Tel: +1-212-661-7566 E-mail: oceanfreight@capitallink.com