DryShips Inc. Reports Financial and Operating Results for the First Quarter 2015
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ATHENS, GREECE -- (Marketwired) -- 05/11/15 -- DryShips Inc. (NASDAQ: DRYS), or DryShips or the Company, an international provider of marine transportation services for drybulk and petroleum cargoes, and through its majority owned subsidiary, Ocean Rig UDW Inc., or Ocean Rig, of offshore deepwater drilling services, today announced its unaudited financial and operating results for the first quarter ended March 31, 2015.
First Quarter 2015 Financial Highlights
- For the first quarter of 2015, the Company reported a net loss of $59.2 million, or 8.9 cents basic and diluted loss per share. Included in the first quarter 2015 results is an impairment charge on ten tanker vessels, of $56.6 million, or 8.5 cents per share. Excluding this item, the Company's net results would have amounted to a net loss of $2.6 million, or 0.4 cents per share.(1)
- The Company reported Adjusted EBITDA of $242.1 million for the first quarter of 2015, as compared to $200.6 million for the first quarter of 2014.(2)
(1) The net result is adjusted for the minority interests of 40.82% not
owned by DryShips Inc. common stockholders.
(2) Adjusted EBITDA is a non-GAAP measure; please see later in this press
release for reconciliation to net income.
Recent Highlights
- On May 6, 2015, Ocean Rigs' Board of Directors declared the fifth consecutive quarterly cash dividend with respect to the quarter ended March 31, 2015, of $0.19 per common share, to Ocean Rig shareholders of record as of May 22, 2015 and payable on or about June 2, 2015. The Company expects to receive dividends amounting to $14.9 million.
- On April 30, 2015, the Company concluded ten Memoranda of Agreement with entities controlled by the Company's Chairman and Chief Executive Officer, George Economou, to sell its four Suezmax tankers, Vilamoura, Lipari, Petalidi and Bordeira, for an en-bloc sales price of $245.0 million. In addition, it has entered into agreements with entities controlled by Mr. Economou to potentially sell its six Aframax tankers, Belmar, Calida, Alicante, Mareta, Saga and Daytona, for an en-bloc sales price of $291.0 million, as long as they confirm their unconditional acceptance by June 30, 2015.
- On April 28, 2015, the Ocean Rig Apollo, which was delivered to Ocean Rig on March 5, 2015, successfully completed acceptance testing and commenced operations under the three year contract with Total EP Congo.
- On April 27, 2015, Ocean Rig has reached an agreement to postpone the delivery of the Ocean Rig Crete and Ocean Rig Amorgos to the first quarter of 2018 and 2019, respectively. As part of the agreement, certain portion of the pre-delivery payments were also deferred and the total project costs for the construction of each drillship have increased by $15 million.
- On March 19, 2015, the Company provided additional security in relation to the ABN AMRO secured bridge credit facility in the form of 12,500,000 Ocean Rig shares owned by us. Cumulatively, the Company has pledged 65,629,069 Ocean Rig shares in relation to that facility and the facility has an outstanding balance of $185.0 million.
- On March 16, 2015, Ocean Rig entered into a one-well drilling contract with an independent oil trading company for the Ocean Rig Olympia for drilling offshore West Africa. The new contract has an estimated backlog of $13.3 million and expected duration of 45 days.
George Economou, Chairman and Chief Executive Officer of the Company, commented:
"We are pleased to announce another quarter of robust operating results. Despite the grueling drybulk market which is at historical lows, our results were boosted by an exceptional quarter of our drilling segment and strong TCE performance of our tankers, averaging over $35,000 per day.
"In March, we announced agreements to potentially sell our entire tanker fleet for an aggregate price of $536 million. Net of the repayment of associated secured bank debt, these sales could potentially generate $275 million of free cash which will provide DryShips with sufficient liquidity to withstand a prolonged downturn in the drybulk market."
Financial Review: 2015 First Quarter
The Company recorded net loss of $59.2 million, or 8.9 cents basic and diluted loss per share, for the three-month period ended March 31, 2015, as compared to a net loss of $34.6 million, or 8.4 cents basic and diluted loss per share, for the three-month period ended March 31, 2014. Adjusted EBITDA(1) was $242.1 million for the first quarter of 2015, as compared to $200.6 million for the same period in 2014.
For the drybulk carrier segment, net voyage revenues (voyage revenues minus voyage expenses) amounted to $35.9 million for the three-month period ended March 31, 2015, as compared to $45.3 million for the three-month period ended March 31, 2014. For the tanker segment, net voyage revenues amounted to $31.7 million for the three-month period ended March 31, 2015, as compared to $22.3 million for the same period in 2014. For the offshore drilling segment, revenues from drilling contracts increased by $41.3 million to $402.1 million for the three-month period ended March 31, 2015, as compared to $360.8 million for the same period in 2014.
Total vessels', drilling rigs' and drillships' operating expenses and total depreciation and amortization increased to $181.1 million and to $118.7 million, respectively, for the three-month period ended March 31, 2015, from $179.6 million and $107.3 million, respectively, for the three-month period ended March 31, 2014. Total general and administrative expenses decreased to $43.3 million in the first quarter of 2015, from $49.1 million during the same period in 2014.
Interest and finance costs, net of interest income, amounted to $76.5 million for the three-month period ended March 31, 2015, compared to $114.3 million for the three-month period ended March 31, 2014.
The Time Charter Equivalent(2), or TCE, rate for our drybulk fleet was $10,535 per day per vessel in the three month period ended March 31, 2015, as compared to $13,564 per day per vessel in the corresponding period of 2014. The Time Charter Equivalent, or TCE, rate for our tanker fleet was $35,203 per day per vessel in the three month period ended March 31, 2015 which is a significant improvement compared to the $24,781 per day per vessel TCE rate in the corresponding period of 2014.
(1) Adjusted EBITDA is a non-GAAP measure; please see later in this press
release for reconciliation to net income.
(2) Time Charter Equivalent is a non-GAAP measure; please see later in this
press release for definition.
Fleet List
The table below describes our fleet profile as of May 4, 2015:
Year Gross rate Redelivery
Built DWT Type Per day Earliest Latest
----------- ------- -------- ------------- ----------- -------
Drybulk fleet
-------------
Capesize:
Rangiroa 2013 206,026 Capesize $23,000 May-18 Dec-23
Negonego 2013 206,097 Capesize $21,500 Mar-20 Feb-28
Fakarava 2012 206,152 Capesize $25,000 Sept-15 Sept-20
Raiatea 2011 179,078 Capesize $23,500 Oct-19 Dec-19
Mystic 2008 170,040 Capesize $52,310 Aug-18 Dec-18
Robusto 2006 173,949 Capesize $23,500 Jul-19 Sept-19
Cohiba 2006 174,234 Capesize $23,500 Sep-19 Nov-19
Montecristo 2005 180,263 Capesize $23,500 Jul-19 Sep-19
Flecha 2004 170,012 Capesize $55,000 Jul-18 Nov-18
Manasota 2004 171,061 Capesize $30,000 Jan-18 Aug-18
Partagas 2004 173,880 Capesize $23,500 Sep-19 Nov-19
Alameda 2001 170,662 Capesize $27,500 Nov-15 Jan-16
Capri 2001 172,579 Capesize $20,000 Jan-16 May-16
Panamax:
Raraka 2012 76,037 Panamax Spot N/A N/A
Woolloomooloo 2012 76,064 Panamax Spot N/A N/A
Amalfi 2009 75,206 Panamax Spot N/A N/A
Rapallo 2009 75,123 Panamax T/C Index Jul-16 Sep-16
linked
Catalina 2005 74,432 Panamax Spot N/A N/A
Majorca 2005 74,477 Panamax Spot N/A N/A
Ligari 2004 75,583 Panamax Spot N/A N/A
Saldanha 2004 75,707 Panamax Spot N/A N/A
Sorrento 2004 76,633 Panamax $24,500 Aug-21 Dec-21
Mendocino 2002 76,623 Panamax T/C Index Sep-16 Nov-16
linked
Bargara 2002 74,832 Panamax T/C Index Sep-16 Nov-16
linked
Oregon 2002 74,204 Panamax Spot N/A N/A
Ecola 2001 73,931 Panamax Spot N/A N/A
Samatan 2001 74,823 Panamax Spot N/A N/A
Sonoma 2001 74,786 Panamax Spot N/A N/A
Capitola 2001 74,816 Panamax Spot N/A N/A
Levanto 2001 73,925 Panamax T/C Index Aug-16 Oct-16
linked
Maganari 2001 75,941 Panamax Spot N/A N/A
Coronado 2000 75,706 Panamax Spot N/A N/A
Marbella 2000 72,561 Panamax Spot N/A N/A
Redondo 2000 74,716 Panamax Spot N/A N/A
Topeka 2000 74,716 Panamax Spot N/A N/A
Ocean Crystal 1999 73,688 Panamax Spot N/A N/A
Helena 1999 73,744 Panamax Spot N/A N/A
Supramax:
Byron 2003 51,118 Supramax Spot N/A N/A
Galveston 2002 51,201 Supramax Spot N/A N/A
Year
Built/or
Scheduled Gross rate Redelivery
Delivery DWT Type Per day Earliest Latest
----------- ------- -------- ------------- ----------- -------
Tanker fleet
-------------
Suezmax:
Bordeira 2013 158,513 Suezmax Spot N/A N/A
Petalidi 2012 158,532 Suezmax Spot N/A N/A
Lipari 2012 158,425 Suezmax Spot N/A N/A
Vilamoura 2011 158,622 Suezmax Spot N/A N/A
Aframax:
Alicante 2013 115,708 Aframax Spot N/A N/A
Mareta 2013 115,796 Aframax Spot N/A N/A
Calida 2012 115,812 Aframax Spot N/A N/A
Saga 2011 115,738 Aframax Spot N/A N/A
Daytona 2011 115,896 Aframax Spot N/A N/A
Belmar 2011 115,904 Aframax Spot N/A N/A
Drilling Rigs/Drillships:
Total backlog as of May 4, 2015 amounted to $4.7 billion.
Year built/
or Scheduled
Unit Delivery Redelivery Operating Area
Leiv Eiriksson 2001 Q1 - 16 Norwegian Continental Shelf
Eirik Raude 2002 Q4 - 15 Falkland Islands
Ocean Rig Corcovado 2011 Q2 - 18 Brazil
Ocean Rig Olympia 2011 Q2 - 16(1)(2) Angola
Ocean Rig Poseidon 2011 Q2 - 17(2) Angola
Ocean Rig Mykonos 2011 Q1 - 18 Brazil
Ocean Rig Mylos 2013 Q3 - 16 Brazil
Ocean Rig Skyros 2013 Q3 - 21 Angola
Ocean Rig Athena 2014 Q2 - 17 Angola
Ocean Rig Apollo 2015 Q2 - 18 West Africa
Newbuildings
Ocean Rig Santorini Q2 2016 N/A N/A
Ocean Rig Crete Q1 2018 N/A N/A
Ocean Rig Amorgos Q1 2019 N/A N/A
(1) Total E&P Angola has redelivered the Ocean Rig Olympia on completion of
its well on March 9, 2015 and ahead of the contractual redelivery date
of August 2015. We are presently in discussions with Total EP Angola and
intend to legally defend our rights should we fail to reach an amicable
solution.
(2) Subject to the confirmation by national authorities and the entering of
definitive documentation of the previously announced Omnibus Agreement
which we expect to occur before the end of the second quarter of 2015.
Drybulk Carrier and Tanker Segment Summary Operating Data(unaudited) (Dollars in thousands, except average daily results)
Three Months Ended
Drybulk March 31,
----------------------
2014 2015
---------- ----------
Average number of vessels(1) 38.0 39.0
Total voyage days for vessels(2) 3,338 3,406
Total calendar days for vessels(3) 3,420 3,510
Fleet utilization(4) 97.6% 97.0%
Time charter equivalent(5) $ 13,564 $ 10,535
Vessel operating expenses (daily)(6) $ 6,325 $ 6,356
Three Months Ended
Tanker March 31,
----------------------
2014 2015
---------- ----------
Average number of vessels(1) 10.0 10.0
Total voyage days for vessels(2) 900 900
Total calendar days for vessels(3) 900 900
Fleet utilization(4) 100.0% 100.0%
Time charter equivalent(5) $ 24,781 $ 35,203
Vessel operating expenses (daily)(6) $ 7,144 $ 6,546
(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 dry-docking days.
(3) Calendar days are the total number of days the vessels were in our
possession for the relevant period including dry-docking days.
(4) 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.
(5) Time charter equivalent, 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 voyage 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 and are paid
by the charterer under a time charter contract, as well as commissions.
TCE revenues, a non-U.S. GAAP measure, provides additional meaningful
information in conjunction with revenues from our vessels, the most
directly comparable U.S. GAAP measure, because it assists our management
in making decisions regarding the deployment and use of its vessels and
in evaluating their financial performance. TCE is also 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. Please see below for a reconciliation of TCE rates to voyage
revenues.
(6) Daily vessel operating expenses, which includes crew costs, provisions,
deck and engine stores, lubricating oil, insurance, maintenance and
repairs is calculated by dividing vessel operating expenses by fleet
calendar days for the relevant time period.
(7) Does not include accrual for the provision of the purchase options under
certain time charter agreements.
(In thousands of U.S. dollars, except for TCE rate, which is expressed in Dollars, and voyage days)
Three Months Ended
Drybulk March 31,
----------------------
2014 2015
---------- ----------
Voyage revenues(7) $ 53,408 $ 45,601
Voyage expenses (8,132) (9,720)
---------- ----------
Time charter equivalent revenues $ 45,276 $ 35,881
---------- ----------
Total voyage days for fleet 3,338 3,406
Time charter equivalent TCE $ 13,564 $ 10,535
Three Months Ended
Tanker March 31,
----------------------
2014 2015
---------- ----------
Voyage revenues $ 43,314 $ 50,065
Voyage expenses (21,011) (18,382)
---------- ----------
Time charter equivalent revenues $ 22,303 $ 31,683
---------- ----------
Total voyage days for fleet 900 900
Time charter equivalent TCE $ 24,781 $ 35,203
DryShips Inc.
Financial Statements
Unaudited Interim Condensed Consolidated Statements of Operations
(Expressed in Thousands of U.S. Dollars except
for share and per share data) Three Months Ended March 31,
----------------------------
2014 2015
------------- -------------
REVENUES:
Voyage revenues $ 96,722 $ 90,028
Revenues from drilling contracts 360,764 402,083
------------- -------------
457,486 492,111
EXPENSES:
Voyage expenses 29,143 28,102
Vessel operating expenses 28,063 28,200
Drilling rigs and drillships operating
expenses 151,515 152,927
Depreciation and amortization 107,277 118,696
Vessel impairments - 56,631
General and administrative expenses 49,091 43,288
Other, net 1,604 (630)
------------- -------------
Operating income 90,793 64,897
OTHER INCOME / (EXPENSES):
Interest and finance costs, net of interest
income (114,251) (76,488)
Loss on interest rate swaps (2,775) (9,680)
Other, net (104) (1,929)
Income taxes (8,791) (19,590)
------------- -------------
Total other expenses, net (125,921) (107,687)
------------- -------------
Net loss (35,128) (42,790)
Net (income)/loss attributable to Non
controlling interests 577 (16,367)
------------- -------------
Net loss attributable to Dryships Inc. $ (34,551) $ (59,157)
============= =============
Net loss attributable to Dryships Inc. common
stockholders (34,551) (59,231)
============= =============
Loss per common share, basic and diluted $ (0.08) $ (0.09)
Weighted average number of shares, basic and
diluted 409,609,554 664,830,988
DryShips Inc.
Unaudited Condensed Consolidated Balance Sheets
December 31, March 31,
(Expressed in Thousands of U.S. Dollars) 2014 2015
------------- -------------
ASSETS
Cash, cash equivalents and restricted cash
(current and non-current) $ 658,936 $ 586,589
Vessels held for sale - 530,640
Other current assets 568,341 730,564
Advances for vessels and drillships under
construction and related costs 623,984 344,870
Vessels, net 2,141,617 1,524,377
Drilling rigs, drillships, machinery and
equipment, net 6,259,747 6,946,165
Other non-current assets 118,978 101,682
------------- -------------
Total assets 10,371,603 10,764,887
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Total debt 5,517,613 5,920,090
Total other liabilities 563,602 603,434
Total stockholders' equity 4,290,388 4,241,363
------------- -------------
Total liabilities and stockholders' equity $ 10,371,603 $ 10,764,887
============= =============
Adjusted EBITDA Reconciliation
Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, vessel impairments and other, dry-dockings and class survey costs and gains or losses on interest rate swaps. Adjusted EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by United States generally accepted accounting principles, or U.S. GAAP, and our calculation of adjusted EBITDA may not be comparable to that reported by other companies. Adjusted EBITDA is included herein because it is a basis upon which the Company measures its operations. Adjusted EBITDA is also used by our lenders as a measure of our compliance with certain covenants contained in our loan agreements and because the Company believes that it presents useful information to investors regarding a company's ability to service and/or incur indebtedness.
The following table reconciles net loss to Adjusted EBITDA:
Three Months Three Months
Ended Ended
(Dollars in thousands) March 31, 2014 March 31, 2015
--------------- ---------------
Net loss attributable to Dryships Inc $ (34,551) $ (59,157)
Add: Net interest expense 114,251 76,488
Add: Depreciation and amortization 107,277 118,696
Add: Dry-dockings and class survey costs 2,659 3,838
Add: Impairment losses - 56,631
Add: Income taxes 8,791 19,590
Add: Loss on interest rate swaps 2,775 9,680
Add: Net income/(loss) attributable to Non
controlling interests (577) 16,367
--------------- ---------------
Adjusted EBITDA $ 200,625 $ 242,133
=============== ===============
Conference Call and Webcast: May 12, 2015
As announced, the Company's management team will host a conference call on Tuesday, May 12, 2015 at 9:00 a.m. Eastern Daylight Time to discuss the Company's financial results.
Conference Call Details
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1(866) 819-7111 (from the US), 0(800) 953-0329 (from the UK) or +(44) (0) 1452 542 301 (from outside the US). Please quote "DryShips."
A replay of the conference call will be available until May 19, 2015. The United States replay number is 1(866) 247-4222; from the UK 0(800) 953-1533; the standard international replay number is (+44) (0) 1452 55 00 00 and the access code required for the replay is: 2133051#.
A replay of the conference call will also be available on the Company's website at www.dryships.com under the Investor Relations section.
Slides and Audio Webcast
There will also be a simultaneous live webcast over the Internet, through the DryShips Inc. website (www.dryships.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
About DryShips Inc.
DryShips Inc. is an owner of drybulk carriers and tankers that operate worldwide. Through its majority owned subsidiary, Ocean Rig UDW Inc., DryShips owns and operates 13 offshore ultra deepwater drilling units, comprising of 2 ultra deepwater semisubmersible drilling rigs and 11 ultra deepwater drillships, 1 of which is scheduled to be delivered to Ocean Rig during 2016, 1 of which is scheduled to be delivered during 2018 and 1 of which is scheduled to be delivered during 2019. DryShips owns a fleet of 39 drybulk carriers, comprising 13 Capesize, 24 Panamax and 2 Supramax with a combined deadweight tonnage of approximately 4.3 million tons, and 10 tankers, comprising 4 Suezmax and 6 Aframax, with a combined deadweight tonnage of over 1.3 million tons.
DryShips' common stock is listed on the NASDAQ Global Select Market where it trades under the symbol "DRYS."
Visit the Company's website at www.dryships.com
Forward-Looking Statement
Matters discussed in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with such safe harbor legislation.
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 we believe 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, we 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 rates and dayrates and vessel and drilling dayrates and drybulk vessel, drilling rig and drillship values, failure of a seller to deliver one or more vessels or drilling units, drillships or drybulk vessels, failure of a buyer to accept delivery of a drilling rig, drillship, or vessel, inability to procure acquisition financing, default by one or more customers, changes in demand for drybulk commodities or oil, changes in demand that may affect attitudes of time charterers and customer drilling programs, scheduled and unscheduled drydockings and upgrades, changes in our operating expenses, including bunker prices, drydocking and insurance costs, complications associated with repairing and replacing equipment in remote locations, limitations on insurance coverage, such as war risk coverage, in certain areas, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, changes in tax laws, treaties and regulations, tax assessments and liabilities for tax issues, 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 DryShips Inc. with the U.S. Securities and Exchange Commission, including the Company's most recently filed Annual Report on Form 20-F.
Investor Relations / Media: Nicolas Bornozis Capital Link, Inc. (New York) Tel. 212-661-7566 E-mail: [email protected]
Source: DryShips Inc.
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