DryShips Inc. Reports Financial and Operating Results for the Fourth Quarter 2015

ATHENS, GREECE -- (Marketwired) -- 03/08/16 -- DryShips Inc. (NASDAQ: DRYS), or DryShips or the Company, an international owner of drybulk carriers and offshore support vessels, today announced its unaudited financial and operating results for the quarter ended December 31, 2015.

Fourth Quarter 2015 Financial Highlights

• For the fourth quarter of 2015, the Company reported a net loss of $527.6 million, or $0.79 basic and diluted loss per share. Included in the fourth quarter 2015 results are:
  • Vessel impairment charges and non-cash losses, of $119.1 million, or $0.18 per share.
  • Non-cash write down of our investment in Ocean Rig of $310.5 million, or $0.47 per share.
• Excluding these impairment charges and losses, the Company's net results would have amounted to a net loss of $98.0 million, or $0.14 per share. (1)
• The Company reported negative Adjusted EBITDA of $14.8 million for the fourth quarter of 2015. (2)

Recent Highlights

• On March 3, 2016, the Company received notice of termination from Petroleo Brasileiro S.A. (Petrobras) of the contract for the oil spill recovery vessel Vega Juniz effective as of March 9, 2016. The contract of the Vega Juniz was expiring on April 25, 2017 and this termination represents a loss in contracted EBITDA of approximately $2.8 million for the balance of 2016.
• On February 19, 2016, the Company's Board of Directors (the "Board") approved a 1-for-25 reverse stock split of the Company's common shares. The reverse stock split will take effect, and the Company's common stock will begin trading on a split adjusted basis on the Nasdaq Capital Market, as of the opening of trading on March 11, 2016.
• On February 15, 2016, the Company announced that the previously disclosed sale of its Capesize vessels, the Fakarava, Rangiroa and Negonego, to entities controlled by its Chairman and CEO Mr. George Economou has failed. In addition, the Company reached a settlement agreement with the charterer of these vessels for an upfront lumpsum payment and the conversion of the daily rates to index-linked time charters.
• On February 15, 2016, the Company announced that Petrobras has given notice of termination of the contract for the platform supply vessel Vega Crusader effective as of March 6, 2016. The contract of the Vega Crusader was expiring on January 8, 2017 and this termination represents a loss in contracted EBITDA of approximately $2.2 million for the balance of 2016.

(1) The net result includes approximately 40.44% of Ocean Rig's results, which are owned by DryShips Inc. common shareholders. (2) Adjusted EBITDA is a non-GAAP measure; please see later in this press release for reconciliation to net loss. (3) Shares and per share data does not give effect to the 1-for -25 reverse stock split, approved on February 19, 2016, which becomes effective on March 11, 2016.

Bank Update / Liquidity

Given the prolonged market downturn in the drybulk segment and the continued depressed outlook on freight rates, the Company is presently engaged in discussions with its lenders for the restructuring of its debt facilities.

Three of these bank facilities have matured and the Company has not made the final balloon installment. For the remaining bank facilities, the Company has elected to suspend principal repayments to preserve cash liquidity.

Fleet List

The table below describes our fleet profile as of March 7, 2016:

                   Year                     Gross rate    Redelivery
                  Built   DWT     Type        Per day      Earliest   Latest
                  ----- ------- -------- ---------------- ---------- -------
Drybulk fleet
-----------------

Capesize:
Rangiroa           2013 206,026 Capesize T/C Index linked   Aug-19    Feb-20
Negonego           2013 206,097 Capesize T/C Index linked   Aug-19    Feb-20
Fakarava           2012 206,152 Capesize T/C Index linked   Aug-19    Feb-20

Panamax:
Raraka             2012  76,037  Panamax       Spot           N/A      N/A
Amalfi             2009  75,206  Panamax       Spot           N/A      N/A
Rapallo            2009  75,123  Panamax T/C Index linked   Aug-16    Oct-16
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
Sorrento           2004  76,633  Panamax       Spot           N/A      N/A
Mendocino          2002  76,623  Panamax T/C Index linked   Oct-16    Dec-16
Bargara            2002  74,832  Panamax T/C Index linked   Sep-16    Nov-16
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 linked   Aug-16    Oct-16
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
Ocean Crystal      1999  73,688  Panamax       Spot           N/A      N/A

Offshore Supply
 fleet
-----------------

Platform Supply
 Vessels:
Vega Crusader      2012  1,457     PSV         Spot           N/A      N/A
Vega Corona        2012  1,430     PSV          T/C         Dec.-16  Dec.-20
Oil Spill
 Recovery
 Vessels:
Vega Inruda        2013  1,393    OSRV          T/C         Aug.-17  Aug.-21
Vega Jaanca        2012  1,393    OSRV          T/C         Jul.-17  Jul.-21
Vega Emtoli        2012  1,363    OSRV          T/C         May.-17  May.-21
Vega Juniz         2012  1,317    OSRV         Spot           N/A      N/A

Drybulk Carrier Segment Summary Operating Data (unaudited) (Dollars in thousands, except average daily results)

                                      Three Months Ended Year Ended December
Drybulk                                  December 31,            31,
-------------------------------------------------------- -------------------
                                        2014      2015      2014      2015
---------------------------------------------- --------- --------- ---------
Average number of vessels(1)              39.0      26.5      38.7      35.8
Total voyage days for vessels(2)         3,555     2,341    13,889    12,562
Total calendar days for vessels(3)       3,588     2,434    14,122    13,060
Fleet utilization(4)                     99.1%     96.2%     98.4%     96.2%
Time charter equivalent(5)             $12,974    $5,097   $12,354    $9,171
Vessel operating expenses (daily)(6)    $6,659    $6,528    $6,400    $6,715

(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 and write off in overdue receivables 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   Year Ended December
Drybulk                               December 31,              31,
------------------------------------------------------ ---------------------
                                    2014       2015       2014       2015
------------------------------------------- ---------- ---------- ----------
Voyage revenues(7)               $   54,037 $   15,660 $  205,630 $  138,828
Voyage expenses                     (7,913)    (3,729)   (34,044)   (23,619)
                                 ---------- ---------- ---------- ----------
Time charter equivalent revenues $   46,124 $   11,931 $  171,586 $  115,209
                                 ---------- ---------- ---------- ----------
Total voyage days for fleet           3,555      2,341     13,889     12,562
Time charter equivalent TCE      $   12,974 $    5,097 $   12,354 $    9,171



                               DryShips Inc.

                            Financial Statements
         Unaudited Condensed Consolidated Statements of Operations

(Expressed in
 Thousands of U.S.
 Dollars except for
 share and per share     Three Months Ended
 data)                      December 31,           Year Ended December 31,
                     --------------------------  --------------------------
                         2014          2015          2014          2015
                     ------------  ------------  ------------  ------------

REVENUES:
Voyage revenues      $     99,045  $     23,766  $    368,447  $    244,020
Revenues from
 drilling contracts       499,366             -     1,817,077       725,805
                     ------------  ------------  ------------  ------------
                          598,411        23,766     2,185,524       969,825

EXPENSES:
Voyage expenses            28,998         4,385       117,165        65,286
Vessel operating
 expenses                  30,537        20,271       116,428       111,451
Drilling rigs and
 drillships
 operating expenses       194,815             -       727,832       259,623
Depreciation and
 amortization             116,254           672       449,792       227,652
Vessels impairment,
 loss on sales and
 other                     38,148       119,054        39,455     1,085,357
General and
 administrative
 expenses                  54,610        14,814       193,686       104,912
Legal settlements
 and other, net            (3,454)         (145)       (2,013)       (2,948)
                     ------------  ------------  ------------  ------------

Operating
 income/(loss)            138,503      (135,285)      543,179      (881,508)

OTHER INCOME /
 (EXPENSES):
Interest and finance
 costs, net of
 interest income          (87,679)       (3,020)     (398,875)     (171,605)
Gain/(Loss) on
 interest rate swaps       (7,683)          718       (15,528)      (11,601)
Other, net                  4,237        (2,617)        7,067        (9,275)
Income taxes              (35,950)         (188)      (77,823)      (37,119)
                     ------------  ------------  ------------  ------------
Total other
 expenses, net           (127,075)       (5,107)     (485,159)     (229,600)
                     ------------  ------------  ------------  ------------

Net income/(loss)          11,428      (140,392)       58,020    (1,111,108)

Loss due to
 deconsolidation of
 Ocean Rig                      -             -             -    (1,347,106)
Equity in loss of
 affiliate                      -      (387,281)            -      (349,872)
Net (income)/ loss
 attributable to Non
 controlling
 interests                (35,425)           54      (105,532)      (38,975)
                     ------------  ------------  ------------  ------------

Net loss
 attributable to
 DryShips Inc.       $    (23,997) $   (527,619) $    (47,512) $ (2,847,061)
                     ============  ============  ============  ============

Net loss
 attributable to
 DryShips Inc.
 common stockholders      (24,161)     (527,619)      (48,209)   (2,847,631)
                     ============  ============  ============  ============
Loss per common
 share, basic and
 diluted (1)         $      (0.04) $      (0.79) $      (0.11) $      (4.28)
Weighted average
 number of shares,
 basic and diluted
 (1)                  586,693,626   665,186,756   456,031,628   664,959,017

(1) Shares and per share data does not give effect to the 1-for-25 reverse stock split, approved on February 19, 2016, which becomes effective on March 11, 2016.

                                DryShips Inc.

               Unaudited Condensed Consolidated Balance Sheets

                                                  December 31,  December 31,
(Expressed in Thousands of U.S. Dollars)              2014          2015
                                                 ------------- -------------

ASSETS

  Cash, cash equivalents and restricted cash
   (current and non-current)                     $     658,936 $      15,026
  Assets held for sale                                       -       216,026
  Other current assets                                 568,341        38,015
  Advances for vessels and drillships under
   construction and related costs                      623,984             -
  Vessels, net                                       2,141,617        96,428
  Drilling rigs, drillships, machinery and
   equipment, net                                    6,259,747             -
  Investment in affiliate                                    -        91,410
  Other non-current assets                             118,978        19,147
                                                 ------------- -------------
  Total assets                                      10,371,603       476,052
                                                 ============= =============


LIABILITIES AND STOCKHOLDERS' EQUITY


  Total debt                                         5,517,613       236,942
  Liabilities held for sale                                  -       104,366
  Total other liabilities                              563,602        13,332
  Total stockholders' equity                         4,290,388       121,412
                                                 ------------- -------------
  Total liabilities and stockholders' equity     $  10,371,603 $     476,052
                                                 ============= =============

Adjusted EBITDA Reconciliation

Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, vessel and investment impairments and certain other non-cash items as described below, dry-dockings, 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      Year Ended    Year Ended
(Dollars in          December 31,  December 31,  December 31,  December 31,
 thousands)              2014          2015          2014          2015
                     ------------  ------------  ------------  ------------

Net loss
 attributable to
 Dryships Inc        $    (23,997) $   (527,619) $    (47,512) $ (2,847,061)

Add: Net interest
 expense                   87,679         3,020       398,875       171,605
Add: Depreciation
 and amortization         116,254           672       449,792       227,652
Add: Dry-dockings
 and class survey
 costs                      1,513         3,393         8,819        23,686
Add: Impairments
 losses on sales and
 other                     38,148       119,054        39,455     1,108,587
Add: Loss due to
 deconsolidation of
 Ocean Rig                      -             -             -     1,347,106
Add: Income taxes          35,950           188        77,823        37,119
Add: Gain /(loss) on
 interest rate swaps        7,683          (718)       15,528        11,601
Add: Equity in loss
 of affiliate                   -       387,281             -       349,872
Add: Net
 income/(loss)
 attributable to Non
 controlling
 interests                 35,425           (54)      105,532        38,975
                     ------------  ------------  ------------  ------------
Adjusted EBITDA      $    298,655  $    (14,783) $  1,048,312  $    469,142
                     ============  ============  ============  ============

About DryShips Inc.

DryShips Inc. is an owner of drybulk carriers and offshore support vessels that operate worldwide. DryShips also owns approximately 40% of the outstanding shares of Ocean Rig UDW Inc. (NASDAQ: ORIG), an international drilling contractor. DryShips owns a fleet of 23 drybulk carriers, comprising 3 Capesize and 20 Panamax with a combined deadweight tonnage of approximately 2.1 million tons, and 6 offshore supply vessels, comprising 2 platform supply and 4 oil spill recovery vessels.

DryShips' common stock is listed on the NASDAQ Capital 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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