DryShips Inc. Reports Financial and Operating Results for the Second Quarter 2016

ATHENS, GREECE -- (Marketwired) -- 08/08/16 -- 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 June 30, 2016.

Second Quarter 2016 Financial Highlights

• For the second quarter of 2016, the Company reported a net loss of $9.1 million, or $0.34 basic and diluted loss per share.
• The Company reported a negative Adjusted EBITDA of $10.1 million for the second quarter of 2016.(1)

Recent Highlights

• Mr. Anthony Kandylidis, Executive Vice President has assumed the duties of interim Chief Financial Officer as of August 8, 2016.
• As of August 7, 2016, 4,635 of the Company's 5,000 Series C Convertible Preferred stock, were converted to 12,719,431 common shares, including the respective dividends.
• On July 27, 2016, the Company's $103.2 million secured term loan facility dated June 20, 2008, with a total outstanding balance of $18.3 million, became due and payable in full.
• On July 27, 2016, the Company received written notification from The Nasdaq Stock Market ("Nasdaq"), indicating that as the closing bid price of the Company's common stock for the last 30 consecutive business days, was below $1.00 per share, the Company no longer meets the minimum bid price requirement for continued listing on the Nasdaq Capital Market, set forth in Nasdaq Listing Rule 5550(a)(2). Pursuant to Nasdaq Listing Rules, the applicable grace period to regain compliance is 180 days, or until January 23, 2017. The Company has determined to effect a 1-for-4 reverse stock split, in order to regain compliance with the Nasdaq Capital Market minimum bid price requirement, effective on or about August 15, 2016.

Bank Update / Liquidity

The Company is presently engaged in discussions with its lenders for the restructuring of its debt facilities. Six 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 and interest payments to preserve cash liquidity.

(1) Adjusted EBITDA is a non-GAAP measure; please see later in this press release for reconciliation to net loss. (2) Shares and per share data does not give effect to the 1-for-4 reverse stock split, approved on July 29, 2016, which will become effective on or about August 15, 2016.

Fleet List The table below describes our fleet profile as of August 8, 2016:

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

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      Laid up         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      Laid up         N/A      N/A
Coronado             2000 75,706 Panamax       Spot           N/A      N/A
Marbella             2000 72,561 Panamax      Laid up         N/A      N/A
Redondo              2000 74,716 Panamax      Laid up         N/A      N/A
Ocean Crystal        1999 73,688 Panamax      Laid up         N/A      N/A

Offshore Supply
 fleet

Platform Supply
 Vessels:
Crescendo            2012  1,457   PSV        Laid up         N/A      N/A
Vega Corona          2012  1,430   PSV          T/C         Dec.-16  Dec.-20
Oil Spill Recovery
 Vessels:
Indigo               2013  1,393   OSRV       Laid up         N/A      N/A
Vega Jaanca          2012  1,393   OSRV         T/C         Jul.-17  Jul.-21
Vega Emtoli          2012  1,363   OSRV         T/C         May.-17  May.-21
Jubilee              2012  1,317   OSRV       Laid up         N/A      N/A


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

                          Three Months Ended June    Six Months Ended June
Drybulk                             30,                       30,
                         ------------------------  ------------------------
                             2015         2016         2015         2016
                         -----------  -----------  -----------  -----------
Average number of
 vessels(1)                     39.0         20.0         39.0         21.5
Total voyage days for
 vessels(2)                    3,458        1,737        6,864        3,830
Total calendar days for
 vessels(3)                    3,549        1,820        7,059        3,913
Fleet utilization(4)            97.4%        95.4%        97.2%        97.9%
Time charter
 equivalent(5)           $    10,813  $     3,392  $    10,675  $     3,166
Vessel operating
 expenses (daily)(6)     $     6,543  $     4,798  $     6,450  $     4,808
(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 and laid-up days.
(3) Calendar days are the total number of days the vessels were in our
    possession for the relevant period including dry-docking days and laid-
    up 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 net of laid-up days for the relevant time period.


(In thousands of U.S. dollars, except for TCE rate, which is expressed in
 Dollars, and voyage days)

                          Three Months Ended June    Six Months Ended June
Drybulk                             30,                       30,
                         ------------------------  ------------------------
                             2015         2016         2015         2016
                         -----------  -----------  -----------  -----------
Voyage revenues          $    42,239  $     6,772  $    87,839  $    15,223
Voyage expenses               (4,847)        (880)     (14,567)      (3,099)
                         -----------  -----------  -----------  -----------
Time charter equivalent
 revenues                $    37,392  $     5,892  $    73,272  $    12,124
                         -----------  -----------  -----------  -----------
Total voyage days for
 fleet                         3,458        1,737        6,864        3,830
Time charter equivalent
 TCE                     $    10,813  $     3,392  $    10,675  $     3,166


                                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 June    Six Months Ended June
 data)                              30,                       30,
                         ------------------------  ------------------------
                             2015         2016         2015         2016
                         -----------  -----------  -----------  -----------

REVENUES:
Voyage revenues          $    79,460  $    13,177  $   169,488  $    25,037
Revenues from drilling
 contracts                   323,722            -      725,805            -
                         -----------  -----------  -----------  -----------
                             403,182       13,177      895,293       25,037

EXPENSES:
Voyage expenses               20,503        1,077       48,605        3,998
Vessel operating
 expenses                     29,550       12,725       57,750       27,513
Drilling units operating
 expenses                    106,696            -      259,623            -
Depreciation and
 amortization                 90,840          861      209,536        1,723
Vessels impairment, loss
 on sales and other          112,178            -      168,809       40,784
General and
 administrative expenses      31,519        8,133       74,807       18,023
Other, net                    (2,173)         756       (2,803)        (761)
                         -----------  -----------  -----------  -----------

Operating income/(loss)       14,069      (10,375)      78,966      (66,243)

OTHER INCOME /
 (EXPENSES):
Interest and finance
 costs, net of interest
 income                      (69,860)      (2,051)    (146,348)      (5,346)
Loss on interest rate
 swaps                        (1,768)        (152)     (11,448)        (709)
Other, net                    (4,506)        (771)      (6,435)      (2,152)
Income taxes                 (17,341)         (19)     (36,931)         (19)
                         -----------  -----------  -----------  -----------
Total other expenses,
 net                         (93,475)      (2,993)    (201,162)      (8,226)
                         -----------  -----------  -----------  -----------

Net loss                     (79,406)     (13,368)    (122,196)     (74,469)

Loss due to
 deconsolidation of
 Ocean Rig                (1,347,106)           -   (1,347,106)           -
Equity in
 earnings/(losses) of
 Ocean Rig                     8,851        4,260        8,851      (41,454)
Net income attributable
 to Non controlling
 interests                   (22,662)           -      (39,029)           -
                         -----------  -----------  -----------  -----------

Net loss attributable to
 DryShips Inc.           $(1,440,323) $    (9,108) $(1,449,480) $  (115,923)
                         ===========  ===========  ===========  ===========

Net loss attributable to
 DryShips Inc. common
 stockholders             (1,440,515)      (9,164)  (1,499,745)    (115,979)
                         ===========  ===========  ===========  ===========
Loss per common share,
 basic and diluted
 (1)(2)                  $    (54.17) $     (0.34) $    (56.40) $     (4.33)
Weighted average number
 of shares, basic and
 diluted (1) (2)          26,593,240   26,827,839   26,593,240   26,758,843
(1) Shares and per share data for Q2 2015 give effect to the 1-for-25
    reverse stock split, approved on February 19, 2016.
(2) Shares and per share data does not give effect to the 1-for-4 reverse
    stock split, approved on July 29, 2016, which will become effective on
    or about August 15, 2016.


                                DryShips Inc.

              Unaudited Condensed Consolidated Balance Sheets

                                                    December 31,   June 30,
(Expressed in Thousands of U.S. Dollars)                2015         2016
                                                   ------------- -----------

ASSETS

  Cash, cash equivalents, including restricted
   cash (current and non-current)                  $      15,026 $     6,173
  Assets held for sale                                   216,026      97,515
  Other current assets                                    38,015      28,950
  Vessels, net                                            96,428      94,705
  Investment in affiliate                                 91,410           -
  Other non-current assets                                19,147      10,214
                                                   ------------- -----------
  Total assets                                           476,052     237,557
                                                   ============= ===========


LIABILITIES AND STOCKHOLDERS' EQUITY

  Total debt                                             236,942     224,766
  Liabilities held for sale                              104,366           -
  Total other liabilities                                 13,332       9,384
  Total stockholders' equity                             121,412       3,407
                                                   ------------- -----------
  Total liabilities and stockholders' equity       $     476,052 $   237,557
                                                   ============= ===========

Adjusted EBITDA Reconciliation Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, goodwill, 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        Three
                            Months       Months     Six Months   Six Months
                          Ended June   Ended June   Ended June   Ended June
(Dollars in thousands)     30, 2015     30, 2016     30, 2015     30, 2016
                         -----------  -----------  -----------  -----------

Net loss attributable to
 Dryships Inc            $(1,440,323) $    (9,108) $(1,499,480) $  (115,923)

Add: Net interest
 expense                      69,860        2,051      146,348        5,346
Add: Depreciation and
 amortization                 90,840          861      209,536        1,723
Add: Dry-dockings and
 class survey costs            4,412          150        8,249          167
Add: Impairments losses
 on sales and other          129,771            -      192,039       40,784
Add: Loss due to
 deconsolidation of
 Ocean Rig                 1,347,106            -    1,347,106            -
Add: Income taxes             17,341           19       36,931           19
Add: Loss on interest
 rate swaps                    1,768          152       11,448          709
Add: Equity in
 (earnings)/losses of
 affiliate                    (8,851)      (4,260)      (8,851)      41,454
Add: Net income
 attributable to Non
 controlling interests        22,662            -       39,029            -
                         -----------  -----------  -----------  -----------
Adjusted EBITDA          $   234,586  $   (10,135) $   482,355  $   (25,721)
                         ===========  ===========  ===========  ===========

About DryShips Inc.

DryShips Inc. is an owner of drybulk carriers and offshore support vessels that operate worldwide. DryShips owns a fleet of 20 Panamax drybulk carriers with a combined deadweight tonnage of approximately 1.5 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 the Company's current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies and other statements.

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 the Company's 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 vessel values, failure of a seller to deliver one or more vessels, failure of a buyer to accept delivery of a vessel, inability to procure acquisition financing, default by one or more charterers of our ships, changes in demand for drybulk commodities, changes in demand that may affect attitudes of time charterers, scheduled and unscheduled drydocking, changes in our voyage and operating expenses, including bunker prices, dry-docking and insurance costs, changes in governmental rules and regulations, changes in our relationships with the lenders under our debt agreements, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents, international hostilities 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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