SOURCE:
DryShips Inc.
2008-08-21 20:39:00
ATHENS, GREECE–(EMWNews – August 21, 2008) – DryShips Inc. (
provider of marine transportation services for drybulk cargoes, today
announced its unaudited financial and operating results for the second
quarter and first half ended June 30, 2008.
Financial Highlights
-- The Company reported Net Income of $299.8 million or $7.10 per fully
diluted share for the second quarter of 2008. Included in the second
quarter results is a capital gain on the sale of three vessels of $135.8
million or $3.21 per fully diluted share and a non-cash gain of $12.2
million or $0.29 per fully diluted share associated with the valuation of
interest rate swaps. Excluding these items Net Income would amount to
$151.8 million or $3.60 per fully diluted share.
-- For the second quarter of 2008 the Company reported adjusted
EBITDA(1), excluding vessel gains and a non-cash gain on interest rate
swaps, of $199.2 million.
-- In July 2008 the Company declared its thirteenth consecutive quarterly
cash dividend of $0.20 per common share.
(1) Please see later in this release for a reconciliation of EBITDA to Net
cash provided by operating activities.
George Economou, the Company’s Chairman and Chief Executive Officer of
DryShips Inc., commented:
“I am pleased to report another quarter with very strong operational and
financial performance. During this quarter we continued with the consistent
implementation of our strategy both in the Drybulk and the Ultra Deep Water
drilling (UDW) sectors.
In the drybulk sector, consistent with our belief in the positive long term
fundamentals of the drybulk market, we continued with our fleet renewal and
expansion replacing older tonnage with newer and larger vessels. When all
the S&P transactions announced to date have been completed, by the end of
the first quarter of 2009 we expect to have a fleet of 47 vessels
(including 7 newbuilding drybulk carriers) with an average age of 6.9
years, well below the industry average. This reaffirms our leadership
position and puts the Company in a unique position to consolidate the
drybulk sector.
Our exposure to the spot market continues to prove very beneficial for our
Company as we have been able to take advantage of the record freight rates.
At the same time, by also gradually securing 68.5% of our fleet under time
charters for the remainder of 2008, 55% for 2009, 49.7% for 2010 and 46.7%
for 2011 we have locked in sizeable cash flows which enhance the visibility
and stability of our earnings for the longer term.
In the UDW drilling sector, we are successfully executing our previously
announced plans. We have arranged financing for the 2 UDW drillships on
order at Samsung, and have successfully completed the OCR acquisition by
de-listing the company from the Oslo Stock Exchange.
We continue to remain focused on maximizing shareholders value and
delivering superior results.”
Second Quarter 2008 Results
Following our acquisition of Ocean Rig, we have two reportable segments,
the drybulk carrier segment and offshore drilling rig segment. For the
second quarter ended June 30, 2008, Net Voyage Revenues (Voyage Revenues
less Voyage Expenses) amounted to $245.0 million as compared to $105.5
million for the second quarter ended June 30, 2007. For the second quarter
ended June 30, 2008, revenues from drilling contracts following the
acquisition of Ocean Rig amounted to $43.8 million. We did not earn any
revenues from drilling contracts in the quarter ended June 30, 2007.
Operating Income, from both segments, was $338.2 million for the quarter
ended June 30, 2008, as compared to $121.5 million for the quarter ended
June 30, 2007. Net Income, from both segments, for the second quarter
ended June 30, 2008 was $299.8 million or $7.10 Earnings Per Share (EPS)
calculated on 42,208,140 weighted average fully diluted shares outstanding
as compared to $110.8 million or $3.12 EPS calculated on 35,490,097
weighted average fully diluted shares outstanding for the quarter ended
June 30, 2007. EBITDA, from both segments, for the second quarter of 2008
was $347.1 million as compared to $139.4 million in the quarter ended June
30, 2007.
An average of 38.5 vessels were owned and operated during the second
quarter of 2008, earning an average Time Charter Equivalent, or TCE, rate
of $70,701 per day as compared to an average of 32.7 vessels owned and
operated during the second quarter of 2007 earning an average TCE rate of
$36,092 per day. During the period from May 14, 2008 through June 30, 2008,
the two drilling rigs that we acquired through Ocean Rig operated at an
average daily rate of $512,222.
First Half 2008 Results
Following our acquisition of Ocean Rig, we have two reportable segments,
the drybulk carrier segment and offshore drilling rig segment. For the
first half ended June 30, 2008, Net Voyage Revenues (Voyage Revenues less
Voyage Expenses) amounted to $462.9 million as compared to $186.9 million
for the first half ended June 30, 2007. For the first half ended June 30,
2008, revenues from drilling contracts amounted to $43.8 million. We did
not earn any revenues from drilling contracts in the first half ended June
30, 2007. Operating Income, from both segments, was $532.6 million for the
first half ended June 30, 2008, as compared to $200.0 million for the first
half ended June 30, 2007. Net Income, from both segments, for the first
half ended June 30, 2008 was $476.1 million or $11.85 EPS calculated on
40,177,016 weighted average fully diluted shares outstanding as compared to
$178.6 million or $5.03 EPS calculated on 35,490,097 weighted average fully
diluted shares outstanding for the first half ended June 30, 2007. EBITDA,
from both segments, for the first half of 2008 was $566.9 million as
compared to $234.0 million for the first half ended June 30, 2007.
An average of 38.4 vessels were owned and operated during the first half of
2008, earning an average TCE rate of $66,921 per day as compared to an
average of 32.4 vessels owned and operated during the first half of 2007
earning an average TCE rate of $32,580 per day. During the period from May
14, 2008 through June 30, 2008, the two drilling rigs that we acquired
through Ocean Rig operated at an average daily rate of $512,222.
Dry-dock related expenses
During the second quarter of 2008, one vessel was drydocked incurring 27
dry dock days at a cost of $0.5 million.
During the first quarter of 2008, the Company changed the method of
accounting for dry-docking costs from the deferral method to the direct
expense method under which related costs are expensed as incurred. The
June 30, 2007 Condensed Consolidated Financial Statements and the December
31, 2007 Condensed Consolidated Balance Sheet are adjusted to reflect this
change in Accounting Policy.
Capitalization
On June 30, 2008, debt to total capitalization (debt, net of deferred
financing fees and stockholders equity) was 59.6% and net debt (total debt
less cash and cash equivalents) to total capitalization (total debt less
cash and cash equivalents and stockholders equity) was 56.0%. As of June
30, 2008, the Company had total cash and cash equivalents of $401.9
million.
Financing activities
On May 6, 2008 the Company concluded a loan agreement of up to $103.2
million with West LB A.G. in order to partly finance the acquisition cost
of the vessels MV Sorrento and to refinance the existing up to that date
loan of MV Iguana. During the six month period ended June 30, 2008, the
Company drew down the amount of $32.5 million from the loan in connection
with the acquisition of the vessel Iguana. The loan bears interest at LIBOR
plus a margin and is repayable in thirty-two variable quarterly
installments through July 2016.
In July 2008 the Company concluded two facility agreements with Deutsche
Bank AG for an aggregate amount of $1.125 billion in order to partly
finance the construction cost of drillship Hulls 1865 and 1866. The loans
bear interest at LIBOR plus a margin and are repayable in eighteen
consecutive semi-annually installments.
In July 2008 the Company concluded a facility agreement with Nord LB for an
amount of $126.4 million in order to partly finance the acquisition cost of
the vessel MV Flecha. The loan bears interest at LIBOR plus a margin and is
repayable in forty consecutive quarterly installments.
As of June 30, 2008, the Company had a total of $2.877 billion in debt
outstanding under its credit facilities with several institutions.
Fleet Developments
Deliveries — New Vessels
On June 27, 2008, the Company took delivery of the vessel MV Positano, a
2000 built second-hand 73,288 dwt Panamax drybulk carrier, which it had
agreed to acquire for $72.0 million.
On June 27, 2008, the Company took delivery of the vessel MV Mystic, a 2008
built 170,500 dwt Capesize drybulk carrier, which it had agreed to acquire
for $147.5 million.
On July 28, 2008, the Company took delivery of the vessel MV Sorento, a
2004 built second-hand 76,500 dwt Panamax drybulk carrier, which it had
agreed to acquire for $86.7 million.
On July 30, 2008, the Company took delivery of the vessel MV Flecha, a 2004
built second-hand 170,012 dwt drybulk carrier, which it had agreed to
acquire for $158.0 million.
Deliveries — Sold Vessels
On June 24, 2008, the MV Lanzarote, a 1996 built 73,008 dwt Panamax drybulk
carrier was delivered to her new owners for a sale price of $65.0 million.
The Company realized a gain of $36.3 million, which was recognized in the
second quarter of 2008.
On June 27, 2008, the MV Menorca, a 1997 built 71,662 dwt Panamax drybulk
carrier was delivered to her new owners for a sale price of $77.0 million.
The Company realized a gain of $36.9 million, which was recognized in the
second quarter of 2008.
On July 2, 2008, the MV Waikiki, a 1995 built 75,473 dwt Panamax drybulk
carrier was delivered to her new owners for a sale price of $63.0 million.
The Company realized a gain of $36.9 million, which will be recognized in
the third quarter of 2008.
On August 14, 2008, the MV Solana, a 1995 built 75,473 dwt Panamax drybulk
carrier was delivered to her new owners for a sale price of $63.0 million.
The Company realized a gain of $29.2 million, which will be recognized in
the third quarter of 2008.
Vessels Acquisitions
On June 25, 2008, the Company entered into memoranda of agreement to
acquire two Panamax vessels built in 2007 and 2008, respectively, for an
aggregate purchase price of $200.0 million from companies controlled by
George Economou. The vessels are expected to be delivered by the end of
2008 with existing time charters attached, each with a remaining period of
approximately four years and each for a gross daily rate of $43,750.
In July 2008, the Company entered into two agreements to acquire the total
shares of two companies previously held by companies controlled by George
Economou. The purchase price for the shares amounts to $140.0 million in
total. These companies’ assets are two charter free Panamax vessels
currently under construction, in a first class Chinese yard, that are
scheduled to be delivered in the fourth quarter of 2008 and the first
quarter of 2009 respectively. The company has assumed the obligation to
make $60 million in yard installments between now and the delivery as per
the pre-existing shipbuilding contracts.
On August 13, 2008, the Company agreed to acquire the MV Amalfi, a 76,608
dwt Panamax drybulk carrier, delivery of which is expected during the first
quarter of 2009 for a total price of approximately $61 million. The vessel
is expected to be delivered with its existing time charter attached, with a
remaining period of approximately 4 years and a gross daily rate of
$28,000.
Vessels disposals
On March 15, 2008, the Company entered into an agreement to sell the MV
Lacerta a 1994 built 71,862 dwt Panamax drybulk carrier for a price of
approximately $55.5 million. The Company expects to realize a gain of
approximately $44.7 million which will be recognized in the fourth quarter
of 2008.
On May 19, 2008, the Company entered into an agreement to sell the MV
Primera a 1998 built 72,495 dwt Panamax drybulk carrier for a price of
approximately $75.0 million. The Company expects to realize a gain of
approximately $39.2 million which will be recognized in the fourth quarter
of 2008.
On June 24, 2008, the Company entered into an agreement to sell the MV
Paragon a 1995 built 71,259 dwt Panamax drybulk carrier for a price of
approximately $61.0 million. The Company expects to realize a gain of
approximately $30.8 million which will be recognized in the first quarter
of 2009.
On July 17, 2008, the Company entered into an agreement to sell the MV Toro
a 1995 built 73,034 dwt Panamax drybulk carrier for a price of
approximately $63.4 million. The Company expects to realize a gain of
approximately $36.0 million which will be recognized in the first quarter
of 2009.
On July 29, 2008, the Company entered into an agreement to sell the MV La
Jolla a 1997 built 72,126 dwt Panamax drybulk carrier for a price of
approximately $66.0 million. The Company expects to realize a gain of
approximately $32.8 million which will be recognized in the first quarter
of 2009.
Gains on Vessel Disposals
During the six-months ended June 30, 2008 the Company recognized an
aggregate gain on sale of vessels of $160.3 million or $3.99 per share.
Based on agreements that have been concluded to date, the Company expects
to recognize a capital gain of $150.0 million in the second half of 2008
and approximately $99.6 million in the first quarter of 2009.
Dividend Payment
On July 18, 2008, the Company declared dividends of $0.20 per share payable
on August 22, 2008 to the stockholders of record as of August 8, 2008. This
is the thirteenth consecutive quarterly dividend since DryShips became a
publicly listed company in February 2005.
As of June 30, 2008, the Company has a total of 43,550,000 shares of common
stock issued and outstanding.
Acquisition of Ocean Rig ASA
On May 14, 2008, DryShips obtained control of Ocean Rig ASA (“Ocean Rig”).
Ocean Rig, a former Oslo Stock Exchange listed company, is a drilling
contractor in the area of offshore exploration, development and production
and operates two ultra deep-water drilling rigs the Leiv Eiriksson and the
Eirik Raude. As of June 30, 2008, DryShips held 98.5% of Ocean Rig’s
outstanding capital stock. In early July, the Company acquired through a
compulsory transfer of shares the remaining shares of Ocean Rig and
effective July 22, 2008, Ocean Rig was delisted from the Oslo Stock
Exchange.
Ocean Rig’s operating results are reflected in the Company’s consolidated
financial statements from May 14, 2008, and the acquisition has been
accounted for using the purchase method of accounting. In accordance with
such purchase accounting, certain preliminary fair values were allocated to
significant assets acquired and liabilities assumed of Ocean Rig in
connection with the consolidation of its financial results with the
financial results of the Company. This purchase price allocation and
resulting goodwill have not yet been finalized and thus may be revised in a
future filing.
Acquisition of two UDW drillships
On April 24, 2008, the Company announced that it will acquire two Ultra
Deep Water (UDW) drillships. The drillships are to be constructed by
Samsung Heavy Industries Co. Ltd. (SHI) and are expected to be delivered
from the shipyard in the third quarter of 2011. The expected total cost of
each drillship is approximately $800.0 million per unit. The drillships
will be managed by Ocean Rig.
Drydocks
The company expects to incur the following expenditures associated with
vessels drydockings:
3rd 4th
Quarter Quarter Full year
2008 2008 2009
---------- ---------- ----------
Number of Vessels 1 2 9
Expected Costs in USD millions 2.0 4.0 18.0
Off-Hire Days 30 60 270
Such costs are expensed as incurred. The actual days and expenses in
connection with vessel drydockings will vary based on the shipyard
schedule, weather, condition of the vessel and other factors.
Fleet Data
Second Quarter of 2008
Total TCE revenue increased during the second quarter of 2008 compared to
the second quarter of 2007, primarily as a result of an increase in the
average number of vessels operated from an average of 32.7 vessels in the
second quarter of 2007 to 38.5 vessels in the second quarter of 2008, and
an increased daily average TCE rate in the second quarter of 2008 of
$70,701 from $36,092 in the second quarter of 2007.
During the second quarter of 2008 revenue from the two drilling rigs
acquired through Ocean Rig amounted to $43.8 million.
Vessel operating expenses increased to $19.9 million for the second quarter
of 2008 compared to $15.7 million for the second quarter of 2007. The
increase is mainly attributable to the increase in the number of vessels
operated from an average of 32.7 vessels for the second quarter of 2007 to
38.5 vessels for the second quarter of 2008.
During the second quarter of 2008 operating expenses for the two drilling
rigs amounted to $13.4 million.
Total depreciation increased to $33.4 million in the second quarter of 2008
compared to $18.0 million in the second quarter of 2007. This was a direct
result of the increase in the Company’s fleet from an average of 32.7
vessels in the second quarter of 2007 to an average of 38.5 vessels in the
second quarter of 2008 and the depreciation on the two drilling rigs for
the period since the consolidation of Ocean Rig’s financial results with
the financial results of the Company.
Total general and administrative expenses, which includes management fees,
increased to $14.8 million in the second quarter of 2008 from $4.5 million
in the second quarter of 2007 mainly due to amortization of the stock based
compensation in the amount of $12.1 million, the increase in the number of
fleet calendar days from 2,980 in the second quarter of 2007 to 3,504 in
the second quarter of 2008 due to the growth of the fleet, and the
significant increase in the exchange rate between the US Dollar and Euro.
First Half 2008
Total TCE revenue increased during the first half of 2008 compared to the
first half of 2007, primarily as a result of an increase in the average
number of vessels operated, from an average of 32.4 vessels in the first
half of 2007 to 38.4 vessels in the first half of 2008, and an increase in
the daily average TCE rate from $32,580 in the first half of 2007 to
$66,921 in the first half of 2008. During the six months ended June 30,
2008, revenue from the two drilling rigs amounted to $43.8 million.
Vessel operating expenses increased to $37.6 million for the first half of
2008 compared to $30.0 million for the first half of 2007. The increase is
attributable to the increase in the number of vessels operated from an
average of 32.4 vessels for the first half of 2007 to 38.4 vessels for the
first half of 2008. During the six months ended June 30, 2008 operating
expenses for the two drilling rigs amounted to $13.4 million.
Total depreciation increased to $57.8 million in the first half of 2008
compared to $34.0 million in the first half of 2007. This was a direct
result of the increase in the Company’s fleet from an average of 32.4
vessels in the first half of 2007 to an average of 38.4 vessels in the
first half of 2008 and the depreciation on the two drilling rigs for the
period since the consolidation of Ocean Rig’s financial results with the
financial results of the Company.
Total general and administrative expenses, including management fees,
increased to $20.5 million in the first half of 2008 from $8.5 million in
the first half of 2007, mainly due to the amortization of the stock based
compensation in the amount of $12.1 million, the increase in the number of
fleet calendar days from 5,867 in the second quarter of 2007 to 6,989 in
the second quarter of 2008 due to the growth of the fleet and the
significant increase in the exchange rate between the US Dollar and Euro.
Second Quarter 2008
Drybulk Segment
Three Three
(Dollars in thousands, except Months Months
Average Daily Results - unaudited) Ended Ended
30-Jun-2008 30-Jun-2007
=========== ===========
Average number of vessels (1) 38.5 32.7
Total voyage days for vessels (2) 3,465 2,924
Total calendar days for vessels (3) 3,504 2,980
Vessels Utilization (4) 98.9% 98.1%
Time charter equivalent (5) 70,701 36,092
Capesize 115,000 55,618
Panamax 65,916 33,628
Handymax 44,571 24,625
Vessel operating expenses (daily) (7) 5,673 5,254
Management fees (daily) 886 820
Total vessel operating expenses (daily) (8) 6,559 6,074
General and administrative expenses (daily) (9) 611* 673
Drilling Rig Segment
Three Three
(Dollars in thousands, except Months Months
Average Daily Results - unaudited) Ended Ended
30-Jun-2008 30-Jun-2007
=========== ===========
Average number of drilling rigs (1) 1 -
Total employment days for drilling rigs (2) 86 -
Total calendar days for drilling rigs (3) 90 -
Rigs Utilization (4) 95% -
Revenue from drilling contracts (daily) (6) 512,222 -
Rigs operating expenses (daily) (7) 148,755 -
General and administrative expenses (daily) (9) 26,889 -
* Excluding Amortization of Stock based compensation of $12.1 million
First Half 2008
Drybulk Segment
(Dollars in thousands, except Six Months Six Months
Average Daily Results - unaudited) Ended Ended
30-Jun-2008 30-Jun-2007
=========== ===========
Average number of vessels (1) 38.4 32.4
Total voyage days for vessels (2) 6,917 5,737
Total calendar days for vessels (3) 6,989 5,867
Vessels Utilization (4) 99.0% 97.8%
Time charter equivalent (5) 66,921 32,580
Capesize 113,544 47,696
Panamax 61,716 30,831
Handymax 42,245 22,931
Vessel operating expenses (daily) (7) 5,387 5,108
Management fees (daily) 843 791
Total vessel operating expenses (daily) (8) 6,230 5,899
General and administrative expenses (daily) (9) 724* 663
Drilling Rig Segment
(Dollars in thousands, except Six Months Six Months
Average Daily Results - unaudited) Ended Ended
30-Jun-2008 30-Jun-2007
=========== ===========
Average number of drilling rigs (1) 0.5 -
Total employment days for drilling rigs (2) 86 -
Total calendar days for drilling rigs (3) 90 -
Rigs Utilization (4) 95% -
Revenue from drilling contracts (daily) (6) 512,222 -
Rig operating expenses (daily) (7) 148,755 -
General and administrative expenses (daily) (9) 26,889 -
* Excluding Amortization of Stock based compensation of $12.1 million
(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. Average number of drilling rigs is the
number of drilling rigs for the relevant period, as measured by the sum of
the number of days each drilling rig was owned by the Company divided by
the number of calendar days in that period.
(2) Total voyage days for vessels are the total days the vessels were in
our possession for the relevant period net of off hire days. Total
employment days for drilling rigs are the total days the drilling rigs were
in our possession for the relevant period net of off hire days.
(3) Calendar days are the total days the vessels or drilling rigs, as
applicable, were in our possession for the relevant period including off
hire days.
(4) Vessels s utilization is the percentage of time that our vessels were
available for revenue generating days, and is determined by dividing voyage
days by calendar days for vessels for the relevant period. Rigs utilization
is the percentage of time that our drilling rigs were available for revenue
generating days, and is determined by dividing employment days by calendar
days for drilling rigs 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, 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. The following table reflects the
calculation of our TCE rates for the three and six months periods ended
June 30, 2007 and 2008:
Three Three Six Six
months months months months
ended ended ended ended
June 30, June 30, June 30, June 30,
(Dollars in thousands) 2007 2008 2007 2008
Voyage revenues 112,521 258,921 199,171 490,984
Voyage expenses (6,987) (13,942) (12,257) (28,092)
--------- --------- --------- ---------
Time charter equivalent 105,534 244,979 186,914 462,892
========= ========= ========= =========
Total voyage days for fleet 2,924 3,465 5,737 6,917
Time charter equivalent (TCE) 36,092 70,701 32,580 66,921
(6) Daily revenue from drilling contracts is calculated by dividing revenue
from drilling contracts by rigs employment days for the relevant time
period.
(7) 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 vessels calendar
days for the relevant time period. Daily rig operating expenses, which
includes crew costs, provisions, repairs and maintenance, insurances and
other operating expenses is calculated by dividing rig operating expenses
by calendar days for drilling rigs for the relevant time period.
(8) Total vessel operating expenses or TVOE is a measurement of our total
expenses associated with operating our vessels. TVOE is the sum of vessel
operating expenses and management fees. Daily TVOE is calculated by
dividing TVOE by vessel calendar days for the relevant time period.
(9) Daily general and administrative expense is calculated by dividing
general and administrative expense per segment (Drybulk, Drilling Rig) by
total calendar days for vessels and total calendar days for drilling rigs
respectively, for the relevant time period.
Financial Statements
Income Statements
The following are DryShips Inc.’s Unaudited Interim Condensed Consolidated
Income Statements for the three and
six-month periods ended June 30, 2007 and 2008:
Three months Three months Six months Six months
ended June ended June ended June ended June
30, 2007 30, 2008 30, 2007 30, 2008
(as adjusted) (as adjusted)
(Dollars in thousands, except for share and per share data-unaudited)
INCOME STATEMENT DATA
REVENUES:
Voyage revenues $ 112,521 258,921 199,171 490,984
Revenues from drilling
contracts - 43,795 - 43,795
---------- ---------- ---------- ----------
112,521 302,716 199,171 534,779
---------- ---------- ---------- ----------
EXPENSES:
Voyage expenses 6,987 13,942 12,257 28,092
Vessel operating expenses 15,658 19,877 29,967 37,650
Drilling rigs operating
expenses - 13,388 - 13,388
Depreciation 17,980 33,377 34,025 57,795
Gain on sale of vessels (54,025) (135,815) (85,634) (160,258)
General & administrative
expenses 4,452 19,782 8,536 25,487
---------- ---------- ---------- ----------
Operating income 121,469 338,165 200,020 532,625
---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest and finance costs (12,174) (25,652) (22,762) (38,544)
Gain on interest rate swap
valuation 1,336 12,153 1,176 6,079
Other, net 178 518 177 499
Total other income
(expenses), net (10,660) (12,981) (21,409) (31,966)
---------- ---------- ---------- ----------
Net income before taxes 110,809 325,184 178,611 500,659
---------- ---------- ---------- ----------
Income taxes - (867) - (867)
---------- ---------- ---------- ----------
Net income, after taxes and
before equity in income of
investee and minority
interest 110,809 324,317 178,611 499,792
---------- ---------- ---------- ----------
Minority interest - (16,813) - (16,813)
Equity in loss of investees - (7,750) - (6,893)
---------- ---------- ---------- ----------
Net income 110,809 299,754 178,611 476,086
---------- ---------- ---------- ----------
Earnings per common share,
basic $ 3.12 7.11 5.03 11.85
Weighted average number of
shares, basic 35,490,097 42,150,753 35,490,097 40,173,941
Earnings per common share,
diluted $ 3.12 7.10 5.03 11.85
Weighted average number of
shares, diluted 35,490,097 42,208,140 35,490,097 40,177,016
========== ========== ========== ==========
Balance Sheet
The following are DryShips Inc.’s Unaudited Interim Condensed Consolidated
Balance Sheets as at December 31, 2007 and June 30, 2008:
(Expressed in thousands of U.S. Dollars)
December 31,
2007 June 30,
(As adjusted) 2008
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 111,068 $ 293,879
Restricted cash 6,791 8,103
Accounts receivable trade, net of allowance
of $0 and $ 957 9,185 76,356
Other current assets 25,991 53,407
Vessel held for sale - 24,083
------------ ------------
Total current assets 153,035 455,828
------------ ------------
FIXED ASSETS, NET:
Advances for vessels under construction and
acquisitions 118,652 322,990
Vessels, net 1,643,867 1,985,992
Drilling rigs, net - 1,392,347
------------ ------------
Total fixed assets, net 1,762,519 3,701,329
------------ ------------
OTHER NON CURRENT ASSETS:
Long term investments 405,725 -
Goodwill - 693,980
Restricted cash 20,000 100,000
Other 3,153 29,159
------------ ------------
Total non current assets 428,878 823,139
------------ ------------
Total assets $ 2,344,432 $ 4,980,296
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 194,999 $ 986,172
Other current liabilities 44,305 94,665
------------ ------------
Total current liabilities 239,304 1,080,837
------------ ------------
NON CURRENT LIABILITIES
Long term debt, net of current portion 1,048,779 1,891,008
Other non-current liabilities 34,620 38,652
------------ ------------
Total non current liabilities 1,083,399 1,929,660
------------ ------------
Minority interest - 21,457
COMMITMENTS AND CONTIGENCIES - -
STOCKHOLDERS' EQUITY 1,021,729 1,948,342
------------ ------------
Total liabilities and stockholders' equity $ 2,344,432 $ 4,980,296
============ ============
EBITDA Reconciliation
DryShips Inc. considers EBITDA to represent net income before interest,
taxes, depreciation and amortization. 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 EBITDA may not be
comparable to that reported by other companies. EBITDA is included herein
because it is a basis upon which the Company assesses its liquidity
position, it is used by our lenders as a measure of our compliance with
certain loan covenants 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 cash provided by operating activities to
EBITDA:
Dollars in thousands Three Months ended
June 30, June 30,
2007 2008
Net cash provided by operating activities 74,471 204,874
Net increase (decrease) in current assets 4,885 22,883
Net decrease (increase) in current liabilities,
excluding current portion of long-term debt (7,767) (6,816)
Gain on sale of vessels 54,025 135,815
Amortization of fair value of acquired time
charter agreements 1,356 9,899
Amortization of free lubricants benefit 137 158
Change in fair value of derivatives 2,657 12,079
Stock based compensation - (12,118)
Equity in income of investee - (7,750)
Minority interest - (16,813)
Net interest expense 12,174 25,652
Gain on interest rate swaps (1,336) (12,153)
Other expenses, net (178) (518)
Amortization of deferred financing costs included
in net interest expense (975) (8,940)
Income taxes - 867
----------- -----------
EBITDA 139,449 347,119
=========== ===========
Dollars in thousands Six Months ended
June 30, June 30,
2007 2008
Net cash provided by operating activities 117,080 369,774
Net increase (decrease) in current assets 10,655 22,236
Net decrease (increase) in current liabilities,
excluding current portion of long-term debt -5,907 6,593
Gain on sale of vessels 85,634 160,258
Amortization of fair value of acquired time
charter agreements 2,655 14,557
Amortization of free lubricants benefit 170 182
Change in fair value of derivatives 3,763 6,005
Stock based compensation - (12,118)
Equity in income of investee - (6,893)
Minority interest - (16,813)
Net interest expense 22,762 38,544
Other, net (177) (499)
Gain on interest rates swaps (1,176) (6,079)
Amortization of deferred financing costs included
in net interest expense (1,414) (9,760)
Income taxes - 867
----------- -----------
EBITDA 234,045 566,854
=========== ===========
Fleet List
The table below describes our fleet development and current employment
profile as of August 21, 2008:
Gross Redelivery
Year Current rate Earl-
Built DWT Type employment per day iest Latest
Capesize:
Brisbane 1995 151,066 Capesize T/C $ 145,000 Oct-08 Dec-08
next employment $ 57,000 Feb-12 Jun-12
Samsara 1995 151,066 Capesize T/C $ 139,000 Oct-08 Dec-08
next employment $ 57,000 Feb-12 Jun-12
Capri 2001 172,579 Capesize T/C $ 61,000 Apr-18 Jun-18
Manasota 2004 171,061 Capesize T/C $ 67,000 Feb-13 Apr-13
Flecha 2004 170,012 Capesize T/C $ 55,000 Jul-18 Nov-18
Mystic 2008 170,500 Capesize T/C $ 52,310 Aug-18 Dec-18
Alameda 2001 170,269 Capesize T/C* $ 152,000 Feb-09 Apr-09
6.5 1,155,880 7
Panamax:
Toro 1995 73,034 Panamax Baumarine $ 67,599
Sonoma 2001 74,786 Panamax Baumarine $ 71,055
Heinrich
Oldendorff 2001 73,931 Panamax BB $ 54,437 Mar-09 Jun-09
Tonga 1984 66,798 Panamax Spot $ 73,000 Prompt Prompt
Lacerta 1994 71,862 Panamax Spot $ 70,500 Prompt Prompt
Paragon 1995 71,259 Panamax Spot $ 85,500 Prompt Prompt
La Jolla 1997 72,126 Panamax Spot $ 55,000 Prompt Prompt
Ocean Crystal 1999 73,688 Panamax Spot $ 84,000 Prompt Prompt
Positano 2000 73,288 Panamax Spot $ 61,500 Prompt Prompt
Maganari 2001 75,941 Panamax Spot $ 30,000 Prompt Prompt
Conquistador 2001 75,607 Panamax Spot $ 63,500 Prompt Prompt
Oregon 2002 74,204 Panamax Spot $ 45,500 Prompt Prompt
Avoca 2004 76,500 Panamax Spot $ 79,000 Prompt Prompt
Sorrento 2004 76,633 Panamax Spot $ 54,000 Prompt Prompt
Iguana 1996 70,349 Panamax T/C $ 77,000 Oct-08 Nov-08
Primera 1998 72,495 Panamax T/C $ 78,600 Sep-08 Oct-08
Xanadu 1999 72,270 Panamax T/C $ 39,750 Jul-13 Sep-13
Coronado 2000 75,706 Panamax T/C $ 81,750 Sep-08 Oct-08
Redondo 2000 74,716 Panamax T/C $ 34,500 Apr-13 Jun-13
Marbella 2000 72,561 Panamax T/C $ 82,500 Oct-08 Nov-08
Ecola 2001 73,931 Panamax T/C $ 43,500 Jun-12 Aug-12
Capitola 2001 74,832 Panamax T/C $ 39,500 Jun-13 Aug-13
Samatan 2001 74,823 Panamax T/C $ 39,500 May-13 Jul-13
Mendocino 2002 76,623 Panamax T/C $ 56,500 Jun-12 Sep-12
Bargara 2002 74,832 Panamax T/C $ 43,750 May-12 Jul-12
Padre 2004 73,601 Panamax T/C $ 81,000 Oct-08 Nov-08
Ligari 2004 75,583 Panamax T/C $ 55,000 Jun-12 Aug-12
Saldanha 2004 75,500 Panamax T/C $ 52,500 Jun-12 Sep-12
Catalina 2005 74,432 Panamax T/C $ 39,750 Jun-13 Aug-13
Majorca 2005 74,364 Panamax T/C $ 43,750 Jun-12 Aug-12
7.9 2,216,275 30
Supramax:
VOC Galaxy 1995 151,066 Capesize BB $ 145,000 Oct-08 Dec-08
next employment $ 20,250 Sep-10 Feb-11
Clipper Gemini 2003 51,201 Supramax BB $ 27,000 Nov-08 Jan-09
5.5 102,402 2
N/B Vessels:
Hull 1518A 2009 75,000 Panamax Spot N/A
Hull 1519A 2010 75,000 Panamax Spot N/A
H1568 2008 75,000 Panamax Spot N/A
H1569 2009 75,000 Panamax Spot N/A
Hull SS058 2010 82,100 Panamax Spot N/A
Hull SS059 2010 82,100 Panamax Spot N/A
Hull 0002 2009 180,000 Capesize Spot N/A
Hull 0003 2010 180,000 Capesize Spot N/A
Hull 2089 2009 180,000 Capesize Spot N/A
H1128 2008 177,000 Capesize T/C $ 60,000 Oct-18 Feb-19
357,000 10
Totals 7.37 3,831,557 49
Rig:
Leiv Eiriksson 2001 Fifth-generation semi-submersible drilling unit
Eirik Raude 2002 Fifth-generation semi-submersible drilling unit
N/B Drillships:
Hull 1865 2011 UDW Drillship
Hull 1866 2011 UDW Drillship
* Indexed Linked
Conference Call and Webcast: Friday, August 22, 2008, at 8:30 a.m. EDT
As announced, DryShips’ management team will host a conference call on
Friday, August 22, 2008, at 8:30 a.m. Eastern Daylight Saving 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) 1452 542 301 (from outside the US). Please quote
“DryShips.”
In case of any problem with the above numbers, please dial 1(866) 223 0615
(from the US), 0(800) 694-1503 (from the UK) or +(44) 1452 586-513 (from
outside the US). Quote “DryShips.”
A replay of the conference call will be available until August 30, 2008.
The United States replay number is 1(866) 247 4222; the international
replay number is 0(800) 953-1533; from the UK or (+44) 1452-550 000 and
access code required for the replay is: 2133051#
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., based in Greece, is an owner and operator of drybulk
carriers that operate worldwide. As of the day of this release, DryShips
owns a fleet of 53 drybulk carriers comprising 7 Capesize, 30 Panamax, 2
Supramax, 10 newbuilding drybulk vessels, with a combined deadweight
tonnage of over 3.8 million tons and 2 drilling rigs.
DryShips has also agreed to purchase 2 ultra deep water drillships to be
built at Samsung Heavy Industries for delivery in the third quarter of
2011. These drillships will be managed by Ocean Rig ASA.
DryShips Inc.’s common stock is listed on the NASDAQ Global Market where it
trades under the symbol “DRYS.”
Visit our website at www.dryships.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 DryShips 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, DryShips 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 charterhire rates and vessel values, changes in demand
that may affect attitudes of time charterers to scheduled and unscheduled
drydocking, changes in DryShips 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 DryShips
Inc. with the US Securities and Exchange Commission.
| Investor Relations / Media:
Nicolas Bornozis |
|
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