CST: 25/05/2016 00:15:55   

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

77 Days ago

ATHENS, GREECE--(Marketwired - Mar 8, 2016) - 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)

Drybulk Three Months Ended December 31,   Year Ended December 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)

Drybulk Three Months Ended December 31,   Year Ended December 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 data)  
Three Months Ended 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
 
(Expressed in Thousands of U.S. Dollars)   December 31, 2014   December 31, 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:

(Dollars in thousands)   Three Months Ended December 31, 2014     Three Months Ended December 31, 2015     Year Ended December 31, 2014     Year Ended December 31, 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: dryships@capitallink.com