-- For the third quarter of 2010, the Company reported net income of $49.3
million, or $0.18 basic and diluted earnings per share. Included in the
third quarter 2010 results are various items, totaling $49.7 million,
or $0.2 per share which are described below. Excluding these items, net
income would have amounted to $99.0 million or $0.38 per share.
-- Included in the third quarter 2010 results are non-cash
amortization of debt issuance costs, including those relating to
our convertible senior notes, totaling $9.4 million, or $0.04 per
share.
-- Included in the third quarter 2010 results are various one time
gains relating to various claim settlements of $8.7 million, or
$0.03 per share.
-- Included in the third quarter 2010 results are losses incurred on
our interest rate swaps, amounting to $49.0 million, or $0.19 per
share.
-- Basic earnings per share for the third quarter of 2010 includes a
non-cash accrual for the cumulative payment-in-kind dividends on the
Series A Convertible Preferred Stock, amounting to $3.4 million, which
reduces the income available to common shareholders.
-- The Company reported adjusted EBITDA of $168.1 million for the third
quarter of 2010. (1)
(1) Please see later in this release for a reconciliation of Adjusted
EBITDA to net income
George Economou, Chairman and Chief Executive Officer of the Company
commented:
"We are pleased to report another solid quarter of operating results. The
strategic decision to fix out our dry bulk fleet has paid off as our time
chartered fleet continues to outperform the spot market. With over 80% of
our shipdays in 2011 fixed out at around $37,000 per day we believe we will
again outperform the spot market next year. On the ultra deepwater drilling
business, the two semi-submersibles continue to perform at high utilization
rates on highly profitable contracts.
"The ultra deepwater market has turned a corner in the last couple of
months and we believe that current enquiry from operators matches or may
even exceed the supply available in 2011. This is even before the full
impact of the unfolding regulations in the Gulf of Mexico are felt by the
older rigs operating in the region. Asset prices for ultra deepwater rigs
with early delivery have strengthened considerably as a result of strong
interest to purchase new assets from several drillers.
"After a long hiatus in terms of announced fixtures we are now starting to
see deals being concluded and expect the next three to six months to be
very active. We believe rates for ultra deepwater rigs bottomed in the
low-$400,000 per day range in the third quarter of 2010 and are now
trending upwards. The employment contract we announced in October and the
Letter of Intent we announced last week reduced our available capacity in
2011 from five rigs to three and we are confident that the remaining three
drillships will find employment in the near future. On the financing side
we are working with a number of banks on options for the first two
drillships and are optimistic that we will obtain the requisite financing
in time for the delivery of the first drillship. Ocean Rig is
well-positioned in the ultra deepwater drilling sector with the most
leverage to the firming market. We remain committed to the sector and
believe Ocean Rig UDW is a strong platform to build a leading pure play in
the ultra deep water drilling segment."
Financial Review: 2010 Third Quarter
The Company recorded net income of $49.3 million, or $0.18 basic and
diluted earnings per share, for the three-month period ended September 30,
2010, as compared to a net income of $31.4 million, or $0.11 basic and
diluted earnings per share, for the three-month period ended September 30,
2009. Adjusted EBITDA, which is defined and reconciled to net income later
in this press release, was $168.1 million for the third quarter of 2010 as
compared to $139.9 million for the same period in 2009.
Included in the third quarter 2010 results are various items totaling $49.7
million, or $0.2 per share, which are described at the beginning of this
press release. Excluding these items, our adjusted net income would have
amounted to $99.0 million, or $0.38 per share.
Basic earnings per share for the third quarter of 2010 includes a non-cash
accrual for the cumulative payment-in-kind dividends on the Series A
Convertible Preferred Stock, amounting to $3.4 million, which reduces the
income available to common shareholders.
For the drybulk carrier segment, net voyage revenues (voyage revenues minus
voyage expenses) decreased by $6.7 million to $108.1 million for the
three-month period ended September 30, 2010, as compared to $114.8 million
for the three-month period ended September 30, 2009. For the offshore
drilling segment, revenues from drilling contracts increased by $8.7
million to $110.4 million for the three-month period ended September 30,
2010 as compared to $101.7 million for the same period in 2009.
Total vessel and rig operating expenses and total depreciation and
amortization decreased to $43.5 million and $48.5 million, respectively,
for the three-month period ended September 30, 2010 from $54.5 million and
$49.4 million, respectively, for the three-month period ended September 30,
2009. Total general and administrative expenses declined to $18.0 million
in the third quarter of 2010 from $22.9 million during the comparative
period in 2009.
Interest and finance costs, net of interest income, increased at $18.4
million for the three-month period ended September 30, 2010, compared to
$16.3 million for the three-month period ended September 30, 2009.
Recent Events
On October 15, 2010, Ocean Rig UDW Inc. signed agreements relating to a
five well contract for exploration drilling off the coast of Ghana and Cote
d'Ivoire with subsidiaries of Vanco Overseas Energy Limited for a period of
about one year with one drillship, commencing in the second quarter of
2011. Under the agreements, Vanco is operator and LUKOIL Overseas its
majority co-venturer. The gross value of the agreements is approximately
$160 million, exclusive of agency fees and commissions. The Company has the
option to use either the Ocean Rig Corcovado (H1837) or the Ocean Rig
Olympia (H1838). The contract may be extended for an additional year prior
to the completion of operations on the second well program.
On November 11, 2010, Ocean Rig UDW Inc. received a Letter of Intent for
the Eirik Raude from a British exploration company. The Letter of Intent is
for a two well contract for exploration drilling offshore the Falkland
Islands for a period of about 90 days, commencing in the fourth quarter of
2011, immediately after the completion of the current contract. The gross
value is approximately $77 million, exclusive of agency fees and
commissions. There are three further optional wells that could extend the
contract by 135 days. The contract is subject to final documentation.
In October and November 2010, the Company issued and sold 36,882,000 common
shares through its at-the-market offering, resulting in net proceeds of
$162.7 million, after deducting various commissions. To date the Company
has issued and sold 52,359,400 common shares pursuant to the at-the-market
offering, resulting in net proceeds of $226.0 million.
Fleet List
The table below describes our drybulk fleet profile as of November 17, 2010
Year Gross rate Redelivery
Built DWT Type Per day Earliest Latest
Fixed rate employment
---------------------
Capesize:
Alameda 2001 170,662 Capesize $ 21,000 Feb-11 May-11
Brisbane 1995 151,066 Capesize $ 25,000 Dec-11 Apr-12
Capri 2001 172,579 Capesize $ 61,000 Apr-18 Jun-18
Flecha 2004 170,012 Capesize $ 55,000 Jul-18 Nov-18
Manasota 2004 171,061 Capesize $ 67,000 Feb-13 Apr-13
Mystic 2008 170,040 Capesize $ 52,310 Aug-18 Dec-18
Samsara 1996 150,393 Capesize $ 57,000 Dec-11 Apr-12
Panamax:
Amalfi ex. Gemini S 2009 75,000 Panamax $ 39,750 Jul-13 Sept-13
Avoca 2004 76,629 Panamax $ 45,500 Sep-13 Dec-13
Bargara 2002 74,832 Panamax $ 43,750 May-12 Jul-12
Capitola 2001 74,816 Panamax $ 39,500 Jun-13 Aug-13
Catalina 2005 74,432 Panamax $ 40,000 Jun-13 Aug-13
Conquistador 2000 75,607 Panamax $ 17,750 Aug-11 Nov-11
Coronado 2000 75,706 Panamax $ 18,250 Sep-11 Nov-11
Ecola 2001 73,925 Panamax $ 43,500 Jun-12 Aug-12
La Jolla 1997 72,126 Panamax $ 14,750 Aug-11 Nov-11
Levanto 2001 73,931 Panamax $ 16,800 Sep-11 Nov-11
Ligari 2004 75,583 Panamax $ 55,500 Jun-12 Aug-12
Maganari 2001 75,941 Panamax $ 14,500 Jul-11 Sep-11
Majorca 2005 74,747 Panamax $ 43,750 Jun-12 Aug-12
Marbella 2000 72,561 Panamax $ 14,750 Aug-11 Nov-11
Mendocino 2002 76,623 Panamax $ 56,500 Jun-12 Sep-12
Ocean Crystal 1999 73,688 Panamax $ 15,000 Aug-11 Nov-11
Oliva 2009 75,208 Panamax $ 17,850 Oct-11 Dec-11
Oregon 2002 74,204 Panamax $ 16,350 Aug-11 Oct-11
Padre 2004 73,601 Panamax $ 46,500 Sep-12 Dec-12
Positano 2000 73,288 Panamax $ 42,500 Sep-13 Dec-13
Primera 1998 72,495 Panamax $ 18,250* Dec-10 Dec-10
Rapallo 2009 75,123 Panamax $ 15,400 Aug-11 Oct-11
Redondo 2000 74,716 Panamax $ 34,500 Apr-13 Jun-13
Saldanha 2004 75,707 Panamax $ 52,500 Jun-12 Sep-12
Samatan 2001 74,823 Panamax $ 39,500 May-13 Jul-13
Sonoma 2001 74,786 Panamax $ 19,300 Sept-11 Nov-11
Sorrento 2004 76,633 Panamax $ 17,300 Sep-11 Dec-11
Toro 1995 73,035 Panamax $ 16,750 May-11 Jul-11
Supramax:
Pachino 2002 51,201 Supramax $ 20,250 Dec-10 Mar-11
Paros I 2003 51,201 Supramax $ 27,135 Oct-11 May-12
Newbuildings
------------
Panamax 1 2011 76,000 Panamax
Panamax 2 2012 76,000 Panamax
* Based on a synthetic time charter
Summary Operating Data (unaudited)
(Dollars in thousands, except average daily results)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------------------
2009 2010 2009 2010
--------- --------- --------- ---------
Average number of vessels(1) 38.5 37.3 37.8 37.3
Total voyage days for
vessels(2) 3,492 3,389 10,125 10,032
Total calendar days for
vessels(3) 3,541 3,428 10,326 10,179
Fleet utilization(4) 98.6% 98.9% 98.1% 98.6%
Time charter equivalent(5) 32,887 31,886 29,986 32,266
Vessel operating expenses
(daily)(6) 5,536 4,864 5,392 5,134
(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 off hire days.
(3) Calendar days are the total number of days the vessels were in our
possession for the relevant period including off hire 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, 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.
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2009 2010 2009 2010
--------- --------- --------- ---------
Voyage revenues 120,584 115,114 325,052 344,283
Voyage expenses (5,742) (7,051) (21,447) (20,588)
--------- --------- --------- ---------
Time charter equivalent
revenues 114,842 108,063 303,605 323,695
--------- --------- --------- ---------
Total voyage days for fleet 3,492 3,389 10,125 10,032
Time charter equivalent TCE 32,887 31,886 29,986 32,266
(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.
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 Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2009 2010 2009 2010
----------- ----------- ----------- -----------
REVENUES:
Voyage revenues $ 120,584 115,114 325,052 $ 344,283
Revenues from drilling
contracts 101,668 110,412 298,348 299,640
----------- ----------- ----------- -----------
222,252 225,526 623,400 643,923
EXPENSES:
Voyage expenses 5,742 7,051 21,447 20,588
Vessel operating
expenses 19,602 16,675 55,680 52,261
Drilling rigs operating
expenses 34,855 26,846 100,694 86,354
Depreciation and
amortization 49,416 48,547 146,569 144,028
Loss/ (gain) on sale of
vessels - 112 (2,432) (10,142)
Loss on contract
cancellations, net - - 211,416 -
General and
administrative
expenses 22,893 18,049 66,313 62,061
----------- ----------- ----------- -----------
Operating income 89,744 108,246 23,713 288,773
OTHER INCOME /
(EXPENSES):
Interest and finance
costs, net of interest
income (16,277) (18,418) (64,930) (66,198)
Gain/(loss) on interest
rate swaps (39,305) (48,962) 20,988 (147,390)
Other, net 1,843 11,270 1,304 4,061
Income taxes (3,505) (2,858) (9,859) (14,796)
----------- ----------- ----------- -----------
Total other
income/(expenses), net (57,244) (58,968) (52,497) (224,323)
----------- ----------- ----------- -----------
Net income/(loss) 32,500 49,278 (28,784) 64,450
Net income attributable
to non-controlling
interests (1,063) - (7,178) -
----------- ----------- ----------- -----------
Net income/(loss)
attributable to
Dryships Inc. $ 31,437 49,278 (35,962) $ 64,450
=========== =========== =========== ===========
Earnings/(loss) per
common share, basic
and diluted $ 0.11 0.18 (0.21) $ 0.21
Weighted average
number of shares,
basic and diluted 253,824,880 257,034,024 193,621,270 255,693,215
Unaudited Condensed Consolidated Balance Sheets
(Expressed in Thousands of U.S.
Dollars) December 31, 2009 September 30, 2010
------------------ ------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 693,169 $ 367,141
Restricted cash 350,833 497,210
Trade accounts receivable, net 66,681 42,414
Other current assets 69,967 69,910
------------------ ------------------
Total current assets 1,180,650 976,675
------------------ ------------------
FIXED ASSETS, NET:
Advances for assets under
construction and acquisitions 1,174,693 1,753,961
Vessels, net 2,058,329 1,952,586
Drilling rigs, machinery and
equipment, net 1,329,641 1,263,794
------------------ ------------------
Total fixed assets, net 4,562,663 4,970,341
------------------ ------------------
OTHER NON CURRENT ASSETS:
Other non-current assets 55,775 90,741
------------------ ------------------
Total non current assets 55,775 90,741
------------------ ------------------
Total assets 5,799,088 6,037,757
================== ==================
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt 1,698,692 1,582,314
Other current liabilities 197,331 198,827
------------------ ------------------
Total current liabilities 1,896,023 1,781,141
------------------ ------------------
NON CURRENT LIABILITIES
Long-term debt, net of current
portion 985,992 1,047,105
Other non-current liabilities 112,438 217,956
------------------ ------------------
Total non current liabilities 1,098,430 1,265,061
------------------ ------------------
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY:
Total stockholders' equity 2,804,635 2,991,555
------------------ ------------------
Total liabilities and
Stockholders' equity $ 5,799,088 $ 6,037,757
================== ==================
Adjusted EBITDA Reconciliation
Adjusted EBITDA represents net income before interest, taxes, depreciation
and amortization 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 and efficiency. 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 income to Adjusted EBITDA:
Three Months Three Months Nine Months Nine Months
(Expressed in Ended Ended Ended Ended
Thousands of U.S. September 30, September 30, September September 30,
Dollars) 2009 2010 30, 2009 2010
------------- ------------- ------------ -------------
Net income/(loss) 31,437 49,278 (35,962) 64,450
Add: Net interest
expense 16,277 18,418 64,930 66,198
Add: Depreciation
and amortization 49,416 48,547 146,569 144,028
Add: Income taxes 3,505 2,858 9,859 14,796
Add: Loss/ (gain)
on interest rate
swaps 39,305 48,962 (20,988) 147,390
------------- ------------- ------------ -------------
Adjusted EBITDA 139,940 168,063 164,408 436,862
============= ============= ============ =============
Conference Call and Webcast: Thursday, November 18, 2010
As announced, the Company's management team will host a conference call, on
Thursday, November 18, 2010 at 8:00 AM Eastern Standard 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".
A replay of the conference call will be available until November 25, 2010.
The United States replay number is 1(866) 247-4222; from the UK 0(800)
953-1533; the standard international replay number is (+44) (0) 1452 55 00
00 and the access code required for the replay is: 2133051#.
A replay of the conference call will also be available on the Company's
website at www.dryships.com under the Investor Relations section.
Slides and Audio Webcast
There will also be a simultaneous live webcast over the Internet, through
the DryShips Inc. website (www.dryships.com). Participants to the live
webcast should register on the website approximately 10 minutes prior to
the start of the webcast.
About DryShips Inc.
DryShips Inc., based in Greece, is an owner and operator of drybulk
carriers and offshore oil deep water drilling units that operate worldwide.
As of the day of this release, DryShips owns a fleet of 39 drybulk carriers
(including newbuildings), comprising 7 Capesize, 30 Panamax and 2 Supramax,
with a combined deadweight tonnage of over 3.5 million tons and 6 offshore
oil deep water drilling units, comprising of 2 ultra deep water
semisubmersible drilling rigs and 4 ultra deep water newbuilding
drillships.
DryShips Inc.'s common stock is listed on the NASDAQ Global Market where
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 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 charterhire rates and vessel values, changes in demand
that may affect attitudes of time charterers to scheduled and unscheduled
drydocking, changes in our 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.
Contact Information: Investor Relations / Media: Nicolas Bornozis Capital Link, Inc. (New York) Tel. 212-661-7566 E-mail: dryships@capitallink.com