DRYSHIPS INC. REPORTS ITS FINANCIAL AND OPERATING RESULTS FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2008.
March 24, 2009, Athens, Greece. DryShips Inc. (NASDAQ: DRYS), a global provider of
marine transportation services for drybulk cargoes, today announced its unaudited
financial and operating results for the fourth quarter and year ended December 31, 2008.
Financial Highlights
• For the fourth quarter of 2008, the Company reported a Loss of $1.02 billion or
$18.42 per share. Included in the fourth quarter results are a non-cash loss of
$700.5 million or $12.68 per share related to the impairment of goodwill
associated with the acquisition of Ocean Rig ASA, a loss related to contract
termination fees and forfeiture of vessel deposits of $160.0 million or $2.90 per
share, a non cash loss of $177.0 million or $3.20 per share associated with the
valuation of the Company’s interest rate swaps , a loss on the sale of one vessel of
$3.0 million or $0.05 per share, amortization of stock based compensation of $9.5
million or $0.17 per share and a gain on the contract cancellation of one vessel of
$9.1 million or 0.16 per share . Excluding these items, Net Income would amount
to $23.5 million or $0.43 per share.
• For the year ended December 31, 2008, the Com pany reported a Loss of $361.3
million or $8.11 per share. Included in the year ended December 31, 2008 results
are a non-cash loss of $700.5 million or $15.71 per share related to impairment of
goodwill associated with the acquisition of our wholly-owned subsidiary Ocean
Rig ASA, a loss related to contract termination fees and forfeiture of vessel
deposits of $160.0 million or $3.59 per share, a non cash loss of $207.9 or $4.66
per share associated with the valuation of the Company’s interest rate swaps , a
gain on the sale of eight vessels of $223.0 million or $5.00 per share, amortization
of stock based compensation of $31.5 million or $0. 71 per share and a gain on the
contract cancellation of one vessel of $9.1 million or 0.20 per share. Excluding
these items, Net Income would amount to $506.2 million or $11.35 per share.
Other Developments
• Negotiated the cancellation of a total 17 contracts associated with vessel
acquisitions previously announced worth about $2.0 billion at the time of the
announcements.
• The Company has raised approximately $380.0 million in gross proceeds through
its ATM Equity OfferingSM under the Prospectus Supplement filed on January 28,
2009. Merrill Lynch & Co. acted as sales agent in the offering.
• Reached a definitive agreement with Nordea Bank Plc, DnB NOR Bank ASA and
HSH Nordbank regarding a covenant waiver in connection with the $800 million
Primelead facility.
• The Company’s wholly-owned subsidiary, Ocean Rig ASA , has received a Letter
of Award from Petrobras for a 3-year period employment contract for exploration
drilling in the Black Sea. The contract is expected to commence in direct
continuation from the current contract with Shell. The contract value is
approximately $630 million including an estimated 60 days of mobilization,
disassembly/reassembly of the derrick structure and an incentive bonus of 8%.
George Economou, Chairman and Chief Executive Officer of the Company commented:
“Since the collapse of the world economy in the latter part of 2008 we have taken a proactive
approach implementing innovative steps to address the current market
environment. DryShips has dramatically reduced its capital expenditures while
minimizing the use of cash. The cancellation of 17 contracts associated with vessels
previously announced wor th $2 billion have dramatically reduced remaining CAPEX in
2009 to $149.6 million excluding payments associated with our newbuilding drillships.
We have shored up the balance sheet by raising significant amounts of fresh equity for
DryShips in an extremely difficult environment enhancing our liquidity position. These
actions have garnered the support of our bankers as demonstrated by the waiver obtained
by our three main lenders on the Primelead facility. These three lenders, acting as agents
or direct lenders, represent 75% of the total loans outstanding. The latest fixture of the
Leiv Eiriksson justifies the decision taken about a year ago to diversify into the ultra deep
water offshore drilling segment by acquiring Ocean Rig ASA. In combination with the
fixed revenue from the second operating rig and the period employment secured at the
peak of the drybulk market for over 50% of our vessel operating days, we estimate our
fixed EBITDA for the next three years will total approximately $1.70 billion. DryShips is
ahead of the curve in fac ing the challenges of tomorrow. We remain cautiously optimistic
about the future as we continue to build the Company for the long term.”
Fourth Quarter 2008 Results
Following our acquisition of Ocean Rig during 2008, we have two reportable
segments, the drybulk carrier segment and the offshore drilling rig segment. For the
quarter ended December 31, 2008, Net Voyage Revenues (Voyage Revenues less
Voyage Expenses) amounted to $117.1 million as compared to $223.5 million for the
quarter ended December 31, 2007. For the quarter ended December 31, 2008, revenues
from drilling contracts following the acquisition of Ocean Rig amounted to $87.5
million. We did not earn any revenues from drilling contracts in the quarter ended
December 31, 2007, as Ocean Rig was not part of Dryships. Operating Loss from both
segments was $794.3 million for the quarter ended December 31, 2008, as compared to
Operating Income of $211.9 million for the quarter ended December 31, 2007. Total Net
Loss, from both segments, for the quarter ended December 31, 2008 was $1.02 billion or
$18.42 Loss per Share calculated on 55,230,433 weighted average fully diluted shares
outstanding as compared to the Net Income of $194.4 million or $5.35 Earnings per Share
(EPS) calculated on 36,323,586 weighted average fully diluted shares outstanding for the
quarter ended December 31, 2007. Total EBITDA(1) , from both segments, for the quarter
ended December 31, 2008 was $(932.2) million as compared to $228.0 million for the
quarter ended December 31, 2007.
Results for Year ended December 31, 2008
Following our acquisition of Ocean Rig during 2008, we have two reportable
segments, the drybulk carrier segment and the offshore drilling rig segment. For the year
ended December 31, 2008, Net Voyage Revenues (Voyage Revenues less Voyage
Expenses) amounted to $808.1 million as compared to $550.9 million for the year ended
December 31, 2007. For the year ended December 31, 2008, revenues from drilling
contracts amounted to $219.4 million. The Company did not earn any revenues from
drilling contracts in the year ended December 31, 2007, as Ocean Rig was not part of
Dryships. Total Operating Loss, from both segments, was $14.0 million for the year
ended December 31, 2008, as compared to Operating Income of $531.8 million for the
year ended December 31, 2007. Total Net Loss, from both segments, for the year ended
December 31, 2008 was $361.3 million or $8.11 Loss per Share calculated on 44,598,585
weighted average basic and fully diluted shares outstanding as compared to Net Income
of $478.3 million or $13.40 EPS calculated on 35,700,182 weighted averages fully
diluted shares outstanding for the year ended December 31, 2007. Total EBITDA(1), from
both segments, for the year ended December 31, 2008 was $(100.4) million as compared
to $601.0 million for the year ended December 31, 2007.
Other Significant Events
Bank Update
The Company has previously reported a definitive and a preliminary agreement with
certain lenders relating to the waiver of breaches of loan covenants. The Company
remains in discussions with its other lenders concerning current breaches of loan
covenants. Pending the outcome of such discussions, the Company has reclassified
approximately $1.8 billion in debt as short-term.
Disposal of Three Capesize Newbuildings
The Company has previously announced the cancellation of agreements to acquire three
Capesize newbuildings from unaffiliated third parties in exchange for the retention by the
sellers of cash deposits and cash payments in the amount of $66.4 million, and the
payment by the Company to the sellers of an additional $50.0 million in cash or common
shares. In connection with the closing of the transaction, the provision regarding the
$50.0 million additional payment was modified so that the Company issued a total of
11,990,405 common shares to the sellers. We expect to incur a loss of approximately
$116.4 million associated with this transaction which will be recorded in the first quarter
of 2009. As of March 24, 2009, the Company has issued and outstanding 153,855,405
common shares.
Cancellation of Nine Capesize Vessels
We expect to close the previously announced cancellation of the nine Capesize vessels
next month. We expect to record losses in association with the cancellations in the first
quarter of 2009.
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 42 drybulk carriers comprising 7 Capesize, 28
Panamax, 2 Supramax, 5 newbuilding drybulk vessels, with a combined deadweight tonnage of about
4.0 million and two drilling rigs, two drillship new building.
DryShips Inc.'s common stock is listed on the NASDAQ Global Market where it trades under the
symbol "DRYS".
Visit the Company’s website at www.dryships.com
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(1) Please see later in this release for a reconciliation of EBITDA to net cash provided by operations.
DryShips Inc.