DryShips Inc. Reports Financial and Operating Results
for the Second Quarter 2012
August 16, 2012, Athens, Greece
DryShips Inc. (NASDAQ: DRYS), or the Company, a global
provider of marine transportation services for drybulk and petroleum cargoes, and through its
majority owned subsidiary, Ocean Rig UDW Inc., or Ocean Rig, of off-shore deepwater drilling
services, today announced its unaudited financial and operating results for the second quarter ended
June 30, 2012.
Second Quarter 2012 Financial Highlights
Included in the second quarter 2012 results are:
- charges to our subsidiary, Ocean Rig, relating to the 10 year class survey costs of $3.0 million for the Eirik Raude, or $0.01 per share
- losses incurred on our interest rate swaps totaling $13.0 million, or $0.03 per share
• The Company reported Adjusted EBITDA of $144.6 million for the second quarter of 2012 as compared to $136.2 million for the second quarter of 2011.(1)
Recent Events
- Ocean Rig signed Letters of Intent (2) with three major oil companies for three drillships for an additional backlog of $2.2 billion over three years.
- On August 7, 2012, Ocean Rig entered into an amortizing interest rate swap agreement for an initial notional amount of $450 million maturing in July 2017. This agreement was entered into to hedge the Company’s exposure to interest rate fluctuations by fixing the interest rate at 1.0425% from July 2013 until July 2017.
- On July 24, 2012, the Company signed a term sheet with ABN AMRO, Korea Development Bank and Korea Trade Insurance Corporation (“KSURE”) for a $107.7 million senior secured term loan facility to partially finance our tankers, Alicante, Mareta and Bordeira. The term of the facility is 6 years and the repayment profile is 12 years. The facility agent will be ABN AMRO. This facility is subject to definitive documentation which we expect to complete in the third quarter of 2012.
- On July 19, 2012, the Company was notified by Norddeutsche Landesbank (“NordLB”) that a waiver request has been formally granted under our $126.4 million term loan facility dated July 23, 2008, as amended. Under the main terms of the waiver, the Company agrees to make a prepayment to the lender in the amount of $9.1 million (which amount is currently in a cash collateral account pledged to the lender) in return for the relaxation of VMC requirements going forward. This waiver is subject to definitive documentation which the Company expects to complete in the third quarter of 2012.
- In July 2012, Ocean Rig formally commenced syndication of a $1.35 billion senior secured term loan facility to partially finance our drillship newbulding hulls 1979, 2013 and 2032. This facility will be led by DNB and Nordea and is expected to have both a commercial tranche and an export credit agency (ECA) tranche. Ocean Rig has received conditional commitments for the commercial tranche, and is expecting to receive commitments from ECAs in the third quarter of 2012.
George Economou, Chairman and Chief Executive Officer of the Company commented:
"The bulk shipping market is in a tough spot facing multiple challenges. In the drybulk and tanker segments, spot charter rates continue to hover at historic lows and asset values have dropped precipitously in the last two years, not to mention from the highs of 2007/2008. Bunker prices have dropped somewhat from the record highs seen earlier this year but remain at high levels. The time charter market lacks liquidity and the rates anyway are very low, well below breakeven rates. And to compound all of this there is a severe lack of liquidity from the traditional lenders as they contract balance sheets to meet Basel III requirements or due to complete exits from the sector. We still have contract coverage of 44% on the drybulk fleet for the remainder of 2012, however, unless the freight market recovers the shipping segment will remain a drag on our results. Additionally we also have significant capital expenditures to finance our newbuilding program, which is something we are proactively managing in this challenging environment.
“Having said that, we remain defensively positioned to weather the storm with a relatively healthy cash position and our holding in Ocean Rig. We are very excited about the prospects for Ocean Rig as we recently signed letters of intent with three major oil companies for three of our drillships, including two of our newbuildings, for an additional backlog of $2.2 billion over three years. Assuming these contracts materialize, our total backlog will nearly double from $2.6 billion to $4.8 billion over three years and will provide Ocean Rig with substantial cash flow visibility and growth. Given strong industry fundamentals and the fact that there are very few ultra deepwater units available in 2013 we expect to further increase our already substantial backlog by entering into long term contracts for our two remaining units available in 2013. We continue to build on the Ocean Rig story and have positioned the company to build further on this strong platform to become the preferred contractor in the ultra deepwater sector. The holding in Ocean Rig provides us the flexibility to navigate through the tough shipping environment and weather the storm."
Financial Review: 2012 Second Quarter
The Company recorded a net loss of $18.2 million, or $0.05 basic and diluted loss per share, for the three-month period ended June 30, 2012, as compared to a net loss of $114.1 million, or $0.33 basic and diluted loss per share, for the three-month period ended June 30, 2011. Adjusted EBITDA was $144.6 million for the second quarter of 2012 as compared to $136.2 million for the same period in 2011.
For the drybulk carrier segment, net voyage revenues (voyage revenues minus voyage expenses) amounted to $58.6 million for the three-month period ended June 30, 2012, as compared to $87.7 million for the three-month period ended June 30, 2011. For the offshore drilling segment, revenues from drilling contracts increased by $136.9 million to $263.5 million for the three-month period ended June 30, 2012 as compared to $126.6 million for the same period in 2011. For the tanker segment, net voyage revenues amounted to $8.5 million for the three-month period ended June 30, 2012 as compared to $4.1 million for the same period in 2011.
Total vessels’, drilling rigs’ and drillships’ operating expenses and total depreciation and amortization increased to $167.3 million and $84.1 million, respectively, for the three-month period ended June 30, 2012, from $84.9 million and $65.1 million, respectively, for the three-month period ended June 30, 2011. Total general and administrative expenses increased to $32.8 million in the second quarter of 2012 from $27.2 million during the comparative period in 2011.
Interest and finance costs, net of interest income, amounted to $54.2 million for the three-month period ended June 30, 2012, compared to $33.3 million for the three-month period ended June 30, 2011.
(1) Adjusted EBITDA is a non-GAAP measure, please see later in this press release for a reconciliation to net income. (2) Subject to certain conditions
About DryShips Inc.
DryShips Inc. is an owner of drybulk carriers and tankers that operate worldwide. Through its majority owned subsidiary, Ocean Rig UDW Inc., DryShips owns and operates 9 offshore ultra deepwater drilling units, comprising of 2 ultra deepwater semisubmersible drilling rigs and 7 ultra deepwater drillships, 3 of which remain to be delivered to Ocean Rig during 2013. DryShips owns a fleet of 46 drybulk carriers (including newbuildings), comprising 11 Capesize, 28 Panamax, 2 Supramax and 5 newbuilding Very Large Ore Carriers (VLOC) with a combined deadweight tonnage of approximately 5.1 million tons, and 12 tankers (including newbuildings), comprising 6 Suezmax and 6 Aframax, with a combined deadweight tonnage of over 1.6 million tons.
DryShips’ common stock is listed on the NASDAQ Global Select Market where it trades under the symbol “DRYS.”
Full report at: www.dryships.com
DryShips Inc. press release