DryShips Inc. Reports Financial and Operating Results for the Fourth Quarter and Year Ended December 31, 2009
February 25, 2010, Athens, Greece. DryShips Inc. (NASDAQ: DRYS), or the Company, a global
provider of marine transportation services for drybulk cargoes and offshore oil deepwater drilling,
today announced its unaudited financial and operating results for the fourth quarter and year ended
December 31, 2009.
Fourth Quarter 2009 Financial Highlights
o Included in the fourth quarter 2009 results are forfeited deposits, fees and other capitalized asset write-offs relating to our cancellation of Hulls SS058 and SS059 on October 16, 2009, which aggregated approximately $30.8 million, or $0.12 per share.
o Included in the fourth quarter 2009 results is the net effect of deferring revenues and direct incremental expenses to future periods, which negatively impacted results by approximately $11.4 million of net revenues, or $0.04 per share, relating to the mobilization of the Leiv Eiriksson, and which have been deferred to future periods. In October 2009, the Leiv Eiriksson commenced mobilization for a three-year contract with Petroleo Brasileiro S.A., or Petrobras, for exploration drilling in the Black Sea. Prior to the Petrobras contract, the rig operated for Shell in the North Sea. Accordingly, all revenue and direct incremental expenditure during the mobilization of this unit from the North Sea to the Black Sea will be amortized over the life of the Petrobras contract. The rig will commence drilling operations from end of February 2010.
o Included in the fourth quarter 2009 results are non-cash amortization of debt issuance costs including those relating to our Convertible Senior Notes issued on November 19, 2009, totaling $3.6 million, or $0.01 per share.
o Included in the fourth quarter 2009 results are net aggregate mark-to-market losses incurred on our interest rate swaps and forward freight agreements, amounting to $5.4 million, or $0.02 per share.
o Included in the fourth quarter 2009 results are an impairment loss and various expenses relating to the contracts for the sale of our vessels, the Iguana and Delray entered into during the quarter, amounting to $3.6 million, or $0.01 per share. o Included in the fourth quarter 2009 results are amortization of stock based compensation of $9.6 million or $0.04 per share.
• Basic loss per share for the fourth quarter of 2009 includes a non-cash accrual for the cumulative payment-in-kind dividends on the Series A Convertible Preferred Stock, amounting to $4.1 million, which reduces the income available to common shareholders (basic earnings per share is calculated as net income less accrued dividends on preferred stock divided by weighted average number of common shares outstanding).
George Economou, Chairman and Chief Executive Officer of the Company commented:
“We are pleased to report another quarter of profitable operating results for DryShips as both our drilling and drybulk units continued to perform at high utilization rates. The Leiv Eiriksson completed its mobilization to the Black Sea successfully and will commence operations from end-February 2010. China was the driving force of the dry bulk market last year with iron ore and coal imports increasing year on year at a record pace. For 2010, we expect commodity demand to increase at a strong pace as the year on year gains in Chinese imports will be supplemented by a return to normality of the rest of the world. On the vessel supply side the projected deliveries are expected to be reduced by cancellations and delays due to the severe lack of financing. On the drilling segment, after a slow 2009, we expect 2010 to be a much more active year for new contracts. With oil prices in the US$70-80 range most ultra deepwater projects are expected to be viable. High oil prices, increasing oil demand and maturing oil fields are incentivizing oil companies to develop the various deepwater finds in the US Gulf of Mexico, Brazil, West Africa, India and elsewhere.
Overall, 2009 was a challenging year for the shipping industry as we weathered an economic recession and a liquidity crunch. DryShips had to take some decisive steps to shore up the balance sheet and place the Company in a position of strength. We are working to release the value in the drilling business with a potential IPO, at some stage this year, creating what we believe to be the only pure play ultra deepwater player. We appreciate the support and patience of our shareholders and are working tirelessly to create shareholder value and highlight the attractive valuation of our Company.”
Financial Review: 2009 Fourth Quarter
The Company recorded net income of $1.4 million, or $0.01 basic and diluted loss per share for the three-month period ended December 31, 2009, as compared to a net loss of $1.0 billion, or $18.42 basic and diluted loss per share for the three-month period ended December 31, 2008. EBITDA, which is defined and reconciled later in this press release, was $75.9 million for the fourth quarter of 2009 as compared to negative $932.2 million for the same period in 2008.
Included in the fourth quarter 2009 results are various items totaling $64.4 million, or $0.24 per share, which are described at the beginning of this press release. Excluding these items, our adjusted net income amounts to $65.8 million or $0.23 per share.
Basic loss per share, as defined earlier in this press release, for the fourth quarter of 2009 includes a non-cash accrual for the cumulative payment-in-kind dividends on the Series A Convertible Preferred Stock, amounting to $4.1 million, which reduces the income available to common shareholders. For the drybulk carrier segment, net voyage revenues (voyage revenues minus voyage expenses) decreased by $5.1 million to $112.0 million for the three-month period ended December 31, 2009, as compared to $117.1 million for the three-month period ended December 31, 2008. For the offshore drilling segment, revenues from drilling contracts amounted to $74.1 million for the three-month period ended December 31, 2009 as compared to $87.5 million for the same period in 2008. This decrease is mainly due to the deferral of revenue during the fourth quarter of 2009 as a result of the mobilization of the Leiv Eiriksson from the North Sea to the Black Sea.
Total vessel and rig operating expenses and total depreciation and amortization decreased to $45.5 million and $50.1 million, respectively, for the three-month period ended December 31, 2009 from $56.5 million and $49.7 million, respectively, for the three-month period ended December 31, 2008. The decrease in operating expenses is mainly due to the deferral of direct operating costs during the fourth quarter of 2009 as a result of the mobilization of the Leiv Eiriksson from the North Sea to the Black Sea. Total general and administrative expenses decreased to $24.5 million in the fourth quarter of 2009 from $36.2 million during the comparative period in 2008.
Interest and finance costs, net of interest income, decreased to $21.5 million for the three-month period ended December 31, 2009, compared to $34.1 million for the three-month period ended December 31, 2008.
About DryShips Inc.
DryShips Inc., based in Greece, is an owner and operator of drybulk carriers and offshore oil deep water drilling that operate worldwide. As of the day of this release, DryShips owns a fleet of 39 drybulk carriers (including newbuildings) comprising seven Capesize carriers, 30 Panamax carriers and two Supramax carriers, with a combined deadweight tonnage of over 3.5 million tons, two ultra deep water semisubmersible drilling rigs and four ultra deep water newbuilding drillships.
DryShips Inc.'s common stock is listed on the NASDAQ Global Market where it trades under the symbol "DRYS".
DryShips Inc.