Dryships Inc. Reports Financial and Operating Results for the First Quarter 2010
May 12, 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 three-month period ended March 31,
2010.
First Quarter 2010 Financial Highlights
- For the first quarter of 2010, the Company reported net income of $5.7 million, or $0.01 basic and
diluted earnings per share. Included in the first quarter 2010 results are various items, totaling
$61.9 million, or $0.26 per share which are described below. Excluding these items, net income
amounted to $67.6 million. or $0.27 per share.
Included in the first quarter 2010 results is the net effect of deferring revenues and direct incremental expenses to future periods, which negatively impacted results by approximately $16.6 million of net revenues, or $0.07 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, commencing from February 24, 2010, the date the rig commenced drilling operations in the Black Sea.
Included in the first quarter 2010 results are non-cash amortization of debt issuance costs, including those relating to our convertible senior notes issued on November 19, 2009, totaling $6.9 million, or $0.03 per share.
Included in the first quarter 2010 results are losses incurred on our interest rate swaps, amounting to $34.6 million, or $0.14 per share.
Included in the first quarter 2010 results is amortization of stock based compensation of $14.5 million, or $0.06 per share.
- Basic earnings per share for the first quarter of 2010 includes a non-cash accrual for the cumulative payment-in-kind dividends on the Series A Convertible Preferred Stock, amounting to $4.0 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 have another quarter of solid operating results with our charters on both the drybulk and drilling units performing as per expectations. The Leiv Eiriksson completed acceptance testing and commenced drilling operations for Petrobras on February 24th and has recorded good utilization rates since. The long operating history of Ocean Rig and its safety record will differentiate us as we bid for tenders going forward. We would also like to point out that all of our existing rigs and newbuildings under construction have the Acoustic Control provided. Operational safety remains a top priority for the Company. The construction of the four newbuilding drillships at Samsung Heavy Industries continues to be on schedule and on budget. We remain focused on the securing of employment for the drillships and the financing for hull numbers 1837 and 1838. We are making progress on both fronts and especially on the financing front where we are pursuing a couple of debt alternatives that appear to be promising. We continue to renew our drybulk fleet through paired trades selling older vessels and replacing them with younger ones. We are now left with just six vessels that are built in the mid to late 1990s. The drybulk market remains resilient and continues to outperform expectations. While 2009 was largely a China story, the first quarter has seen demand from the rest of the world return to pre-crisis levels, as evidenced by the global iron ore imports. We remain bullish on the prospects of the drybulk market.
Financial Review: 2010 First Quarter
The Company recorded net income of $5.7 million, or $0.01 basic and diluted earnings per share, for the three-month period ended March 31, 2010, as compared to a net loss of $118.9 million, or $1.09 basic and diluted loss per share, for the three-month period ended March 31, 2009. EBITDA, which is defined and reconciled later in this press release, was $81.9 million for the first quarter of 2010 as compared to negative $41.0 million for the same period in 2009.
Included in the first quarter 2010 results are various items totaling $61.9 million, or $0.26 per share, which are described at the beginning of this press release. Excluding these items, our adjusted net income amounts to $67.6 million, or $0.27 per share.
Basic earnings per share, as defined earlier in this press release, for the first quarter of 2010 includes a non-cash accrual for the cumulative payment-in-kind dividends on the Series A Convertible Preferred Stock, amounting to $4.0 million, which reduces the income available to common shareholders.
For the drybulk carrier segment, net voyage revenues (voyage revenues minus voyage expenses) increased by $18.0 million to $106.9 million for the three-month period ended March 31, 2010, as compared to $88.9 million for the three-month period ended March 31, 2009. For the offshore drilling segment, revenues from drilling contracts amounted to $80.3 million for the three-month period ended March 31, 2010 as compared to $96.0 million for the same period in 2009. This decrease is mainly due to the deferral of revenue during the first quarter of 2010 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 $48.4 million and $47.2 million, respectively, for the three-month period ended March 31, 2010 from $50.5 million and $48.4 million, respectively, for the three-month period ended March 31, 2009. Total general and administrative expenses increased to $27.2 million in the first quarter of 2010 from $21.5 million during the comparative period in 2009.
Interest and finance costs, net of interest income, decreased to $24.5 million for the three-month period ended March 31, 2010, compared to $26.6 million for the three-month period ended March 31, 2009.
Recent Events
$240 million in aggregate principal amount raised through the issuance of senior convertible notes.
The Company has entered into agreements to:
Sell the Panamax vessel MV Xanadu 72,270 dwt built in 1999 for $33.7 million. Delivery to the new owners will take place during the second or third quarter of 2010. The vessels charter (at $39,750 per day until July 2013) will be transferred to the vessel purchased below.
Purchase a Panamax vessel about 75,000 dwt built in 2009 for $43 million. Delivery to the Company will take place during the second or third quarter of 2010. Financing from a previously sold vessel will be transferred to finance the purchase of this vessel.
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.