FreeSeas Inc. Announces 2009 First Quarter Financial Results

28.05.2009

First Quarter 2009 Financial Highlights

• Operating revenues of $17.6 million, an increase of 103% year-over-year
• Net income of $6.2 million, or $0.29 earnings per share, basic and diluted
• Adjusted EBITDA of $11.9 million
• Cash flow from operations of $8.7 million

First Quarter 2009 Operating Highlights

• Nine Handysize / Handymax vessels owned and operated during the period, earning an average Time Charter Equivalent, or TCE, of $20,334 per day
• Fleet utilization of 99.9%

PIRAEUS, Greece, May 28, 2009 (GLOBE NEWSWIRE) -- FreeSeas Inc. (Nasdaq:FREE) (Nasdaq:FREEW) (Nasdaq:FREEZ) ("FreeSeas" or the "Company"), a transporter of dry bulk cargoes through the ownership and operation of a fleet of seven Handysize vessels and two Handymax vessels, today announced financial results for its first quarter ended March 31, 2009.

Mr. Ion Varouxakis, President and CEO of FreeSeas, stated, "We are very pleased with the Company's successful execution throughout a challenging period in our industry, which we feel also reflects our flexibility as a smaller company and unique position as a Handysize owner. We have nine vessels with a balanced charter strategy, solid relationships with our lenders, and lean and efficient operations. We have placed considerable focus on maintaining a streamlined, cost-efficient infrastructure, without compromising the safety of our crews, the maintenance standards and the quality of our service or ability to secure new charters. These efforts were reflected in our first quarter results, as we reduced daily operating expenses by 38.7% and daily general and administrative expenses by 40.3%, on a per vessel basis. As a result, we substantially improved our operating and net margins in the first quarter of 2009 when compared to the first quarter of 2008, and produced $8.7 million in cash from operations during the period."

2009 First Quarter Financial Review

Operating revenues for the first quarter of 2009 were $17.6 million, an increase of 103% from $8.6 million in the comparable period of the prior year, largely due to the increase in the size of the Company's fleet.

Vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs, totaled $3.5 million, or 19.8% of revenue, for the 2009 first quarter, as compared to $3.3 million, or 37.7% of revenue, for the comparable period of the prior year. For the first quarter of 2009, depreciation and amortization expense totaled $4.6 million, as compared to $2.1 million for the first quarter of 2008. The increase in operating and depreciation expenses was a result of an increase from six to nine vessels.

Net income for the first quarter of 2009 was $6.2 million, or $0.29 per diluted share based on 21.2 million diluted weighted average number of shares outstanding, as compared to net income of $283,000, or $0.01 per diluted share based on 21.0 million diluted shares outstanding, for the first quarter of 2008. Adjusted EBITDA for the quarter ended March 31, 2009 increased to $11.9 million from $3.7 in the prior year quarter. A table reconciling adjusted EBITDA to net income can be found in footnote(1) to this release.

Outlook for 2009

Mr. Varouxakis continued, "We have focused on securing attractive rates for our vessels currently operating in the spot market, and are benefiting from the favorable time charter agreements made by the Company last year and that were extended in the first quarter of 2009. We are also very pleased with the upward turn in the Baltic Dry Index, which we feel only begins to explain the potential rate of expansion for operators of Handysize vessels. According to available market data, the worldwide Handysize fleet has been shrinking since the third quarter of 2008. The Handysize segment in which FreeSeas operates is the only dry bulk segment where scrapping exceeded newbuildings, a trend we expect to continue due to the average older age of the segment's fleet. While we acknowledge that numerous challenges remain, we continue to see support in recent weeks towards more favorable rates and are encouraged by the improving strength in the charter market. As a result of this reasonable optimism, our solid results in the first quarter, and our existing charter agreements, we expect to achieve profitability throughout 2009."

Mr. Varouxakis concluded, "We also continue to feel that there are selective opportunities available for our Company to safely expand its fleet. The secondhand Handysize market is a niche that we do not feel has been explored by the other major listed shipping companies, and provides a potential avenue for the acquisition of immediately accretive assets. In addition, our management capacity is such that we could expand our fleet without significant incremental costs to our operations or corporate overhead. While our current and immediate focus is on repayment of debt, we are selectively pursuing potential opportunities that would be accretive to shareholders."

About FreeSeas Inc.
FreeSeas Inc. is a Marshall Islands corporation with principal offices in Piraeus, Greece. FreeSeas is engaged in the transportation of dry bulk cargoes through the ownership and operation of dry bulk carriers. Currently, it has a fleet of seven Handysize vessels and two Handymax vessels. FreeSeas' common stock and warrants trade on the NASDAQ Global Market under the symbols FREE, FREEW and FREEZ, respectively. Risks and uncertainties are described in reports filed by FreeSeas Inc. with the U.S. Securities and Exchange Commission, which can be obtained free of charge on the SEC's website at http://www.sec.gov. For more information about FreeSeas Inc., please visit the corporate website, http://www.freeseas.gr.

FreeSeas Inc. press release