-- Forward Freight Agreement ("FFA") loss in connection with the
Company's freight hedging activities earlier this year, amounting to $22.5
million, including an unrealized portion of $14.6 million.
-- Unrealized Interest Rate Swap (IRS) loss amounting to $2.4 million due
to the re-valuation of previously disclosed interest rate hedging
instruments.
-- Aggregate non-cash loss amounting to $0.38 million associated with the
amortized of deferred revenue or prepaid charter revenue incurred upon the
acquisition of vessels with attached charter parties.
-- Additional Vessel operating expenses in connection with the
maintenance of three vessels in the third quarter 2006, amounting to $0.35
million.
-- Additional Vessel operating expenses associated with the delivery of
three newly acquired vessels amounting to $0.48 million.
Excluding the above items Net Income for the third quarter 2006 would have
been $16.7 million or $0.50 per share.
Recent Activities
-- Took delivery of five recently acquired Panamax vessels since
September 2006. The Company expects to take delivery of a sixth charter
free Panamax vessel in December 2006.
-- Entered into a contract for two newbuilding Panamax vessels to be
built in China with expected delivery in the fourth quarter of 2009 and the
first quarter of 2010, respectively, for an aggregate contract price of
$66.5 million.
-- Entered into agreements to sell two Panamax vessels which will be
delivered to their new owners by year end. The Company expects to realize a
total gain of approximately $24 million which will be recognized in the
fourth quarter of 2006.
-- Concluded new time charter agreements ranging in duration from 3.5 to
12 months for two Capesize, two Panamax and two Handymax vessels. The
Company expects these charters to contribute up to $50 million in time
charter revenues over the duration of their respective periods.
-- Declared and paid in October 2006 its sixth consecutive quarterly
dividend of $0.20 per share.
-- Agreed to the request of the Company's major shareholders to reinvest
the dividend payment that they were scheduled to receive in October, in the
amount of about $3.1 million in DryShips shares.
George Economou, the Company's Chairman and Chief Executive Officer,
commented:
"The Company generated Operating Income before FFA losses of $25.3 million
for the quarter which shows an improvement over the previous quarter and
demonstrates that the operating results are in-line with the improving
freight market conditions. With the delivery of the new vessels and the
time charters recently concluded at higher rates, the Company is in a great
position to achieve a marked improvement in its fourth quarter and 2007
results. We remain committed to expanding and renewing our fleet and
deliver the best possible results to our shareholders, taking advantage of
the solid drybulk market fundamentals."
Third Quarter 2006 Results
For the third quarter ended September 30, 2006, Net Revenues (Voyage
Revenues less Voyage Expenses) amounted to $56.2 million as compared to
$58.0 million for the third quarter ended September 30, 2005. Operating
Income before FFA losses of $22.5 million was $25.3 million for the third
quarter ended September 30, 2006 as compared to $31.2 million for the
quarter ended September 30, 2005. Net Loss for the third quarter of 2006
was $9.4 million as compared to Net Income of $25.9 million for the quarter
ended September 30, 2005 and Earnings/(Losses) Per Share (EPS) for the
third quarter 2006 calculated on 33.23 million weighted average basic and
diluted shares outstanding was $(0.28) as compared to $0.85 in the quarter
ended September 30, 2005 calculated on 30.35 million weighted average basic
and diluted shares outstanding. EBITDA for the third quarter of 2006 was
$18.4 million as compared to $44.9 million in the quarter ended September
30, 2005. Please see later in this release for a reconciliation of EBITDA
to net cash provided by Operating activities.
An average of 29.8 vessels were owned and operated during the third quarter
of 2006, earning an average Time Charter Equivalent, or TCE, rate of
$20,807 per day as compared to an average of 26.4 vessels owned and
operated during the third quarter of 2005 earning an average TCE rate of
$24,800 per day.
Nine Months ended September 30, 2006 Results
For the nine months ended September 30, 2006, Net Revenues (Voyage Revenues
less Voyage Expenses) amounted to $158.5 million as compared to $160.5
million for the nine months ended September 30, 2005. Operating Income
before FFA losses of $22.5 million was $72.8 for the nine month period
ended September 30, 2006 as compared to $100.9 million for the nine month
period ended September 30, 2005. Net Income for the nine months ended
September 30, 2006 was $20.8 million as compared to $88.1 million in the
nine months ended September 30, 2005 and Earnings Per Share (EPS) for the
nine months ended September 30,2006, calculated on 31.34 million weighted
average basic and diluted shares outstanding was $0.66 as compared to $3.09
in the nine months ended September 30, 2005 calculated on 28.49 million
weighted average basic and diluted shares outstanding. EBITDA for the nine
months ended September 30, 2006 was $94.2 million as compared to $129.3
million in the nine months ended September 30, 2005. Please see later in
this release for a reconciliation of EBITDA to net cash provided by
Operating activities.
An average of 28.4 vessels were owned and operated during the nine months
ended September 30, 2006, earning an average Time Charter Equivalent, or
TCE, rate of $20,902 per day as compared to an average of 19.7 vessels
owned and operated during the nine months ended September 30, 2005 earning
an average TCE rate of $30,527 per day.
Freight Forward Agreements (FFAs)
An FFA loss amounting to $22.5 million is included in Operating Income for
the third quarter of 2006, including $14.6 million for unrealized but
closed FFA positions that will be paid in the next three quarters. The FFA
loss is the result of the Company's decision earlier this year to hedge its
Panamax freight market exposure, mainly for the third quarter of 2006,
given the market outlook at the time. The freight market staged a recovery
contrary to seasonal expectations and the Company settled or closed all of
its FFA positions. DryShips currently has no further FFA exposure.
Interest Rate Swaps (IRS)
An unrealized IRS loss amounting to $2.4 million is included in Net
Interest and Finance Costs for the third quarter of 2006, due to the
re-valuation of previously disclosed interest rate hedging instruments. The
Company has entered into six interest rate cap and floor agreements, in
order to hedge its interest rate exposure with respect to its borrowings.
The fair value of these interest rate hedges is equivalent to the amount
that would be received or paid by the Company if the agreements were
cancelled as of the day of the balance sheet and is completely unrealized.
Any change on the fair value of these interest rate hedges between
accounting periods is recorded in the corresponding Income statement. No
money has been paid or received by the Company in relation to these
agreements.
Under these agreements the base interest rate the Company is obligated to
pay under different interest rate scenarios is as follows:
LIBOR DryShips Pays
-----------------------------------------------------------
LIBOR < 3% Fixed 3%
3% < LIBOR < 5.6% to 5.85% Floating LIBOR
5.59% to 5.85% < LIBOR < 8% Fixed 5.59% to 5.85%
LIBOR > 8% Floating LIBOR
Acquisition of vessels with period employment attached
During the nine months ended September 30, 2006 the Company acquired six
dry bulk carriers which where all under existing period charter contracts
which the Company agreed to assume through arrangements with the respective
charterers. The Company upon delivery of each of the above vessels
evaluated the charter contracts assumed and recognized (a) an asset
(Prepaid Charter Revenue) of $5.5 million, for two vessels, with a
corresponding decrease in the vessel's purchase price and (b) a liability
(Deferred Revenue) of $8.8 million, for the other four vessels, with a
corresponding increase in the vessels' purchase price. An aggregate
non-cash loss of $0.38 million is included in the Voyage revenues for the
third quarter 2006 results associated with the amortization and deferral of
the above charter revenues.
Drydock related expenses
During the third quarter of 2006, three vessels were drydocked for a total
direct cost of $ 1.1 million. Such costs are capitalized and amortized
until the vessels' next drydock. In addition, the Company incurred expenses
for peripheral supplies and other repair works while the vessels were in
drydock amounting to $0.35 million which are included in Vessel operating
expenses for the third quarter 2006.
New Vessel Deliveries
Deliveries of new vessels typically entail one time expenses associated
with crew mobilization and initial stores, paints, provisions and spare
parts. During the third quarter of 2006 we took delivery of 4 recently
acquired vessels. We incurred additional expenses associated with these
deliveries amounting to $0.48 million, which are included in Vessel
operating expenses for the third quarter 2006.
Capitalization
On September 30, 2006, debt to total capitalization (debt, net of deferred
financing fees and stockholders' equity) was 61% and net debt (total debt
less cash and cash equivalents) to total capitalization was 57%.
As of September 30, 2006, the Company had a total liquidity of
approximately $ 47.1 million.
Financing activities
The five new vessels already delivered since September 2006, have been
financed by cash, the existing term loan facility and a new secured bridge
loan. Following the delivery of the Company's sixth vessel and the sale of
two Panamaxes, the Company expects to combine these facilities into a
single increased term loan facility.
In August 2006, the Company terminated and repaid in full $9 million of
principal and interest under a short term credit facility provided by an
affiliate, in connection with the purchase of the MV Maganari.
In October 2006, the Company terminated and repaid in full by means of
issuance of common stock, $3.3 million of principal and interest under a
seller's credit agreement entered into with an affiliate in connection with
the acquisition of the MV Hille Oldendorff. The Company issued 254,512
shares in relation with the repayment of the seller's credit.
In October 2006, the Company issued a total of 235,585 shares of common
stock to major shareholders that requested to reinvest in Company common
stock the dividend payment in the aggregate amount of $3.1 million that
they were scheduled to receive for the third quarter of 2006.
As of November 20, 2006, the Company has a total of 35,490,097 shares of
common stock outstanding.
Fleet Developments
Deliveries
On September 6, 2006, DryShips took delivery of the MV Lanzarote, a 1996
built second-hand 73,008 dwt Panamax drybulk carrier.
On September 8, 2006, DryShips took delivery of the MV Ligari, a 2004 built
second-hand 75,583 dwt Panamax drybulk carrier.
On September 12, 2006, DryShips took delivery of the MV Delray, a 1994
built second-hand 70,029 dwt Panamax drybulk carrier.
On September 26, 2006, DryShips took delivery of the MV Estepona, a 1994
built second-hand 70,003 dwt Panamax drybulk carrier.
On October 16, 2006, DryShips took delivery of the MV Formentera, a 1996
built second-hand 70,015 dwt Panamax drybulk carrier.
Acquisitions
In September 2006, DryShips agreed to acquire the MV Redondo, a 2000 built
second-hand 74,716 dwt Panamax drybulk carrier, delivery of which is
expected during the fourth quarter of 2006 for an aggregate price of
approximately $40.75 million.
In September 2006, DryShips entered into agreements to acquire two
newbuilding Panamax drybulk carriers, delivery of which is scheduled for
the last quarter of 2009 and the first quarter of 2010 respectively, for an
aggregate contract price of $66.5 million. In October, the Company paid
the first installment of the contract price in the aggregate amount of
approximately $6.7 million, in cash.
Disposals
The Company has entered into an agreement to sell the MV Panormos, a 1995
built second-hand 71,747 dwt Panamax drybulk carrier for an aggregate price
of approximately $35 million. The Company expects to realize a total gain
of approximately $15 million which will be recognized in the fourth quarter
of 2006.
The Company has entered into an agreement to sell the MV Flecha, a 1982
built second-hand 65,081 dwt Panamax drybulk carrier for an aggregate price
of approximately $11.7 million. The Company expects to realize a total gain
of approximately $9 million which will be recognized in the fourth quarter
of 2006.
Employment Developments
The Company has entered the MV Manasota into a time charter for a period
between 9 to 12 months that commenced in November 2006 at a daily rate of
$55,000.
The Company has entered the MV Shibumi into a time charter for a period
between 3 to 5 months that commenced in November 2006 at a daily rate of
$40,000.
The Company has entered the MV Lanzarote into a time charter for a period
between 3.5 to 6 months that commenced in October 2006 at a daily rate of
$31,500.
The Company has entered the MV Padre into a time charter for a period
between 9 to 11.5 months that will commence in early December 2006 at a
daily rate of $30,000.
The Company has entered the MV Matira into a time charter for a period
between 4 to 6 months that commenced in November 2006 at a daily rate of
$25,750.
The Company has entered the MV Alona into a time charter for a period
between 4 to 6 months that commenced in November 2006 at a daily rate of
$27,000.
The recently concluded time charters are expected to contribute
approximately between $35.1 million and $49.5 million in time charter
revenue over the course of their respective charters. The lower figure
corresponds to the minimum charter duration and the higher figure to the
maximum charter duration.
Capital expenditures
The Company expects to incur the following capital expenditures associated
with vessel drydockings:
Fourth First Second Third Fourth
quarter quarter quarter quarter quarter
2006 2007 2007 2007 2007
-------- -------- -------- -------- --------
Number of vessels 3 2 1 4 1
-------- -------- -------- -------- --------
Expected cost in USD
millions 1.44 0.7 0.4 2.2 0.2
-------- -------- -------- -------- --------
Offhire days 61 35 35 85 15
-------- -------- -------- -------- --------
Such costs are capitalized and amortized until the vessels' next drydock.
The actual days and expenses in connection with vessel drydockings will
vary based on the shipyard schedule, weather, condition of the vessel and
other factors.
In addition the Company expects to incur expenses for peripheral supplies
and other repair works while the vessels will be in drydock which will be
included in Vessel operating expenses for the respective quarter.
Dividend Payment
In September 2006, DryShips declared its quarterly dividend of $0.20 per
common share; the dividend was paid in October 2006. This was the sixth
consecutive dividend payment since the Company went public in 2005. Since
that time, DryShips has paid a total of $1.20 per share in dividends.
Fleet Data
Third Quarter 2006
Total TCE revenue decreased during the third quarter of 2006 compared to
the third quarter of 2005, primarily as a result of a decrease in the daily
average TCE rate from $24,800 in the third quarter of 2005 compared to
$20,807 in the third quarter of 2006 off-set by an increase in the average
number of vessels operated, from an average of 26.4 vessels in the third
quarter of 2005 to 29.8 vessels in the third quarter of 2006.
Vessel operating expenses increased to $11.9 million for the third quarter
of 2006 compared to $11.1 million for the third quarter of 2005. The
increase is attributable to the increase in the number of vessels operated
from an average of 26.4 vessels for the third quarter of 2005 to 29.8
vessels for the third quarter of 2006, offset by a decrease in daily vessel
operating expenses from $4,594 per day for the third quarter of 2005 to
$4,344 per day for the third quarter of 2006. This increase is also the
result of three vessels undergoing drydocking in the third quarter of 2006
compared to one vessel in the third quarter of 2005 and four newly acquired
vessels being delivered in the third quarter of 2006 compared to one vessel
in the third quarter of 2005.
Depreciation and amortization increased to $15.5 million in the third
quarter of 2006 compared to $13.4 million in the third quarter of 2005.
This was a direct result of the increase in the Company's fleet from an
average of 26.4 vessels in the third quarter of 2005 to an average of 29.8
vessels in the third quarter of 2006.
Management fees increased to $1.7 million in the third quarter of 2006
compared to $1.5 million in the third quarter of 2005 as a direct result of
the increase in the number of fleet calendar days from 2,425 in the third
quarter of 2005 to 2,738 in the third quarter of 2006 due to the growth of
the fleet.
General and administrative expenses increased from $0.7 million in the
third quarter of 2005 to $1.8 million in the third quarter of 2006, mainly
due to the growth of the fleet.
Nine Months Ended September 30, 2006
Total TCE revenue decreased during the nine months ended September 30, 2006
compared to the nine months ended September 30, 2005, primarily as a result
of a decrease in the average daily TCE rate from $30,527 in the nine months
ended September 30, 2005 to $20,902 in the nine months ended September 30,
2006 offset by an increase in the average number of vessels operated, from
an average of 19.7 vessels in the nine months ended September 30, 2005 to
28.4 vessels in the nine months ended September 30, 2006.
Vessel operating expenses increased to $33.5 million for the nine months
ended September 30, 2006 compared to $24.8 million for the nine months
ended September 30, 2005. The increase is attributable to the increase in
the number of vessels operated from an average of 19.7 vessels for the nine
months ended September 30, 2005 to 28.4 vessels for the nine months ended
September 30, 2006, offset by lower daily vessel operating expenses
decreasing from $4,606 per day to $4,324 day, respectively.
Depreciation and amortization increased to $43.7 million in the nine months
ended September 30, 2006 compared to $28.4 million in the nine months ended
September 30, 2005. This was a direct result of the increase in the
Company's fleet from an average of 19.7 vessels in the nine months ended
September 30, 2005 to an average of 28.4 vessels in the nine months ended
September 30, 2006.
Management fees increased to $4.7 million in the nine months ended
September 30, 2006 compared to $3.6 million in the nine months ended
September 30, 2005 as a direct result of the increase in the number of
fleet calendar days from 5,379 in the nine months ended September 30, 2005
to 7,743 in the nine months ended September 30, 2006 due to the growth of
the fleet.
General and administrative expenses increased from $2.9 million in the nine
months ended September 30, 2005 to $3.8 million in the nine months ended
September 30, 2006, mainly due to the growth of the fleet.
Third Quarter 2006
(Dollars in thousands, except
Average Daily Results - unaudited)
3 Months Ended 3 Months Ended
September 30, September 30,
2006 2005
-------------- --------------
Average number of vessels (1) 29.8 26.4
Total voyage days for fleet (2) 2,700 2,339
Total calendar days for fleet (3) 2,738 2,425
Fleet Ultilization (4) 98.6% 96.5%
Time charter equivalent (5) 20,807 24,800
Capesize 29,542 44,203
Panamax 19,219 21,218
Handymax 15,038 22,020
Vessel operating expenses (daily)
(6) 4,343 4,594
Management fees (daily) 625 635
General and administrative expenses
(daily) (7) 661 280
Total vessel operating expenses
(daily) (8) 5,629 5,509
Nine Months ended September 30, 2006
(Dollars in thousands, except
Average Daily Results - unaudited)
9 Months Ended 9 Months Ended
September 30, September 30,
2006 2005
--------------- ---------------
Average number of vessels (1) 28.4 19.7
Total voyage days for fleet (2) 7,582 5,259
Total calendar days for fleet (3) 7,743 5,379
Fleet Ultilization (4) 97.9% 97.8%
Time charter equivalent (5) 20,902 30,527
Capesize 31,033 51,455
Panamax 18,913 27,435
Handymax 14,751 22,420
Vessel operating expenses (daily)
(6) 4,324 4,606
Management fees (daily) 603 660
General and administrative expenses
(daily) (7) 492 543
Total vessel operating expenses
(daily) (8) 5,419 5,809
1) Average number of vessels is the number of vessels that constituted our
fleet for the relevant period, as measured by the sum of the number of days
each vessel was a part of our fleet during the period divided by the number
of calendar days in that period.
(2) Total voyage days for fleet are the total days the vessels were in our
possession for the relevant period net of off hire days associated with
major repairs, drydockings or special or intermediate surveys.
(3) Calendar days are the total days the vessels were in our possession for
the relevant period including off hire days associated with major repairs,
drydockings or special or intermediate surveys.
(4) Fleet utilization is the percentage of time that our vessels were
available for revenue generating voyage days, and is determined by dividing
voyage days by fleet calendar days for the relevant period.
(5) Time charter equivalent, or TCE, is a measure of the average daily
revenue performance of a vessel on a per voyage basis. Our method of
calculating TCE is consistent with industry standards and is determined by
dividing voyage revenues (net of voyage expenses) by voyage days for the
relevant time period. Voyage expenses primarily consist of port, canal and
fuel costs that are unique to a particular voyage, which would otherwise be
paid by the charterer under a time charter contract, as well as
commissions. TCE is a standard shipping industry performance measure used
primarily to compare period-to-period changes in a shipping company's
performance despite changes in the mix of charter types (i.e., spot
charters, time charters and bareboat charters) under which the vessels may
be employed between the periods.
The following table reflects the calculation of our TCE rates for the
periods then ended:
3 Months 3 Months 9 Months 9 Months
(Dollars in thousands) Ended Ended Ended Ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
--------- --------- --------- ---------
Voyage revenues 59,967 59,066 169,324 167,232
Voyage expenses (3,786) (1,060) (10,843) (6,688)
--------- --------- --------- ---------
Time Charter equivalent
revenues 56,181 58,006 158,481 160,544
========= ========= ========= =========
Total voyage days for fleet 2,700 2,339 7,582 5,259
Time charter equivalent (TCE)
rate 20,807 24,800 20,902 30,527
(6) Daily vessel operating expenses, which includes crew costs, provisions,
deck and engine stores, lubricating oil, insurance, maintenance and repairs
is calculated by dividing vessel operating expenses by fleet calendar days
for the relevant time period.
(7) Daily general and administrative expense is calculated by dividing
general and administrative expense by fleet calendar days for the relevant
time period.
(8) Total vessel operating expenses, or TVOE is a measurement of our total
expenses associated with operating our vessels. TVOE is the sum of vessel
operating expenses, management fees and general and administrative
expenses. Daily TVOE is calculated by dividing TVOE by fleet calendar days
for the relevant time period.
DryShips Inc. Fleet
As at September 30, 2006, the Company's fleet consisted of 33 vessels.
During the three month period ended September 30, 2006, the Company
operated the following types of vessels:
Capesize Panamax Handymax Total
--------- --------- --------- ---------
Average number of vessels
during period 4.00 22.76 3.00 29.76
Number of vessels at end of
period 4.00 26.00 3.00 33.00
Dwt at end of period 657,256 1,877,020 150,069 2,684,345
DWT as percentage of total
fleet 24.48% 69.92% 5.59% 100.00%
During the nine month period ended September 30, 2006, the Company operated
the following types of vessels:
Capesize Panamax Handymax Total
--------- --------- --------- ---------
Average number of vessels
during period 4.00 21.76 2.60 28.36
Number of vessels at end of
period 4.00 26.00 3.00 33.00
Dwt at end of period 657,256 1,877,020 150,069 2,684,345
DWT as percentage of total
fleet 24.48% 69.92% 5.59% 100.00%
Financial Statements
The following are DryShips Inc.'s Condensed Income Statements (unaudited)
for the three-month and nine-month periods ended September 30, 2006 and
September 30, 2005:
3 Months 3 Months 9 Months 9 Months
(Dollars in thousands, Ended Ended Ended Ended
except for share and
per share data - September September September September
unaudited) 30, 2006 30, 2005 30, 2006 30, 2005
----------- ----------- ----------- -----------
Unaudited Unaudited Unaudited Unaudited
Restated(1) Restated(1)
INCOME STATEMENT DATA
Voyage revenues $ 59,967 $ 59,066 $ 169,324 $ 167,232
Loss on Forward
Freight Agreements 22,473 - 22,473 -
Voyage expenses 3,786 1,060 10,843 6,688
Vessels operating
expenses 11,894 11,140 33,490 24,775
Depreciation and
amortization 15,475 13,422 43,749 28,402
Management fees 1,712 1,543 4,666 3,552
General and
administrative 1,810 679 3,814 2,919
----------- ----------- ----------- -----------
Operating Income 2,817 31,222 50,289 100,896
----------- ----------- ----------- -----------
Interest and finance
costs, net (12,375) (5,518) (29,679) (12,865)
Other, net 208 226 209 20
----------- ----------- ----------- -----------
Net (Loss) / Income $ (9,350) $ 25,930 $ 20,819 $ 88,051
=========== =========== =========== ===========
Basic and fully
diluted earnings per
share $ (0.28) $ 0.85 $ 0.66 $ 3.09
Weighted average basic
and diluted shares
outstanding 33,233,421 30,350,000 31,343,241 28,488,095
(1) The nature of the restatement of the income statement data for the
three and nine months ended September 30, 2005 consisted mainly of
corrections relating to accrued liabilities, the valuation of an interest
rate swap, the capitalization of loan fees, the amortization of deferred
revenue for vessels acquired with an attached time charter agreement and
expensing of costs previously capitalized.
The following are DryShips Inc.’s Balance Sheets as at September 30, 2006
(unaudited) and December 31, 2005 (audited):
September 30, December 31,
(Dollars in thousands) 2006 2005
-------------- --------------
BALANCE SHEET DATA Unaudited Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 20,889 5,184
Restricted cash 6,205 3,040
Accounts receivables - trade, net 1,793 5,514
Insurance claims 233 107
Due from related parties 1,965 0
Inventories 2,821 1,326
Financial instruments 961 270
Prepaid charter revenue 2,872 0
Prepayments and other 5,295 3,336
-------------- --------------
Total current assets 43,034 18,777
-------------- --------------
FIXED ASSETS:
Advances for vessels acquisitions 6,975 0
Vessels 1,131,127 923,890
Accumulated depreciation -100,435 -59,157
-------------- --------------
Net book value 1,037,667 864,733
-------------- --------------
Deferred charges, net 5,342 3,781
Restricted cash 20,000 21,011
Other non current assets 2,785 2,257
-------------- --------------
Total assets 1,108,828 910,559
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt 107,060 107,738
Sellers credit 3,250 0
Accounts payable 8,884 8,479
Due to related parties 2,170 6,460
Dividends payable 7,000 0
Accrued liabilities 7,081 6,529
Deferred revenue 13,500 6,309
Financial instruments 14,618 0
Other currrent liabilities 201 230
-------------- --------------
Total current liabilities 163,764 135,745
-------------- --------------
Long-term debt, net of currrent portion 535,884 417,615
-------------- --------------
Other non-current liabilities 607 698
-------------- --------------
STOCKHOLDERS' EQUITY
Capital stock 350 304
Additional paid-in capital 321,044 264,600
Retained earnings 87,179 91,597
-------------- --------------
Total Stockholders' equity 408,573 356,501
-------------- --------------
Total liabilities and stockholders' equity 1,108,828 910,559
============== ==============
EBITDA Reconciliation
DryShips Inc. considers EBITDA to represent net income before interest,
taxes, depreciation and amortization. EBITDA does not represent and should
not be considered as an alternative to net income or cash flow from
operations, as determined by United States generally accepted accounting
principles, or U.S. GAAP, and our calculation of EBITDA may not be
comparable to that reported by other companies. EBITDA is included herein
because it is a basis upon which the Company assesses its liquidity
position, it is used by our lenders as a measure of our compliance with
certain loan covenants and because the Company believes that it presents
useful information to investors regarding a company's ability to service
and/or incur indebtedness.
The following table reconciles net cash from operating activities to
EBITDA:
(Dollars in thousands) 3 Months ended 3 Months ended
September 30, 2006 September 30, 2005
------------------ ------------------
Net cash provided by operating
activities 27,577 42,552
Net (decrease) / increase in
current assets (5,098) (2,136)
Net decrease / (increase) in
current liabilities, excluding
currrent portion of long term debt 1,622 (5,283)
Amortization of deferred revenue (1,446) 834
Amortization of free lubricants 37 (301)
Change in fair value of derivatives (17,049) 1,398
Net Interest expense 12,238 5,518
Amortization of deferred financing
costs included in interest expense (182) (223)
Payments for dry-docking costs 668 2,512
------------------ ------------------
EBITDA 18,367 44,871
================== ==================
(Dollars in thousands) 9 Months ended 9 Months ended
September 30, 2006 September 30, 2005
------------------ ------------------
Net cash provided by operating
activities 73,444 128,884
Net (decrease) / increase in
current assets 1,824 4,197
Net decrease / (increase) in
current liabilities, excluding
currrent portion of long term debt 3,963 (22,482)
Amortization of deferred revenue (1,598) 4,646
Amortization of free lubricants 120 (761)
Change in fair value of derivatives (13,927) (252)
Net Interest expense 29,679 12,865
Amortization of deferred financing
costs included in interest expense (3,290) (491)
Payments for dry-docking costs 4,032 2,714
------------------ ------------------
EBITDA 94,247 129,320
================== ==================
Fleet List
The table below describes in detail our fleet development and current
employment profile as of November 20, 2006:
Year Current Gross Redelivery
Built Deadweight Type Employment Rate Earliest Latest
==== ========= ======== ======== ========= ======== ====== ======
Capesize
Manasota 2004 171,061 342,122 Capesize TC $ 55,000 Aug-07 Nov-07
Alameda 2001 170,662 853,310 Capesize TC $ 28,000 Feb-07 Apr-07
Shibumi 1984 166,058 3,653,276 Capesize TC $ 40,000 Feb-07 Apr-07
Netadola 1993 149,475 1,943,175 Capesize TC $ 30,750 Jan-07 Mar-07
4 657,256 10.3
Panamax
Ligari 2004 75,583 151,166 Panamax TC $ 17,500 Prompt Feb-07
Padre 2004 73,601 147,202 Panamax TC $ 30,000 Sep-07 Nov-07
Maganari 2001 75,941 379,705 Panamax TC $ 29,000 Feb-07 May-07
Coronado 2000 75,706 454,236 Panamax TC $ 18,500 Apr-07 Jun-07
Ocean
Crystal 1999 73,688 515,816 Panamax TC $ 24,500 Nov-06 Feb-07
Xanadu 1999 72,270 505,890 Panamax TC $ 18,500 Apr-07 Jun-07
Lanzarote 1996 73,008 730,080 Panamax TC $ 31,500 Feb-07 Apr-07
Iguana 1996 70,349 703,490 Panamax TC $ 28,000 Sep-07 Nov-07
Formen-
tera 1996 70,015 700,150 Panamax TC $ 18,000 May-07 Jul-07
Waikiki 1995 75,473 830,203 Panamax TC $ 17,500 Feb-07 Apr-07
Delray 1994 70,029 840,348 Panamax TC $ 16,100 Prompt Dec-06
Estepona 1994 70,003 840,036 Panamax TC $ 18,500 May-07 Sep-07
Catalina 2005 74,432 74,432 Panamax Spot $ 26,750
Mendocino 2002 76,623 306,492 Panamax Spot $ 28,500
La Jolla 1997 72,126 649,134 Panamax Spot $ 24,650
Solana 1995 75,100 826,100 Panamax Spot $ 29,500
Paragon 1995 71,259 783,849 Panamax Spot $ 27,000
Sonoma 2001 74,786 373,930 Panamax Baumarine $ 25,671
Toro 1995 73,034 803,374 Panamax Baumarine $ 25,402
Panormos 1995 71,747 789,217 Panamax Baumarine $ 26,205
Lacerta 1994 71,862 862,344 Panamax Baumarine $ 25,253
Daytona 1989 69,703 1,184,951 Panamax Baumarine $ 22,084
Lanikai 1988 68,676 1,236,168 Panamax Baumarine $ 22,969
Tonga 1984 66,798 1,469,556 Panamax Baumarine $ 17,779
Flecha 1982 65,081 1,561,944 Panamax Baumarine $ 18,675
Striggla 1982 64,747 1,553,928 Panamax Baumarine $ 19,427
Mostoles 1981 75,395 1,884,875 Panamax Baumarine $ 18,683
27 1,947,035 10.9
Handymax
Alona 2002 48,640 194,560 Handymax TC $ 27,000 Mar-07 May-07
Matira 1994 45,863 550,356 Handymax TC $ 25,750 Mar-07 May-07
Hille
Olden-
dorff 2005 55,566 55,566 Handymax BB $ 20,020 Jan-07 May-07
3 150,069 5.3
Newbuildings
TBN 2009 75,000 Panamax
TBN 2010 75,000 Panamax
2 150,000
Total
Fleet 36 2,904,360 10.4
Notes:
1. For spot vessels the TCE rate is for the current voyage
2. For vessels trading in the Baumarine pool the TCE rate is the Pool's
estimate for earnings in the month of October
3. The MV Maganari has been fixed in direct continuation at $18,400 per day
for 12 months
4. The MV Hille Oldendorff is employed under a bareboat charter
5. The MV Padre is presently on TC at $23,000 per day expiring in early
December 2006 before commencing the indicated charter above
6. The MV Conrad Oldendorff upon redelivery by previous charterers was
renamed MV Mendocino
7. The quoted rates are not indications of future earnings and the Company
gives no assurance or guarantee of future rates.
8. The MV Belmonte upon redelivery by previous charterers was renamed MV
Padre
Conference Call and Webcast
On November 21, 2006 at 9.30 am EST, the Company's management will host a
conference call to discuss the results.
Conference Call details:
Participants should dial into the call 10 minutes before the scheduled time
using the following numbers: 1866 819 7111 (from the US), 0800 953 0329
(from the UK) or +44 1452 542 301 (from outside the US). Please quote
"DryShips".
In case of any problem with the above numbers, please dial 1866 869 2352
(from the US), 0800 694 1449 (from the UK) or +44 1452 560 304 (from
outside the US). Quote "DryShips".
A telephonic replay of the conference call will be available until November
28, 2006, by dialing 1866 247 4222 (from the US), 0800 953 1533 (from the
UK) or +44 1452 550 000 (from outside the US). Access Code: 2133051#
Slides and audio webcast:
There will also be a live webcast of the conference call, through the
internet on DryShips, Inc.'s website (www.dryships.com). Participants to
the live webcast should register on the website approximately 10 minutes
prior to the start of the webcast.
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 36 drybulk carriers consisting 4 Capesize, 27 Panamax, 3
Handymax and 2 newbuilding Panamax vessels, with a combined deadweight
tonnage of approximately 2.9 million.
DryShips Inc.'s common stock is listed on NASDAQ Global Market where it
trades under the symbol "DRYS".
Forward-Looking Statement
Matters discussed in this release may constitute forward-looking
statements. Forward-looking statements reflect our current views with
respect to future events and financial performance and may include
statements concerning plans, objectives, goals, strategies, future events
or performance, and underlying assumptions and other statements, which are
other than statements of historical facts.
The forward-looking statements in this release are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, management's examination of historical
operating trends, data contained in our records and other data available
from third parties. Although DryShips Inc. believes that these assumptions
were reasonable when made, because these assumptions are inherently subject
to significant uncertainties and contingencies which are difficult or
impossible to predict and are beyond our control, DryShips Inc. cannot
assure you that it will achieve or accomplish these expectations, beliefs
or projections.
Important factors that, in our view, could cause actual results to differ
materially from those discussed in the forward-looking statements include
the strength of world economies and currencies, general market conditions,
including changes in charterhire rates and vessel values, changes in demand
that may affect attitudes of time charterers to scheduled and unscheduled
drydocking, changes in DryShips Inc.'s operating expenses, including bunker
prices, dry-docking and insurance costs, or actions taken by regulatory
authorities, potential liability from pending or future litigation,
domestic and international political conditions, potential disruption of
shipping routes due to accidents and political events or acts by
terrorists.
Risks and uncertainties are further described in reports filed by DryShips
Inc. with the US Securities and Exchange Commission.
Visit our website at www.dryships.com
Contact Information: Investor Relations / Media: Nicolas Bornozis Capital Link, Inc. (New York) Tel. 212-661-7566 E-mail: nbornozis@capitallink.com