2009 Third Quarter Financial Highlights * Operating revenues of $13.1 million, up 5.6% quarter-over-quarter * Net income of $465,000, or $0.02 diluted earnings per share * Adjusted EBITDA of $5.9 million * Cash flow from operations of $4.9 million * 9.4 vessels were operated during the period, generating a time charter equivalent rate of $14,598 per day 2009 Nine Month Financial Highlights * Operating revenues of $43.0 million * Net income of $7.2 million, or $0.31 diluted earnings per share * Adjusted EBITDA of $23.5 million * Cash flow from operations of $17.7 million * 9.14 vessels were operated during the period, generating a time charter equivalent rate of $16,466 per day Operational Highlights * Increased the size of the Company's fleet from nine to 10 vessels, taking delivery of the M/V Free Neptune; lowering the average age and increasing carrying capacity from 268,166 DWT to 299,004 DWT Financing Highlights * New secured seven-year term loan of up to $27.75 million to refinance existing $21.75 million and up to $6.0 million of additional liquidity * Reduced market-value-to-loan covenant on a revolving credit facility to 115% from April 1, 2010 until April 1, 2011
PIRAEUS, Greece, Nov. 16, 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 eight Handysize and two Handymax vessels, today announced financial results for its third quarter and nine months ended September 30, 2009.
Mr. Ion Varouxakis, President and CEO of FreeSeas, stated, "We continue to position the Company for long-term growth amid challenging, but improving, market conditions. We operated profitably during the period, with an emphasis on maintaining our low operating cost structure and maximizing our cash flow. We believe that our fleet is well-positioned to take advantage of the current upturn in the dry bulk market, as a result of our strategic decision earlier this year to operate our Handysize vessels in the spot market at what proved to be profitable and improving charter rates. We are also encouraged with the recent demand driven improvement in the dry bulk market, especially for Handysize vessels, as evidenced by the considerable gains shown by the Baltic Dry Index in recent weeks, which seems to indicate that the market low may be behind us."
Mr. Alexandros Mylonas commented, "Our recently concluded acquisition of the M/V Free Neptune lowers our per-vessel cash break-even cost, while the recently agreed new term loan with First Business Bank and the amendment of the market-value-to-loan covenant with Credit Suisse provides us with access to additional liquidity and a sustainable debt repayment and covenant package going forward."
2009 Third Quarter Financial Review
* Operating revenues for the 2009 third quarter were $13.1 million, as compared to $22.3 million reported the same period of the prior year. The decrease was largely due to the weaker freight market, with the resulting lower charter rates for the period. * Daily vessel operating expenses were $5,624, for the 2009 third quarter, as compared to $6,311 for the same period of the prior year. They decreased by 10.9%, as a result of close monitoring of vessel operating expenses and the more efficient operation of our vessels due to repairs completed in 2008 to bring the newly purchased vessels to our operational standards. For the third quarter of 2009, depreciation expense and amortization of deferred charges totaled $4.3 million, as compared to $4.2 million for the third quarter of 2008. The slight increase in depreciation expenses and amortization of deferred charges reflected primarily an increase of the fleet to 9.40 vessels from 8.26 vessels, offset by an adjustment to the period over which the Company depreciates its vessels to 28 years from 27 years. * Income from operations for the third quarter of 2009 was $1.7 million, as compared to the $10.8 million reported in the prior year period. Net income for the third quarter of 2009 was $465,000, or $0.02 diluted earnings per share based on 28.2 million diluted weighted average number of shares outstanding, as compared to net income of $9.4 million, or $0.43 diluted earnings per share based on 21.5 million diluted weighted average number of shares outstanding, for the third quarter of 2008. The increase in the diluted weighted average number of shares outstanding is a result of the Company's registered offering of 10,041,151 shares of common stock in July 2009. * Adjusted EBITDA for the quarter ended September 30, 2009 was $5.9 million compared to $15.1 million in the prior year's quarter. A table reconciling adjusted EBITDA to net income can be found in footnote (1) to this release. The decrease is attributable to the weaker freight market in the three months ended September 30, 2009 compared to the same period in 2008.
2009 Nine Month Financial Review
* Operating revenues for the first nine months of 2009 were $43.0 million, compared to $45.9 million in the comparable period of the prior year. The decrease of $2.9 million is attributable to the weaker freight market, with the resulting lower charter rates in the nine months ended September 30, 2009 compared to the same period in 2008. * Daily vessel operating expenses were $4,918, for the nine-month period ended September 30, 2009, as compared to $6,533 for the same period in 2008. They decreased by 24.7% as a result of close monitoring of vessel operating expenses and the more efficient operation of our vessels due to repairs completed in 2008 to bring the newly purchased vessels to our operational standards. * For the first nine months of 2009, depreciation expense and amortization of deferred charges totaled $13.2 million, as compared to $9.5million for the first nine months of 2008. The increase in depreciation expenses and amortization of deferred charges was mainly due to the increase of the fleet size partly offset by the change in depreciation policy due to the increase of the vessels useful life from 27 to 28 years. * Income from operations for the first nine months of 2009 was $10.5 million compared to $18.1 million reported in the prior year period. Net income for the first nine months of 2009 was $7.2 million, or $0.31 diluted earnings per share based on 23.5 million diluted weighted average number of shares outstanding, as compared to net income of $13.8 million, or $0.62 diluted earnings per share based on 22.3 million diluted weighted average number of shares outstanding, for the first nine months of 2008. * Adjusted EBITDA for the first nine months of 2009 was $23.5 million as compared to $27.6 million the prior year period. A table reconciling adjusted EBITDA to net income can be found in footnote (1) to this release. The decrease is attributable to the weaker freight market in the nine months ended September 30, 2009 compared to the same period in 2008.
Balance Sheet Highlights; New Increased Term Loan and Extension of Loan Covenant Waivers
At September 30, 2009, FreeSeas' cash and cash equivalents were $2.8 million, total debt was $137.8 million and shareholders' equity was $144.3 million, compared to $3.4 million, $160.4 million and $120.9 million, respectively, at December 31, 2008.
On November 12, 2009, the Company announced an agreement for a new secured seven-year term loan of up to $27.75 million with First Business Bank S.A. of Greece ("FBB"). This new loan refinances the Company's existing $21.75 million loan on the M/V Free Impala and provides the Company with up to $6.0 million of additional liquidity, while also decreasing expected payments by approximately $1.0 million in aggregate over the next 12 months.
In addition, FBB has agreed to reduce the market-value-to-loan covenant to 100% through June 30, 2010, which then increases to 115% from July 1, 2010 through June 30, 2011 and to 125% from July 1, 2011 through maturity. Credit Suisse, one of our other lenders, also agreed to reduce the market-value-to-loan covenant on its revolving credit facility with the Company to 115% from April 1, 2010 until April 1, 2011.
As a result of the new secured term loan with FBB and the amended agreement with Credit Suisse, the Company's current portion of its total debt has been reduced from $32.3 million as of June 30, 2009 to $17.3 million as of September 30, 2009.
Conference Call Information
The Company will conduct a conference call to discuss third quarter and nine months ended September 30, 2009 later this morning at 10:00 a.m. ET.
The dial-in numbers are: (866) 861-6730 (US) (702) 696-4678 (INTERNATIONAL)
The conference call will also be broadcast live via the "Investor Relations" section of FreeSeas's website at www.freeseas.gr. The Company will also have an accompanying slide presentation available in PDF format 30 minutes prior to the conference call. Once at the "Investor Relations" section, interested parties should click on "Conference Calls." The webcast will be archived and accessible for approximately 15 days if you are unable to listen to the live call. To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software. If you are unable to participate in the live call, the conference call will be archived and can be accessed for approximately 15 days.
Fleet Employment Data
---------------------------------------------------------------
Vessel Name Dwt Type Built Employment as of
November 16, 2009*
---------------------------------------------------------------
Free Destiny 25,240 Handysize 1982 Approximately 26 day
trip time charter at
$9,075 per day through
November 2009
---------------------------------------------------------------
Free Envoy 26,318 Handysize 1984 Approximately 55-60 day
trip time charter at
$7,200 per day through
January 2010
---------------------------------------------------------------
Balance of time charter
at $10,500 per day on
September 15, 2009
through January/February
2010 (+50% profit sharing
Free Goddess 22,051 Handysize 1995 above $12,500 per day)
---------------------------------------------------------------
Free Hero 24,318 Handysize 1995 3-5 month trip time
charter at $11,500 per
day through February/
April 2010
---------------------------------------------------------------
Free Impala 24,111 Handysize 1997 Approximately, 60 day
trip time charter at
$10,000 per day through
December 2009
---------------------------------------------------------------
Balance of time charter
at $25,216 per day
through February 2011
and $28,000 per day
Free Jupiter 47,777 Handymax 2002 through March 2011
---------------------------------------------------------------
Free Knight 24,111 Handysize 1998 Approximately, 60-65
day trip time charter at
$ 7,000 per day through
November 2009
---------------------------------------------------------------
Free Lady 50,246 Handymax 2003 Balance of time charter
at $51,150 per day
through May 2010
---------------------------------------------------------------
Approximately, 60-65 day
trip time charter at
$9,000 or $11,000 per
Free Maverick 23,994 Handysize 1998 day through December 2009
---------------------------------------------------------------
Free Neptune 30,838 Handysize 1996 Dry-dock through
November 2009
---------------------------------------------------------------
TOTAL 299,004
---------------------------------------------------------------
* The average net charter rates per vessel realized by the
Company will depend on actual repositioning time and bunkers
consumed between successive chartering employments, as well
as potential operational off-hires. The above table is
provided for indicative purposes only, and should not to be
deemed to reflect actual operating revenues received from
employment of the vessels.
---------------------------------------------------------------
About FreeSeas Inc.
FreeSeas Inc. is a Marshall Islands corporation with principal offices in Piraeus, Greece. FreeSeas is engaged in the transportation of drybulk cargoes through the ownership and operation of drybulk carriers. Currently, it has a fleet of eight 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.
The FreeSeas Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5981
Forward-Looking Statements
This press release contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events and the Company's growth strategy and measures to implement such strategy, including expected vessel acquisitions. Words such as "expects," "intends," "plans," "believes," "anticipates," "hopes," "estimates," and variations of such words and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, changes in the demand for drybulk vessels; competitive factors in the market in which the Company operates; risks associated with operations outside the United States; and other factors listed from time to time in the Company's filings with the Securities and Exchange Commission. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.
FREESEAS INC.
PERFORMANCE INDICATORS
(All amounts in tables in thousands of United States dollars,
except for fleet
data and per diem amounts)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2009 2008 2009 2008
-------- -------- -------- --------
Adjusted EBITDA (1) $ 5,906 $ 15,111 $ 23,495 $ 27,573
Fleet Data:
Average number of vessels
(2) 9.40 8.26 9.14 6.8
Ownership days (3) 865 760 2,494 1,864
Available days (4) 845 760 2,454 1,810
Operating days (5) 828 740 2,416 1,693
Fleet utilization (6) 95.7% 97.4% 96.9% 90.8%
Average Daily Results:
Average TCE rate (7) $ 14,598 $ 28,558 $ 16,466 $ 25,678
Vessel operating expenses
(8) 5,624 6,311 4,918 6,533
Management fees (9) 548 601 526 665
General and administrative
expenses (10) 873 1,124 1,033 1,411
Total vessel operating
expenses (11) 6,172 6,912 5,444 7,198
(1) Adjusted EBITDA reconciliation to
net income:
Adjusted EBITDA represents net earnings before interest, taxes,
depreciation and amortization, the change in the fair value of
derivatives and gains/losses on debt extinguishment. Adjusted 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 adjusted EBITDA may not be comparable to that reported by
other companies. Adjusted EBITDA is included herein because it is an
alternative measure of our liquidity, performance and indebtedness. The
following is a reconciliation of adjusted EBITDA to net income:
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2009 2008 2009 2008
-------- -------- -------- --------
Net income (loss) $ 465 $ 9,356 $ 7,222 $ 13,826
Depreciation and
amortization 4,337 4,184 13,197 9,498
Change in derivatives fair
value 44 36 (416) 90
Interest and finance cost,
net of interest
income 1,060 1,535 3,492 3,520
Loss on debt extinguishment -- -- -- 639
------------------ ------------------
Adjusted EBITDA $ 5,906 $ 15,111 $ 23,495 $ 27,573
================== ==================
(2) 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 the period.
(3) Ownership days are the total number of days in a period during which
the vessels in our fleet have been owned by us. Ownership days are an
indicator of the size of our fleet over a period and affect both the
amount of revenues and the amount of expenses that we record during a
period.
(4) Available days are the number of ownership days less the aggregate
number of days that our vessels are off-hire due to major repairs, dry
dockings or special or intermediate surveys. The shipping industry
uses available days to measure the number of ownership days in a period
during which vessels should be capable of generating revenues.
(5) Operating days are the number of available days less the aggregate
number of days that our vessels are off-hire due to any reason,
including unforeseen circumstances. The shipping industry uses operating
days to measure the aggregate number of days in a period during which
vessels actually generate revenues.
(6) We calculate fleet utilization by dividing the number of our fleet's
operating days during a period by the number of ownership days during
the period. The shipping industry uses fleet utilization to measure a
company's efficiency in finding suitable employment for its vessels and
minimizing the amount of days that its vessels are off-hire for reasons
such as scheduled repairs, vessel upgrades, or dry dockings or other
surveys.
(7) 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 operating revenues (net of voyage expenses and commissions)
by operating 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. 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:
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2009 2008 2009 2008
-------- -------- -------- --------
Operating revenues $ 13,077 $ 22,320 $ 43,000 $ 45,900
Voyage expenses and
commissions (990) (1,187) (3,217) (2,427)
Net operating revenues 12,087 21,133 39,783 43,473
Operating days 828 740 2,416 1,693
------------------ ------------------
Time charter equivalent
daily rate $ 14,598 $ 28,558 $ 16,466 $ 25,678
================== ==================
(8) Average 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 ownership days for the relevant time periods:
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2009 2008 2009 2008
-------- -------- -------- --------
Vessel operating expenses $ 4,865 $ 4,797 $ 12,266 $ 12,178
Ownership days 865 760 2,494 1,864
-------- -------- -------- --------
Daily vessel operating
expense $ 5,624 $ 6,311 $ 4,918 $ 6,533
======== ======== ======== ========
(9) Daily management fees are calculated by dividing total management
fees directly associated with vessels' operation paid on ships owned by
ownership days for the relevant time period.
(10) Average daily general and administrative expenses are calculated by
dividing general and administrative expenses by operating days for the
relevant period.
(11) Total vessel operating expenses, or TVOE, is a measurement of our
total expenses associated with operating our vessels. TVOE is the sum
of daily vessel operating expense and daily management fees. Daily
TVOE is calculated by dividing TVOE by fleet ownership days for the
relevant time period.
FREESEAS INC.
CONDENSED UNAUDITED STATEMENTS OF OPERATIONS
(All amounts in tables in thousands of United States dollars,
except for share data)
For three months ended For nine months ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2009 2008 2009 2008
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------- ---------- ---------- ----------
OPERATING REVENUES $ 13,077 $ 22,320 $ 43,000 $ 45,900
OPERATING EXPENSES:
Vessel operating
expenses (4,865) (4,797) (12,266) (12,178)
Voyage expenses (990) (1,187) (3,217) (2,427)
Depreciation
expense (3,910) (3,940) (11,996) (8,980)
Amortization of
deferred charges (427) (244) (1,201) (518)
Management fees
to a related
party (474) (582) (1,312) (1,614)
Stock-based
compensation
expense (3) (28) (9) (82)
General and
administrative
expenses (723) (707) (2,496) (2,013)
---------- ---------- ---------- ----------
Income (loss)
from operations $ 1,685 $ 10,835 $ 10,503 $ 18,088
OTHER INCOME
(EXPENSE):
Interest and
finance costs $ (1,069) $ (1,573) $ (3,515) $ (4,093)
Loss on debt
extinquishment -- -- -- (639)
Change in
derivatives
fair value (44) (36) 416 (90)
Interest income 9 38 23 573
Other (116) 92 (205) (13)
---------- ---------- ---------- ----------
Other (expense) $ (1,220) $ (1,479) $ (3,281) $ (4,262)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income $ 465 $ 9,356 $ 7,222 $ 13,826
========== ========== ========== ==========
Basic earnings
per share $ 0.02 $ 0.44 $ 0.31 $ 0.66
Diluted earnings
per share $ 0.02 $ 0.43 $ 0.31 $ 0.62
Basic weighted
average number
of shares 28,156,478 21,171,329 23,525,298 20,950,346
Diluted weighted
average number
of shares 28,156,478 21,539,704 23,525,298 22,330,808
FREESEAS INC.
CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS
(All amounts in tables in thousands of United States dollars,
except for share data)
Sept. 30, 2009 Dec. 31, 2008
(Unaudited) Audited
--------------------------------
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 2,786 $ 3,378
Trade receivables, net 3,257 812
Insurance claims 9,344 17,807
Due from related party 1,356 1,634
Inventories 662 579
Back log assets -- 907
Restricted cash 1,741 1,095
Prepayments and other 682 972
-------------- --------------
Total current assets $ 19,828 $ 27,184
Advances for acquisition of
vessels
Fixed assets, net 274,691 275,405
Deferred charges, net 2,689 3,772
Restricted cash 1,500 1,500
-------------- --------------
Total non-current assets $ 278,880 $ 280,677
-------------- --------------
Total Assets $ 298,708 $ 307,861
============== ==============
LIABILITIES AND SHAREHOLDERS'
EQUITY
-----------------------------
CURRENT LIABILITIES:
Accounts payable $ 11,633 $ 10,916
Accrued liabilities 1,741 11,347
Due to related party 37 12
Unearned revenue 379 1,320
Deferred revenue-current portion 1,032 --
Derivatives financial
instruments at fair value 601 473
Bank loans - current portion 17,341 26,700
-------------- --------------
Total current liabilities $ 32,764 $ 50,768
Derivatives financial
instruments at fair value 793 1,337
Deferred revenue-current portion 398 1,251
Bank loans - net of current
portion 120,409 133,650
-------------- --------------
Total long-term liabilities $ 121,600 $ 136,238
Commitments and Contingencies
SHAREHOLDERS' EQUITY:
Common stock 31 21
Additional paid-in capital 126,580 110,322
Retained earnings 17,733 10,512
Total shareholders' equity $ 144,344 $ 120,855
-------------- --------------
Total Liabilities and
Shareholders' equity $ 298,708 $ 307,861
============== ==============