Financial Highlights for Third Quarter 2008
-- For the third quarter of 2008 the Company reported Net Income of
$9.0 million or $0.61 per common share. Excluding a non-cash loss
of $3.6 million associated with the valuation of the Company's
interest rate swaps and $1.3 million non-cash compensation cost
associated with the vesting of executives shares, Net Income for
the third quarter of 2008 amounted to $13.9 million or $0.95 per
common share.
-- OceanFreight's Board of Directors declared a dividend of $0.77 per
share in respect of the third quarter of 2008. The dividend was
paid on November 6, 2008, to common shareholders of record as of
October 31, 2008. This was the sixth consecutive quarterly
dividend since the Company's IPO in April 2007.
Other Developments
-- The Company has received a commitment from a first class bank for
a $30.5 million term loan facility, the proceeds of which will be
used in order to partly finance the acquisition of the M/T Tamara
and M/T Tigani. The facility is expected to be drawn down in the
fourth quarter of 2008.
Anthony Kandylidis, the Company's President and Chief Executive Officer,
commented: "I am pleased with yet another quarter of solid operational and
financial performance. Our ability to obtain bank financing in this
difficult credit environment is a testament to the strong reputation and
confidence we have built within the banking community. Despite the current
volatile market we have also managed to increase the size of our fleet to
thirteen vessels and with the recent acquisition of the M/T Tamara and the
M/T Tigani, we have enhanced our presence in the tanker sector, in line
with our strategy of diversifying our fleet among multiple shipping
sectors. Including our dividend for the third quarter of 2008, since our
IPO in April of 2007, we have paid six quarterly dividends totaling $3.98
per share. We expect that with the employment of the M/T Olinda in the Blue
Fin Tankers pool we can capture some of the strength that currently exists
in the spot tanker market, which will complement the cash flow generated
from our remaining twelve vessels which are all on fixed rate charters with
an average remaining duration of approximately two years."
Third Quarter 2008 Results
For the quarter ended September 30, 2008, Gross Revenue amounted to $40.3
million and Operating Income amounted to $16.3 million.
Net Income for the third quarter of 2008 was $9.0 million or $0.61 per
common share calculated on 14,659,201 weighted average common shares
outstanding. This Net Income figure includes a non-cash loss of $3.6
million associated with the valuation of the Company's interest rate swaps
and $1.3 million non-cash compensation cost associated with the vesting of
executives shares. Excluding the above non-cash items Net Income for the
third quarter of 2008 amounted to $13.9 million or $0.95 per common share.
Net cash provided by operating activities and EBITDA for the third quarter
of 2008 was $24.9 million and $23.1 million, respectively. Please see
later in this release for a reconciliation of EBITDA to net cash provided
by Operating activities.
An average of 11 vessels were owned and operated during the third quarter
of 2008, earning an average Time Charter Equivalent, or TCE, rate of
$35,649 per day.
Capitalization
On September 30, 2008, debt (debt, net of deferred financing fees) to total
capitalization (debt, net of deferred financing fees, and stockholders'
equity) was 55.0% and net debt (debt less cash and cash equivalents) to
total capitalization was 41.8%. This does not include the $30.5 million
term loan facility announced above.
As of September 30, 2008, the Company had a total liquidity of
approximately $75.2 million.
Capital expenditures
During October 2008, one of our Panamax drybulk carriers underwent its
scheduled special survey for a period of approximately 22 days with a total
cost of approximately $1.4 million. It is the policy of the Company to
expense special survey costs as incurred.
Dividend Payment
OceanFreight's Board of Directors declared a dividend of $0.77 per share in
respect of the third quarter of 2008. The dividend was paid on November 6,
2008, to shareholders of record as of October 31, 2008.
On August 14, 2008, we paid a dividend in the amount of $0.77 per share in
respect of the second quarter of 2008. This dividend payment satisfied the
test under our Amended and Restated Articles of Incorporation for early
conversion of all of our subordinated shares into common shares on a
one-for-one basis. As a result, all 2,085,150 subordinated shares were
converted into 2,085,150 common shares on August 15, 2008.
Since the Company's listing on the NASDAQ Global Market in April 2007,
OceanFreight has declared six consecutive quarterly dividends totaling
$3.98 per share.
Fleet Data
Three months ended
September 30, 2008
--------------
Average number of vessels (1) 11.00
--------------
Total voyage days for fleet (2) 1,005
--------------
Total calendar days for fleet (3) 1,012
--------------
Fleet Utilization (4) 99.31%
--------------
Time charter equivalent (5) 35,649
--------------
Vessel operating expenses (daily) (6) 6,210
--------------
Management fees (daily) 712
--------------
General and administrative expenses (daily) (7) 739*
--------------
Total vessel operating expenses (daily) (8) 8,961
--------------
*Excluding $1.3 million non-cash compensation cost associated with the
vesting of the shares of Company executives
(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.
(3) Calendar days are the total days the vessels were in our possession for
the relevant period including off hire days.
(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 gross 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.
(6) Daily vessel operating expenses include crew costs, provisions, deck
and engine stores, lubricating oil, insurance, maintenance and repairs and
are 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.
The following table reflects the calculation of our TCE rates for the three
months ended September 30, 2008:
(Dollars in thousands except for voyage days and TCE rate)
---------
Gross revenues 40,297
Voyage expenses (4,470)
---------
Time Charter Equivalent revenues 35,827
=========
Total voyage days for fleet 1,005
Time charter equivalent (TCE) daily rate 35,649
Financial Statements
The following are OceanFreight Inc.'s Consolidated Statements of Income for
the three month periods ended September 30, 2008 and 2007:
(Dollars in thousands, except 3 Months Ended 3 Months Ended
for share and per share data) September 30, September 30,
2008 2007
------------- -------------
Unaudited Unaudited
INCOME STATEMENT DATA
Voyage revenues $ 37,704 $ 13,742
Imputed revenue 2,593 2,088
------------- -------------
Gross Revenue 40,297 15,830
Voyage expenses (4,470) (763)
Vessels operating expenses (6,286) (4,007)
Depreciation (10,485) (5,647)
Management fees (721) (295)
General and administrative expenses (2,063) (1,125)
Survey and dry docking cost (1,685)
Operating Income 16,272 2,308
Interest and finance costs (4,084) (1907)
Interest income 370 573
Gain on derivative instruments (3,628) -
Net Income $ 8,930 $ 974
Basic and fully diluted earnings per common
share $ 0.61 $ 0.07
Weighted average number of shares outstanding 14,659,201 14,457,237
The following are OceanFreight Inc.'s Consolidated Balance Sheets as at
September 30, 2008 and December 31, 2007
OCEANFREIGHT INC.
Consolidated Balance Sheets
September 30, 2008 and December 31, 2007
(Expressed in thousands of U.S. Dollars - except for share
and per share data)
2008 2007
(Unaudited)
--------- ---------
ASSETS
---------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 75,248 $ 19,044
Accounts receivable 343 226
Inventories 887 678
Prepayments and other 2,085 763
--------- ---------
Total current assets 78,563 20,711
FIXED ASSETS, NET:
Vessels, net 520,011 485,280
Other, net 132 61
--------- ---------
Total fixed assets, net 520,143 485,341
OTHER NON CURRENT ASSETS:
Deferred financing fees, net 1,642 1,860
Derivative asset 2,253 -
Restricted cash 5,500 -
--------- ---------
Other, net 13 13
--------- ---------
Total other non current assets, net 9,408 1,873
Total assets $ 608,114 $ 507,925
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current Portion of Long-term debt $ 33,389 $ 16,000
Accounts payable 1,312 2,427
Due to related parties 781 742
Accrued liabilities 8,137 2,909
Unearned revenue 3,873 1,488
Derivative liability 1,067 -
Imputed deferred revenue, current portion 10,290 10,318
--------- ---------
Total current liabilities 58,849 33,884
NON CURRENT LIABILITIES
Imputed deferred revenue, net of current portion 8,335 16,031
Long term debt, net of current portion 283,111 244,600
--------- ---------
Total non current liabilities 291,446 260,631
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY:
Preferred stock, $ 0.01 par value; 5,000,000 shares
authorized, none issued - -
Common stock, $0.01 par value; 95,000,000 shares
authorized; 16,422,493 and 12,394,079 shares issued
and outstanding at September 30, 2008 and December
31, 2007, respectively 164 124
Subordinated Shares, par value $0.01; 10,000,000
shares authorized, 0 and 2,063,158 shares issued and
outstanding at September 30, 2008 and December 31,
2007 respectively. - 21
Additional paid-in capital 257,863 218,263
Accumulated earnings/(deficit) (208) (4,998)
--------- ---------
Total stockholders' equity 257,819 213,410
--------- ---------
Total liabilities and stockholders' equity $ 608,114 $ 507,925
========= =========
EBITDA Reconciliation
OceanFreight 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 provided by operating activities to
EBITDA for the three months ended September 30, 2008
(Dollars in thousands)
30-Sep-08
---------
Net cash provided by operating activities 24,866
Net (decrease) in current assets, excluding cash and cash
equivalents (3,223)
Net decrease in current liabilities, excluding derivative
liability, current portion of long term debt and imputed
current portion of imputed deferred revenue 260
Net Interest expense 3,714
Loss on derivative instruments (3,628)
Amortization of stock based compensation (1,330)
Amortization of imputed deferred revenue 2,593
Amortization of deferred financing costs included in interest
expense (123)
---------
EBITDA 23,129
=========
Fleet List
The table below provides summary information concerning our fleet and its
current employment profile as of November 11, 2008:
Year Current Gross Rate Earliest Latest
Built DWT Type Employment Per Day Redelivery Redelivery
DRYBULK
-------
Trenton 1995 75,229 Panamax TC $ 26,000 Apr-10 Jun-10
Pierre 1996 70,316 Panamax TC $ 23,000 Jun-10 Oct-10
Austin 1995 75,229 Panamax TC $ 26,000 Apr-10 Jun-10
Juneau 1990 149,495 Capesize TC $ 48,700 Sep-09 Oct-09
Lansing 1996 73,040 Panamax TC $ 24,000 May-09 Sep-09
Helena 1999 73,744 Panamax TC $ 32,000 Apr-12 Dec-12
Topeka 2000 74,710 Panamax TC $ 23,100 Oct-10 May-11
Richmond 1995 75,265 Panamax TC $ 29,100 Dec-09 Apr-10
Augusta 1996 69,053 Panamax TC $ 42,100 Nov-11 Feb-12
TANKERS
-------
Pink Sands 1993 93,723 Aframax TC $ 27,450 Dec-10 Jan-11
Olinda 1996 149,085 Suezmax Pool
Tigani 1991 95,951 Aframax TC $ 29,800 Sept-09 Nov-09
Tamara 1990 95,793 Aframax TC $ 27,000 Nov 10 March 11
Conference Call and Webcast: November 12, 2008, at 10:00 A.M. EST
OceanFreight management team will host a conference call on November 12,
2008, at 10:00 a.m. EST to discuss the Company's financial results for the
Third Quarter 2008.
Conference Call details:
Participants should dial into the call 10 minutes before the scheduled time
using the following numbers: 1 866 819 7111 (US Toll Free Dial In), 0800
953 0329 (UK Toll Free Dial In) or +44 (0) 1452 542 301 (Standard
International Dial In). Please quote "OceanFreight."
A telephonic replay of the conference call will be available until
Wednesday , November 19, 2008 by dialing 1 866 247 4222 (US Toll Free Dial
In), 0800 953 1533 (UK Toll Free Dial In) or +44 (0) 1452 500 000 (Standard
International Dial In). Access Code: 7445162#.
Slides and audio webcast:
There will also be a simultaneous live webcast over the Internet, through
the OceanFreight Inc. website (www.oceanfreightinc.com). Participants to
the live webcast should register on the website approximately 10 minutes
prior to the start of the webcast.
About OceanFreight Inc.
OceanFreight Inc. was incorporated in 2006 to acquire high quality
secondhand vessels and deploy them on medium and long term charters. The
Company began operations with the delivery of its first vessel in June 2007
and currently owns and operates a fleet of thirteen vessels, consisting of
one Capesize drybulk carrier, eight Panamax drybulk carriers, one Suezmax
tanker and three Aframax tankers with a total carrying capacity of
1,170,633 dwt.
OceanFreight's Inc. common stock is listed on the NASDAQ Global Market
where it trades under the symbol "OCNF."
Visit our website at www.oceanfreightinc.com
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 OceanFreight 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, OceanFreight
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 OceanFreight 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
OceanFreight Inc. with the US Securities and Exchange Commission.
Contact Information: Company Contact: Michael Gregos Chief Operating Officer Tel: +30-210-809-0514 E-mail: management@oceanfreightinc.com Investor Relations/Media: Nicolas Bornozis Capital Link, Inc. (New York) Tel: +1-212-661-7566 E-mail: oceanfreight@capitallink.com