-- A non-cash loss of $1.4 million associated with the change in the fair value of interest rate swaps. -- An expense of $1.3 million associated with the drydocking of two vessels. -- A gain of $1.5 million associated with the sale of a vessel.Excluding the above items Net Income for the second quarter of 2010 would amount to $0.39 million or $0.01 basic and diluted earnings per share. Recent Developments
-- On June 17, 2010, the Company effected a 3:1 reverse stock split in order to regain compliance with NASDAQ's minimum bid price. As a result our then issued and outstanding 231,800,001 common shares were converted to 77,266,655 common shares. On August 6, 2010, the Company received notice from NASDAQ that it has regained compliance with the Listing Rule in connection with the minimum bid price requirement of $1.00. -- On September 30, 2009, we agreed to acquire the M/V Montecristo from a third party for a gross sale price of $49.5 million. The vessel was delivered to the Company on June 28, 2010 and entered a time charter employment for a minimum duration of 4 years at a gross daily rate of $23,500.Anthony Kandylidis, the Company's Chief Executive Officer, commented: "We continue to execute our stated business plan. Operating income for the second quarter of 2010 was in line with expectations and moving forward we will continue our fleet renewal and expansion program that will improve our operational efficiency, enhance our profitability and increase shareholder value." Second Quarter 2010 Results For the second quarter ended June 30, 2010, Voyage Revenues amounted to $24.0 million and Operating Income amounted to $3.8 million. Net Loss amounted to $0.81 million or $0.01 basic and diluted loss per share. Adjusted EBITDA(*) for the second quarter of 2010 was $6.7 million. An average of 11.6 vessels were owned and operated during the second quarter of 2010, earning an average Time Charter Equivalent, or TCE rate, of $23,812 per day. Capitalization On June 30, 2010, the debt (debt, net of deferred financing fees) to total capitalization (debt and stockholders' equity) ratio was 44.1% and the net debt (debt less cash, cash equivalents and restricted cash) to total capitalization ratio was 40.6%. Equity Infusion On May 28, 2010, Basset Holding Inc, a company affiliated with our Chief Executive Officer, made an equity infusion of $20.0 million in exchange for 50,000,000 common shares (before the reverse stock split took effect). The funds were used to partially finance the acquisition of the M/V Montecristo. As of the date of this release the Company has 77,266,655 shares outstanding. Liquidity As of June 30, 2010, the Company had total liquidity of approximately $18.3 million. Fleet Data
(Dollars in thousands, except Average Daily Three Months Ended results - unaudited) June 30, ---------------------- 2009 2010 ---------- ---------- Average number of vessels (1) 13 11.6 ---------- ---------- Total voyage days for fleet (2) 1,065 952 ---------- ---------- Total calendar days for fleet (3) 1,183 1,050 ---------- ---------- Time charter equivalent (TCE) daily rate (4) $ 28,071 $ 23,812 ---------- ---------- Fleet utilization (5) 90.0% 90.7% ---------- ---------- (*) Please see later in this release for a reconciliation of adjusted EBITDA to net cash provided by Operating activities.(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) Time charter equivalent rate, 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. (5) 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. The following table reflects the calculation of our TCE daily rates for the periods then ended:
(Dollars in thousands, except Average Daily Three Months Ended results - unaudited) June 30, ---------------------- 2009 2010 ---------- ---------- Revenues 31,688 24,043 ---------- ---------- Voyage expenses (1,792) (1,374) ---------- ---------- Revenue on a time charter basis 29,896 22,669 ---------- ---------- ---------- ---------- Total voyage days for fleet 1,065 952 ---------- ---------- Time charter equivalent (TCE) daily rate $ 28,071 $ 23,812 ---------- ----------Financial Statements The following are OceanFreight Inc.'s Consolidated Statements of Operations for the three-month periods ended June 30, 2009 and 2010:
(Dollars in thousands, except for share and per Three Months Ended share data) June 30, 2009 2010 ----------- ----------- STATEMENT OF OPERATIONS DATA (unaudited) (unaudited) Voyage revenues $ 29,123 $ 24,014 Gain on forward freight agreements 591 261 Imputed revenue 2,565 29 ----------- ----------- Gross revenue 32,279 24,304 Voyage expenses (1,792) (1,374) Vessels operating expenses (12,800) (10,983) Depreciation (12,921) (6,833) General and administrative expenses (1,817) (1,490) Dry docking costs (4,691) (1,336) (Impairment loss) on vessels held for sale and gain on vessel sold (31,281) 1,491 ----------- ----------- Operating income/(loss) (33,023) 3,779 =========== =========== Interest income 148 41 Interest expense and finance costs (4,896) (3,238) Gain/(loss) on derivative instruments 4,934 (1,395) ----------- ----------- Net Loss $ (32,837) $ (813) =========== =========== Earnings per common share, basic and diluted $ (1.54) $ (0.01) Weighted average number of common shares, basic and diluted (1) 21,359,153 66,827,101(1) The weighted average number of common shares gives effect to the 3:1 reverse stock split which took place on June 17, 2010. The following are OceanFreight Inc.'s Consolidated Balance Sheets as of December 31, 2009 and June 30, 2010
(Dollars in thousands, except per share data) 2009 2010 ------------ ------------ ASSETS (audited) (unaudited) CURRENT ASSETS: Cash and cash equivalents $ 37,272 $ 11,895 Restricted cash 2,500 406 Vessels held for sale 51,080 19,000 Other current assets 9,447 14,700 ------------ ------------ Total current assets 100,299 46,001 ------------ ------------ FIXED ASSETS, NET: Advances for vessel acquisition 9,900 - Vessels under construction - 46,623 Vessels, net of accumulated depreciation of $43,486 and $56,939, respectively 423,242 459,855 Other, net of accumulated depreciation of $123 and $251, respectively 856 728 ------------ ------------ Total fixed assets, net 433,998 507,206 ------------ ------------ OTHER NON-CURRENT ASSETS Restricted cash 6,511 6,011 Other non-current assets 8,464 9,324 ------------ ------------ Total assets 549,272 568,542 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt 49,947 39,112 Other current liabilities 23,381 28,679 ------------ ------------ Total current liabilities 73,328 67,791 ============ ============ NON-CURRENT LIABILITIES: Derivative liability, net of current portion 3,606 6,731 Long-term debt, net of current portion 215,727 196,649 ------------ ------------ Total non-current liabilities 219,333 203,380 ============ ============ STOCKHOLDERS' EQUITY: 256,611 297,371 ------------ ------------ Total liabilities and stockholders' equity 549,272 568,542 ============ ============Adjusted EBITDA Reconciliation
OceanFreight Inc. considers EBITDA to represent net income before interest, taxes, depreciation and amortization. Adjusted EBITDA excludes loss on sale of vessels and impairment on vessels. EBITDA and Adjusted EBITDA do not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by U.S. GAAP and our calculation of EBITDA may not be comparable to that reported by other companies. Adjusted EBITDA is included in this earnings release because it is a basis upon which we assess our liquidity position, because it is used by our lenders as a measure of our compliance with certain loan covenants and because we believe that it presents useful information to investors regarding our ability to service and/or incur indebtedness. The following table reconciles Net cash provided by operating activities to EBITDA as adjusted for the effect of the loss from the sale of vessels and impairment loss:
Three Months Ended June 30, 2009 2010 ----------- ----------- Net cash provided by operating activities 6,660 5,129 Net increase in operating assets 1,731 6,057 Net (increase) in operating liabilities (4,330) (7,575) Net interest expense 4,749 3,197 Amortization of deferred financing costs included in interest expense (196) (140) ----------- ----------- Adjusted EBITDA 8,614 6,668 =========== ===========Fleet List The table below describes our fleet and current employment profile as of September 3, 2010:
Gross Rate Year Current per Earliest Latest Vessel Name Built DWT Type Employment Day Redelivery Redelivery ----- ------- -------- ------- -------- --------- -------- Drybulk Vessels M/V Robusto 2006 173,949 Capesize TC 26,000 Aug-14 Dec-14 M/V Cohiba 2006 174,200 Capesize TC 26,250 Oct-14 Feb-15 M/V Montecristo 2005 180,263 Capesize TC 23,500 May-14 Oct-14 M/V Partagas 2004 173,880 Capesize TC 27,500 Jul-12 Dec-12 M/V Topeka 2000 74,710 Panamax TC 18,000 Jan-11 Mar-11 M/V Helena 1999 73,744 Panamax TC 32,000 May-12 Jan-13 M/V Augusta 1996 69,053 Panamax TC 16,000 Nov-11 Mar-12 M/V Austin 1995 75,229 Panamax TC (1) Aug-12 Aug-12 M/V Trenton 1995 75,229 Panamax TC (1) Aug-12 Aug-12 Tanker Vessels M/T Pink Sands 1993 93,723 Aframax TC 27,450 Oct-10 Jan-11 M/T Tamara 1990 95,793 Aframax TC 27,000 Dec-10 Mar-11 Tanker to be Sold M/T Olinda 1996 149,085 Suezmax POOL - - - Drybulk Vessels to be Acquired Newbuilding VLOC #1 2012 206,000 Capesize TC 25,000 Jun-15 Jun-15 Newbuilding VLOC #2 2012 206,000 Capesize TC 23,000(2) Oct-17 Oct-17 Newbuilding VLOC #3 2013 206,000 Capesize TC 21,500(3) Jan-20 Jan-20(1) The hire rate per vessel will be calculated based on a formula linked to the average of the Baltic Panamax Index for the preceding 30 days. (2) The charter agreement includes a 50/50 percent profit sharing arrangement with the charterer for charterhire above the basic rate, up to $40,000. (3) The charter agreement includes a 50/50 percent profit sharing arrangement with the charterer for charterhire above the basic rate, up to $38,000. Conference Call and Webcast: Monday, September 6, 2010 at 08:30 A.M. EDT OceanFreight management team will host a conference call on Monday, September 6, 2010, at 08:30 A.M. Eastern Daylight Time (EDT) to discuss the Company's financial results for the Quarter ended June 30, 2010. Conference Call details: Participants should Dial-Into the call 10 minutes before the scheduled time using the following numbers: 1 866 819 7111 (U.S. Toll Free Dial-In), 0800 953 0329 (U.K. 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 September 13, 2010 by dialing 1 866 247 4222 (U.S. Toll Free Dial -In), 0800 953 1533 (U.K. Toll Free Dial -In) or +44 (0) 1452 550 000 (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., is an owner and operator of both drybulk and tanker vessels that operate worldwide. As of the date of this release, OceanFreight owns a fleet of 12 vessels, comprised of 9 drybulk vessels (4 Capesize, 5 Panamaxes) and 3 crude carrier tankers (1 Suezmax, 2 Aframaxes) with a combined deadweight tonnage of about 1.4 million tons. OceanFreight Inc.'s 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 charter hire 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 U.S. Securities and Exchange Commission.
Contact Information: Investor Relations/Media: Nicolas Bornozis Capital Link, Inc. (New York) Tel: +1-212-661-7566 E-mail: oceanfreight@capitallink.com