Q1 2010 Financial Highlights
- Operating revenues of $15.7 million
- Net income of $2.7 million, or $0.09 diluted earnings per
share
- Adjusted net income of $2.9 million or $0.09 diluted earnings
per share excluding non-cash unrealized swap losses and stock-based
compensation expense (see below for reconciliation)
- Adjusted EBITDA of $8.2 million (see below for
reconciliation)
- Cash from operations of $7.3 million for the period
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 vessels and two Handymax vessels,
announced today financial results for its first quarter ended March
31, 2010.
Market Conditions and Outlook
Mr. Ion Varouxakis, Chairman and CEO, noted, "The substantially
improved results of the first quarter of 2010 as compared to the
fourth quarter of 2009 reflect our chartering strategy to operate
the fleet on the spot market. This has led to significant
improvements to free cash flow, available cash at banks, corporate
leverage and profitability as compared to the fourth quarter of
2009. We feel that the Company has turned a corner and our
strengthened financial position provides us with multiple options
for growth in the future. The steadily improving Handysize
chartering market positions us to renew our fleet by exploring
second-hand and newbuilding opportunities."
Mr. Alexandros Mylonas, CFO, added, "Our quarterly results show
an improvement of net debt from $128.4 million at December 31, 2009
to $121.1 million at March 31, 2010, translating into a net debt
over total assets ratio of approximately 41%. Based on improving
chartering rates and disciplined cost management, these metrics are
expected to further improve in future quarters positioning the
Company for the expansion and renewal of its fleet."
Financial Review for the First Quarter of
2010
- Operating revenues for the first quarter of 2010 were $15.7
million, as compared to $17.6 million reported during the same
period of the prior year. This decline primarily reflected the
lower rates earned during the first quarter of 2010 compared to the
rates earned from time charters still in effect during the first
quarter of 2009. By comparison, the Company's revenues for the
first quarter of 2010 improved by $1.2 million as compared to the
fourth quarter of 2009. This represents the third consecutive
quarter that the Company has reported sequential revenue growth,
with charter rates for the Company's Handysize vessels increasing
throughout the last three-quarter period.
- Vessel operating expenses were $4.7 million for the 2010 first
quarter, as compared to $3.5 million for the same period of the
prior year. The Company's daily vessel operating expenses were
$5,208 during the first quarter of 2010, compared to $4,295 in the
prior year period. The Company's expenses for the first
quarter of 2009 reflect the effect of the Company's vigorous
cost-cutting initiatives taken during the quarter as a response to
the deteriorating market conditions at the time. Although vessel
operating expenses for the 2010 quarter increased year-over-year,
these expenses declined 14% from the fourth quarter of 2009 and are
in line with the daily vessel operating expenses for the full year
2009.
- Income from operations for the first quarter of 2010 was $3.8
million, as compared to the $7.3 million reported in the prior year
period (please see below explanation).
- The Company reported net income for the first quarter of 2010
of $2.7 million, or $0.09 diluted earnings per share based on 31.6
million diluted weighted average number of shares, as compared to
net income of $6.2 million, or $0.29 diluted earnings per share
based on 21.2 million diluted weighted average number of shares,
for the first quarter of 2009 (please see below explanation).
- Adjusted net income for the first quarter of 2010, excluding
non-cash unrealized swap losses and stock-based compensation
expense, was $2.9 million, or $0.09 per share, as compared to $6.1
million, or $0.29 per share, for the first quarter of 2009 (please
see below explanation). A table reconciling adjusted net income to
net income can be found in footnote (1) to this release.
- Adjusted EBITDA for the quarter ended March 31, 2010 was $8.2
million compared to $12.9 million in the prior year's quarter
(please see below comment). A table reconciling adjusted EBITDA to
net income can be found in footnote (2) to this release.
Income from operations, net income, adjusted net income and
adjusted EBITDA for the quarter ended March 31, 2010 decreased
compared to the same period ended in 2009. This is primarily
attributable to the higher vessel operating expenses and the lower
rates earned by the Company's vessels operated in the spot market
in the three months ended March 31, 2010 compared to the higher
rates earned in the three months ended March 31, 2009. During
the 2009 quarter, the Company benefitted from the higher charter
rates earned under period time charter employment contracted at the
peak of the market in 2008. In addition, the Company's general
and administrative expenses were higher during the first quarter of
2010 as a result of the higher non-cash stock-based compensation
expense of $155,000 compared to $3,000 in the prior year period and
the write-off of capitalized expenses of $113,000.
Balance Sheet and Debt Repayment
Information
At March 31, 2010, FreeSeas' cash and cash equivalents and
restricted cash were $13 million and stockholders' equity was
$147.3 million, compared to $9.6 million and $144.5 million,
respectively, at December 31, 2009. Our remaining principal
repayments total $9 million for 2010 and $17 million for 2011. The
following table describes FreeSeas' annual debt repayment
obligations for 2010 through 2016:
Year |
Amount |
Upcoming Obligations by
Quarter |
|
(in 000s) |
|
(in 000s) |
2010 |
$11,550 |
|
|
2011 |
$16,750 |
Q2 2010 |
$3,850** |
2012 |
$33,759* |
Q3 2010 |
$3,850 |
2013 |
$14,350 |
Q4 2010 |
$3,850 |
2014 |
$14,350 |
|
$11,550 |
2015 |
$21,075 |
|
|
2016 |
$22,275 |
|
|
Total |
$134,109 |
|
|
*Includes a balloon payment of $17.6 million, which FreeSeas
currently intends to refinance, although there can be no assurances
that it will be able to do so. ** FreeSeas has already paid $2.6
million in principal as of May 31, 2010.
Fleet Employment Data
Since its last press release, FreeSeas has entered into the
following new charter:
- The M/V Free Maverick, a
1998-built, 23,994 dwt Handysize vessel, has been chartered for a
time charter trip of approximately 50 days at a daily rate of
$15,000.
Vessel Name |
Type |
Built |
Dwt |
Employment |
M/V Free
Destiny |
Handysize |
1982 |
25,240 |
45-55 day time charter trip at
$10,750 per day through June 2010 |
M/V Free Envoy |
Handysize |
1984 |
26,318 |
30 day time charter trip at $15,000
per day through June 2010 |
M/V Free
Goddess |
Handysize |
1995 |
22,051 |
Passing scheduled dry-dock |
M/V Free Hero |
Handysize |
1995 |
24,318 |
40-45 day time charter at $18,000 per
day through June 2010 |
M/V Free Impala |
Handysize |
1997 |
24,111 |
30 day time charter trip at $20,000
per day through June 2010 |
M/V Free
Jupiter |
Handymax |
2002 |
47,777 |
Balance of time charter at $25,216
per day through February 2011 and any day in excess at $28,000 per
day through May 2011 |
M/V Free Knight |
Handysize |
1998 |
24,111 |
25-30 day time charter trip at
$15,500 per day through June 2010 |
M/V Free Lady |
Handymax |
2003 |
50,246 |
Balance of time charter at $51,150
per day through June 2010 |
M/V Free
Maverick |
Handysize |
1998 |
23,994 |
50 day time charter trip at $15,000
per day through July 2010 |
M/V Free
Neptune |
Handysize |
1996 |
30,838 |
60 day time charter trip at $25,000
per day through June 2010 |
*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 vessels. |
Conference Call with Accompanying Slide
Presentation
The Company will discuss these results in a conference call
later this morning at 11:00 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 or interested parties can click on the following
link:
http://investor.shareholder.com/media/eventdetail.cfm?eventid=81835&CompanyID=FREE&e=1&mediaKey=EB9ADB8E14D55FD69646AF90B449183D.
The Company will also have an accompanying slide presentation
available approximately 30 minutes prior to the conference
call. 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 30 days.
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
) |
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
March 31,
2010 |
|
March 31,
2009 |
EBITDA
(2) |
|
$ |
8,168 |
|
$ |
12,853 |
Fleet Data: |
|
|
|
|
|
|
Average number of vessels (3) |
|
|
10.00 |
|
|
9.00 |
Ownership days (4) |
|
|
900 |
|
|
810 |
Available days (5) |
|
|
900 |
|
|
810 |
Operating days (6) |
|
|
845 |
|
|
809 |
Fleet utilization (7) |
|
|
93.9% |
|
|
99.9% |
Average daily results: |
|
|
|
|
|
|
Average TCE rate (8) |
|
$ |
17,102 |
|
$ |
20,334 |
Vessel operating expenses (9) |
|
|
5,208 |
|
|
4,295 |
Management fees (10) |
|
|
589 |
|
|
512 |
General and administrative expenses(11) |
|
|
1,238 |
|
|
884 |
Total vessel operating expenses (12) |
|
$ |
5,797 |
|
$ |
4,807 |
|
|
|
|
|
|
|
(1) Adjusted net income
reconciliation to net income: |
|
|
|
|
|
|
|
|
|
Adjusted Net Income. We
consider adjusted net income to represent net earnings before
unrealized gain/(loss) on derivative instruments and stock based
compensation expense. Adjusted Net Income is a non-GAAP measure and
does 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 Adjusted Net Income may not
be comparable to that reported by other companies. Adjusted Net
Income is included herein because it is an alternative measure of
our liquidity performance and indebtedness. |
|
Three Months Ended |
|
March 31, 2010 |
March 31, 2009 |
Net income (loss) |
$ 2,697 |
$ 6,197 |
Stock-based compensation expense |
155 |
3 |
Unrealized swap (gains)/losses |
4 |
(57) |
Adjusted Net Income |
$ 2,856 |
$ 6,143 |
(2) EBITDA reconciliation to net
income: |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA. We
consider EBITDA to represent net earnings before interest, taxes,
depreciation and amortization, amortization of deferred revenue,
back log asset, gain/(loss) on derivative instruments and stock
based compensation expense. Under the laws of the Marshall Islands,
we are not subject to tax on international shipping income.
However, we are subject to registration and tonnage taxes, which
have been included in vessel operating expenses. Accordingly, no
adjustment for taxes has been made for purposes of calculating
Adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure and does 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 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. |
|
Three Months Ended |
|
March 31, 2010 |
March 31, 2009 |
Net income (loss) |
$ 2,697 |
$ 6,197 |
Depreciation and amortization |
4,411 |
4,561 |
Amortization of deferred revenue |
(254) |
251 |
Back log asset |
-- |
680 |
Stock-based compensation expense |
155 |
3 |
loss on derivative instruments |
113 |
92 |
Interest and finance cost, net |
1,046 |
1,069 |
Adjusted EBITDA |
$ 8,168 |
$ 12,853 |
(3) 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. |
(4) 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. |
(5) 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. |
(6) 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. |
(7) 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. |
(8) 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 |
|
March 31, 2010 |
March 31, 2009 |
Operating revenues |
$ 15,657 |
$ 17,556 |
Voyage expenses and commissions |
(1,206) |
(1,106) |
Net operating revenues |
14,451 |
16,450 |
Operating days |
845 |
809 |
Time charter equivalent daily
rate |
$ 17,102 |
$ 20,334 |
(9) 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 |
|
|
March 31, 2010 |
|
March 31, 2009 |
Vessel operating expenses |
|
$ 4,687 |
|
$ 3,479 |
Ownership days |
|
900 |
|
810 |
Daily vessel operating
expense |
|
$ 5,208 |
|
$ 4,295 |
|
|
|
|
|
(10) Daily management fees are
calculated by dividing total management fees paid on ships owned by
ownership days for the relevant time period. |
(11) Average daily general and
administrative expenses are calculated by dividing general and
administrative expenses by operating days for the relevant
period. |
(12) 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. |
UNAUDITED CONDENSED
STATEMENTS OF INCOME |
(All amounts in tables in
thousands of United States dollars, except for share and per share
data) |
|
|
|
|
|
|
For three months ended
31-Mar-10 (Unaudited) |
For three months ended
31-Mar-09 (Unaudited) |
OPERATING REVENUES |
|
$ 15,657 |
$ 17,556 |
|
|
|
|
OPERATING EXPENSES: |
|
|
|
Voyage expenses |
|
(295) |
(159) |
Vessel operating expenses |
|
(4,687) |
(3,479) |
Depreciation expense |
|
(3,922) |
(4,280) |
Amortization of deferred charges |
|
(489) |
(281) |
Management and other fees to a related
party |
|
(530) |
(415) |
Commissions |
|
(911) |
(947) |
General and administrative expenses |
|
(1,046) |
(715) |
Income from
operations |
|
$ 3,777 |
$ 7,280 |
|
|
|
|
OTHER INCOME (EXPENSE): |
|
|
|
Interest and finance costs |
|
$ (1,066) |
$ (1,083) |
(Loss) on derivative instruments |
|
(113) |
(92) |
Interest income |
|
20 |
14 |
Other |
|
79 |
78 |
Other (expense) |
|
$ (1,080) |
$ (1,083) |
|
|
|
|
Net income |
|
$ 2,697 |
$ 6,197 |
|
|
|
|
Basic earnings per share |
|
$ 0.09 |
$ 0.29 |
Diluted earnings per share |
|
$ 0.09 |
$ 0.29 |
Basic weighted average number of shares |
|
31,567,480 |
21,171,329 |
Diluted weighted average number of
shares |
|
31,591,158 |
21,171,329 |
FREESEAS
INC. |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(All amounts in tables in
thousands of United States dollars, except for share and per share
data) |
|
|
|
|
|
|
|
|
|
|
March 31, 2010
(Unaudited) |
December 31,
2009 |
ASSETS |
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and cash equivalents |
|
$ 9,900 |
$ 6,341 |
Restricted cash |
|
1,649 |
1,750 |
Trade receivables, net |
|
2,251 |
2,011 |
Insurance claims |
|
6,504 |
9,240 |
Due from related party |
|
1,447 |
1,410 |
Inventories |
|
658 |
601 |
Prepayments and other |
|
506 |
772 |
Total current
assets |
|
$ 22,915 |
$ 22,125 |
|
|
|
|
Fixed assets, net |
|
266,779 |
270,701 |
Deferred charges, net |
|
2,455 |
2,995 |
Restricted cash |
|
1,500 |
1,500 |
Total non-current
assets |
|
$ 270,734 |
$ 275,196 |
|
|
|
|
Total Assets |
|
$ 293,649 |
$ 297,321 |
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
Accounts payable |
|
$ 7,816 |
$ 10,746 |
Accrued liabilities |
|
1,169 |
1,310 |
Due to related party |
|
41 |
18 |
Unearned revenue |
|
1,040 |
416 |
Derivative financial instruments - current
portion |
|
575 |
566 |
Deferred revenue - current portion |
|
916 |
1,032 |
Bank loans - current portion |
|
15,738 |
15,400 |
Total current
liabilities |
|
$ 27,295 |
$ 29,488 |
|
|
|
|
Derivative financial instruments - net of
current portion |
|
679 |
684 |
Deferred revenue - net of current
portion |
|
-- |
138 |
Bank loans - net of current
portion |
|
118,371 |
122,559 |
Total long -
term liabilities |
|
$ 119,050 |
$ 123,381 |
|
|
|
|
Commitments and Contingencies |
|
|
|
SHAREHOLDERS' EQUITY: |
|
|
|
Common stock |
|
32 |
32 |
Additional paid-in capital |
|
127,204 |
127,049 |
Retained earnings |
|
20,068 |
17,371 |
Total shareholders'
equity |
|
147,304 |
144,452 |
Total Liabilities and
Shareholders' Equity |
|
$ 293,649 |
$ 297,321 |
CONTACT: FreeSeas Inc.
Alexandros Mylonas, Chief Financial Officer
011-30-210-45-28-770
Fax: 011-30-210-429-10-10
info@freeseas.gr
www.freeseas.gr
The Equity Group
Investor Relations
Adam Prior, Vice President
212-836-9606
aprior@equityny.com
www.theequitygroup.com
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