- Published: 28 May 2009
- Written by Editor
FreeSeas Inc. Announces 2009 First Quarter Financial Results
First Quarter 2009 Financial Highlights
* Operating revenues of $17.6 million, an increase of 103% year-over-year
* Net income of $6.2 million, or $0.29 earnings per share, basic and diluted
* Adjusted EBITDA of $11.9 million
* Cash flow from operations of $8.7 million
First Quarter 2009 Operating Highlights
* Nine Handysize / Handymax vessels owned and operated during the period, earning an average Time Charter Equivalent, or TCE, of $20,334 per day
* Fleet utilization of 99.9%
PIRAEUS, Greece, May 28, 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 seven Handysize vessels and two Handymax vessels, today announced financial results for its first quarter ended March 31, 2009.
Mr. Ion Varouxakis, President and CEO of FreeSeas, stated, "We are very pleased with the Company's successful execution throughout a challenging period in our industry, which we feel also reflects our flexibility as a smaller company and unique position as a Handysize owner. We have nine vessels with a balanced charter strategy, solid relationships with our lenders, and lean and efficient operations. We have placed considerable focus on maintaining a streamlined, cost-efficient infrastructure, without compromising the safety of our crews, the maintenance standards and the quality of our service or ability to secure new charters. These efforts were reflected in our first quarter results, as we reduced daily operating expenses by 38.7% and daily general and administrative expenses by 40.3%, on a per vessel basis. As a result, we substantially improved our operating and net margins in the first quarter of 2009 when compared to the first quarter of 2008, and produced $8.7 million in cash from operations during the period."
2009 First Quarter Financial Review
To facilitate an understanding of FreeSeas, a summary of financial results is included below:
In USD thousands, except share numbers and EPS
----------------------------------------------
(unaudited) (unaudited)
Q1 2009 Q1 2008
----------------- ----------------
Amount % of Amount % of Y-O-Y %
Revenue Revenue CHANGE
-------- ------- -------- ------- -------
Operating revenues $ 17,556 100.0% $ 8,641 100.0% 103%
Vessel operating
expenses $ 3,479 19.8% $ 3,257 37.7% 7%
Depreciation
expense and
amortization of
deferred charges $ 4,561 26.0% $ 2,117 24.5% 115%
Income from
operations $ 7,280 41.5% $ 1,661 19.2% 338%
Interest and
finance costs $ 1,232 7.0% $ 916 10.6% 35%
Net Income $ 6,197 35.3% $ 283 3.3% 2090%
Basic and diluted
earnings per share $ 0.29 $ 0.01
Adjusted EBITDA $ 11,919 67.9% $ 3,734 43.2% 219%
Basic weighted
average number
of shares 21,171,329 20,743,456 2.1%
Diluted weighted
average number
of shares 21,171,329 21,012,924 0.8%
Operating revenues for the first quarter of 2009 were $17.6 million, an increase of 103% from $8.6 million in the comparable period of the prior year, largely due to the increase in the size of the Company's fleet.
Vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs, totaled $3.5 million, or 19.8% of revenue, for the 2009 first quarter, as compared to $3.3 million, or 37.7% of revenue, for the comparable period of the prior year. For the first quarter of 2009, depreciation and amortization expense totaled $4.6 million, as compared to $2.1 million for the first quarter of 2008. The increase in operating and depreciation expenses was a result of an increase from six to nine vessels.
Net income for the first quarter of 2009 was $6.2 million, or $0.29 per diluted share based on 21.2 million diluted weighted average number of shares outstanding, as compared to net income of $283,000, or $0.01 per diluted share based on 21.0 million diluted shares outstanding, for the first quarter of 2008. Adjusted EBITDA for the quarter ended March 31, 2009 increased to $11.9 million from $3.7 in the prior year quarter. A table reconciling adjusted EBITDA to net income can be found in footnote(1) to this release.
Outlook for 2009
Mr. Varouxakis continued, "We have focused on securing attractive rates for our vessels currently operating in the spot market, and are benefiting from the favorable time charter agreements made by the Company last year and that were extended in the first quarter of 2009. We are also very pleased with the upward turn in the Baltic Dry Index, which we feel only begins to explain the potential rate of expansion for operators of Handysize vessels. According to available market data, the worldwide Handysize fleet has been shrinking since the third quarter of 2008. The Handysize segment in which FreeSeas operates is the only dry bulk segment where scrapping exceeded newbuildings, a trend we expect to continue due to the average older age of the segment's fleet. While we acknowledge that numerous challenges remain, we continue to see support in recent weeks towards more favorable rates and are encouraged by the improving strength in the charter market. As a result of this reasonable optimism, our solid results in the first quarter, and our existing charter agreements, we expect to achieve profitability throughout 2009."
Mr. Varouxakis concluded, "We also continue to feel that there are selective opportunities available for our Company to safely expand its fleet. The secondhand Handysize market is a niche that we do not feel has been explored by the other major listed shipping companies, and provides a potential avenue for the acquisition of immediately accretive assets. In addition, our management capacity is such that we could expand our fleet without significant incremental costs to our operations or corporate overhead. While our current and immediate focus is on repayment of debt, we are selectively pursuing potential opportunities that would be accretive to shareholders."
Balance Sheet and Debt Repayment Information
At March 31, 2009, FreeSeas' cash and cash equivalents was $3.2 million and stockholders' equity was $127.1, compared to $3.4 million and $120.9 million, respectively, at December 31, 2008. During the first quarter of 2009, FreeSeas also obtained covenant waiver agreements from each of its bank lenders and received a commitment to refinance the existing credit facility for the Free Maverick, which the Company feels provided it with a greater level of operational and financial flexibility. The following table outlines FreeSeas' annual debt repayment obligations for the remainder of 2009 through 2016:
Year Amount 2009 Obligations by Quarter
---- --------- ---------------------------
(in 000s) (in 000s)
2009* $ 19,200 Q2* $ 6,000
2010 $ 16,400 Q3 $ 9,100
2011 $ 16,400 Q4 $ 4,100
2012 $ 35,100 ---------
2013 $ 14,000 $ 19,200
2014 $ 14,000 =========
2015 $ 24,475
2016 $ 13,275
---------
Total $ 152,850
=========
* Company has already paid $5.25 million in principal as of the
date of this press release.
Most of the Company's credit facilities bear interest at a rate of LIBOR plus a margin, ranging from 2.0% to 3.0%.
Fleet Employment Data
---------------------------------------------------------------------
Vessel
Name Dwt Type Built Employment as of April 2009
---------------------------------------------------------------------
Spot time charter trip of 2-4
Free months at $4,000 per day
Destiny 25,240 Handysize 1982 through June 2009
---------------------------------------------------------------------
Balance of time charter at
Free $20,000 per day through
Envoy 26,318 Handysize 1984 July/August 2009
---------------------------------------------------------------------
Balance of time charter at
$8,000 per day through
September 2009 (+50% profit
sharing above $10,000);
increases to $10,500 per day
on September 15, 2009 through
January/February 2010 (+50%
Free profit sharing above $12,500
Goddess 22,051 Handysize 1995 per day)
---------------------------------------------------------------------
25 day spot time charter trip
at $13,500 per day through May
Free Hero 24,318 Handysize 1995 2009
---------------------------------------------------------------------
Free Spot time charter trip at $6,500
Impala 24,111 Handysize 1997 per day through May 2009
---------------------------------------------------------------------
Balance of time charter at
$28,000 per day through March
Free 2010 and $24,000 per day
Jupiter 47,777 Handymax 2002 through March 2011
---------------------------------------------------------------------
45-65 day spot time charter
Free trip at $7,000 per day through
Knight 24,111 Handysize 1998 June 2009
---------------------------------------------------------------------
Balance of time charter at
$51,150 per day through May
Free Lady 50,246 Handymax 2003 2010
---------------------------------------------------------------------
60-70 day spot time charter
Free trip at $7,500 per day through
Maverick 23,994 Handysize 1998 August 2009
---------------------------------------------------------------------
TOTAL 268,166
---------------------------------------------------------------------
Conference Call
The dial-in numbers are:
(866) 861-6730 (U.S.) (702) 696-4678 (INTERNATIONAL)
Slide Presentation and Webcast
The conference call will also be broadcast live via the "Investor Relations" section of FreeSeas' 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", or go directly to: http://investor.shareholder.com/media/eventdetail.cfm?mediaid=36693&c=FREE&mediakey=C78307CCF204FC3291AFCA74BAB21D67&e=0.
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 90 days.
About FreeSeas Inc.
FreeSeas Inc. is a Marshall Islands corporation with principal offices in Piraeus, Greece. FreeSeas is engaged in the transportation of dry bulk cargoes through the ownership and operation of dry bulk carriers. Currently, it has a fleet of seven 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 dry bulk 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, March 31,
2009 2008
-------- --------
EBITDA (1) $ 11,919 $ 3,734
Fleet Data:
Average number of vessels (2) 9.00 5.11
Ownership days (3) 810 465
Available days (4) 810 465
Operating days (5) 809 386
Fleet utilization (6) 99.9% 83.0%
Average Daily Results:
Average TCE rate (7) $ 20,334 $ 20,964
Vessel operating expenses (8) 4,295 7,004
Management fees (9) 512 1,043
General and administrative expenses (10) 880 1,474
Total vessel operating expenses (11) $ 4,807 $ 8,047
(1) EBITDA reconciliation to net income:
Adjusted EBITDA represents net earnings before interest, taxes,
depreciation and amortization and change in the fair value of
derivatives. 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
March 31, March 31,
2009 2008
-------- --------
Net income $ 6,197 $ 283
Depreciation and amortization 4,561 2,117
Change in derivatives fair value (57) 702
Interest and finance cost 1,218 632
-------- --------
Adjusted EBITDA $ 11,919 $ 3,734
======== ========
(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
March 31, March 31,
2009 2008
-------- --------
Operating revenues $ 17,556 $ 8,641
Voyage expenses and commissions (1,106) (549)
Net operating revenues 16,450 8,092
Operating days 809 386
-------- --------
Time charter equivalent daily rate $ 20,334 $ 20,964
======== ========
(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
March 31, March 31,
2009 2008
-------- --------
Vessel operating expenses $ 3,479 $ 3,257
Ownership days 810 465
-------- --------
Daily vessel operating expense $ 4,295 $ 7,004
======== ========
(9) Daily management fees are calculated by dividing total
management fees 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
31-Mar-09 31-Mar-08
(Unaudited) (Unaudited)
----------- -----------
OPERATING REVENUES $ 17,556 $ 8,641
OPERATING EXPENSES:
Vessel operating expenses (3,479) (3,257)
Voyage expenses (159) (89)
Depreciation expense (4,280) (2,015)
Amortization of deferred charges (281) (102)
Management fees to a related party (415) (485)
Commissions (947) (460)
Stock-based compensation expense (3) (27)
General and administrative expenses (712) (545)
----------- -----------
Income from operations $ 7,280 $ 1,661
OTHER INCOME (EXPENSE):
Interest and finance costs $ (1,232) $ (916)
Change in derivatives fair value 57 (702)
Interest income 14 284
Other 78 (44)
----------- -----------
Other (expense) $ (1,083) $ (1,378)
----------- -----------
----------- -----------
Net income $ 6,197 $ 283
=========== ===========
Basic earnings per share $ 0.29 $ 0.01
Diluted earnings per share $ 0.29 $ 0.01
Basic weighted average number of
shares 21,171,329 20,743,456
Diluted weighted average number of
shares 21,171,329 21,012,924
FREESEAS INC.
CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS
(All amounts in tables in thousands of United States dollars, except
for share data)
March 31, Dec. 31,
2009 2008
(Unaudited)
----------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,189 $ 3,378
Trade receivables, net 1,624 812
Insurance claims 9,525 17,807
Due from related party 1,703 1,634
Inventories 607 579
Back log assets 227 907
Restricted cash 2,483 1,095
Prepayments and other 799 972
----------- -----------
Total current assets $ 20,157 $ 27,184
Fixed assets, net 271,125 275,405
Deferred charges, net 3,361 3,772
Restricted cash 1,500 1,500
----------- -----------
Total non-current assets $ 275,986 $ 280,677
----------- -----------
Total Assets $ 296,143 $ 307,861
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 9,813 $ 10,916
Accrued liabilities 1,216 11,347
Due from related party 0 12
Unearned revenue 1,956 1,320
Derivatives financial instruments
at fair value 708 473
Deferred revenue - current portion 77 0
Bank loans - current portion 23,300 26,700
----------- -----------
Total current liabilities $ 37,070 $ 50,768
Derivatives financial instruments
at fair value 1,043 1,337
Deferred revenue - non current
portion 1,425 1,251
Bank loans - net of current portion 129,550 133,650
----------- -----------
Total long term liabilities $ 132,018 $ 136,238
Commitments and Contingencies
SHAREHOLDERS' EQUITY:
Common stock 21 21
Additional paid-in capital 110,325 110,322
Retained earnings / (deficit) 16,709 10,512
Total shareholders' equity $ 127,055 $ 120,855
----------- -----------
Total Liabilities and
Shareholders' Equity $ 296,143 $ 307,861
=========== ===========
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: FreeSeas Inc.
FreeSeas Inc.
Ion Varouxakis, Chief Executive Officer
011210-45-28-770
Fax: 011210-429-10-10
This email address is being protected from spambots. You need JavaScript enabled to view it.
www.freeseas.gr
89 Akti Miaouli Street
185 38 Piraeus, Greece
The Equity Group Inc.
Investor Relations
Adam Prior, Vice President
212-836-9606
This email address is being protected from spambots. You need JavaScript enabled to view it.
www.theequitygroup.com
