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Tidewater Reports Q2 Results, Fiscal 2011

Wednesday, November 3rd, 2010

Tidewater Inc. (NYSE:TDW) announced second quarter net earnings for the period ended September 30, 2010, of $19.4 million, or $0.38 per share, on revenues of $267.1 million. For the same quarter last year, net earnings were $98.2 million, or $1.90 per share, inclusive of a $34.3 million, or $0.66 per common share, tax benefit resulting from a favorable resolution of tax litigation, on revenues of $295.5 million. The immediately preceding quarter ended June 30, 2010, had net earnings of $39.8 million, or $0.77 per common share, on revenues of $262.5 million.

Included in net earnings for the quarter ended September 30, 2010, was a $4.35 million ($4.35 million after-tax, or $0.09 per common share) charge included in general and administrative expenses related to an agreement in principle with the United States Department of Justice to resolve the previously disclosed Foreign Corrupt Practices Act investigation. Also included in the September 2010 quarter was an effective tax rate of 34.4%, which reflects the company’s current estimate for its operating tax rate for fiscal 2011 of approximately 22.5%, the cumulative effect on income tax expense for the six-months ended September 30, 2010 of the company’s current estimate of its effective tax rate, and the Department of Justice charge, which has no related tax benefit. Relative to the company’s previously disclosed effective tax rate estimate of 18.5%, the impact of the higher effective tax rate on the September 2010 quarterly results was approximately $0.09 per common share.

 

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Northrop Grumman Reports 3Q Results

Wednesday, October 27th, 2010

Northrop Grumman Corporation (NYSE: NOC) reported that third quarter 2010 earnings from continuing operations increased to $489 million, or $1.64 per diluted share, from $464 million, or $1.45 per diluted share, in the third quarter of 2009.  Net earnings for the 2010 third quarter increased to $497 million, or $1.67 per diluted share, from $490 million, or $1.53 per diluted share, in the prior year period.  The 2009 third quarter included a net tax benefit of $75 million, or $0.23 per diluted share.  Third quarter 2010 sales increased 4 percent to $8.7 billion from $8.35 billion.  

Cash provided by operations totaled $978 million in the third quarter of 2010 compared with $544 million in the third quarter of 2009. New business awards for the 2010 third quarter totaled $7.4 billion, bringing total backlog to $64.6 billion as of Sept. 30, 2010.  

“This was a strong quarter for Northrop Grumman.  Third quarter results demonstrate that our focus on sustainable performance improvement continues to gain traction across the corporation.  All our businesses performed well, and based on year-to-date results, we are raising our 2010 EPS guidance to $6.85 to $7.00 per share.  We are also confirming our guidance for cash from operations and free cash flow.  Looking ahead, we continue to position the company to generate value for shareholders, customers and employees,” said Wes Bush, CEO and president.  

Third quarter 2010 operating income increased 29 percent to $801 million from $619 million in the prior year period, and as a percent of sales increased 180 basis points to 9.2 percent from 7.4 percent.  The improvement principally reflects higher segment operating income and lower net pension adjustment.  Third quarter 2010 segment operating income increased $107 million, or 14 percent, driven by double-digit increases in operating income for four of five businesses.  As a percent of sales, third quarter 2010 segment operating income improved 80 basis points to 9.8 percent from 9 percent.  Net pension adjustment improved to an expense of $8 million from an expense of $72 million in the prior year period.  Unallocated corporate expenses totaled $46 million in the 2010 third quarter and $55 million in the 2009 third quarter.  








Shipbuilding third quarter 2010 sales increased 1 percent. Third quarter 2010 operating income declined 11 percent, and as a percent of sales totaled 6 percent compared with 6.8 percent in the third quarter of 2009.  The declines in operating income and rate are primarily due to lower performance for expeditionary warfare programs, partially offset by milestone incentives on the LPD program.

 

Shipbuilding ($ millions)

 
 

Third Quarter

 

Nine Months

 
 

2010

 

2009

 

% Change

 

2010

 

2009

 

% Change

 

Sales

$ 1,670

 

$ 1,650

 

1.2%

 

$ 4,989

 

$ 4,549

 

9.7%

 

Operating income

101

 

113

 

(10.6%)

 

191

 

211

 

(9.5%)

 

as % of sales

6.0%

 

6.8%

     

3.8%

 

4.6%

     
                         

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Horizon Lines Reports Q3 Results

Saturday, October 23rd, 2010

Horizon Lines, Inc. (NYSE: HRZ) reported financial results for its fiscal third quarter ended September 19, 2010.

 

On a GAAP basis, third-quarter net income was $7.7 million, or $0.25 per diluted share, compared with $8.4 million, or $0.27 per diluted share, for the third quarter of 2009. On an adjusted basis, third-quarter net income totaled $11.0 million, or $0.35 per diluted share, excluding charges of $3.3 million after tax, or $0.10 per diluted share, for antitrust-related legal expenses, an equipment impairment charge and union severance. This compares with 2009 adjusted net income of $11.4 million, or $0.37 per diluted share, after excluding antitrust-related legal expenses and a vessel impairment charge totaling $3.0 million after tax, or $0.10 per diluted share. Third-quarter revenue increased to $311.0 million from $308.0 million a year ago.

 

Container volume for the 2010 third quarter totaled 65,726 loads, a 2.8% decline from 67,649 loads for the same period a year ago. Puerto Rico and Hawaii/Guam experienced the largest year-over-year declines. Alaska volume was down just marginally. Container volume for the 2010 nine-month period totaled 190,610 loads, down 1.4% from 193,305 loads a year ago.

 

Container rates, net of fuel, for the 2010 third quarter, rose slightly to $3,247 from $3,229 for the third quarter a year ago. Container rates, net of fuel, for the 2010 nine-month period were $3,258, marginally below the rate of $3,266 a year ago.

 

“A summer slowdown in the pace of economic recovery pressured volumes across all of our markets, resulting in a third-quarter financial performance that was short of our expectations,” said Chuck Raymond, Chairman, President and Chief Executive Officer. “We had anticipated a firmer overall economic recovery in the third quarter. However, after some initial inventory rebuilding this past spring, economic activity slowed in our tradelanes as consumer spending remained muted in the face of continuing high unemployment. The quarter also was impacted by high fuel prices and lower revenue from transportation services agreements. In addition, vessel operating expenses increased from a year ago due to the timing of regulatory dry-dockings.

 

“In the face of this challenging operating environment, our financial results demonstrate modest revenue growth and diligent cost management,” Mr. Raymond said. “We continued to generate solid adjusted free cash flow, debt paydown remained ahead of plan, and we finished the quarter with improved liquidity. As was the case in the second quarter, our third-quarter was characterized by improved EBITDA contributions from our Alaska market, terminal services to third parties and logistics businesses, combined with ongoing overhead cost savings.

 

“Volume declines were greatest in Puerto Rico, which remains in recession, and in Hawaii/Guam, which continues to experience a very slow and uneven economic recovery,” Mr. Raymond continued. “The volume declines in Puerto Rico were exacerbated by ongoing competitive pricing pressures, due in part to capacity that was added by a competitor to the depressed market in the spring. We are responding appropriately and will continue to do so in the months ahead. Alaska, while down very slightly in volume, contributed to EBITDA growth amid an improving business environment.”

 

Third-Quarter 2010 Financial Highlights

Operating Revenue – Third-quarter operating revenue increased 1.0% to $311.0 million from $308.0 million a year ago. The largest factor in the $3.0 million revenue gain was a $6.9 million gain in logistics revenue, followed by a $4.9 million rise in fuel surcharges to help partially mitigate higher fuel costs. Terminal services contributed $2.3 million of the revenue increase, while rate/mix improvement added $1.7 million. These gains were partially offset by a $6.2 million revenue decline resulting from lower container volume, and a $6.6 million decrease related to the expiration of a vessel management contract with the federal government.

 

Operating Income – GAAP operating income for the third quarter decreased to $18.1 million from $19.0 million a year ago. The 2010 GAAP operating income includes expenses of $3.4 million, consisting of $1.5 million in antitrust-related legal expenses, $1.8 million for an equipment impairment charge, and $0.1 million for a union severance charge. The 2009 GAAP operating income includes $2.0 million of antitrust-related legal expenses and $1.2 million for a vessel impairment charge. Excluding these items, the third-quarter 2010 adjusted operating income totaled $21.5 million, compared with $22.1 million for the prior year’s third quarter. The decline in 2010 third-quarter adjusted operating income from the prior year was primarily due to reduced volume, lower fuel recovery, decreased space charter income, and higher vessel operating expense as a result of an increase in dry-dockings. These negative factors were partially offset by a decrease in overhead expenses and terminal services savings.

 

EBITDA – EBITDA totaled $33.4 million for the 2010 third quarter, compared with $33.8 million for the same period a year ago. Adjusted EBITDA for the third quarter of 2010 was $36.8 million, compared with $36.9 million for 2009. EBITDA and adjusted EBITDA for the 2010 and 2009 third quarters were impacted by the same factors affecting operating income.

Shares Outstanding – The company had a weighted daily average of 31.2 million diluted shares outstanding for the third quarter of 2010, compared with 30.9 million outstanding for the third quarter of 2009.

 

Nine-Month Results – For the nine months ended September 19, 2010, operating revenue increased 5.1% to $902.7 million from $858.8 million for the same period in 2009. EBITDA totaled $72.9 million compared with $51.2 million a year ago. Adjusted EBITDA for the 2010 nine-month period totaled $78.6 million, after excluding $3.5 million in antitrust-related legal expenses, a $1.8 million equipment impairment charge, and $0.5 million for union severance. Adjusted EBITDA for the 2009 nine-month period totaled $84.6 million, after excluding $20.0 million for the Puerto Rico class-action settlement, $10.4 million in antitrust-related legal expenses, and $3.0 million for impairment, restructuring and other charges. The 2010 nine-month net loss totaled $1.8 million, or $0.06 per share, compared with a net loss of $32.6 million, or $1.07 per share for the same period a year earlier. Adjusted net income for the 2010 nine-month period totaled $3.7 million, or $0.12 per diluted share, compared with $10.8 million, or $0.35 per diluted share, a year ago.

 

Liquidity, Credit Facility Compliance & Debt Structure – As of September 19, 2010, the company had total liquidity of $85.8 million, consisting of $4.4 million in cash and $81.4 million of effective revolver availability. The company’s trailing 12-month interest coverage and senior secured leverage ratios were 3.81 times and 1.98 times, respectively, in compliance with the credit agreement requirement of above 3.5 times and below 2.75 times, respectively. Funded debt outstanding totaled $540.7 million, a reduction of $22.4 million from the second quarter and $39.8 million from the year-ago third quarter. The funded debt outstanding at September 19, 2010, consisted of $210.7 million in senior secured debt and $330.0 million in convertible notes, at a weighted average interest rate of 4.48%. The company’s senior secured debt matures in August 2012, but the maturity will accelerate to February 2012 if the convertible notes are not refinanced or if arrangements are not being made for their refinancing by that date.

 

Outlook

“In light of the third-quarter slowdown, we are more guarded about our outlook for the remainder of 2010,” Mr. Raymond said. “While volume trends have firmed modestly so far in October, we expect pricing pressures to continue in Puerto Rico and fuel costs to increase across all of our tradelanes through year end. As we move forward, volume improvement remains dependent on the strength of the economic recovery in our markets and its impact on consumer sentiment.

 

“We currently expect full-year adjusted EBITDA results to be below those of 2009, but above the levels required by our debt covenants,” Mr. Raymond continued. “We also are actively engaged in planning to refinance our debt, and currently expect the refinancing to be completed in the first or second quarter of 2011, depending on market conditions and other factors.

“We remain optimistic about prospects for our new trans-Pacific Five Star Express liner service between China and the U.S. West Coast, which launches on December 13th,” Mr. Raymond noted. “We also are starting to see improved volume in Guam, where major infrastructure construction projects are finally underway in preparation for the eventual transfer of U.S. military forces from Okinawa to Guam. This bodes well for 2011 and beyond.”

 

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Golar 2010 AGM Results

Thursday, September 30th, 2010

Golar LNG Limited advised that the 2010 Annual General Meeting of the company was held on September 24, 2010 at 10:30 a.m. at the Elbow Beach Hotel, 60 South Shore Road, Paget PG04, Bermuda.  The following resolutions were passed:

 

1) To re-elect John Fredriksen as a Director of the company.

2) To re-elect Kate Blankenship as a Director of the company.

3) To re-elect Hans Petter Aas as a Director of the company.

4) To re-elect Kathrine Fredriksen as a Director of the company.

5) To re-appoint PricewaterhouseCoopers of London, England as auditors and to authorize the Directors to determine their remuneration.

6) That the remuneration payable to the Company’s Board of Directors of a total amount of fees not to exceed $450,000.00 be approved for the year ended December 31, 2010.

 

In addition, the audited consolidated financial statements for the company for the year ended December 31, 2009 were presented to the meeting.

 

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Knightsbridge Tankers 2010 AGM Results

Wednesday, September 29th, 2010

Knightsbridge Tankers Limited advised that the 2010 Annual General Meeting of the Company was held on September 24, 2010 at 9:30 a.m. at the Elbow Beach Hotel, 60 South Shore Road, Paget PG04, Bermuda.  The following resolutions were passed:

 

1) To re-elect Ola Lorentzon as a Director of the company.

2) To re-elect Douglas C. Wolcott as a Director of the company.

3) To re-elect David M. White as a Director of the company.

4) To re-elect Hans Petter Aas as a Director of the company.

5) To elect Herman Billung as a Director of the company to fill the vacancy currently

existing on the Board.

6) To appoint PricewaterhouseCoopers AS as the Company’s independent auditors and to

authorise the Directors to determine their remuneration.

7) That the remuneration payable to the company’s Board of Directors of a total amount of fees not to exceed $500,000 be approved for the year ended December 31, 2010.


In addition, the audited consolidated financial statements for the company for the year ended December 31, 2009 were presented to the meeting.

 

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Genco Shipping & Trading Q2 2010 Results

Wednesday, August 11th, 2010

Genco Shipping & Trading Limited (NYSE:GNK) reported its financial results for the three and six months ended June 30, 2010. The following financial review discusses the results for the three and six months ended June 30, 2010 and June 30, 2009.


Second Quarter 2010 and Year-to-Date Highlights:

  –  Recorded net income attributable to Genco’s shareholders for the second quarter of $36.8 million, or $1.17 basic and $1.16 diluted earnings per share;

  –  Agreed to acquire five Handysize vessels from companies within the Metrostar Management Corporation for an aggregate purchase price of $166.25 million;

  –  Agreed to acquire 13 Supramax vessels from affiliates of Bourbon SA for an aggregate purchase price of approximately $440 million;

  –  Entered into a commitment letter for a $100 million senior secured term loan facility to finance a portion of the Metrostar acquisition;

:portion of the Bourbon acquisition;

  –  Completed the closing of a concurrent $125 million convertible offering and $57.5 million follow-on offering including over-allotment options exercised by the underwriters;

  –  Fixed three of the Bourbon acquisition Supramax vessels on long term time charters; and

  –  Maintained short term time charter strategy for Capesize vessels up for renewal due to seasonal weak rate environment.


Financial Review: 2010 Second Quarter:

The company recorded net income attributable to Genco shareholders for the second quarter of 2010 of $36.8 million, or $1.17 basic and $1.16 diluted earnings per share. Comparatively, for the three months ended June 30, 2009, our net income attributable to Genco shareholders was $37.6 million or $1.20 basic and diluted earnings per share.


EBITDA was $79.3 million for the three months ended June 30, 2010 versus $73.9 million for the three months ended June 30, 2009.


Robert Gerald Buchanan, President, commented, “During the second quarter, Genco posted strong operating results by drawing upon the company’s significant time charter coverage while further expanding its modern fleet. As we maintained our focus on executing our time charter strategy, we also agreed to acquire 18 drybulk vessels and have already taken delivery of three of these vessels. With 15 additional vessels expected to be delivered in 2010 and 2011, Genco remains well positioned to further enhance the age profile of its fleet and continue to provide multinational charterers with high-quality tonnage.”


Genco’s revenues increased 12.4% to $105.3 million for the three months ended June 30, 2010 versus $93.7 million for the three months ended June 30, 2009 mainly due to the increase in the size of our fleet and consolidated revenues from Baltic Trading Limited offset by lower charter rates for some of our vessels.


The average daily time charter equivalent, or TCE, rates obtained by the company’s fleet decreased 5.7% to $30,405 per day for the three months ended June 30, 2010 compared to $32,245 per day for the three months ended June 30, 2009. The decrease in TCE rates resulted from lower charter rates in the second quarter of 2010 versus the second quarter of 2009 for 17 of the vessels in our fleet offset by higher charter rates for 14 of the vessels in our fleet.


Total operating expenses increased to $50.4 million for the three months ended June 30, 2010 from $40.4 million for the three month period ended June 30, 2009. Higher vessel operating expenses, general, administrative and management fees and depreciation and amortization were recorded in the 2010 period as a result of the operation of a larger fleet. Vessel operating expenses were $16.2 million for the second quarter of 2010 compared to $13.3 million for the same period last year. The increase in vessel operating expenses was due to the operation of a larger fleet, the consolidated expenses of Baltic Trading Limited’s fleet and slightly higher expenses related to the timing of repairs for the second quarter of 2010 versus the same period last year.


Depreciation and amortization expenses increased to $26.3 million for the second quarter of 2010 from $20.9 million for the second quarter of 2009 as a result of the growth of our fleet. General, administrative and management fees increased to $7.2 million from $5.0 million during the comparative periods due to the addition of personnel as the fleet expanded, costs associated with Baltic Trading Limited as well as higher third-party management fees.


Daily vessel operating expenses, or DVOE, increased to $4,671 per vessel per day during the second quarter of 2010 from $4,556 for the same quarter last year due to higher repair costs as well as stores and spares costs offset by lower insurance costs. Daily vessel operating expenses year to date have been below budget due to the timing of purchases of spare parts, as well as lower than anticipated crew, lubricants and insurance costs offset by the timing of repair costs. We believe daily vessel operating expenses are best measured for comparative purposes over a 12month period in order to take into account all of the expenses that each vessel in our fleet will incur over a full year of operation. Based on estimates provided by our technical managers and management’s expectations, we expect DVOE for the second half of 2010 to be $5,100 per vessel per day on a weighted average basis.


John C. Wobensmith, Chief Financial Officer, commented, “Our strong results for the second quarter highlight the sizeable cash flows generated by our large and modern fleet. Complementing our success, management solidified Genco’s position as a bellwether in the drybulk industry with the acquisition of 13 Supramax vessels and five Handysize vessels at compelling valuations. With these acquisitions, which adhere to our strict return criteria, Genco is poised to expand its world-class fleet by 31% on a deadweight tonnage basis and increase its future earnings potential. In support of our robust growth, we recently completed $182.5 million in capital markets financing and entered into $353 million in new credit facilities, significantly increasing our financial flexibility. We intend to utilize the combined $535.5 million in new financing as well as cash on hand to fund our current acquisitions. Building upon our extensive consolidation experience, we will work diligently to ensure the seamless integration of our newly acquired vessels into our existing infrastructure for the benefit of the Company and its shareholders.”


Financial Review: First Half 2010

Net income attributable to Genco was $70.2 million or $2.24 basic and $2.23 diluted earnings per share for the six months ended June 30, 20010, compared to $78.9 million or $2.52 basic and $2.51 diluted earnings per share for the six months ended June 30, 2009. Revenues increased to $200.0 million for the six months ended June 30, 2010 compared to $190.4 million for the six months ended June 30, 2009. EBITDA was $152.9 million for the six months ended June 30, 2010 versus $150.0 for the six months ended June 30, 2009. TCE rates obtained by the company decreased to $30,326 per day for the six months ended June 30, 2010 from $32,724 for the same period in 2009 mainly due to lower rates achieved for our vessels in the first six months of 2010 as opposed to the same period last year. Total operating expenses were $96.7 million for the six months ended June 30, 2010 compared to $82.0 million for the six months ended June 30, 2009, and daily vessel operating expenses per vessel were $4,697 versus $4,743 for the comparative periods.


Liquidity and Capital Resources:


Cash Flow

Net cash provided by operating activities for the six months ended June 30, 2010 and 2009 was $118.0 million and $109.8 million, respectively. The increase in cash provided by operating activities was primarily due to higher depreciation and amortization expenses related to the operation of a larger fleet as well as a reduction in net income and the amount of time charter amortization.


Net cash used in investing activities for the six months ended June 30, 2010 and 2009 was $304.6 million and $2.4 million, respectively. The increase was primarily due to cash used for purchase of Baltic Trading’s five initial vessels and deposits made for the acquisition of 21 vessels during the second quarter of 2010. For the six months ended June 30, 2010, cash used in investing activities primarily related to the purchase of vessels in the amount of $214.4 million and the deposit on vessels in the amount of $84.9 million. For the six months ended June 30, 2009, cash used in investing activities primarily related to deposits on vessels to be acquired of $1.4 million.


Net cash provided by (used in) financing activities was $194.4 million during the six months ended June 30, 2010 as compared to $(3.6) million during the six months ended June 30, 2009. The $198.0 million increase in net cash provided by financing activities was primarily due to the proceeds from the issuance of common stock in the amount of $214.5 million from the initial public offering for Baltic Trading Limited that was completed on March 15, 2010 as well as the drawdown of $10.0 million under the Baltic Trading Credit facility. Cash provided by financing activities was also offset by the $25.0 million repayment of debt under the 2007 Credit Facility, $3.7 million for payments of common stock issuance costs, and $1.3 million of deferred financing costs. For the same period last year, net cash used in financing activities consisted of a $3.6 million payment of deferred financing costs.


Capital Expenditures

We make capital expenditures from time to time in connection with vessel acquisitions. Excluding Baltic Trading Limited’s vessels, and assuming deliveries of the vessels we recently agreed to acquire, we will own a fleet of 53 drybulk vessels, consisting of nine Capesize, eight Panamax, 17 Supramax, six Handymax and 13 Handysize vessels, with an aggregate carrying capacity of approximately 3,812,000 dwt. In addition, our subsidiary Baltic Trading Limited, assuming deliveries of the vessels it recently agreed to acquire, will own a fleet of nine drybulk vessels, consisting of two Capesize, four Supramax, and three Handysize vessels with an aggregate carrying capacity of approximately 672,000 dwt.


In addition to acquisitions that we may undertake in future periods, we will incur additional expenditures due to special surveys and drydockings for our fleet. We estimate that one vessel will be drydocked in the third quarter of 2010 and one additional vessel will be drydocked in the remainder of 2010.


The Genco Charger and Tiberius completed their drydockings during the second quarter of 2010 at a cumulative cost of approximately $1.0 million. The vessels were on planned offhire for an aggregate of 21 days in connection with their scheduled drydockings.


Summary Consolidated Financial and Other Data:

The following table summarizes Genco Shipping & Trading Limited’s selected consolidated financial and other data for the periods indicated below.

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Seaspan Financial Results, Three and Six Months

Friday, August 6th, 2010

Seaspan Corporation (NYSE:SSW) announced the financial results for the three and six months ended June 30, 2010.


Gerry Wang, Chief Executive Officer of Seaspan, stated, “During the second quarter, Seaspan achieved high utilization for its modern fleet and posted strong operating results while further expanding its contracted revenue streams. We took delivery of six newbuildings, four of which were delivered ahead of schedule, highlighting increased demand during the quarter. All six vessels commenced long-term time charters with top liner companies as planned. In addition, we capitalized on an attractive market opportunity by acquiring a 4250 TEU newbuilding, our first acquisition since late 2007. This vessel commenced a time charter for a period of two years at a favorable rate of more than $20,000 per day, reflecting strong market conditions.”


Wang concluded, “We continue to take proactive measures to enhance our financial flexibility, including a $26 million preferred share issuance in May. Due to the strength of our business model, our increasing cash flows, and the considerable improvement in the container shipping industry fundamentals, we were able to increase our second quarter dividend by 25%. Going forward, we plan to take delivery of 16 newbuildings over the next 21 months and pursue additional growth opportunities. During a time when the fundamentals in the container shipping industry have improved considerably, we remain well-positioned to strengthen Seaspan as a leading franchise.”


Series B Preferred Share Issuance:

In May 2010, we issued 260,000 Series B Preferred Shares for $26 million to Jaccar Holdings Limited, an investor related to Zhejiang Shipbuilding Co., Ltd. of China (“Zhejiang”). These preferred shares are perpetual and not convertible into common shares. They carry an annual dividend rate of 5% until June 30, 2012, 8% from July 1, 2012 to June 30, 2013 and 10% from July 1, 2013 thereafter and are redeemable by the Company at any time for $26 million plus accrued and unpaid dividends.


Vessel Acquisitions:

On June 1, 2010, we accepted delivery of a 4250 TEU newbuilding vessel constructed by Zhejiang for approximately $43 million. The vessel commenced a two-year time charter on July 1, 2010 with United Arab Shipping Company (S.A.G.) (“UASC”) at a rate of $20,500 per day in the first year and increasing to $20,850 per day in the second year.


Subsequent to the end of the quarter, on July 5, 2010, we accepted delivery of an 8500 TEU vessel named the COSCO Indonesia, bringing our fleet to 53 vessels.


We accepted delivery of seven vessels in the year ended December 31, 2009. We began 2010 with 42 vessels in operation and accepted delivery of 10 vessels for a total of 52 vessels in operation as at June 30, 2010. Operating days are the primary driver of revenue while ownership days are the driver for ship operating costs.


Vessel utilization was 99.0% and 98.1%, respectively, for the three and six months ended June 30, 2010 compared to 99.9% for each of the comparable periods in the prior year.


This decrease in vessel utilization for the six months ended June 30, 2010 was primarily due to the 90 days of unscheduled off-hire for the CSCL Hamburg grounding in the Gulf of Aqaba on December 31, 2009. We combined the repairs of the CSCL Hamburg with an earlier dry-docking to achieve savings that resulted in 12 days of scheduled off-hire. The CSCL Hamburg was back in service in April. We also completed the dry-docking for the CSCL Vancouver, the CSCL Sydney and the CSCL New York, which resulted in a total of 62 days of scheduled off-hire. Our vessel utilization since our initial public offering is 99.1%.


Depreciation

The increase in depreciation expense was due to the additional ownership days from the 10 deliveries in 2010 and a full period for the seven deliveries in 2009.


General and Administrative Expenses

The increase in general and administrative expenses was primarily due to an increase in non-cash share based compensation and increased costs to support growth.


Interest Expense

Interest expense is composed of interest at the variable rate plus margin incurred on debt for operating vessels and a reclassification of amounts from accumulated other comprehensive income related to previously designated hedging relationships. The increase in interest expense for the three and six months ended June 30, 2010, was due to a higher average operating debt balance compared to the comparable periods in the prior year. The average LIBOR was lower for both the three and six months ended June 30, 2010 was 0.3%, compared to 0.4% and 0.6%, respectively, for the comparable periods in the prior year. Although we have entered into fixed interest rate swaps, the difference between the variable interest rate and the swapped fixed rate on operating debt is recorded in our change in fair value of financial instruments caption as required by financial reporting standards. The interest incurred on our long-term debt for our vessels under construction is capitalized to the respective vessels under construction.


Change in Fair Value of Financial Instruments

The change in fair value of financial instruments resulted in a loss of $157.7 million for the three months ended June 30, 2010 compared to a gain of $89.3 million for the comparable quarter last year. The change in fair value of financial instruments resulted in a loss of $223.2 million for the six months ended June 30, 2010 compared to a gain of $92.5 million for the comparable period last year. The change in fair value loss for the three and six months ended June 30, 2010 was due to decreases in the forward LIBOR curve and overall market changes in credit risk.


Cash Available for Distribution to Common Shareholders(2)

During the three and six months ended June 30, 2010, we generated $48.4 million and $88.8 million, respectively, of cash available for distribution to common shareholders, compared to $39.0 million and $73.8 million, respectively, for the comparative periods in 2009. For the three months ended June 30, 2010, this represents an increase of $9.4 million, or 24.0%, as compared to the same quarter in 2009. For the six months ended June 30, 2010, this represents an increase of $15.0 million, or 20.3%, as compared to the same period in 2009. These increases are primarily due to an increased fleet size of 52 vessels at June 30, 2010 compared to 39 vessels at June 30, 2009.


Cash dividends paid on the Series B Preferred Shares have been deducted from the Cash Available for Distribution to Common Shareholders calculation. The Series A Preferred Shares are non-cash and accrue until January 31, 2014 and thus, do not impact the Cash Available for Distribution to Common Shareholders.


Dividend Declared:

For the quarter ended June 30, 2010, we declared a quarterly dividend of $0.125 per common share, representing a total distribution of $8.5 million. The dividend will be paid on August 20, 2010 to all shareholders of record as of August 9, 2010. Because we adopted a dividend investment plan, or DRIP, the actual amount of cash dividends paid may be less than the $8.5 million based on shareholder participation in the DRIP.


Since our initial public offering in August 2005, we have declared cumulative dividends of $6.715 per common share. Cumulatively, since we adopted the DRIP in May 2008, an additional 1.6 million shares have been issued through the participation in the DRIP. As of today’s date and based on a discount of 3%, participating shareholders have invested $16.3 million in the DRIP since the plan’s adoption.


13. Excel Maritime Q2 and Six Month Results

Excel Maritime Carriers Ltd (NYSE: EXM), an owner and operator of dry bulk carriers and an international provider of worldwide seaborne transportation services for dry bulk cargoes, announced its operating and financial results for the second quarter and six month period ended June 30, 2010.


Management Commentary:

Pavlos Kanellopoulos, Chief Financial Officer of Excel, stated, “We are pleased to report another profitable quarterly performance with strong cash flow generation. The consistent implementation of our business strategy combined with better market conditions in the dry bulk sector during the second quarter of this year, resulted in an improved EBITDA and operating cash flow generation compared to the respective period of last year. In this context, we have opted to accelerate bank debt repayments and further enhance our balance sheet structure, in order to qualify for lower applicable margin on our $1.4bn Credit Facility for the future quarters. We acknowledge the high volatility in the dry bulk market, especially in the Capesize vessels, however, we continue to be optimistic for the medium and long term outlook of the markets in which we operate.”


Year to Date Corporate Developments

During the six month period ended June 30, 2010, the following corporate developments took place, which are discussed in more detail in our earnings release for the first quarter of 2010 released on May 5, 2010:

–  The delivery of M/V Christine and scheduled installments paid to the shipyard in relation to M/V Hope (tbn Mairaki);

–  The conclusion of new loan agreements for the above mentioned vessels;

–  The repayment of the RBS credit facilities related to the new building vessels; and

–  An exercise of warrants by their holders


Furthermore, on June 30, 2010, we notified our major lenders of our intention to make an additional payment of $28.0 million, on top of our regular installment of $18.0 million due on July 1, 2010, under our $1.4 billion credit facility. The payment was made in accordance with the excess cash flow provision as defined in the amended agreement and as such, it will be applied against the term loan instalment due on April 1, 2016. Another $12.0 million will be maintained in a pledged account to fund the capital expenditures for the newbuilding vessel M/V Hope (tbn Mairaki). These payments were made on July 1, 2010.


Following the total payment of $46.0 million, we have repaid the total principal amount of $455.0 million that we would have paid in accordance with the original credit facility dated April 14, 2008 and we are in compliance with the relevant financial covenants as applicable after the end of the waiver period. As a result, the excess cash flow provision will be terminated and the loan applicable margin for the interest period starting July 1, 2010 and ending October 1, 2010 will decrease from 2.5% to 1.25% and will remain at this level as long as we follow the repayment schedule provided in the original loan agreement and we are in compliance with the relevant financial covenants as applicable after the end of the waiver period.


On July 1, 2010, a total amount of $46.0 million was paid as discussed above, while, an amount of $12.0 million was transferred in a pledged account to fund future capital expenditures for M/V Hope (tbn Mairaki).


Fleet Developments

–  On May 19, 2010, the M/V Happy Day, a Panamax vessel of 71,694 dwt built in 1997, was fixed under a new time charter for a period of 12-15 months at a daily rate of $27,000.


–  On July 9, 2010, the M/V Angela Star, a Panamax vessel of 73,798 dwt built in 1998, was involved in a collision while departing in ballast condition from a Panamanian port. Damages were sustained on her hull structure and as a result temporary repairs were carried out locally. The vessel later sailed to a yard in Bahamas for permanent repairs. The vessel is currently estimated to remain off hire for approximately 47 days and the estimated repair cost will be approximately $2.8 million which is an insured loss covered, subject to a small deductable, under the vessel’s hull and machinery insurance policy. At the time of the incident the vessel was fixed under a trip time charter at $23,000 per day for 50-55 days.


Time Charter Coverage

As of today, we have secured under time charter employment 63.1% of our operating days for 2010 (Q3-Q4) and 18.2% for the year ending December 31, 2011.


Second Quarter 2010 Results:

Excel reported net profit for the quarter of $78.9 million or $0.95 per weighted average diluted share compared to a net profit of $78.0 million or $1.05 per weighted average diluted share in the second quarter of 2009.


The second quarter 2010 results include a non-cash unrealized interest-rate swap loss of $5.1 million compared to a non-cash unrealized interest-rate swap gain of $14.3 million in the corresponding period in 2009. The changes in the fair values of interest rate swaps are recorded in income as they do not meet the criteria for hedge accounting.


Included in the above net income is also the amortization of favorable and unfavorable time charters that were recorded upon acquiring Quintana Maritime Limited (Quintana) on April 15, 2008 amounting to a net income of $80.9 million ($0.98 per weighted average diluted share) and $65.3 million ($0.88 per weighted average diluted share) for the second quarters of 2010 and 2009, respectively.


Adjusted net income, excluding all the above items, for the second quarter of 2010 would have amounted to $3.1 million or $0.04 per weighted average diluted share compared to an adjusted net loss, excluding all the above items, for the second quarter of 2009 of $1.6 million or $0.02 per weighted average diluted share.


A reconciliation of adjusted Net income to Net Income is included in a subsequent section of this release.


Included in the above adjusted net income is also the amortization of stock based compensation expense of $1.1 million ($0.01 per weighted average diluted share) and $3.0 million ($0.04 per weighted average diluted share), for the quarters ended June 30, 2010 and 2009, respectively.


Voyage revenues for the second quarter of 2010 amounted to $107.0 million as compared to $98.4 million for the same period in 2009, an increase of approximately 8.7%.


An average of 47.7 and 47.0 vessels were operated during the second quarters of 2010 and 2009, respectively, earning a blended average time charter equivalent rate of $24,062 and $22,148 per day, respectively. Please refer to a subsequent section of this Press Release for a calculation of the TCE.


Adjusted EBITDA for the second quarter of 2010 was $60.1 million compared to $57.3 million for the second quarter of 2009, an increase of approximately 4.9%. Please refer to a subsequent section of this Press Release for a reconciliation of adjusted EBITDA to Net Income.


Six Months to June 30, 2010 Results:

Excel reported net profit for the period of $146.2 million or $1.78 per weighted average diluted share compared to a net profit of $196.0 million or $3.27 per weighted average diluted share in the respective period of 2009.


The results for the six month period ended June 30, 2010 include a non-cash unrealized interest-rate swap loss of $4.8 million compared to a non-cash unrealized interest-rate swap gain of $21.0 million in the corresponding period in 2009. The changes in the fair values of interest rate swaps are recorded in income as they do not meet the criteria for hedge accounting. In addition, the results for the six month period ended June 30, 2009 include $0.1 million of a non-cash gain on sale of a vessel.


Included in the above net income is also the amortization of favorable and unfavorable time charters that were recorded upon acquiring Quintana Maritime Limited (“Quintana”) on April 15, 2008 amounting to a net income of $138.9 million ($1.69 per weighted average diluted share) and $184.6 million ($3.08 per weighted average diluted share) for the second quarters of 2010 and 2009, respectively.


Adjusted net income, excluding all the above items, for the six months to June 30, 2010 would have amounted to $12.0 million or $0.15 per weighted average diluted share compared to an adjusted net loss, excluding all the above items, for the respective period of 2009 of $9.7 million or $0.17 per weighted average diluted share.


A reconciliation of adjusted Net income to Net Income is included in a subsequent section of this release.


Included in the above adjusted net income is also the amortization of stock based compensation expense of $1.9 million ($0.02 per weighted average diluted share) and $5.4 million ($0.09 per weighted average diluted share), for the six months to June 30, 2010 and 2009, respectively.


Voyage revenues for the six month period ended June 30, 2010 amounted to $211.3 million as compared to $191.2 million for the same period in 2009, an increase of approximately 10.5%.


An average of 47.3 and 47.4 vessels were operated during the six months to June 30, 2010 and 2009, respectively, earning a blended average time charter equivalent rate of $24,254 and $21,559 per day, respectively. Please refer to a subsequent section of this Press Release for a calculation of the TCE.


Adjusted EBITDA for the period was $122.1 million compared to $110.5 million for the respective period of 2009, an increase of approximately 10.5%. Please refer to a subsequent section of this Press Release for a reconciliation of adjusted EBITDA to Net Income.

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Tsakos Energy Navigation Q2 Results

Friday, August 6th, 2010

Tsakos Energy Navigation Limited (TEN) (NYSE: TNP) reported results (unaudited) for the second quarter and first half of 2010.


Second quarter 2010 highlights

–  Voyage revenues of $112.8 million

–  Operating income of $30.1 million

–  Net income of $8.5 million

–  EPS, diluted, of $0.22 per share

–  Vessel average daily operating expenses decreased by 14% to $7,342

–  Delivery of a new building aframax and sale of one aframax and one panamax tanker with total gains of $5.8 million

–  Semi-annual dividend of $0.30 per share paid in April 2010 (bringing the total for fiscal 2009 to $0.60)

–  Quarterly dividend declared of $0.15 with first payment in July, 2010


First half 2010 highlights

–  Voyage revenues of $217.5 million

–  Operating income of $63.2 million

–  Net income of $27.9 million

–  EPS, diluted, of $0.73 per share

–  Sale of four tankers and delivery of new building aframax reducing fleet’s average age to 6.5 years with total gains of $20.2 million

–  Quarterly dividend policy announced


Second quarter results

Revenues, net of voyage expenses and commissions, were $83.3 million in the second quarter of 2010 compared to $88.6 million in the second quarter of 2009 primarily reflecting a slightly smaller fleet. Despite improved rates for crude carriers, the Company’s product carriers achieved lower rates than in the second quarter of 2009, as did its LNG carrier.


On average, TEN deployed 45.0 vessels versus 46.0 vessels in the prior year quarter. Fleet utilization remained high at 97.8%, the same level as in the second quarter of 2009. The average daily time charter equivalent rate per vessel was $22,059 down from $22,890 in the 2009 second quarter. Vessel operating costs were $7,342 per ship, per day, down nearly 14% from $8,514 in the previous second quarter in part to a stronger US dollar against the Euro that positively impacted crew costs, reduced insurance costs, and decreased repair costs. In addition, the increased cooperation between our technical managers and Columbia ShipManagement S.A., even prior to the launch of the joint-venture Tsakos Columbia ShipManagement Ltd., achieved price reductions for spares, provisions, stores and lubricants. On July 1, this joint-venture formally assumed the technical management of the vast majority of the company’s vessels.


Depreciation and dry-docking amortization costs fell to $23.4 million from $25.1 million in the second quarter of 2009, mainly due to the sale of vessels and reduced dry-docking costs over the past year. Management fees were $3.2 million, in line with the slightly smaller fleet and a modest increase in fees in January. G&A expenses were down 12%, as a result of cost cutting, primarily on promotional costs. In the second quarter of 2010, operating income was $30.1 million, which included gains on the sale of vessels amounting to $5.8 million, compared to operating income of $24.1 million (with no gains on the sale of vessels) in the second quarter of 2009. The gains on sale of vessels in the second quarter of 2010 relate to the aframax tanker Marathon and the panamax tanker Hesnes. These vessels were delivered to their new owners in April 2010. At year end 2009, both vessels had been accounted for as held-for-sale. The Victory III commenced a voyage in the second quarter, which completed in the Far East where she was eventually delivered to her new owners in early August.


Interest and finance costs rose sharply in the second quarter to $21.5 million from $6.1 million in the previous year’s second quarter. While actual loan interest fell by almost $5 million between the two quarters, reflecting the reduction in average interest rates, interest paid on interest rate swaps rose by nearly $7 million. There were non-cash negative movements of $4.5 million in interest rate swap valuations, compared to positive movements of $4 million in the second quarter of 2009, and a $2.5 million non-cash negative movement in the bunker related swap valuations compared to a positive $3 million in the second quarter of 2009. Cash received on bunker swaps was $0.5 million higher than in last year’s second quarter. Interest income was $0.7 million in the quarter compared to $1.1 million in the prior year second quarter.


Net income in the 2010 second quarter was $8.5 million (including gains on the sale of vessels of $5.8 million) versus $18.8 million in the second quarter of 2009, primarily reflecting the negative impact of swap valuations. Diluted earnings per share were $0.22 versus $0.51 in the second quarter of 2009.


Cash flow from net income before depreciation, amortization and finance costs improved to $53.4 million compared to $49.9 million in the second quarter of 2009.


Net proceeds from the sale of vessels contributed a further $44.7 million in the second quarter of 2010 from which $34.5 million was used to prepay debt on the sold vessels. A further $7 million was raised in the second quarter of 2010 from the sale of stock under the ATM program, which has not been used since May 2, 2010. Subject to market conditions, the Company intends to sell, from time to time, a final 500,000 of its common shares under this program.


First half results

Voyage revenues were $217.5 million in the first six months of 2010, down from $240.5 million in the 2010 period reflecting primarily the lower rates achieved, mainly on product carriers. TEN operated, on average, 45.8 vessels as compared with 46.0, a year earlier. The average daily time charter equivalent rate per vessel decreased to $21,371 from $25,187 while operating expenses declined to $7,885 from $8,932, a 12% reduction. General and administrative expenses decreased to $1.8 million from $2.4 million in the same period last year. Management fees were approximately the same. Depreciation and dry-docking amortization costs fell to $46.3 million from $49.8 million in the first half of 2009 mainly due to the sale of vessels.


In the first half of 2010, operating income was $63.2 million which included gains on the sale of vessels amounting to $20.2 million, compared to operating income of $63 million (with no gains on the sale of vessels) in the first six months of 2009.


Interest and finance costs were raised in the first half to $35.6 million from $21.2 million. Actual loan interest fell by almost $14 million, reflecting the reduction in average interest rates, but interest paid on interest rate swaps rose by nearly $12 million. In addition, there was a non-cash negative movement of $5 million in interest rate swap valuations compared to a positive $5 million movement in the first half year of 2009 and a $3 million non-cash negative movement in the bunker related swap valuations compared to a nearly $4 million positive movement in the first half of 2009. Cash received on bunker swaps was $1.3 million higher than in the first half of 2009. Interest income was $1.3 million in the half-year compared to $2.5 million in the prior year first half.


Net income in the six months of 2010 was $27.9 million, including gains on the sale of vessels of $20.2 million, compared to net income of $43.2 million, with no gains on the sale of vessels. Diluted earnings per share for the first half of 2010 were $0.73, while diluted earnings per share for the first six months of 2009 were $1.16.


“A strong relative performance in a temporarily depressed environment is a strong testament to the efficacy of TEN’s basic business strategy and management’s execution,” stated D. John Stavropoulos, Chairman of the Board of TEN. He concluded, “There are signs that the worst of the economic tsunami have passed. The renewed growth of the world’s oil consumption driven by the dynamic expansion of the emerging economies is the foundation of our optimism. Meantime, the ability to operate profitably whereby sustained dividends, fleet growth and a strong financial position are fundamental to building shareholder value.”


Quarterly dividend

As already announced on June 8, 2010, the company decided to revise its dividend policy from semi-annual to quarterly payments. The first such quarterly dividend of $0.15 per share was paid on July 15, 2010 to shareholders of record on July 12, 2010. Including this distribution, TEN has distributed in total $8.325 per share in dividends to its shareholders since the Company was listed on the NYSE in March of 2002. The listing price was $7.50 per share taking into account for the 2-1 share split of November 14th, 2007.


The basis of dividends will continue to target a payout ratio of 25% to 50% of net income subject to maintaining an appropriate level of liquidity as a function of a prudent and strong financial position. Each April, the Board of Directors will give consideration to the declaration of a supplementary dividend.


Subsequent events

On July 2, TEN took delivery of the Uraga Princess, the last DNA-design aframax tanker in a series of eight from Sumitomo Heavy Industries in Japan. Upon delivery, the vessel entered an up to two month redelivery voyage charter to the Mid-Atlantic basin.


In July, the Company’s 2007-built LNG carrier Neo Energy entered a 12-month time charter with a major European gas company.


In July, TEN entered into an agreement to acquire four fully coated 2009 Korean built panamax tankers from affiliated companies, sister vessels to the Selecao and Socrates already in the fleet. The first two vessels are on time charters to a major South American state affiliated oil entity at a minimum base rate with 100% upside for the Company. The charters expire in April and June 2011, respectively. The remaining two panamaxes currently operate in a spot pool and management will consider employment options upon delivery depending on prevailing market conditions. The first vessel, the World Harmony, was delivered to the Company on July 23, the second, the Chantal, is expected to be delivered on August 10 while the last two, Selini and Salamis, in the fourth quarter of this year.


In early August, the 1990-built panamax tanker Victory III was delivered to her third-party buyers at approximately book value.


Fleet strategy & outlook

The turnaround in world oil demand and the continuation of contango, albeit at lower levels from the beginning of the year, lead to an improvement in freight rates for the larger crude carriers. Such improvements, for the more optimistic, signified the end of the crude tanker recession while for others it was a cautious statement for things to come should the rebound in world economies stay largely intact. TEN falls in the latter category and remains committed to its policy of a diversified fleet with flexible employment and upside options. The cyclicality of the markets, particularly at this juncture of world recovery, merits caution and calls for prudence in both employment and growth. Cash preservation continues to be the cornerstone of TEN’s strategy as was evident in the Company’s non-restricted cash reserves this past quarter which stood at $306 million.


Looking ahead, it is becoming more evident that charterers continue to reevaluate the attractiveness of longer term charters and TEN will continue to explore all available options for the chartering of its vessels. Options that are consistent with the flexible elements that have so far enabled our fleet to perform successfully irrespective of market cycles. At the beginning of the third quarter 2010, 76% of remaining employable days are under secured revenue employment and 58% for 2011. Without taking into consideration the potential additional revenues from profit-sharing arrangements in place and assuming only the minimum rates for the remaining operating days in 2010, TEN expects to earn at least $114 million in gross revenues. For 2011, based on the same assumptions, the minimum gross revenue already secured is estimated at $145 million.


“Once again, the Company maintained its momentum at a time where markets did not display a stable sense of direction. Our vessels exhibited high utilization levels, 98.5% for the first half of the year, as demand from charterers for term employment increased,” Nikolas P. Tsakos, President and CEO of TEN stated. “With an improvement in world oil demand, an acceleration in scrapping and a disciplined newbuilding approach, our modern, versatile fleet will remain well positioned to take advantage of market upturns. Our objective remains to operate the fleet at the highest utilization levels possible, to vigorously monitor cost elements (as confirmed by the 14% quarter-over-quarter drop in operating expenses) to continue the quest of modernization and to explore sale & purchase opportunities for the benefit of both the Company and our shareholders,” Tsakos concluded.

 

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General Maritime Q2 & Six Months Results

Friday, July 30th, 2010

General Maritime Corporation (NYSE:GMR) reported its financial results for the three and six months ended June 30, 2010.


Financial Review: Second Quarter 2010

The company recorded a net loss of $14.3 million or $0.25 basic and $0.25 diluted loss per share for the three months ended June 30, 2010 compared to net income of $7.3 million or $0.13 basic and $0.13 diluted earnings per share for the three months ended June 30, 2009. The decrease in net income was primarily the result of an 18.1% decrease in TCE to $22,633 per day for the three months ended June 30, 2010 compared to $27,649 per day for the prior year period, as well as an $11.2 million increase in net interest expense to $19.0 million for the three months ended June 30, 2010 compared to $7.8 million for the prior year period.


John Tavlarios, President of General Maritime Corporation, commented, “During the second quarter of 2010 and year-to-date, we entered into several important value-creating transactions, positioning the company to grow its modern fleet, increase its earnings power and strengthen its balance sheet. With our agreement to acquire seven double-hull tankers, we capitalized on attractive asset values and expect to expand our fleet by approximately 50% on a tonnage basis and further improve our age profile. With a flexible deployment strategy, a diverse service offering and an increased presence in the favorable VLCC market, we have positioned the Company to take advantage of future tanker rate increases while achieving a level of stability in our results. As we focus on integrating the newly acquired vessels into the Company, we will continue to concentrate on providing leading international charterers with service that meets the highest operational standards.”


Net voyage revenue, which is gross voyage revenues minus voyage expenses unique to a specific voyage (including port, canal and fuel costs), decreased 13.8% to $61.0 million for the three months ended June 30, 2010 compared to $70.8 million for the three months ended June 30, 2009. This was primarily due to an increase in voyage expenses from $9.4 million for the three months ended June 30, 2009, to $30.4 million for the three months ended June 30, 2010. This increase in voyage expenses were due to higher bunker costs as well as an increase in percentage of spot market operating days for the second quarter 2010, compared to the prior year period. EBITDA for the three months ended June 30, 2010 decreased 27% to $27.0 million compared to $37.0 million for the prior year period (please see below for a reconciliation of EBITDA to net income). As of June 30, 2010 the Company’s net debt (calculated as total long term debt less cash) was $842.6 million.


Total vessel operating expenses, which are direct vessel operating expenses and general and administrative expenses, increased 1.3% from $33.2 million for the three months ended June 30, 2009 to $33.7 million for the three months ended June 30, 2010. Total vessel operating expenses is a measurement of the company’s total expenses associated with operating its vessels. Daily direct vessel operating expenses increased by 2.9% to $8,602 for the quarter ended June 30, 2010 compared to $8,359 for the prior year period. This increase was primarily due to increased costs on the VLCC vessels as well as certain Handymax and Panamax vessels whose fixed fee contracts from the prior year period expired, subjecting them to higher current market costs. Additionally, daily vessel operating expenses on certain vessels still on fixed fee contracts from the Arlington acquisition experienced annual contractual fee increases.


General and administrative costs decreased by 2.5% to $9.4 million for the quarter ended June 30, 2010 compared to $9.7 million for the prior year period. Contributing to this reduction was a decrease in personnel costs in our New York office and in operating costs of our Portugal office resulting primarily from an appreciation of the U.S. Dollar against the Euro.


Financial Review: First Half 2010

Net loss was $23.4 million or $0.41 basic and $0.41 diluted loss per share, for the six months ended June 30, 2010 compared to net income of $26.2 million, or $0.48 basic and $0.47 diluted earnings per share, for the six months ended June 30, 2009. Net voyage revenues decreased 17.4% to $126.9 million for the six months ended June 30, 2010 compared to $153.7 million for the six months ended June 30, 2009. EBITDA decreased 31% to $59.1 million for the six months ended June 30, 2010 compared to $85.7 million for the six months ended June 30, 2009. TCE rates obtained by the Company’s fleet decreased 19.7% to $23,479 per day for the six months ended June 30, 2010 from $29,227 for the prior year period. Total vessel operating expenses decreased 0.4% to $67.7 million for the six months ended June 30, 2010 from $68.0 million for the prior year period, and daily direct vessel operating expenses increased 4.2% to $8,648 for the six month period ended June 30, 2010 from $8,299 from the prior year period.


As of July 28, 2010, General Maritime Corporation’s fleet was comprised of 32 wholly owned tankers, consisting of 3 VLCC, 11 Suezmax, 12 Aframax, 2 Panamax, and 4 Products tankers, with a total carrying capacity of approximately 4.2 million deadweight tons, or dwt. The average age of the company’s fleet as of June 30, 2010 by dwt was 10.1 years compared to 9.1 years as of June 30, 2009.


As of July 28, 2010, General Maritime has 14 out of 32 vessels on time charters comprised of five Aframax, one Suezmax, two Panamax, four Handymax and two VLCC tankers. There are options to extend charters on two of the vessels, and a profit sharing arrangement on two vessels during its option period.


The company’s primary area of operation is the Atlantic basin. The Company also currently has vessels employed in the Black Sea and Far East to take advantage of market opportunities and to position vessels in anticipation of drydockings.


Metrostar Acquisition

On June 6, 2010, General Maritime Corporation announced it had agreed to acquire seven modern double hull tankers from subsidiaries of Metrostar Management Corporation. The fleet to be acquired consists of five VLCC tankers built between 2002 and 2010 and two Suezmax newbuilding tankers to be delivered in 2010 and 2011.


On June 17, 2010, General Maritime Corporation announced it had priced 30.6 million shares in a follow-on offering with gross proceeds of $206.6 million. The company announced that it intends to use the net proceeds, from the offering, of approximately $195.6 million to finance a portion of the total purchase price for the announced vessel acquisitions. Additionally, the company has entered into a senior secured credit facility Nordea Bank Finland plc and DnB NOR Bank ASA that the Company intends to use to finance 60% of the acquisition purchase price.


In the second quarter, the company paid a 10% deposit in connection with the vessel acquisitions totaling $62 million. As of July 28, 2010, the company has taken delivery of one vessel, the Genmar Zeus, with the delivery occurring on July 2, 2010. Of the remaining 6 vessels, 2 are scheduled for delivery in August 2010, 3 in Q4 2010 and 1 in April 2011.


Q2 2010 Dividend Announcement

The company announced that its Board of Directors has adopted a new dividend policy under which the company intends to declare quarterly dividends with a target amount per share of $0.08 based on the current number of shares outstanding. The declaration of dividends and their amount, if any, will depend upon the results of the Company and the determination of the Board of Directors.


The company’s Board of Directors declared a Q2 2010 quarterly dividend of $0.08 per share payable on or about September 3, 2010 to shareholders of record as of August 20, 2010. Including the Q2 2010 dividend, General Maritime has declared cumulative quarterly and special dividends of $21.95 per share.


Jeff Pribor, Chief Financial Officer of General Maritime Corporation, commented, “During the second quarter of 2010 and year-to-date period, we continued to receive strong support from both leading shipping banks and the equity capital markets, enabling the company to successfully finance our fleet expansion in a timely manner. We are also pleased to have deleveraged the company’s balance sheet during a time when we significantly increased the size of our fleet. We enter the second half of 2010 with considerable financial flexibility and remain committed to opportunistically implementing our long-term growth strategy as we continue to distribute quarterly dividends to shareholders.”

 

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Seanergy Maritime Reports Q1 Results

Monday, June 7th, 2010

Seanergy Maritime Holdings Corp. (NASDAQ: SHIP; SHIP.W) announced its operating results for the first quarter ended March 31, 2010.


Dale Ploughman, the company’s Chief Executive Officer, stated: “Our first quarter 2010 revenues were in line with our expectations driven by our secured cash flow from fleet operations and the high utilization rate of our vessels. It is an important achievement that in a tough shipping environment we continue to be profitable. We attribute this success to our customer base, which we view as very strong and established, and our operators, which we feel are highly efficient. In the first quarter 2010 we were able to reduce our daily total vessel operating expenses by 10% over the same period last year.


“In the first quarter 2010 we completed a public offering of our common stock resulting in approximately $30.0 million in proceeds, which expanded our shareholder base and enhanced the liquidity of our common stock. The offering also strengthened our cash position and our ability to pursue fleet expansion opportunities. We are pleased to announce the completion of the MCS acquisition on schedule. We view this as a strategic and transformational acquisition for Seanergy. It increases our controlled fleet to the significant size of 20 vessels while decreasing the average fleet age, and we believe it expands our revenue and profit generation capacity.


“We believe that the acquisition of MCS is accretive to our shareholders. The purchase price for the 51% ownership interest in MCS was $33.0 million and the projected adjusted EBITDA from the MCS contribution is estimated to be $23.0 million for the remainder of 2010 and $40.0 million for 2011 implying a purchase price to EBITDA multiple of 1.6 times on an annualized basis.


“In the short period of less than two years as a publicly-traded company, we have more than tripled our controlled fleet from 6 to 20 vessels and quadrupled our deadweight, in our opinion without sacrificing the strength of our balance sheet. We also believe that the timing of the MCS acquisition is optimal, as it enables Seanergy to benefit from the gradual global economic recovery with a larger and younger fleet.


“Freight rates continue to remain firm despite an uncertain market place. Currently, congestion at iron ore and coal ports is increasing due to Chinese demand on both products and India’s demand for coal which helps offset the newbuildings coming into the market. We expect the harvest season in the southern hemisphere to help sustain rates although volatility will most likely remain. We continue to remain quietly optimistic on the long term outlook for the dry bulk sector due to the robust growth especially in the Far East region and the gradual global economic recovery.”


Christina Anagnostara, the Company’s Chief Financial Officer, stated: “Our results for the first quarter 2010 correspond to a daily TCE, or time charter equivalent rate, of $18,314.


“Our cash reserves as of March 31, 2010 were $89.4 million, reflecting $7.4 million in cash generated from operations and approximately $30.0 million from our latest public offering of our common stock which were used for the acquisition of the controlling ownership interest in MCS. The purchase consideration was paid from the proceeds of our recent equity offering and our cash reserves.

We believe our strong cash position enables us to meet remaining debt repayments and anticipated capital expenditures in 2010, and we believe our healthy balance sheet allows us to take advantage of market opportunities as they become available.


“Following the MCS acquisition, our total assets will be approximately $730 million and our total debt will be approximately $430.8 million. As of June 3, 2010, our cash reserves amount to $84.5 million and the Company now operates a fleet of 20 vessels. On a combined fleet basis, we have secured under period employment 93% of ownership days in 2010, 58% for 2011, 27% for 2012 and 19% for 2013 providing us with significant cash flow visibility. As we welcome MCS as a new subsidiary we believe that this acquisition contributes significant value in the long term and allows our Company to take advantage and exploit market opportunities in Hong Kong and China, access the Chinese capital markets and subsequently expand its asset base revenue and profitability.”


First Quarter 2010 Financial Results

Net Revenues for the three month period ended March 31, 2010 decreased to $18.2 million from $26.2 million in the same quarter in 2009. This is mainly attributable to the lower market imposed time charter rates earned during the three month period ended March 31, 2010 as compared to the same period in 2009.


The company operated a fleet of 11 vessels on average during the first quarter of 2010, earning a TCE rate of $18,314 as compared to an average of six vessels and TCE rate of $51,831 during the first quarter of 2009. The decrease in TCE reflects the new time charter contracts at prevailing lower market rates.

EBITDA was $8.9 million for the three months ended March 31, 2010 as compared to $21.3 million in the same quarter in 2009. Please refer to a subsequent section of the press release for a reconciliation of net income to EBITDA and operating cash flows to EBITDA.


Operating Income amounted to $5.2 million for the three months ended March 31, 2010, as compared to an Operating Income of $13.6 million for the same quarter in 2009.


Net Income was $0.1 million, or $0.002 per basic and diluted share for the three months ended March 31, 2010, as compared to Net Income of $12.1 million, or $0.54 per basic and $0.50 per diluted share, for the same quarter in 2009, based on weighted average common shares outstanding of 49,347,837 basic and diluted for 2010, 22,361,227, basic, and 24,621,227 diluted, for 2009.

 

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