Dryships in the Red

DryShips Inc. and through its majority owned subsidiary, Ocean Rig UDW Inc., of offshore deepwater drilling services, today announced its unaudited financial and operating results for the fourth quarter ended December 31, 2014.

Fourth Quarter 2014 Financial Highlights

For the fourth quarter of 2014, the Company reported a net loss of $24.0 million, or $0.04 basic and diluted loss per share.
Included in the fourth quarter 2014 results is an impairment charge on one drybulk vessel, of $38.1 million, or $0.06 per share.

Excluding this item, the Company’s net results would have amounted to a net income of $14.1 million, or $0.02 per share. ([1])
The Company reported Adjusted EBITDA of $298.7 million for the fourth quarter of 2014, as compared to $179.8 million for the fourth quarter of 2013. ([2])

Year Ended December 31, 2014 Financial Highlights

For the year ended December 31, 2014, the Company reported a net loss of $47.5 million, or $0.11 basic and diluted loss per share.
Included in the year ended December 31, 2014 results are:
 -       Impairment charge on one drybulk vessel, of $38.1 million, or $0.08 per share.
 -       Non-cash write-offs and redemption costs associated with the full refinancing of Ocean Rig's $500.0 million 9.5% senior unsecured notes  due 2016, totaling $32.6 million or $0.07 per share.
 -       Non-cash write offs and breakage costs associated with the full refinancing of Ocean Rig's $1.35 billion Senior Secured Credit Facility,  totaling $22.0 million or $0.05 per share.

Excluding the above items, the Company would have reported a net income of $23.0 million, or $0.05 per share. (1)

The Company reported Adjusted EBITDA(2) of $1,048.3 million for the year ended December 31, 2014, as compared to $597.0 million for the year ended December 31, 2013.
(1) The net result is adjusted for the minority interests of 40.69% not owned by DryShips Inc. common stockholders.
(2) Adjusted EBITDA is a non-GAAP measure;

Recent Highlights

-          On February 24, 2015, Ocean Rigs’ Board of Directors declared a quarterly cash dividend with respect to the quarter ended December 31, 2014, of $0.19 per common share, to Ocean Rig shareholders of record as of March 10, 2015 and payable on or about March 23, 2015.

George Economou, Chairman and Chief Executive Officer of the Company, commented, “We are pleased to announce another quarter of positive operating results returning the company to full-year profitability excluding non-cash items.

“Our results were driven by another excellent quarter by Ocean Rig who continues to execute on its business plan with high operating utilization. While the short-term outlook for the industry is not as bright as it was a year ago, Ocean Rig with it’s modern fleet, solid contract backlog and strong balance sheet is well positioned not only to weather the storm but also to take advantage of distressed opportunities as they arrive.

“The drybulk market remains challenging but we feel that we are getting closer to the bottom with each passing day as the increased scrapping activity of older vessels this year indicates. With no newbuildings on order, Dryships is better positioned than most of its peers in this downturn and with its large amount of spot market exposure is uniquely placed to take advantage of any increase in freight rates.

“Lastly, turning to the crude tanker markets, the fundamentals for 2015 remain extremely bullish. Our fourth quarter results include only in a limited way the stronger freight market that started since last November, which will be more fully reflected in our first quarter results. With few newbuilding deliveries and healthy demand driven by the lower oil price, the strong tanker market should extend well into 2016.”

Financial Review: 2014 Fourth Quarter

The Company recorded net loss of $24.0 million, or $0.04 basic and diluted loss per share, for the three-month period ended December 31, 2014, as compared to a net loss of $24.4 million, or $0.06 basic and diluted loss per share, for the three-month period ended December 31, 2013. Adjusted EBITDA(1) was $298.7 million for the fourth quarter of 2014, as compared to $179.8 million for the same period in 2013.

For the drybulk carrier segment, net voyage revenues (voyage revenues minus voyage expenses) amounted to $46.1 million for the three-month period ended December 31, 2014, as compared to $45.4 million for the three-month period ended December 31, 2013. For the tanker segment, net voyage revenues amounted to $23.9 million for the three-month period ended December 31, 2014, as compared to $11.9 million for the same period in 2013. For the offshore drilling segment, revenues from drilling contracts increased by $153.9 million to $499.4 million for the three-month period ended December 31, 2014, as compared to $345.5 million for the same period in 2013.

Total vessels’, drilling rigs’ and drillships’ operating expenses and total depreciation and amortization increased to $225.4 million and to $116.3 million, respectively, for the three-month period ended December 31, 2014, from $166.7 million and $96.5 million, respectively, for the three-month period ended December 31, 2013. Total general and administrative expenses decreased to $54.6 million in the fourth quarter of 2014, from $57.1 million during the same period in 2013.

Interest and finance costs, net of interest income, amounted to $87.7 million for the three-month period ended December 31, 2014, compared to $75.8 million for the three-month period ended December 31, 2013.

The Time Charter Equivalent(2) , or TCE, rate for our drybulk fleet was $12,974 per day per vessel in the three month period ended December 31, 2014, as compared to $13,303 per day per vessel in the corresponding period of 2013.  The Time Charter Equivalent, or TCE, rate for our tanker fleet was $26,003 per day per vessel in the three month period ended December 31, 2014 which is a significant improvement compared to the $12,963 per day per vessel TCE rate in the corresponding period of 2013.

(1) Adjusted EBITDA is a non-GAAP measure; please see later in this press release for reconciliation to net income.
(2) Time Charter Equivalent is a non-GAAP measure; please see later in this press release for definition.