Financial Highlights
Q4 2009 operating revenues of $14.5 million; net loss of
$363,000, or $0.01 per share; adjusted net income of $89,000; or
$0.00 per share excluding non-cash unrealized gain from swap,
stock-based compensation expense and write-off of financing
fees
YE 2009 operating revenues of $57.5 million; net income of $6.9
million, or $0.27 per share; adjusted net income of $6.9 million;
or $0.27 per share excluding non-cash unrealized gain from swap,
stock-based compensation expense and write-off of financing
fees
FreeSeas Inc. (Nasdaq:FREE) (Nasdaq:FREEW) (Nasdaq:FREEZ)
("FreeSeas'' or the "Company''), a transporter of dry-bulk cargoes
through the ownership and operation of a fleet of eight Handysize
vessels and two Handymax vessels, announced today financial results
for its fourth quarter and year ended December 31, 2009.
Mr. Ion Varouxakis, Chairman and CEO, noted, "2009 was a
challenging year for the global economy, yet the steady increase in
daily dry bulk charter rates over the course of the year is an
indication that the overall market has stabilized and is on an
upward trend. During this economic downturn, we have maintained our
focus on operational efficiencies. We implemented several steps
during the third and fourth quarters of 2009 to improve our fleet,
which resulted in additional charges related to maintenance. While
these expenses adversely impacted our fourth quarter net income, we
anticipate that they will result in longer-term economic benefits
that will be reflected in our future results."
Mr. Varouxakis continued, "FreeSeas continued to generate
significant cash ($21.4 million from operations in 2009) and
further strengthened its balance sheet. The demonstrated cash
generating ability in these results underscore the operational
efficiency of FreeSeas' model and our belief that the Company will
benefit from the improving environment of the dry-bulk sector. Our
overall strategy continues to be the expansion of our fleet through
accretive vessel acquisitions, the development of beneficial
relationships with top-quality charterers, and the maintenance of a
strong financial position to support future growth."
Mr. Alexandros Mylonas, CFO, added, "2009 was a year of
deleveraging for the Company with net debt decreasing from $154.4
million to $128.4 million while at the same time our fleet
increased by 10% with the addition of one more vessel in July 2009,
the market value of which has significantly increased since its
acquisition. The additional vessel has lowered the fleet cash
break-even rate and is generating positive cash flows for the
Company."
Financial Highlights for the Fourth Quarter and Year End
2009
Operating revenues for the 2009 fourth quarter were $14.5
million, as compared to $20.8 million reported the same period of
the prior year. The Company's revenues for the fourth quarter of
2009 improved sequentially by $1.5 million as compared to the third
quarter of 2009, with FreeSeas achieving its highest daily revenue
for spot operated vessels in December 2009. Operating revenues for
the year ended December 31, 2009 were $57.5 million, compared to
$66.7 million in the prior year. The decrease for the fourth
quarter and year was attributable to the weaker freight market,
resulting from lower charter rates compared to 2008.
Vessel operating expenses were $5.5 million for the 2009 fourth
quarter, as compared to $4.2 million for the same period of the
prior year. The Company's daily vessel operating expenses stood at
$6,029 during the fourth quarter of 2009 compared to $5,043 in the
prior year period. The 2009 fourth quarter results include
additional maintenance upgrading on some of its vessels. The
Company continues to efficiently manage its operating expenses
while maintaining a high standard of maintenance for its vessels
which is reflected in the higher utilization rate which increased
from 91% in the fourth quarter of 2008 to 94% in the fourth quarter
of 2009.
Vessel operating expenses were $17.8 million for the year ended
December 31, 2009, as compared to $16.4 million in the prior year.
Daily vessel operating expenses were $5,218 for the year ended
December 31, 2009, as compared to $6,084 for 2008. This decrease
for the year was the result of close monitoring of vessel operating
expenses and the more efficient operation of the Company's vessels,
which is reflected in the higher utilization rate which increased
from 91% in 2008 to 97% in 2009.
For the fourth quarter of 2009, depreciation expense and
amortization of deferred charges totaled $4.6 million, as compared
to $4.6 million for the fourth quarter of 2008. For the year ended
December 31, 2009, depreciation expense and amortization of
deferred charges increased to $17.8 million, as compared to $14.1
million for 2008. The increase for the year was largely due to the
increase of our fleet size, which was partly offset by the
change in depreciation policy due to the increase of the vessels
useful life from 27 to 28 years.
Income from operations for the fourth quarter of 2009 was $1.0
million, as compared to the $8.5 million reported in the prior year
period. As a result of the lower charter rates, additional vessel
maintenance costs, and non-cash based compensation charges, the
Company reported a net loss for the fourth quarter of 2009 of
$363,000 or $0.01 diluted loss per share based on 31.2 million
diluted weighted average number of shares outstanding, as compared
to net income of $5.4 million, or $0.25 diluted earnings per share
based on 21.2 million diluted weighted average number of shares
outstanding, for the fourth quarter of 2008.
Adjusted net income for the fourth quarter of 2009, excluding
stock-based compensation expense, write-off of financing fees and
unrealized swap gains was $89,000, or $0.00 per share, as compared
to $6,362,000 or $0.30 per share for the fourth quarter of 2008.
The decrease for the fourth quarter was attributable to the weaker
freight market, resulting in lower charter rates compared to
2008.
Income from operations for 2009 was $11.5 million compared to
$26.6 million reported in the prior year period. Net income for
year ended December 31, 2009 was $6.9 million, or $0.27 diluted
earnings per share based on 25.5 million diluted weighted average
number of shares outstanding, as compared to net income of $19.2
million, or $0.91 diluted earnings per share based on 21.1 million
diluted weighted average number of shares outstanding, in the prior
year.
Adjusted net income for 2009, excluding stock-based compensation
expense, write-off of financing fees and unrealized swap gains was
$6.9 million or $0.27 per share, as compared to $21.0 million or
$1.0 per share for 2008. The decrease for the year was attributable
to the weaker freight market, resulting in lower charter rates
compared to 2008.
Adjusted EBITDA for the quarter ended December 31, 2009 was $5.7
million compared to $13.9 million in the prior year's quarter.
Adjusted EBITDA for 2009 was $30.3 million as compared to $41.3
million in the prior year. The decrease is attributable to the
weaker freight market, resulting in lower charter rates
compared to 2008. A table reconciling adjusted EBITDA to net income
can be found in footnote (1) to this release.
Balance Sheet and Debt Repayment Information
At December 31, 2009, FreeSeas' cash and cash equivalents was
$6.3 million and stockholders' equity was $144.5 million, compared
to $3.4 million and $120.9 million, respectively, at December 31,
2008. The following table outlines FreeSeas' annual debt
repayment obligations for 2010 through 2016:
Year
Amount
Upcoming Obligations by Quarter
(in 000s)
(in 000s)
2010
$15,400
Q1 2010**
$3,850
2011
$16,750
Q2 2010
$3,850
2012
$33,759*
Q3 2010
$3,850
2013
$14,350
Q4 2010
$3,850
2014
$14,350
$15,400
2015
$21,075
2016
$22,275
Total
$137,959
* Includes a balloon payment of $17.6 million, which FreeSeas
intends to refinance
** FreeSeas has already paid $2.6 million in principal as of
March 8, 2010
Fleet Employment Data
FreeSeas has entered into the following two new contracts for
M/V Free Knight and M/V Free Maverick:
The M/V Free Knight, a 1998-built, 24,111 dwt Handysize vessel,
has entered into a contract for a time charter trip of
approximately 30-40 days at a daily rate of $12,000
The M/V Free Maverick, a 1998-built, 23,994 dwt Handysize
vessel, has entered into a contract for a time charter trip of
approximately 60-110 days at a daily rate of $15,000
The combined daily charter rate for these two charters
represents an increase of $4,500 per day as compared to their prior
combined daily charter rates.
Vessel Name
Type
Built
Dwt
Employment
M/V Free Destiny
Handysize
1982
25,240
60-65 day time charter trip at $8,250 per day through March
2010
M/V Free Envoy
Handysize
1984
26,318
40-50 day time charter trip at $17,250 or $17,500 per day
through March 2010
M/V Free Goddess
Handysize
1995
22,051
40 day time charter trip at $12,000 per day through March
2010
M/V Free Hero
Handysize
1995
24,318
3-5 month time charter at $11,500 per day through February/
April 2010
M/V Free Impala
Handysize
1997
24,111
70-80 day time charter trip at $10,700 per day through April
2010
M/V Free Jupiter
Handymax
2002
47,777
Balance of time charter at $25,216 per day through February 2011
and any day in excess at $28,000 per day through May 2011
M/V Free Knight
Handysize
1998
24,111
30-40 day time charter trip at $12,000 per day through
April 2010
M/V Free Lady
Handymax
2003
50,246
Balance of time charter at $51,150 per day through June 2010
M/V Free Maverick
Handysize
1998
23,994
60-110 day time charter trip at $15,000 per day through May/
June 2010
M/V Free Neptune
Handysize
1996
30,838
45-75 day time charter trip at $16,000 per day through March
2010
*The average net charter rates per vessel realized by the
Company will depend on actual repositioning time and bunkers
consumed between successive chartering employments, as well as
potential operational off-hires. The above table is provided for
indicative purposes only, and should not to be deemed to reflect
actual operating revenues received from employment of vessels.
Conference Call with Accompanying Slide Presentation
The Company will discuss these results in a conference call
later this morning at 10:00 a.m. ET.
The dial-in numbers are:
(866) 861-6730 (U.S.)
(702) 696-4678 (INTERNATIONAL)
The conference call will also be broadcast live via the
"Investor Relations" section of FreeSeas's website at
www.freeseas.gr or interested parties can click on the following
link:
http://investor.shareholder.com/media/eventdetail.cfm?mediaid=40945&c=FREE&mediakey=86C85467C5C15536E30C5DCD52F593F5&e=0.
The Company will also have an accompanying slide presentation
available approximately 30 minutes prior to the conference
call. The webcast will be archived and accessible for
approximately 15 days if you are unable to listen to the live call.
To listen to the live call, please go to the website at least 15
minutes early to register, download and install any necessary audio
software. If you are unable to participate in the live call,
the conference call will be archived and can be accessed for
approximately 30 days.
About FreeSeas Inc.
FreeSeas Inc. is a Marshall Islands corporation with principal
offices in Piraeus, Greece. FreeSeas is engaged in the
transportation of drybulk cargoes through the ownership and
operation of drybulk carriers. Currently, it has a fleet of eight
Handysize vessels and two Handymax vessels. FreeSeas' common stock
and warrants trade on the NASDAQ Global Market under the symbols
FREE, FREEW and FREEZ, respectively. Risks and uncertainties are
described in reports filed by FreeSeas Inc. with the U.S.
Securities and Exchange Commission, which can be obtained free of
charge on the SEC's website at http://www.sec.gov. For more
information about FreeSeas Inc., please visit the corporate
website, http://www.freeseas.gr.
The FreeSeas Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5981
Forward-Looking Statements
This press release contains forward-looking statements (as
defined in Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended)
concerning future events and the Company's growth strategy and
measures to implement such strategy, including expected vessel
acquisitions. Words such as "expects,'' "intends,'' "plans,''
"believes,'' "anticipates,'' "hopes,'' "estimates,'' and variations
of such words and similar expressions are intended to identify
forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are
reasonable, no assurance can be given that such expectations will
prove to be correct. These statements involve known and unknown
risks and are based upon a number of assumptions and estimates
which are inherently subject to significant uncertainties and
contingencies, many of which are beyond the control of the Company.
Actual results may differ materially from those expressed or
implied by such forward-looking statements. Factors that could
cause actual results to differ materially include, but are not
limited to, changes in the demand for drybulk vessels; competitive
factors in the market in which the Company operates; risks
associated with operations outside the United States; and other
factors listed from time to time in the Company's filings with the
Securities and Exchange Commission. The Company expressly disclaims
any obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein to
reflect any change in the Company's expectations with respect
thereto or any change in events, conditions or circumstances on
which any statement is based.
FREESEAS INC.
PERFORMANCE INDICATORS
(All amounts in tables in thousands of United States dollars,
except for fleet data )
Three Months Ended
Year Ended
December 31, 2009
December 31, 2008
December 31, 2009
December 31, 2008
EBITDA (1)
$5,746
$13,888
$30,337
$41,296
Fleet Data:
Average number of vessels (2)
10.00
9.00
9.35
7.36
Ownership days (3)
920
828
3,414
2,688
Available days (4)
908
799
3,373
2,605
Operating days (5)
866
752
3,294
2,441
Fleet utilization (6)
94.1%
90.8%
96.5%
90.8%
Average daily results:
Average TCE rate (7)
$15,320
$25,673
$16,105
$25,719
Vessel operating expenses (8)
6,029
5,043
5,218
6,084
Management fees (9)
611
870
549
727
General and administrative expenses(10)
1,906
1,420
1,262
1,451
Total vessel operating expenses (11)
$6,640
$5,913
$5,767
$6,811
(1) EBITDA reconciliation to net income:
Adjusted EBITDA. We consider EBITDA to represent net
earnings before interest, taxes, depreciation and amortization,
amortization of deferred revenue, back log asset, gain/(loss) on
derivative instruments and stock based compensation expense. Under
the laws of the Marshall Islands, we are not subject to tax on
international shipping income. However, we are subject to
registration and tonnage taxes, which have been included in vessel
operating expenses. Accordingly, no adjustment for taxes has been
made for purposes of calculating Adjusted EBITDA. Adjusted EBITDA
is a non-GAAP measure and does not represent and should not be
considered as an alternative to net income or cash flow from
operations, as determined by U.S. GAAP, and our calculation of
Adjusted EBITDA may not be comparable to that reported by other
companies. Adjusted EBITDA is included herein because it is an
alternative measure of our liquidity performance and
indebtedness.
Three Months Ended
Year Ended
December 31, 2009
December 31, 2008
December 31, 2009
December 31, 2008
Net income (loss)
$(363)
$5,366
$6,859
$19,192
Depreciation and amortization
4,551
4,639
17,748
14,137
Amortization of deferred revenue
(260)
98
(81)
(368)
Back log asset
--
680
907
899
Stock-based compensation expense
485
25
494
107
Gain/(loss) on derivative instruments
106
1,075
111
1,456
Interest and finance cost, net
1,229
2,005
4,299
5,873
Adjusted EBITDA
$5,748
$13,888
$30,337
$41,296
Adjusted net income reconciliation to net income:
Adjusted Net Income. We consider adjusted net income to
represent net earnings before unrealized swap gains/losses, stock
based compensation expense and write off of deferred financing
fees. Adjusted Net Income is a non-GAAP measure and does not
represent and should not be considered as an alternative to net
income or cash flow from operations, as determined by
U.S. GAAP, and our calculation of Adjusted Net Income may not
be comparable to that reported by other companies. Adjusted Net
Income is included herein because it is an alternative measure of
our liquidity performance and indebtedness.
Three Months Ended
Year Ended
December 31, 2009
December 31, 2008
December 31, 2009
December 31, 2008
Net income (loss)
$(363)
$5,366
$6,859
$19,192
Stock-based compensation expense
485
25
494
107
Unrealized swap gains/losses
(144)
971
(560)
1,061
Write off of deferred financing fees
111
--
111
639
Adjusted Net Income
$89
$6,362
$6,904
$20,999
(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
Year Ended
December 31, 2009
December 31, 2008
December 31, 2009
December 31, 2008
Operating revenues
$14,533
$20,789
$57,533
$66,689
Voyage expenses and commissions
(1,266)
(1,483)
(4,483)
(3,910)
Net operating revenues
13,267
19,306
53,050
62,779
Operating days
866
752
3,294
2,441
Time charter equivalent daily rate
$15,320
$25,673
$16,105
$25,719
(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
Year Ended
December 31, 2009
December 31, 2008
December 31, 2009
December 31, 2008
Vessel operating expenses
$5,547
$4,176
$17,813
$16,354
Ownership days
920
828
3,414
2,688
Daily vessel operating expense
$6,029
$5,043
$5,218
$6,084
(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 CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE PERIODS ENDED DECEMBER 31, 2009 AND DECEMBER 31,
2008
(All amounts in tables in thousands of United States dollars,
except for share data)
For three months
ended
For three months
ended
For year
ended
For year
ended
31-Dec-09
31-Dec-08
31-Dec-09
31-Dec-08
(Unaudited)
(Audited)
(Unaudited)
(Audited)
OPERATING REVENUES
$14,533
$20,789
$57,533
$66,689
OPERATING EXPENSES:
Voyage expenses
(457)
(342)
(1,394)
(527)
Vessel operating expenses
(5,547)
(4,176)
(17,813)
(16,354)
Depreciation expense
(4,010)
(4,369)
(16,006)
(13,349)
Amortization of deferred charges
(541)
(270)
(1,742)
(788)
Management fees to a related party
(562)
(1,020)
(1,874)
(2,634)
Commissions
(809)
(1,141)
(3,089)
(3,383)
General and administrative expenses
(1,651)
(768)
(4,156)
(2,863)
Bad debt
--
(221)
--
(221)
Income (loss) from operations
$956
$8,482
$11,459
$26,570
OTHER INCOME (EXPENSE):
Interest and finance costs
$(1,229)
$(2,012)
$(4,323)
$(6,453)
Gain/(loss) on derivative instruments
(106)
(1,075)
(111)
(1,456)
Interest income
1
7
24
580
Other
15
(36)
(190)
(49)
Other income (expense)
$(1,319)
$(3,116)
$(4,600)
$(7,378)
Net income (loss)
$(363)
$5,366
$6,859
$19,192
Basic earnings (loss) per share
$(0.01)
$0.25
$0.27
$0.91
Diluted earnings (loss) per share
$(0.01)
$0.25
$0.27
$0.91
Basic weighted average number of shares
31,216,339
21,171,329
25,463,862
21,006,497
Diluted weighted average number of shares
31,216,339
21,171,329
25,463,862
21,051,963
FREESEAS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
FOR THE PERIODS ENDED DECEMBER 31, 2009 AND DECEMBER 31,
2008
(All amounts in tables in thousands of United States dollars,
except for share data)
December 31, 2009
December 31, 2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$6,341
$3,378
Restricted cash
1,750
1,095
Insurance claims
9,240
17,807
Due from related party
1,410
1,634
Inventories
601
579
Back log assets
--
907
Trade receivables, net
2,011
812
Prepayments and other
772
972
Total current assets
$22,125
$27,184
Fixed assets, net
270,701
275,405
Deferred charges, net
2,995
3,772
Restricted cash
1,500
1,500
Total non-current assets
$275,196
$280,677
Total assets
$297,321
$307,861
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Account payable
$10,746
$10,916
Accrued liabilities
1,310
11,347
Unearned revenue
416
1,320
Due to related party
18
12
Derivatives financial instruments at fair value - current
portion
566
473
Deferred revenue - current portion
1,032
--
Bank loans - current portion
15,400
26,700
Total current liabilities
$29,488
$50,768
Derivatives financial instruments at fair value - net of current
portion
684
1,337
Deferred revenue-net of current portion
138
1,251
Bank loans - net of current portion
122,559
133,650
Total long term liabilities
$123,381
$136,238
Commitments and Contingencies
--
--
SHAREHOLDERS' EQUITY:
Common stock
32
21
Additional paid-in capital
127,049
110,322
Retained earnings
17,371
10,512
Total shareholders' equity
144,452
120,855
Total Liabilities and Shareholders' Equity
$297,321
$307,861
CONTACT: FreeSeas Inc.
Alexandros Mylonas, Chief Financial Officer
011-30-210-45-28-770
Fax: 011-30-210-429-10-10
info@freeseas.gr
www.freeseas.gr
The Equity Group
Investor Relations
Adam Prior, Vice President
212-836-9606
aprior@equityny.com
www.theequitygroup.com
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