) declared disappointing financial results for the third quarter
of 2012. Strong performance of the company's majority owned
deepwater oil drilling unit
Rig UDW Inc.
) was more than offset by tepid results of DryShips' legacy
drybulk shipping cargo division and newly formed oil tanker
The drybulk shipping and oil tanker segments are suffering
from over supply of ships and tankers, which reduced spot rates
to historic low levels. Sometimes the spot rates were even below
the cash breakeven rates. However, the deepwater oil drilling
segment is currently witnessing shortages of rigs throughout the
world, as the energy companies have raised their level of
production. Ocean Rig, in which DryShips controls 65% stake,
currently has an order backlog of approximately $4.5 billion over
the next three years.
Quarterly GAAP net loss was $51.3 million or a loss of 13
cents per share compared to a net income of $25 million or 7
cents per share in the prior-year quarter. However, adjusted
(excluding one-time charges) loss per share in the third quarter
of 2012 was 9 cents, in contrast to the Zacks Consensus Estimate
of a breakeven per share. Quarterly total revenue was $343.6
million, up 8% year over year and just managed to surpass the
Zacks Consensus Estimate of $342 million.
Quarterly total operating expenses were $307 million, up 46%
year over year. This was mainly due to higher drilling rigs
operating expenses, higher voyage expenses, higher depreciation
and amortization charges, and higher general and administrative
expenses. Operating income in the previous quarter was $36.6
million compared with an operating income of $107.8 million in
the prior-year quarter. In the third quarter of 2012, adjusted
EBITDA was $141 million compared with $172.9 million in the
At the end of the third quarter of 2012, DryShips had $986.8
million of cash & cash equivalents and $4,453.5 million of
outstanding debt on its balance sheet compared with $251.1
million of cash and cash equivalents and $4,241.8 million of
outstanding debt at the end of 2011. At the end of the reported
quarter, debt-to-capitalization ratio was 0.52 compared with 0.49
at the end of 2011.
Drybulk Carrier Segment
Drybulk carrier segment generated $46.9 million in revenue,
down 47.1% year over year. Time charter equivalent revenue was
$41.1 million, down 51.9% year over year. Time charter equivalent
TCE was $12,727, down 52.4% year over year. Total voyage days per
fleet were 3,233, up 1.1% year over year. Management declared
that just 33% of calendar days in the Drybulk segment in 2013 and
22% in 2014 are at present under fixed rate charters.
Oil Tanker Segment
Tanker segment generated $11.1 million in revenue, up by a
significant 226.4% year over year. Time charter equivalent
revenue was $9 million, up 174.5% year over year. Time charter
equivalent TCE was $13,978, down 17.7% year over year. Total
voyage days per fleet were 644, up 131.7% year over year.
Offshore Drilling Segment
Quarterly revenue from Drilling contracts was approximately
$285.7 million, up 26.4% year over year.
We maintain our long-term Underperform recommendation
onDryShips. Currently, DryShipshas a Zacks # 3 Rank, implying a
short-term Hold rating on the stock.
DRYSHIPS INC (DRYS): Free Stock Analysis
OCEAN RIG UDW (ORIG): Free Stock Analysis
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