) declared disappointing financial results for the second quarter
of 2012, which fell below the Zacks Consensus Estimates. Strong
performance of the company's majority owned deepwater oil drilling
Rig UDW Inc.
) was more than offset by tepid results of DryShips' legacy drybulk
shipping cargo division and newly formed oil tanker division.
The drybulk shipping and oil tanker segments are suffering from
over supply of ships and tankers, which reduced spot rates
significantly. 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 65.2% stake, currently has order backlog
of approximately $4.8 billion.
Quarterly GAAP net loss was $18.2 million or a loss of 5 cents
per share compared with a net loss of $114.1 million or 33 cents
per share in the prior-year quarter. However, adjusted (excluding
one-time charges) loss per share in the second quarter of 2012 was
1 cent, in contrast to the Zacks Consensus Estimate of earnings of
5 cents per share. Quarterly total revenue was $336.1 million, up
50% year over year but fell below the Zacks Consensus Estimate of
Quarterly total operating expenses were $281.8 million, up 4.2%
year over year. This was mainly due to higher drilling rigs
operating expenses, higher depreciation and amortization charges,
and higher general and administrative expenses. Operating income in
the previous quarter was $54.4 million compared with an operating
loss of $46.5 million in the prior-year quarter. In the second
quarter of 2012, adjusted EBITDA was $144.6 million compared with
$136.2 million in the prior-year quarter.
At the end of the first half of 2012, DryShips had $366.3
million of cash & cash equivalents and $4,194.8 million of
outstanding debt on its balance sheet compared with $251.1 million
of cash & 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 0.48 compared with 0.49 at the end
Drybulk Carrier Segment
Drybulk carrier segment generated $62.5 million in revenue, down
32.9% year over year. Time charter equivalent revenue was $58.6
million, down 33.2% year over year. Time charter equivalent TCE was
$18,319, down 34.5% year over year. Total voyage days per fleet
were 3,200, up 2% year over year. Management declared that 44% of
its operating days in the Drybulk segment in 2012 are at present
under fixed rate charters.
Oil Tanker Segment
Tanker segment generated $10.2 million in revenue, up by
significant 139.1% year over year. Time charter equivalent revenue
was $8.5 million, up 103.7% year over year. Time charter equivalent
TCE was $15,310, down 9.6% year over year. Total voyage days per
fleet were 552, up 125.3% year over year.
Offshore Drilling Segment
Quarterly revenue from Drilling contracts was approximately
$263.5 million, up 108.1% year over year.
We maintain our long-term Underperform recommendation
onDryShips. Currently, DryShipshas a Zacks #5 Rank, implying a
short-term Strong Sell rating on the stock.
DRYSHIPS INC (DRYS): Free Stock Analysis Report
OCEAN RIG UDW (ORIG): Free Stock Analysis
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