DryShips Inc. (DRYS) Shares Tumble on Back of 3Q:17 Results


DryShips (NASDAQ:DRYS) just announced its third-quarter earnings results that failed to live up to Wall Street’s expectations. The stock is down nearly 10% in after-hours trading Tuesday.

Earnings

Cash on Hand: The company’s cash position is getting tight. As of November 20, 2017, the company had approximately $25.9 million in cash and cash equivalents versus $77.2 million on August 30, 2017.

Book Value of Vessels: At Q3 2017, the company’s book value of its vessels is approximately $786.5 million. The company strengthened its balance sheet through major dilution and reverse splits.

Debt: As of Q3 2017, the company had an outstanding debt of $185.5 million – $25 million lower than at the end of Q2.

Revenue: The company generated $29.9 million in total revenue in Q3 2017, versus $16.4 million in Q2:17.

Operating Margin: The revenue was $29.9 million versus $17.1 million in vessel operating expenses alone. When we include the other expenses, the company posted a net loss of $18 million.

Recent Developments

  • Credit Facility with Sierra Investments Inc.

    Following the closing of the previously announced, $100.0 million private placement and $100.0 million rights offering, on October 25, 2017, the Company’s credit facility with Sierra Investments Inc., an entity affiliated with Mr. George Economou, the Company’s Chairman and Chief Executive Officer, with an outstanding balance of approximately $73.8 million, was refinanced with a new loan facility secured by assets, and which has a loan to value ratio of 50%, a tenor of 5 years, no amortization and a margin of LIBOR plus 4.5%. No arrangement fees or otherwise were charged in connection with the refinancing.

  • Appointment of new director

    Mr. George Kokkodis was appointed to the Board of the Company as of November 21, 2017. From 2009 to January 2015, Mr. Kokkodis has been an Independent Business Introducer and Independent Client Advisor of financial investments at BNP Paribas (Suisse) SA, where he was a Senior Private Banker from 2003 to 2009 and the Head of the Greek Private Banking Desk at BNP Paribas London from 1999 to 2003. From 1998 to 1999, Mr. Kokkodis served as Vice President of Private Banking at Merrill Lynch International Bank, London UK and, from 1996 to 1998 held the same position at Merrill Lynch Bank Suisse S.A. Prior to that, Mr. Kokkodis was Vice President of Private Banking at Bankers Trust International PLC, London UK from 1993 to 1996. Mr. Kokkodis holds a Bachelor of Science in Aeronautical Engineering from the Imperial College of Science and Technology and a Master of Science in Aeronautical Engineering from the University of Glasgow. Mr. Kokkodis was a member of the board of directors of MIG Real Estate from April 2011 to September 2015. Mr. Kokkodis was a member of the board of directors of Ocean Rig UDW Inc. from September 2015 to November 2017.

    Following the appointment of Mr. Kokkodis, the Company’s Board of Directors is now comprised of six directors, four of whom are considered independent under the NASDAQ rules.

DryShips engages in ocean transportation services for drybulk and petroleum cargoes. The company operates its business through three segments: Drybulk and Offshore support. The Drybulk segment provides drybulk commodities transportation services for the steel, electric utility, construction and agri-food industries, which consists transportation and handling of Drybulk cargoes through ownership and trading of vessels. The Offshore Support segment consists of offshore support services to the global offshore energy industry through the operation of a diversified fleet of offshore support vessels.

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