2009 Second Quarter Financial Highlights
* Operating revenues of $12.4 million
* Net income of $0.56 million, or $0.03 per diluted share
* Adjusted EBITDA of $5.7 million
* Cash flow from operations of $4.1 million
* Nine vessels were operated during the period, generating a time
charter equivalent rate of $14,437 per day
2009 Six Month Financial Highlights
* Operating revenues of $29.9 million
* Net income of $6.8 million, or $0.32 per diluted share
* Adjusted EBITDA of $17.6 million
* Cash flow from operations of $12.9 million
* Nine vessels were operated during the period, generating for a time
charter equivalent rate of $17,441 per day
PIRAEUS, Greece, Aug. 18, 2009 (GLOBE NEWSWIRE) -- 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 Handysize and Handymax vessels, today announced financial results for its second quarter and six months ended June 30, 2009.
Mr. Ion Varouxakis, President and CEO of FreeSeas, stated, "We are very pleased to have generated positive cash flow from operations and profitability in our second quarter during a difficult period in the global economy and the shipping market, and to have reported strong results for the first half of the year. Throughout 2009, FreeSeas' management team has remained focused on taking advantage of our efficient organizational structure to quickly implement initiatives that reduced our operating costs, which resulted in lower vessel operating costs for the period. We have period time charters at favorable rates on three of our nine vessels, and have been successful in consistently securing employment of our remaining vessels at profitable rates on the spot market."
Recent Financing Provided Greater Flexibility -- Agrees to Acquire New Vessel
Mr. Varouxakis continued, "As a result of FreeSeas' streamlined operating infrastructure, we have maintained our belief that the acquisition of additional tonnage at highly attractive prices in this environment would be consistent with our fleet expansion strategy. Given that many of FreeSeas' costs are fixed, such acquisitions should be expected to lower our per vessel break-even, and we expect would be immediately accretive to our earnings. Our recent capital raise positioned us to take advantage of this opportunity, and we were very pleased to announce today that we have agreed to acquire a Handysize vessel, the Free Neptune, which we expect to be delivered to the Company in the next few weeks. Furthermore, this equity infusion strengthened our balance sheet and, we believe, provided us with a distinct competitive advantage in today's overleveraged shipping environment."
Outlook for 2009
Mr. Varouxakis concluded, "We continue to see trends in our markets that lead us to believe that the ownership of Handysize vessels puts us in a unique position in the dry-bulk sector. As opposed to other asset classes, we are witnessing a net reduction in the worldwide Handysize fleet throughout 2009. As a consequence, we believe that our fleet is in a prime position to take advantage of potential market upturns as demand increases and rates improve. We believe that the completion of our recent financing and strengthened balance sheet, efficient operating infrastructure, and recent acquisition provide a positive outlook for both the immediate and long-term future."
2009 Second Quarter Financial Review
* Operating revenues for the 2009 second quarter were $12.4 million,
as compared to $15.1 million reported the same period of the prior
year. Operating revenues during the period were affected by off-
hire days relating to technical and operational occurrences during
the second quarter of 2009. The Company intends to seek to recover
a portion of this loss of revenue resulting from off-hire days,
although there can be no assurances that it will be successful in
recovering all or any portion of it. The Company's operating
revenues were also impacted by lower charter rates during the 2009
second quarter versus the 2008 period, offset by an increase in the
Company's fleet.
* Vessel operating expenses, which include crew costs, provisions,
deck and engine stores, lubricating oil, insurance, maintenance and
repairs, totaled $3.9 million, or 31.7% of revenue, for the 2009
second quarter, as compared to $4.1 million, or 27.3% of revenue,
for the same period of the prior year.
* For the second quarter of 2009, depreciation expense and
amortization of deferred charges totaled $4.3 million, as compared
to $3.2 million for the second quarter of 2008. The increase in
depreciation expenses and amortization of deferred charges
reflected primarily an increase of the fleet from an average of
approximately seven to nine vessels, which increase was offset by
an adjustment to the period over which the Company depreciates its
vessels to 28 years from 27 years.
* Income from operations for the second quarter of 2009 was $1.5
million as compared to the $5.6 million reported in the prior year
period. Net income for the second quarter of 2009 was $0.56
million, or $0.03 per diluted share based on 21.2 million diluted
weighted average number of shares outstanding, as compared to net
income of $4.2 million, or $0.19 per diluted share based on 21.7
million diluted shares outstanding, for the second quarter of 2008.
* Adjusted EBITDA for the quarter ended June 30, 2009 was $5.7
million compared to $8.7 million in the prior year quarter. A
table reconciling adjusted EBITDA to net income can be found in
footnote (1) to this release.
2009 Six Month Financial Review
* Operating revenues for the first six months of 2009 were $29.9
million, an increase of 26.0% from $23.8 million in the comparable
period of the prior year, largely due to the increase in the size
of the Company's fleet.
* Vessel operating expenses, which include crew costs, provisions,
deck and engine stores, lubricating oil, insurance, maintenance and
repairs, totaled $7.4 million, or 24.7% of revenue, for the first
half of 2009, as compared to $7.4 million, or 31.1% of revenue, for
the comparable period of the prior year. The decrease in vessel
operating expenses as a percentage of revenue is largely due to the
Company's cost-reduction initiatives.
* For the first six months of 2009, depreciation expense and
amortization of deferred charges totaled $8.9 million, as compared
to $5.3 million for the first six months of 2008. The increase in
depreciation expenses and amortization of deferred charges was
mainly due to the increase of the fleet size from an average of
approximately six to nine vessels.
* Income from operations for the first six months of 2009 was $8.8
million, an increase of 21.6% from the $7.3 million reported in the
prior year period. Net income for the first six months of 2009 was
$6.8 million, or $0.32 per diluted share based on 21.2 million
diluted weighted average number of shares outstanding, as compared
to net income of $4.5 million, or $0.21 per diluted share based on
21.9 million diluted shares outstanding, for the first half of 2008.
* Adjusted EBITDA for the first half of 2009 increased to $17.6
million from $12.5 million in the prior year period. A table
reconciling adjusted EBITDA to net income can be found in footnote
(1) to this release.
Balance Sheet and Debt Repayment Information
At June 30, 2009, FreeSeas' cash and cash equivalents were $2.1 million, total debt was $146.7 million and stockholders' equity was $127.6 million, compared to $3.4 million, $160.4 million and $120.9 million, respectively, at December 31, 2008.
These amounts do not reflect the $16.7 in net proceeds received from the Company's common stock offering in July 2009. As a result of a debt repayment made using a portion of the net proceeds, the current portion of debt as of the date of this press release has been reduced to $24.5 million. Included in the current portion of debt of $24.5 million is $10.9 million, which has been recorded as current to reflect the difference between today's vessel market value and value to loan covenant requirements coming into effect in the second quarter of 2010.
