DryShips Inc. (NASDAQ:DRYS)
DryShips Inc. (NASDAQ:DRYS)’ second-quarter results matched analysts’ estimates. Yet that’s nothing to write home about, since analysts didn’t really expect to see a great income statement in the first place.
The company reported a net loss of $18.2 million, or $0.05 a share. Net voyage revenues from its tanker segment increased slightly to $9.1 million, but revenues from its dry bulk division marked an almost 28% year-over-year drop. Ocean Rig – DryShips Inc. (NASDAQ:DRYS)’ arm in the offshore drilling business – delivered revenue of roughly $260 million, just $3.7 million less than it did last year.
George Economou, the company’s CEO, does not expect to see any positive developments in charter rates for the remainder of 2013. Instead, he remains focused on reducing break-even levels. From where I stand, things look pretty awful for this company. It had to restructure some of its debt agreements and pledge an aggregate of 5,450,000 of its Ocean Rig shares as a guarantee. But it’s still drowning in debt, and unable to stop its cash-bleeding.
Clearly, there are challenges ahead from DryShips Inc. (NASDAQ:DRYS). Let’s say it weathers the storm and eventually emerges as a winner from an industry recovery. Even so, I can’t help but wonder what investors make of certain agreements the company has signed over the past few years.
For instance, Vivid Finance, a private financial advisory firm controlled by Economou, provides consulting services to DryShips Inc. (NASDAQ:DRYS). For the years ended Dec. 31, 2012, 2011, and 2010, total charges from Vivid amounted to $14.2 million, $6.0 million, and $1.7 million, respectively. Also, up until the end of 2010, DryShips Inc. (NASDAQ:DRYS)’ day-to-day vessel and chartering operations were run by Cardiff Marine, another company affiliated with Economou. In January 2011, Cardiff was replaced by TMS Bulkers … which is also owned by Economou.
Final thoughts
It was undeniably a rough quarter for Greek shippers. Excel Maritime, the operator of 38 dry bulk carriers, didn’t make it. Last month, it filed for bankruptcy protection . Obviously, it’s not “buying season” yet. But if I were to gamble on a shipper right now, I’d probably choose Navios Maritime Partners L.P. (NYSE:NMM), mainly because I pin my hopes on Angeliki Frangou’s management skills.
When will this industry finally escape the doldrums? Lately, there’s been an upswing in the Baltic Dry Index – the barometer that gauges the cost of shipping dry bulk commodities around the globe, and the industry’s key health indicator. Nevertheless, shipping companies’ No. 1 problem – the oversupply of tonnage that keeps pushing down charter rates — is not going away anytime soon, especially after this year’s whopping ordering activity.
The article Greek Shippers Brave Stormy Seas in Q2 originally appeared on Fool.com and is written by Fani Kelesidou.
Fani Kelesidou has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
