DryShips Inc.(DRYS) declared its first quarter 2011 financial results after the market closed yesterday. Quarterly results failed to beat the Zacks Consensus Estimate. In the after-market trade on NASDAQ, shares of DryShips plunged 8 cents (1.71%) to $4.60.
Quarterly GAAP net income was $25.8 million or 7 cents per share compared with a net income of $13.3 million or 4 cents per share in the prior-year quarter, while adjusted earnings per share (EPS) in the first quarter of 2011 were 15 cents, missing the Zacks Consensus Estimate of 17 cents.
Quarterly total revenue was $207.4 million, up 6.8% year over year but was well below the Zacks Consensus Estimate of $246 million. Quarterly Voyage revenue was $98.1 million, down 13.9% year over year. Revenue from Drilling contracts was approximately $109.3 million, up 36.1% year over year. Quarterly Time charter equivalent revenue (Voyage revenue less Voyage expense) was $90.5 million, down 15.3% year over year.
Quarterly total operating expenses were $62.9 million, up 29.9% year over year. This was mainly due to higher vessel operating expense and higher drilling rigs operating expenses. Operating income in the first quarter of 2011 was $56.4 million, down 24.9% year over year.
In the first quarter of 2011, adjusted EBITDA (excluding gain/loss from interest rate swaps) was $107.1 million compared with $116.5 million in the prior-year quarter.
At the end of first quarter of 2011, DryShips had $129.5 million of cash & cash equivalents and $1,992.4 million of outstanding debt on its balance sheet compared with $391.5 million of cash & cash equivalents and $1,988.5 million of outstanding debt at the end of fiscal 2010. At the end of first quarter of 2011, debt-to-capitalization ratio was 0.34 compared with 0.34 at the end of fiscal 2010.
Operating Metrics
In the first quarter of 2011, average number of vessels at DryShips was 36.8 vessels compared with 37.6 in the prior-year quarter. Quarterly total voyage days for vessels were 3,268 compared with 3,314 in the year-ago quarter. Total calendar days for vessels were 3,314 compared with 3,384 in the year-ago quarter. Quarterly Fleet utilization was 98.6% versus 98.0% in the year-ago quarter. Time charter equivalent TCE was $27.7 million versus $32.25 million in the prior-year quarter. Vessel operating expense (daily) was $5,794 versus $5,691 in the prior-year quarter.
Recommendation
DryShips fiercely competes with other drybulk carriers, such as Diana Shipping Inc. (DSX) and Excel Maritime Carriers Ltd. (EXM).
We maintain our long-term Underperform recommendation on DryShips. Currently, DryShips has a Zacks #5 Rank, implying a short-term Strong Sell rating on the stock.
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