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FreeSeas announces 2009 results

FreeSeas announces 2009 results
FreeSeas Inc., a transporter of dry-bulk cargoes through the ownership and operation of a fleet of eight Handysize vessels and two Handymax vessels, announced yesterday financial results for its fourth quarter and year ended December 31, 2009.

FreeSeas Announces 2009 Fourth Quarter and Year End Financial Results.

FreeSeas Inc., a transporter of dry-bulk cargoes through the ownership and operation of a fleet of eight Handysize vessels and two Handymax vessels, announced yesterday financial results for its fourth quarter and year ended December 31, 2009. Mr. Ion Varouxakis, Chairman and CEO, noted, "2009 was a challenging year for the global economy, yet the steady increase in daily dry bulk charter rates over the course of the year is an indication that the overall market has stabilized and is on an upward trend. During this economic downturn, we have maintained our focus on operational efficiencies. We implemented several steps during the third and fourth quarters of 2009 to improve our fleet, which resulted in additional charges related to maintenance. While these expenses adversely impacted our fourth quarter net income, we anticipate that they will result in longer-term economic benefits that will be reflected in our future results."

Mr. Varouxakis continued, "FreeSeas continued to generate significant cash ($21.4 million from operations in 2009) and further strengthened its balance sheet. The demonstrated cash generating ability in these results underscore the operational efficiency of FreeSeas' model and our belief that the Company will benefit from the improving environment of the dry-bulk sector. Our overall strategy continues to be the expansion of our fleet through accretive vessel acquisitions, the development of beneficial relationships with top-quality charterers, and the maintenance of a strong financial position to support future growth."

Mr. Alexandros Mylonas, CFO, added, "2009 was a year of deleveraging for the Company with net debt decreasing from $154.4 million to $128.4 million while at the same time our fleet increased by 10% with the addition of one more vessel in July 2009, the market value of which has significantly increased since its acquisition. The additional vessel has lowered the fleet cash break-even rate and is generating positive cash flows for the Company."

Financial Highlights for the Fourth Quarter and Year End 2009.

Operating revenues for the 2009 fourth quarter were $14.5 million, as compared to $20.8 million reported the same period of the prior year.

The Company's revenues for the fourth quarter of 2009 improved sequentially by $1.5 million as compared to the third quarter of 2009, with FreeSeas achieving its highest daily revenue for spot operated vessels in December 2009. Operating revenues for the year ended December 31, 2009 were $57.5 million, compared to $66.7 million in the prior year. The decrease for the fourth quarter and year was attributable to the weaker freight market, resulting from lower charter rates compared to 2008.

Vessel operating expenses were $5.5 million for the 2009 fourth quarter, as compared to $4.2 million for the same period of the prior year. The Company's daily vessel operating expenses stood at $6,029 during the fourth quarter of 2009 compared to $5,043 in the prior year period. The 2009 fourth quarter results include additional maintenance upgrading on some of its vessels. The Company continues to efficiently manage its operating expenses while maintaining a high standard of maintenance for its vessels which is reflected in the higher utilization rate which increased from 91% in the fourth quarter of 2008 to 94% in the fourth quarter of 2009.

Vessel operating expenses were $17.8 million for the year ended December 31, 2009, as compared to $16.4 million in the prior year. Daily vessel operating expenses were $5,218 for the year ended December 31, 2009, as compared to $6,084 for 2008. This decrease for the year was the result of close monitoring of vessel operating expenses and the more efficient operation of the Company's vessels, which is reflected in the higher utilization rate which increased from 91% in 2008 to 97% in 2009.

For the fourth quarter of 2009, depreciation expense and amortization of deferred charges totaled $4.6 million, as compared to $4.6 million for the fourth quarter of 2008. For the year ended December 31, 2009, depreciation expense and amortization of deferred charges increased to $17.8 million, as compared to $14.1 million for 2008. The increase for the year was largely due to the increase of our fleet size, which was partly offset by the change in depreciation policy due to the increase of the vessels useful life from 27 to 28 years.

Income from operations for the fourth quarter of 2009 was $1.0 million, as compared to the $8.5 million reported in the prior year period. As a result of the lower charter rates, additional vessel maintenance costs, and non-cash based compensation charges, the Company reported a net loss for the fourth quarter of 2009 of $363,000 or $0.01 diluted loss per share based on 31.2 million diluted weighted average number of shares outstanding, as compared to net income of $5.4 million, or $0.25 diluted earnings per share based on 21.2 million diluted weighted average number of shares outstanding, for the fourth quarter of 2008.

Adjusted net income for the fourth quarter of 2009, excluding stock-based compensation expense, write-off of financing fees and unrealized swap gains was $89,000, or $0.00 per share, as compared to $6,362,000 or $0.30 per share for the fourth quarter of 2008. The decrease for the fourth quarter was attributable to the weaker freight market, resulting in lower charter rates compared to 2008.

Income from operations for 2009 was $11.5 million compared to $26.6 million reported in the prior year period. Net income for year ended December 31, 2009 was $6.9 million, or $0.27 diluted earnings per share based on 25.5 million diluted weighted average number of shares outstanding, as compared to net income of $19.2 million, or $0.91 diluted earnings per share based on 21.1 million diluted weighted
average number of shares outstanding, in the prior year.

Adjusted net income for 2009, excluding stock-based compensation expense, write-off of financing fees and unrealized swap gains was $6.9 million or $0.27 per share, as compared to $21.0 million or $1.0 per share for 2008. The decrease for the year was attributable to the weaker freight market, resulting in lower charter rates compared to 2008.

Adjusted EBITDA for the quarter ended December 31, 2009 was $5.7 million compared to $13.9 million in the prior year's quarter. Adjusted EBITDA for 2009 was $30.3 million as compared to $41.3 million in the prior year. The decrease is attributable to the weaker freight market, resulting in lower charter rates compared to 2008.

www.turkishmaritime.com.tr

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