TBS International plc (NASDAQ: TBSI) announced today its financial
and operating results for the first quarter ended March 31, 2011.
First Quarter Ended March 31, 2011 Highlights:
---------- ----------
Metric Q1 2011 Q1 2010
------ ---------- ----------
Revenue (thousands) $ 89,827 $ 100,069
Net (loss) attributable to TBS International plc
(thousands) $ (16,668) $ (7,843)
Net (loss) per ordinary share (basic and diluted) $ (0.54) $ (0.26)
Weighted average ordinary shares outstanding (basic
and diluted) 30,891,916 29,887,632
EBITDA (thousands) (1) $ 11,340 $ 23,246
Drydock Days 187 73
Freight Voyages
---------- ----------
Metric Q1 2011 Q1 2010
---------- ----------
Average Daily Voyage TCE $ 11,147 $ 14,511
Freight Voyage Days 2,759 2,804
Revenue tons carried for all cargoes (thousands) 2,836 2,674
Average Freight Rate for all cargoes $ 24.49 $ 27.81
Average Freight Rate for other than aggregate
cargoes $ 49.77 $ 52.84
Time Charter Out Voyages
Average Daily Time Charter TCE $ 12,063 $ 16,299
Time Charter Days 1,490 1,337
(1) EBITDA is a non-GAAP financial measure. Please refer to "Non-GAAP
Reconciliations-EBITDA" following the financial statements included in
this press release for a reconciliation of EBITDA to Net Loss.
Management Commentary:
Ferdinand V. Lepere, Senior Executive Vice President and Chief
Financial Officer, commented:
"The weakening freight and charter rate environment that began
in the second half of 2010 continued into early 2011, and adversely
affected our revenues and our ability to maintain financial ratios
as required by our credit facilities.
"Our lenders, as previously announced on April 18, 2011, agreed
to modify our financial covenants through December 31, 2011,
reducing the minimum consolidated interest charges coverage ratio
for the fiscal quarters ending June 30, 2011 through December 31,
2011 from 3.35 to 1.00 to 2.50 to 1.00. In addition, the
modifications increased the maximum consolidated leverage ratio for
the same periods from 4.00 to 1.00 to 5.10 to 1.00, and reduced the
minimum cash requirement from $15 million to $10 million for the
period from July 1, 2011 to December 31, 2011.
"We expect that these amendments will allow us to remain in
compliance with our various credit facilities through December 31,
2011. After December 31, 2011, financial covenant requirements will
revert back to the levels set in the January 28, 2011 credit
agreement amendments. Unless the Baltic Dry Index and the freight
and charter rates that we obtain strengthen significantly in the
near future, it is likely that after December 31, 2011 we would
fail to meet the tests under certain of our financial covenants.
Our lenders have agreed to enter into further negotiations at that
time, if necessary, to seek further modifications of those
financial covenants. The ability to make the cash payment later in
the year and maintain our minimum cash requirement of $10 million
is contingent on obtaining additional funding. Failure to meet any
of the financial covenants or our inability to obtain a waiver of
such future covenant violations would continue to raise substantial
doubt about our ability to continue as a going concern. At March
31, 2011, we were in compliance with all the financial covenants
relating to our debt as amended on January 28, 2011.
"At the end of first quarter 2011, our net debt to
capitalization ratio was 53.9%, and our cash balance, excluding
restricted cash, was approximately $18.4 million. In connection
with our newbuilding program, for the first quarter 2011, we paid
$6.2 million from our restricted cash deposit to the shipyard.
"Under our newbuilding program, we have taken delivery of five
of six newbuildings. During the first quarter of 2011, we took
delivery of two of those five vessels and the final vessel is
scheduled to deliver during the second quarter of 2011. These
34,000 dead weight ton ("dwt") vessels are a larger vessel class
and their addition to our fleet will be a significant milestone in
the implementation of our business plan to modernize and expand our
fleet.
"During first quarter 2011, we continued our drydocking program
and drydocked five vessels, including one vessel which entered into
drydock during the fourth quarter of 2010, for a total of 187
days."
First Quarter 2010 Results:
For the first quarter ended March 31, 2011, total revenues were
$89.8 million, a decrease of 10.3% compared to total revenues of
$100.1 million for the same period in 2010. Net Loss for the first
quarter 2011 was $16.7 million, an increase of $8.9 million
compared to the Net Loss of $7.8 million for the same period in
2010. Loss per ordinary share on a basic and diluted basis was
$0.54 in the first quarter of 2011, calculated based on 30,891,916
shares, compared to a loss of $0.26 for the first quarter of 2010,
calculated based on 29,887,632 shares.
EBITDA, which is a non-GAAP measure, decreased to $11.3 million
for the quarter ended March 31, 2011 from $23.2 million in the same
period in 2010. Please see "Non-GAAP Reconciliations - EBITDA"
following the financial statements in this press release for a
reconciliation of EBITDA to Net Loss.
Revenues:
Total revenues for the first quarter 2011 were $89.8 million,
which included voyage revenues of $69.4 million, time charter
revenues of $19.2 million, logistics revenue of $0.2 million, and
other revenues of $1.0 million.
An average of 47 vessels (excluding off-hire) were operated
during the first quarter 2011 compared to 46 vessels (excluding
off-hire) during the same period 2010.
Voyage Revenues:
Voyage revenues for the quarter ended March 31, 2011 were $69.4
million, a decrease of $5.0 million, or 6.7%, from $74.4 million
for the same period in 2010. The decrease in voyage revenue for the
first quarter 2011, as compared to the same period in 2010, was
primarily due to a decrease in freight rates. Overall average
freight rates for all cargoes decreased $3.32 per ton, or 11.9%, to
$24.49 per ton for the first quarter ended March 31, 2011, as
compared to $27.81 per ton for the same period in 2010.
Average freight rates excluding aggregates decreased by $3.07
per ton or 5.8%, to $49.77 per ton for the first quarter 2011 from
$52.84 per ton for the same period in 2010. During the first
quarter there was a weakening of freight rates for fertilizers,
steel products, bulk cargo and concentrate cargoes; however,
freight rates for agricultural products, which is one of the larger
cargo groups that the Company transports, remained comparable to
the 2010 first quarter levels.
Average freight rates for aggregate cargoes increased $0.04 per
ton or 0.6%, to $6.24 per ton for the first quarter 2011, as
compared to $6.20 per ton for the same period in 2010.
Revenue tons carried increased 162,000 tons, or 6.1%, to
2,836,000 tons for the first quarter ended March 31, 2011 as
compared to 2,674,000 revenue tons for the same period in 2010,
which can be attributed to an increase in the number of aggregate
voyages in the first quarter of 2011. The decrease in non-aggregate
revenue tons carried of approximately 50,000 tons was led primarily
by lower agricultural products.
Average Daily Voyage Time Charter Equivalent, which is a
standard industry metric reflecting the daily net earnings of a
voyage after deducting all voyage expenses from voyage revenues,
was $11,147 per day for the first quarter of 2011, a decrease of
23.2% from $14,511 during the same period in 2010.
Time Charter Revenues:
Time charter revenues decreased by $3.7 million or 16.2%, to
$19.2 million for the first quarter ended March 31, 2011 from $22.9
million for the same period in 2010. The decrease was primarily due
to lower average charter hire rates, which decreased by $4,264 per
day to $12,866 for the first quarter of 2011 from $17,130 for the
same period in 2010.
Average Daily Time Charter Equivalent, which is a standard
industry metric reflecting time charter-out revenues during the
period reduced by commissions, was $12,063 per day for the first
quarter 2011, a decrease of 26.0% from $16,299 for the same period
in 2010. The decrease in the average charter hire rate per day is
reflective of the continued weakness of the global dry cargo
shipping markets.
Expenses:
Total operating expenses for the first quarter ended March 31,
2011 decreased by $3.2 million or 3.1%, to $99.1 million as
compared to $102.3 million for the same period in 2010.
Voyage expenses, which include fuel costs, commissions, port
call charges, stevedoring and other cargo-related expenses,
increased by $3.7 million, or 10.6%, to $38.5 million for the first
quarter ended March 31, 2011, as compared to $34.8 million for the
same period in 2010. The increase was principally due to an
increase in fuel expense, port call expenses and miscellaneous
voyage expense off-set by a decrease in commission expense.
Vessel expenses, which consist of operating expenses relating to
owned and controlled vessels, such as crewing, stores, repairs and
maintenance, insurance and charter hire fees for vessels that are
chartered-in, increased by $3.9 million, or 14.0%, to $31.7 million
for the first quarter ended March 31, 2011 as compared to $27.8
million for the same period in 2010. The primary cause for the
increase was the addition in 2011 of three Brazilian flagged ships.
In addition, chartered in-vessel expense and space chartered
expenses increased. During the first quarter ended March 31, 2011,
in order to meet customer needs, the Company chartered-in vessels
for total of 305 days and transported cargo under six space
charters.
Depreciation and amortization expense decreased by $6.2 million,
or 24.3%, to $19.3 million for the first quarter ended March 31,
2011, compared to $25.5 million for the same period in 2010, mainly
due to lower vessel book values resulting from a $201.7 million
impairment adjustment made at the end of 2010.
General and administrative expenses decreased by $2.7 million,
or 21.8%, to $9.7 million for the first quarter of 2011, as
compared to $12.4 million for the same period in 2010, due to lower
compensation costs. Compensations costs for the three months ended
March 2010 included $2.5 million in amortization of shares vesting
in the second quarter of 2010 that were awarded as a noncash bonus
to employees. No similar share grant was made in 2011.
Interest expense increased by $2.2 million for the three months
ended March 31, 2011 as compared to the same period in 2010 due to
several factors, including higher borrowings due to the larger size
of our fleet following the delivery of the additional three
newbuildings, additional financing costs related to 3rd party
transaction fees incurred in connection with the January 28, 2011
debt restructuring and higher interest rates paid to some of our
lenders.
Financial Covenant Modification
On April 18, 2011, the Company and its various lender groups
agreed to modify certain financial covenants through December 31,
2011. Pursuant to the new modifications, the minimum consolidated
interest charges coverage ratio has been reduced for the fiscal
quarters ending June 30, 2011 through December 31, 2011 from 3.35
to 1.00 to 2.50 to 1.00. In addition, the modifications increased
the maximum consolidated leverage ratio for the same periods from
4.00 to 1.00 to 5.10 to 1.00, and reduced the minimum cash
requirement from $15 million to $10 million for the period July 1,
2011 to December 31, 2011. After December 31, 2011, financial
covenant requirements will revert back to the levels set in the
January 28, 2011 credit agreement amendments.
Unless the Baltic Dry Index, and in particular the freight and
charter rates that we are able to obtain, strengthen significantly
in the near future, we will need to raise additional funds in order
to be able to make the principal repayments due September 30, 2011
and continue to comply with the minimum liquidity covenant.
Freight and charter rates will need to strengthen significantly
in the near future or we will fail to meet the financial covenants
after December 31, 2011. Prior to that time we will need to enter
into negotiations with our lenders to seek modifications of the
financial covenants. Failure to meet any of the financial covenants
or our inability to obtain a waiver of such future covenant
violations would continue to raise substantial doubt about our
ability to continue as a going concern.
Fleet Developments:
The TBS program to construct six "Roymar Class" 34,000 dwt
multipurpose tweendecker vessels proceeded with the delivery of
three vessels between September 2009 and December 2010. On January
5, 2011 and February 22, 2011, TBS took delivery of the M/V Omaha
Belle and the M/V Comanche Maiden, respectively, the fourth and
fifth vessels in the series for a purchase price of $35.4 million
each. The Company expects to take delivery of the sixth vessel in
the second quarter of 2011.
With the delivery of these vessels, TBS's operational fleet
expanded to 51 vessels with an aggregate of 1.55 million dwt,
consisting of 29 tweendeckers and 22 handymax/handysize bulk
carriers.
TBS previously entered into a $150 million term loan credit
agreement with a syndicate of lenders led by The Royal Bank of
Scotland to finance the building and purchase of these six new
vessels. As of March 31, 2011, the Company made cumulative payments
of $28.0 million to the Shipyard towards the purchase of the sixth,
and final vessel.
Drydock Program and Vessel Upgrade Program:
For the year 2011, TBS' plan is to drydock 17 vessels, including
one vessel that entered into drydocking during the fourth quarter
of 2010, for approximately 546 drydocking days with a steel renewal
of about 1,765 metric tons at a total cost of approximately $17.8
million.
Our anticipated 2011 drydocking schedule is as follows:
-- During the first quarter 2011, one vessel that entered into
drydock during the fourth quarter of 2010 continued its drydock for
89 days into the first quarter of 2011, and four additional vessels
entered into drydock for 98 days. These vessels required about 590
metric tons of steel.
-- In the second quarter 2011, TBS plans to drydock six vessels,
including two vessels that entered into drydock in the first
quarter 2011, for about 141 days requiring about 275 metric tons of
steel.
-- In the third quarter 2011, TBS plans to drydock three vessels
for about 90 days requiring about 430 metric tons of steel.
-- In the fourth quarter 2011, TBS plans to drydock five vessels
for about 128 days requiring about 470 metric tons of steel.
Conference call and webcast:
On Wednesday, May 11, 2011 at 8:00 a.m. EDT, the company's
management will host a conference call to discuss the results.
Conference call details:
Participants should dial into the call 10 minutes before the
scheduled time using the following numbers: 1-888-680-0878 (from
the US) or 1-617-213-4855 (International Dial In). Participant
Passcode: 28722627. Participants may pre-register for the call at
https://www.theconferencingservice.com/prereg/key.process?key=PXY4E9QAM.
Pre-registrants will be issued a PIN number to use when dialing
into the live call which will provide quick access to the
conference by bypassing the operator upon connection.
Webcast:
There will also be a live -- and then archived -- slides and
audio webcast of the conference call on the company's website
http://www.tbsship.com, which can be accessed by clicking on the
webcast link. As soon as practicable, the webcast and the
corresponding slides will be archived and will be accessible on our
website.
Replay:
A telephonic replay of the conference call will be available
from 11:00 a.m. EDT on Wednesday, May 11, 2011 until Wednesday, May
18, 2011 by dialing 1-888-286-8010 (from the US) or 1-617-801-6888
(International Dial In). Access Code: 85763053. A replay of the
webcast will be available soon after the completion of the
call.
Consolidated Statements of Income
For the three months ended March 31, 2011 and 2010
(In thousands, except per share amounts and outstanding shares)
Three Months Ended
March 31,
------------------------
2011 2010
----------- -----------
Revenue
Voyage revenue $ 69,458 $ 74,358
Time charter revenue 19,171 22,903
Logistic revenue (1) 214 2,652
Other revenue 984 156
----------- -----------
Total Revenue 89,827 100,069
----------- -----------
Operating expenses
Voyage 38,460 34,780
Logistics (1) - 1,877
Vessel 31,684 27,771
Depreciation and amortization of vessels
and other fixed assets 19,283 25,497
General and administrative 9,716 12,373
----------- -----------
Total Operating expenses 99,143 102,298
----------- -----------
(Loss) from operations (9,316) (2,229)
Other (expenses) and income
Interest expense, net (7,622) (5,396)
Loss on extinguishment of debt (2) (1,103) (200)
Other income (expense) 77 (18)
----------- -----------
Total other (expenses) and income, net (8,648) (5,614)
----------- -----------
Net (loss) (17,964) (7,843)
=========== ===========
Less: Net (loss) attributable to
noncontrolling interests (3) (1,296) -
----------- -----------
Net (loss) attributable to TBS International plc $ (16,668) $ (7,843)
=========== ===========
Loss per share
Net (loss) per ordinary share
Basic and Diluted $ (0.54) $ (0.26)
Weighted average ordinary shares outstanding
Basic and Diluted 30,891,916 29,887,632
Operating Data for the three months March 31, 2011 and 2010
Three Months Ended
March 31,
---------------------
2011 2010
---------- ----------
Other Operating Data:
Controlled vessels (at end of period) (4) 51 49
Chartered vessels (at end of period) (5) 4 -
Freight voyage days (6) 2,759 2,804
Vessel days (7) 4,837 4,325
Revenue tons carried for all cargoes (8) 2,836 2,674
Freight rates for all cargoes (9) $ 24.49 $ 27.81
Revenue tons carried other than aggregate cargeos (8)
(10) 1,189 1,239
Freight rates for other than aggregate cargoes (9)
(10) $ 49.77 $ 52.84
Time charter days 1,490 1,337
Daily charter hire rates $ 12,866 $ 17,130
TCE per day-Freight Voyages (11) $ 11,147 $ 14,511
TCE per day-Time Charters-Out (12) $ 12,063 $ 16,299
(1) TBS Logistics represents revenue and related costs for cargo and
transportation management services.
(2) The loss on extinguishment of debt in 2011 and 2010 represents the
write-off of unamortized deferred finance costs for the BOA revolver
in connection with the January 2011 restructuring and March 2010
loan amendments and waivers to our credit facilities.
(3) Represents a 30% non controlling interest held by Log-In Logistica
Intermodal S.A.
(4) Controlled vessels are vessels that are owned or chartered-in with an
option to purchase. As of March 31, 2011, two vessels in the
controlled fleet were chartered-in with an option to purchase.
(5) Represents vessels that were both chartered-in under short-term
charters (less than one year at the start of the charter) and
chartered-in under long-term charters without an option to purchase.
Charter vessel includes three Brazilian flagged vessels chartered-in
under a bare-boat charter through our joint venture LOG.STAR NAVEGACAO
S.A.
(6) Represents the number of days controlled and time-chartered vessels
were operated by the Company performing freight voyages. Freight
voyage days exclude both off-hire days and time-chartered out days.
(7) Represents the number of days that we operated our controlled and
time-chartered vessels. Vessel expense relating to controlled vessels
is based on a 365-day year. Vessel expense relating to chartered-in
vessels is based on the actual number of days the vessel is operated,
excluding off-hire days.
(8) In thousands.
(9) Freight rates are a measurement on which shipments are freighted.
Cargoes are rated as weight (based on metric tons) or measure (based
on cubic meters), whichever produces the higher revenue will be
considered the revenue ton.
(10) Aggregates represent high-volume, low-freighted cargo, which can
overstate the amount of tons that are carried on a regular basis and
accordingly, reduces the revenue per ton. TBS believes that the
exclusion of aggregates better reflects their cargo shipping and
revenue per ton data for their principal services.
(11) Daily Time Charter Equivalent or "TCE" rates are defined as voyage
revenue less voyage expenses during the period divided by the number
of available freight voyage days during the period. Voyage expenses
include: fuel, port call, commissions, stevedore and other cargo
related and miscellaneous voyage expenses. No deduction is made for
vessel or general and administrative expenses. TCE includes the full
amount of any probable losses on voyages at the time such losses can
be estimated. TCE is a standard industry metric for measuring and
analyzing fluctuations between financial periods and as a method of
equating TCE revenue generated from a voyage charter to time charter
revenue.
(12) Daily Time Charter Equivalent or "TCE" rates for vessels that are time
chartered-out are defined as time charter revenue during the period
reduced principally by commissions and certain voyage costs (for which
we are responsible under some time charters) divided by the number of
available time charter days during the period. Voyage costs incurred
under time charters were $0.3 million for the three months ended March
31, 2011. No voyage costs were incurred under time charters in 2010.
The voyage costs include fuel costs (resulting from fuel price
differentials between the time a vessel was delivered out to the
charterer and the time of redelivery) and the cost for ballasting
vessels to time charter delivery ports. No deduction is made for
vessel or general and administrative expenses. Commission for vessels
that were time chartered out for the three months ended March 31, 2011
and 2010 were $0.8 million and $1.1 million, respectively.
Balance Sheet Data
Please find below TBS' selected balance sheet data:
March 31, December 31,
2011 2010
------------- -------------
Balance Sheet Data (In thousands):
Cash and cash equivalents $ 18,351 $ 18,976
Restricted cash 400 6,737
Working capital (deficit) (a) (318,042) (299,616)
Total assets 681,396 686,321
Total debt 340,029 332,259
Total shareholders' equity 275,175 296,874
(a) includes total debt of $340.0 million at March 31, 2011 and $332.3
million at December 31, 2010.
Non-GAAP Reconciliations
We use EBITDA as a liquidity measure. Below is a reconciliation for the
three months ended March 31, 2011 and 2010 reconciling cash flows from
operations to adjusted EBITDA:
Three months ended
March 31,
--------------------
(In thousands) 2011 2010
--------- ---------
Net Cash Provided by Operating Activities $ 4,844 $ 10,793
Net loss attributed to noncontrolling interest 1,296 -
--------- ---------
Net Cash Provided by Operating Activities attributed
to TBS 6,140 10,793
Adjustments to reconcile net cash provided by
Operating activities to EBITDA:
Net Interest expense excluding amortization of
finance costs and non cash change in value of
swap contracts 6,428 4,622
Drydocking expenditures 2,834 2,463
Net change in operating assets and liabilities (3,171) 8,007
Non cash adjustments made to cash provided by
operating activities:
Non cash stock based compensations (891) (2,639)
--------- ---------
Adjusted EBITDA $ 11,340 $ 23,246
========= =========
--------- ---------
Cash flows (used) by investing activities $ (12,953) $ (11,585)
========= =========
--------- ---------
Cash flows provided/(used) by financing activities $ 7,436 $ (12,418)
========= =========
EBITDA is defined as net loss before interest expense, taxes, depreciation
and amortization. The calculation is as follows:
Three Months Ended
March 31,
--------- ---------
2011 2010
--------- ---------
EBITDA Reconciliation (In thousands):
Net (loss) attributable to TBS International plc $ (16,668) $ (7,843)
Net interest expense 8,725 5,592
Depreciation and Amortization 19,283 25,497
========= =========
EBITDA $ 11,340 $ 23,246
========= =========
Forward-Looking Statements "Safe Harbor" Statement under the
Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are
based on management's current expectations and observations.
Included among the factors that, in the Company's view, could cause
actual results to differ materially from the forward-looking
statements contained in this press release are the following:
-- the effects of severe and rapid declines in industry
conditions that have required the Company to restructure its
outstanding indebtedness;
-- the Company's ability to manage and repay its substantial
indebtedness;
-- the Company's ability to maintain financial ratios and comply
with the financial covenants in its credit facilities;
-- the Company's ability to continue to operate as a going
concern;
-- the Company's ability to effectively operate its business and
manage its growth while complying with operating covenants in its
credit facilities;
-- the Company's ability to generate the significant amounts of
cash necessary to service its debt obligations;
-- very high volatility in the Company's revenues and costs,
including volatility caused by increasing oil prices;
-- excess supplies of dry bulk vessels in all classes and
resulting heavy pressure on freight rates;
-- adverse weather conditions that may significantly decrease
the volume of many dry bulk cargoes;
-- the stability and continued growth of the Asian and Latin
American economies and rising inflation in China;
-- the Company's vessels exceeding their economic useful life
and the risks associated with operating older vessels;
-- the Company's ability to grow its vessel fleet and
effectively manage its growth;
-- impairments of the Company's long lived assets or
goodwill;
-- compliance with environmental laws and regulations and the
implementation of new environmental laws and regulations;
-- other factors that are described in the "Risk Factors"
sections of the Company's reports filed with the Securities and
Exchange Commission.
About TBS International plc:
TBS provides worldwide shipping solutions to a diverse client
base of industrial shippers through its Five Star Service: ocean
transportation, projects, operations, port services and strategic
planning. The TBS shipping network operates liner, parcel and dry
bulk services, supported by a fleet of multipurpose tweendeckers
and handysize/handymax bulk carriers, including specialized
heavy-lift vessels and newbuild tonnage. TBS has developed its
franchise around key trade routes between Latin America and China,
Japan and South Korea, as well as select ports in North America,
Africa, the Caribbean and the Middle East. Visit our website at
http://www.tbsship.com.
For more information, please contact: Ferdinand V. Lepere Senior
Executive Vice President and Chief Financial Officer TBS
International plc Tel. 914-961-1000 InvestorRequest@tbsship.com
Investor Relations / Media: Nicolas Bornozis Capital Link, Inc. New
York Tel. 212-661-7566 E-mail: tbs@capitallink.com
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