DUBLIN, IRELAND
-- (MARKET WIRE)
-- 05/09/11
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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