PIRAEUS, Greece, Aug. 12 /PRNewswire-FirstCall/ -- NewLead Holdings Ltd. ("NewLead" or the "Company"), an international, vertically integrated shipping company, today reported financial results for the three and six months ended June 30, 2010.
Michael S. Zolotas, President and Chief Executive Officer stated, "I am pleased with our performance and the significant progress we have made since we took control of the Company in October 2009. The hard work of our team, while implementing our fleet transformation and growth strategy, is reflected by the $10.1 million in adjusted EBITDA generated by our core vessels during the second quarter of 2010."
-- NewLead Continues its Turnaround Strategy -- Creating appropriate operational scale and platform to support growth -- Continues fleet growth: 13 vessels acquired since Q1 2010 -- Expands newbuilding program: 4 newbuildings acquired since Q1 2010 -- NewLead's Recent Developments -- Completes acquisition of five dry bulk vessels, including two newbuild Handysize vessels -- Progresses on the sale of non-core vessels; agrees to sale of High Land in Q3 2010 Continuation of Turnaround Strategy
NewLead's new leadership is focusing on refining the Company's core fleet as reflected in the 13 vessels acquired, including four newbuildings, since the close of the first quarter of 2010. The Company has strategically decided to dispose of all non-core vessels, including container vessels, while simultaneously acquiring newer tonnage, with long-term quality time charters attached. The acquisition and integration of operational, commercial and technical management, completed during Q2 2010, has improved the profitability of the Company as reflected by the 17.3% reduction in direct daily vessel operating expenses compared to Q2 2009, as well as in the relative improvement of its fleet utilization to 97.4% in the second quarter of 2010, excluding non-core vessels. Furthermore, NewLead's management has implemented a coherent chartering strategy, to secure long-term cash, with upside via profit sharing, while taking into account both the dry bulk and tanker market industry trends. The Company has contracted 71.0%, 45.0%, 37.0%, 34.0% of its available days on a charter-out-basis for the remainder of 2010, 2011, 2012 and 2013, respectively. As a result, NewLead has over $200.0 million of total contracted revenue through 2013, excluding any profit sharing from existing charters.
Fleet Growth
In April 2010, NewLead completed the first dropdown of six vessels from Grandunion Inc. ("Grandunion"). This acquisition is reflected in the Company's second quarter 2010 financial results. In July 2010, NewLead completed a second dropdown of five dry bulk vessels, including two newbuildings with long-term quality time charters from Grandunion. Total consideration for the dropdown of the five vessels is approximately $147.0 million, which includes approximately $93.0 million in assumed bank debt and other liabilities. The balance, representing newbuilding commitments, will be financed with committed bank and shipyard credit facilities as well as with cash from the Company's balance sheet.
The three vessels acquired as part of the second dropdown that are currently in operation, the Grand Markela, the Grand Spartounta and the Grand Esmeralda, should generate approximately $11.0 million in annual vessel EBITDA, based on prevailing market rates and assuming direct operating expenses of $6,800 per vessel per day.
Newbuilding Program
In the second quarter of 2010, NewLead completed the purchase of two 80,000 dwt geared Kamsarmaxes for an aggregate purchase price of $112.7 million. The two Kamsarmaxes are expected to be delivered from COSCO Dalian Shipyard during the fourth quarter of 2010 and 2011, respectively, and will be chartered out immediately upon delivery to a first-class charterer. The first vessel is chartered-out for a five-year initial term of $28,710 net rate per day plus owner's two-year put option ranging between $20,000 and $28,000. The second vessel is chartered-out for a seven-year term of $27,300 net rate per day. These time charters are projected to add approximately $16.1 million in annual vessel EBITDA and $104.0 million in aggregate vessel EBITDA over the term of the charters.
In the first quarter of 2010, NewLead completed the purchase of a 92,000 dwt post-Panamax vessel for $37 million, constructed at a first-class Korean shipyard and is expected to be delivered in the second quarter of 2011. The vessel is chartered-out to a first-class charterer for approximately seven years at a floor rate of $14,438 net rate per day plus 50/50 profit sharing above $17,000. This time charter is projected to add approximately $3.2 million in annual vessel EBITDA and $21.0 million in aggregate vessel EBITDA, assuming zero profit sharing. Using rates as of August 4, 2010, the annualized vessel EBITDA would be $4.2 million and aggregate EBITDA over the term of the charter would be $28.3 million, reflecting the profit sharing contribution.
As part of the second dropdown completed in July 2010, NewLead also acquired two 35,000 dwt Handysize vessels, which are under construction at a first-class shipyard in Korea and scheduled to be delivered in the first quarter of 2011 and third quarter of 2012, respectively. Once delivered, each vessel will be immediately chartered-out for 12 years at a floor rate of $12,000 per day plus 40/60 profit sharing above $14,000 to a first-class European charterer. Upon delivery, the vessels are expected to add approximately $5.0 million in annual vessel EBITDA based on prevailing market rates.
As part of the second dropdown, NewLead also secured the right of first refusal for three additional newbuildings from Grandunion. The three newbuildings are 81,000 dwt Kamsarmaxes, being constructed at a first-class shipyard in Korea, scheduled for delivery in 2013 with long-term charters attached.
Sale of Non-Core Vessels
In April 2010, NewLead divested two no-core vessels, the Chinook and the High Rider, for a total consideration of approximately $14.9 million.
In July 2010, NewLead signed a Memorandum of Agreement for the sale of the High Land, a 1992 Japanese-built, 41,450 dwt, MR tanker for a total consideration of approximately $4.3 million, consistent with the Company's announced intention of selling its non-core assets.
The divestiture of the Ostria and the Nordanvind is expected to conclude during the third quarter of 2010.
Divesting these inefficient vessels is expected to favorably impact adjusted EBITDA from continuing operations by approximately $7.8 million annually. NewLead plans to use the net proceeds from these sales to renew its fleet or reduce its outstanding indebtedness.
Furthermore, in January 2010, NewLead completed the sale of its container vessels, the MSC Seine and the Saronikos Bridge, for $13.0 million of gross cash proceeds. A portion of these proceeds was used to pay down outstanding debt. As a result of the sale and delivery of these vessels, NewLead exited the container market. Accordingly, the results of operations related to the container market are reflected as discontinued operations.
FINANCIAL RESULTS
For the following results and the selected financial data presented herein, NewLead has compiled consolidated statement of operations for the three and the six months ended June 30, 2010 and 2009. The information was derived from the unaudited consolidated financial statements of the successor and predecessor business (all financial results subsequent to October 13, 2009 are reflected in the SUCCESSOR business). EBITDA, adjusted EBITDA and adjusted EBITDA excluding non-core vessels are non-US GAAP financial measures and should not be used in isolation or substitution for the predecessor and successor results. Furthermore, with the exit from the container market and the addition of dry bulk vessels, NewLead will focus its operations and strategic initiatives on the tanker and dry bulk shipping markets. As a result, NewLead reports its operations in two operating segments, the "Wet" and "Dry" which will include the results of operations for the product tankers and dry bulk vessels, respectively.
Second Quarter Results (Unaudited) (Unaudited) SUCCESSOR PREDECESSOR April 1 April 1 to to June 30, June 30, 2010 2009 (Expressed in thousands of U.S. dollars) Operating revenues $25,785 $10,755 EBITDA $3,509 $3,156 Adjusted EBITDA $7,881 (1) $2,067 (2) Adjusted EBITDA (excluding the non core vessels) $10,103 $4,063 Net loss from continuing operations $(20,259) $(3,940)
(1) Adjusted EBITDA for the three months ended June 30, 2010, excludes $3.2 million for impairment loss, $0.3 million for a non-cash gain in the fair value of derivatives, $0.7 million for stock-based compensation expense, $0.014 million for doubtful receivables, $0.6 million provision for claims as well as $0.2 million for the straight lining of revenue.
(2) Adjusted EBITDA for the three months ended June 30, 2009, excludes $1.2 million for a non-cash gain in the fair value of derivatives, $0.1 million for stock-based compensation expense and $0.007 million for doubtful receivables.
For the second quarter ended June 30, 2010, total revenues from continuing operations increased by 138.9% to $25.8 million compared to total revenues of $10.8 million recorded for the quarter ended June 30, 2009. This increase in revenue is primarily attributable to the 82.2% growth in NewLead's fleet and the corresponding increase in available and operating days of 95.1% and 104.3%, respectively, reflecting management's initiatives to continue its fleet expansion strategy and bring operational, commercial and technical management capabilities in-house. This revenue growth was partially offset by an increase in direct voyage expenses of $3.3 million to $4.7 million, representing a 235.7% increase from the $1.4 million incurred during the second quarter of 2009 as a consequence of an increase in the number of vessels operating on the spot market during the second quarter of 2010. The number of days for vessels operating on the spot market has increased by 98.6% to 423 days in the second quarter of 2010 from 213 days for the relevant period in 2009. For the quarters ended June 30, 2010 and June 30, 2009, NewLead's time charter equivalent (TCE) rates were $14,716 per day and $13,761 per day, respectively. This increase is mainly attributable to the favorable charters attached to the vessels that were incorporated in NewLead's fleet, which was partially offset by the decrease in the charter rates of the vessels operating on the spot market.
Fleet utilization for the quarter ended June 30, 2010 was 88.1% compared to 84.2% for the second quarter of 2009. Fleet utilization for the quarter ended June 30, 2010 was suppressed by 166 unemployment days, mainly attributable to the inefficient performance of NewLead's non-core vessels, which were primarily operating on the spot tanker market. Excluding non-core vessels scheduled for divestiture during the third quarter of 2010, fleet utilization for the second quarter of 2010 was 97.4%. During the second quarter of 2010, 72.0% of NewLead's fleet was fixed on time charters compared to 73.0% in the same quarter of 2009, which is in line with NewLead's chartering strategy to have 60.0%-80.0% of its fleet on period time charters.
Adjusted EBITDA from continuing operations for the quarter ended June 30, 2010 was $7.9 million, compared to $2.1 million for the quarter ended June 30, 2009. Adjusted EBITDA for the core vessels doubled from the first quarter to $10.1 million, reflecting a 146.3% increase compared to second quarter of 2009. This growth in adjusted EBITDA was primarily attributable to the increased operational contribution in total revenues related to the aforementioned 82.2% operating fleet growth and 17.3% reduction in daily vessel operating expenses relative to the second quarter of 2009.
Net loss from continuing operations was $20.2 million for the quarter ended June 30, 2010, compared to a net loss from continuing operations of $3.9 million for the quarter ended June 30, 2009. The results for the second quarter of 2010 reflect the higher operating contribution, as previously discussed, but were more than offset by higher non-operating expenses which include interest and non-cash charges such as depreciation and amortization. Excluding non-cash charges reflected in interest expense, primarily attributable to the $3.6 million amortization of the beneficial conversion feature embedded in the 7.0% convertible senior unsecured notes ("7.0% Notes") and $0.7 million loss from the change in the fair value of our interest rate swaps, interest expenses were $8.6 million representing a 152.9% increase, reflecting an overall increase in indebtedness relative to the second quarter of 2009. Depreciation and amortization increased by approximately 197.3% to $11.0 million during the three months ended June 30, 2010, compared to $3.7 million during the equivalent period in 2009, reflecting the 82.2% increase in operating fleet growth compared to the prior period as well as the amortization of intangible assets created as a result of the 2009 recapitalization. In addition, the results for the three month period ended June 30, 2010 include a non-cash impairment loss on vessels of $3.2 million related to the pending sale of the High Land, a non-core vessel. Moreover, the results for the second quarter of 2010 included a $0.3 million non-cash gain from the change in the fair value of derivatives compared to a $1.2 million non-cash gain in the second quarter of 2009, as well as transaction costs of $0.4 million mainly relating to the dropdown which closed on April 1, 2010.
Net loss for the quarters ended June 30, 2010 and 2009 was $20.0 million and $8.2 million, respectively. This loss includes income from discontinued operations of $0.2 million in 2010 and a loss of $4.3 million in 2009, which were primarily related to NewLead's exit from the container market.
Loss per share from continuing operations, reflecting the 1-for-12 reverse stock split of its common shares, was $2.84, compared to $1.65 for the equivalent period of 2009. This loss does not include the earnings per share from discontinued operations of $0.03 for the three month period ended June 30, 2010 and the loss per share of $1.79 for the equivalent period of 2009. For the second quarter of 2010, the loss per share (from both continuing and discontinued operations) was $2.81 for the second quarter of 2010, and $3.44 for the second quarter of 2009.
First Half Results (Unaudited) (Unaudited) SUCCESSOR PREDECESSOR January 1 January 1 to to June 30, June 30, 2010 2009 (Expressed in thousands of U.S. dollars) Operating revenues $43,851 $22,490 EBITDA $(6,935) $5,678 Adjusted EBITDA $9,540 (1) $4,841 (2) Adjusted EBITDA (excluding the non-core vessels) $15,210 $8,006 Net loss from continuing operations $(44,770) $(8,655)
(1) Adjusted EBITDA for the six months ended June 30, 2010, excludes $15.7 million for impairment loss, $1.7 million for a non-cash gain in the fair value of derivatives, $1.4 million for stock-based compensation expense, $0.2 million for doubtful receivables, $0.6 million provision for claims as well as $0.4 million for the straight lining of revenue.
(2) Adjusted EBITDA for the six months ended June 30, 2009, excludes $1.1 million for a non-cash gain in the fair value of derivatives, $0.3 million for stock-based compensation expense and $0.007 million for doubtful receivables.
For the six months ended June 30, 2010, total revenues from continuing operations increased by 94.7% to $43.8 million, compared to total revenues of $22.5 million recorded for the six months ended June 30, 2009. This increase in revenue is primarily attributable to the 57.8% growth in NewLead's fleet and the corresponding increase in available and operating days by 58.8% and 63.8% respectively, relative to the same period of 2009, reflecting management's initiatives to continue its fleet expansion strategy and bring operational, commercial and technical management capabilities in-house. The revenue growth was partially offset by an increase in direct voyage expenses of $6.4 million to $9.7 million, representing a 193.9% increase from the $3.3 million incurred during the first half of 2009 as a consequence of an increase in the number of vessels operating on the spot market during the first half of 2010. The number of days for vessels operating on the spot market has increased by 104.2% to 980 days in the first half of 2010 from 480 days for the relevant period in 2009. For the six months ended June 30, 2010 and June 30, 2009, NewLead's time charter equivalent (TCE) rates were $14,341 per day and $13,544 per day, respectively. This increase is mainly attributable to the favorable charters attached to the vessels that were incorporated in NewLead's fleet, which was partially offset by the decrease in the charter rates of the vessels operating on the spot market.
Fleet utilization for the six months ended June 30, 2010 was 85.8% compared to 83.2% for the first half of 2009. Fleet utilization for the six months ended June 30, 2010 was suppressed by 341 unemployment days mainly attributable to the inefficient performance of NewLead's non-core vessels, which were primarily operating on the spot tanker market. Excluding the non-core vessels scheduled for divestiture during the third quarter of 2010, fleet utilization for the first half of 2010 was 94.7%. During the first half of 2010, 62.0% of NewLead's fleet was fixed on time charters, compared to 71.0% in the first half of 2009, which is in line with NewLead's chartering strategy to have 60.0%-80.0% of its fleet on period time charters.
Adjusted EBITDA from continuing operations for the six months ended June 30, 2010 was $9.6 million, compared to $4.8 million for the six months ended June 30, 2009. Adjusted EBITDA for the core vessels was $15.2 million, representing a 90.0% increase compared to the relevant period in 2009. This growth in Adjusted EBITDA was primarily attributable to the increased operational contribution in total revenues related to the aforementioned 57.8% operating fleet growth and the 11.3% reduction in daily vessel operating expenses relative to the first half of 2009.
Net loss from continuing operations was $44.8 million for the six months ended June 30, 2010, compared to a net loss from continuing operations of $8.7 million recorded for the six months ended June 30, 2009. The results for the first half of 2010 reflect the higher operating contribution, as previously discussed, but were more than offset by higher non-operating expenses, which include interest and non-cash charges such as depreciation and amortization. Excluding non-cash charges reflected in interest expense, primarily attributable to the $7.2 million amortization of the beneficial conversion feature embedded in the 7.0% Notes and $0.4 million gain from the change in the fair value of our interest rate swaps, interest expenses were $14.8 million. This represents a 117.6% increase, reflecting an overall increase in indebtedness from the first half of 2009. Depreciation and amortization increased by approximately 121.3% to $16.6 million during the six months ended June 30, 2010, compared to $7.5 million during the equivalent period in 2009 reflecting the 57.8% increase in operating fleet growth compared to the prior period, as well as the amortization of the intangible assets created as a result of the 2009 recapitalization. In addition, the results for the six-month period ended June 30, 2010 include a non-cash impairment loss on vessels of $15.7 million related to the sale of non-core vessels. Moreover, the results for the first half of 2010 included a $1.7 million non-cash gain from the change in the fair value of derivatives, compared to a $1.1 million in the first half of 2009, as well as transaction costs of $1.3 million mainly relating to the dropdown entities which closed on April 1, 2010.
Net loss for the six months ended June 30, 2010 and 2009 was $42.3 million and $12.5 million, respectively. This loss includes income from discontinued operations of $2.5 million in 2010 and a loss of $3.8 million in 2009, which were primarily related to NewLead's exit from the container market.
Loss per share from continuing operations, reflecting the 1-for-12 reverse stock split of its common shares, was $6.60, compared to $3.62 for the equivalent period of 2009. This loss does not include the earnings per share from discontinued operations of $0.37 for the six month periods ended June 30, 2010 and the loss per share of $1.59 for the equivalent period of 2009. For the first half of 2010, the loss per share (from both continuing and discontinued operations) was $6.23 and $5.21 for the first half of 2009.
Balance Sheet
NewLead's liquidity reflects $96.8 million of total cash (non-restricted $62.9 million and restricted of $33.9 million) as of June 30, 2010, compared with $116.3 million in total cash as of December 31, 2009. The decrease of $19.5 million in total cash is primarily attributable to vessels' acquisitions, debts service, decrease in operating liabilities and dry-docking/special surveys costs. Total debt as of June 30, 2010 and December 31, 20009 was $465.4 million and $278.7 million, respectively, representing a $186.7 million increase. The increase is mainly attributable to: (i) $7.2 million amortization of the beneficial conversion feature attributed to the 7.0% Notes; (ii) the $154.5 million assumption of loans related to the dropdown entities and (iii) the $42.5 million assumption and drawdown of debt related to the acquisition of two Kamsarmax newbuildings. The overall increase in indebtedness reflects $17.5 million of debt repayments related to the amortization installments of debt and proceeds generated from container sales. As of June 30, 2010, NewLead had approximately 7.4 million of common shares issued and outstanding reflecting mainly the 1-for-12 reverse stock split of its common shares which occurred on August 3, 2010.
FLEET UPDATE
NewLead currently controls 24 vessels, including nine double-hull product tankers, ten dry bulk vessels and five newbuildings, which reflect the five vessels acquired in the recent dropdown. Currently, 14 out of NewLead's 19 vessels in operation are secured on period charters with established international charterers.
The following table details NewLead's fleet deployment as of August 12, 2010:
Size Vessel Year Vessel Name (dwt) Type Built ----------- ----- ------ ----- Product Tanker Vessels -------------- Stena Compass 72,736 Panamax 2006 ------------- ------ ------- ---- NewLead Compassion 72,782 Panamax 2006 ----------- ------ ------- ---- NewLead Avra (formerly Altius) 73,495 Panamax 2004 ------------ ------ ------- ---- NewLead Fortune (formerly Fortius) 73,495 Panamax 2004 --------------- ------ ------- ---- Hiotissa 37,329 Handymax 2004 -------- ------ -------- ---- Hiona 37,337 Handymax 2003 ----- ------ -------- ---- Nordanvind 38,615 Handymax 2001 ---------- ------ -------- ---- Ostria 38,615 Handymax 2000 ------ ------ -------- ---- High Land 41,450 Handymax 1992 --------- ------ -------- ---- Net Daily Charter Vessel Name Charter Expiration Hire Rate ----------- ------------------ ----------------- Product Tanker Vessels -------------- Stena Compass December 2010 $18,233 (bareboat rate) + (1) 30.0% profit share ------------- ------------- above --- $26,000 ------- NewLead Compassion Spot - ----------- ---- --- NewLead Avra (formerly Altius) Spot - ------------ ---- --- NewLead Fortune (formerly Fortius) Spot - --------------- ---- --- Hiotissa min: April 2011 $19,013 plus profit sharing -------- max: June 2011 above $19,500 -------------- ------------- Hiona min: March 2011 $19,013 plus profit sharing ----- max: May 2011 above $19,500 ------------- ------------- Nordanvind Spot (2) - ---------- ---- --- --- Ostria Spot (2) - ------ ---- --- --- High Land July 2010 $8,181 --------- --------- ------ Size Vessel Year Vessel Name (dwt) Type Built ----------- ----- ------ ----- Dry bulk Vessels ---------------- NewLead Victoria 75,966 Panamax 2002 ---------------- ------ ------- ---- Brazil 151,738 Capesize 1995 ------ ------- -------- ---- Australia 172,972 Capesize 1993 --------- ------- -------- ---- China 135,364 Capesize 1992 ----- ------- -------- ---- Grand Ocean 149,498 Capesize 1990 ----------- ------- -------- ---- Grand Venetico 134,982 Capesize 1990 -------------- ------- -------- ---- Grand Rodosi 68,788 Panamax 1990 ------------ ------ ------- ---- Grand Esmeralda 69,458 Panamax 1990 --------------- ------ ------- ---- Grand Markela 71,733 Panamax 1990 ------------- ------ ------- ---- Grand Spartounta 135,070 Capesize 1989 ---------------- ------- -------- ---- Charter Net Daily Charter Vessel Name Expiration Hire Rate ----------- ---------- ----------------- Dry bulk Vessels ---------------- NewLead Victoria min: October 2010 $16,875 (3) ---------------- max: January 2011 ------- --- ----------------- Brazil min: October 2014 $28,985 (4) max: February ------ 2015 ------- --- -------------- min: November Australia 2011 $20,391 --------- max: January 2012 ------- ----------------- min: November China 2015 $12,753 ----- max: October 2016 ------- ----------------- min: December Grand Ocean 2010 (5) $15,360 ----------- max: April 2011 --- ------- --------------- Grand Venetico min: June 2011 (6) $17,760 -------------- max: October 2011 --- ------- ----------------- Grand Rodosi September 2010 $30,000 ------------ -------------- ------- Grand Esmeralda min: Dec. 2011 $10,175 + 50.0% profit sharing (7) --------------- max: Apr. 2012 ------------------------------ --- -------------- Grand Markela Min: Feb 2013 $21,972 ------------- Max: Jun 2013 ------- -------------- Grand Spartounta min: July 2010 $20,625 ---------------- max: Oct. 2010 ------- -------------- Expected Size Vessel Delivery Newbuildings (dwt) Type Date Post- TBN 92,000 Panamax Q2 2011 Newlead Tomi 80,000 Kamsarmax Q4 2010 TBN 80,000 Kamsarmax Q4 2011 SPP Hull H-4023 35,000 Handysize NB 2/2011 SPP Hull H-4029 35,000 Handysize NB 7/2012 Charter Rate (daily, Newbuildings Charter term net) Seven year time TBN charter $14,438 plus 50.0% Profit Sharing (8) when 110.0% of BPI route index exceeds $17,000 Seven year time Newlead Tomi charter $28,710 (9) Seven year time TBN charter $27,300 Twelve years +/- SPP Hull H-4023 4months $12,000 plus 40.0%-60.0% Profit (10) Sharing Twelve years +/- SPP Hull H-4029 4months $12,000 plus 40.0%-60.0% Profit (10) Sharing
(1) Vessel is under a bareboat charter party agreement. The operating expenses are for the account of the charterer. Accordingly, the vessel's Time Charter Equivalent (TCE) rate is grossed up to reflect estimated daily operating costs. As a result, the vessel's charter rate is adjusted to a TCE rate of $24,933, to include estimated operating costs of $6,700.
(2) The sales of these vessels are expected to close during the third quarter of 2010.
(3) After the end of the current time charter, the vessel is fixed for a period of 20-22 months earning 105.0% of the average of the 4 BPI routes less 5.0% commissions.
(4) $28,985 for the first and second years, $26,180 plus 50/50 profit sharing for all years thereafter, (85.0% of the Cape Spot 4 TCE Avg. Minus $26,600). If Charterers exercise their option for M/V Grand Ocean third year, Brazil third year hire to remain $28,985.
(5) Charterer's option to extend for one additional year (6) Charterer's option to extend for six additional months
(7) Profit sharing is based on 86.0% of the Baltic Panamax Average 4TC Routes.
(8) Charterer's option for 1+1 additional years. Hire for first optional year $15,400 (net) plus 50/50 profit sharing. Hire for second optional year $16,844 (net) plus 50/50 profit sharing.
(9) $28,710 five years charter, plus two optional years (1+1). Owners' put option for up to two year's charter at a net charter rate between $20,000 and $28,000. This fixture is subject to Charterer not exercising their optional years, in order to secure seven-year charter duration for the vessel.
(10) Base rate $12,000. Above $14,000 profit sharing 40.0% based on open book accounting on actual earnings.
Summary of Selected Data (Unaudited) Three months ended June 30, -------- 2010 2009 FLEET DATA Number of Vessels 16.4 9 Number of Vessels on time Charter 12 6 Weighted average age of fleet 11.9 8.5 Available days (1) 1,467 752 Operating days (2) 1,293 633 Fleet utilization (3) 88.1% 84.2% Fleet utilization excluding non-core vessels (3) 97.4% 98.4% Equivalent vessels (4) 16.1 8.3 AVERAGE DAILY RESULTS Time Charter Equivalents (5) $14,716 $13,761 Direct Daily Vessel Operating Expenses (6) $7,101 $8,589 (Unaudited) Six months ended June 30, -------- 2010 2009 FLEET DATA Number of Vessels 14.2 9 Number of Vessels on time Charter 12 6 Weighted average age of fleet 11.9 8.5 Available days (1) 2,480 1,562 Operating days (2) 2,128 1,299 Fleet utilization (3) 85.8% 83.2% Fleet utilization excluding non-core vessels (3) 94.7% 99.3% Equivalent vessels (4) 13.7 8.6 AVERAGE DAILY RESULTS Time Charter Equivalents (5) $14,341 $13,544 Direct Daily Vessel Operating Expenses (6) $7,788 $8,784
1) Available days is the total number of days a vessel is controlled by a company less the aggregate number of days that the vessel is off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues.
2) Operating days is the number of available days in a period less the aggregate number of days that the vessels are off-hire due to any reason, including lack of demand or unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.
3) Fleet utilization is obtained by dividing the number of operating days during a period by the number of available days during the period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning.
4) Equivalent vessels data is the available days of the fleet divided by the number of the calendar days in the respective period.
5) Time Charter Equivalent, or TCE, rates are defined as voyage, time charter and bareboat revenues, less voyage expenses and commissions during a period, divided by the number of available days during the period. The TCE rate is a standard shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per day amounts, while charter hire rates for vessels on time charters generally are expressed in such amounts. The Stena Compass and the Stena Compassion were each employed on bareboat charters during the three and the six-month periods ended June 30, 2010 and 2009. Accordingly, the Stena Compass and the Stena Compassion's charter rates have been adjusted to reflect a TCE rate of approximately $24,933 per day for fiscals 2010 and 2009, assuming operating costs of 6,700 per day for fiscals 2010 and 2009.
6)Direct daily vessel operating expenses are defined as the sum of the vessel operating expenses and management fees, divided by the vessels calendar days. This has been adjusted to exclude the calendar days with respect to the Stena Compass and the Stena Compassion, which were employed on bareboat charters.
CONFERENCE CALL INFORMATION
NewLead will hold a conference call today, Thursday, August 12, 2010 at 10:00 am EDT to discuss highlights and details of the second quarter 2010 financial results.
A supplemental slide presentation will be available on NewLead's website on the morning of the call.
To access the conference call participants should dial +1 (888) 895-3561 (US/Canada) or +1 (706) 634-7259 (international) at 9:50 a.m. (EDT) and request the NewLead Holdings Ltd. Second Quarter 2010 Earnings Call or Conference ID #92184865.
A telephonic replay will be available for anyone unable to participate in the live call. To access the replay, call +1 (800) 642-1687 (US/Canada) or +1 (706) 645-9291 (international) and enter confirmation code 92184865. The recording will be available from Thursday, August 12, 2010 at 1:00 p.m. (EDT) through Thursday, August 19, 2010 at 11:59 p.m. (EDT).
A live webcast of the earnings conference call will also be available at http://www.newleadholdings.com/ under the Investor Relations section.
About NewLead Holdings Ltd.
NewLead Holdings Ltd. is an international shipping company that owns and operates product tankers, and dry bulk vessels. NewLead's common shares are traded under the symbol "NEWL" on the NASDAQ Global Select Market. Following the reverse stock split on August 3, 2010, NewLead's common shares are trading under the symbol "NEWLD" until August 31, 2010. To learn more about NewLead Holdings Ltd., please visit the new website at http://www.newleadholdings.com/.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995
This press release includes assumptions, expectations, projections, intentions and beliefs about future events. These statements are intended as 'forward-looking statements.' We caution that assumptions, expectations, projections, intentions and beliefs about future events may and often do vary from actual results and the differences can be material. All statements in this document that are not statements of historical fact are forward-looking statements. Forward-looking statements include, but are not limited to, such matters as future operating or financial results; statements about planned, pending or recent acquisitions, business strategy, future dividend payments and expected capital spending or operating expenses, including dry-docking and insurance costs; statements about trends in the drybulk vessel and products tanker shipping markets, including charter rates and factors affecting supply and demand; our ability to obtain additional financing; expectations regarding the availability of vessel acquisitions; and anticipated developments with respect to pending litigation. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although NewLead Holdings Ltd. believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, NewLead Holdings Ltd. cannot assure you that it will achieve or accomplish these expectations, beliefs or projections described in the forward looking statements contained in this press release. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter rates and vessel values, failure of a seller to deliver one or more vessels, failure of a buyer to accept delivery of a vessel, default by one or more charterers of our ships, changes in demand for oil and oil products, the effect of changes in OPEC's petroleum production levels, worldwide oil consumption and storage, changes in demand that may affect attitudes of time charterers, scheduled and unscheduled dry-docking, changes in NewLead Holdings Ltd.'s voyage and operating expenses, including bunker prices, dry-docking and insurance costs, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents, international hostilities and political events or acts by terrorists and other factors discussed in NewLead Holdings Ltd.'s filings with the U.S. Securities and Exchange Commission from time to time. When used in this document, the words 'anticipate,' 'estimate,' 'project,' 'forecast,' 'plan,' 'potential,' 'may,' 'should,' and 'expect' reflect forward-looking statements.
Investor Contact: Media Contact: Sarah Freeman Elisa Gerouki CJP Communications NewLead Holdings Ltd. +1 (212) 279 3115 x244 + 30 (213) 014 8023 NEWLEAD HOLDINGS LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (All amounts expressed in thousands of U.S. dollars except share amounts) (Unaudited) As of December As of 31, June 30, 2009 2010 ASSETS Current assets Cash and cash equivalents $62,916 $106,255 Restricted cash 10,649 403 Trade receivables, net 4,217 4,572 Other receivables 1,024 496 Due from related parties 767 40 Inventories 2,961 3,085 Prepaid expenses 2,596 1,082 Due from managing agents 493 8 Backlog asset 8,943 5,528 ----- ----- Total current assets 94,566 121,469 ------ ------- Restricted cash 23,260 9,668 Vessels under construction 36,224 - Assets held for sale 14,791 8,250 Vessels and other fixed assets, net 342,620 253,115 Goodwill 14,280 - Backlog asset 26,545 - Deferred charges, net 11,407 6,831 ------ ----- Total non-current assets 469,127 277,864 ------- ------- Total assets $563,693 $399,333 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current portion of long-term debt $36,152 $14,240 Accounts payable, trade 15,984 11,048 Accrued liabilities 19,771 16,957 Deferred charter revenue 2,176 - Deferred income 663 226 Derivative financial instruments 10,179 9,687 Due to related parties 425 234 Due to managing agent 247 1,868 --- ----- Total current liabilities 85,597 54,260 ------ ------ Non-Current Liabilities Derivative financial instruments 9,209 7,407 7% convertible senior notes, net 48,597 41,430 Deferred income 911 730 Long-term debt 380,648 223,030 ------- ------- Total non-current liabilities 439,365 272,597 ------- ------- Total liabilities 524,962 326,857 ------- ------- Commitments and contingencies - - Shareholders' equity Preference Shares, $0.01 par value, 500 million shares - - authorized, none issued Common Shares, $0.01 par value, 1 billion shares authorized, 7.3 75 67 and 6.6 million shares issued and outstanding as of June 30, 2010 and December 31, 2009, respectively Additional paid-in capital 118,820 110,281 Accumulated deficit (80,164) (37,872) ------- ------- Total shareholders' equity 38,731 72,476 ------ ------ Total liabilities and shareholders' equity $563,693 $399,333 ======== ======== NEWLEAD HOLDINGS LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (All amounts expressed in thousands of U.S. dollars except share and per share amounts) Successor Predecessor Three months Three months ended June ended June 30, 30, 2010 2009 OPERATING REVENUES $25,785 $10,755 EXPENSES: Commissions (702) (201) Voyage expenses (4,756) (1,425) Vessel operating expenses (9,734) (5,178) General and administrative expenses (3,911) (1,741) Depreciation and amortization expenses (10,958) (3,719) Impairment loss (3,224) - Management fees (286) (293) ---- ---- (33,571) (12,557) ------- ------- Net operating loss (7,786) (1,802) ------ ------ OTHER (EXPENSES) /INCOME, NET: Interest and finance expense, net (12,923) (3,381) Interest income 113 4 Other (expense) /income , net 50 (5) Change in fair value of derivatives 287 1,244 --- ----- Total other expenses, net (12,473) (2,138) ------- ------ Net loss from continuing operations (20,259) (3,940) ------- ------ Net income /(loss) from discontinued 224 (4,277) operations (includes gain from sale of vessels $2,497 in 6 months 2010 and loss $ 5,584 in 6 months 2009, respectively) Net loss $(20,035) $(8,217) -------- ------- (Loss) /income per share: Basic and diluted Continuing operations $(2.84) $(1.65) ------ ------ Discontinued operations $0.03 $(1.79) ----- ------ Total $(2.81) $(3.44) ------ ------ Weighted average number of shares: Basic and diluted 7,133,033 2,393,490 --------- --------- Successor Predecessor Six months Six months ended ended June 30, June 30, 2010 2009 OPERATING REVENUES $43,851 $22,490 EXPENSES: Commissions (1,201) (462) Voyage expenses (9,731) (3,298) Vessel operating expenses (17,110) (10,541) General and administrative expenses (8,027) (3,059) Depreciation and amortization expenses (16,579) (7,491) Impairment loss (15,662) - Management fees (816) (588) ---- ---- (69,126) (25,439) ------- ------- Net operating loss (25,275) (2,949) ------- ------ OTHER (EXPENSES) /INCOME, NET: Interest and finance expense, net (21,646) (6,849) Interest income 390 7 Other (expense) /income , net 43 (2) Change in fair value of derivatives 1,718 1,138 ----- ----- Total other expenses, net (19,495) (5,706) ------- ------ Net loss from continuing operations (44,770) (8,655) ------- ------ Net income /(loss) from discontinued 2,478 (3,808) operations (includes gain from sale of vessels $2,497 in 6 months 2010 and loss $ 5,584 in 6 months 2009, respectively) Net loss $(42,292) $(12,463) -------- -------- (Loss) /income per share: Basic and diluted Continuing operations $(6.60) $(3.62) ------ ------ Discontinued operations $0.37 $(1.59) ----- ------ Total $(6.23) $(5.21) ------ ------ Weighted average number of shares: Basic and diluted 6,780,991 2,393,490 --------- --------- NEWLEAD HOLDINGS LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (All amounts expressed in thousands of U.S. dollars) Successor Predecessor Six months Six months ended June ended June 30, 30, 2010 2009 OPERATING ACTIVITIES: Net loss $(42,292) $(12,463) Adjustments to reconcile net loss to net cash used in operating activities: Non-cash adjustments 41,010 9,580 (Gain) /loss on sale from vessels (2,546) 5,584 Payments for dry-docking /special survey costs (2,737) (304) Increase in operating assets (375) (319) Decrease in operating liabilities (3,816) (3,800) ------ ------ Net cash used in operating activities (10,756) (1,722) ------- ------ INVESTING ACTIVITIES: Advances for vessel under construction (16,497) - Restricted cash (10,017) - Cash acquired through business combination 1,561 - Other fixed asset acquisitions (14) (63) Vessels disposals 6,422 - Assets held for sale 10,747 2,279 ------ ----- Net cash (used in) /provided by investing activities (7,798) 2,216 ------ ----- FINANCING ACTIVITIES: Principal repayments of long-term debt (271,480) - Proceeds from long-term debt 264,035 - Restricted cash (13,786) (1,380) Payments for deferred charges (3,555) - Proceeds from issuance of capital shares 1 - --- --- Net cash used in financing activities (24,785) (1,380) ------- ------ Net decrease in cash and cash equivalents (43,339) (886) Cash and cash equivalents Beginning of period 106,255 4,009 ------- ----- End of period $62,916 $3,123 ------- ------ Supplemental Cash Flow information: Interest paid $11,615 $6,776 Issuance of common shares for business combination 5,210 - Issuance of warrants for deferred charges 1,943 - Assets disposed in connection with assumed acquisitions 8,501 - Assets acquired and liabilities assumed under acquisitions -Advances for vessels under construction 19,727 - -Vessels and other fixed assets, net 143,808 - - Long-term debt 186,975 - -Other assets and liabilities, net $23,301 $ - ======= === === NEWLEAD HOLDINGS LTD. FIRST HALF 2010 RESULTS BY SEGMENT (All amounts expressed in thousands of U.S. dollars) Wet Successor Predecessor Six months Six months ended ended June 30, June 30, 2010 2009 Operating revenue $25,385 $22,490 Commissions (839) (462) Voyage expenses (9,399) (3,298) Vessel operating expenses (10,358) (10,541) General and administrative expenses (3,398) (2,758) Management fees (638) (588) Other (expense) / income , net 49 (2) Net operating income before depreciation and amortization 802 4,841 --- ----- Depreciation and amortization expense (10,534) (7,491) Impairment loss (15,662) - Net operating (loss) / income (25,394) (2,650) ------- ------ Transaction costs (909) - Straight line revenue - - Compensation costs (927) (294) Provision for doubtful receivables (162) (7) Interest and finance expense, net (12,361) (6,849) Interest income 271 7 Change in fair value of derivatives 1,237 1,138 ----- ----- Net loss from continuing operations $(38,245) $(8,655) -------- ------- Dry Successor Predecessor Six months Six months ended ended June 30, June 30, 2010 2009 Operating revenue $ $18,828 $ - Commissions (362) - Voyage expenses (332) - Vessel operating expenses (6,752) - General and administrative expenses (1,736) - Management fees (178) - Other (expense) / income , net (6) - Net operating income before depreciation and amortization 9,462 - ----- --- Depreciation and amortization expense (6,045) - Impairment loss - - Net operating (loss) / income 3,417 - ----- --- Transaction costs (383) - Straight line revenue (362) - Compensation costs (465) - Provision for doubtful receivables (47) - Interest and finance expense, net (9,285) - Interest income 119 - Change in fair value of derivatives 481 - --- --- Net loss from continuing operations $ $(6,525) $ - --- ------- --- --- Total Successor Six months ended June 30, 2010 Operating revenue $ $44,213 22,490 Commissions (1,201) (462) Voyage expenses (9,731) (3,298) Vessel operating expenses (17,110) (10,541) General and administrative expenses (5,134) (2,758) Management fees (816) (588) Other (expense) / income , net 43 (2) --- --- Net operating income before depreciation and amortization 10,264 4,841 ------ ----- Depreciation and amortization expense (16,579) (7,491) Impairment loss (15,662) - ------- --- Net operating (loss) / income (21,977) (2,650) ------- ------ Transaction costs (1,292) - Straight line revenue (362) - Compensation costs (1,392) (294) Provision for doubtful receivables (209) (7) Interest and finance expense, net (21,646) (6,849) Interest income 390 7 Change in fair value of derivatives 1,718 1,138 ----- ----- Net loss from continuing operations $ $(44,770) (8,655) --- -------- ------ NEWLEAD HOLDINGS LTD. SECOND QUARTER 2010 RESULTS BY SEGMENT (All amounts expressed in thousands of U.S. dollars) Wet --- Successor Predecessor Three months Three months ended June 30, ended June 30, 2010 2009 Operating revenue $13,683 $10,755 Commissions (474) (201) Voyage expenses (4,424) (1,425) Vessel operating expenses (5,097) (5,178) General and administrative expenses (1,680) (1,586) Management fees (246) (293) Other (expense) / income , net 50 (5) Net operating income before depreciation and amortization 1,812 2,067 ----- ----- Depreciation and amortization expense (6,856) (3,719) Impairment loss (3,224) - Net operating (loss) / income (8,268) (1,652) ------ ------ Transaction costs (197) - Straight line revenue - - Compensation costs (385) (148) Provision for doubtful receivables 33 (7) Interest and finance expense, net (5,780) (3,381) Interest income 64 4 Change in fair value of derivatives 164 1,244 ----- Net loss from continuing operations $(14,369) $(3,940) -------- ------- Dry --- Successor Predecessor Three months Three months ended June 30, ended June 30, 2010 2009 Operating revenue $12,284 $ - Commissions (228) - Voyage expenses (332) - Vessel operating expenses (4,637) - General and administrative expenses (1,203) - Management fees (40) - Other (expense) / income , net - - --- Net operating income before depreciation and amortization 5,844 - ----- --- Depreciation and amortization expense (4,102) - Impairment loss - - Net operating (loss) / income 1,742 - ----- --- Transaction costs (146) - Straight line revenue (182) - Compensation costs (286) - Provision for doubtful receivables (47) - Interest and finance expense, net (7,143) - Interest income 49 - Change in fair value of derivatives 123 - --- --- Net loss from continuing operations $(5,890) $ - ------- --- --- Total ----- Successor Three months ended June 30, 2010 Operating revenue $25,967 10,755 Commissions (702) (201) Voyage expenses (4,756) (1,425) Vessel operating expenses (9,734) (5,178) General and administrative expenses (2,883) (1,586) Management fees (286) (293) Other (expense) / income , net 50 (5) Net operating income before depreciation and amortization 7,656 2,067 ----- ----- Depreciation and amortization expense (10,958) (3,719) Impairment loss (3,224) - Net operating (loss) / income (6,526) (1,652) ------ ------ Transaction costs (343) - Straight line revenue (182) - Compensation costs (671) (148) Provision for doubtful receivables (14) (7) Interest and finance expense, net (12,923) (3,381) Interest income 113 4 Change in fair value of derivatives 287 1,244 --- ----- Net loss from continuing operations $(20,259) (3,940) -------- ------ NEWLEAD HOLDINGS LTD. RECONCILIATION OF NET INCOME UNDER GAAP TO ADJUSTED EBITDA (NON-GAAP) (All amounts expressed in thousands of U.S. dollars) Successor Predecessor Successor Predecessor Three months Three months Six months Six months ended ended ended ended June 30, June 30, June 30, 2010 June 30, 2009 2010 2009 --------- ------------- --------- --------- Net loss from continuing operations (20,259) (3,940) (44,770) (8,655) PLUS: Net interest expense 12,810 3,377 21,256 6,842 Depreciation and amortization 10,958 3,719 16,579 7,491 ------ ----- ------ ----- EBITDA (1) 3,509 3,156 (6,935) 5,678 Straight line revenue 182 - 362 - Provision for doubtful receivables 14 7 209 7 Provision for claims 566 - 566 - Change in fair value of derivatives (287) (1,244) (1,718) (1,138) (includes warrants valuations) Impairment loss 3,224 - 15,662 - Stock based compensation 673 148 1,394 294 --- --- ----- --- ADJUSTED EBITDA (2)(3) $7,881 $2,067 $9,540 $4,841 ------ ------ ------ ------ (1) EBITDA represents net income before interest, taxes, depreciation and amortization. Adjusted EBITDA represents EBITDA before other non-cash items such as gains on sales of assets, stock-based compensation expense, claim provisions, doubtful receivables, impairment loss and the effect of the amortization of the backlog asset and deferred revenue due to the assumption of charters associated with certain vessels acquisitions. (2) We use adjusted EBITDA because we believe that it is a basis upon which liquidity can be assessed and because we believe that adjusted EBITDA presents useful information to investors regarding the Company's ability to service and/or incur indebtedness. We also believe that adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. (3) Adjusted EBITDA includes adjusted EBITDA for the High Rider, the High Land, the Ostria, the Nordanvind and the Chinook ("non-core vessels") which amounted to an EBITDA loss of $2,222 for the three months ended June 30, 2010, and an EBITDA loss of $5,670 for the six months ended June 30, 2010 ($1,996 and $3,165 for the respective relevant periods of 2009). As a result, adjusted EBITDA excluding non-core vessels ("adjusted EBITDA for core vessels") amounted to $10,103 for the three months ended June 30, 2010, and $15,210 for the six months ended June 30, 2010 ($4,063 and $8,006 for the respective relevant periods of 2009).
NewLead Holdings Ltd.
CONTACT: Investor Contact: Sarah Freeman, CJP Communications,
+1-212-279-3115 x244, Media Contact: Elisa Gerouki, NewLead Holdings Ltd.,
+30 (213) 014-8023
Web Site: http://www.newleadholdings.com/
