Excel Maritime Reports Q3 Results

Thursday, November 05, 2009

Excel Maritime Carriers Ltd (NYSE: EXM), an owner and operator of dry bulk carriers and an international provider of worldwide seaborne transportation services for dry bulk cargoes, announced its operating and financial results for the third quarter and nine-month period ended September 30, 2009.

Third Quarter 2009 Highlights:
Revenue from operations for the quarter amounted to $174.4 million as compared to $231.6 million in the third quarter of 2008.

Net profit for the quarter was $62.0 million or $0.79 per weighted average diluted share compared to $117.6 million or $2.66 per weighted average diluted share in the third quarter of 2008. The third quarter 2009 results include a non-cash unrealized interest-rate swap loss of $1.8 million compared to an unrealized interest-rate swap loss of $6.7 million in the corresponding period in 2008. Swap gains and losses are recorded in income as they do not meet the criteria for hedge accounting. Net income, excluding the above item, for the third quarter of 2009 would amount to $63.8 million or $0.81 per weighted average diluted share compared to respective income for the third quarter of 2008 of $124.3 million or $2.81 per weighted average diluted share.

Adjusted EBITDA for the third quarter of 2009 was $59.1 million compared to $110.1 million for the third quarter of 2008. A reconciliation of adjusted EBITDA to Net Income is included in a subsequent section of this release.

An average of 47 vessels were operated during the third quarters of 2009 and 2008 earning a blended average time charter equivalent rate of $21,912 and $33,806 per day, respectively.

Nine Months 2009 Highlights:
Revenue from operations for the nine-month period ended September 30, 2009 increased to $570.4 million from $506.9 million in the nine-month period ended September 30, 2008.

Net profit for the nine-month period ended September 30, 2009 was $258.0 million or $3.91 per weighted average diluted share compared to $276.2 million or $7.97 per weighted average diluted share in the respective period of 2008. The nine months 2009 results include a non-cash unrealized interest-rate swap gain of $19.2 million compared to an unrealized interest-rate swap gain of $14.4 million in the corresponding period in 2008. Net income for 2009 includes also a non-cash item of $0.1 million relating to the resulting gain from the sale of vessel Swift. Net income, excluding the above items, would amount to $238.8 million or $3.62 per weighted average diluted share for the nine month period ended September 30, 2009 compared to $261.8 million or $7.55 per weighted average diluted share for the respective period in 2008.

Adjusted EBITDA for the nine month period ended September 30, 2009 was $169.7 million compared to $253.1 million for the respective period of 2008.  A reconciliation of adjusted EBITDA to Net Income is included in a subsequent section of this release.
   
Third Quarter 2009 Corporate Developments
On August 11, 2009, we completed our offering to the public of 6,000,000 shares of our Class A common stock. The Offered Shares were priced at $8.00 per share gross of underwriters' commissions and expenses and the total net proceeds to us from the offering were approximately $45.2 million. We used the net offering proceeds for repayment of debt as well as to build up our committed capital expenditure reserve account, which we may utilize for future capital expenditure requirements.

Recent Developments
We recently reached agreements with our joint venture partners aimed to consolidate and simplify our new buildings program. These agreements, as detailed below, provide us with direct control of one Capesize vessel and majority control of another one:
On October 27, 2009 we completed an agreement with our joint venture partners for the transfer of our membership interests in certain consolidated joint venture companies under which we agreed to sell our 50% membership interest in Lillie ShipCo LLC for a consideration of $1.2 million and the transfer by one of the joint venture partners to us of its 50% membership interest in Hope ShipCo LLC. In addition, in the context of the above agreement, one of the joint venture partners sold its 28.6% membership interest in Christine ShipCo LLC to us for a consideration of $2.8 million. Following the completion of the transaction, we became 100% owner of Hope ShipCo LLC and increased our interest in Christine ShipCo LLC to 71.4%. Both companies will continue being consolidated in our financial statements, while Lillie ShipCo will be deconsolidated as of the date we ceased to have a financial interest in it. We are currently evaluating the effect of the above transaction in our consolidated financial statements for the fourth quarter of 2009.
 
On October 27, 2009, Hope ShipCo LLC and Christine ShipCo LLC loan agreements were amended to reflect the changes in the ownership of the companies discussed above.

Vessels new fixtures
On October 15, 2009 the M/V Isminaki, a Panamax vessel of 74,577 dwt built in 1998, was fixed under a new time charter for a period of 4-6 months at a daily rate of $24,000.

On October 20, 2009 the M/V Coal Age, a Panamax vessel of 72,824 dwt built in 1997, was fixed under a new time charter for a period of 11-13 months at a daily rate of $21,250.

On October 21, 2009 the M/V Fearless I, a Panamax vessel of 73,427 dwt built in 1997, was fixed under a new time charter for a period of 4-6 months at a daily rate of $22,250.

Time Charter Coverage
We have secured under time charter employment 69% of our operating days for the fourth quarter of 2009 and 54% for 2010.

Management Commentary:
Lefteris Papatrifon, Chief Financial Officer of Excel, stated, "For one more quarter, we have been able to deliver solid operating results. Our chartering strategy has allowed us, despite the prevailing rate volatility in our market, to generate stable and slightly increased cash flows on a quarter over quarter basis, as demonstrated by the Adjusted EBITDA of $59.1 million earned in the third quarter of this year.

During the third quarter, we also took proactive measures in strengthening and simplifying our balance sheet. The capital increase concluded in early August has allowed us to further deleverage and has also provided equity financing for our 2010 new building commitments. Additionally, the agreements reached with our joint venture partners enable us to consolidate and simplify our new buildings program.

At the same time, we have continued taking advantage of rate strengthening opportunities by fixing vessels on medium to long term charters at attractive rates, allowing us to enhance the stability of cash flows."

Third Quarter 2009 Results:
The company reported net profit for the quarter of $62.0 million or $0.79 per weighted average diluted share as compared to net income of $117.6 million or $2.66 per weighted average diluted share for the third quarter of 2008.

The third quarter 2009 results include a non-cash unrealized interest-rate swap loss of $1.8 million compared to an unrealized interest-rate swap loss of $6.7 million in the corresponding period in 2008. Net income, excluding the above items, for the third quarter of 2009 would amount to $63.8 million or $0.81 per weighted average diluted share compared to respective income for the third quarter of 2008 of $124.3 million or $2.81 per weighted average diluted share.

Included in the above adjusted net income are also the amortization of favorable and unfavorable time charters that were fair valued upon acquiring Quintana Maritime Limited on April 15, 2008 amounting to a net income of $66.4 million ($0.84 per weighted average diluted share) and $71.8 million ($1.62 per weighted average diluted share) for the third quarters of 2009 and 2008, respectively, and the amortization of stock based compensation expense of $8.9 million ($0.11 per weighted average diluted share) and $4.0 million ($0.09 per weighted average diluted share), for the three months ended September 30, 2009 and 2008, respectively.

In addition, effective January 1, 2009, we changed the method of accounting for dry-docking and special survey costs from the deferral method to the expense as incurred method, as well as, adopted FASB Staff Position APB 14-1 "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion" that changed the method of accounting for our Convertible Notes. Please refer to a subsequent section of this Press Release for a further discussion on these accounting changes.

Such changes were effected retrospectively to all periods presented and their effect in the three months ended September 30, 2009 was an increase in net income of approximately $1.0 million or $0.01 per weighted average diluted share in relation to the change in dry-dock and special survey policy and a decrease in net income of $1.5 million or $0.02 per weighted average diluted share in relation to the change in the accounting for the convertible notes.

Revenues for the third quarter of 2009 amounted to $174.4 million as compared to $231.6 million for the same period in 2008, a decrease of approximately 24.7%.

Included in revenues for the third quarters of 2009 and 2008 are $76.4 million and $81.9 million, respectively of non-cash revenues relating to the amortization of unfavorable time charters that were fair valued upon acquiring Quintana.

An average of 47 vessels were operated during the third quarters of 2009 and 2008 earning a blended average time charter equivalent rate of $21,912 and $33,806 per day, respectively. Please refer to a subsequent section of this Press Release for a calculation of the TCE.

Adjusted EBITDA for the third quarter of 2009 was $59.1 million compared to $110.1 million for the third quarter of 2008, a decrease of approximately 46.3%. Please refer to a subsequent section of this Press Release for a reconciliation of adjusted EBITDA to Net Income.

Nine Months to September 30, 2009:
The company reported net profit for the period of $258.0 million or $3.91 per weighted average diluted share as compared to net income of $276.2 million or $7.97 per weighted average diluted share for the respective period of 2008.

The nine months 2009 results include a non-cash unrealized interest-rate swap gain of $19.2 million compared to an unrealized interest-rate swap gain of $14.4 million in the corresponding period in 2008. Net income for 2009 includes also a non-cash item of $0.1 million relating to the resulting gain from the sale of vessel Swift.

Net income, excluding the above items, would amount to $238.8 million or $3.62 per weighted average diluted share for the nine month period ended September 30, 2009 compared to $261.8 million or $7.55 per weighted average diluted share for the respective period in 2008.

Included in the above adjusted net income are also the amortization of favorable and unfavorable time charters discussed above and amounting to a net income of $251.0 million ($3.8 per weighted average diluted share) and $136.8 million ($3.9 per weighted average diluted share) for the nine-month periods ended September 30, 2009 and 2008, respectively and the amortization of stock based compensation expense of $14.3 million ($0.22 per weighted average diluted share) and $6.7 million ($0.19 per weighted average diluted share), respectively.

The effect of the accounting changes discussed above in the nine-month period ended September 30, 2009 was a decrease in net income of approximately $2.4 million or $0.04 per weighted average diluted share due to the change in dry-dock and special survey policy and $4.3 million or $0.07 per weighted average diluted share due to the change in the accounting for the convertible notes.

Revenues for the period amounted to $570.4 million as compared to $506.9 million for the same period in 2008, an increase of approximately 12.5%.

Included in revenues for the nine-month periods ended September 30, 2009 and 2008 are $280.9 million and $155.2 million, respectively of non-cash revenues relating to the amortization of unfavorable time charters that were fair valued upon acquiring Quintana.

An average of 47.3 vessels were operated during the nine-month period ended September 30, 2009, earning a blended average time charter equivalent (TCE) rate of $21,676 per day compared to $34,913 per day for the nine-months period ended September 30, 2008 earned by an average of 35.8 vessels. Please refer to a subsequent section of this Press Release for a calculation of the TCE.

Adjusted EBITDA for the period was $169.7 million compared to $253.1 million for the respective period of 2008, a decrease of approximately 33.0%. Please refer to a subsequent section of this Press Release for a reconciliation of adjusted EBITDA to Net Income.

(www.excelmaritime.com)

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