General Maritime Q3 & Nine Months Results

Friday, October 29, 2010

General Maritime Corporation (NYSE: GMR) reported its financial results for the three and nine months ended September 30, 2010.

Financial Review: Third Quarter 2010
The Company recorded a net loss of $26.0 million or $0.30 basic and $0.30 diluted loss per share for the three months ended September 30, 2010 compared to net income of $14.8 million or $0.27 basic and $0.27 diluted earnings per share for the three months ended September 30, 2009. The decrease in net income was primarily the result of a 31.9% decrease in TCE to $19,109 per day for the three months ended September 30, 2010 compared to $28,077 per day for the prior year period, as well as a $13.6 million increase in net interest expense to $21.4 million for the three months ended September 30, 2010 compared to $7.7 million for the prior year period. Excluding the acceleration of the amortization of the net time charter liability of $13.1 million, from the prior year period for the Arlington vessels which were redelivered to the Company earlier than expected, the decrease in TCE was 17.4% from $23,136 from the prior year period to $19,109 for the three months ended September 30, 2010. 

John Tavlarios, President of General Maritime Corporation, commented, "During the third quarter and year-to-date, we continued to grow General Maritime's fleet and contracted revenue stream while taking steps to enhance its financial flexibility. We are pleased to have already taken delivery of six of the seven double-hull vessels we agreed to acquire in June 2010.  During the quarter, we also significantly increased our time charter coverage by entering into contracts for six vessels with Trafigura, the third largest independent oil trader.  Additionally, we placed the Genmar Elektra, a 2002 build Aframax, with Clearlake, another leading oil trading firm.  General Maritime's ongoing success in implementing its flexible deployment strategy positions the Company to take advantage of future rate increases while maintaining a level of stability in results and covering a substantial portion of fixed costs."

Net voyage revenue, which is gross voyage revenues minus voyage expenses unique to a specific voyage (including port, canal and fuel costs), decreased 26.0% to $57.6 million for the three months ended September 30, 2010 compared to $77.8 million for the three months ended September 30, 2009.  This decrease was primarily due to an increase in voyage expense from $18.9 million for the three months ended September 30, 2009, to $40.7 million for the three months ended September 30, 2010.  This increase in voyage expense was due to higher bunker costs as well as an increase in percentage of spot market operating days for the third quarter 2010, compared to the prior year period.  EBITDA for the three months ended September 30, 2010 decreased 53.6% to $20.8 million compared to $44.7 million for the prior year period (please see below for a reconciliation of EBITDA to net income). As of September 30, 2010, the Company's net debt (calculated as total debt less cash) was $1,184 million.

Total vessel operating expenses, which are direct vessel operating expenses and general and administrative expenses, increased 11.2% from $32.1 million for the three months ended September 30, 2009 to $35.7 million for the three months ended September 30, 2010.  Total vessel operating expenses is a measurement of the Company's total expenses associated with operating its vessels. This increase was primarily due to the addition of 5 VLCCs which were acquired during the third quarter ended September 30, 2010 and are more expensive to operate.  Daily direct vessel operating expenses increased by 7.1% to $8,486 for the quarter ended September 30, 2010 compared to $7,923 for the prior year period.  The increase in daily direct vessel expenses is primarily due to the expiration of fixed cost technical management contracts for certain vessels, which subjected them to higher current market costs, and to the change in composition of the fleet to include the addition of the 5 VLCCs acquired during the quarter.  

General and administrative costs decreased by 1.4% to $9.3 million for the quarter ended September 30, 2010 compared to $9.5 million for the prior year period.  Contributing to this reduction was a decrease in professional expenses and the effects of changes in exchange rates.

Financial Review: Nine Months Ended September 30, 2010
The Company recorded a net loss of $49.4 million or $0.74 basic and $0.74 diluted loss per share, for the nine months ended September 30, 2010 compared to net income of $40.9 million, or $0.75 basic and $0.74 diluted earnings per share, for the nine months ended September 30, 2009. Net voyage revenues decreased 20.3% to $184.5 million for the nine months ended September 30, 2010 compared to $231.5 million for the prior year period.  EBITDA decreased 38.8% to $79.8 million for the nine months ended September 30, 2010 compared to $130.4 million for the prior year period.  TCE rates obtained by the Company's fleet decreased 24.0% to $21,915 per day for the nine months ended September 30, 2010 from $28,830 for the prior year period. Total vessel operating expenses increased 3.3% to $103.4 million for the nine months ended September 30, 2010 from $100.0 million for the prior year period, and daily direct vessel operating expenses increased 5.1% to $8,590 for the nine month period ended September 30, 2010 from $8,172 from the prior year period.

Metrostar Acquisition Update
During the quarter ended September 30, 2010, the Company took delivery of 5 VLCCs associated with the Metrostar acquisition announced in June 2010.  These vessels consist of a 2010 built, a 2002 built, a 2003 built and two 2007 built vessels.  The vessels were paid for with the proceeds from the Company's equity offering in June 2010 and borrowings from the Company's $372 million credit facility. 

On October 5, 2010, the Company entered into a $22.8 million bridge loan with Nordea and DnB to fund a portion of the purchase price of the Genmar Maniate, a Suezmax newbuild it had agreed to acquire in the Metrostar acquisition. 

The Genmar Maniate was delivered on October 6, 2010 and is the sixth of seven Metrostar vessels to be delivered. The final vessel, the Genmar Spartiate, a Suezmax newbuilding, is expected to be delivered to the Company in April 2011.  

$372 Million Facility Update
On October 5, 2010, the Company announced that it had completed the syndication process of the new $372 million credit facility, led by Nordea and DnB NOR.  The Company is pleased to have a group of leading global lenders in its new facility, including NIBC Bank, Skandinaviska Enskilda Banken (SEB), DVB Bank and Citibank. 

Additionally, the Company announced that it had amended the $372 million facility to extend, by 12 months, the period within which the Company is required to raise 40% of the purchase price of the seven Metrostar vessels from new equity. 

Q3 2010 Dividend Announcement
On October 27, 2010 the Company's Board of Directors declared a Q3 2010 quarterly dividend of $0.01 per share payable on or about November 26, 2010 to shareholders of record as of November 12, 2010.  Under the terms of the $22.8 million bridge loan, the quarterly cash dividend will limited to $0.01 per share per quarter during the period while the $22.8 million bridge loan is outstanding.

Jeff Pribor, Chief Financial Officer of General Maritime Corporation, commented, "During the quarter and year-to-date, we took important steps to enhance General Maritime's financial flexibility during a time when we continue to grow our modern high-quality fleet.  Specifically, we amended our $372 million senior secured credit facility, which was successfully syndicated to four global lending institutions.  We appreciate the continued support we receive from world-class banks, underscoring General Maritime's leading industry position and strong future prospects."
 

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