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Stake in Ocean Rig Supports Revenue Gain at Dryships, Losses Narrow

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August 16, 2012

DryShips Inc.’s (DRYS) second-quarter loss narrowed as revenue improved and vessel-impairment expenses weighed on year-ago results.

However, shares fell 4.8% to $2.20 after hours as results missed analyst expectations.

Last year, DryShips, which transports dry bulk and oil cargoes, closed its acquisition of OceanFreight Inc. for $118 million as it looked to add additional vessels with long-term charters to its fleet. It also partially spun off its offshore drilling-services provider subsidiary, Ocean Rig UDW Inc. (ORIG, OCRG.NO).

Oversupply of available ships has continued to weaken the U.S. shipping industry, which has also grappled with aging fleets. George Economou, Chairman and Chief Executive Officer, said the company is defensively positioned to weather a tough bulk shipping market due to its relatively healthy cash position and stake in Ocean Rig.

DryShips reported a loss of $18.2 million, or five cents a share, compared with a year-earlier loss of $114.1 million. The latest period included four cents in charges related to class survey costs and losses incurred on interest rate swaps. Revenue jumped 50% to $336.1 million.

Analysts polled by Thomson Reuters had projected a per-share profit of four cents and revenue of $343 million.

The year-earlier period included $87.7 million in expenses related to vessel impairments, compared with a $525,000 gain in the latest period. However, drilling rigs’ operating expenses more than doubled.

Drybulk fleet utilization, the percentage of time vessels were available for revenue-generating voyage days, increased to 99.4% from 98.4%.

Through the close, the stock has gained 16% since the start of the year.

– Nathalie Tadena, (c) 2012 Dow Jones & Company

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