EXHIBIT 99.1
FreeSeas Inc. Reports Results for the First Quarter Ended March 31, 2008
Operating Revenue Increased 102.5% in First Quarter Company Announces Quarterly Dividend of $.175 Per Share to Shareholders of Record as of May 20, 2008
PIRAEUS, Greece, May 15, 2008 (PRIME NEWSWIRE) -- FreeSeas Inc. (Nasdaq:FREE) (Nasdaq:FREEW) (Nasdaq:FREEZ) ("FreeSeas" or "the Company"), a provider of seaborne transportation for drybulk cargoes, announced today unaudited operating results for the first quarter ended March 31, 2008.
Financial Highlights
* Operating revenues grew by 102.5% compared to the same quarter of 2007, to $8.64 million from $4.27 million. * Net income for the first quarter of 2008, including changes in the fair value of derivatives of $.70 million, was $.28 million or $0.01 basic earnings per share based on 20,743,456 common shares outstanding, compared with net income of $0.91 million, or $0.15 basic earnings per share based on 6,290,100 common shares outstanding for the same quarter of 2007. * Net income for the quarter ended March 31, 2008, excluding changes in the fair value of derivatives of $.70 million, reached $.99 million, or $0.05 basic earnings per share based on 20,743,456 common shares outstanding, compared to net income of $0.91 million, or $0.15 basic earnings per share, based on 6,290,100 common shares outstanding, for the same period of 2007. * Net income for the quarter ended March 31, 2008 was affected by the following factors: * The Free Jupiter unscheduled dry-docking for repairs during part of the first quarter of 2008, and * A $.70 million loss related to changes in the fair value of derivatives representing unrealized valuation loss on interest rates swap contracts entered into in connection with existing bank debt. * Adjusted EBITDA for the quarter ended March 31, 2008 increased by 78.68% as compared to same period in 2007, to $3.82 million from $2.14 million
Fleet Developments
* On February 28, 2008 the Company announced the return to service of the Free Jupiter. The vessel immediately began its previously announced three-year time charter through February 2011 at a rate of $32,000 per day for the first year, $28,000 per day for the second year and $24,000 per day for the third year. * The Free Knight was delivered to FreeSeas on March 19, 2008 and the Free Impala was delivered to FreeSeas on April 2, 2008. Both vessels have been fixed to one-year time charters at a rate of $31,500 per day. * In March, FreeSeas announced the purchase of the Free Lady from an unaffiliated third party for approximately US$65.2 million. The vessel is a 2003-built, 50,246 dwt Handymax vessel built in Japan, and is scheduled for charter-free delivery to FreeSeas in June or July 2008. * Also in March, FreeSeas announced a new charter for the Free Destiny, a 75-day time charter at $27,500 per day. * Finally, in April, the Free Envoy was chartered for a time charter of approximately 25 days at a rate of $28,500 per day.
Corporate Initiatives
* In February 2008, FreeSeas declared its inaugural quarterly dividend of $0.175 per share on its common stock outstanding. The dividend was paid on February 28, 2008 to shareholders of record as of February 18, 2008. * Earlier this week, the Company announced that it has declared a quarterly dividend of $0.175 per share on its common stock outstanding. The dividend will be paid on May 30, 2008 to shareholders of record as of May 20, 2008. * The Company also announced that it had finalized the financing for the Free Impala and Free Knight, securing facilities in the total amount of approximately $53 million for a term of approximately seven years. * FreeSeas launched its new corporate website in March. The website, www.freeseas.gr, will serve as FreeSeas' home on the internet, offering the investors, financial community, and industry partners an in depth look at the latest company updates as well as pertinent industry information.
Mr. Ion Varouxakis, President and Chief Executive Officer, commented, "Our first quarter results clearly indicate that we have built on the momentum established in 2007. Despite the fact that we only had the operating days equivalent of 4.2 of our seven current vessels, we were still able to post record operating revenue. We expect that the second quarter will produce even better results as we expect to increase the amount of available days, and have secured accretive charters that reflect the strength of the drybulk market."
Mr. Varouxakis continued, "While our earnings were impacted by the change in fair value of derivatives, we expect that this unrealized, non-cash loss will reverse itself in future quarters, as interest rates stabilize and their falling trend reverses during the life of the swap contracts. We will continue to hedge ourselves against fluctuations in interest rates to protect our balance sheet."
Mr. Varouxakis concluded, "We are very encouraged by the current dynamics in our industry. Rates have continued to improve and our recent acquisitions have appreciated in value. With seven vessels on the water, and one still to be delivered, we believe that our increased free cash flow will position the Company to comfortably support our operating expenses, debt service and dividend payments. As such, we announced earlier this week our second quarterly dividend of $.175 per share. Further, our increased scale and the associated revenue growth should provide ample capital for fleet growth, and we anticipate making additional acquisitions this year. Our financial flexibility continues to improve, and with it our prospects for future growth."
FreeSeas current fleet and vessels to be delivered are detailed below.
Conference Call
As previously announced, the Company will host a conference call on May 15, 2008 at 8:30 am Eastern Time to review the results as well as management's outlook for the business. The call, which will be hosted by FreeSeas' management, may contain information beyond what is included in the earnings press release.
To participate in the call from the United States or Canada, please dial +1.888.694.4702 approximately five minutes prior to the starting time. To participate in the call outside the United States or Canada, please dial +1.973.582.2741 five minutes prior to the starting time. The Conference ID is 44229677.
Two hours after the completion of the conference call, a digital recording of the call will be available for seven days, and can be accessed by dialing +1.800.642.1687 from inside the United States or Canada and +1.706.645.9291 from outside the United States or Canada and entering the Conference ID 44229677.
The call, which will be simultaneously broadcast live over the Internet, can be accessed at: http://www.videonewswire.com/event.asp?id=47798. The online archive of the broadcast will be available within one hour of the live call at the same web address.
Current fleet: ==================================================================== Vessel Name Dwt Vessel Type Built Employment ==================================================================== Free Destiny 25,240 Handysize 1982 75-day time-charter at $27,500 p/d ==================================================================== Free Envoy 26,318 Handysize 1984 25-day time-charter at $28,500 p/d ==================================================================== Free Goddess 22,051 Handysize 1995 Two-year time-charter through November 2009 at $19,250 p/d ==================================================================== Free Hero 24,318 Handysize 1995 Time-charter through February 2009 at $14,500 p/d ==================================================================== Free Jupiter 47,777 Handymax 2002 Three-year time- charter through February 2011 at $32,000/28,000 /24,000 p/d ==================================================================== Free Knight 24,111 Handysize 1998 One-year time-charter through March 2009 at $31,500 p/d ==================================================================== Free Impala 24,111 Handysize 1997 One-year time-charter through April 2009 at $31,500 p/d ==================================================================== Vessels to be delivered: ==================================================================== Expected Vessel Name Dwt Vessel Type Built Delivery Employment ==================================================================== Free Lady 50,246 Handymax 2003 June-July No employment 2008 currently in place ====================================================================
About FreeSeas Inc.
FreeSeas Inc. is a Marshall Islands corporation with principal offices in Piraeus, Greece. FreeSeas is engaged in the transportation of dry bulk cargoes through the ownership and operation of dry bulk carriers. Currently, it has a fleet of six Handysize vessels and one Handymax vessel. FreeSeas' common stock and warrants trade on the NASDAQ Global Market under the symbols FREE, FREEW and FREEZ, respectively. Risks and uncertainties are described in reports filed by FreeSeas Inc. with the U.S. Securities and Exchange Commission, which can be obtained free of charge on the SEC's website at www.sec.gov. For more information about FreeSeas Inc., please go to our corporate website, www.freeseas.gr.
Forward-Looking Statements
This press release contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events and the Company's growth strategy and measures to implement such strategy, including expected vessel acquisitions. Words such as "expects," "intends," "plans," "believes," "anticipates," "hopes," "estimates," and variations of such words and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or impli ed by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, changes in the demand for dry bulk vessels; competitive factors in the market in which the Company operates; risks associated with operations outside the United States; and other factors listed from time to time in the Company's filings with the Securities and Exchange Commission. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.
FREESEAS INC. CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS (All amounts in tables in thousands of United States dollars, except for share data) Year Ended 31-Mar-08 31-Dec-07 (Unaudited) Audited --------- --------- ASSETS ------ CURRENT ASSETS: Cash and cash equivalents 32,785 63,394 Trade receivables, net 393 60 Insurance claims 21,330 16,116 Due from related party 1,098 1,037 Inventories 290 499 Prepayments and other 260 334 --------- --------- Total current assets $ 56,156 $ 81,440 Advances for acquisition of vessels 10,270 -- Fixed assets, net 145,710 108,021 Deferred charges, net 2,185 2,161 Restricted cash 350 350 --------- --------- Total Assets $ 214,671 $ 191,972 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable 5,345 3,181 Accrued liabilities 15,085 16,713 Unearned revenue 1,205 783 Deferred revenue 1,257 1,620 Bank loans -- current portion 18,700 11,800 --------- --------- Total current liabilities $ 41,592 $ 34,097 Derivative financial instruments 1,451 749 Shareholders loans - net of current portion Bank loans, - net of current portion 62,325 44,500 --------- --------- Total long term liabilities $ 63,776 $ 45,249 Commitments and Contingencies SHAREHOLDERS' EQUITY: Common stock 20 20 Additional paid-in capital 111,858 115,464 Accumulated deficit (2,575) (2,858) --------- --------- Total shareholders' equity $ 109,303 $ 112,626 --------- --------- Total Liabilities and Shareholders' Equity $ 214,671 $ 191,972 ========= ========= FREESEAS INC. CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (All amounts in tables in thousands of United States dollars, except for share data) Three Months Ended 31-Mar-08 31-Mar-07 (Unaudited) (Unaudited) ------------ ------------ OPERATING REVENUES $ 8,641 $ 4,268 OPERATING EXPENSES: Vessel operating expenses (3,257) (1,414) Voyage expenses (89) (2) Depreciation expenses (2,015) (812) Amortization of deferred charges (102) (195) Management fees to a related party (485) (135) Commissions (460) (257) Stock-based compensation expenses (27) (25) General and administrative expenses (545) (342) ------------ ------------ Income (loss) from operations $ 1,661 $ 1,086 ------------ ------------ OTHER INCOME (EXPENSE): Interest and finance costs (916) (219) Change in derivatives fair value (702) -- Interest income 284 -- Other (44) 46 ------------ ------------ Other income (expense) $ (1,378) $ (173) ------------ ------------ ------------ ------------ Net income $ 283 $ 913 ============ ============ Basic earnings per share $ 0.01 $ 0.15 Diluted earnings per share $ 0.01 $ 0.15 Basic weighted average number of shares 20,743,456 6,290,100 Diluted weighted average number of shares 21,012,924 6,290,100 PERFORMANCE INDICATORS Three Months Ended 31-Mar-08 31-Mar-07 (Unaudited) (Unaudited) ---------- ---------- Adjusted EBITDA (1) $ 3,734 $ 2,139 Fleet Data: Average number of vessels (2) 5.11 3.00 Ownership days (3) 465 270 Available days (4) 465 270 Operating days (5) 386 258 Fleet utilization (6) 83.0% 96.0% Average Daily Results: Average TCE rate (7) $ 20.964 $ 15.539 Vessel operating expenses (8) 7.004 5.237 Management fees (9) 1.043 0.500 General and administrative expenses (10) 1.474 1.326 Total vessel operating expenses (11) $ 8.047 $ 5.737
(1) EBITDA reconciliation to net income:
Adjusted EBITDA represents net earnings before interest, taxes, depreciation and amortization and change in the fair value of derivatives. Adjusted EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by United States generally accepted accounting principles, or U.S. GAAP, and our calculation of adjusted EBITDA may not be comparable to that reported by other companies. Adjusted EBITDA is included herein because it is an alternative measure of our liquidity, performance and indebtedness. The following is a reconciliation of adjusted EBITDA to net income:
Three Months Ended 31-Mar-08 31-Mar-07 (Unaudited) (Unaudited) ---------- ---------- Net income (loss) $ 283 $ 913 Depreciation and amortization 2,117 1,007 Change in fair value of derivatives 702 -- Interest and finance cost, net 632 219 ---------- ---------- Adjusted EBITDA $ 3,734 $ 2,139 ========== ==========
(2) Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in the period.
(3) Ownership days are the total number of days in a period during which the vessels in our fleet have been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.
(4) Available days are the number of ownership days less the aggregate number of days that our vessels are off-hire due to major repairs, dry dockings or special or intermediate surveys. The shipping industry uses available days to measure the number of ownership days in a period during which vessels should be capable of generating revenues.
(5) Operating days are the number of available days less the aggregate number of days that our vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.
(6) We calculate fleet utilization by dividing the number of our fleet's operating days during a period by the number of ownership 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 such as scheduled repairs, vessel upgrades, or dry dockings or other surveys.
(7) Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards and is determined by dividing operating revenues (net of voyage expenses and commissions) by operating days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract. TCE is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods:
Three Months Ended 31-Mar-08 31-Mar-07 (Unaudited) (Unaudited) ---------- ---------- Operating revenues $ 8,641 $ 4,268 Voyage expenses and commissions (549) (259) ---------- ---------- Net operating revenues 8,092 4,009 Operating days 386 258 Time charter equivalent daily rate $ 20.964 $ 15.539
(8) Average daily vessel operating expenses, which includes crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs, is calculated by dividing vessel operating expenses by ownership days for the relevant time periods:
Three Months Ended 31-Mar-08 31-Mar-07 (Unaudited) (Unaudited) ---------- ---------- Vessel operating expenses $ 3,257 $ 1,414 Ownership days 465 270 ---------- ---------- Daily vessel operating expense $ 7.004 $ 5.237
(9) Daily management fees are calculated by dividing total management fees paid on ships owned by ownership days for the relevant time period.
(10) Average daily general and administrative expenses are calculated by dividing general and administrative expenses by operating days for the relevant period.
(11) Total vessel operating expenses, or TVOE, is a measurement of our total expenses associated with operating our vessels. TVOE is the sum of daily vessel operating expense and daily management fees. Daily TVOE is calculated by dividing TVOE by fleet ownership days for the relevant time period.
CONTACT: FreeSeas Inc. Ion Varouxakis, Chief Executive Officer 011-30-210-45-28-770 Fax: 011-30-210-429-10-10 info@freeseas.gr www.freeseas.gr 89 Akti Miaouli Street 185 38 Piraeus, Greece Cubitt Jacobs & Prosek Communications Investor Relations / Financial Media: Thomas J. Rozycki, Jr., Sr. Vice President +1.212.279.3115 x208 Fax: +1.212.279-3117 trozycki@cjpcom.com www.cjpcom.com 350 Fifth Avenue - Suite 3901 New York, NY 10118, USA