DryShips Inc. (DRYS), the largest publicly traded global operator of dry bulk carriers, reported first quarter results that topped analysts’ estimates. The company reported net income of $176.3 million or $4.61 per share, which included a gain of $24.4 million or $0.64 per share on the sale of one vessel and a non-cash loss of $6.1 million or $0.16 per share on interest rate swap valuations. Excluding these one-time items, DryShips earned $4.13 per share vs. $4.05 consensus on revenues of $232.1 million vs. estimates of $218.6 million.
“We remain confident in the positive fundamentals of the dry bulk market,” said George Economou, the company’s chairman and Chief Executive Officer. “We have continued with our fleet renewal and expansion strategy aimed to replace older tonnage with younger and larger vessels, thereby expanding and enhancing the quality of earnings of our fleet for the longer term. Based on the sales and purchase activity we have concluded to date, by the end of the year our fleet will include 47 vessels, including 7 newbuildings, with an average age of 7 years, considerably lower than the industry average of 13 years. With our modern, large and versatile fleet, we believe we are strategically positioned to continue taking advantage of the strong freight rate environment.”
Economou continued, “I am also particularly excited with the implementation of our strategic vision to create a leading presence in the ultra deep water drilling (UDW) market and to take advantage of the extremely positive fundamentals of that sector. The acquisition of Ocean Rig, which already operates two UDW rigs, and the agreement to construct two state of the art drillships create a significant platform for our foray into this sector. As we have mentioned before, we intend to spin off this business unit to our shareholders through a U.S. listing within the next 12 months.”
The company provided updates on fleet transactions that include the disposition of aging vessels and the acquisition of younger ships, resulting in a net gain of one vessel, bringing the total fleet up to 48 vessels. Demand for the services of dry bulk carriers, which transport commodities such as coal, grains, and iron ore, has been soaring due to economic growth in developing nations, most notably China, and a dearth of vessels, which take many months to build. The Baltic Dry Index, which monitors the prevailing rates these vessels can command, has nearly doubled from its January lows and closed at a record 11709, the third record close in a row.
Shares of DRYS closed today at $105 and have traded in a range of $34.55 – $131.34 during the past year. Shares have risen 84% since March 20 when the stock closed at $57.14. Today’s results give DRYS a trailing twelve month P/E of 6.2.
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