For: B+H Ocean Carriers Ltd.
From: Navinvest Marine Services (
The Sail Loft
FOR IMMEDIATE RELEASE
B+H
Ocean Carriers, Ltd. Announces Results for the Third Quarterly Period Ending
NEW YORK, NEW YORK , October 31, 2005. . . . B+H Ocean Carriers Ltd. (AMEX:
BHO) reported unaudited net income of $15,028,000
or $2.78 per share basic and $2.66 per share diluted, for the nine months
ended September 30, 2005, compared to unaudited net income of $65,000, or
$0.02 per share basic and $0.01 diluted, for the nine months ended September
30, 2004. EBITDA for the nine month period ending September 30, 2005 was $26,141,000 as compared to $10,808,000
for the comparable period of 2004.
The Company also reported unaudited net income of $6,528,000,
or $0.91 per share basic and $0.88 per share diluted for the three month period
ending September 30, 2005,
as compared to unaudited net income of $2,115,000, or $0.55 per share basic
and $0.48 diluted for the same period of 2004. EBITDA for the three months
ending September 30, 2005 was $10,181,000 as
compared to $4,378,000 for the three months ending September 30, 2004.
On September
21, 2005, the Company, through a wholly owned subsidiary, acquired a 1992-built
double hull combination carrier of approximately 75,000 dwt for $33,250,000
and simultaneously delivered the vessel on a time charter for three years.
The Company used cash to purchase the vessel, but has entered into an agreement
to finance a portion of the purchase price, as noted below. Including the
funds projected to be returned to the Company following the financing later
this year, the Company’s cash at September
30, 2005 amounted to approximately $68,000,000.
On
$138,000,000 revolving term loan facility. A portion of the funds was used to refinance the $102,000,000 floating rate facility used to acquire three combination carriers in March 2005. The additional funds will be applied toward the financing of the Company’s recent acquisition of M/V ROGER M JONES and the acquisition of M/T CHALLENGE EXPRESS (to be renamed SAGAMORE) scheduled for delivery within 2005.
The Company also said that it was continuing to develop vessel acquisition projects with multi-year fixed rate employment which would be expected to generate operating economics similar to those of the five vessels acquired so far this year. The Company intends to expand its presence in its two current sectors of the tanker market: combination carriers capable of transporting both wet and dry bulk cargoes, and product carriers; however, there can be no assurance that the Company will be able to purchase any of such vessels on favorable terms or at all.
The following is a discussion of our financial
condition and results of operations for the nine month and the quarterly periods
ended
Results of Operations
Nine Months Ended September 30, 2005 versus September 30, 2004
Revenues from voyage and time charters increased $16.6 million or 47% from 2004. The increase is due to the Company’s ongoing vessel acquisition program, the composition of the fleet in terms of size and type and to higher time charter equivalent rates. Voyage expenses, which consist of port, canal and fuel costs that are unique to a particular voyage and commercial overhead costs, including commercial management fees paid to B+H Management Ltd. (“BHM”), a company affiliated with management, decreased $1.9 million, or 30%, to $4.6 million for the nine month period ended September 30, 2005 compared to $6.5 million for the comparable period of 2004. This is due to the significant decrease in voyage charter days from 653 in 2004 to 155 in 2005. All of the Company’s vessels have been employed on long term time charters since March 2005, during which the Company does not incur port, canal or fuel costs.
The increase in vessel
operating expenses is due to the increase in the number of vessels, as noted
above. Vessel operating expenses increased $3.7 million (24%) which is comprised
of $4.6 million for four vessels acquired in 2005 and $1.2 million for a vessel
owned less than nine months in 2004. This is offset by a $2.1 million decrease
relating to the sale of one vessel in each of the second and fourth quarters
of 2004. Depreciation and amortization,
which includes depreciation of vessels as well as amortization of special
surveys, increased by $2.5 million, or 44%, to $8.2 million for the nine months
ended
The Company had a gain on the sale of the
vessel M/T COMMUTER of $0.8 million for the nine month period ended
General and administrative expenses include
all of our onshore expenses and the fees that BHM charges for administration
of our vessels and shipowning companies. Management fees increased by $0.26
million, or 83%, to $0.57 million for the nine month period ended
The $2.8 million (301%)
increase in interest expense is due to the increase of $102 million in debt
for the acquisition of three vessels in early 2005. The increase in interest
income of $0.75 million is due to the fact that the Company issued 3,243,243
shares of its common stock for net cash proceeds of $57 million in May 2005.
The Company’s approximate average cash balance in for the nine month period
ended
Quarter Ended
Revenues from voyage,
time and bareboat charters increased $5.8 million or 45% from the third quarter
of 2004 to that of 2005. The increase is due to the vessel acquisitions discussed
above. This increase was offset by decreases in voyage charter revenue versus
time charter revenue, the former of which generate greater gross revenues
per charter. Voyage expenses consist of port, canal and fuel costs that are unique
to a particular voyage and commercial overhead costs, including commercial
management fees paid to BHM. There was a $1.1 million (49%) decrease in voyage
expenses in the third quarter of 2005 as compared to the same period of 2004.
The decrease is due to the fact that there were no voyage charters during
the three month period ended
Vessel operating expenses
increased $1.7 million or 31% for the three month period ended
The $1.2 million (347%) increase in interest expense is due to the increase of $102 million in debt for the acquisition of three vessels in early 2005. The increase in interest income is due to the fact that the Company issued 3,243,243 shares of its common stock for net cash proceeds of $57 million in May 2005. The Company’s approximate average cash balance in the third quarter of 2005 was $59.6 million as compared to $8.8 million in 2004. The interest rate earned for cash on deposit also increased to approximately 3.7% up from 2.0% for the same period in 2004.
The Company had a gain on the sale of the
vessel M/T COMMUTER of $0.8 million for the three month period ended
Liquidity and Capital Resources
Cash
at
The inflow for financing activities is primarily attributable to mortgage proceeds of $102.0 million to finance the acquisition of three combination carriers in the first quarter, to the issuance of common stock for net proceeds of $56.8 million and the proceeds from exercise of stock options of $0.1 million. This was offset by the payment of mortgage principal of $15.0 million and to payments for debt issuance costs of $1.0 million.
The outflow for investing activities is attributable to the purchase of four combination carriers for $144.5 million, investment in vessel upgrades of $1.0 million and the deposit on the purchase of a panamax product tanker of $2.4 million, net of the proceeds from the sale of one vessel of $7.9 million.
The Company intends to continue its vessel acquisition program to expand its presence in its two current sectors of the tanker market: combination carriers capable of transporting both wet and dry bulk cargoes, and product carriers; however, there can be no assurance that the Company will be able to purchase any of such vessels on favorable terms or at all.
The Company’s fleet currently consists of six Medium Range product tankers, five combination carriers and one Panamax product carrier (to be delivered within 2005), all of which are currently fixed on long-term time charters, which vary in original length of between one and five years.
We provide EBITDA (earnings before interest expense, taxes, depreciation and amortization) information as a guide to the operating performance of the Company. EBITDA, which is not a term recognized under generally accepted accounting principles, is calculated as net income plus interest expense, income taxes (benefit), depreciation and amortization, and an adjustment for book value gains and losses on the sale of vessels. Included in the depreciation and amortization for the purpose of calculating EBITDA is depreciation of vessels, including capital improvements and amortization of mortgage fees. EBITDA, as calculated by the Company, may not be comparable to calculations of similarly titled items reported by other companies.
Certain statements contained in this press release, including, without limitation, statements containing the words “believes,” “anticipates,” “expects,” “intends,” and words of similar import, constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules, regulations and releases, regarding the Company’s financial and business prospects. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, those set forth in the Company’s Annual Report and filings with the Securities and Exchange Committee. Given these uncertainties, undue reliance should not be placed on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained or incorporation by reference herein to reflect future events or developments.
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For further information, including the Company’s Annual Report on Form 20F, access the Company’s website: www.bhocean.com
Company Contact: John LeFrere
917.225.2800
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