General Maritime Corporation Announces Fourth Quarter and Full Year 2007 Financial Results

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

28 Feb 2008

General Maritime Corporation today reported its financial results for the three months and full year ended December 31, 2007.Financial Review: 2007 Fourth QuarterExcluding the $4.4 million of other expense, the Company recorded net income of $9.6 million or $0.32 basic and $0.31 diluted earnings per share for the three months ended December 31, 2007. Net income was $5.2 million or $0.17 basic and $0.17 diluted earnings per share for the three months ended December 31, 2007 compared to net income of $22.4 million, or $0.73 basic and $0.71 diluted earnings per share, for the three months ended December 31, 2006. The decrease in net income was principally the result of a rise in other expense and net interest expense compared with the prior year period. Other expense included $2.6 million unrealized non-cash loss associated with the change in fair value of our freight derivatives as well as a $2.0 million loss associated with the monthly cash settlements of our freight derivatives offset by $0.2 million of other income. Net interest expense was higher due to increased borrowings to fund our $15.00 special dividend paid in March 2007. Net income in the quarter was also impacted by a 5.5% decrease in average daily TCE and lower utilization due to additional off hire.Peter C. Georgiopoulos, Chairman, Chief Executive Officer and President, commented, "During 2007, General Maritime continued to achieve notable accomplishments as we further differentiated the Company by providing both strong results and unlocking shareholder value in diverse shipping rate environments. Specifically, we posted solid financials results and declared dividends of $2.00 per share, which is directly related to our prior success in placing a significant portion of our fleet on attractive time charters. During a time, in which we continued to expand our fleet with modern double- hull vessels, we also unlocked value through the distribution of a $15 per share special dividend and opportunistic share repurchases."Net voyage revenue, which is gross voyage revenue minus voyage expenses unique to a specific voyage (including port, canal and fuel costs), increased 4.6% to $55.0 million for the three months ended December 31, 2007 compared to $52.6 million for the three months ended December 31, 2006. EBITDA for the three months ended December 31, 2007 was $25.7 million compared to $32.8 million for the three months ended December 31, 2006 (please see below for a reconciliation of EBITDA to net income). Net cash provided by operating activities was $16.2 million for the three months ended December 31, 2007 compared to $54.3 million for the prior year period.The average daily time charter equivalent for vessels on spot charters decreased by 18.5% to $28,157 for the three months ended December 31, 2007 compared to $34,537 for the prior year period. The Company's spot Aframax vessels earned $30,408 and the Company's spot Suezmax vessel earned $16,878 for the quarter ended December 31, 2007.Total vessel operating expenses, which are direct vessel operating expenses and general and administrative expenses, increased by 14.8% to $24.8 million for the three months ended December 31, 2007 compared to $21.6 million for the three months ended December 31, 2006. During the same periods, the average size of General Maritime's fleet increased 11.1% to 20 vessels from 18 vessels in the prior year period. Daily direct vessel operating expenses increased 5.7% to $7,032 per vessel day during the fourth quarter of 2007, from $6,650 per vessel day during the same period in 2006. The increase was attributable to higher crew costs and insurance as well as higher costs for lubricating oil and maintenance and repair. General and administrative expenses increased 12.2% to $11.9 million for the three months ended December 31, 2007 from $10.6 million in the prior year period.Financial Review: Full Year 2007Net income was $44.5 million or $1.46 basic and $1.43 diluted earnings per share, for the full year ended December 31, 2007 compared to $156.8 million, or $4.98 basic and $4.87 diluted earnings per share, for the full year ended December 31, 2006. Net voyage revenues decreased 11.7% to $216.9 million for the full year ended December 31, 2007 compared to $245.6 million for the full year ended December 31, 2006. EBITDA was $117.2 million for the full year ended December 31, 2007 compared to $197.8 million for the full year ended December 31, 2006. Net cash provided by operating activities was $95.8 million for the full year ended December 31, 2007 compared to $189.7 million for the prior year period. TCE rates obtained by the Company's fleet decreased 4.7% to $32,876 per day for the full year ended December 31, 2007 from $34,487 for the prior year period.Daily direct vessel operating expenses per vessel for the year ended December 31, 2007 increased 8.6% to $6,844 compared to $6,301 for the prior year period. The year over year increase in daily direct vessel operating expenses per vessel is mostly attributable to higher crew costs, higher lube oil costs, as well as higher maintenance and repair and higher insurance costs. General and administrative expenses increased 4.7% to $46.9 million for the year ended December 31, 2007 compared to $44.8 million for the prior year period. This increase is mainly attributable to fees paid in connection with banking advisory services relating to the special divided paid in March of 2007.Summary Consolidated Financial and Other DataThe following table summarizes General Maritime Corporation's selected consolidated financial and other data for the periods indicated below. Attached to this press release is an Appendix, which contains additional financial, operational and other data for the three month and full year periods, ended December 31, 2007 and 2006.Three Months Twelve Months Ended Ended December-07 December-06 December-07 December-06 INCOME STATEMENT DATA (Dollars in thousands, except per share data) Voyage revenues $67,937 $66,621 $255,015 $325,984 Voyage expenses (12,963) (13,974) (38,069) (80,400) Net voyage revenues 54,974 52,647 216,946 245,584 Direct vessel expenses 12,938 11,012 48,213 47,472 Other expenses - - - 2,430 General and administrative expenses 11,850 10,577 46,920 44,787 Depreciation and amortization 12,595 11,199 49,671 42,395 Net (loss) gain on sale of vessels and equipment 68 19 417 (46,022) Operating income 17,523 19,840 71,725 154,522 Net interest expense 7,939 (833) 23,059 (1,455) Other (income) expense 4,422 (1,735) 4,127 (854) Net Income $5,162 $22,408 $44,539 $156,831 Basic earnings per share $0.17 $0.73 $1.46 $4.98 Diluted earnings per share $0.17 $0.71 $1.43 $4.87 Weighted average shares outstanding, thousands 29,710 30,711 30,403 31,472 Diluted average shares outstanding, thousands 30,444 31,493 31,213 32,217 12 Months 12 Months Ended Ended BALANCE SHEET DATA, December-07 December-06 at end of period (Dollars in thousands) Cash $44,526 $107,460 Current assets, including cash 82,494 137,865 Total assets 835,035 843,690 Current liabilities, including current portion of long-term debt 35,502 27,147 Current portion of long-term debt - - Total long-term debt, including current portion 565,000 50,000 Shareholders' equity 228,657 763,913 Three Months Twelve Months Ended Ended December-07 December-06 December-07 December-06 OTHER FINANCIAL DATA (dollars in thousands) EBITDA (1) $25,696 $32,774 $117,269 $197,771 Net cash provided by operating activities 16,202 54,325 95,833 189,717 Net cash provided (used) by investing activities (3,915) (8,819) (84,516) 285,264 Net cash provided (used) by financing activities (116) (22,486) (74,251) (464,497) Capital expenditures Vessel sales (purchases) net, including construction in progress(2,763) (6,124) (80,061) 290,299 Drydocking or capitalized survey or improvement costs (7,182) (5,050) (11,815) (11,929) Weighted average long-term debt 547,826 50,000 414,137 93,085 FLEET DATA Total number of vessels at end of period 20 18 20 18 Average number of vessels (2) 20.0 18.0 19.3 20.6 Total voyage days for fleet (3) 1,691 1,530 6,599 7,121 Total time charter days for fleet 1,150 679 4,641 2,300 Total spot market days for fleet 541 851 1,958 4,821 Total calendar days for fleet (4) 1,840 1,656 7,045 7,534 Fleet utilization (5) 91.9% 92.4% 93.7% 94.5% AVERAGE DAILY RESULTS Time charter equivalent(6) $32,510 $34,410 $32,876 $34,487 Direct vessel operating expenses per vessel (7) 7,032 6,650 6,844 6,301 EBITDA (8) 13,965 19,791 16,646 26,250 Three Months Twelve Months Ended Ended December-07 December-06 December-07 December-06 EBITDA Reconciliation Net Income $5,162 $22,408 $44,539 $156,831 + Net interest expense 7,939 (833) 23,059 (1,455) + Depreciation & Amortization 12,595 11,199 49,671 42,395 EBITDA $25,696 $32,774 $117,269 $197,771 (1) EBITDA represents net income plus net interest expense and depreciation and amortization. EBITDA is included because it is used by management and certain investors as a measure of operating performance. EBITDA is used by analysts in the shipping industry as a common performance measure to compare results across peers. Management of the Company uses EBITDA as a performance measure in consolidating monthly internal financial statements and is presented for review at our board meetings. The Company believes that EBITDA is useful to investors as the shipping industry is capital intensive which often brings significant cost of financing. EBITDA is not an item recognized by GAAP, and should not be considered as an alternative to net income, operating income or any other indicator of a company's operating performance required by GAAP. The definition of EBITDA used here may not be comparable to that used by other companies. (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 part of our fleet during the period divided by the number of calendar days in that period. (3) Voyage days for fleet are the total days our vessels were in our possession for the relevant period net of off hire days associated with major repairs, drydockings or special or intermediate surveys. (4) Calendar days are the total days the vessels were in our possession for the relevant period including off hire days associated with major repairs, drydockings or special or intermediate surveys. (5) Fleet utilization is the percentage of time that our vessels were available for revenue generating voyage days, and is determined by dividing voyage days by calendar days for the relevant period. (6) 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 net voyage revenue by voyage days. (7) Daily direct vessel operating expenses, is calculated by dividing DVOE, which includes crew costs, provisions, deck and engine stores, lubricating oil, insurance and maintenance and repairs, by calendar days for the relevant time period. (8) Daily EBITDA is total EBITDA divided by total vessel calendar days. General Maritime Corporation's FleetOn February 7, 2008, the Company took delivery of the Genmar St. Nikolas, a 150,000 dwt newbuilding at Universal Shipbuilding in Nagoya Japan. The Genmar St. Nikolas is the final of 4 newbuildings ordered at this yard and completes our Suezmax newbuilding project.As of February 25, 2008, General Maritime Corporation's fleet was comprised of 21 wholly owned tankers, consisting of 10 Aframax and 11 Suezmax tankers, with a total carrying capacity of approximately 2.7 million deadweight tons, or dwt. The average age of the Company's fleet as of December 31, 2007 by dwt was 8.9 years compared to 9.5 years as of December 31, 2006. The average age of the Company's Aframax tankers was 12.3 years and the average age of the Company's Suezmax tankers was 6.8 years.Currently, 7 of General Maritime Corporation's Aframax tankers and 1 of its Suezmax tankers are operating on the spot market. 62% of the Company's fleet, consisting of 3 Aframax tankers, and 10 Suezmax tankers are currently under time charter contracts, compared to 53% of the fleet under time charter contracts as of December 31, 2006. The table below outlines which vessels are on time charter at what rate and when the contracts are set to expire.Vessel Vessel Type Expiration Date Daily Rate (1) Genmar Hope Suezmax August 13, 2009 $ 36,500 Genmar Spyridon Suezmax October 12, 2009 $ 38,500 Genmar Princess Aframax October 24, 2009 $ 27,750 Genmar Phoenix Suezmax November 1, 2009 $ 38,500 Genmar Ajax (2) Aframax December 1, 2009 $ 29,500 Genmar Defiance Aframax December 25, 2009 $ 29,500 Genmar Argus Suezmax January 6, 2010 $ 38,500 Genmar Horn Suezmax January 23, 2010 $ 38,500 Genmar Orion Suezmax June 1, 2010 $ 38,000 Genmar Harriet G. Suezmax June 1, 2010 $ 38,000 Genmar Kara G. Suezmax June 1, 2010 $ 38,000 Genmar George T Suezmax August 30, 2010 $ 39,000 Genmar St. Nikolas Suezmax February 15, 2011 $ 39,000 (1) Before brokers' commissions. (2) Rate is reduced to $25,000 per day on 12/1/08.The Company's primary area of operation is the Atlantic basin. The Company also currently has vessels employed in the Black Sea and Far East to take advantage of market opportunities and to position vessels in anticipation of drydockings.Q4 2007 Dividend AnnouncementOn February 25, 2008 the Company's Board of Directors declared a Q4 2007 quarterly dividend of $0.50 per share payable on or about March 28, 2008 to shareholders of record as of March 14, 2008. Under the Company's dividend policy, the Company intends to declare quarterly dividends with a target amount of $0.50 per share. The declaration of dividends and their amount, if any, will depend upon the results of the Company and the determination of the Board of Directors.Share RepurchaseDuring the fourth quarter of 2007 the Company bought back 174,200 shares at an average price of $24.54 per share under its previously announced share repurchase program. For the full year 2007 the Company bought back 1.35 million shares at an average price of $24.16. Since December 31, 2007 the Company has repurchased 711,300 shares at an average price of $23.03 and as of February 27, 2008 has 31,318,240 shares of its common stock outstanding.Forward Interest Rate Swap AgreementsAs of February 27, 2008 the Company has entered into three interest rate swap transactions with an aggregate notional amount of $275 million to manage interest costs and the risk associated with changing interest rates. Effective October 1, 2007 the Company entered into an interest rate swap agreement. The notional principal amount was $100 million and has a fixed interest rate on the notional amount of 4.748% through October 1, 2010. Effective January 31, 2008, the Company entered into another interest rate swap agreement. The notional principal amount of the swap is $100 million and has a fixed interest rate on the notional amount of 3.515% through September 30, 2012, when it expires. Effective February 5, 2008, the Company entered into a third interest rate swap agreement. The notional principal amount of the swap is $75 million and has a fixed interest rate on the notional amount of 3.39% through September 30, 2012, when it expires.Mr. Georgiopoulos concluded, "With 67% of our fleet currently on time charters, representing contracted revenue of $175.8 million for 2008, General Maritime is in a strong position to provide shareholders with a high degree of earnings visibility. Complementing this approach, we will seek additional opportunities to unlock future shareholder value. With approximately $300 million in liquidity, we believe that General Maritime has the financial strength to achieve this important objective. We plan to draw upon our consolidation success to seek opportunities to further grow our fleet. We also intend to distribute dividends through our fixed annual dividend target, which remains at $2.00 per share. As we have done since the inception of our repurchase program, we will also continue to look for opportunities to further implement our share repurchase program."