B+H Ocean Carriers, Ltd. Announces Unaudited Results for the Fourth Quarterly Period and Year Ending December 31, 2006.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- B+H Ocean Carriers B+H Ocean Carriers (OSE: BHOC, AMEX: BHO) is an international shipping company that operates seven bulk ships, seven product tankers and two chemical tankers. Based in Hamilton, Bermuda it also has offices in Oslo, Singapore, Bristol and New York. Ltd. (AMEX AMEX See: American Stock Exchange : BHO BHO Browser Helper Object BHO Bundeshaushaltsordnung BHO Barack Hussein Obama BHO Bhopal, India (airport code) BHO British History Online BHO Banjo Hangout (website) BHO Battle Handover ) reported unaudited net income of $1.9 million, or $0.27 per share basic and $0.26 per share diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. for the three month period ending December 31, 2006, as compared to unaudited net income of $6.9 million or $0.97 per share basic and $0.94 diluted for the same period of 2005. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become for the three months ending December 31, 2006 was $10.1 million as compared to $12.6 million for the three months ending December 31, 2005. Basic earnings per share calculations are based on weighted average shares outstanding of 6,965,745 and 7,129,094 respectively, for the three months ended December 31, 2006 and 2005. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of calculations are based on weighted average shares outstanding of 7,155,400 and 7,364,490 respectively, for the three months ended December 31, 2006 and 2005. The unaudited financial information presented is subject to audit adjustments. The Company also reported unaudited net income of $18.8 million or $2.68 per share basic and $2.60 per share diluted, for the twelve months ended December 31, 2006, compared to audited net income of $20.1 million, or $3.44 per share basic and $3.30 diluted, for the twelve months ended December 31, 2005. EBITDA for the twelve month period ending December 31, 2006 was $45.1 million as compared to $36.9 million for the comparable period of 2005. Basic earnings per share calculations are based on weighted average shares outstanding of 7,027,510 and 5,844,301 respectively, for the twelve months ended December 31, 2006 and 2005. Diluted earnings per share calculations are based on weighted average shares outstanding of 7,237,620 and 6,092,522 respectively, for the twelve months ended December 31, 2006 and 2005. The Company also announced that it had completed the conversion of two of its six single hull medium range ("MR") product tankers to fully double hull A double hull is a ship hull design and construction method where the bottom and sides of the ship have two complete layers of watertight hull surface: one outer layer forming the normal hull of the ship, and a second inner hull which is somewhat further into the ship, perhaps a , Marpol compliant vessels suitable for trading in petroleum products and vegetable oils <onlyinclude> This list of vegetable oils includes all vegetable oils that are extracted from plants by placing the relevant part of the plant under pressure to extract the oil. . The Company said it intends to continue this conversion project one vessel at a time, with the completion of the sixth vessel expected in early 2008. The following is a discussion of our financial condition and results of operations for the twelve month and the quarterly period ended December 31, 2006 and 2005. You should read this section together with the unaudited and audited consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge for the periods mentioned above. Quarter Ended December 31, 2006 (unaudited) versus December 31, 2005 Revenues Revenues from voyage, time and bareboat charters A bareboat charter is an arrangement for the hiring of a boat, whereby no crew or provisions are included as party of the agreement; instead, the people who rent the boat from the owner are responsible for taking care of such things. increased $5.4 million or 25% from the fourth quarter of 2005 to that of 2006. The increase is due to a 10% increase in the number of revenue days as a result of vessel acquisitions. In addition, there were 223 additional voyage days, which generate greater gross revenues per charter and 118 fewer time charter days, which generate revenue net of voyage expenses. Time charter equivalent rates ("TCE TCE trichloroethylene. TCE Environment A volatile chlorinated hydrocarbon that boils at 88ºC and is highly soluble–1000 ppm in water, with various industrial uses Toxicity Peripheral neuropathy, carcinogenic. "), which is the measure used to compare time charter rates with voyage charter rates, decreased 6% for the quarter due to higher port charges and bunker bunk, bunker large storage bin. bunk forage forage, usually ensilage stored in a large storage bunk and made available to cattle or other livestock along a face of the storage. costs. TCE revenue is defined as gross voyage revenue less voyage expenses, which are discussed below. The Company also said that offhire relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the double hull conversion projects was 117 days in the fourth quarter of 2006. The Company notes that voyage charter days increased since all of the MR tankers came off time charters during 2006 and were scheduled for conversion to double hull. Voyage charters allowed the Company more flexibility with respect to positioning for the conversions. Also, a combination carrier scheduled for special survey work was operated on voyage charters after the expiration of the two year time charter it was on since it was acquired in 2004. At December 31, 2006, the Company's six MR product tankers and one combination carrier were employed in the voyage charter market. The remaining six of the Company's combination carriers and two Panamax product tankers were employed on long-term time charters. Voyage Expenses Voyage expenses increased $4.7 million or 329% from 2005. The increase is due to the fact that there were 269 voyage days during the three month period ended December 31, 2006 whereas there were only 46 during this period in 2005. The ship owner is responsible for the port, canal and fuel charges of a voyage charter but is not responsible for these costs when on either a time or bareboat charter. Vessel Operating Expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. Vessel operating expenses increased $2.7 million or 37% for the three month period ended December 31, 2006 versus the comparable period in 2005. This increase is the result of a 22% increase in total vessel operating days and a 13% increase in average daily operating expenses. Depreciation and Amortization The increase in depreciation and amortization is due to the increase in the number of vessels comprising the Company's fleet, to the completed conversion of one MR tanker to a double hull and the additional amortization of special survey costs incurred in 2006. General and administrative expenses General and administrative expenses include all of our onshore on·shore adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. expenses and the fees that B+H Management Ltd., ("BHM BHM Black History Month BHM Big Handsome Man BHM Bachelor of Hotel Management BHM Big Hairy Monster (cryptozoology slang) BHM Bachelor in Hospitality Management BHM British Heavy Metal (music genre) "), an affiliate of the Chief Executive Officer and a director, charges for administration. Consulting, professional and other expenses increased by $0.3 million, or 43%, from the fourth quarter of 2005 to the fourth quarter of 2006. The increase is due to increases in travel expenses, consulting fees and director and officer liability insurance premiums. Interest Expense and Interest Income The $1.4 million (72%) increase in interest expense is due to the increase in outstanding debt. The total long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. balance outstanding at December 31, 2006 was $201.9 million, as compared to $149.7 million at December 31, 2005 and $29.3 million at December 31, 2004. In addition, the Company incurred $12 million in new mortgage debt on October 12, 2006 for the acquisition of one vessel purchased in June 2006 and $8 million on September 5, 2006 to finance the acquisition of its 50% share in Nordan OBO OBO Or Best Offer (used in for sale ads) OBO On Behalf Of OBO Oboe (music scores) OBO Observation (UK) OBO One By One (animal rescue) 2 Inc. The Company also issued $25 million of Floating Rate Bonds in December 2006, of which $5 million were subscribed to by the Company. Both the interest paid on the Company's debt and the interest earned on its cash balances are based on LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). . The increase in interest income is due to the increase in cash and to an increase in interest rates. The average cash balance during the fourth quarter of 2006 was $66.5 million versus an average cash balance for the same period in 2005 of $55.9 million. Average LIBOR rates for the fourth quarter of 2006 were 5.3%, approximately 1.2% higher than in the fourth quarter of 2005. Loss on value of put option contracts In December 2006, the Company bought put options in consideration for upfront premiums to provide a hedge against the possibility of falling time charter rates. Unrealized gain Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. or loss on these contracts are recorded in the Statement of Operations See Income statement. . The unrealized losses Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. on the value of the contracts totaled $0.3 million during the fourth quarter of 2006. Twelve Months Ended December 31, 2006 (unaudited) versus December 31, 2005 Revenues Revenues from voyage and time charters increased $24.1 million or 34% from 2005. The increase is due to a 20% increase in the number of total on-hire days from 2005 to 2006 and due to the fact that there were 545 more voyage days in 2006 than in 2005. Revenue from voyage charters is recorded on a gross basis, before voyage expenses. TCE increased $528 per day (3%). The Company notes that voyage charter days increased since all of the MR tankers came off time charters during 2006 and were scheduled for conversion to double hull. Voyage charters allowed the Company more flexibility with respect to positioning for the conversions. Also, a combination carrier scheduled for special survey work was operated on voyage charters after the expiration of the two year time charter it was on since it was acquired in 2004. At December 31, 2006, the Company's six MR product tankers and one combination carrier were employed in the voyage charter market. The remaining six of the Company's combination carriers and two Panamax product tankers were employed on long-term time charters. Other revenue primarily includes $0.8 million earned in respect of the combination carrier acquired in 2006, in lieu of Instead of; in place of; in substitution of. It does not mean in addition to. time-charter revenue, from the January 15, 2006 effective date of the purchase until the closing date and $0.3 million representing settlement proceeds from the Company's claim against Enron for lost time-charter revenue. The Company said that offhire relating to the two double hull conversion projects completed to date was 230 days in 2006. Additional offhire for special survey work performed in 2006 totaled 125 days. The Company expects that the remaining four of the MR product tankers will cease to generate revenue for periods of up three months each in 2007 while being converted to double hull tankers. The Company expects the offhire related to its Double Hull conversion program for the remaining four MR product tankers, and one Panamax product tanker to continue to be a drag on Verb 1. drag on - last unnecessarily long drag out last, endure - persist for a specified period of time; "The bad weather lasted for three days" 2. revenue and cash flow results through the first quarter of 2008. The Company adds that while any acquisition to its fleet will increase its revenue, there can be no assurance that the Company will be able to purchase any of such vessels on favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. terms or at all. Voyage expenses Voyage expenses consist of port, canal and fuel costs that are unique to a particular voyage and commercial overhead costs overhead costs see fixed costs. , including commercial management fees paid to BHM. Under a time charter, the Company does not incur port, canal or fuel costs. Voyage expenses increased $8.7 million, or 145%, to $14.8 million for the twelve month period ended December 31, 2006 compared to $6.0 million for the comparable period of 2005. This is due to the increase in voyage days from 201 in 2005 to 746 in 2006. Voyage expenses on a per day basis increased 40% or $3,700 per day, predominantly due to increases in port charges and bunkers. However, these increases are intrinsic in the gross voyage revenue rates, as indicated by the TCE rate discussed above. Vessel operating expenses The increase in vessel operating expenses is due to the increase in the number of vessels, as noted above. Vessel operating expenses increased $7.6 million (29%) from 2005 to 2006. The increase in total operating days of 1,036 (27%) accounted for approximately $6.9 million of the increase. In addition, there was an increase in the average daily operating expenses of $340 per day for a total of $1.6 million. This was offset by a decrease in expenses for intermediate drydocking of approximately $0.9 million. Depreciation and amortization Depreciation and amortization, which includes depreciation of vessels as well as amortization of special surveys and debt issuance costs, increased by $4.8 million, or 40%, to $16.7 million for the twelve months ended December 31, 2006 compared to $11.9 million for the prior period. The increase is due to the increase in the number of vessels comprising the Company's fleet, to the completed conversion of one MR tanker to a double hull and the additional amortization of special survey costs incurred in 2006. General and administrative expenses General and administrative expenses include all of our onshore expenses and the fees that BHM charges for administration. Management fees increased by $0.3 million, or 36%, to $1.2 million for the twelve month period ended December 31, 2006 compared to $0.9 million for the prior period. The increase is due to the increase in the number of vessels and therefore the number of months during which fees were incurred. Fees for consulting and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. increased $1.2 million or 40%. The increase is comprised of increases in travel expenses, consulting fees and director and officer insurance premiums. Interest Expense and Interest Income The $5.1 million (90%) increase in interest expense is due to the increase in outstanding debt. The total long-term debt balance outstanding at December 31, 2006 was $201.9 million, as compared to $149.7 million at December 31, 2005 and $29.3 million at December 31, 2004. In addition, the Company incurred $12 million in new mortgage debt on October 12, 2006 for the acquisition of one vessel purchased in June 2006 and $8 million on September 5, 2006 to finance the acquisition of a 50% share in Nordan OBO 2 Inc. The Company also issued $25 million of Floating Rate Bonds in December 2006, of which $5 million were subscribed to by the Company. Both the interest paid on the Company's debt and the interest earned on its cash balances are based on LIBOR. The increase in interest income of $1.2 million is due to the fact that the Company had an average of $54.8 million in cash during 2006 as compared to $43.1 in 2005. In addition, average LIBOR rates of 5.1% for 2006 were approximately 1.7% higher than the 2005 average of 3.4%. Equity in income of Nordan OBO II Equity in income of Nordan OBO II of $1.2 million represents income from the Company's 50% interest in an entity which is the disponent owner of a 1992-built 75,000 DWT DWT abbr. 1. deadweight tonnage 2. deadweight tons combination carrier through a bareboat charter party. Gain on fair value of interest rate swaps Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. During 2006, the Company entered into interest rate swaps to hedge against increases in LIBOR. Unrealized gain or loss on two of the swaps is recorded in the Statement of Operations. The aggregate unrealized gain on the value of these swaps at December 31, 2006 was $0.3 million. The unrealized gain or loss on a third swap, which is considered an effective cash flow hedge A cash flow hedge is a hedge of the exposure to the variability of cash flow that
See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , is recorded as Other Comprehensive Income. The unrealized gain on the value of this swap at December 31, 2006 was approximately $18,000. Loss on value of put option contracts In 2006, the Company bought put options to provide a hedge against the possibility of falling time charter rates. Unrealized gain or loss on the contracts is recorded in the Statement of Operations. The aggregate unrealized loss on the value of the contracts totaled $0.3 million at December 31, 2006. Liquidity and Capital Resources Cash at December 31, 2006, amounted to $79.4 million, an increase of $18.6 million as compared to December 31, 2005. The increase in the cash balance is attributable to net inflows from operations of $38.7 million and inflows from financing activities of $14.9 million. These inflows were offset by outflows for investing activities of $35.0 million. Approximately $30.0 million of the Company's cash is currently earmarked for the Company's double hull conversion program in 2007, another $30 million is earmarked for additional fleet expansion, and approximately $15 million of cash is restricted by the Company's current loan covenants A loan covenant is a condition in a commercial loan or bond issue that requires the borrower to fulfill certain conditions or forbids the borrower from undertaking certain actions, or possibly restricts certain activities to circumstances when other conditions are met. . During the year ended December 31, 2006, inflows for financing activities were primarily attributable to mortgage proceeds of $22.3 million to finance the acquisition of a Panamax product tanker and the 50% interest in Nordan OBO 2 Inc. and to net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from issuance of Floating Rate Bonds of $20 million. This total was offset by the payment of mortgage principal of $21.4 million, payments for equity and debt issuance costs of $1.7 million, payment of unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. of $1.4 million and the purchase of an aggregate of 160,800 shares of common stock for treasury, for an aggregate price of $2.9 million. During the year ended December 31, 2006, outflows for investing activities were attributable to the purchase of one combination carrier and one Panamax product tanker for $16.2 million, to vessel conversion costs of $7.8 million, a net investment in Nordan OBO 2 Inc. of $10.5 million and the investment in freight forward contracts of $1.1 million. This total was offset by proceeds from the sale of marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has of $0.6 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 That which is generally shipped in volume where the transportation conveyance is the only external container; such as liquids, ore, or grain. , 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, six combination carriers, two Panamax product carriers and a 50% disponent owner interest in another combination carrier. All of the combination carriers and Panamax product tankers are currently fixed on long-term time charters, which vary in original length of between one and five years. The product tankers are being operated in a mix of time and voyage charters. There are four product tankers scheduled for conversion to double hull tankers in 2007 and early 2008. 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 The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , 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. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 The method of making one document of any kind become a part of another separate document by alluding to the former in the latter and declaring that the former shall be taken and considered as a part of the latter the same as if it were completely set out therein. herein to reflect future events or developments. For further information, including the Company's 2005 Annual Report on Form 20F and previous announcements, access the Company's website: www.bhocean.com [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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