TBS International Limited announced yesterday its financial and operating results for the second quarter and six months ended June 30, 2009. Joseph E. Royce, Chairman and Chief Executive Officer and President, stated: “The second quarter of 2009 continued to be very challenging for TBS,

and the Handymax/Handysize and General Cargo segment of the Dry Cargo
Shipping Industry. For the first six months of 2009 our revenues and
EBITDA declined significantly and we experienced a Net Loss, as the
stimulus packages adopted by several governments around the world had
not yet positively affected cargo movement and freight rates in our
segment of the dry cargo transportation industry. We anticipated these
financial results and, accordingly, prepaid all principal payments due
on our debt through the end of 2009. Additionally, our cash balance on
June 30, 2009 was $52.5 million, plus $15.2 million on deposit to cover
the remaining 2009 stage advances on construction of the six Roymar
Class multipurpose tweendeckers in China.
“Our financial results were not unexpected, and in our view part of the
normal progression of the recovery of dry cargo ocean transportation
from the depths of the severe global recession we are experiencing. The
recovery is now being led by the movement of basic raw materials such
as iron ore, coal, and agricultural products on Capesize and Panamax
vessels. We are now seeing improvement in TBS cargo volumes and freight
rates for the third quarter of 2009 with respect to bulk cargoes of
minerals, metals and basic steel products which we carry on our
Handymax/Handysize bulk carriers.
“The liner service and general cargo segment of our business has lagged
behind the bulk cargo business and we would expect to see demand for
the movement of high value finished goods and logistic services resume
significantly in the latter part of this year as our customers restock
their inventories and resume their projects. We are cautiously
optimistic that the global stimulus packages are taking effect and that
there will be a gradual return to more normalized market conditions
with the developing countries at the forefront of the global economic
recovery. Urbanization and core economic development, which have been
the prevalent trends in developing economies around the world,
especially in China, India, South America and Africa, may temporarily
slow down but we believe they are irreversible.
“In this environment, we continue to leverage our strongest assets –
our worldwide team of shipping professionals and our Five-Star Service
consisting of Ocean Transportation, Logistics, Port Services,
Operations and Strategic Planning. We have fully staffed affiliate
agencies and representative offices on five continents and are taking
steps to expand our trading areas.
“We are also quickly positioning TBS to participate in the economic
recovery and to take advantage of new opportunities that may arise:
–  We enhanced our local presence in Southeast Asia, moving our Senior
    Executive responsible for our Pacific Liner Service to Shanghai.
–  We reinforced our commitment to the Houston Energy and Logistics
    business segment by relocating two senior Executives to Houston, expanding
    our office and establishing a Port Warehouse. Houston is the regional
    project logistics hub.
–  We are exploring Joint Venture opportunities in the Caribbean, South
    America and Africa for logistics and ocean cargo movement.
“We believe that this pro-active approach combined with our efficient
and reliable service will serve TBS well through the second half of
2009 and the economic recovery in 2010.”
Ferdinand V. Lepere, Executive Vice President and Chief Financial
Officer, commented: “I am pleased to report that as of June 30, 2009,
TBS was in full compliance with all of its financial covenants. Our net
debt to capitalization ratio was 33.5% with a cash balance of $52.5
million on June 30, 2009. In addition, we have $15.2 million on deposit
which is to be used for our payments to the shipyard on our newbuilding
program.
“Our newbuilding program for the six Roymar Class multipurpose
tweendeckers is in progress and we have in place the requisite bank
financing for them. So far, two vessels have been launched: one in
November 2008 and the other in May 2009; however, the scheduled
delivery dates on the six vessels have changed. According to the new
schedule, we expect the delivery of our first vessel in the third
quarter of this year, four vessels are to be delivered in 2010 and the
last vessel is expected to be delivered in the first quarter of 2011.
“I would like to reiterate that we have decided to scale back our
accelerated steel renewal program to meet only the necessary
maintenance requirements. During the second quarter of 2009, we
drydocked eight vessels, which includes five vessels that entered into
drydocking during the first quarter for 88 days and the remaining three
vessels entered drydock for 48 days.”
Second Quarter 2009 Results:
For the second quarter ended June 30, 2009, total revenues were $72.2
million, a decrease of 54.0% compared to the $156.9 million for the
same period in 2008. Net loss for the second quarter 2009 was $16.9
million, a decrease of 132.1% compared to $52.6 million profit for the
same period in 2008. Earnings per share on a basic and diluted basis
were $(0.57) in the second quarter of 2009, calculated based on
29,827,345 shares, compared to $1.82 for the second quarter 2008,
calculated based on 28,778,769 shares.
EBITDA, which is a non-GAAP measure, decreased by 84.6% to $11.2
million for the quarter ended June 30, 2009 from $72.8 million in 2008.
Please see “Non-GAAP Reconciliations – EBITDA” following the financial
statements in this press release for a reconciliation of EBITDA to net
income.
Revenues:
Total revenues of $72.2 million for the second quarter 2009 include
voyage revenues of $59.7 million, time charter revenues of $12.2
million and logistics and other revenues of $0.3 million.
An average of 45 vessels (excluding off-hire) were operated during the
second quarter 2009 compared to 39 vessels (excluding off-hire) during
the same period of 2008.
Voyage Revenues:
Voyage revenues in the second quarter 2009 were $59.7 million, a
decrease of $69.0 million or 53.6% from the $128.7 million during the
same period in 2008.
Total cargo volume (including aggregates) increased 161,000 tons or
7.0% to 2,449,000 tons for the second quarter 2009 from 2,288,000 for
the same period in 2008. The increase in cargo volume is attributed to
a slight increase in both aggregates (97,000 tons) and non-aggregates
(64,000 tons) carried.
Cargo volume (excluding aggregates) increased 64,000 tons or 5.2% to
1,297,000 tons for the second quarter 2009 from 1,233,000 tons for the
same period in 2008. Freight rates excluding aggregates decreased
$51.46 per ton or 56.1% to $40.33 per ton for the second quarter 2009
from $91.79 per ton during the same period in 2008.
Average Daily Voyage Time Charter Equivalent, which is an industry
standard metric reflecting the daily net earnings of a voyage after
deducting all voyage expenses from voyage revenues, was $11,268 per day
in the second quarter 2009, a decrease of 64.8% from the $32,007 during
the same period in 2008 and a decrease of 3.6% from the $11,685 per day
during the first quarter 2009, reflecting continued weakness in the dry
cargo industry.
Time Charter Revenues:
Time charter revenues decreased by $13.1 million or 51.8% to $12.2
million for the second quarter 2009 from $25.3 million for the same
period in 2008, reflecting a decrease in the average charter hire rates
caused by the collapse in the shipping markets.
Average Daily Time Charter Equivalent, which is an industry standard
metric reflecting time charter-out revenues during the period reduced
by commissions, was $9,642 per day in the second quarter 2009, a
decrease of 68.5% from the $30,563 during the same period of 2008. The
key factor driving the decrease in the average time charter equivalent
rate per day is the worldwide economic crisis.
Expenses:
Total operating expenses for the second quarter 2009 decreased by $15.2
million or 15.2% to $85.0 million from $100.2 million for the same
period in 2008.
Voyage expenses, which include fuel costs, commissions, port call
charges and stevedoring, declined by $14.6 million or 34.9% to $27.3
million for the second quarter 2009. The decrease is due to a decline
in fuel expenses which were a result of lower average fuel costs
partially offset by higher fuel consumption due to an increase in the
average number of controlled vessels; decreased commission expense as a
result of lower voyage revenues, as well as port call expenses and
stevedore and other cargo-related expenses.
Vessel expenses which consist of operating expenses relating to owned
and controlled vessels, such as crewing, stores, repairs and
maintenance, insurance and charter hire fees for vessels that are
chartered-in, increased by $1.2 million or 4.9% to $25.5 million for
the second quarter 2009 as compared to $24.3 million for the same
period in 2008. Owned vessel expenses increased by $1.3 million due to
an increase in the average number of owned vessels (47 compared to 42)
and increased vessel days. Chartered-in vessel expenses decreased $0.5
million due to a decrease in the chartered-in rate per day.
General and administrative expenses decreased by $6.9 million or 45.4%
to $8.3 million in the second quarter 2009 reflecting our cost
reduction efforts and due to a decrease in personnel expenses, related
to the elimination of our 2009 bonus accrual.
The operating expenses for the second quarter 2009 also include an
expense of $0.2 million related to TBS Logistics Incorporated, our
cargo and transport management subsidiary.
Results for the Six Months ended June 30, 2009:
For the six months ended June 30, 2009, total revenues were $143.4
million, a decrease of 50.3% compared to the $288.5 million for the
same period 2008. Net loss for the six months 2009 was $38.2 million, a
decrease of 139.0% compared to $98.0 million profit for the same period
2008. Earnings per share on a basic and diluted basis were $(1.28) for
the six months ended June 30, 2009, calculated based on 29,822,402
shares, compared to $3.44 for the same period of 2008, calculated based
on 28,411,539 shares.
EBITDA, which is a non-GAAP measure, decreased by 88.3% to $16.0
million for the six months ended June 30, 2009 from $137.1 million in
2008. Please see “Non-GAAP Reconciliations – EBITDA” following the
financial statements included in this press release for a
reconciliation of EBITDA to net income.
An average of 45 vessels (excluding off-hire) were operated during the
six months 2009 compared to 38 vessels (excluding off-hire) during the
same period of 2008.
Total revenues of $143.4 million for the six months 2009 include voyage
revenues of $124.3 million, time charter revenues of $18.3 million and
logistic and other revenues of $0.8 million.
Fleet Expansion and Newbuilding Program:
The previously announced TBS Newbuilding Program to construct six
Roymar Class multipurpose vessels with retractable tweendecks is
proceeding with the launch of two vessels: one in November 2008 and the
other in May 2009. Two vessels were tentatively scheduled to be
delivered in 2009 and four vessels in 2010. However, the scheduled
delivery dates on the six vessels have changed with the first vessel to
be delivered in the third quarter of 2009, the next four vessels in
2010 and the last vessel in 2011.
TBS previously entered into a $150 million term loan credit agreement
with a syndicate of lenders led by The Royal Bank of Scotland to
finance the building and purchase of these six new multipurpose
vessels. As of June 30, 2009, the Company has made cumulative payments
of $125.9 million to the Shipyard towards the purchase of these vessels.

Source: TBS International

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