NewLead Holdings Ltd. Reports Third Quarter 2010 Financial Results

-- 213.0% increase in quarterly revenue

-- 102.2% growth in fleet

-- Q3 Adjusted EBITDA of $10.3 million

Dec 16, 2010, 07:00 ET from NewLead Holdings Ltd.

PIRAEUS, Greece, Dec. 16, 2010 /PRNewswire-FirstCall/ -- NewLead Holdings Ltd. (Nasdaq: NEWL) ("NewLead" or the "Company"), an international, vertically integrated mixed fleet shipping company, today announced its financial results for the three and nine months ended September 30, 2010.

Operational Highlights and Recent Developments

  • Delivery of new, 79,224 dwt geared Kamsarmax dry bulk vessel "Newlead Tomi" chartered-out for an initial period of five years at a net daily charter-out rate of $28,710
  • Completed the sale and immediate leaseback transaction of four dry bulk vessels for $86.8 million
  • Secured new revolving credit facility of up to $62.0 million
  • Acquired five dry bulk vessels, including two newbuildings for $147.0 million
  • Divested all non-core vessels, with the sale of three remaining product tankers, the High Land, the Ostria and the Nordanvind in September 2010 for aggregate consideration of $20.8 million
  • New charter party agreements for the Newlead Avra and the Newlead Fortune for 12-month time charters with a net daily charter-out rate of $13,825 plus profit sharing
  • Agreed to acquire one Handysize dry bulk vessel; initially delivered under bareboat charter

Michael S. Zolotas, president and CEO of NewLead, stated: "We have transformed the Company since we took control a year ago. Today, NewLead is an integrated shipping company with in-house commercial and operational management along with an enlarged and optimized fleet.  We will continue to capitalize on opportunities to build upon the scalable platform created to support ongoing growth."

Operational Updates

Delivery of New 79,224 dwt Geared Kamsarmax Dry Bulk Vessel "Newlead Tomi"

In December 2010, the new 79,224 dwt geared Kamsarmax vessel Newlead Tomi was delivered from Cosco Dalian Shipyard Co. to NewLead's owned fleet. The vessel is chartered-out for an initial period of five years at a net daily charter-out rate of $28,710. In addition, the charterer has a call option at the same charter-out rate and the owner has a put option at a net daily charter-out rate between $19,800 and $28,710 for two additional years (in each case, one plus one year).

$86.8 Million in Cash Proceeds from Sale and Leaseback Agreement

In November 2010, NewLead completed an agreement with Lemissoler Maritime Company W.L.L. for the sale and immediate bareboat leaseback of four dry bulk vessels composed of three Capesize vessels, the Brazil, the Australia, and the China, as well as the Panamax vessel Grand Rodosi. Total consideration for the sale was $86.8 million and the bareboat leaseback period is eight years.

The Company has call options to buy the vessels back during the leaseback period at pre-determined de-escalating prices and is obliged to repurchase the vessels for approximately $40.0 million at the end of the lease term. The repurchase obligation can be paid partially in cash and partially in common shares. The Company also secured the option to substitute one or more vessels throughout the term of the lease, subject to approval by the owners and their lenders. The aggregate net rate of the bareboat charters of the four vessels is approximately $40,000 per day for the first three years and approximately $24,000 per day thereafter. NewLead will continue to earn charter hire on the current time charters on the vessels. The sale leaseback transaction is EBITDA neutral and is expected to be treated as a capital lease for accounting purposes.

$62.0 Million New Revolving Credit Facility

NewLead used the $86.8 million proceeds from the aforementioned sale and leaseback transaction to repay all loans outstanding on the previously listed vessels, as well as other bank debt and associated fees. We also, agreed to a new revolving credit facility of up to $62.0 million. The Company intends to utilize this credit facility to re-finance several vessels.

Divested All Non-Core Vessels

In September 2010, NewLead completed the divestiture of all its non-core vessels, the High Rider, the Chinook, the High Land, the Ostria and the Nordanvind, with the sale of the last three, for aggregate consideration of approximately $20.8 million. Net proceeds to the Company from the divestiture of the five underperforming tanker vessels were $32.0 million and will be used to renew the fleet or reduce outstanding indebtedness. Total consideration from the sale of all divested vessels, including the two previously disposed container vessels reflected in discontinued operations, was $50.0 million.

New Charter Party Agreements

During the third quarter of 2010, NewLead entered into agreements for 12-month time charters for the Newlead Avra and the Newlead Fortune, each a 2004-built, 73,495 dwt Panamax product tanker vessel. The time charter for the Newlead Fortune commenced in November 2010 and the time charter for the Newlead Avra is expected to commence in the first quarter of 2011. The net daily charter-out rate for both vessels is $13,825 plus 50.0% profit sharing. In addition, the Company reached an agreement with a charterer to enter into a time charter for the Grand Rodosi for a period ranging from four to six months. The net daily charter-out rate is $21,516 and the time charter commenced during September 2010.

Acquired Five Vessels Including Two Newbuildings

In July 2010, NewLead acquired five dry bulk vessels, including two newbuildings with long-term quality time charters. Total consideration for the acquisition was approximately $147.0 million, which includes approximately $93.0 million in assumed liabilities. The balance, representing newbuilding commitments, will be financed with committed bank debt and shipyard credit facilities, as well as with cash from the balance sheet.

Agreement for the Acquisition of One Handysize Dry Bulk Vessel

Furthermore, NewLead recently committed to purchase one 2003-built, 34,682 dwt, Handysize dry bulk vessel for $24.5 million. The vessel, initially delivered under a bareboat charter, has been fixed in a time charter for approximately seven years at a net daily hire rate of $12,936. The Company anticipates financing the acquisition of this vessel with a combination of debt and cash from the balance sheet.

Third Quarter and Nine Months 2010 Financial Results

Third Quarter 2010 Financial Results

NewLead has compiled consolidated statement of operations for the three months ended September 30, 2010 and 2009. The information was derived from the unaudited consolidated financial statements of the successor and predecessor business (all financial results subsequent to October 13, 2009 are reflected in the SUCCESSOR business). EBITDA and adjusted EBITDA are non-US GAAP financial measures and should not be used in isolation or substitution for the predecessor and successor results.  NewLead reports its operations in two operating segments, "Wet" and "Dry" which will include the results of operations for the product tankers and dry bulk vessels, respectively.

(USD in 000s)

(Unaudited)

SUCCESSOR

July 1

to

September 30, 2010

(Unaudited)

PREDECESSOR

July 1

to

September 30, 2009

Operating Revenues

$

28,793

$

9,244

EBITDA

$

8,701

$

(78,504)

Adjusted EBITDA

$

10,276

(1)

$

232

(2)

Loss from continuing operations

$

(14,151)

$

(85,709)

(1)  Adjusted EBITDA is EBITDA adjusted further for the following: $1.2 million non-cash gain on sale from vessels, $0.1 million non-

cash loss in the fair value of derivatives, $0.7 million for share-based compensation expense, $0.1 million provision for doubtful

receivables, $0.9 million provision for claims, $0.1 million for the straight lining of revenue and $0.9 million operating loss for non-core vessels.

(2)  Adjusted EBITDA is EBITDA adjusted further for the following: $68.0 million for impairment loss, $3.5 million provision for claims,

$0.2 million non-cash gain in the fair value of derivatives, $0.1 million for share-based compensation expense, $0.2 million provision for

doubtful receivables and $7.2 million operating loss for non-core vessels.

For the three month period ended September 30, 2010, operating revenues increased by 213.0% to $28.8 million, compared to $9.2 million for the three month period ended September 30, 2009. The increase in revenue was primarily attributable to the 102.2% growth in our fleet and the corresponding increase in available and operating days of 170.0% and 179.8%, respectively, reflecting NewLead's continued fleet expansion strategy and initiatives to bring operational, commercial and technical management capabilities in-house. As a result, there was on average 18.2 vessels in operation for the three month period ended September 30, 2010, compared to nine vessels for the three month period ended September 30, 2009. For the three month periods ended September 30, 2010 and September 30, 2009, TCE rates were $13,951 per day and $9,631 per day, respectively. This increase reflects the favorable charters attached to the vessels that were incorporated into the fleet, which was partially offset by the decrease in the charter rates of the vessels operating on the spot market, inclusive of voyage expenses.

Fleet utilization, excluding non-core vessels, for the third quarter of 2010 was 91.7%, compared to 91.4% for the third quarter of 2009. Fleet utilization, excluding non-core vessels, was suppressed by 96 unemployment days attributable mainly to the adverse tanker market conditions and the corresponding decrease in demand. Moreover, dry bulk vessels fleet utilization was 97.0% compared to 82.9% for the wet vessels for the third quarter of 2010. During the third quarter of 2010, 74.0% of the fleet was fixed on time charters, compared to 37.0% during the third quarter of 2009.

Adjusted EBITDA increased significantly in the third quarter of 2010 to $10.3 million compared to $0.2 million for the equivalent period of 2009. This growth in adjusted EBITDA was primarily attributable to the increased operational contribution from revenues related to the aforementioned 102.2% operating fleet growth and 45.1% reduction in daily vessel operating expenses relative to the third quarter of 2009. Furthermore, dry bulk vessels contributed $9.7 million in adjusted EBITDA in the third quarter of 2010 while there were no dry bulk vessels in our fleet in the equivalent 2009 period.  

Loss from continuing operations was $14.1 million for the three month period ended September 30, 2010, compared to $85.7 million for the three month period ended September 30, 2009. The results for the third quarter of 2010 reflected the higher operating contribution, as previously discussed, but were more than offset by higher non-operating expenses which included interest and non-cash charges, such as depreciation and amortization. Excluding non-cash charges reflected in interest expense, primarily attributable to the $3.6 million amortization of the beneficial conversion feature embedded in the 7.0% convertible senior unsecured notes ("7% Notes") and $0.8 million loss from the change in the fair value of our interest rate swaps, interest expense was $7.0 million representing a 112.1% increase relative to the third quarter of 2009, reflecting $552.7 million of indebtedness for balance sheet purposes as of September 30, 2010, which included approximately $86.4 million in new loans assumed during the third quarter of 2010 related to fleet growth. Depreciation and amortization increased by approximately 197.4% to $11.6 million during the three months ended September 30, 2010, compared to $3.9 million during the equivalent period in 2009, reflecting the 102.2% increase in operating fleet growth compared to the prior period as well as the amortization of intangible assets created as a result of the 2009 recapitalization and the 2010 business and asset acquisitions. In addition, the results for the third quarter of 2010 included a $1.2 million non-cash gain on sale from non-core vessels. Loss from continuing operations for the third quarter of 2009 included an impairment loss of $68.0 million.

Net loss for the third quarter of 2010 was $14.2 million, compared to $111.3 million for the third quarter of 2009. This loss included a loss from discontinued operations of $0.1 million in 2010, and a loss of $25.6 million in 2009, which were primarily related to the Company's strategic decision to exit from the container market.

For the three months ended September 30, 2010, the weighted average number of basic and diluted shares was 7.1 million, compared to 2.4 million for the relevant period of 2009. As such, the loss per share from continuing operations was $1.98, compared to $35.72 for the equivalent period of 2009. These results do not include the earnings per share from discontinued operations of $0.01 for the three month period ended September 30, 2010, and the loss per share of $10.66 for the equivalent period of 2009. For the third quarter of 2010, the loss per share (from both continuing and discontinued operations) was $1.99, compared to $46.38 for the third quarter of 2009.

Nine Months Financial Results

 (USD in 000s)

(Unaudited)

SUCCESSOR

January 1

to

September 30, 2010

(Unaudited)

PREDECESSOR

January 1

to

September 30, 2009

Operating Revenues

$

72,644

$

31,734

EBITDA

$

1,766

$

(72,826)

Adjusted EBITDA

$

25,486

(1)

$

8,238

(2)

Loss from continuing operations

$

(58,921)

$

(94,364)

(1)  Adjusted EBITDA is EBITDA adjusted further for the following: $15.7 million for impairment loss, $1.6 million non-cash gain in the

fair value of derivatives, $1.2 million non-cash gain on sale from vessels, $2.0 million for share-based compensation expense,

$0.3 million provision for doubtful receivables, $1.5 million provision for claims, $0.4 million for the straight lining of revenue and $6.6

million operating loss for non-core vessels.

(2)  Adjusted EBITDA is EBITDA adjusted further for the following: $68.0 million for impairment loss, $3.5 million provision for claims,

$1.4 million non-cash gain in the fair value of derivatives, $0.4 million for share-based compensation expense, $0.2 million provision for

doubtful receivables and $10.3 million operating loss for non-core vessels.

For the nine month period ended September 30, 2010, operating revenues increased 129.0% to $72.6 million compared to operating revenues of $31.7 million recorded for the nine month period ended September 30, 2009. The increase in revenue was primarily attributable to the 73.3% growth in fleet size and the corresponding increase in available and operating days by 90.3% and 95.9%, respectively. These results reflected NewLead's initiatives to continue its fleet expansion strategy and bring operational, commercial and technical management capabilities in-house. As a result, the Company had on average 15.6 vessels in operation for the nine month period ended September 30, 2010, versus nine vessels for the relevant period in 2009. For the nine month periods ended September 30, 2010 and September 30, 2009, our TCE rates were $14,184 per day and $12,433 per day, respectively. This increase in TCE rates reflected the favorable charters attached to the vessels that were incorporated into the fleet, which was partially offset by the decrease in the charter rates of the vessels operating on the spot market inclusive of voyage expenses.

Fleet utilization excluding non-core vessels for the nine months ended September 30, 2010 was 93.3%, and 97.0% for the relevant period of 2009. Fleet utilization excluding non-core vessels for the nine months ended September 30, 2010 was suppressed by 183 unemployment days, attributable the adverse tanker market conditions and the corresponding decrease in demand. Moreover, dry bulk vessels fleet utilization was 98.1% compared to 87.6% for the wet vessels for the nine months of 2010.  During the first nine months of 2010, 67.8% of the fleet was fixed on time charters, compared with 63.6% for the relevant period of 2009.

Adjusted EBITDA increased by 212.2% for the nine months of 2010 to $25.5 million compared to $8.2 million for the equivalent period of 2009. This growth in adjusted EBITDA was primarily attributable to the increased operational contribution in total revenues related to the aforementioned 73.3% operating fleet growth and 26.3% reduction in daily vessel operating expenses relative to the nine months of 2009. Furthermore, dry bulk vessels contributed $18.5 million in the nine months of 2010 adjusted EBITDA while there were no dry bulk vessels in our fleet in the equivalent 2009 period.

Loss from continuing operations was $58.9 million for the nine month period ended September 30, 2010, and $94.4 million for the nine month period ended September 30, 2009. The results for the nine months of 2010 reflect the higher operating contribution, as previously discussed, but were more than offset by higher non-operating expenses which included interest and non-cash charges, such as depreciation and amortization, as well as impairment charges of $15.7 million in connection with the non-core vessels that were recently divested. Excluding non-cash charges reflected in interest expense, primarily attributable to the $10.8 million amortization of the beneficial conversion feature embedded in the 7% Notes and $0.4 million loss from the change in the fair value of our interest rate swaps, interest expenses were $21.9 million representing a 116.8% increase, reflecting $552.7 million of indebtedness for balance sheet purposes as of September 30, 2010, which included approximately $283.4 million in new loans assumed during 2010 related to fleet growth and our newbuilding program. Depreciation and amortization was $28.1 million during the nine months ended September 30, 2010, compared to $11.4 million during the equivalent period in 2009, reflecting the 73.3% increase in operating fleet growth, as well as the amortization of the intangible assets created as a result of the 2009 recapitalization and the 2010 business and asset acquisitions. In addition, the results for the nine months of 2010 included a $1.2 million non-cash gain on sale from vessels, as previously mentioned. Loss from continuing operations for the nine months of 2009 included an impairment loss of $68.0 million.

Net loss for the nine month periods ended September 30, 2010 and 2009 was $56.5 million and $123.8 million, respectively. This loss included income from discontinued operations of $2.4 million in 2010, and a loss from discontinued operations of $29.4 million in 2009, which were related primarily to the strategic decision to exit from the container market.

For the nine months ended September 30, 2010, the weighted average number of basic and diluted shares was 6.9 million, compared to 2.4 million for the relevant period of 2009. As such, the loss per share from continuing operations was $8.54, compared to $39.39 for the equivalent period of 2009.  These results do not include the earnings per share from discontinued operations of $0.35 for the nine month period ended September 30, 2010, and the loss per share of $12.27 for the equivalent period of 2009. For the nine months of 2010, the loss per share (from both continuing and discontinued operations) was $8.19, compared to $51.66 for the third quarter of 2009.

Balance Sheet

As of September 30, 2010, NewLead's liquidity reflected $103.1 million of total cash ($43.4 million of restricted cash). Total debt as of September 30, 2010 was $552.7 million, compared to $278.7 million at December 31, 2009, representing a $274.0 million increase. The increase was mainly attributable to: (i) $10.8 million amortization of the beneficial conversion feature attributed to the 7% Notes; (ii) the $154.5 million assumption of loans related to the dropdown entities; (iii) the $91.5 million assumption and drawdown of debt related to the acquisition of five dry bulk vessels completed in July 2010; and (iv) the $42.5 million assumption and drawdown of debt related to the acquisition of two Kamsarmax newbuildings. The overall increase in indebtedness was partially offset by $25.3 million of debt repayments including proceeds generated from container vessel sales.

As of September 30, 2010, there were approximately 7.3 million common shares issued and outstanding.

Fleet Update

NewLead currently controls 22 vessels, including six double-hull product tankers and 16 dry bulk vessels, including four newbuildings.

The following table details NewLead's fleet deployment as of December 16, 2010:

Vessel Name

Size

(dwt)

Vessel

Type

Year

Built

Charter Expiration

Net Daily Charter Hire Rate

Product

Tanker Vessels

Stena Compass

72,736

Panamax

2006

December 2010

$18,233 (bareboat rate) plus 30.0% profit sharing above $26,000

(1)

Newlead Compassion

72,782

Panamax

2006

Spot

Newlead Avra

73,495

Panamax

2004

Q1 2012

(2)

 $13,825 plus 50.0% profit sharing above $14,000  

Newlead Fortune

73,495

Panamax

2004

min: November 2011

max: December 2011

 $13,825 plus 50.0% profit sharing above $14,000  

Hiotissa

37,329

Handymax

2004

min: April 2011

max: June 2011

$19,013 plus profit sharing above $19,500

Hiona

37,337

Handymax

2003

min: March 2011

max: May 2011

$19,013 plus profit sharing above $19,500

Dry Bulk Vessels

Newlead Tomi

79,224

Kamsarmax

2010

min: September 2015

max: March 2016

$28,710

(3)

Newlead Prosperity

34,682

Handysize

2003

min: July 2017

max: January 2018

$12,936

(4)

Newlead Victoria

75,966

Panamax

2002

min: July 2012

max: October 2012

Floating rate time charter

(5)

Brazil

151,738

Capesize

1995

min: December 2013

max: February 2014

$28,985

(6)

Australia

172,972

Capesize

1993

min: November 2011

max: January 2012

$20,391

China

135,364

Capesize

1992

min: November 2015

max: October 2016

$12,753

Grand Ocean

149,498

Capesize

1990

min: January 2012

max: May 2012

(7)

$19,680

Grand Venetico

134,982

Capesize

1990

min: June 2012

max: October 2012

(8)

$17,760

Grand Rodosi

68,788

Panamax

1990

min: December 2010

max: March 2011

$21,516

Newlead Markela

71,733

Panamax

1990

min: February 2013

max: June 2013

$21,972

Newlead Esmeralda

69,458

Panamax

1990

 January 2011

$18,281

Grand Spartounta

135,070

Capesize

1989

January 2011

$20,900

Expected

Newbuildings

Size

(dwt)

Vessel

Type

Delivery

Date

Charter term

Charter Rate

(daily, net)

Newlead TBN

35,000

Handysize

Q1 2011 

Twelve years +/- 4 months

$12,000 plus 40.0% profit sharing above $14,000  

(9)

Newlead TBN

92,000

Post-Panamax

Q2 2011 

Seven year time charter

$14,438 plus 50.0% profit sharing

(10)

Newlead TBN

80,000

Kamsarmax

Q4 2011

Seven year time charter

$27,300

Newlead TBN

35,000

Handysize

Q3 2012 

Twelve years +/- 4 months

$12,000 plus 40.0% profit sharing above $14,000

(9)

(1)  Vessel is under a bareboat charter party agreement. The operating expenses are for the account of the charterer. Accordingly, the vessel's Time Charter Equivalent ("TCE") rate is grossed up to reflect estimated daily operating costs. As a result, the vessel's charter rate is adjusted to a TCE rate of $24,933, to include estimated operating costs of $6,700.

(2)  The time charter is expected to commence in Q1 2011.

(3)  $28,710 five year time charter, plus charterer's option for one year plus one additional year. The vessel owners have a put option for a second two-year charter at a net charter rate between $19,800 and $28,710 per day. The second charter is subject to the first charterer not exercising the optional years. The first and second charter secure a total charter duration of seven years for the vessel.

(4)  The vessel was chartered-in during Q4 2010 until March 15, 2011, with an obligation to conclude the purchase by the end of the charter period at the latest.

(5)  The vessel owner shall have the right for an earlier redelivery of the vessel at any time within charter duration; subject to vessel owner's tendering to charterer three months' advance notice.

(6)  $28,985 per day for the first three years and $26,180 per day thereafter, plus 50.0% profit sharing above $26,600.  

(7)  Charterer's option to extend for one additional year.

(8)  Charterer's option to extend for six additional months.

(9)  Base rate is $12,000 per day. Above a rate of $14,000 per day, profit sharing is 40.0% based on open book accounting on actual earnings. Charterers have a 50.0% purchase option.

(10)  Charterer's option for one year and one additional year. Hire rate for first optional year is $15,400 (net) per day plus 50.0% profit sharing. Hire rate for second optional year is $16,844 per day (net) plus 50.0% profit sharing.

Summary of Selected Data

(Unaudited)

Three months ended

September 30,

2010

2009

FLEET DATA

Number of vessels

18.2

9

Number of vessels on time charter

13.5

3.3

Weighted average age of fleet

13.7

8.9

Available days (1)

1,671

619

Operating days (2)

1,388

496

Fleet utilization excluding non-core vessels (3)

91.7%

91.4%

Fleet utilization dry segment (3)

97.0%

-

Fleet utilization wet segment  excluding non-core vessels (3)

82.9%

91.4%

Equivalent vessels (4)

18.2

6.7

AVERAGE DAILY RESULTS

Time Charter Equivalents (5)

$13,951

$9,631

Direct Daily Vessel Operating Expenses (6)

$6,446

$11,734

(Unaudited)

Nine months ended

September 30,

2010

2009

FLEET DATA

Number of vessels

15.6

9

Number of vessels on time charter

10.6

5.7

Weighted average age of fleet

13.7

8.9

Available days (1)

4,151

2,181

Operating days (2)

3,517

1,795

Fleet utilization excluding non-core vessels (3)

93.3%

97.0%

Fleet utilization dry segment (3)

98.1%

-

Fleet utilization wet segment  excluding non-core vessel (3)

87.6%

97.0%

Equivalent vessels (4)

15.2

8.0

AVERAGE DAILY RESULTS

Time Charter Equivalents (5)

$14,184

$12.433

Direct Daily Vessel Operating Expenses (6)

$7,206

$9.778

1) 

Available days is the total number of days a vessel is controlled by a company less the aggregate number of days that the vessel is off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues.

2) 

Operating days is the number of available days in a period less the aggregate number of days that the vessels are off-hire due to any reason, including lack of demand or unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.

3) 

Fleet utilization is obtained by dividing the number of operating days during a period by the number of available days during the period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning.

4) 

Equivalent vessels data is the available days of the fleet divided by the number of the calendar days in the respective period.

5) 

Time Charter Equivalent, or TCE, rates are defined as voyage, time charter and bareboat revenues, less voyage expenses and commissions during a period, divided by the number of available days during the period. The TCE rate is a standard shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per day amounts, while charter hire rates for vessels on time charters generally are expressed in such amounts. The Stena Compass was employed on bareboat charter during the nine month periods ended September 30, 2010 and 2009. The Newlead Compassion was employed on bareboat charter up to June 10, 2010, and during the three and nine month period ended September 30, 2009 was employed on bareboat charters. Accordingly, the Stena Compass and the Newlead Compassion's charter rates have been adjusted to reflect a TCE rate of approximately $24,933 per day, assuming operating costs of $6,700 per day, for the three and the nine months ended September 30, 2010 and 2009, respectively.

6) 

Direct daily vessel operating expenses are defined as the sum of the vessel operating expenses, excluding provision for claims, and management fees, divided by the vessels calendar days. This has been adjusted to exclude the calendar days with respect to the Stena Compass and the Stena Compassion, during their employment on bareboat charters.

Conference Call and Webcast

NewLead will hold a conference call today, December 16, 2010 at 8:00 EST to discuss highlights and details of the third quarter 2010 financial results.

To access the conference call participants should dial +1 (888) 895-3561 (US/Canada) or +1 (706) 634-7259 (international) at 7:50 a.m. (EST) and request the NewLead Holdings Ltd. Third Quarter 2010 Earnings Call or Conference ID #29006421.

Following the teleconference, a replay of the call may be accessed by dialing +1 (800) 642-1687 (US/Canada) or +1 (706) 645-9291 (international). The conference ID is 29006421. The recording will be available from Thursday, December 16, 2010 at 11:00 a.m. (EST) through Thursday, December 23, 2010 at 11:59 p.m. (EST).

The conference call will also be broadcast live over the Internet. To access the live webcast, please go to the Investor Information tab on the Company's website: http://www.newleadholdings.com.

NewLead will be publishing a supplemental slide presentation which will also be available on the Company's website on the morning of the call.

About NewLead Holdings Ltd.

NewLead Holdings Ltd. is an international, vertically integrated shipping company that owns and manages product tankers and dry bulk vessels. NewLead currently controls 22 vessels, including six double-hull product tankers and 16 dry bulk vessels of which four newbuildings. NewLead's common shares are traded under the symbol "NEWL" on the NASDAQ Global Select Market. To learn more about NewLead Holdings Ltd., please visit the new website at www.newleadholdings.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

This press release includes assumptions, expectations, projections, intentions and beliefs about future events. These statements, as well as words such as "anticipate," "estimate," "project," "plan," and "expect," are intended to be ''forward-looking" statements. We caution that assumptions, expectations, projections, intentions and beliefs about future events may vary from actual results and the differences can be material. Forward-looking statements include, but are not limited to, such matters as future operating or financial results; statements about planned, pending or recent acquisitions and business strategy. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although NewLead believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, NewLead cannot assure you that it will achieve or accomplish these expectations, beliefs or projections described in the forward looking statements. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter rates and vessel values, failure of a seller to deliver one or more vessels, and other factors discussed in NewLead's filings with the U.S. Securities and Exchange Commission from time to time. NewLead expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in NewLead's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.

Investor Contact:

Media Contact:

Sarah Freeman

Elisa Gerouki

CJP Communications

NewLead Holdings Ltd.

+1 (212) 279 3115 x244

+ 30 (213) 014 8023

NEWLEAD HOLDINGS LTD. 

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(All amounts expressed in thousands of U.S. dollars except share amounts)

As of September 30,

As of December 31,

2010

2009

ASSETS

Current assets

Cash and cash equivalents

$

59,659

$

106,255

Restricted cash

10,276

403

Trade receivables, net

3,890

4,572

Other receivables

1,357

496

Due from related parties

-

40

Inventories

2,221

3,085

Prepaid expenses

2,374

1,082

Due from managing agents

799

8

Backlog asset

10,380

5,528

Total current assets

90,956

121,469

Restricted cash

33,156

9,668

Vessels under construction

59,751

-

Advances for vessel acquisition

3,213

-

Assets held for sale

-

8,250

Vessels and other fixed assets, net

387,501

253,115

Goodwill

14,280

-

Backlog asset

47,426

-

Deferred charges, net

12,489

6,831

Total non-current assets

557,816

277,864

Total assets

$

648,772

$

399,333

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Current portion of long-term debt

$

34,862

$

14,240

Accounts payable, trade

21,354

11,048

Accrued liabilities

19,801

16,957

Deferred charter revenue

1,768

-

Deferred income

1,181

226

Derivative financial instruments

6,992

9,687

Due to related parties

-

234

Due to managing agent

158

1,868

Total current liabilities

86,116

54,260

Non-current liabilities

Derivative financial instruments

7,320

7,407

7% convertible senior notes, net

52,237

41,430

Deferred charter revenue

116

-

Deferred income

1,250

730

Other non-current liabilities

7,857

Long-term debt

465,593

223,030

Total non-current liabilities

534,373

272,597

Total liabilities

620,489

326,857

Commitments and contingencies

Shareholders' equity

Preference Shares, $0.01 par value, 500 million shares authorized, none issued

-

-

Common Shares, $0.01 par value, 1 billion shares authorized, 7.3 million and 6.6 million shares issued and outstanding as of September 30, 2010 and December 31, 2009, respectively

74

67

Additional paid-in capital

122,579

110,281

Accumulated deficit

(94,370)

(37,872)

Total shareholders' equity

28,283

72,476

Total liabilities and shareholders' equity

$

648,772

$

399,333

NEWLEAD HOLDINGS LTD. 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(All amounts expressed in thousands of U.S. dollars except share and per share amounts)

Successor

Predecessor

Successor

Predecessor

Three months ended September 30,

Three months ended September 30,

Nine months ended September 30,

Nine months ended September 30,

2010

2009

2010

2009

OPERATING REVENUES

$

28,793

$

9,244

$

72,644

$

31,734

EXPENSES:

Commissions

(593)

(192)

(1,794)

(654)

Voyage expenses

(5,575)

(4,323)

(15,306)

(7,621)

Vessel operating expenses

(10,949)

(10,755)

(28,059)

(21,296)

General and administrative expenses

(3,777)

(4,396)

(11,804)

(7,455)

Depreciation and amortization expenses

(11,554)

(3,921)

(28,133)

(11,412)

Impairment loss

-

(68,042)

(15,662)

(68,042)

Management fees

(191)

(265)

(1,007)

(853)

(32,639)

(91,894)

(101,765)

(117,333)

Net operating loss from continuing operations

(3,846)

(82,650)

(29,121)

(85,599)

OTHER (EXPENSES) / INCOME, NET:

Interest and finance expense

(11,426)

(3,286)

(33,072)

(10,135)

Interest income

128

2

518

9

Gain on sale from vessels

1,168

-

1,168

-

Other expense, net

(49)

(22)

(6)

(24)

Change in fair value of derivatives

(126)

247

1,592

1,385

Total other expenses, net

(10,305)

(3,059)

(29,800)

(8,765)

Loss from continuing operations

(14,151)

(85,709)

(58,921)

(94,364)

Net (loss) / income from discontinued operations (includes gain from sale of vessels $2,497 in nine months ended 2010 and loss $5,584 in nine months ended 2009, respectively)

(55)

(25,589)

2,423

(29,397)

Net loss

$

(14,206)

$

(111,298)

$

(56,498)

$

(123,761)

(Loss) / income per share:

Basic and diluted

Continuing operations

$

(1.98)

$

(35.72)

$

(8.54)

$

(39.39)

Discontinued operations

$

(0.01)

$

(10.66)

$

0.35

$

(12.27)

Total

$

(1.99)

$

(46.38)

$

(8.19)

$

(51.66)

Weighted average number of shares:

Basic and diluted

7,133,033

2,399,740

6,899,628

2,395,596

NEWLEAD HOLDINGS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(All amounts expressed in thousands of U.S. dollars)

Successor

Predecessor

Nine months ended September 30,

Nine months ended September 30,

2010

2009

OPERATING ACTIVITIES:

Net loss

$

(56,498)

$

(123,761)

Adjustments to reconcile net loss to net cash used in operating activities:

Non-cash adjustments

55,544

106,677

(Gain) / loss on sale from vessels

(3,665)

5,584

Payments for dry-docking / special survey costs

(2,394)

(5,369)

Decrease / (increase) in operating assets

3,676

(271)

(Decrease) / increase in operating liabilities

(2,545)

8,228

Net cash used in operating activities

(5,882)

(8,912)

INVESTING ACTIVITIES:

Vessels under construction

(28,599)

-

Advances for vessel acquisitions

(3,213)

-

Restricted cash for vessel installment payments

(10,026)

-

Cash acquired through business acquisition

1,561

-

Other fixed asset acquisitions

(19)

(63)

Proceeds from the sale of vessels

37,263

2,279

Net cash (used in) /  provided by investing activities

(3,033)

2,216

FINANCING ACTIVITIES:

Principal repayments of long-term debt

(365,633)

(2,280)

Proceeds from long-term debt

355,475

-

Restricted cash for debt repayment

(22,170)

4,967

Payments for deferred charges

(5,354)

-

Proceeds from issuance of common shares

1

-

Net cash (used in) /  provided by financing activities

(37,681)

2,687

Net decrease in cash and cash equivalents

(46,596)

(4,009)

Cash and cash equivalents

Beginning of period

106,255

4,009

End of period

$

59,659

$

-

Supplemental Cash Flow information:

Interest paid

$

15,978

$

11,218

Issuance of common shares for business combination

$

5,210

-

Issuance of warrants for deferred charges

$

1,943

-

Assets disposed in connection with assumed acquisitions

$

8,501

-

Acquired advances for vessels under construction

$

29,315

-

Vessels and other fixed assets, net

$

58,110

-

Long-term debt

$

86,368

-

Acquired other assets / liabilities, net

$

40,098

-

Assets acquired and liabilities assumed under business acquisitions:

- Vessels and other fixed assets, net

$

143,808

-

- Long-term debt

$

154,475

-

- Other assets and liabilities, net

$

36

-

NEWLEAD HOLDINGS LTD.

NINE MONTHS RESULTS BY SEGMENT (unaudited)

(All amounts expressed in thousands of U.S. dollars) 

Wet

Dry

Total

Successor

Predecessor

Successor

Predecessor

Successor

Predecessor

Nine months ended September 30,

Nine months ended September 30,

Nine months ended September 30,

Nine months ended September 30,

Nine months ended September 30,

Nine months ended September 30,

2010

2009

2010

2009

2010

2009

Operating revenue

$

36,460

$

31,734

$

36,617

$

-

$

73,077

31,734

Commissions

(1,093)

(654)

(701)

-

(1,794)

(654)

Voyage expenses

(14,700)

(7,621)

(606)

-

(15,306)

(7,621)

Vessel operating expenses

(14,288)

(21,296)

(13,771)

-

(28,059)

(21,296)

General and administrative expenses

(4,970)

(4,318)

(3,173)

-

(8,143)

(4,318)

Management fees

(829)

(853)

(178)

-

(1,007)

(853)

Other expense, net

-

(24)

(6)

-

(6)

(24)

Net operating (loss) /  income before depreciation and amortization

580

(3,032)

18,182

-

18,762

(3,032)

Depreciation and amortization expense

(14,807)

(11,412)

(13,326)

-

(28,133)

(11,412)

Impairment loss

(15,662)

(68,042)

-

-

(15,662)

(68,042)

Net operating (loss) / income

(29,889)

(82,486)

4,856

-

(25,033)

(82,486)

Transaction costs

(931)

(2,552)

(409)

-

(1,340)

(2,552)

Straight line revenue

-

-

(433)

-

(433)

-

Compensation costs

(1,218)

(370)

(809)

-

(2,027)

(370)

Provision for doubtful receivables

(246)

(215)

(48)

-

(294)

(215)

Gain on sale from vessels

1,168

-

-

-

1,168

-

Interest and finance expense, net

(18,190)

(10,135)

(14,882)

-

(33,072)

(10,135)

Interest income

330

9

188

-

518

9

Change in fair value of derivatives

1,179

1,385

413

-

1,592

1,385

Loss from continuing operations

(47,797)

$

(94,364)

$

(11,124)

$

-

$

(58,921)

(94,364)

NEWLEAD HOLDINGS LTD.

THIRD QUARTER RESULTS BY SEGMENT (unaudited)

(All amounts expressed in thousands of U.S. dollars)

Wet

Dry

Total

Successor

Predecessor

Successor

Predecessor

Successor

Predecessor

Three months ended September 30,

Three months ended September 30,

Three months ended September 30,

Three months ended September 30,

Three months ended September 30,

Three months ended September 30,

2010

2009

2010

2009

2010

2009

Operating revenue

$

11,075

$

9,244

$

17,789

$

-

$

28,864

9,244

Commissions

(254)

(192)

(339)

-

(593)

(192)

Voyage expenses

(5,301)

(4,323)

(274)

-

(5,575)

(4,323)

Vessel operating expenses

(3,930)

(10,755)

(7,019)

-

(10,949)

(10,755)

General and administrative expenses

(1,572)

(1,560)

(1,437)

-

(3,009)

(1,560)

Management fees

(191)

(265)

-

-

(191)

(265)

Other expense, net

(49)

(22)

-

-

(49)

(22)

Net operating (loss) /  income before depreciation and amortization

(222)

(7,873)

8,720

-

8,498

(7,873)

Depreciation and amortization expense

(4,273)

(3,921)

(7,281)

-

(11,554)

(3,921)

Impairment loss

-

(68,042)

-

-

-

(68,042)

Net operating (loss) / income

(4,495)

(79,836)

1,439

-

(3,056)

(79,836)

Transaction costs

(22)

(2,552)

(26)

-

(48)

(2,552)

Straight line revenue

-

-

(71)

-

(71)

-

Compensation costs

(291)

(76)

(344)

-

(635)

(76)

Provision for doubtful receivables

(84)

(208)

(1)

-

(85)

(208)

Gain on sale from vessels

1,168

-

-

-

1,168

-

Interest and finance expense, net

(5,829)

(3,286)

(5,597)

-

(11,426)

(3,286)

Interest income

59

2

69

-

128

2

Change in fair value of derivatives

(58)

247

(68)

-

(126)

247

Loss from continuing operations

(9,552)

(85,709)

(4,599)

-

(14,151)

(85,709)

NEWLEAD HOLDINGS LTD. 

RECONCILIATION OF NET LOSS UNDER GAAP TO ADJUSTED EBITDA (NON-GAAP)

(All amounts expressed in thousands of U.S. dollars)

Successor

Predecessor

Successor

Predecessor

July 1,

July 1,

January 1,

January 1,

to

to

to

to

September 30, 2010

September 30, 2009

September 30, 2010

September 30, 2009

ADJUSTED EBITDA RECONCILIATION

Loss from continuing operations

$

(14,151)

$

(85,709)

$

(58,921)

$

(94,364)

PLUS:

Net interest expense

11,298

3,284

32,554

10,126

Depreciation and amortization

11,554

3,921

28,133

11,412

EBITDA (1)

$

8,701

$

(78,504)

$

1,766

$

(72,826)

Straight line revenue

71

-

433

-

Provision for doubtful receivables

85

208

294

215

Provision for claims

940

3,463

1,499

3,463

Change in fair value of derivatives (includes warrants valuations)

126

(247)

(1,592)

(1,385)

Impairment loss

-

68,042

15,662

68,042

Gain on sale from vessels

(1,168)

-

(1,168)

-

Share based compensation  

635

76

2,029

370

Non-core vessels operating loss  

886

7,194

6,563

10,359

ADJUSTED EBITDA (2)

$

10,276

$

232

$

25,486

$

8,238

(1) EBITDA represents net loss from continuing operations before net interest, taxes, depreciation and amortization.

(2) Adjusted EBITDA represents EBITDA before other non-cash items, including straight-line of revenue, provision for doubtful receivables, provision for claims, change in fair value of derivatives, impairment loss, gains and losses on sales of assets, share-based compensation expense and operating loss for the High Rider, the High Land, the Ostria, the Nordanvind and the Chinook ("non-core vessels"). We use adjusted EBITDA because we believe that it is a basis upon which liquidity can be assessed and because we believe that adjusted EBITDA presents useful information to investors regarding the Company’s ability to service and/or incur indebtedness. We also believe that adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.  

SOURCE NewLead Holdings Ltd.



RELATED LINKS

http://www.newleadholdings.com