NewLead Holdings Ltd. Announces Financial Results for the Fourth Quarter and Year Ended December 31, 2010

PIRAEUS, Greece, April 11, 2011 /PRNewswire/ -- NewLead Holdings Ltd. (NASDAQ: NEWL) ("NewLead" or the "Company"), an international, vertically integrated mixed fleet shipping company, today announced its financial results for the fourth quarter and year ended December 31, 2010.  

Michael S. Zolotas, president and CEO of NewLead, stated: "2010 was a successful year for NewLead, illustrated by the Company's remarkable transformation. This turnaround reflects the acquisition of 14 vessels, including five newbuildings, the divestiture of all underperforming vessels, including five non-core product tanker and two container vessels, as well as the integration of commercial and operational management. We worked hard in achieving 70% fleet growth while executing on our restructuring strategy and delivering on our commitments. We continue to be opportunistic and are monitoring market conditions closely to capture opportunities that will support NewLead's further growth."

2010 Accomplishments and Recent Developments

New Time Charters – Coverage

In the second quarter of 2011, two of NewLead's product tankers, the Hiona and the Hiotissa, will enter Scorpio's Handymax Tanker Pool, a competitive tanker pool with more than 30 quality vessels currently participating.

In January 2011, NewLead entered into two new five-year time charter contracts with profit sharing for two product tankers, the Newlead Compass and the Newlead Compassion, for a net daily charter-out rate for each vessel of $11,700 for the first year, $13,650 for the second, third and fourth years, and $15,600 for the fifth year. In addition, during the term of the charters, NewLead will have a profit-sharing interest equal to 50% of the actual earnings up to $26,000 per day and 30% above such amount.

As a result of the above transactions, NewLead expects to have 78% of its operating days covered for 2011, 61% for 2012 and 50% for 2013.

Delivery of One Geared Kamsarmax; the Newlead Tomi

In December 2010, NewLead took delivery of the 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.    

Sale and Leaseback Agreement with $86.8 Million in Cash Proceeds

In November 2010, the Company completed the sale and immediate bareboat leaseback transaction of four dry bulk vessels, the Australia, the Brazil, the China and the Grand Rodosi for $86.8 million and for a bareboat leaseback period of eight years.

$62.0 Million New Revolving Credit Facility

NewLead also secured a new revolving credit facility of up to $62.0 million in November 2010. The Company has already utilized part of this credit facility to re-finance several vessels and provide financial flexibility.

Completion of Divestiture of Non-Core Vessels

In September 2010, the Company completed the divestiture of all its non-core vessels, the High Rider, the Chinook, the High Land and the Nordanvind. Total consideration from the sale of the divested vessels, including the two disposed container vessels in January 2010, was $50.0 million.

Fleet Expansion and Newbuildings

During 2010, NewLead completed the acquisition of 14 vessels, including five newbuildings, and two ship management companies, Newlead Shipping S.A. and Newlead Bulkers S.A.. The Company also agreed to acquire one additional dry bulk vessel initially delivered under bareboat charter.

Restatement of Previously Issued Financial Statements

In connection with the reporting of the Company's recapitalization that occurred in October 2009, goodwill resulting from the application of acquisition accounting to the Aries business was recorded directly in shareholders' equity but should have been recorded as Goodwill in our non-current assets. We have corrected this in the consolidated balance sheet and the consolidated statement of shareholders' equity with resulting increases in Goodwill, Total Non-Current Assets, Total Assets, Additional Paid-In Capital and Total Shareholders' Equity of $86,036 as of December 31, 2009. As a result, goodwill increased from zero to $86,036, total non-current assets increased from $277,864 to $363,900, total assets increased from $399,385 to $485,321, additional paid-in capital increased from $110,281 to $196,317 and total shareholders' equity increased from $72,476 to $158,512. This correction had no effect on annual and fourth quarter 2009 Net loss and Net cash provided by operating activities. If 2010 quarterly information previously released by the Company was similarly restated, the only impact would be that the line items for goodwill and shareholders' equity would each be increased by approximately $86 million.

We have filed an amendment to our Annual Report on Form 20-F for the fiscal year ended December 31, 2009 which included fully restated financial statements and intent to file Reports on Form 6-K with respect to our quarterly results during 2010.

Financial Results

Fourth Quarter 2010 Financial Results

NewLead has compiled consolidated statement of operations for the three months ended December 31, 2010 and for the periods from October 1, 2009 to October 13, 2009 and from October 14, 2009 to December 31, 2009. The information was derived from the audited 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 include the results of operations for the product tankers and dry bulk vessels, respectively.

For the three month period ended December 31, 2010, operating revenues increased by 89.3% to $30.1 million, compared to $15.9 million for the three month period ended December 31, 2009. The increase in revenue was primarily attributable to the 49.1% growth in our fleet and the corresponding increase in available and operating days of 69.3% and 90.1%, respectively, as well as a 40.3% increase in TCE rates. Furthermore, the revenue and operational growth reflects 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 of 17.3 vessels in operation for the three month period ended December 31, 2010, compared to an average of 11.6 vessels for the three month period ended December 31, 2009. For the three month periods ended December 31, 2010 and December 31, 2009, TCE rates were $16,945 per day and $12,077 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 fourth quarter of 2010 was 92.1%, compared to 91.4% for the fourth quarter of 2009. Fleet utilization, excluding non-core vessels, was suppressed by 76 unemployment days attributable mainly to the adverse tanker market conditions and the corresponding decrease in demand, as well as by 48 days of unforeseen dry bulk off-hires. Dry bulk vessels fleet utilization was 94.5% compared to 87.3% for the wet vessels for the fourth quarter of 2010. During the fourth quarter of 2010, 84.8% of the fleet was fixed on time charters, compared to 45.4% during the fourth quarter of 2009.

Adjusted EBITDA increased by 290.3% in the fourth quarter of 2010 to $12.1 million, compared to $3.1 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 49.1% operating fleet growth and 16.1% reduction in daily vessel operating expenses relative to the fourth quarter of 2009. Furthermore, dry bulk vessels contributed $10.7 million in adjusted EBITDA in the fourth quarter of 2010 compared to $1.9 million for the period October 14, 2009 to December 31, 2009 when they initially entered NewLead's fleets.

Loss from continuing operations was $38.7 million for the three month period ended December 31, 2010, compared to $36.9 million for the three month period ended December 31, 2009. The results for the fourth 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 a $4.3 million gain from the change in the fair value of the Company's interest rate swaps, interest expense was $12.5 million representing a 60.2% increase relative to the fourth quarter of 2009, reflecting $588.7 million of indebtedness for balance sheet purposes as of December 31, 2010, which included, among other items of indebtedness capital lease obligations of $85.0 million and  $49.0 million  in drawings from a new revolving credit facility, all of which, where entered into during the fourth quarter of 2010. Depreciation and amortization increased by approximately 119.2% to $11.4 million during the three months ended December 31, 2010, compared to $5.2 million during the equivalent period in 2009, reflecting the 49.1% 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 assets acquisitions. In addition, the results for the fourth quarter of 2010 included, an impairment loss of $23.9 million comprising of $18.7 million impairment on goodwill and $5.2 million in charges associated with terminating a MR1 Tanker purchase commitment. Loss for continuing operations also reflected a $2.7 million non-cash loss related to the sale and leaseback of the Australia and Brazil vessels.  

Net loss for the fourth quarter of 2010 was $38.3 million, compared to $39.9 million for the fourth quarter of 2009. This loss included a gain from discontinued operations of $0.3 million in 2010 and a loss of $2.9 million in 2009, related to the Company's strategic decision to exit from the container market.

For the three months ended December 31, 2010, the weighted average number of basic and diluted shares was 7.1 million, compared to 5.1 million for the equivalent period of 2009. As such, the loss per share from continuing operations was $5.43, compared to $7.19 for the equivalent period of 2009. These results do not include the earnings per share from discontinued operations of $0.05 for the three month period ended December 31, 2010, and the loss per share of $0.57 for the corresponding period of 2009. For the fourth quarter of 2010, the loss per share (from both continuing and discontinued operations) was $5.38, compared to $7.76 for the fourth quarter of 2009.

Year Ended December 31, 2010 Financial Results

For the year ended December 31, 2010, operating revenues increased 115.3% to $102.7 million, compared to operating revenues of $47.7 million recorded for the year ended December 31, 2009. The increase in revenue was primarily attributable to the 69.8% growth in fleet size and the corresponding increase in available and operating days by 84.0% and 94.2%, respectively, as well as a 21.2% increase in TCE rates. Furthermore, the revenue and operational growth reflects 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 of 16.3 vessels in operation for the year period ended December 31, 2010, versus an average of 9.6 vessels in 2009. For the years ended December 31, 2010 and December 31, 2009, TCE rates were $14,942 per day and $12,327 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 year ended December 31, 2010 was 92.9%, compared to 94.9% for the full year 2009. Fleet utilization, excluding non-core vessels, for the year ended December 31, 2010 was suppressed by 259 unemployment days attributable primarily to the adverse tanker market conditions and the corresponding decrease in demand. Moreover, dry bulk vessels' fleet utilization was 96.7% compared to 87.5% for the wet vessels for the full year 2010.  During 2010, 72.4% of the fleet was fixed on time charters, compared with 58.2% in 2009.

Adjusted EBITDA increased by 229.8% for the full year 2010 to $37.6 million compared to $11.4 million for the full year 2009. This growth in adjusted EBITDA was primarily attributable to the increased operational contribution in total revenues related to the aforementioned 69.8% operating fleet growth and 26.3% reduction in daily vessel operating expenses relative to the full year 2009. Furthermore, dry bulk vessels contributed $30.0 million in the full year 2010 adjusted EBITDA while during 2009 contributed $1.9 million when they initially entered NewLead's fleet on October 14, 2009 as part of the 2009 recapitalization.

Loss from continuing operations was $97.6 million for the year ended December 31, 2010, and $131.3 million for the year ended December 31, 2009. The results for the year 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. Excluding non-cash charges reflected in interest expense, primarily attributable to the $14.4 million amortization of the beneficial conversion feature embedded in the 7% Notes and a $4.0 million gain from the change in the fair value of our interest rate swaps, interest expenses were $34.5 million representing a 92.7% increase, reflecting $588.7 million of indebtedness for balance sheet purposes as of December 31, 2010, which included approximately $298.5 million in new loans assumed and drawdowns during 2010 related to fleet growth and our newbuilding program. Depreciation and amortization was $39.5 million for the year ended December 31, 2010, compared to $16.7 million in 2009, reflecting the 69.8% increase in operating fleet growth, as well as the amortization of the intangible assets created as a result of the 2010 business and assets acquisitions. In addition, the results for the full year 2010 included a $1.6 million non-cash net loss on sale from vessels. During 2010, $39.5 million of impairment charges were recognized in connection with impairment losses on goodwill, divesting the non-core vessels and charges associated with terminating a MR1 Tanker purchase commitment. Loss from continuing operations for the year 2009 included an impairment loss of $68.0 million.

Net loss for the full years ended December 31, 2010 and 2009 was $94.8 million and $163.6 million, respectively. This loss included income from discontinued operations of $2.8 million in 2010, and a loss from discontinued operations of $32.2 million in 2009, which were related to the strategic decision to exit from the container market.

For the year ended December 31, 2010, the weighted average number of basic and diluted shares was approximately 7.0 million, while for the periods January 1, 2009 to October 13, 2009 and October 14, 2009 to December 31, 2009 it was approximately 2.4 million and 5.6 million, respectively. As such, the loss per share from continuing operations was $14.03 for the year ended December 31, 2010, and $39.84 and $6.42 for the periods January 1, 2009 to October 13, 2009 and October 14, 2009 to December 31, 2009, respectively.  These results do not include the earnings per share from discontinued operations of $0.40 for the year ended December 31, 2010, and the loss per share of $12.65 and $0.36 for the periods January 1, 2009 to October 13, 2009 and October 14, 2009 to December 31, 2009, respectively. For the full year 2010, the loss per share (from both continuing and discontinued operations) was $13.63, while for the periods January 1, 2009 to October 13, 2009 and October 14, 2009 to December 31, 2009, it was $52.49 and $6.78, respectively.

Balance Sheet

As of December 31, 2010, NewLead's liquidity reflected $110.8 million of total cash ($43.3 million of restricted cash). Total debt, on the balance sheet, as of December 31, 2010 was $588.7 million, compared to $278.7 million at December 31, 2009, representing a $310.0 million increase. The increase was mainly attributable to: (i) $14.4 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; (iv) the $52.5 million assumption and drawdown of debt related to the acquisition of two Kamsarmax newbuildings; (v) the $49.0 million drawdown of the new Marfin revolving facility and (vi) net proceeds of $2.4 million from the sale and leaseback transaction. The overall increase in indebtedness was partially offset by $34.8 million of debt repayments including proceeds generated from the sale of a container vessel, as well as the repayments for terminated loans of $17.7 million and the capital lease payments of $1.8 million.

As of December 31, 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 April 11, 2011:

Conference Call and Webcast

NewLead will hold a conference call today, April 11, 2011 at 4:30PM EDT to discuss highlights and details of the fourth quarter 2010 financial results.

To access the conference call participants should dial +1 (888) 285-0969 (US/Canada) or +1 (706) 758-6357 (international) at 4:15PM EDT and request the NewLead Holdings Ltd. Fourth Quarter 2010 Earnings Call or Conference ID #59389831.

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 59389831. The recording will be available from April 11, 2011 at 8:00PM EDT through April 18, 2011 at 11:59PM EDT.

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 day 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 are 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.

SOURCE NewLead Holdings Ltd.