TBS International's CEO Discusses Q2 2011 Results - Earnings Call Transcript

TBS International plc ( TBSI)

Q2 2011 Earnings Call

August 9, 2011 8:30 a.m. ET

Executives

Joseph Royce - Chairman, President and Chief Executive Officer

Ferdinand Lepere - Senior Executive Vice President and Chief Financial Officer

Analysts

John Shortino - Superior Technology

Presentation

Operator

Good day and thank you for standing by ladies and gentlemen and welcome to the TBS International Second Quarter and Six Months Ended June 30, 2011 Earnings Conference Call. We have with us today Joseph E. Royce, Chairman, President and CEO; and Mr. Fred Lepere, Senior Executive Vice President and Chief Financial Officer of the company. (Operator Instructions)

The conference will also be webcast live, audio and slideshow on the company's website at www.tbsship.com, by clicking on the webcast banner. I must advice you that this conference is being recorded today, Tuesday, August 9, 2011.

We now pass the floor to one of your speakers for today, Mr. Fred Lepere. Please go ahead Mr. Lepere.

Ferdinand Lepere

Well, good morning and thank you for joining TBS International's quarterly conference call. The purpose of today's call is to discuss the results of TBS' second quarter and six months ended June 30, 2011.

On Monday, August 8, 2011, we issued a press release after the market closed in New York, with financial and operational information for the second quarter and six months ended June 30, 2011. If you have not received this release, you may log on to our website at www.tbsship.com and navigate to the Investor Relations page. Or you can call Capital Link at area code 212-661-7566. We will also post the transcript of this call on our website once it has been prepared.

Our remarks today will be followed by a question-and-answer session. For those of you who want to follow our slide presentation, please go to the TBS website, which again is www.tbsship.com and click on the webcast link. Note that the slides are user controlled. For those of you who want to follow the webcast, please click on the arrow at the bottom of the webcast screen to make the slides turn. Also, please note that the webcast will be archived on our website.

Now, I would like you to please turn to slide number two. This slide refers to forward-looking statements. During the course of this conference call we may make forward-looking statements. Such statements are just predictions and involve risks and uncertainties such that actual results may differ materially.

I'd like to refer you to our filings with the Securities and Exchange Commission, in particular our quarterly report on Form 10-Q and our annual report on Form 10-K. These documents contain and identify important factors that could cause the actual results to differ materially from those expressed in these forward-looking statements.

And with that, I'd like to introduce Joseph Royce, our Chairman, CEO and President.

Joseph Royce

Thank you, Fred. Good morning everybody and welcome to TBS International’s conference call for the results of the second quarter and six months ended June 30, 2011. I’d like to begin our presentation with slide number three, the Baltic Indices.

TBSs’ financial results for the second quarter and first six months of 2011 were negatively affected by three major macroeconomic factors. Contingent deliveries of newbuild vessels in all drybulk categories, which is increasing capacity as it outpaces scrapping of tonnage. Downward pressure on dry cargo freight rates, and the high cost of transportation fuel, which we have not been able to pass on to our customers because of the downward pressure on freight rates.

Please now turn to slide number four, addressing weakness in dry cargo market. TBS is taking an aggressive proactive approach in dealing with the weaknesses in the dry cargo market. We are engaged in cost reduction programs. Three key members from management purchased 100,000 Series A and Series B preference shares for aggregate consideration of $10 million. Pursuant to our rights offering we issued 8,260 shares A preference, for an aggregate consideration of $826,000.

Please now turn to slide number five, looking into the third quarter 2011. So far in the third quarter of 2011 we see the same macroeconomic factors continuing. Deliveries of additional newbuild dry cargo vessels, continuing downward pressure on dry cargo freight rates with the Baltic Dry Index or BDI at 1,264 on August 8, 2011 compared to 1,348 on May 9, 2011.

Correspondingly, the Baltic Handysize Index or BHSI, was 657 on August 8, 2011, compared to 789 on May 9, 2011. And although the quoted price for a barrel of oil has come down in the past two weeks, the reduction in the price of bunkers have been at a much slower rate.

Reflecting the continuous downturn in the BDI and lack of improvement in the TBS operating results, we are in discussions with our lenders about our liquidity requirements. We have retained the services of Lazard Freres to assist TBS in this process and to address the liquidity requirements of the company.

Now I would like to turn the floor over to Fred Lepere, our Senior Executive Vice President and Chief Financial Officer.

Ferdinand Lepere

Thank you, Joe. We should now all be on slide number six. This slide summarizes our second quarter 2011 operating and financial highlights. For the second quarter ended June 30,2011, total revenues were $97.1 million, a decrease of 13% over the same period in 2010. Voyage revenues for the three months ended June 30, 2011, were $75.9 million, an increase of 8% from $70.6 million during the same period in 2010.

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