What’s In DryShips Inc. (NASDAQ:DRYS)’S 2015 Annual Filing?


DryShips Inc. (NASDAQ:DRYS) sent out a press release announcing the filing of its 2015 annual report with the U.S. Securities and Exchange Commission. It’s something that investors had been waiting to see and when it happened, excitement could be seen around DryShips’ stock. But what does the report contain?

Before highlighting DryShips Inc. (NASDAQ:DRYS)’s 2015 annual report on Form 20-F, it’s noteworthy that the company is struggling with debt amid contracts cancelation. Some of the company’s debts have been declared in default. The company could also face tougher times ahead following a series of contracts cancelations. In particular, Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) has terminated several contracts with DryShips several months before their schedule. The termination of the contracts has complicated DryShips’ already tricky financial position.

What’s in the 2015 annual report?

DryShips Inc. (NASDAQ:DRYS) has made a wide range of disclosures in its Form 20-F as expected by SEC. Among other things, the report shows that revenue fell to $9.7 million in 2015 compared to $2.2 billion in 2014 and $1.1 billion five years earlier in 2011. The steep decline in the headline figure resulted in net loss of more than $2.1 million, sharply above a net loss of about $58 million in the previous year.

Assets shrink

DryShips Inc. (NASDAQ:DRYS)’s assets also contracted in 2015. The company reported total assets of $476.1 million in 2015 as opposed to $10.4 billion in 2014.

What’s the management expecting?

Optimism appears doused in DryShips Inc. (NASDAQ:DRYS). The Form-20F report, the management outlined a number of risks that could make it difficult for the company to generate enough revenue to be profitable and pay down its debts.

For example, the low down in the global financial markets as well as global macroeconomic conditions worry DryShips’ management. When the global economy is in distress, obtaining financing becomes difficult partly because lenders are relactunt to lend to struggling industry and when they do it, the costs of the loan can be quite high.

Given its condition, DryShips Inc. (NASDAQ:DRYS) requires additional financing and tough borrowing terms can only complicate its woes.

Instability of the common currency Euro is another thing that worries DryShips’ management. The instability of the Euro has potential adverse impact on refinancing in the Eurozone. That means that when DryShips’ customers cannot secure the financing they need, there will be less demand for its shipping services, thus hurting revenues and profits.


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