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Philly Shipyard sees record breaking 2017 ... but not 2018

NOVEMBER 3, 2017 — Philly Shipyard ASA reports third quarter results for the third quarter and first nine months of 2017 that included net income of $17.1 million for the quarter and$36.5 million for the nine months, compared with $12.0 million and $19.3 million in the same periods in 2016.

Philly Shipyard expects to achieve record high revenues and profits in 2017, the main drivers being the deliveries of Hulls 026 and 027 in Q1 and Q3, 2017, respectively, and the expected delivery of Hull 028 in Q4 2017.

In contrast, in 2018, the company expects it will recognize revenues only for the continued progress on Hulls 029-030 (the two containerships it is building for Matson) and potentially some additional revenues on the new contracts contemplated by its letter of intent with TOTE Maritime.

Under the terms of the LOI, it is contemplated that TOTE Maritime will make an initial order for two 3,700 TEU containerships (Hulls 031 and 032) with deliveries in 2020 and receive options to order two additional sister ships (Hulls 033 and 034) with deliveries in 2021. It is intended that these CV 3700 vessels will service the containership trade between the U.S. West Coast and Hawaii.

In order to support this timetable, Philly Shipyard is forging ahead with design, planning and procurement activities. The vessels are being designed to address the present market trends for larger sized containers, faster transit times and LNG fuel. Philly Shipyard has placed orders for all major long-lead items for the first pair of these vessels.

Philly Shipyard notes that while it has decided on building large containerships for its next contracts after the Matson project it Philly Shipyard continues to explore potential new construction projects in other areas of the Jones Act market to secure new orders for deliveries beyond 2021. Among other endeavors, Philly Shipyard has teamed with Fincantieri Marine Group and Vard Marine to compete for the detail design and construction of the U.S. Coast Guard's next generation heavy polar icebreaker. In support of this effort, the team is participating in a government funded industry study to develop a baseline icebreaker design, cost estimate, and project schedule and refine key vessel features and performance requirements.

The section on "Risks" in the report is a reminder of why shipbuilding is not a business for the faint of heart.

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