Eagle Bulk Shipping Inc. Expects To Navigate Current Market Turbulence


Eagle Bulk Shipping Inc., one of the world’s largest owner-operators within the Supramax / Ultramax segment, reported financial results for the three months ended March 31, 2020.

Highlights for the Quarter:

Generated net revenues of $74.4 million.
TCE Revenue (1) for the quarter equated to $43.0 million.
TCE (1) of $10,075 for the quarter.

Realized a net loss of $3.5 million or $0.05 per basic and diluted share.

Adjusted EBITDA(1) of $18.8 million.
Other highlights

Completed the scrubber installation program in early April- 41 vessels, or 82% of our fleet, are now fitted with exhaust gas cleanings systems

Looking ahead into the second quarter of 2020, the Company has attained a TCE of $8,110 with approximately 67% of the available days fixed for the period thus far.

Gary Vogel, Eagle Bulk’s CEO, commented, “Global economic disruption brought about by the COVID-19 pandemic has led to a massive reduction of global trade and cargo flows. While our primary focus has been and will continue to be ensuring the health, safety and welfare of our crews and employees, we also consistently seek to deliver above market commercial performance, regardless of underlying conditions. Although the BSI dropped by almost 40% in Q1, we have been able to maintain our trading momentum into the quarter and significantly outperform the market with a TCE of over $10,000 per day, which equates to a 62% beat. We were able to achieve this result by successfully executing on our active management approach to trading and by benefiting from operating scrubbers on the majority of our fleet. While the short-term dynamics are challenging, we believe Eagle is well-positioned to navigate through this uncertain period given the quality of our team, our active owner-operator model, and our solid balance sheet.”

Results of Operations for the three months ended March 31, 2020 and 2019

For the three months ended March 31, 2020, the Company reported a net loss of $3.5 million, or basic and diluted loss of $0.05 per share. In the comparable quarter of 2019, the Company reported net income of $29 thousand, or basic and diluted income of $0.0 per share.

Revenues, net

Net time and voyage charter revenues for the three months ended March 31, 2020 were $74.4 million compared with $77.4 million recorded in the comparable quarter in 2019. The decrease in revenue was primarily attributable to a decrease in available days, due to lower chartered-in activity offset by an increase in owned days due to the acquisition of six Ultramax vessels in the second half of 2019.

Voyage expenses

Voyage expenses for the three months ended March 31, 2020 were $26.6 million compared to $25.9 million in the comparable quarter in 2019. The increase was mainly attributable to an increase in the number of freight voyages performed offset by a decrease in bunker prices.

Vessel expenses

Vessel expenses for the three months ended March 31, 2020 were $23.7 million compared to $20.1 million in the comparable quarter in 2019. The increase in vessel expenses was attributable to increased crew wages, expenses for lubes, deck stores, scrubber spares and an increase in ownership days after the purchase of six Ultramax vessels offset by the sale of the vessels Thrasher and Kestrel in the second half of 2019. The ownership days for the three months ended March 31, 2020 and 2019 were 4,550 and 4,160, respectively.

Average daily vessel operating expenses for our fleet for the three months ended March 31, 2020 and 2019 were $5,209 and $4,830, respectively.

Charter hire expenses

Charter hire expenses for the three months ended March 31, 2020 were $6.0 million compared to $11.5 million in the comparable quarter in 2019. The decrease in charter hire expenses was principally due to a decrease in the number of chartered-in days. The total chartered-in days for the three months ended March 31, 2020 were 604 compared to 1,036 for the comparable quarter in the prior year. The Company currently charters-in three Ultramax vessels on a long term basis with lease terms ranging from one to two years.

Depreciation and amortization

Depreciation and amortization expense for the three months ended March 31, 2020 and 2019 was $12.5 million and $9.4 million, respectively. Total depreciation and amortization expense for the three months ended March 31, 2020 includes $10.6 million of vessel and other fixed asset depreciation and $1.9 million relating to the amortization of deferred drydocking costs. Comparable amounts for the three months ended March 31, 2019 were $8.2 million of vessel and other fixed asset depreciation and $1.2 million of amortization of deferred drydocking costs. The increase in depreciation expense is due to an increase in the cost base of our owned fleet due to the capitalization of scrubbers and BWTS on our vessels, and the purchase of six Ultramax vessels in the second half of 2019, marginally offset by the sale of two vessels. The increase in drydock amortization was due to the completion of twelve additional drydocks since the first quarter of 2019.

General and administrative expenses

General and administrative expenses for the three months ended March 31, 2020 and 2019 were $8.0 million and $8.4 million, respectively. General and administrative expenses included stock-based compensation of $0.8 million and $1.4 million for the three months ended March 31, 2020 and 2019, respectively. The decrease in general and administrative expenses was mainly attributable to the decrease in stock-based compensation expense.

Interest expense

Interest expense for the three months ended March 31, 2020 and 2019 was $9.2 million and $6.8 million, respectively. The increase in interest expense is primarily due to an increase in our outstanding debt under the Convertible Bond Debt and the New Ultraco Debt Facility offset by a decrease in interest rates.

Net cash used in operating activities for the three months ended March 31, 2020 was $12.1 million, compared with net cash provided by operating activities of $11.9 million in the comparable period in 2019. The cash flows from operating activities decreased as compared to the same period in the prior year primarily due to the negative impact of working capital changes due to an increase in net unrealized gains on our derivative instruments as well as an increase in drydock expenditures.

Net cash used in investing activities for the three months ended March 31, 2020 was $15.3 million, compared to $16.9 million in the comparable period in the prior year. During the three months ended March 31, 2020, the Company paid $18.4 million for the purchase and installation of scrubbers and ballast water treatment systems (“BWTS) on our fleet. The Company also received insurance proceeds of $3.6 million for hull and machinery claims. Additionally, the Company paid $0.5 million towards vessel improvements. During the three months ended March 31, 2019, the Company purchased one Ultramax vessel for $20.4 million, out of which $2.0 million was paid as an advance as of December 31, 2018 offset by the proceeds from the sale of two vessels for $12.8 million. Additionally, the Company paid $11.2 million for the purchase and installation of scrubbers and BWTS on our fleet.

Net cash provided by financing activities for the three months ended March 31, 2020 was $40.5 million compared with $6.8 million in the comparable period in 2019. During the three months ended March 31, 2020, the Company received $45.0 million in proceeds from the revolver loan under the New Ultraco Debt Facility and $2.5 million in proceeds from the Super Senior Facility. The Company repaid $5.8 million of the New Ultraco Debt Facility and paid $1.2 million towards shares withheld for taxes due to the vesting of restricted shares. During the three months ended March 31, 2019, the Company completed a debt refinancing transaction and received net proceeds of $153.4 million, by entering into new term and revolver loan facilities under the New Ultraco Debt Facility and repaid all outstanding debt under the Original Ultraco Debt Facility and New First Lien Facility of $82.6 million and $65.0 million, respectively. The Company paid $3.2 million as debt issuance costs to the lenders under the New Ultraco Debt Facility. Additionally, the Company paid $0.9 million towards shares withheld for taxes due to the vesting of restricted shares.

As of March 31, 2020, our cash and cash equivalents including restricted cash was $72.2 million compared to $59.1 million as of December 31, 2019.

As of March 31, 2020, the total availability under the New Ultraco Debt Facility revolving credit facility is $10.0 million and $12.5 million under the Super Senior Facility.

As of March 31, 2020, the Company’s outstanding debt consisted of the $188.0 million Norwegian Bond, the $211.8 million under the New Ultraco Debt Facility including $45 million of outstanding revolver, $2.5 million under the Super Senior Facility and the $114.1 million Convertible Bond Debt.

Capital Expenditures and Drydocking

Our capital expenditures relate to the purchase of vessels and capital improvements to our vessels, which are expected to enhance the revenue earning capabilities and safety of the vessels.

In addition to acquisitions that we may undertake in future periods, the Company’s other major capital expenditures include funding the Company’s program of regularly scheduled drydocking necessary to comply with international shipping standards and environmental laws and regulations. Although the Company has some flexibility regarding the timing of its drydocking, the costs are relatively predictable. Management anticipates that vessels are to be drydocked every two and a half years for vessels older than 15 years and five years for vessels younger than 15 years. Funding of these requirements is anticipated to be met with cash from operations. We anticipate that this process of recertification will require us to reposition these vessels from a discharge port to shipyard facilities, which will reduce our available days and operating days during that period.

Drydocking costs incurred are deferred and amortized to expense on a straight-line basis over the period through the date of the next scheduled drydocking for those vessels. In the three months ended March 31, 2020, three of our vessels completed drydocking and we incurred drydocking expenditures of $5.2 million. In the three months ended March 31, 2019, three vessels completed drydock and one vessel was still in drydock as of March 31, 2019 and we incurred drydocking expenditures of $2.5 million.
Source: Eagle Bulk Shipping





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