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Eagle Bulk Shipping Inc. Reports Third Quarter 2020 Results


iCrowdNewswire   Nov 9, 2020  12:02 PM ET

Eagle Bulk Shipping Inc. one of the world’s largest owner-operators within the Supramax / Ultramax drybulk segment, reported financial results for the three and nine months ended September 30, 2020.

Highlights for the Quarter:

Subsequent Events

Gary Vogel, Eagle Bulk’s CEO, commented, “The Baltic Supramax Index continued to recover in the third quarter, since bottoming in April while in the midst of the global lockdown. I believe this positive trend is indicative of a normalization of freight demand.

Additionally, due to the easing of logistical issues, in the third quarter we were able to repatriate the vast majority of our seafarers who had been unable to return home in a timely manner due to travel restrictions.

Looking ahead, I believe our Q4 fixtures reflect not just an improving market but also our ability to outperform commercially. We have now fixed approximately 73% of our available days for the fourth quarter at a net TCE of $11,275. While uncertainty around COVID-19 remains, we are cautiously optimistic that the global economy will continue to recover and benefit from various new monetary and fiscal stimulus programs being instituted around the world.”

Results of Operations for the three and nine months ended September 30, 2020 and 2019

For the three months ended September 30, 2020, the Company reported a net loss of $11.2 million, or basic and diluted loss of $1.09 per share. In the comparable quarter of 2019, the Company reported a net loss of $4.6 million, or basic and diluted loss of $0.45 per share.

For the nine months ended September 30, 2020, the Company reported a net loss of $35.2 million, or basic and diluted loss of $3.42 per share. In the comparable period of 2019, the Company reported a net loss of $10.5 million, or basic and diluted loss of $1.03 per share.

Revenues, net

Net time and voyage charter revenues for the three months ended September 30, 2020 were $68.2 million compared with $74.1 million recorded in the comparable quarter in 2019. The decrease in revenues was primarily attributable to lower charter rates as a result of COVID-19 and lower chartered-in days offset by an increase in owned days due to the acquisition of six Ultramax vessels in the second half of 2019. The available days for the three months ended September 30, 2020 were impacted by offhire days relating to delays in crew changes as a result of COVID-19.

Net time and voyage charter revenues for the nine months ended September 30, 2020 and 2019 were $200.0 million and $220.9 million, respectively. The decrease in revenues was primarily due to lower charter rates offset by a higher number of freight voyages performed, which gross up both revenue and voyage expenses. The available days remained flat year over year.

Voyage expenses

Voyage expenses for the three months ended September 30, 2020 were $19.6 million compared to $19.4 million in the comparable quarter in 2019. The increase was mainly attributable to an increase in the number of voyage charters performed offset by a decrease in bunker consumption expense due to lower bunker prices as a result of COVID-19.

Voyage expenses for the nine months ended September 30, 2020 were $70.0 million compared to $66.3 million in the comparable period in 2019. The increase was primarily due to an increase in the number of voyage charters performed offset by a decrease in bunker consumption expense due to lower bunker prices as a result of COVID-19.

Vessel expenses

Vessel expenses for the three months ended September 30, 2020 were $21.7 million compared to $20.0 million in the comparable quarter in 2019. The increase in vessel expenses was primarily attributable to an increase in ownership days after the purchase of six Ultramax vessels in the second half of 2019, offset by the sale of the vessel Goldeneye in the third quarter of 2020. The ownership days for the three months ended September 30, 2020 and 2019 were 4,546 and 4,156, respectively.

Average daily vessel operating expenses for our fleet for the three months ended September 30, 2020 and 2019 were $4,784 and $4,801, respectively.

Vessel expenses for the nine months ended September 30, 2020 were $65.7 million compared to $60.0 million in the comparable period in 2019. The increase in vessel expenses was primarily attributable to an increase in ownership days after the purchase of six Ultramax vessels offset by the sale of the vessel Thrasher in the second quarter of 2019, the sale of the Kestrel in the third quarter of 2019, and the sale of the vessel Goldeneye in the third quarter of 2020. Additionally, the Company incurred $0.7 million in additional costs relating to COVID-19 for procurement of personal protective equipment, test kits and crew changes. The ownership days for the nine months ended September 30, 2020 and 2019 were 13,646 and 12,485, respectively.

Average daily vessel operating expenses for our fleet for the nine months ended September 30, 2020 and 2019 were $4,813 and $4,806 respectively.

Charter hire expenses

Charter hire expenses for the three months ended September 30, 2020 were $5.1 million compared to $11.3 million in the comparable quarter in 2019. The decrease in charter hire expenses was principally due to a decrease in chartered-in days as well as charter hire rates due to COVID-19. The total chartered-in days for the three months ended September 30, 2020 were 535 compared to 931 for the comparable quarter in the prior year. The Company currently charters in three Ultramax vessels on a long term basis with remaining lease terms of approximately one year.

Charter hire expenses for the nine months ended September 30, 2020 were $15.8 million compared to $34.0 million in the comparable period in 2019. The decrease in charter hire expenses was primarily due to a decrease in the number of chartered-in days as well as charter hire rates. The total chartered-in days for the nine months ended September 30, 2020 were 1,664 compared to 2,937 for the comparable period in the prior year.

Depreciation and amortization

Depreciation and amortization expense for the three months ended September 30, 2020 and 2019 was $12.6 million and $10.1 million, respectively. Total depreciation and amortization expense for the three months ended September 30, 2020 includes $10.8 million of vessel and other fixed asset depreciation and $1.8 million relating to the amortization of deferred drydocking costs. Comparable amounts for the three months ended September 30, 2019 were $8.4 million of vessel and other fixed asset depreciation and $1.7 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 three vessels. The increase in drydock amortization was due to the completion of fourteen additional drydocks since the third quarter of 2019.

Depreciation and amortization expense for the nine months ended September 30, 2020 and 2019 was $37.6 million and $29.2 million, respectively. Total depreciation and amortization expense for the nine months ended September 30, 2020 includes $32.1 million of vessel and other fixed asset depreciation and $5.5 million relating to the amortization of deferred drydocking costs. Comparable amounts for the nine months ended September 30, 2019 were $24.8 million of vessel and other fixed asset depreciation and $4.4 million of amortization of deferred drydocking costs.

General and administrative expenses

General and administrative expenses for the three months ended September 30, 2020 and 2019 were $8.0 million and $8.5 million, respectively. General and administrative expenses included stock-based compensation of $0.7 million and $1.2 million for the three months ended September 30, 2020 and 2019, respectively. The decrease in general and administrative expenses was mainly attributable to decreases in stock-based compensation expense.

General and administrative expenses for the nine months ended September 30, 2020 and 2019 were $22.7 million and $24.9 million, respectively. General and administrative expenses included stock-based compensation of $2.3 million and $3.8 million for 2020 and 2019, respectively. The decrease in general and administrative expenses was mainly attributable to decreases in stock-based compensation expense, corporate travel and office expenses due to COVID-19.

Loss/(gain) on sale of vessels

For the three months ended September 30, 2020 and 2019, the Company recorded a loss of $0.4 million and a gain of $1.0 million, respectively. The loss for the three months ended September 30, 2020 includes a loss of approximately $0.1 million in connection with the sale of the vessel Goldeneye and a loss of $0.3 million in connection with the pending sale of the vessel Skua, which was classified as a vessel held for sale as of September 30, 2020. The vessel is expected to be delivered to its buyers in the fourth quarter of 2020. The gain for the three months ended September 30, 2019 includes a gain of $1.0 million in connection with the sale of the vessel Kestrel.

For the nine months ended September 30, 2020 and 2019, the Company recorded a loss of $0.4 million and a gain of $6.0 million, respectively. The loss for the nine months ended September 30, 2020 includes a loss of approximately $0.1 million in connection with the sale of the vessel Goldeneye and a loss of $0.3 million in connection with the pending sale of the vessel Skua, which was classified as a vessel held for sale as of September 30, 2020. The gain for the nine months ended September 30, 2019 includes a gain of $6.0 million, in connection with the sales of the vessels Condor, Merlin, Thrasher, and Kestrel.

Interest expense

Interest expense for the three months ended September 30, 2020 and 2019 was $9.0 million and $8.1 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.

Interest expense for the nine months ended September 30, 2020 and 2019 was $26.9 million and $21.6 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 nine months ended September 30, 2020 was $2.3 million, compared with net cash provided by operating activities of $19.0 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 decrease in charter hire rates due to COVID-19 and the increase in drydock expenditures.

Net cash used in investing activities for the nine months ended September 30, 2020 was $17.5 million, compared to $100.4 million in the comparable period in the prior year. During the nine months ended September 30, 2020, the Company paid $25.2 million for the purchase and installation of scrubbers and ballast water treatment systems on our fleet. The Company also received insurance proceeds of $3.7 million for hull and machinery claims. Additionally, the Company paid $0.6 million towards vessel improvements. This use of cash was partially offset by the proceeds from the sale of one vessel for net proceeds of $4.6 million. During the nine months ended September 30, 2019, the Company purchased four Ultramax vessels for $81.4 million, of which $2.0 million was paid as an advance as of December 31, 2018 and $6.0 million was paid as an advance for the purchase of three additional vessels which were delivered in the fourth quarter of 2019. The proceeds from the sale of four vessels were $29.6 million. The Company received $2.1 million for hull and machinery claims. Additionally, during the nine months ended September 30, 2019, the Company paid $44.5 million for the purchase and installation of scrubbers and ballast water treatment systems on our fleet.

Net cash provided by financing activities for the nine months ended September 30, 2020 was $46.0 million compared to $104.4 million in the comparable period in 2019. During the nine months ended September 30, 2020, the Company received $55.0 million in proceeds from the revolver loan under the New Ultraco Debt Facility, $22.6 million in proceeds from the New Ultraco Debt Facility, and $15.0 million from the Super Senior Facility. The Company repaid $20.9 million of the New Ultraco Debt Facility, $20.0 million of the revolver loan under the New Ultraco Debt Facility, and $4.0 million of the Norwegian Bond Debt. Additionally, the Company paid $1.2 million to settle net share equity awards, and $0.4 million as debt issuance costs to the lenders of the New Ultraco Debt Facility. During the nine months ended September 30, 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 received $112.5 million in proceeds from the Convertible Bond Debt, net of debt discount. 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 to settle net share equity awards.

As of September 30, 2020, our cash and cash equivalents including restricted cash was $85.3 million compared to $59.1 million as of December 31, 2019.

As of September 30, 2020, the Company’s outstanding debt excluding debt discount and debt issuance costs consisted of the $184.0 million Norwegian Bond, the $209.2 million under the New Ultraco Debt Facility which includes $35.0 million of an outstanding revolver loan, $15.0 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 nine months ended September 30, 2020, eight of our vessels completed drydock and one of our vessels was still in drydock as of September 30, 2020, and we incurred drydocking expenditures of $10.8 million. In the nine months ended September 30, 2019, five of our vessels completed drydock and three vessels were still in drydock as of September 30, 2019, and we incurred drydocking expenditures of $6.1 million.



Contact Information:

Company Contact:
Frank De Costanzo
Chief Financial Officer
Eagle Bulk Shipping Inc.
Tel. +1 203-276-8100
Email: investor@eagleships.com








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