Eagle Bulk Shipping Inc. Reports Third Quarter 2015 Results

16 Nov, 2015, 17:15 ET from Eagle Bulk Shipping Inc.

NEW YORK, Nov. 16, 2015 /PRNewswire/ -- Eagle Bulk Shipping Inc. (Nasdaq: EGLE) today announced its results for the third quarter ended September 30, 2015. 

Third Quarter Highlights:

  • Net loss of $20.4 million or $0.54 per share for the Company, compared with net loss of $45.9 million, or $2.39 per share for the comparable quarter of 2014.
  • Net revenues of $29.1 million, compared to $29.8 million for the comparable quarter in 2014.
  • Fleet utilization rate of 98.0%.
  • As previously reported, the Company entered into an Amendatory Agreement with its lenders under which the lenders have agreed to, among other things, defer the compliance with the minimum interest coverage ratio covenant from December 31, 2015, to December 31, 2016.
  • Elected to bring in-house the technical management of the 11 vessels, which had been previously outsourced to a third-party.

Subsequent Events:

Subsequent to the close of the third quarter, the Company took the following additional actions:

  • Announced key additions to the Company's senior commercial and technical teams:
    • Bo Westergaard Jensen as Chief Commercial Officer, with responsibility for all Chartering and Operations activities worldwide;
    • Per Moelris as Head of Technical Management, with responsibility for the Company's owned fleet of 44 vessels; and,
    • Jonathan Dowsett as Senior Fleet Performance Manager, with responsibility for a newly-created business unit, Performance Management and Optimization.
  • Entered into a new commercial lease agreement for office space in Stamford, Connecticut and simultaneously entered into a lease termination agreement for its New York office space effective on March 31, 2016. 

Gary Vogel, Eagle Bulk's Chief Executive Officer, stated, "Eagle's third quarter financial results are reflective of the currently-weak drybulk market.  As such, and given the muted near-term outlook, we will remain focused on maintaining a healthy balance sheet in order to provide for stability in the short-term and flexibility in the future.

"Notwithstanding the current freight environment, we are now well into the early stages of a fundamental effort to redefine the Company.  This includes actively working to create a world-class commercial and technical operating platform with the objective to deliver premium value and results around our assets.  The new hires we announced today are central to this effort.  More generally, we are excited by the positive changes underway, and are confident that these measures – undertaken with purpose and resolve -- will help position Eagle Bulk to capitalize and grow from the opportunities ahead."

Results of Operations for the three-month periods ended September 30, 2015 and 2014

For the third quarter of 2015, the Company reported net loss of $20,376,620 or $0.54 per share, based on a weighted average of 37,639,352 diluted shares outstanding. In the comparable second quarter of 2014, the Company reported a net loss of $45,857,654 or $2.39 per share, based on a weighted average of 19,172,717 diluted shares outstanding.

Gross time and voyage charter revenues in the quarter ended September 30, 2015 were $30,612,503, compared with $31,381,634 recorded in the comparable quarter in 2014. The decrease in revenue was attributable to reduced available days due to drydocking of an increased number of vessels and the sale of one vessel, the Kite, in the quarter ended June 30, 2015. Brokerage commissions incurred on revenues earned in the quarters ended September 30, 2015 and 2014 were $1,485,021 and $1,535,596, respectively. Net revenues during the quarters ended September 30, 2015 and 2014, were $29,127,482 and $29,846,038, respectively.

Total operating expenses for the Company in the quarter ended September 30, 2015 were $46,135,325 compared with $56,081,682 recorded for the Company in the comparable quarter 2014. The decrease in operating expenses resulted primarily from a reduction in the Depreciation expense of $8,326,900 due to lower vessel valuation upon adoption of Fresh-Start Accounting, lower General and Administrative expenses by $2,146,088 due to lower allowance for bad debts offset by charter hire expense of $1,248,649.

Results of Operations for the nine-month periods ended September 30, 2015 and 2014

For the nine months ended September 30, 2015, the Company reported net loss of $68,551,984 or $1.82 per share, based on a weighted average of 37,602,316 diluted shares outstanding. In the comparable period of 2014, the Company reported a net loss of $113,107,599 or $6.36 per share, based on a weighted average of 17,785,290 diluted shares outstanding.

Gross time and voyage charter revenues in the nine-month period ended September 30, 2015 were $82,177,331, compared with $123,436,530 recorded in the comparable period in 2014. The decrease in revenue is attributable to lower charter rates earned by the fleet, reduced available days due to drydocking of an increased number of vessels and the sale of one vessel, the Kite in the quarter ended June 30, 2015. Brokerage commissions incurred on revenues earned in the nine-month periods ended September 30, 2015 and 2014 were $4,061,311 and $5,415,042, respectively. Net revenues during the nine-month periods ended September 30, 2015 and 2014, were $78,116,020 and $118,021,488, respectively.

Total operating expenses for the Company for the nine months ended September 30, 2015 were $136,985,400 compared with $155,186,545 recorded for the Company in the comparable period in 2014. The decrease in operating expenses resulted primarily from a reduction in the Depreciation expense of approximately $25,302,988  due to lower vessel valuation upon adoption of Fresh-Start Accounting , offset by higher charter hire  expense  $3,697,745, loss on sale of the Kite $5,696,675 and higher general and administrative expenses primarily due to increase in non-cash compensation expense and adviser's fees.

Liquidity and Capital Resources

Net cash used in operating activities during the nine-month period ended September 30, 2015 was $29,809,434, compared with $11,094,580 during the corresponding nine-month period ended September 30, 2014. The increase is primarily due to lower charter rates on time charter renewals.

Net cash provided by investing activities during the nine-month period ended September 30, 2015 was $9,621,753, compared with net cash used in investing activities of $340,286 during the corresponding nine-month period ended September 30, 2014. The increase is due to proceeds of $4,235,542 from the sale of the Kite vessel and proceeds of $6,906,190 from the sale of KLC shares offset by higher expenditures on vessel improvements.

Net cash provided by financing activities during the nine-month period ended September 30, 2015 was $5,495,744, compared with $24,250,000 during the corresponding nine-month period ended September 30, 2014. During the nine-month period ended September 30, 2015, we borrowed $23,000,000 from our revolving credit facility under the Exit Financing Facility and repaid $15,718,750 toward our term loan under the Exit Financing Facility.

As of September 30, 2015, our cash balance was $25,283,350 compared with a cash balance of $39,975,287 at December 31, 2014. Also recorded in Restricted Cash is an amount of $66,243, which collateralizes letters of credit relating to our office leases.

At September 30, 2015, the Company's debt consisted of $232,281,250 in term loans under the Exit Financing Facility.

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 these vessels.

In addition to acquisitions that we may undertake in future periods, the 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. 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. Seventeen vessels completed drydocking in the nine months ended September 30, 2015 and we incurred $9,680,582 in drydocking related costs. Six vessels completed drydocking in the nine months ended September 30, 2014 and we incurred $4,008,903 in drydocking related costs.

The following table represents certain information about the estimated costs for anticipated vessel drydockings in the next four quarters, along with the anticipated off-hire days:

Quarter Ending

Off-hire Days(1)

Projected Costs(2)

(in millions)

December 31, 2015

22

$

0.65

March 31, 2016

66

$

1.95

June 30, 2016

44

$

1.30

September 30, 2016

88

$

2.60

(1)Actual duration of drydocking will vary based on the condition of the vessel, yard schedules and other factors.

(2)Actual costs will vary based on various factors, including where the drydockings are actually performed.

 

Summary Consolidated Financial and Other Data:

The following table summarizes the Company's selected consolidated financial and other data for the periods indicated below.

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2015 and 2014

(Unaudited)

Three Months Ended

Nine Months Ended

Successor

Predecessor

Successor

Predecessor

September 30, 2015

September 30, 2014

September 30, 2015

September 30, 2014

Revenues, net of commissions

$

29,127,482

$

29,846,038

$

78,116,020

$

118,021,488

Voyage expenses

5,202,219

5,062,030

13,540,698

12,379,345

Vessel expenses 

23,979,906

24,842,113

67,596,014

71,932,268

Charter hire expenses

1,248,649

-

3,697,745

-

Depreciation and amortization

11,284,454

19,611,354

32,739,674

58,042,662

General and administrative expenses

4,420,097

6,566,185

13,574,594

12,832,270

Loss on sale of vessel

-

-

5,696,675

-

Total operating expenses

46,135,325

56,081,682

136,845,400

155,186,545

Operating loss 

(17,007,843)

(26,235,644)

(58,729,380)

(37,165,057)

Interest expense

3,048,180

12,312,139

9,197,163

60,466,686

Interest Income

-

(1,369)

(2,955)

(8,125)

Other expense

320,597

-

488,396

-

Reorganization expenses

-

7,311,240

-

15,483,981

Total other expense, net

3,368,777

19,622,010

9,682,604

75,942,542

Net loss

$

(20,376,620)

$

(45,857,654)

$

(68,411,984)

$

(113,107,599)

Weighted average shares outstanding:

Basic

37,639,352

19,172,717

37,602,316

17,785,290

Diluted

37,639,352

19,172,717

37,602,316

17,785,290

Per share amounts:

Basic net loss

$

(0.54)

$

(2.39)

$

(1.82)

$

(6.36)

Diluted net loss 

$

(0.54)

$

(2.39)

$

(1.82)

$

(6.36)

 

 

Fleet Operating Data

Three Months Ended

Nine Months Ended

Successor

Predecessor

Successor

Predecessor

September 30, 2015

September 30, 2014

September 30, 2015

September 30, 2014

Ownership Days

4,048

4,140

12,138

12,285

Chartered in Days

92

-

273

-

Available Days

4,080

4,083

12,049

12,143

Operating Days

3,996

4,001

11,750

11,934

Fleet Utilization

98.0%

98.0%

97.5%

98.3%

 

 

Condensed Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014

 (Unaudited)

Successor

ASSETS:

September 30, 2015

December 31, 2014

Current assets:

Cash and cash equivalents

$

25,283,350

$

39,975,287

Accounts receivable

11,094,138

14,731,301

Prepaid expenses

1,555,719

3,212,930

Inventories

6,547,466

5,749,273

Investment

1,046,977

8,300,740

Other current assets

474,390

4,621,312

Total current assets

46,002,040

76,590,843

Noncurrent assets: 

Vessels and vessel improvements, at cost, net of accumulated depreciation of $38,910,877 and $8,766,830, respectively

794,917,415

834,052,684

Other fixed assets, net of accumulated amortization of $135,962 and $118,232, respectively

170,506

230,805

Restricted cash

66,243

66,243

Deferred drydock costs

9,685,030

1,960,792

Deferred financing costs

464,786

550,753

Other assets

102,956

424,702

Total noncurrent assets

805,406,936

837,285,979

Total assets

$

851,408,976

$

913,876,822

LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

8,364,800

$

11,663,697

Accrued interest

342,416

531,918

Other accrued liabilities

9,539,398

9,142,229

Fair value below contract value of time charters acquired

1,401,799

1,648,740

Unearned charter hire revenue

2,223,731

2,389,595

Current portion of long-term debt

15,625,000

15,625,000

Total current liabilities

37,497,144

41,001,179

Noncurrent liabilities:

Long-term debt

212,586,273

204,106,928

Other liabilities

624,604

-

Fair value below contract value of time charters acquired

3,684,381

4,678,049

Total noncurrent liabilities

216,895,258

208,784,977

Total liabilities

254,392,402

249,786,156

Commitment and contingencies

Stockholders' equity:

Common stock, $.01 par value, 150,000,000 shares authorized, 37,639,352 and 37,504,541 shares issued and outstanding, respectively

376,394

375,045

Additional paid-in capital

676,975,876

675,264,349

Accumulated deficit

(80,100,712)

(11,548,728)

Accumulated other comprehensive loss

(234,984)

-

Total stockholders' equity

597,016,574

664,090,666

Total liabilities and stockholders' equity

$

851,408,976

$

913,876,822

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2015 and 2014

 (Unaudited) 

Nine Months Ended

Successor

Predecessor

September 30, 2015

September 30, 2014

Cash flows from operating activities:

Net loss

$

(68,551,984)

$

(113,107,599)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation

30,783,330

55,670,788

Amortization of deferred drydocking costs

1,956,344

2,371,874

Amortization of deferred financing costs

85,967

16,278,544

Amortization of Debtor-In-Possession deferred financing costs

-

576,923

Amortization of discount on Exit Financing Facility

1,698,095

-

Amortization of fair value below contract value of time charter acquired

(1,240,609)

-

Payment-in-kind interest on debt

-

17,858,132

Loss on sale of vessel

5,696,675

-

Realized loss from investment

112,589

-

Allowance for accounts receivable

-

1,824,519

Non-cash compensation expense

2,998,382

765,339

Drydocking expenditures

(9,680,582)

(4,008,903)

Reorganization items, non cash

-

3,107,207

Changes in operating assets and liabilities:

Accounts receivable

3,637,163

(2,846,887)

Other current assets

4,468,668

(3,702,486)

Prepaid expenses

1,657,211

1,584,689

Inventories

(798,193)

(972,777)

Accounts payable

(3,298,897)

(826,763)

Accrued interest

(189,502)

(63,955)

Accrued interest subject to compromise

-

15,102,925

Other Accrued Liabilities

1,021,773

2,238,703

Unearned  revenue

(165,864)

(2,944,853)

Net cash used in operating activities

(29,809,434)

(11,094,580)

Cash flows from investing activities:

Vessels and vessel improvements

(1,508,778)

(149,756)

Purchase of other fixed assets

(11,201)

(190,530)

Proceeds from sale of vessel

4,235,542

-

Proceeds from sale of investment

6,906,190

-

Net cash provided by/(used in) investing activities

9,621,753

(340,286)

Cash flows from financing activities:

Debtor-In-Possession Loan Facility

-

25,000,000

Proceeds from Revolver Loan

23,000,000

-

Fee paid to the lenders

(500,000)

-

Deferred financing costs

-

(750,000)

Repayment of Term Loan under the Exit Financing Facility

(15,718,750)

-

Cash used to settle net share equity awards

(1,285,506)

-

Net cash provided by financing activities

5,495,744

24,250,000

Net (decrease) / increase in cash and cash equivalents

(14,691,937)

12,815,134

Cash and cash equivalents at beginning of period

39,975,287

19,682,724

Cash and cash equivalents at end of period

$

25,283,350

$

32,497,858

We have employed all of our vessels in our operating fleet on time and voyage charters. The following table represents certain information about our revenue earning charters with respect to our operating fleet as of September 30, 2015:

 

 Vessel

Year

Built

Dwt

Charter Expiration

Daily Charter Hire Rate (1)

Avocet

2010

53,462

Oct 2015

$

5,100

Bittern

2009

57,809

Nov 2015

$

10,750

Canary

2009

57,809

Oct 2015

$

5,250

Cardinal

2004

55,362

Oct 2015

$

10,250

Condor

2001

50,296

Oct 2015

$

7,000

Crane

2010

57,809

Oct 2015

  Voyage

Crested Eagle

2009

55,989

Oct 2015

$

5,850

Crowned Eagle

2008

55,940

Dec 2015

Voyage

Egret Bulker

2010

57,809

Nov 2015                  

$

4,000 (2)

Falcon

2001

50,296

Oct 2015

$

4,500

Gannet Bulker

2010

57,809

Oct 2015

$

11,350

Golden Eagle

2010

55,989

Oct 2015

$

6,000

Goldeneye

2002

52,421

Nov 2015

$

13,500

Grebe Bulker

2010

57,809

Oct 2015

$

4,500

Harrier

2001

50,296

Oct 2015

$

5,200

Hawk I

2001

50,296

Oct 2015

$

5,225

Ibis Bulker

2010

57,775

Oct 2015

$

1,200 (3)

Imperial Eagle

2010

55,989

Oct 2015

$

8,500 (4)

Jaeger

2004

52,248

Oct 2015

$

5,200

Jay

2010

57,802

Oct 2015

$

6,150

Kestrel I

2004

50,326

Oct 2015

$

9,000

Kingfisher

2010

57,776

Oct 2015

$

9,350

Kittiwake

2002

53,146

Oct 2015

$

4,800

Martin

2010

57,809

Dec 2015

$

1,650 (5)

Merlin

2001

50,296

Oct 2015

$

6,300

Nighthawk

2011

57,809

Oct 2015

$

5,150

Oriole

2011

57,809

Nov 2015

$

7,000

Osprey I

2002

50,206

Oct 2015

$

4,750

Owl

2011

57,809

Nov 2015

$

7,500

Peregrine

2001

50,913

Oct 2015

$

9,500

Petrel Bulker

2011

57,809

Oct 2015

$

5,500

Puffin Bulker

2011

57,809

Oct 2015

$

13,250

Redwing

2007

53,411

Oct 2015

$

5,300

Roadrunner Bulker

2011

57,809

Nov 2015

$

4,000

Sandpiper Bulker

2011

57,809

Oct 2015

$

7,000

Shrike

2003

53,343

Oct 2015

$

5,700

Skua

2003

53,350

Oct 2015

$

11,500

Sparrow

2000

48,225

Oct 2015

$

9,500

Stellar Eagle

2009

55,989

Oct 2015

$

7,050

Tern

2003

50,200

Oct 2015

$

9,750

Thrasher

2010

53,360

Nov 2015

$

5,250

Thrush

2011

53,297

Oct 2015

$

3,050

Woodstar

2008

53,390

Nov 2015

$

5,600

Wren

2008

53,349

Oct 2015

$

6,500

(1)

Upon conclusion of the previous charter as of September 30, 2015, the vessel will commence a short term charter for up to six months or a voyage charter. The time charter hire rates presented are gross daily charter rates before address and brokerage commissions, ranging from 1.25% to 5.50%, to third party ship brokers.

(2)

The vessel is contracted to continue the existing time charter at a charter rate of $8,000 after November 1, 2015.

(3)

The vessel is contracted to continue the existing time charter at a charter rate of $8,250 after November 5, 2015.

(4)

The vessel is contracted to continue the existing time charter at a charter rate of $10,000 after October 5, 2015.

(5)

The vessel is contracted to continue the existing time charter at a charter rate of $7,350 after December 9, 2015.

Glossary of Terms:

Ownership days:  The Company defines ownership days as the aggregate number of days in a period during which each vessel in its fleet has been owned. Ownership days are an indicator of the size of the fleet over a period and affect both the amount of revenues and the amount of expenses that is recorded during a period.

Chartered-in under operating lease days: The Company defines chartered-in under operating lease days as the aggregate number of days in a period during which the Company chartered-in vessels.

Available days:  The Company defines available days as the number of ownership days less the aggregate number of days that its vessels are off-hire due to vessel familiarization upon acquisition, scheduled repairs or repairs under guarantee, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues.

Operating days:  The Company defines operating days as the number of its available days in a period less the aggregate number of days that the vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.

Fleet utilization: We calculate fleet utilization by dividing the number of our operating days during a period by the number of our available days during the period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning. Our fleet continues to perform at high utilization rates.

About Eagle Bulk Shipping Inc.

Eagle Bulk Shipping Inc. (NASDAQ: EGLE) is a US-based owner and operator of dry bulk vessels, providing its customers with reliable and responsible global transportation services for the carriage of bulk commodities including: coal, grain, iron ore, steel, cement, and forest products, among others.  Our fleet currently totals 45 ships and is focused on the mid-size asset class, referred to as Supramax.

Forward-Looking Statements

Matters discussed in this release may constitute forward-looking statements. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although Eagle Bulk Shipping Inc. believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, Eagle Bulk Shipping Inc. cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.

Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled drydocking, changes in our vessel operating expenses, including dry-docking and insurance costs, or actions taken by regulatory authorities, potential liability from future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.

Risks and uncertainties are further described in reports filed by Eagle Bulk Shipping Inc. with the US Securities and Exchange Commission.

Visit our website at www.eagleships.com

SOURCE Eagle Bulk Shipping Inc.



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