Eagle Bulk Shipping Inc. Reports Second Quarter 2015 Results

Aug 14, 2015, 16:30 ET from Eagle Bulk Shipping Inc.

NEW YORK, Aug. 14, 2015 /PRNewswire/ -- Eagle Bulk Shipping Inc. (Nasdaq: EGLE) today announced its results for the second quarter ended June 30, 2015.

For the Second Quarter:

  • Net loss of $27.5 million or $0.73 per share for the Company, compared with net loss of $44.7 million, or $2.61 per share for the comparable quarter of 2014.
  • Net revenues of $22.7 million, compared to $42.4 million for the comparable quarter in 2014.
  • Fleet utilization rate of 97.5%.
  • Sold the M/V Kite, a 1997-built Handymax for net proceeds of $4.2 million and recorded loss on sale of $5.7 million.
  • On May 20, 2015, Eagle Bulk delivered a 90 day termination notice to terminate its Pool arrangement with Navig8.

Subsequent Events:

  • On July 7, 2015, the Company announced that it appointed Gary Vogel as Chief Executive Officer of the Company, effective as of September 1, 2015. Mr. Vogel will be joining as a member of the Company Board and Mr. Ryan will be stepping down from his role as CEO and will remain a Board member.
  • On August 14, 2015, the Company entered into an Amendatory Agreement with its lenders. Pursuant to the Amendatory Agreement, 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.

Stanley H. Ryan, CEO, commented, "Despite ongoing weakness in the dry bulk market, Eagle Bulk continued to make progress during the second quarter upgrading our fundamentals and transitioning to an operating platform that delivers sustainable value through diverse market cycles. The credit amendment we announced today – which provides financial flexibility and the benefit of time – will help ensure that this momentum continues. Looking ahead, the Company's focus will be on continued business improvements, fleet renewal and growth, and accelerated efforts to ensure that Eagle Bulk is optimally-positioned to capture current and future market opportunities."

Results of Operations for the three-month period ended June 30, 2015 and 2014

For the second quarter of 2015, the Company reported a net loss of $27,508,300 or $0.73 per share, based on a weighted average of 37,639,352 basic and diluted shares outstanding. In the comparable second quarter of 2014, the Company reported a net loss of $44,660,059 or $2.61 per share, based on a weighted average of 17,079,991 basic and diluted shares outstanding.

Gross time and voyage charter revenues in the quarter ended June 30, 2015 were $23,853,039, compared with $44,194,434 recorded in the comparable quarter 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 M/V Kite, in the quarter ended June 30, 2015. Brokerage commissions incurred on revenues earned in the quarters ended June 30, 2015 and 2014 were $1,195,667 and $1,814,375, respectively. Net revenues during the quarters ended June 30, 2015 and 2014, were $22,657,372 and $42,380,059, respectively.

Total operating expenses for the Company in the quarter ended June 30, 2015 were $47,011,056 compared with $50,489,321 recorded for the Company in the comparable quarter of 2014. The decrease in operating expenses resulted primarily from a reduction in the Depreciation expense of $8,455,446 due to lower vessel valuation upon adoption of Fresh-Start Accounting , offset by additional charter hire expense of $1,233,132 and loss on sale of M/V Kite $5,696,675 in the second quarter of 2015.

Results of Operations for the six-month period ended June 30, 2015 and 2014

For the six months ended June 30, 2015, the Company reported a net loss of $48,175,364 or $1.28 per share, based on a weighted average of 37,583,491 basic and diluted shares outstanding. In the comparable period of 2014, the Company reported a net loss of $67,249,945 or $3.94 per share, based on a weighted average of 17,080,079 basic and diluted shares outstanding.

Gross time and voyage charter revenues in the six-month period ended June 30, 2015 were $51,564,828, compared with $92,054,896 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 M/V Kite in the quarter ended June 30, 2015. Brokerage commissions incurred on revenues earned in the six-month periods ended June 30, 2015 and 2014 were $2,576,290 and $3,879,446, respectively. Net revenues during the six-month periods ended June 30, 2015 and 2014, were $48,988,538 and $88,175,450, respectively.

Total operating expenses for the Company for the six months ended June 30, 2015 were $90,850,075 compared with $99,104,863 recorded for the Company in the comparable period of 2014. The decrease in operating expenses resulted primarily from a reduction in the Depreciation expense of approximately $16,976,088 due to lower vessel value upon adoption of Fresh-Start Accounting on October 15, 2014, offset by higher charter hire expense of $2,449,096, loss on sale of the M/V Kite of $5,696,675 and higher general and administrative expenses primarily due to increase in non cash compensation expense and adviser's fees for the six months ended June 30, 2015 compared to the six months ended June 30, 2014.

Liquidity and Capital Resources

Net cash used in operating activities during the six-month period ended June 30, 2015 was $23,328,501, compared with net cash provided by operating activities of $593,725 during the corresponding six-month period ended June 30, 2014. The decrease is primarily due to lower charter rates on time charter renewals and higher drydock expenditures.

Net cash provided by investing activities during the six-month period ended June 30, 2015, was $8,635,658, compared with net cash used in investing activities of $186,201 during the corresponding six-month period ended June 30, 2014. The increase is primarily due to proceeds of $4,235,542 from the sale of the M/V Kite and proceeds of $5,807,917 from the sale of KLC shares. 

Net cash provided by financing activities during the six-month period ended June 30, 2015 was $1,901,994, compared with none during the corresponding six-month period ended June 30, 2014. We borrowed $15,000,000 from our revolver credit facility and we repaid $11,812,500 toward our term loan. 

As of June 30, 2015, our cash balance was $27,184,438, compared to a cash balance of $39,975,287 at December 31, 2014.

As of June 30, 2015, the Company's debt consisted of $228,187,500 in term loans and debt discount of $4,068,755. The Company availability under the revolving credit facility as of June 30, 2015 is $35 million

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. Fourteen vessels completed drydocking in the six months ended June 30, 2015 while one other vessel was still in drydock as of June 30, 2015. We incurred $8,505,455 in drydocking related costs during the six month period ended June 30, 2015. Three vessels completed drydocking in the six months ended June 30, 2014 while one other vessel was still in drydocking as of June 30, 2014 and we incurred $2,391,412 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)

September 30, 2015

44

$1.30

December 31, 2015

-

-

March 31, 2016

88

$2.60

June 30, 2016

44

$1.30

(1)Actual duration of drydocking will vary based on the condition of the vessel, yard schedules and other factors. We assumed 22 off-hire days for each drydock.

(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 Six Months Ended June 30, 2015 and 2014

(Unaudited)

Three Months Ended

Six Months Ended

Successor 

Predecessor 

Successor  

Predecessor 

June 30, 2015

June 30, 2014

June 30, 2015

June 30, 2014

Revenues, net of commissions

$

22,657,372

$

42,380,059

$

48,988,538

$

88,175,450

Voyage expenses

3,156,304

3,480,037

8,338,479

7,317,315

Vessel expenses

21,671,397

24,512,637

43,616,108

47,090,155

Charter hire expenses

1,233,132

-

2,449,096

-

Depreciation and amortization

10,898,049

19,353,495

21,455,220

38,431,308

General and administrative expenses

4,355,499

3,143,152

9,294,497

6,266,085

Loss on sale of vessel

5,696,675

-

5,696,675

-

Total operating expenses

47,011,056

50,489,321

90,850,075

99,104,863

Operating loss

(24,353,684)

(8,109,262)

(41,861,537)

(10,929,413)

Interest expense

2,986,817

28,380,928

6,148,983

48,154,547

Interest income

-

(2,872)

(2,955)

(6,756)

Other expense

167,799

-

167,799

-

Reorganization expenses

8,172,741

8,172,741

Total other expense, net

3,154,616

36,550,797

6,313,827

56,320,532

Net loss

$

(27,508,300)

$

(44,660,059)

$

(48,175,364)

$

(67,249,945)

Weighted average shares outstanding:

Basic

37,639,352

17,079,991

37,583,491

17,080,079

Diluted

37,639,352

17,079,991

37,583,491

17,080,079

Per share amounts:

Basic net loss

$

(0.73)

$

(2.61)

$

(1.28)

$

(3.94)

Diluted net loss

$

(0.73)

$

(2.61)

$

(1.28)

$

(3.94)

 

Fleet Operating Data

Three Months Ended

Six Months Ended

Successor

Predecessor

Successor

Predecessor

June 30, 2015

June 30, 2014

June 30, 2015

June 30, 2014

Ownership Days

4,040

4,095

8,090

8,145

Chartered in Days

91

181

Available Days

3,949

4,065

7,969

8,061

Operating Days

3,850

3,996

7,754

7,933

Fleet Utilization

97.5%

98.3%

97.3%

98.4%

 

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

(Unaudited)

ASSETS:

June 30, 2015

December 31, 2014

Current assets:

Cash and cash equivalents

$

27,184,438

$

39,975,287

Accounts receivable

11,537,826

14,731,301

Prepaid expenses

2,883,640

3,212,930

Inventories

6,297,658

5,749,273

Investment

2,138,447

8,300,740

Other current assets

3,004,678

4,621,312

          Total current assets

53,046,687

76,590,843

Noncurrent assets:

Vessels and vessel improvements, at cost, net of accumulated depreciation of  $28,674,281 and $8,766,830, respectively

805,048,200

834,052,684

Other fixed assets, net of accumulated amortization of $112,359 and $118,232, respectively

187,744

230,805

Restricted cash

66,243

66,243

Deferred drydock costs

9,534,157

1,960,792

Deferred financing costs

493,757

550,753

Other assets

424,702

424,702

          Total noncurrent assets

815,754,803

837,285,979

Total assets:

$

868,801,490

$

913,876,822

LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

9,457,029

$

11,663,697

Accrued interest

385,795

531,918

Other accrued liabilities

10,711,575

9,142,229

Fair value below contract value of time charters acquired

1,526,330

1,648,740

Unearned charter hire revenue

1,379,750

2,389,595

Current portion of long-term debt

15,625,000

15,625,000

          Total current liabilities

39,085,479

41,001,179

Noncurrent liabilities:

Long-term debt

208,493,745

204,106,928

Other liabilities

563,181

-

Fair value below contract value of time charters acquired

4,008,286

4,678,049

          Total noncurrent liabilities

213,065,212

208,784,977

Total liabilities:

252,150,691

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

676,185,073

675,264,349

Accumulated deficit

(59,724,092)

(11,548,728)

Accumulated other comprehensive loss

(186,576)

-

          Total stockholders' equity

616,650,799

664,090,666

Total liabilities and stockholders' equity

$

868,801,490

$

913,876,822

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014

(Unaudited)

Six Months Ended

Successor

Predecessor

June 30, 2015

June 30, 2014

Cash flows from operating activities:

Net loss

$

(48,175,364)

$

(67,249,945)

Adjustments to reconcile net loss to net cash provided by/(used in)  operating activities:

Depreciation

20,523,130

36,954,796

Amortization of deferred drydocking costs

932,090

1,476,512

Amortization of deferred financing costs

56,996

12,235,555

Amortization of discount on Exit Facility

1,199,317

-

Amortization of fair value below contract value of time charter acquired

(792,173)

-

Payment-in-kind interest on debt

-

14,803,454

Loss on sale of vessel

5,696,675

-

Realized loss from investment

167,799

-

Non-cash compensation expense

2,207,579

568,360

Drydocking expenditures

(8,505,455)

(2,391,412)

          Changes in operating assets and liabilities:

Accounts receivable

3,193,475

(4,526,474)

Other current assets

1,616,634

(4,621,223)

Prepaid expenses

329,290

1,382,673

Inventories

(548,385)

935,100

Accounts payable

(2,206,668)

(966,434)

Accrued interest

(146,123)

10,622,948

Other Accrued Liabilities

2,132,527

4,501,795

Unearned revenue

(1,009,845)

(3,131,980)

Net cash provided by/(used in) operating activities

(23,328,501)

593,725

Cash flows from investing activities:

Vessels and vessel improvements

(1,407,801)

(149,756)

Purchase of other fixed assets

-

(36,445)

Proceeds from sale of vessel

4,235,542

-

Proceeds from sale of investment

5,807,917

-

Net cash provided by/(used in) investing activities

8,635,658

(186,201)

Cash flows from financing activities:

Revolver loan

15,000,000

-

Repayment of Term Loan

(11,812,500)

-

Cash used to settle net share equity awards

(1,285,506)

-

Net cash provided by/(used in) financing activities

1,901,994

-

Net (decrease) / increase in cash and cash equivalents

(12,790,849)

407,524

Cash and cash equivalents at beginning of period

39,975,287

19,682,724

Cash and cash equivalents  at end of period

$

27,184,438

$

20,090,248

 

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 June 30, 2015:

Vessel

Year Built

 Dwt

 Charter Expiration (1)

 Daily Charter Hire Rate

Avocet

2010

53,462

Sep 2015

Pool (2)

Bittern

2009

57,809

Sep 2015

Pool (2)

Canary

2009

57,809

Sep 2015

Pool (2)

Cardinal

2004

55,362

Jul 2015

$

9,100(1)

Condor

2001

50,296

Jul 2015

$

7,500(1)

Crane

2010

57,809

Sep 2015

Pool (2)

Crested Eagle

2009

55,989

Jul 2015

$

6,400(1)

Crowned Eagle

2008

55,940

Jul 2015

$

5,700(1)

Egret Bulker 

2010

57,809

Sep 2015

Pool (2)

Falcon

2001

50,296

Jul 2015

$

6,600(1)

Gannet Bulker

2010

57,809

Jul 2015

$

2,950(1)

Golden Eagle

2010

55,989

Jul 2015

$

5,800(1)

Goldeneye

2002

52,421

Jul 2015

$

3,500(1)

Grebe Bulker

2010

57,809

Drydock

(3)

Harrier

2001

50,296

Aug 2015

$

10,000

Hawk I

2001

50,296

Jul 2015

$

8,500(1)

Ibis Bulker

2010

57,775

Sep 2015

Pool (2)

Imperial Eagle

2010

55,989

Jul 2015

$

5,500 (1)

Jaeger

2004

52,248

Jul 2015

$

5,200(1)

Jay

2010

57,802

July 2015

$

6,500(1)

Kestrel I

2004

50,326

July 2015

$

9,500(1)

Kingfisher

2010

57,776

Sep 2015

Pool (2)

Kittiwake

2002

53,146

Jul 2015

$

8,750(1)

Martin

2010

57,809

Sep 2015

Pool (2)

Merlin

2001

50,296

Jul 2015

$

5,500(1)

Nighthawk

2011

57,809

Sep 2015

Pool (2)

Oriole

2011

57,809

Jul 2015

$

7,000(1)

Osprey I

2002

50,206

Jul 2015

$

10,062(1)

Owl

2011

57,809

Jul 2015

$

5,600(1)

Peregrine

2001

50,913

Jul 2015

$

8,375(1)

Petrel Bulker

2011

57,809

Open

(1)

Puffin Bulker

2011

57,809

Jul 2015

Voyage(1)

Redwing

2007

53,411

Jul 2015

$

6,000(1)

Roadrunner Bulker

2011

57,809

Open

(1)

Sandpiper Bulker

2011

57,809

Jul 2015

Voyage (1)

Shrike

2003

53,343

Sep 2015

Pool(2)

Skua

2003

53,350

Jul 2015

$

9,250(1)

Sparrow

2000

48,225

Jul 2015

$

9,500(1)

Stellar Eagle

2009

55,989

Oct 2015

$

7,050

Tern

2003

50,200

Aug 2015

$

7,800

Thrasher

2010

53,360

Jul 2015

$

5,800(1)

Thrush

2011

53,297

Sep 2015

Pool (2)

Woodstar

2008

53,390

Aug 2015

$

7,000

Wren

2008

53,349

Sep 2015

Pool(2)

 

(1)

Upon conclusion of the previous charter or if open as of June 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 brokerage commissions, ranging from 1.25% to 5.00%, to third party ship brokers.

(2)

These vessels are operating in a dry bulk pool for a period between 8 to 14 months. On May 20, 2015, the Company delivered a 90 day termination notice to Navig8 to terminate the Pool arrangements for all of its vessels in the Pool. The notice of termination was given pursuant to the terms of the Company's pool agreement.

(3)

Upon conclusion of the drydocking the vessel will commence a short term charter for up to six months or re enter the dry bulk pool.

 

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. is a Marshall Islands corporation headquartered in New York. The Company is a leading global owner of Supramax dry bulk vessels that range in size from 50,000 to 60,000 deadweight tons and transport a broad range of major and minor bulk cargoes, including iron ore, coal, grain, cement and fertilizer, along worldwide shipping routes.

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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