Eagle Bulk Shipping reports 1Q17 results

Financial results

• Revenue, net of commissions, of US$45.9 million, compared to US$21.3 million for the comparable quarter in 2016.
• Net loss of US$11.1 million, or US$0.17 per share, compared to a net loss of US$27.5 million excluding impairment and refinancing charges of US$11.7 million, or US$14.53 per share, for the comparable quarter in 2016.
• Adjusted EBITDA1, which Eagle believes is one of the key metrics to measure operating performance, was US$4.6 million for the first quarter of 2017.

Business

• Fleet utilisation rate of 99.3%.
• Took delivery of the MV Singapore Eagle (SDARI-64 ultramax / 2017-built).
• Subsequent to the close of the quarter:
• Took delivery of the MV Mystic Eagle and the MV Southport Eagle, the first two of the nine vessels acquired from Greenship Bulk (CROWN-63 ultramax vessels, both built in 2013).

Cash and liquidity

• Cash totalled US$145.8 million as of 31 March, 2017.
• Including funds available under Eagle Bulk’s revolving credit facility revolver, total liquidity stood at US$170.8 million as of 31 March, 2017.

Gary Vogel, Eagle Bulk's CEO, commented:

“During the first quarter, Eagle finalised the acquisition of nine Crown-63 ultramax dry bulk sister vessels – a transaction that will significantly increase our operating scale and provide meaningful exposure to the Ultramax segment.  In total over the past year, we have acquired 11 modern ultramax vessels as part of our fleet renewal and growth strategy which, in conjunction with the continued build-out of our active operator business model and charter-in fleet, is beginning to drive increased revenue. Importantly, these developments are occurring against the backdrop of continued improvement in the dry bulk market itself with respect to both trade demand and vessel supply fundamentals.

“Looking ahead, we are increasingly optimistic concerning Eagle’s enviable positioning within the dry bulk market, as well as our ability to generate value for all stakeholders.”

Results of operations for the three months ended 31 March, 2017 and 2016

For the three months ended 31 March, 2017, the company reported a net loss of US$11.1 million, or US$0.17 per share, based on a weighted average of 65,637,692 diluted shares outstanding. In the comparable quarter of 2016, the company reported a net loss of US$39.3 million, or US$20.77 per share, based on a weighted average of 1891 463 diluted shares outstanding. The net loss, excluding vessel impairment and refinancing charges, for the first quarter of 2016 was US$27.5 million, or US$14.53 per share.  Earnings per share for the first quarter of 2016 was retrospectively adjusted to give effect for the 1 for 20 reverse stock split that became effective as of the opening of trading on 5 August, 2016 (the Reverse Stock Split).

Net time and voyage charter revenues in the quarter ended 31 March, 2017 were US$45.9 million compared with US$21.3 million recorded in the comparable quarter in 2016. The increase in revenue was attributable to higher time charter rates in the first quarter of 2017 as well as an increase in available days due to chartered in vessels. The company’s fleet utilisation increased from 98.4% to 99.3% due to better vessel performance and lower off hire days.

Voyage expenses for the three months ended March 31, 2017 were US$13.4 million, compared to US$9.2 million in the comparable quarter in 2016. The increase was mainly attributable to an increase in the number of freight voyages in the current quarter compared to the comparable quarter in the previous year as well as increased bunker prices year over year. Vessel expenses for the three months ended 31 March, 2017 were US$18.0 million compared to US$20.5 million in the comparable quarter in 2016. The lower vessel expenses were attributable to the efficiencies achieved through in-house technical management of vessels as well as vessel sales of the MV Falcon, MV Harrier, MV Peregrine and MV Kittiwake during 2016, and the sale of the MV Redwing in the first quarter of 2017 offset by the purchase of two ultramax vessels, the MV Stamford Eagle and the MV Singapore Eagle, which were delivered in fourth quarter of 2016 and first quarter of 2017, respectively. Average daily vessel operating expenses for our fleet decreased by US$244 per day to US$4871 in the first quarter of 2017 as compared to US$5115 in the comparable period in 2016.

The charter hire expenses for the three months ended March 31, 2017 were US$3.9 million compared to US$1.5 million in the comparable quarter in 2016. The increase in charter hire expense was principally due to an increase in the number of chartered in vessels. The Company chartered in a 63 000 DWT new building vessel in May 2016 for a period of nine to 14 months and a 61 000 DWT new building vessel that was delivered in July 2016 for a period of 11 to 13 months. In addition, the company chartered in vessels on a short-term basis as needed. The total chartered in days for the three-month period ended 31 March, 2017 were 514 compared to 151 for the comparable quarter in the previous year.

Depreciation and amortisation expense for the three months ended 31 March, 2017 and 2016 was US$7.5 million and US$9.4 million, respectively. The decrease in depreciation expense is attributable to the sale of five vessels during 2016 and first quarter of 2017 and lower book value of vessels subsequent to the impairment charge of US$129.0 million recorded in the first and fourth quarters of 2016 offset by the purchase of two new ultramax vessels in the fourth quarter of 2016 and first quarter of 2017 as well as higher drydock amortisation.

General and administrative expenses for the three months ended 31 March, 2017 and 2016 were US$7.8 million and US$5.3 million, respectively. General and administrative expenses include a non-cash compensation component of US$2.2 million and US$0.8 million for 2017 and 2016, respectively. The increase in general and administrative expenses was mainly attributable to increases in advisers’ fees, non-cash compensation expense and general and administrative expenses relating to our new office in Germany offset by a decrease in rental expense due to moving the corporate office to Stamford, Connecticut in March 2016, which necessitated payment of rent on both the current and previous offices for the three months ended 31 March, 2016.

Interest expense for the three months ended 31 March, 2017 and 2016 was US$6.4 million and US$2.8 million, respectively. The increase in interest expense was primarily due to assumption of debt under Second Lien Facility which bears a payment-in-kind interest rate of 15% including a margin over LIBOR and higher amortisation of deferred financing costs and debt discount. Refinancing charges for the three months ended 31 March, 2017 and 2016 were none and US$5.6 million respectively. These costs primarily relate to the professional fees incurred in connection with the refinancing transaction, which was closed on 30 March, 2016.

Read the article online at: https://www.drybulkmagazine.com/dry-bulk/09052017/eagle-bulk-shipping-reports-1q17-results/