11/16/2015 5:15:39 PMEagle Bulk Shipping Inc. Reports Third Quarter 2015 Results

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

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/eagle-bulk-shipping-inc-reports-third-quarter-2015-results-300179598.html

SOURCE Eagle Bulk Shipping Inc.

Adir Katzav, Chief Financial Officer, Eagle Bulk Shipping Inc., Tel. +1 212-785-2500; or Investor Relations / Media: Jonathan Morgan, Perry Street Communications, New York, Tel. +1 212-741-0014

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