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EGLE Eagle Bulk Shipping

Participants
Gary Vogel Chief Executive Officer
Frank De Costanzo Chief Financial Officer
Amit Mehrotra Deutsche Bank
Jon Chappell Evercore
Liam Burke B. Riley FBR
Espen Landmark Fearnley
Call transcript
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Operator

Greetings, and welcome to the Eagle Bulk Shipping Second Quarter 2019 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, this conference call is being recorded.

I would now like to turn the call over to Gary Vogel, Chief Executive Officer, and Frank De Costanzo, Chief Financial Officer of Eagle Bulk Shipping. Mr. begin. may you Vogel,

Gary Vogel

slide good second like To quarter I access remarks and our available to at website supplement welcome Eagle today, eagleships.com. the to participants Bulk’s XXXX encourage that morning. you, is to on I’d everyone our presentation Thank earnings call.

forward-looking and future that are performance part include inherently discussion uncertainties. are statements subject today our note These not risks and Please will to of statements. guarantees of

our risks to with You more a forward-looking that operating place statements. performance our our and should Commission the may results, on undue these Exchange and refer not financial Securities on detailed reliance Please discussion and have filings for a condition. our bearing of direct the uncertainties

financial non-GAAP including appendix TCE. refer information is financial also with refer for BSI-XX EBITDA, a the adjusted that Our concerning the reconciliation the worth we also in the Commission discussion to measures earnings today comparable EBITDA to index. and Securities Please to measures, includes Baltic today Index release the presentation more and financial that or certain measures. our presentation Exchange throughout filed noting will BSI It’s and basis the and non-GAAP Supramax GAAP most

now Please for Slide the today’s for agenda to turn X call.

call brief of After will provide industry by issuance, financials. convertible then we detailed first of be plan that environment, quarter make review on by with scrubber bond a will fundamentals. We’ll fleet to a review of Q&A. of you of Ultramax discussion initiative. the completed up overview followed followed our and Frank that vessels We the our that, rate This issuance provide a acquisition our recently brief will performance the wrap six and second the a from business with proceeds

X. Slide to turn now Please

price The we price of over a July $X.XX $XXX share. XX. to premium week. reported is convert bond of bond As to last X% on XX% the Eagle’s related convertible equal million coupon closing strike The per five-year issued conversion previously, carries of

customer In greenshoe be vessel Proceeds gross addition, from corporate to proceeds used the $XXX.X will bond and total general and bringing exercised, pricing, purposes. acquisitions is subsequent to million. towards the the

Cleaning On we’ve have high-specification two customary agreements, an of Ultramax to an the just to X.X aggregate of years. vessels vessels age typically acquire to of Systems we scrubbers, conditions, two us on will closing are Four front, total which eliminating off-hire subject the a average associated thereby entered install vessels The SDARI-XX delivered Gas approximately scrubbers million. with of purchase remaining into utilizing vessels hold. acquired intend be We retrofits. acquisition six for the to $XXX time contracts any Exhaust price or with currently

of first between two the We onset the and We XXXX. four the sometime expect and current believe and delivery is relative developments to QX. the take vessels October ships to attractive taking able remaining of of recent is given impending anticipate ideal rate we price that IMO timing were and delivery achieve by comps QX to

below a the benefits. to capital an we’re review Slide and attractive be acquisitions rate transaction debt, benefits. long-term is raise for provide to of believe both believe interest turn Please we financing cost. which the unsecured related a what secured From X and will We incurring bond significantly perspective, our

the to continue vessel taking as important basis July. will by forma pro and one provide and acquisitions into The XX and bringing In sold further around The Supramax IMO vessels capacity believe execute results Eagle operating as for to six consideration on growth. XX%, size increased total our fleet step and strategy forward well it’s an improve our our a terms fleet the of our vessels acquisitions, in the we grow for fleet renew we meaningfully as makeup XXXX.

age to percentage to X.X. Ultramaxes a began of and Eagle comprise generation down of fleet our with fleet vessels. It years, bringing years by average no scrubbers our of efficient when X.X vessels. increases It a fuel own X.X bringing worth earning renewal XX% percentage total XX five over fleet, to pro fitted by years. the larger vessel and just ago reduces count XX also is forma fleet of to Ultramaxes be we total noting more now our the age with acquired the new improves to capacity XX%, the which a in It strategy, adding It’s increases It hadn’t vessels.

benefits day the per fitted day We approximately rate platform, reduction of adding regard, or day incremental pro this a be any per generate improvement forma In before management the estimate we by vessels OpEx of through to run estimate $XXX fleet. as outperformance pro into earned run regulations. across new more the all $XXX will per by it on tonnage an on efficient result larger will generate rate any active may fleet. taking scrubber as our the to basis as under well approximately basis, model our vessel per we We our forma fleet a believe reduce a pro forma and account entire younger

reduction It be no per day basis. pro will a day forma reduce G&A to with estimate rate per per incremental approximately overhead such vessel the on expected, to we little run $XXX

the be current expect will to transaction in and to believe accretive rate earnings modestly the environment also incremental We EPS. generate P&L

for six us bank Finally, be offering. from are vessels if we bond it’s when all some have these being using further the will proceeds dry the appropriate. powder provide to worth acquisitions, noting they Since that and the ability unencumbered, the traditional and acquired vessels debt the apply

liquidity Slide debt. to pro and snapshot of forma a our for X turn now Please

the our the from note undrawn liquidity we sale. availability approximately the cash As our consideration to issuance, of you into taking million and convert and spend pro the be acquisitions one comprise will forma from on estimate six slide, under proceeds after RCFs vessel $XXX

decreases of debt by forma over cost XX $XXX pro approximately million, X.XX%. debt to average Our basis while increases points to our

our a now X Please review of evolution. makeup turn to Slide fleet for

six Supramax price gross acquiring, to reached the Kestrel of agreement company is $X.X quarter-end, we million. the an a In XXXX SDARI-XX to for to vessels the sell subsequent addition built

expect to the within deliver We new the to vessel on next the owners her sale month. and close

I think that drydock ballast to being saving ahead the in a the in a Kestrel total maintenance approximately requisite September, sold mention statutory million spend $X.X system. to Eagle it’s due and installation is of of statutory important water treatment CapEx related

years and our At managed three of years smallest, who the least at and between past three we’ve purchase. is of acquiring S&P the over We years XX the vessels, sufficient maximizing XX as over capability. years, the age same amount have earnings Together, sweet total keep average bought these and a age Supramaxes, with our nine ships. transactions of of sale to flat generation due in this essentially lower and terms and sold of total around past believe of transformed oldest these of Inclusive eight years, modern improved averaged to operating fleet we invested of believe time, XX age. the newer a efficiencies spot age balancing, at a capital with fleet age, three fleet yield capacity average compared all XX divesting of transactions roughly makeup Ultramaxes which the our averaging of have and significantly

during somewhat Baltic quarter discussed we this Please our our when the to day, discussion that $X,XXX beating by I’m day. the earnings to performance. result was per adjusted Index or last report call. $X,XXX BSI it equates pleased Supramax which equated almost Slide TCE is than for X QX per higher a turn on TCE to our Eagle’s to where second TCE for

has gray measured The Slide chart depict bars third-party on days. in investible historical the our charter on business X time

with During third-party supplement dynamic and of third-party XX cover commitments in take as ships a advantage active and ships made our market We This as drive own part had risk us outperformance of second our vessel management enabled opportunities hedging fleet we we quarter, to in to basis. dislocations. strategy combined total well of on distinct to has to a took the on charter as strategy charter. cargo XXX order managed up support days market a of arbitrage

that report for the quarter second consecutive outperform been period the marks we’ve able pleased very XXth I’m to the BSI. to which

strengthened per achieved million approximately size $XX an fleet our Over to creation on around $XX,XXX based the XX average $X,XXX averaging acquisitions. is current second almost market prior to far. the per TCE value and since quarter the equating months, the has announced did gross annual quarter we’ve day, day now last BSI The in average and third $XX,XXX – the outperformance thus and about of is

to approximately of day. these portion the fixed the that market for at available days an meaningful XX% our improve be today, $XX,XXX of a per TCE net of days before way. significant began a of noted we average in third fixed Should were As quarter

of in percentage we’ve trading greater for weaker normal as has repositioning been to compared we In a China. have a addition, currently a installations scrubber fleet in tonnage yards at our state Pacific

has believe generation an we This starting somewhat to will investment our positively expect making will installation be affected course a continued such, in our program. for is balance we’re that earnings of result as fleet the of As of year XXXX. the today performance we impact TCE of be scrubber and our

EBITDA. performance. the $XX.X outperformance million impactful It’s for quarter noting XX or company’s important green how the This a illustrated last our the of for $XX months. the million view to items turn been XX EBITDA is for the Please incremental portion to for certain EBITDA historical columns. roughly Slide totaled non-cash has second worth adjusted by of and

million. second quarter, to outperformance our $X.X equated TCE approximately For the

four now Please a IMO expect to fleet a our XX Inclusive vessels to with fitted of scrubber the of acquiring, comply vessels fitted to turn are on update XXXX. for we scrubber which brief have we Slide total XX initiative. scrubber

year the is Our months in of operational vessels have to balance and XX of XXXX. target the end fitted this first the by now

spreads of be As during just derive period we and believe in January scrubbers XXXX likely time. before previously, adopters over the benefit we’ve will expect IMO fuel after implementation the will as moderating early stated we maximum widest

the to and Nine One our the scrubbers scrubber XX is to being we in days, installed commissioning. timing vessels installed acquired. work, nine ride been scrubbers now increase XX with as teams has continue recent speak. addition is estimates. completing experience, on have our the for off-hire the scrubber September, between By and budgeted work installation being been additional is completing which within while vessels operational This Based date with end on onboard XX for to we four commissioned expect commissioned and of trade. onboard to installations riding have

the review call With that, turn performance. Frank, I’d who will to over like to financial our

Frank De Costanzo

voyage summary you, results. the quarter. charters. prior from Please $XX.X The Revenue, Gary. and our quarter net of for million, in change quarter a commissions of reflects second second decrease for of turn XX% mix Slide Thank was the XX XXXX decrease to financial between a revenue time the

the to by quarter in compared saw the chartered-in revenue decrease is the X%. days. increase and TCE of decrease an XXXX, we result As in days, The in same a owned in of a offset decrease available

charter core owned revenue, net The reflects line of related fewer voyage QX, and expenses the charter part of days available best commissions, fewer lower decrease in net than expenses was of driven commissions, of primarily and a million commissions, TCE. off-hire and net Revenue, marginally The performance. hire quarter decrease by voyage TCE. same from at days days X% hire voyage a offset We came decrease and the due resulting to in in company was Revenue, in XXXX. from believe higher and in that charter XX% prior expenses hire quarter. decrease available scrubber by was top $XX.X drydock

second Total result voyage versus million, a offset lower prior lower quarter from of expenses, The $XX.X lower on vessels. for operating sale the of quarter. quarter G&A driven XXXX part was a in revenue X% of by in decrease decrease a primarily by the gain prior a in change of QX as were expenses the mix,

in compared gain X%, as expenses increased an resulted and $X.X quarter on $XX,XXX in hire by the by net operating same increase quarter approximately sales. stock-based compared in a decrease increase of charter the Total from XXXX vessel in million a expenses to a prior higher net before million net quarter, income in loss offset and voyage and the reported quarter of income a in the company of to second the same $X XXXX. The as comp

$X to earnings $X.XX year. loss QX compared decline earnings million the and EPS share as quarter second in from the from $XX for million share, $XX.X same per the the in Basic from XXXX in basic QX of versus an second at prior of and $X.XX XXXX. per Adjusted was EBITDA QX XXXX, million The in XXXX. TCE the the the of in or diluted quarter of and the $XX.X lower was in quarter driver primary quarter prior came

net adjusted will presentation, income EBITDA. of walk EBITDA or In adjusted and to from are the Both find non-GAAP EBITDA loss our measurements. a appendix you

information You can additional measurements find appendix. non-GAAP also in the on

the of $XX.X million million Facility all in activities, with on on balance ballast of quarter. payment June sale drydocks, installations, cash decrease and turn million payment now The of for total and interest offset XX The to a liquidity. $X part overview cash $X Thrasher. Debt in $X.X treatment an million cash paid, on of a million for cash Bond, along Slide restricted for had scrubber of million water as by from including decrease company sheet driven $X on the equivalents, Let’s $XX.X the by operating million XX, million principal and first of $XX.X used from spent Norwegian the our principle primarily approximately on the XXXX, a was of $XX.X end and proceeds Ultraco

liquidity up company’s is restricted revolving and cash, XX, was including total credit million. June and XXXX undrawn $XX cash The of million as $XXX.X facilities of totaling made

As from close sale the on indicated forma of liquidity the the essentially cash post-transaction total by is pro required offsetting essentially being with six unchanged earlier the Ultramaxes QX, to from acquired. proceeds Kestrel Gary,

million lower EBITDA June of drive the and chartering X.X The which first driver Net momentum and in Total million the in the came charter prior Shipco XX-month the the primary tick-up Norwegian rates debt recent increase turns, of The cap modest the largely EBITDA up X trailing leverage. and improved in rates is as up likely half of New in resulted was from in that comprised XXXX, $XXX debt $XXX.X quarter. from $XXX.X improvement number turns profitability, in and in month, earlier XX was leverage. will picked adjusted Bond lower over Facility. Debt the at Ultraco million the

turn review XX cash Slide to a Please for flow from of operations.

used down XXXX. $XX.X million During of The the activities was a was positive million in operating and capital. negative QX $X.X second the million in due the in change $X.X quarter million cash quarter, net in in a working dip mainly from $X positive flows cash to second

was light reflected the blue capital working flows $X positive in as the the Excluding million cash change in quarter. operations bar, current from

turn let’s in for XXXX. color Slide cash of look at company’s cash At the balance changes the Please slide, on to flows. QX XX additional the the top in

of offset believe million this The received Thrasher. clearly a and installations, our at the the our the noted year-to-date bars $XX.X very of I’ve which the To million results. positive find payments, cash on payments scrubber simple look covering themes As million, the sale QX bottom interest lays driving of ballast $X in is by The prior out calls, operations. in the in part paid slide close EBITDA covers bars we chart the I number. left in the million million will large movements’ chart two paid the two large water the the comes revenue bars net we principle right, are and operating adjusted $XX.X XXXX. you to at we $XX for for the $X.X paid and the in we The expenditures

$XXX OpEx the in was per lower now more QX and review per XXXX, lower year XXXX per than Let’s by QX day. lower came essentially than ship drydocking year than $XX higher was unchanged XXXX. in amortization. higher in The $XXX than from or per and full payments per number. QX cash was than QX principal XXXX. in for $X,XXX, operating the $XX full XX breakeven at day, vessel Cash $XXX our QX increase $XX,XXX, Slide breakeven day QX breakeven XXXX per offset debt ship

QX down have G&A per $XXX chartered and per per different marginally noting days in per lower. the or we to $X,XXX higher at that than were worth QX $X,XXX from ship It’s ship cash came G&A year would calculation, QX $XX number. in our day full If chartered-in we vessels. day XXXX XX include in been QX in

to higher principal debt the Debt QX $X,XXX started day, QX. per increased Ultraco ship $X,XXX facility which down are interest expense is amortization quarter. payments in when $XX, bank both principal compared cash payments by per the on payments while

call my the review his Gary, the industry discussion now will concludes turn and around This who I business of back continue provide context financials. of the fundamentals. will to

Gary Vogel

The Slide same day. the market averaged Supramax/Ultramax Frank. decreased X% you, XX. Please average the day to while Pacific during second during the $X,XXX per rates turn by BSI the $X,XXX BSI to the XX% per gross Atlantic Thank quarter-on-quarter, per market the averaging with fairly period. were X% $X,XXX prior up from period during quarter, up range-bound second quarter BSI day,

Although was some the generally by Pacific the to the during the Chinese quarter, surrounding choppiness coal market primarily stable volatility driven broader imports. index experienced downside

on led exports. posted Supramax/Ultramax Brazilian since back and mid-June benefited The material in overall This Panamax demand pickup sentiment for positive of also as Capes, a primarily to market drybulk segments strong recovery a well. has ore has and but the iron is

a and seen the have These volumes. of believe from over In experienced is the grain America of result lows reach QX. Black the primarily $XX,XXX exports demand some in over incremental pickup of XX% drought addition, helped a increase of per wheat the We meaningful South we’ve day, factors an in out impacting Australia, BSI in Sea. the

an update to of X.X approximately million representing on Please X% XX% quarter-on-quarter. quarter, prior the decrease basis but up X notably deadweight Demolition vessels tonnage million count. the quarter, year-on-year almost over amounted during older tons turn a of totaled where vessel increase second deadweight X% vessel XX of to Slide the deliveries XX vessels during for representing new or supply. tons, building XX a brief Drybulk roughly quarter,

is but as net in graph, of is overall, for the you’ll line growth, be X.X% XXXX, dotted light when the the with dotted to line, segment, down by even darker fleet. more is drybulk Supramax/Ultramax on growth expected note historically to depicted fleet the net low from growth where favorable of X.X% the blue on-the-water drilling fleet As blue net just expected

for building to turn at new ordering. look Slide Please XX a

growth, deadweight quarter, X.X million prior forward tons, vessel in In down totaled new terms of quarter XX building supply second XX% approximately orders basis count. the or over ships the

no latest the quarter. ordered we information the have, during of As were Ultramaxes

requirements, uncertainty not As as including also building in given a a as second-hand factors, increase unless and both as levels. we Tier cautiously see we’ve future in remain on current number regulatory material prices new from optimistic of regulations, significantly that an will previously, a an result rates ordering of indicated X increase see values well we increase we

low. from basis last almost XX% stands Unchanged of is on-the-water XX%, the quarter’s highest segment fleet the Eagle, the Supramax/Ultramax on-the-water book of importantly which call, deadweight as Capesize book order X% a just at the book XX-year order percentage tons. at The to at stands over a around fleet, has order the

Looking which due continue increasing remain to the order coming ahead, favorable of older and low supply believe we into are fundamentals to regulations effect. book less given becoming commercially viable number side the vessels,

for forecasted global due Downside growth we’ve as factors, both retentions. to call. perspective, risk Please at for down turn area GDP by the growth a highlighted and now to somewhat uncertainty last growth, earnings basis down since on Brexit number continued Chinese around XX previous trade Global new including and remain is expectations a slowing of which calls, XX XXXX, on points. been global From summary macro our to X.X% growth Slide a demand. forecasted IMF revised have

The since earnings Drybulk demand basis to revision downward from low major is a points down roughly reach about XX from to calculated now as bottom perspective due call. X.X%, up expected last is expectations our bulks. growth fundamental

coal primarily offsetting growth, in Vale’s major flat in of driven iron XXXX, real expected ore, grains to Within production grain bulks growth trades. growth demand are comprised effectively and are the and of cuts the which by be negative where effects in X.X% iron ore is coal

of grow carry typically represents total X.X% the XX% of X.X% expected X.XX million this expected of decrease since to represents this to the coal million approximately in around year cargoes XX% for to call. our from grow which by to a we to Demand about for about quarter XX% is Demand XX% is earnings billion typically marginal last by year cargoes $XX tons, tons. XXX grains carry which anywhere a we to

are of being or was last us, of which the bulks noted agri time trades Eagle is again the importantly expected by surpass its driven call the roughly from our as XXXX. Most once minor X.X%. nickel and X% to drybulk typically by bauxite. and demand up such forecasted represents to forest of XX at two-thirds on of metric in to forecasted we makes almost is Conversely to table overall the growth million incremental when line about improvements up number and bulks, the bulks increase The cargo tons manganese and products, carries in earnings last this as fertilizer, or growth major

historically We dynamic demand makeup. the the bulks our remains picture Eagle the with combined believe favor of towards favorable fleet as book that creates which given is the order low is particularly existing minor fleet Supramax/Ultramax a a percentage for

turn the the have. now With questions I’d may to you like and operator any answer call over Operator? that, to

Operator

Instructions] question from [Operator Amit with you. comes first Deutsche Thank Mehrotra our And Bank.

line open. Your is

Amit Mehrotra

it’s do drivers I team. the of pursue XXXX, piece just that. related partly much about the it’s capital, the operator. so of question. in start help had to Gary. but the with, ask back convert, already, can I that Hi, maybe restructuring us the more obviously in if fully a think context kind low to to profile understand very route. through taking of flexible decision Thanks, the leverage to just you guess, just of Thanks also for to obviously you wanted Hi, I

think vessels due unencumbered powder? how with partly you And us just the Can would chosen forma also you to in dry related about leverage was help the that, guess, pro you related financing think of respect to just of the thinking to consideration. to opportunities I Gary. there that magnitude mentioned, prospective convert the I the with the terms path

well. talk just can you if that Thanks. about as So

Gary Vogel

Absolutely. Amit. thanks, Yes,

you, support of mean, of course first on we mentioned them spot. of financing. lease Ultramax’s what a being we was spectrum I scrubber solving that And in scale, equity the on one – to hand, decision four considered From like about then vessels, I aspects. ways capital based and this the felt to the the of was for all, sweet – straight this the broad have something potential commercial All this. structure. benefits the we So, fitted, efficient

I think shown higher, we’re to Obviously, have a of price good different a we’ve bank we the Norwegian the balance. conversion felt in we bond. kinds this that we was combination have between open regard financing. And debt, equity and straight obviously, unsecured and debt

Also, have more raised could equity, as And In you Ultraco to I accordion we facility, we that drop there, confident not think have quantum XX% talks we and where that us that’s ships, just it’s on feature mentioned, the while for been up regard, I’m have want feel we but if opportunity. six saying on go appropriate we and straight vessels. our have sets can these will And an where would than this about go. we less. new I’m

itself. the view in clearly, have of So we time appropriate. proceeds call mentioned as kind But the effectively we be earlier, this with leverage cover could a can that right that the at

that said if think but and be industry on I’ve is I QX I prepared need weakness. this Although showed anything this of periods before, the will to a for constructive we’re say, volatile market, you and

has struck ever market I position the the do day. don’t on we in put a to want company where time, that here something And and so At a between given balance I to there’s think given convert for has want And that think well a Eagle. this any difference to constructive ensure.

Amit Mehrotra

you want imagine, see more say dry safe to that get related that powder to on Or be progresses guess, And pull would to Yes, more of on the before maybe asset I number because the fleet. of that, maybe that, way cadence? unencumbered to or want debt that about the think the do the down sense. market how I want so. months makes to further net levers would still get to that would over next to right some front? prudent you that that vessels to you values kind XX want Is be the it to are grow just get kind Maybe low, you now hopefully

Gary Vogel

Yes.

decision door I where think the every evaluate and need a through walk you are. day that to it’s you you

did was I think for this which in vessels. this nine six large we last us, X.X large something acquisition ships, ago. now Greenship, general, time was The years is a

all a – that this, approach anything, things we’ll develop. XXXX to say see I’m and do we general, things and look wouldn’t we see erring how but to think wouldn’t do I but year, I we’ll yes, do something. and a saying in on side caution are where IMO not pause, like I’d But take the of then

on looking also we sheet well. And the and as mentioned, we’re also, capacity more potential as look I always at, at other activity M&A you balance this gives

the I look – future we’ll But how we think appropriate. your is will in and take this a initial, do So, comes act. at around determine what pause

Amit Mehrotra

Okay, that sense. makes

just me could. I ask Let operating if one, question

a to all the either of reposition to the of XXXX, relative hustle the half fleet respect oil to actively scrubbers? fleet that source that – the the about kind maybe to January maybe doing talk for back is you get index. XXXX with fuel active there install that Can what deadline? the you’re have with to year in different or X, just about and chart respect side on you Does IMO with to at impacted the fleet managing good Specifically talk history obviously of you the need guys

Gary Vogel

I clearly on for positioning it vessels Yes, retrofits and scrubber absolutely. feel is touched that, impacting decision. our

to managed right, instead of free make whatever risk ship decisions it’s to numbers, and just If on a anytime going you a to hand make basis, that have you you numbers. you maximize to And it, about when impact. can best revenue left have the have think not have that you a determination it’s about you’re go to has an going and

China So, case, in my if out hands ships, Bo, with and to back helpful. because say, our me, was to get Chief got you’re that’s he’d here XX our XX I’ve or not and Commercial Officer tying ships

impactful. it’s of of we seen will So think the it just the package that, needs benefits business the part I is for said total as think XXXX. where to part be, be to of investing compared IMO around Having strategy our and IMO,

we able performance continue I wrong do have not but and we’ve be it obviously impactful. to it’s So so, would to to been say think will good

one we knows look forward no out. play will this to how As IMO XXXX, exactly

so, And trading methodology? it Absolutely. our impact will

the Supra/Ultra amazing fitted of this And also open challenging, more really fleet scrubber to but XXXX. I to some to be very of that going to be going the long-haul looking it’s And number of in you’re competing things spend because by time end opportunities. with which some will up most fleet be We think for that, at XX% the of you expect time are to very which ships most trades, relative want effectively sea efficient, the because vessels you’re of port. a are really don’t only small

for Eagle percentage So but the And long-haul of only you’ll decent that business, you’re that. effectively XX%, in looking with obviously, fleet. a be competing has XX% of

be in that will regard, So beneficial. that

we course, have pick fuel. to where Of we up plan for

secondary, to trade fairly time more the around doing. more concerned ships told have naturally limited, that will is able I think carry I spending scrubber fitted, long-haul you fitted me up If be as to ports. Supra/Ultra additional would confident something we’re that we’ll to about And be end tertiary that I’d it’s that. But trades competing for said, on XX%, fuel because and of having fleet XX% scrubbers

going day of career many how per whole about many burns it’s much ship fuel, – you that it’s how right? terms ships talked tons that differences believe Because how a we it’s you very how will a tons but day of have always my fuel have time first X, we’ve significant to burning not starting in we’re January fuels day in terms the many dollars spend, costs. burn, a For

So hopefully that…

Amit Mehrotra

Right. Thanks lot it. a the acquisition. congrats Appreciate and on

Gary Vogel

Thank you.

Operator

Thank you.

Our Chappell Jon next from Evercore. question comes with

is line Your open.

Jon Chappell

morning, Good you. Gary. Thank

Gary Vogel

Good morning, Jon.

Jon Chappell

second, fell modernize and think modernize S&P I now kind covered sales proceeds from payback can of the years to you could your or stocks are be side if eight of the about are use lately, obviously on. transactions continued fleet? kind the hit through Do accelerate that a XX attributed over the sell the a convert Thrasher, post short the big it kind taken you payment old. you be point that the that on Kestrel fleet we at then the say Kestrel that the tracking ships the feel Following up kind other would and down to a look a those equation, component the something How and to to holistically, Would that would of candidates, to think buyback? debt? of natural that And efficiency continue of cash of of the that you’re the

Gary Vogel

Yes.

ships, you words. So ships, but all, the older the eight happens first it louder at than course of of the cash matched that Kestrel if I believer actions, the will, if big look fungible. hole you quantum I’m mean is actions Clearly our speak

fleet monetize to in average keep vessels the age I to If at done what in look this so year we future because the look about we are a eight clearly us. year you far. talking older we’ve fleet that do those gets kind look right, will was nothing, every obviously if of just as and area. like our renew we that Yes, ships

in So it’s price a that comment decision converts. every is, on the take I don’t we day. it’s share We days that after is regard, that effectively what we do that and the few with – capital only a short-term – development think again

do early it’s to past. done talk in haven’t relative terms So the in price of might little share I buyback. we think to what Obviously a a about that

to said, older just that. grow will acquire. look fleet dollar the new to for I dollar. can’t one-to-one price not And continue it’s it. an a – as be continue as one, I a as to acquiring clearly efficient a selling renew keep early is the less as versus strategic, we a it the then but or a for vessels, age necessarily vessel it’s We sell, see and to these little a vessels not think to vessels But new older, even we And and for on it’s given

it’s they’re or one-to-one but So, obviously connected, a not two-to-one.

Jon Chappell

on one it’s I agree sense. and that. opportunities, to makes no with completely going you That play And IMO knows mean, XXXX the out I said how then

low time, as of the amount off-hire pole – significant of with not by the a disruption, some days of the operational off-hire times, mentioned is there pretty totem clearly but, going stuff I of think of XX on XX However, a to shifting is see there’s out you’re short-term ships to region. you the preferred

bit spend. So maybe the than, monetary a just greater cost little the than is

– in difference more flexible ships? to approaching charters opportunity with ships to as those fleet scrubbers? efficient having nine kind is going of you in with spread to more Or voyage just by ability do fitted, the a are locking seeing the view the your ships Now of be are those be with opposed approach any charters kind you the are

Gary Vogel

to unpack Yes. there. think Few things, I

all, we on days, days to it the to China of so did back we’re riding and still board want, days, in the in yard whether And that commercial. to full XX its XX is then of has a days of XX hindered to in-yard ship ship spending, whether we XX will First terms we at the installation while get the the XX where reposition change. crews ultimately all, not doesn’t that days

those think the I same. are So

to Just now. right – the first commissioned, scrubber our be is being clear,

the nine. think number So nine, the I was

the crews those work electrical Our towers is but piping, portion installed, done, so over months. board, that. riding commissioned next couple like on the be there’s things yard And finishing will

scrub benefit to trading when having our a down you’re ecozones, ability down some to have we’ll scrubbers moment the X.X. X.X have ship, all the to scrubber-fitted At in

two versus day burn port sense, in are by X.X. where will tons once where able Europe able of will to which X.X. that sea burn our that at scrubbers when being you’ll alliance to Gulf ships X.X States, XXXX be in majority from, the U.S. roughly be time kicks obviously IMOP burn trading and you’ll save comes in. allowed, share areas where not a that’s So But around, and be of in and you’re XXX Coastal instance, The for United instead

discussions. charters, we’ve some of had terms In

we get basis paid positioned I less the ton fuel line. management we prefer a basis, think talked will dollar it’s think you we carry regard, – to and I’ve to that given for straight fair about of a we to of per every that, pay do say save price also paying that, stream. our And fuel model, dollar charters active things not in scrubber is be. before at revenue cost maximize per goes the to the we that moment When which full think in cargo. my benefit that that best willing becomes we’re Right? opinion value on what for definitely bottom voyage or I’m to an internal

So, the be lot But deem saying like to right at ships the a we do people I’m as not re-lets, and if we won’t you value. redelivery give of you know, away of things need to don’t full in time long-term what re-let because us pay optionality that. terms we of

So our any today, don’t we fitted months, over few develops. haven’t have tonnage really out changing and see that of charted it we’ll how see scrubber next the I but to

Jon Chappell

Yes.

Thanks Okay. answers, Gary. proper the I understand. for

Gary Vogel

Okay. Thank you.

Operator

B. Burke comes from Thank Riley question you. [Operator next Liam with FBR. Instructions] And our

open. is line Your

Liam Burke

morning, Good Good Gary. you. Thank frank. morning,

Gary Vogel

Hi, Liam.

Frank De Costanzo

Liam. Hi,

Liam Burke

help force scrubber will installation end, side scrapping you and a and think the faster order the Gary, more at book? they if higher we’re at supply the efficient of that fleets over further do time looking

Gary Vogel

on as be dependent So, I spreads. development will lot rate think as a well fuel

because fuel wider will ships would the slow more yes. inefficient discount willing spreads to an ones. make are people of particularly then people more to be that down, market of and in simply still older said efficient the – to vessel, ships scrap. And Having less are flows and less make costs scrubber cash rates – and go ships fuel even think money. the and to answer Obviously, there’s the higher an if for a making fitted ships and be more to wider efficient relative on impetus that, up people that robust echo become spread, fuel So, I take more

increase capacity into on last Obviously, But see we is positive general, I a I little is it for expected nine number and So, think is need to of back there’s plays as of which development. But catalyst before, tons, we as over that this doubled for in Scrapping about there’s year, see in terms of said I’d XXXX, million rate think positive to a that. fuel spreads be variable the which IMO scrapping. more obvious. XXXX. a and how to out is inputs year, think I that think I IMO

Liam Burke

previous quarter. fleet overall that And versus of your service your vessel debt individual much break-even just this better working How cash prior to is was the than quarter the management?

Gary Vogel

it’s mean that. I ship goes each Yes. obviously into individual

ship. on OpEx before, come maximize But said to be these We’re efficiencies working as when of working terms based every to on we – in in. tend expenses we’re choppy, everyday numbers

on now you an this We given at quarter. also you long-term But look later. or a something at basis. can OpEx in as number me Hitting you me the do is pay can a pay same can

the there’s hit a the to our that $XXX fleet, sense. inside. case, day clearly, out We for no specification put a silicone-based paint, I quarter been think, during across of very will it flash period about But was service our we took we the pay made to of also on think number itself, have pay which lot for and as ship high over one a OpEx, business which – per visibility itself

make So, we and on. our clean could the have $XX,XXX had for decision. and right easily just is bottom But business view we’re the to gone moved going

looking in whether always based improve we’re you – But in it don’t sometimes it goes see in So, numbers it improve goes OpEx to or all. the over it efficiency. on

Liam Burke

True. you, Gary. Thank

Gary Vogel

Okay. Thank you.

Operator

Thank a Fearnley. you. And Espen from Landmark we question with have

open. line Your

Espen Landmark

good Hey, morning guys.

curious, the any scrubber-fitted market. it time replacement guess cost scrubbers, you do with vessels is secondhand have first about the Just the for see we a Is this premium vessels? transaction, beyond fitted I and just changing hands question those on the

Gary Vogel

about No, costs, with I very if say in much would $X line our the scrubber will, component was you million.

for premium relative we the have other to market pay that the a on So, didn’t to ships.

Espen Landmark

it? And with CapEx to vessels open crustaceans potentially with part you paying up another do going for if the beyond you scrubber, forward, of would were

Gary Vogel

It’s a great question.

you would long take ship get immediately present come of would kind have – think we would that how much manufactured what have scrubbers. what to how on come installed a versus and really more existing a value I with it It relationships the it. and a words, I getting access Obviously, other In scrubber, of get think to would out was. manufacturers. benefit down to we ship –

us, I I with fairly install and significant limited question kind of think of think given but for of could I imminent math my it an that’s would we acquire be be and mind. one in to IMO think inside XXXX justify a spreads that confident, to it. more feel So, we have you’d that

right see our us now the scrubber. with comfortable for I near-term, in think and a up wouldn’t I we’re position paying I don’t –

Espen Landmark

Fair much. enough. you Thank very

Gary Vogel

you. Thank

Operator

I’d I’m to And this further any to for remarks. at Gary Vogel it time. like questions back no Thank Mr. you. further turn showing

Gary Vogel

you, Thank operator.

joining today a so have I’d further day. like wish our everyone We remarks, to no great thank everyone us and for earnings you. Thank for call quarterly

Operator

Ladies today’s and This concludes gentlemen, program. thank conference. today’s participating in you for

all may great You Everyone, have day. a disconnect.