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EGLE Eagle Bulk Shipping

Participants
Gary Vogel Chief Executive Officer
Frank De Costanzo Chief Financial Officer
Jon Chappell Evercore
Chris Robertson Jefferies
Call transcript
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Operator

Greetings, and welcome to the Eagle Bulk Shipping First Quarter 2020 Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Gary Vogel, Chief Executive Officer; and Frank De Costanzo, Chief Financial Officer of Eagle Bulk Shipping.

Mr. begin. may you Vogel,

Gary Vogel

access good Bulk's would call. first today, our of Please note website participants risks our are and that everyone To subject future to discussion performance of that statements These and eagleships.com. to remarks to forward-looking to encourage include and would Eagle quarter I will slide morning. statements. you, at presentation like uncertainties. are is on I welcome part supplement the Thank XXXX our available today not guarantees inherently earnings

You should reliance on statements. forward-looking these not place undue

Please financial and on discussion bearing refer a condition. may to of our Commission detailed direct our filings a our with operating that the more uncertainties have Exchange Securities results, the our and risks and for performance

today including certain TCE. discussion also and EBITDA measures, adjusted financial non-GAAP EBITDA, includes Our

appendix non-GAAP filed release for Please financial the refer with more measures Exchange the to comparable financial information to and and the the our presentation reconciliation most Commission and earnings concerning measures. in Securities GAAP a

employment open, of away are members for do global of beyond crew discussing saying to well global from with many or chains all that are the to at healthcare all who those and and of our begin those the relatives the on as health-wise continue from lines and to figures and community, pandemic. global contractual community, as now extremely home. COVID-XX ships also to grateful benefit their front by family the or we have to loss suffering risk the who are keep of their those the our sail friends, all like otherwise thoughts broader who supply today, periods We're professionals great Before impacted on indebted part and been by seafaring I'd the themselves putting and

limiting PPE, of regard, by and external equipment both As providing our on shipboard health, purposes our with this In we to personnel. ships we're kits implemented minimize visits and wellness minimizing a remain have focused infections for personnel. safety the with protocols ship and by non-essential and interactions testing employees, company, shore-based potential and

to we're restrictions guidance to authorities as home working seafarers crew and organizations to be adjustments challenges, wide-scale members current and in necessary. crew a and to safe manner. able We from travel again the follow bring also to Notwithstanding and changes to affect order will continue relevant soon onboard in and allow efficient make begin

at reality have remotely our March, Ashore, this to our with new been environment. working adjusted pleased I'm global staff with and disruptive levels the across and since collaboration execution has globe how despite team remaining our work high very

please and to Supramax pressured New X. brought turn Index, further remained Chinese on weak Baltic IMO of a building by back deliveries or the during traditional Slide about The was increased to by QX to fuel new Now, switchover. seasonal BSI, costs switch and Year, fuel XXXX relating related weakness the higher the

XX. during Despite the negative of China of Rates the December reaching holiday March started and on XX. break again impact activity over there, it had driven $X,XXX shutdown of extension the recover, by country, on of the general to the economic and up Lunar was rates back a BSI February outbreak the in [X,XXX] of first COVID-XX around the low per quarter, the and the down end day, continued as of half on $X,XXX initial of were

XX $X,XXX by rates in both in the $X,XXX This, essence, ports. and by just to to closures supply of to and economic days over global short-term demand, mines, supply driving beginning spill down started the well restrictions world as and enacting with a of as created to of shock the rest outbreak cargo its However, a chains countries broad rapidly implications activity mid-late-March, market, COVID-XX to quarter-end. the

first our the volatile outperformance by per of market this were highly this achieve $XX,XXX for outperformance to of quarter net TCE We or day, achieved able $X,XXX Against backdrop, XX%. to Eagle calculate about a equating a two that driven trading of outperformance benefiting to majority on factors. the contribution management on We successfully these executing evenly and active approach between by from was fleet. scrubbers our operating the

into Moving led disruption trade in has COVID-XX QX, and flows. to cargo global massive

Additionally, by brought negative excess precipitous drop the further the has demand been oil Eagle. war prices then as in a and for of industry, and fuel including result of on price from supply virus exacerbated disruption the the

which time faster efficient the effective and encourages older supply board, at less vessel least relative For separately, across basis, steaming drybulk, makes more on being. and a increases cheap fuel for ships the competitive

low-sulfur Secondly, mid-distillates, due, spread HFO, is such in in which has low jet oil. diesel of disruption historically and or weakened. crude scrubber-related to as revenue, drives massive and or demand fuel heavy but decrease as VLSFO oil, spread part, fuel very headline for between the prices, also oil result the a fuel fuel oil, fuel The

impacts exposure the we to spreads above our for wide. XXXX, XXXX of Fortunately, prior both about were and spread hedged scrubber mentioned when fuel XX%

As generate around this to million, $XXX,XXX fuel annum significant almost now be cash incremental and still depressed Eagle about you value providing contribution $XX the is per in to while realized able the the on hedges mentioned. bottom hedges also addition money, in $XX including current of our currently ton, is the that $XX well are in expect, of would which spreads mark-to-market a worth roughly I in noting these line. are at quarter previously It representing to per first million spread figure, flow levels should

of compared So quarter, BSI average a the as per far, QX. $X,XXX of second approximately the in has the with drop averaged representing day, XX%

quarter fixed current a $X,XXX day, representing second our today, available per the of about have outperformance a of net XX% at $X,XXX. for roughly significant of TCE days we of As

is level the the the $X,XXX. higher trading Looking about further towards curve ahead at second half a of BSI current of FFA year,

And as disclose our of FFA of in current owned of that. over typically disclose don't environment, $X,XXX. today, FFA an forward position hedge just excess we given we beneficial we our fleet is have positions, it XX% around to of While believe specifics hedge the

believe are Eagle drivers a all strategy forward cargo our We navigate would revenue disruption. this active help combined hedges; these management market unprecedented hedges, fuel spread important scrubber and with book, contribution, that

provide with Although liquidity also the call, million. $XX Frank will and we of strong it's that cash position on I maintain totaling think a to important detail almost undrawn more in later XX, highlight revolvers March as

In Ultramaxes addition to scrubber-fitted two this, unencumbered modern well. we own as

$XX.X items, utilization a the Please in certain EBITDA, increase prior representing turn totaled for quarter, over to thanks, Slide first for the adjusted operating achieved. higher X. significant performance in commercial period, noncash to part, million

fully April X, be forward, that on expect and report to historic revert pleased to program such, our drydocks. primarily going our to as very I'm related Additionally, able to was days we statutory levels to scrubber off-hire installation completed back

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

Frank De Costanzo

and XXXX BSI. Thank first net voyage in you, turn Slide flat for we fall totaled results. XX% for is of the It hire that to Gary. line prior keep Please essentially $XX.X top to both to were note important a circa quarter. quarter from financial flat of despite quarter, the million summary Revenue, the expenses, X our charter the a first able

realized attributed Our the commercial significant by be and our outperformance can to the our benefits to scrubber-fitted fleet. index platform

Adjusted the XX% an quarter increase company and $X.X of benefited $X in were million, also million program net EBITDA a quarter. QX gain in days of million scrubber share for or $X.XX, prior available positive EBITDA from both a fuel an the related per adjusted hedge $XX.X Operating loss company to from or came to increase of $X The installation our which lower. scrubbers. reported first diluted. the book, from spread benefited loss at a million on protects as performance from exposure off-hire days the significantly its operating basic related

cash, year-end. in scrubbers debt X Total turn by principal revolving of CapEx balance and cash, million, in on $X facility. of overview sheet million of a cash million by an of driven from facility payment for roughly to drawdowns, as water XX, treatment part, $XX.X liquidity. Slide on XXXX, representing an credit our inclusive proceeds of spending was ballast now increase The Let's a million and Ultraco offset March our restricted $XX.X $XX.X from increase in was systems, and

debt $XX.X of debt and cost, revolving is was principal gross million. super excluding repayments issuance increase quarter. $XXX.X in was total of the from The Ultraco Total revolver primarily Total liquidity undrawn in our offset on debt, million credit facility million, $XX.X XX is facilities. of March cash due drawdowns part million our $XX comprised million the $X.X at and and of million $X.X debt $XX.X prior by an senior $XX.X facility, of totaling to million increase on million Shipco

came by you net in top can $X.X XXXX. our first quarter XXXX cash in that million capital are working operating to which in walk. $XX.X bars, out operating QX reported liability, timing-driven used working introduces cash activities Slide bars, the operations light in the blue the cash provided for strip cash down operating also turn assets numbers; of the which million, At shows to differences as the blue activities from that demonstrated in see slide, from Please XX at the The chart cash capital. and by the ops dark and between variability from changes essentially

items. evens in by As explained the between working chart relatively QX caused demonstrates, out be large volatility time. can over two capital largely bars those the by two The difference primarily

future other which we First, the or as positions. our instruments will a hedges off monetize choose current quarters in reversed $X.X million unrealized derivative gain be in on our recorded assets, roll to

end payments bunker early accrued first and $X paid of quarter. the had of million approximately at in year we Additionally, last

slide lays you $X of and the proceeds million the net finally, a look The represents XXXX. balance $XX and the revolving principal QX systems. bars are $XX the The And the for simple cost cash bottom left, the interest debt water will facility CapEx the bar in and the right, a ballast the drydocking scrubbers bar the of expenditures, and million million chart To changes two operations. The operating find company's treatment million draws. totaling in quarter. covering the bar at paid in from represents credit at the large the out of revenue on $XX

our Slide for ship cash breakeven XX day. per review now per Let's

offset XXXX, per breakeven OpEx. quarter-on-quarter than $XXX year part, QX breakeven. an OpEx decrease ship at expenses costs, day. cash per in For per $XX,XXX, in QX The per was and $X,XXX $XXX $XXX ship the or lower in came cash came of XXXX drydocking by XXXX result and serviced primarily increase than in debt at higher day vessel lower full QX

not seen in is have uncommon prior a as annual result we in for expenses. it As to come QX years, higher of somewhat

QX. than was as QX In fleet. initial stores XXXX, stocking ship $XXX elevating of per and of OpEx well at In acquired purchasing the came newly impacted drydocking by due per the $X,XXX day, scrubber-fitted vessels lower for critical addition, spares as to spares in

was worth per days the It in if $XXX quarter-on-quarter the in in noting by $X,XXX full completed. QX XXXX per G&A calculation XXXX year calculation that our per than based include ship down to $X,XXX. G&A be results. day, Cash own G&A The lower driven on is only a vessels. chugger our in QX of decrease day, QX in ship we decrease came In per $XXX drydocks at would our number were and this per the regard, the of is it from ship

came ownership day, on prior quarter. Cash a increased for in than days. Cash per XXXX is in $XXX and principal drawdowns all repayment at per our fact than due came ship $XX to attributable debt. interest bond The the to income, lower $X,XXX XXXX the by decrease debt included primarily revolver principal XXXX QX QX day, which is The increase $X,XXX decrease quarter. in is from in per is prior Norwegian payments which interest at per that a in expense an QX increase debt higher ship

April, CapEx, CapEx noted such, our of scrubber to will end program related earlier, early program and in in QX. this we Gary terms by In completed installation as as

XX a up water Looking one has week, for U.S. to for we a extensions. ahead, program of ballast treatment the approval this the for Guard of as Earlier received year. of allowing deferral such Coast result COVID-XX, systems installation instituted the

we such, related ballast CapEx we in reduced installations. a XXXX. Given treatment as water expect of be And the will current environment, number defer systems to will

terms the We provide quantum. in timing further final made and will updates as are determinations of

my have and response COVID-XX, to concludes in certain G&A This Additionally, we costs. comments. reduced

back now turn to the call Gary. I will

Gary Vogel

Please Frank. Slide turn you, Thank to XX.

prior performance, the we for balance year depict year-to-date XXXX plus the and the compared BSI the forward Here, of as curve to years.

Lunar As New comes posts as historically through the BSI The the you China post quarter, recovery out in mid-February. has March of first Year the can online back bottoming a index the see, end throughout declined between strong holiday. typically mid-February

To spread put of trade And this of vessel different, no – and is end around recovery hindering through supply. was BSI this year, to that started world, until into is the lull from perspective, March across the percentage in it XX%. demand the historical outbreak both the average COVID-XX and the cargo impacting mid-February

On side, demand the as started reduced shutdown the in country. due like importer at largest the coal their weaker to for lower demand across second electricity to the requirements countries India, world, the capacity from operate power arising saw plants

and In restrictions addition, bottlenecks internal general. to further imports and on enacted cargo flows have disruptions ports transportation and even caused in

a Africa, country. On drybulk, has in leading million supply across shut of their and One important in of April, this an to the been tons commodities. of South spot of of where a flows South cargo all XX% been Unfortunately, down grain sharp curtailed drop American bright happening has XX has countries exported port midst year-on-year. through side, such reduction exporter the as out volumes that cargo virtually mines operations, up exports, Brazil

the The forefront in XX at countries well. appears be ago activity back each increasing solely two of about has getting come the we're of but business, trading in last online, increase begin seeing back BSI as China terms as just we're days. grinding bottomed to others been at seeing higher to to weeks $X,XXX above

starting the ramp up, world. ports are South to loading across African in are and mines cargoes back most

supportive continued this as We expectation mid a the [X,XXXs]. in forward slow in The there QX of coming the to trade and will flows curve believe rates. is currently around is a that with trading normalization be online, back low world recovery

weakness partly Please Slide expected the was are increase scrapping. flat with by were was fairly growth turn demolition. total vessels offset Vessel drybulk in QX, scrapping Deliveries quarter while with went delivered to XXX to A rates. XX. while deliveries, increased the elevated spot to supply typically new net as compared given prior building increased in XX of in January,

note to case that I for crews the Pakistan countries and potentially but the think Ship significantly it's transiting came and a not scrapping by affected important bringing in March late to like screeching virus order enacted in foreign that not as ashore. COVID-XX, from India, halt deliveries Bangladesh through were to outbreak and of lockdowns QX. the QX is demolition prevent

what weak that but envision environment Prior a to and scenario this quarter, no has difficult been with transpired. it such a virtually would to have scrapping, rate is exactly

extent deliveries, building tell this on will there is be delays, the bit a be there it's impact that new for a general early consensus quarter but For too the to of exactly year. what or will the

addition to difficult. challenging are crew In the logistics at delays to making to very completion deliveries travel vessels, relating moment, of

level just stands positive, years. currently In lowest terms look growth, the things the forward the X%, at supply whereas and X%, of order book Supramax/Ultramax segment, drybulk in for XX

weak due earlier. For restrictions likely mentioned to increased believe ease recycling XXXX, lower to at the at dry growth in bulk number will the come expected primary with it's net scrapping countries X.X%. conditions market We is that, fleet come in once that

is prevailing from aside there many new drybulk addition, to during owners almost that on and ships. shipbuilding QX. put the conditions. A XX likely XXXX building out the market delays average total quarterly during was To deliveries push ordered ships XXX the In this look context, were in potential will XXXX of given side,

lower. even expect, will would figures we believe be one As QX

the see ordering we pickup that on ships indicated surrounding price as of material will increase versus without a impact we propulsion we for due first. foreseeable factors, As buildings, uncertainties in significant call, the advantage our future well the technology number new remain a in last secondhand now as to not confident rates a and of earnings COVID-XX, future including of

Slide been by before expectations projecting since more reaching to our COVID-XX. a turn XXXX then currently XXXX growth last Global The earnings in from downwards significantly a implications for XX. Please to due state in XXXX revised the global recovery have call by post X% contract normalized to GDP and strong XXXX. is IMF

you crisis uncertainty current global the though, due As the will there's in to chart, beyond. economy GDP through and of extreme range a see forecast the from how perform wide the can

same well, industry revised the correlated in for have given how is been global significantly economic projections the drybulk Following as path, output. downward growth with XXXX

drybulk overall year. is in for demand around decline this A of X% projected

some to think the towards implying near projecting still shipments X%. potentially short we steel, that grain that demand and the are are as end I in and impacted and important be grain, are whereas trade increase is the is it's recovery. Clarkson’s the However, cement, of weighted such half, of coal not most materially which note roughly in contraction a to to likely start the first the include decline Commodities expected a of be year-on-year cargoes, impacted, in term

As historic their that we have of down. stimulus very global be substantial been in of believe to up open replenishment will projects many way And drawn efforts precedent then believe countries begin their countries, is there there to economies, which natural to is demand. infrastructure find stockpiles, a supportive will drybulk which economic and to reason

are unprecedented fundamentals we this, the these for and drybulk, Having the times. Clearly, favorable medium-to-long-term believe said and that Supramax/Ultramax particularly segment. remain in challenging

our people, believe period such, and navigate to As our through remains uncertain I balance well-positioned sheet. market solid given owner-operator Eagle our active our model positions, this

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

Operator

go of [Operator first Instructions] question from Evercore. from Jon Our Please Chappell comes the ahead. line

Jon Chappell

morning, you. guys. Thank Good

Gary Vogel

Jon. Good morning,

Jon Chappell

the how changed And the one others, right has any fleet your quite I differentiators, key Gary, kind flexibility than first in in with performance? certain but is you the is now. traded this mean, and your frankly, the on had situation of with regions strategy question of issues ports, the flexibility your in with obviously, the fleet on of that way that active we're that and, certain seafarers, the management fleet? impact the has of hit your harder the pandemic both

Gary Vogel

all, Thanks one team the changing one is, at a decisions ship. all in out, real-time making really because thing, our that. best of that's sea [port] for is the it's place mean, the certain restrictions, the of yes, first being active Yes. you I I answer of management platform having time. the is mean, is pointed with benefits as for

we that's you're been we things as all through longer get voyages, period, of will, equal, course, on. at how focused choosing And normally trade. would So we longer, on you something where sea impact, duration this lockdown being if out had some has

aspect the we come to you haul that when moment, at is Atlantic, pent-up level. other low market, The really it invest front given to evaporated call has demand the the a

to So back from where we benefit believe sending be you out, potentially typically more that ships will holding try would come you're and back. maybe when demand

deliver is simple the trying the basis, we've able but daily quarter, all forward. to things answer maximum put to to this in best value be a changes position only So the on made deliver going normalize as not ourselves many

Jon Chappell

for Thank you that.

since feel there? been know you've to And it your point close call could answer I on – the the I cut hedging don't, just everything BSI What path that, an do gets already to hedging than answered. implemented doing, you're off the the it's that – step? question, then is, and what where outperformance listened to that for it it's next and estimate the Second the differentiation, you if this do active the When all be you you then what's the looked XX% management, you differentiation but because that NAV, conference FFA to you that. equity to to depending of from all to the I'm I the response put all relative you've you to to like price, and fuel going shouldn't at your less credit the get

Gary Vogel

that's choose there's our outperformance, on but cash that the probably changes of that – talked to Well, I on or what I the fact Yes. $XX sheet. that off it believe, is would lot what we spread, hedges. unpack that's do while, crystallize And I doing. million speak to mark-to-market they for to roll about say continue can we have it there, to a and matters. or matters. we're a we the And balance if And fuel earlier monetize without we

headlines, in where and overwhelming entire the at unfortunately, that. think the get but terms the to for moment, situation execute, will I credit I is macro in the of industry a environment we believe is So continue we

governance. with be I'm we think we I when if for go what we'll think term. I will I don't credit that, and it to going company reflected long not to the happens we continue run good continue because believe to So get execute, do with

Jon Chappell

Thank you [indiscernible].

Gary Vogel

Okay, thank you.

Operator

Our comes question from Instructions] [Operator next Jefferies. Randy you. Giveans Thank from

ChrisRobertson

gentlemen. Good Thanks is morning, Chris This my call. Randy. on taking Robertson for for

Gary Vogel

morning, Chris. Good

Chris Robertson

can supply start around comments us from based to also much gets older Hi. your prepared recover more the becomes you about removed the expensive, and and Once thoughts through prices in tonnage fuel on the oil walk moment remarks up? trading the effective market your at how speeding [things]

Gary Vogel

prices I – sure. pricing, we've from not VLSFO given what seeing the where today in the actually of dissimilar mean of in prices year. it's going seen fuel decline fuel that Yes, it's heavy were part latter in the terms we're crew, interesting,

of in much while in in expected back prices, were significant the it to happening. started in with – a is switchover at weaker. we're speeds now XXXX vessels And So, in QX, because notwithstanding fallback pretty the think, slowdown market the general, I this on we we based IMO where year see and

things impact market you're up, straight-line back of has about a [X-plus the If out but terms basis ships ramp on that we looked talking we've well, we're level. as speed So at follow of where curve. in $XXX the if their prices kind $XXX, were. Potentially, price, an historically, of optimal percent] of fuel

which what fuel don't speed optimal we an what computer environment is rate that is the the us is both tell calls, speed the our speed sell of before and [chipset]. decide As a that I've models said curves in. input There's to price on ship our the

Chris Robertson

simply due this this levels? grain by to river give water trade the you color the us slowdown Can Argentina that. in offset the Brazilian season, just outperformance? for Was Thanks from the any strong Okay. low around

Gary Vogel

in soybeans, Brazil mean America. I Yes. dominates Latin

the to China. so answer yes, And has, export far, Brazil the by is and largest

cost. matter the is So for the this about in Brazil drybulk ultimately, But But time levels environment not as it's economics terms grain given year. of weak freight in obviously, the river significantly it the right really in now, trade for of the terms pronounced.

Chris Robertson

then you. question, modeling have don't a I if you And Got mind.

gave number guidance vessel the could some was You in off-hire by days of in I maybe you that break on if per wondering vessels. terms release. down a of basis And quarter

Gary Vogel

Yes.

that put over to me one Let Frank to answer that.

Frank De Costanzo

Hi best Chris, we front that one in that right me I the take it's information of don't think at have offline. I moment.

pick the after can if we call, So, okay. up this that's

Chris Robertson

Happy to Sure. follow-up.

Frank De Costanzo

Sure. you. Thank

Chris Robertson

Alright thanks guys. Appreciate it.

Gary Vogel

you. Thank

Operator

Thank the closing this show back remarks. turn like queue. Mr. to Chief Gary no Officer, you. I time, in for questions Vogel, to over the I Executive At call further

Gary Vogel

have further. We much. don't very anything Thanks

So, and wish everyone and Have healthy. I'd today to thank a us be to everyone And like safe joining for day. good again. thanks

Operator

gentlemen, today's participating. you call. and concludes Thank this for conference Ladies

disconnect. now may You