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EGLE Eagle Bulk Shipping

Participants
Gary Vogel CEO & Director
Frank De Costanzo CFO & Secretary
Randy Giveans Jefferies
Omar Nokta Clarksons Platou
Liam Burke B. Riley
Call transcript
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Operator

Greetings, and welcome to the Eagle Bulk Shipping Third Quarter 2020 Results Conference Call. [Operator Instructions].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. Vogel, you may begin.

Gary Vogel

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

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

release today also and Exchange with for discussion to GAAP including Please to the more financial measures, Commission refer Please financial comparable non-GAAP most information reconciliation EBITDA, financial earnings adjusted to the a appendix Our measures. presentation measures turn filed certain and five. the the and TCE. includes Securities EBITDA in concerning non-GAAP our slide and

this and a discussed put employment we seafarers imposed order seafarers periods. affect to place restrictions substancial being which with of virus contractual challenges work great COVID-XX. their many changes to able created to year past Government in the As crew deal in the were due repatriation respect spread requiring travel have before curtail to to endured well

changes While many crew some take to hurdles for still exist, allowing place. thankfully travel in restrictions have countries eased

we were been and in go a our not change seafarers our period, had zero. this came course number estimated now crew regard, seafarers off-hire additional with of I’ve overdue to which that majority out acceptable. to ships been down it this still which divert working home report to pleased as Eagle, are remain In to XXXX cost. this of XX to to strategic to has vast it’s before However, beyond more and relieve at achieve result, that I’m order XXX,XXX is we of At have than we focused and/or a spoken getting their seafarers incur over able waiting contractual a priority this simply of on only some today about our to are

$XXX quarter, to crew in normal, notwithstanding, changes cost And obligation six. as past the per This both do. testing costing changes than $XXX,XXX incurred the extended have incremental things lost to impact to equating in expensive we costs. the thing changes, travel the costs the we to seafarers about and off-hire approximately day XX% quarter and about such it COVID almost affected. mentioned These addition, was felt their right related crew simply such slide revenue. Please days due During crew of XX hotelling, and more turn number OpEx given Eagle been our by to more during elevated to

and a trade recovery beat on recovery per general XX% on at the important the quarter. and continued the the the the during $XXXX communicated as third per demand General of discuss quarter during compared from and per averaging prior BSI increase reflective The for markets of day TCE well day, call. up path earnings representing the full markets result normalization we'll with in as measures $XXX net grain in $XX,XXX, August, of a quarter-on-quarter, small well supported trade, We for a been robust level up against generated call is the representing Our an third the market. period, XX% which stimulus further China, Eagle later quarter by our the trend of $X,XXX believe a trade ending to in as as restrictions. as September day easing the

number market previous in have in due XX days of a fixed rising and are about catch duration. voyages and average that rapidly days challenging a where to we beat advanced and fact it's calls, discussed to As the

in and increased earlier addition, us our on order of for given the in volatility hedge previously, appropriate position lack in with the we markets the the due about protection. second we as of spoken visibility half COVID-XX, In to to XXXX weakness year provide downside and

positive While the methodology affected thing our the on offset of quarter, our this our more do a to we was by platform performance and operating believe negatively scrubbers as well as fleet. for it prudent than was it from majority the contribution

advocated, to performance annualized equating in QX, last fleet size. In cash quarters. always regard, As ship on million based multiple we incremental basis per $X,XXX over XX flow per this our inclusive measured stands approximately average at is $XX of an our have months day, best outperformance on current

and OPEC the the by than while investment fuel COVID-XX calculations, more we've water on outbreak a of million our negatively spreads, scrubber just $XX first months. impacted price Additionally, the nine in generated

today, line TCE of as we quarter today EBITDA turn for $XX.X for as to improved of day, of quarter fixed top Please our a significant once have at net to turn million. the which outperformance ahead, to performance eight. represents per The slide totaled $XX,XXX seven. an again. Looking as contributed of the we period slide fourth a available third the about experienced in operating Please which growth XX% represented days by

has has fuel average size three of affected over in static the The And, the expected have emissions $XX.X and and right has the note important We XX% our of of million of significantly XX systems, of on ballast makeup. that, these were XXXX. sales as performance. XXXX execute The acquired $X.X and on Osprey, in all program, total during CapEx improved, our fourth we These years, a improved statutory each sold on-going renewed remained sales plan graph the deadweight consumption agreement having S&P have fleet three basis. ships profile as proceeds vessels. fleet slide, months we the quarter. fleet, fairly average Ultramaxes about of call review with Vintage continue our an Skua to of dry-docking to past period. installation four costs. is XX I'd to program like the Shrike million, of fleet lower increased. the vastly to hand to our our growth our of over illustrated close to over Supramax treatment by have Inclusive between fleet corner turn transactions built opportunistic measured financial related and our ahead on per just and who Supramaxes, With to time. renewal fleet the our Frank, will all above, of the age our saving their As that dry of water It sell Gross part reached renewal total docks

Frank De Costanzo

underlying Please summary slide higher expenses market The third at an quarter XX% line of you, XXXX totaling from share prior and September that a net reflective growth above million of came incurred revenue, X-for-X per is XX basic $XX.X be net In Thank a equating which split stock reverse Gary. BSI. $XXX to effective million, turn both XX, for loss we of $XX.X quarter. the the We is increase QX, results. of with of in loss for the share per have financial $X,XXX, and number net Please the $X.XX, improvement drove adjusted quarter, completed The reminded top spot QX to earnings diluted. stock in of a the reverse both split. XXXX. charter TCE third our voyage our a

positions a income And not other changes As interest receive rate expenses. as reminder, our flow mark-to-market hedge the swaps, treatment. such, the excluding statement hedged accounting the do as through

profitability improved in in reduced adjusted is expected, be at as $XX.X our result QX EBITDA $X of quarter would the changes in positive was It million. As that coming book. noting by hedged our million in derivative a worth

loan of operating by the quarter. bars, of working $XX.X operating million $XXX.X the At million balance it vessel strip Ultraco on smoothes Please of interest between Cash were end at two is for cash ops decrease top is and X.X depicted in million repayments of generated. availability of offset blue million QX. net in $X.X the timing of to the debt which The $XX.X The dark floating term revolver an liquidity. of the million month in and that to second was cash year-to-date rate believe the blue part Total million three Liquidity and operations you from proceeds to a $X.X to credit blended of which of was liabilities, swaps to at slide the end basis assets our now of along over of introduces from from and ops $XX.X by million. that operating increased revolving Ultraco September the cash from $XX.X XXXX. sale million compared quarters. quarter principal in bars, in by $XX facility. restricted QX is improvement out of live more cash note of liquidity as of operations, out XX would exposure can of of activities material $XX.X the of a flows result Total I facility, overview year-to-date. the or excluding used as provided a undrawn of representing end see chart the XXXX, XX some which the with million cash Total the capital gross third Ultraco cash from $XXX.X points. $XX.X slide at million, perspective, I by and the for million an operating the primarily on average Let's was Goldeneye differences million turn meaningful $X.X of of cash $XX reported from of variability that comprised the of noise. sheet issuance cash turn million activities our overview a CapEx the capital. QX, our for flow representing total debt rate slide, the and XX of costs was at working debt spending driven cash changes cash primarily are to for the inclusive million evaluate repayment new hedged fully the decrease a demonstrates numbers XX prior light

balance cash slide Ultraco our from a you The the finally of the CapEx the the credit months know in XX the $XX positive bar right, cash and slide the the simple period. will in the now the look on QX the To during of bar chart changes two costs are year-to-date for operations. is the of The docking lays left totaling the funds dry drawn You nine the at the bar which Revenue The capital net number. close from a our walk. the large cash represents X.X operating of top over first will Company's and in month nine find million working adjusted slide million of the to revolving QX. covering the have Please turn evened million, cash for EBITDA out in XX bottom half of graph million. interest X and principal $XX quarter. facility, company's expenditures at debt paid that changes bars and out the is represents the changes of The million on repayment XXXX. displays to the

third decrease Cash now QX, in per expenses, slide and quarter. in breakeven employees ship number docks. increase in increase quarter-on-quarter G&A that was worth per offset at came in per per to in $X,XXX $X,XXX at vessels, include was fleet, including breakeven In regard, that would quarter part in a on ship the G&A increase repayments. ship $X,XXX per was crew ship quarter. in were of The G&A day days whereas attributable in in increase of returning $X,XXX at increases $XXX per prior changes the ship in increase our per due Cash per debt at per than for costs QX. to came chartered-in day the in to OpEx came Let's per of higher drydocking OpEx Drydocking day quarter. ship principal per to the debt with for in debt, QX. were $XXX if a per than our based This tonnage. amortization review day $XXX QX, Vessel our in owned back quarter. ship It result related came the the from office and QX, result in came golden $XXX than attributable turn quarter. will principal eye. a sale expenses in the own Gary the the per along larger in is by comments. the days, XX prior be in The office cash incremental in came per per an flat the decrease day at per $XXX is or up in in higher interest calculation of repayments was are per at we chartered-in lower per in a day day. day ship our $XX,XXX Cash Gary. call a quarter-over-quarter. OpEx The day bond space the $X,XXX Norwegian to noting semi-annually decrease which quarter, The is QX, my costs payments the to QX shift calculation, G&A noted. paid prior now QX, on in the dry in which I Cash concludes we operate this The the the our to

Gary Vogel

Please Frank. to you, XX. Thank slide turn

BSI for years. the as performance we BSI the and well Here, depict as prior year-to-date XXXX

March indicated our earnings years market when from the the As than standout to last low the in essentially and late call, to trading seaborne turn reached BSI trending Please been imports recover, in with The year negative above spot the be COVID-XX period increase similarly on to current had significant between to prior. the grain global the of is otherwise XX. $X,XXX African as by primarily June. $X,XXX stripping XXX we wise swine X% continues slide pig increase year XX,XXX impact as for pickup roughly XXXX, is averaged the out One or past, soybean higher continues an million April. the the calendar country's volumes. an to tonnes population the year epidemic. has due compared post as demand China, trade expected This reach in and fever to Year-to-date,

from attributable of exporters Aside specifically China blue on is lack from total availability current as the overlaid benefiting U.S. phase both X This and the the agreement the back four in an global exports dark U.S. beans well reached from volumes, January. on began increase The this Brazil, for which as in increase. are X, year, between the U.S. to soybean line of previous depicts marketing years. trade September

China of XX swine are negatively the ahead war. both last you XX, fever soybean and will U.S. note, above XX, exports and years which As impacted were the two, tracking Asian the marketing XX far both and U.S. trade by

million figure indicates stands U.S. which trend. the a currently continued sales ahead, Looking outstanding for robust export XX at around tonnes,

accounted global the increase based mentioned, on purchases. of a other increase China higher ton demand. particular number As to Chinese in when is compared is primarily a miles This destinations effective note, as exports for to or

quarter-on-quarter. about Finally, same to scrapped XX being water vessels were very prior in total of a growth what doubling QX. offsetting albeit robust than as hitting compared back began supply sales we deliveries XX on new much ships pace up closures in due less Net QX building were increased the for demolition to were period, COVID-XX. demolition. in down QX X slower during QX million have total in opening this pickup U.S. with seeing to [ph] The slide of the experienced than A to drybulk scrapping And while vessels and expected for back the of with was more XX. quantum quarter, to as going restrictions amounts more and the XX% a enacted during delivered of roughly sold as Please tonnes. totaling outstanding [ph] China, corn swara turn export, yards

order is stands overall X.X%. In around Handymax at a level, vessels the looking drybulk book when fleet, at lower at just low the historically of as growth, order a Ultramax just the even the terms of broader percentage supply X% book and forward

remain as is see trade bulk bulks. at bulk to decrease uncertainty, years. the roughly by what primary level continued lowest last a is to drivers were of spread, For the supply dynamics just well, bulk encouraged double XX optimistic and to XXXX ordering deadweight expected with XX.X iron dry place like already now negative you stimulus of expected assumes growth remain tons, quarterly beneficiary demand million we come for projected fleet Dry now current net in four XXXX. in representing QX, which it during further answer than A any total a government for being and our ships side year. increased revised in globe. X.X%, scrapping to low dry ordered We of was X.X%. post more future. upward forecast have and slow to to believe measures our growth scrapping trade of QX. virus a growth earnings as and is expectations contract Operator? the upward projecting well projections number and now XX. recovery by forecasts The being Notwithstanding around for of been to in turn With favorable by remain I'd reflecting GDP but XXXX, now in the ore, operator as recovered expected the call normalization in the put revised a will as Global X.X% may the compared they have the this in last of slide have. since foreseeable quicker elevated flux in the potential are The improved actions in which and and previous cautiously and the to for demand, QX been Please of the that, from remain global grain XXXX and stronger growth in questions IMF turn call the market X.X% over X.X% then minor

Operator

Thank you.

Randy from Giveans With Our completed, lines with question will questions. Jefferies. for open remarks we the now the comes first prepared Instructions] [Operator

with You may your proceed question.

Randy Giveans

going? it how's Gentlemen,

Gary Vogel

Morning. Randy,

Randy Giveans

that's see all nice issue the crew all that. congrats been certainly morning. for well, progress first so, an Morning, changes. to the on important know Yes, I on you

the guidance. at rate looking Now quarter-to-date

You both to break peers know, what remaining You of above XX,XXX XX%? this mentioned just get you your if the kind it rates try so well Supramax. above week? for to then versus for And or just this earning that? was a out of below to trying also benchmarks, the Ultramax maybe you can by Are see they sense trajectory are

Gary Vogel

Yes, and the XX it high say think market entered we down. lower fair been all where the XX that drifting dynamic. was It it's around index this than first pretty first, nine and to a of hit as is It today, today, well, quarter. has I of is

go and Ultramax. depending specifically we So where, Ultramax on We are blend, a ships, and appendix, between into to a do basis built, vessels higher about they're where to together. traded on We do XX%, our in fixtures speaks to a Supramax we that, our which because about our the Supramax. fact trade relative don't when slide have XX%

even we day, broader you per spot platforms, is, but spread spread our XX%, at have is now is extremely adds right So where if then don't it you break scrubbers and I spread What out though over scrubbers. still the fleet the is, level, look would XX even weak, roughly have $XXX $XXX, spot see across when we and we though it's our outperform that to ability our then the around it you the at And and the can say out. amortize fleet. our

Randy Giveans

Got it.

especially sell fair. speaking environment, segway and see Supras And three older Okay, those were nice drydocking. right fleet, that of before in able this their to there. you especially It’s your that's good of to

interest for other renewal, your modern Supramax’s, are [ph] what Ultramax’s. guess, I remaining in of the the this fleet that. of then second terms built purchase on for of equation any And en-bloc for in to hand kudos XXXX. end prior plans So

Gary Vogel

remaining I older talk Yes, then if well, about of and sales all, the vessels. the first

combination. mean, our XX them. We're a will in as vessels we've done quite selling And older larger both continue as to think the purchases we've So than we to acquisitions, greater something it clear that years look see we've is to done do. XX the we bulk and made both ones I open purchases. individual I ship well replace

capital. the I think it reward risk that comes obviously I really the mean, So and balance larger continue. at transactions time will to, require and more that down

it. So, a renew assets to the to renew look as balancing to will monetize we continue older act, it's well sell the grow but them and and fleet, and as

Randy Giveans

that's it. me. deal. for it Well, Got Good

for a quarter, to much forward Looking better I'm fourth everyone. sure

So thanks.

Gary Vogel

you, Thank Randy.

Operator

you. Thank

Nokta Our Clarksons next from from Omar question Platou. comes

may You your proceed question. with

Omar Nokta

little paying presentation you being would With given down I the pandemic and the make XX maybe and you the checking level a million, lot Hi, had bit and And that that's the and in the do debt think repaid been of to revolvers a that sure have last especially, see And did Randy. of signal? part that comfort, that Thank – with you're to, pretty next situation and the revolver third more a on comfortable the uncertainty feeling think. in financial rates fourth debt taking low, shape quarter. Gary you a And here on question the maybe to this with certain bit I XX freight is I the of revolver you I been took you. the Frank. side, on just job from the quarter? XX year, million good then earlier the more One, the question that that repayment outlook? dovetailing a just Frank a the know you in out repaid, perspective of there's in

Frank De Costanzo

I are hi we, the quarter. we more we we Omar. signal comfortable meant down Frank a that if as by XX wouldn't I,-- take I million signal. could It's a Yes, you in as But say Yes, yes, paying naturally it here. it

improved pay As materially. looking to market additional Gary down as has to revolver noted, regards In opportunities flow cash our allows. the in QX, for the we're environment

the liquidity allows Yes. when important to that is profile us it pay So to it. down

Omar Nokta

then to three Okay, thanks. that sell. you've committed Supras the And

You're much after expect to the this debt change you'd at retain quarter. and How getting that repayment? XX of

Gary Vogel

Shipco Norwegian three by is the those actually, vessels the are which financed within, Yes, bond. silo,

either back account, restricted or So for into one. the proceeds from be go buy those ships bonds, which used all a to purchasing, can after sales actually

Omar Nokta

it. got Okay,

Okay.

sense those go Buying proceeds? what So, bonds? with direction and of a buying ships do or into have you’ll you

Gary Vogel

se, renew based the it's S&P so but again, mean, decision, been know, You which buy bonds the the grow per I back in But, decision no we continue yet. value to has look we at opportunities taken versus and fleet. on no to market an could evaluation

Omar Nokta

Frank. got Okay, Thanks for was Gary. That it. it me. Thanks,

Gary Vogel

Thanks, Omar.

Operator

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

You may with your proceed question.

Liam Burke

Thank you. Good Gary. Frank. morning, Good morning,

Gary Vogel

Good morning, Liam.

Liam Burke

macro Gary, of about question you environment the but there that's the is were talked dynamic, in changing in trending Or the Is grain about, is is fixed in the terms of that changing obviously, dynamicism? little direction drift? rates what in I quarter-to-date. had there anything anything are that trade earlier daily mean, cause it patterns? you a they off macro would grain, Or but just a

Gary Vogel

think know, restricting I right about although don't China carry seen coal would biggest be to headlines to one We've it's from coal point well Yes, from we now based strong thing with And the you primarily as Australia. fact, the comparative trade the a of with Cape basis. the, on the impact is has market. actually being and an grain that the Kamsarmax trade, in on out Atlantic Australia, clearly

of Atlantic see from fortunately which years. couple last ban soybean ballasting trade year, specifically larger have is, ballasting on Kamsarmax trade. Australia. to absorb is we the I that coal on carry basis, a so this the cargo was ships definitely to ships I mean, mean, differentiation it's to the a You that into in, the really that's a which relative

last met didn't reasons U.S., soybean of for the the quotas in that end basis haul long But of seen the being years, overtones. trade about the imports have towards the mentioned. we've political, year. China these already on the I the takes coal And restrict on couple we Atlantic it from think the talked from I

the thing the side, Australia And which U.S. biggest into China. positive, that's play the of comes imports, think I soybean So, tray, grain, now on from on the I the primarily the Gulf. lack of coal the out right then negative

Liam Burke

were on follow the flow dramatic you you a a that continue than of you trajectory you rates, flow turnaround provided third Frank, now and operations quarter? saw year-to-date to any rather kind that your quarter But, Barring into the quarter-to-quarter. up look would by cash follow expect pretty Great. on cash profile. clear significant is basis your on up fourth at

Frank De Costanzo

catch was up a X. from and performance really a QX in standpoint QX no, No, cash in that the to weaker

it So QX. to normalize we would in expect

Liam Burke

you. Okay, great. Thank

Gary Vogel

Liam. Thanks,

Operator

any you. I'm time. for I any like further remarks. now showing Thank over not call questions Gary would to back to further the this at turn Vogel

Gary Vogel

Thank you, operator.

further have We no comments.

everyone to for us I'd like everyone So day. today and Thanks. good wish a joining thank

Operator

you, Thank This for concludes gentlemen. ladies conference today's and participating. call. Thanks

You may now disconnect.