Press Release | Exhibit 99.1 |
Eagle Bulk Shipping Inc. Reports Fourth Quarter and
Fiscal Year 2007 Results
— Fourth Quarter Time Charter Revenue Increased 23% —
— Declares Fourth Quarter Dividend of $0.50 —
— 2007 Capital Investment Program of $1.5 Billion Triples Fleet to 53 Vessels —
NEW YORK, NY, February 27, 2008 — Eagle Bulk Shipping Inc. (NasdaqGS: EGLE) today announced its results for the fourth quarter and fiscal year ended December 31, 2007.
Financial highlights included:
For the Fourth Quarter:
| • | Net Income of $16.3 million or $0.35 per share (based on a weighted average of 46,948,385 diluted shares outstanding for the quarter) on net revenues of $35.6 million. |
| • | Adjusting for non-cash compensation charge of $0.8 million, net income was $17.1 million or $0.36 per share. |
| • | Gross time charter revenue increased by $7.0 million, or 23%, to $38.0 million for the fourth quarter of 2007, from $31.0 million for the fourth quarter of 2006. |
| • | EBITDA, as adjusted for exceptional items under the terms of the Company’s credit agreement, increased by 26% to $27.9 million for the fourth quarter of 2007, from $22.1 million during the fourth quarter of 2006. |
| • | Declared a dividend of $0.50 per share, based on fourth quarter results, to be paid on or about March 18, 2008, to shareholders of record as of March 13, 2008. |
For Fiscal Year 2007:
| • | Net Income of $52.2 million, or $1.24 per share (based on a weighted average of 42,220,160 diluted shares outstanding for the period) on net revenues of $124.8 million. |
| • | Adjusting for non-cash compensation of $1.1 million and non-cash non-dilutive compensation charge of $3.1 million, net income was $56.5 million or $1.34 per share. |
| • | Gross time charter revenue increased by $21.5 million, or 19%, to $135.4 million, compared to $113.9 million for the 2006 fiscal year |
| • | EBITDA, as adjusted for exceptional items under the terms of the Company’s credit agreement, increased 20% to $99.4 million in 2007 from $82.7 million in 2006. |
Sophocles N. Zoullas, Chairman and Chief Executive Officer, commented, “We are very pleased with Eagle Bulk’s fourth quarter and year-end 2007 results, which reflect our success in balancing operational excellence with our significant growth trajectory. During this summer, we are scheduled to take delivery of the first of the 35 ships from our newbuilding program, with an accelerated delivery calendar thereafter, further increasing cash flow
“We believe that the investments made in 2007 offer our investors a unique combination of stability and market upside during 2008 and beyond due to several factors: (1) our high built-in growth rate provides
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chartering flexibility which generates significantly increased cashflows; (2) increasing open days on our fleet and 19 profit-sharing charters that provide additional cashflows in a strong drybulk market; and (3) approximately $1.1 billion of minimum contracted revenues which secure the cashflows that support our dividend.”
Results for the three months ended December 31, 2007 and 2006
For the fourth quarter of 2007, the Company reported net income of $16,329,603 or $0.35 per share, based on a weighted average of 46,948,385 diluted shares outstanding. Net income included a non-cash compensation expense of $752,584. Excluding this non-cash charge, net income for the quarter was $17,082,187 or $0.36 per share.
In the comparable fourth quarter of 2006, the Company reported net income of $4,516,566 or $0.13 per share, based on a weighted average of 35,900,678 diluted shares outstanding. Net income included a non-cash, non-dilutive compensation charge of $7,302,118. Excluding this non-cash charge, net income for the quarter was $11,818,684 or $0.33 per share.
All of the Company’s revenues were earned from time charters. Gross revenues in the quarter ended December 31, 2007 were $37,990,223, an increase of 23% from the $30,981,339 recorded in the comparable quarter in 2006. Net revenues during the quarter ended December 31, 2007 were $35,612,521 compared to $28,393,932 in the quarter ended December 31, 2006, an increase of 25% primarily due to the operation of a larger fleet and an increase in daily time charter rates. Net revenues include the non-cash charge of amortization of prepaid revenues of $500,000 recorded in the 2007 quarter compared to $1,026,500 recorded in the 2006 quarter. Brokerage commissions incurred on revenues earned were $1,877,702 and $1,560,907 in the fourth quarters of 2007 and 2006, respectively.
For the quarter ended December 31, 2007, total vessel expenses incurred amounted to $7,393,813. These expenses included $6,900,806 in vessel operating costs and $493,007 in technical management fees paid to the Company’s third-party technical managers. For the corresponding quarter in 2006, total vessel expenses were $5,819,577 which included $5,407,577 in vessel operating costs and $412,000 in technical management fees.
General and administrative expenses for the quarter ended December 31, 2007 amounted to $2,731,760 compared to $1,856,467 in the corresponding quarter in 2006, an increase attributed to costs associated with operating a larger fleet.
EBITDA, as adjusted for exceptional items under the terms of the Company’s credit agreement, increased by 26% to $27.9 million for the fourth quarter of 2007, from $22.1 million for the fourth quarter of 2006. (Please see below for a reconciliation of EBITDA to net income).
Based on the fourth quarter results, the Company declared a 4Q 2007 dividend of $0.50 per share and this cash dividend will be paid on or about March 18, 2008 to its shareholders of record as of March 13, 2008.
Results for the years ended December 31, 2007 and 2006
For the year ended December 31, 2007, the Company reported net income of $52,243,980 or $1.24 per share, based on a weighted average of 42,220,160 diluted shares outstanding. Net income included a non-cash compensation charge of $1,118,965 and a non-cash, non-dilutive compensation charge of $3,137,812. Excluding these non-cash charges of $4,256,777, net income for the year was $56,500,757 or $1.34 per share.
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For the year ended December 31, 2006, the Company reported a net income of $33,801,540 or $0.98 per share, based on a weighted average of 34,543,862 diluted shares outstanding. Net income included a non-cash compensation charge of $47,033 and non-cash, non-dilutive compensation charge of $13,023,440. Excluding these non-cash charges, net income for the year was $46,872,013 or $1.36 per share.
All of the Company’s revenues were earned from Time Charters. Gross revenues for the year ended December 31, 2007 were $135,412,594, an increase of 19% from the $113,900,922 recorded in 2006. Net revenues include the non-cash charge of amortization of net prepaid and deferred revenues of $3,740,000 recorded in 2007 compared to $3,462,000 recorded in 2006. Brokerage commissions incurred on revenues earned were $6,857,790 and $5,790,725 in 2007 and 2006, respectively. Net revenues for the year ended December 31, 2006 were $124,814,804 compared to $104,648,197 for 2006. Net revenues for 2007 were significantly higher than 2006 due to the operation of a larger fleet and an increase in daily time charter rates.
Vessel expenses for the year ended December 31, 2007 were $27,143,515 compared to $21,562,034 for 2006. The increase in vessel expenses is attributable to a larger fleet size in operation for 2007 which increased ownership days to 6,166 days in 2007 from 5,288 days in 2006. Vessel expenses for the year ended December 31, 2007 included $25,338,098 in vessel operating costs and $1,805,417 in technical management fees. For the year ended December 31, 2006, vessel expenses included $20,070,181 in vessel operating costs and $1,491,853 in technical management fees.
General and administrative expenses for the years ended December 31, 2007 and 2006 were $7,519,734 and $5,222,875, respectively, an increase attributed to costs associated with operating a larger fleet.
The Company records non cash compensation charges relating to its stock incentive plan. For 2007 and 2006, such amounts recorded were $1,118,965 and $47,033 respectively. The Company had also recorded non-cash, non-dilutive, compensation charges relating to profits interests awarded to members of the Company’s management by the Company’s former principal shareholder Eagle Ventures LLC. The profits interests diluted only the interests of the owners of Eagle Ventures LLC, and not holders of the Company’s common stock. However, Generally Accepted Accounting Principles require that share-based awards to an employee of the Company by a shareholder (such as Eagle Ventures LLC) be accounted for as compensation for services provided to the Company. Consequently, the Company’s statement of operations reflects non-cash non-dilutive compensation charges related to the profits interests in Eagle Ventures LLC. For 2007 and 2006, such amounts recorded were $3,137,812 and $13,023,440, respectively.
The 2007 EBITDA, as adjusted for exceptional items under the terms of the Company’s credit agreement, increased by 20% to $99.4 million from $82.7 million in 2006. (Please see below for a reconciliation of EBITDA to net income).
The Company has entered into interest rate swaps to effectively convert a significant portion of its outstanding debt from a floating to a fixed-rate basis. The swaps are designated and qualify as cash flow hedges. As of December 31, 2007, the Company had outstanding swap contracts totaling $515,711,599. These contracts mature between September 2009 and August 2012. The fixed rates of interest range between 4.22% and 5.24%. The Company records the fair value of the interest rate swap as an asset or liability on the balance sheet. The effective portion of the swap is recorded in accumulated other comprehensive income. Accordingly, $13,531,883 and $2,936,804 have been recorded in Other Liabilities and Other Assets in the Company’s financial statements as of December 31, 2007 and December 31, 2006, respectively.
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The Company has entered into foreign exchange swaps to hedge foreign currency risks to its vessel newbuilding contracts in Japan. In 2007, the Company swapped a total of 11.5 billion in Japanese yen currency exposure into the equivalent of $100,063,305. At December 31, 2007, the Company had outstanding foreign currency swap contracts for notional amounts aggregating 11.28 billion Japanese yen swapped into equivalent $104,259,998. The fair value of the currency swaps is recorded as an asset or liability in the financial statements. The effective portion of the swap is recorded in accumulated other comprehensive income. Accordingly, an amount of $932,638 and $359,180 has been recorded in Other Assets and Other Liabilities in the Company’s financial statements as of December 31, 2007 and December 31, 2006, respectively.
Newbuilding Program
As of December 31, 2007, the Company had entered into contracts with shipyards in Japan and China for the construction of a total of 35 Supramax vessels. The first of these vessels is expected to deliver to the Company in the third quarter of 2008. The Company is expecting to take delivery of three vessels in 2008 and the remainder will deliver between 2009 and 2012.
During 2007, the Company entered into contracts for the construction of three Supramax vessels at IHI Marine United, a shipyard in Japan. The Company now has entered into contracts for the construction of a total of five Supramax vessels at IHI. These five vessel construction contracts are Japanese yen based and the total cost of these contracts in US dollars is $167,172,089. The Company will incur additional associated costs relating to the construction of these vessels. As of December 31, 2007, the Company has advanced $62,912,091 in progress payments towards these contracts. These vessels are expected to be delivered between 2008 and 2010.
The Company is also constructing 30 Supramax newbuilding vessels at the Sinopacific Shipbuilding Group’s shipyard in China. The total cost of the newbuilding vessel construction project in China is approximately $1,269,000,000 and associated capitalized financing, legal and technical supervision costs. The Company also has options to build five additional Supramax vessels at the shipyard and these options expire on March 31, 2008. These vessels are expected to be delivered between 2008 and 2012. The Company will periodically advance construction payments to the shipyard and incur additional associated costs relating to the construction of these vessels. As of December 31, 2007, the Company has advanced $270,940,000 in progress payments towards this newbuilding project.
The Company has incurred an additional $11,002,871 in capitalized interest costs and costs associated with the technical supervision and legal and other costs relating to the construction of these newbuilding vessels. At December 31, 2007, total advances for vessel construction was $344,854,962.
Liquidity and Capital Resources
Net cash provided by operating activities during the years ended December 31, 2007 and 2006 was $82,889,373 and $70,535,078, respectively. The increase was primarily due to cash generated from the operation of the fleet for 6,166 operating days in 2007 compared to 5,288 operating days in 2006.
Net cash used in investing activities during 2007, was $446,250,566 compared to $130,759,211 during 2006. For the year ended December 31, 2007, net cash used by investing activities primarily related to the purchase of three modern second-hand Supramax vessels and fleet improvements for $139,033,326, payment on the newbuilding program of $319,228,722 (including advances, capitalized interest, legal and supervision fees) offset by the proceeds of $12,011,782 from the sale of one vessel. For the year ended December 31, 2006, net cash used by investing activities primarily related to the purchase of three modern second-hand supramax vessels and fleet improvements for $105,591,698, and payments for the newbuilding program of $25,167,513 (including advances, capitalized interest, legal and supervision).
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Net cash provided by financing activities during 2007 was $493,989,394. During 2007, the Company received $234,206,147 in net proceeds from the sale of shares of its common stock. We borrowed $369,708,070 from our revolving credit facility, of which an amount of $36,344,000 was used to partly fund the purchase of the three vessels, and $333,364,070 was used to fund the advances for the construction of newbuilding vessels and pay $12,000,000 in financing costs associated with the amended credit facility. We used $12,440,000 from the proceeds of the sale of the SHIKRA to repay borrowings from the revolving credit facility. We also paid $82,134,982 in dividends. Net cash provided by financing activities during 2006, was $57,973,096 which primarily consisted of $33,000,000 in gross proceeds from the issue of shares of the Company’s common stock, borrowings of $99,974,820 from the Company’s revolving credit facility, net of $71,729,500 paid in dividends.
As of December 31, 2007, our cash balance was $152,903,692 compared to a cash balance of $ 22,275,491 at December 31, 2006. In addition, $9,000,000 in cash deposits are maintained with our lender for loan compliance purposes and this amount is recorded in Restricted Cash on our balance sheet as of December 31, 2007. Also recorded in Restricted Cash is an amount of $124,616 which is collateralizing a letter of credit relating to our office lease.
On October 19, 2007, the Company amended its revolving credit facility to a $1,600,000,000 senior secured revolving credit facility underwritten by its sole lender. The revolving credit facility will be available to pay the remaining installments and associated costs relating to the construction of the Company’s newbuilding vessels. The facility also provides working capital of up to $20,000,000; and provides funds for the acquisition of additional drybulk vessels. At December 31, 2007, $1,002,757,110 is available for additional borrowings under the credit facility.
The facility has a term of 10 years and is available in full until July 2012 when availability will begin to reduce in 10 semi-annual reductions of $75,000,000 with a full repayment in July 2017. The facility bears interest at the rate of 0.80% to 0.90% over LIBOR, depending upon the amount of debt drawn as a percentage of the value of the Company’s vessels. The Company will also pay on a quarterly basis a commitment fee of 0.25% per annum on the undrawn portion of the facility.
We anticipate that our current financial resources, together with cash generated from operations and, if necessary, borrowings under our revolving credit facility will be sufficient to fund the operations of our fleet, including our working capital requirements, for at least the next 12 months. Our amended and enhanced credit facility also provides us with the funds required to meet our newbuilding commitments. We were in compliance with all of the covenants contained in our debt agreements as of December 31, 2007.
It is our intention to fund our future acquisition related capital requirements initially through borrowings under the amended and increased revolving credit facility and to repay all or a portion of such borrowings from time to time with the net proceeds of equity issuances. On December 31, 2007, the Company filed an S-3 shelf registration which would enable the Company to issue such securities. We believe that funds will be available to support our growth strategy, which involves the acquisition of additional vessels, and will allow us to pay dividends to our stockholders as contemplated by our dividend policy.
Disclosure of Non-GAAP Financial Measures
EBITDA represents operating earnings before extraordinary items, depreciation and amortization, interest expense, and income taxes, if any. EBITDA is included because it is used by certain investors to measure a company’s financial performance. EBITDA is not an item recognized by GAAP and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United
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States or as a measure of profitability or liquidity. EBITDA is presented to provide additional information with respect to the Company’s ability to satisfy its obligations including debt service, capital expenditures, and working capital requirements. While EBITDA is frequently used as a measure of operating results and the ability to meet debt service requirements, the definition of EBITDA used here may not be comparable to that used by other companies due to differences in methods of calculation.
The Company’s revolving credit facility permits it to pay dividends in amounts up to cumulative cash flows which is its earnings before extraordinary or exceptional items, interest, taxes, depreciation and amortization (Credit Agreement EBITDA), less the aggregate amount of interest incurred and net amounts payable under interest rate hedging agreements during the relevant period and an agreed upon reserve for dry-docking, provided that there is not a default or breach of loan covenant under the credit facility and the payment of the dividends would not result in a default or breach of a loan covenant. Therefore, the Company believes that this non-GAAP measure is important for its investors as it reflects its ability to pay dividends. The following table is a reconciliation of net income, as reflected in the consolidated statements of operations, to the Credit Agreement EBITDA for the three-month periods ended December 31, 2007 and 2006 and for the years ended December 31, 2007 and 2006
| | Three Months
ended December 31,
2007 | | Three Months
ended December 31,
2006 | | Year ended
December 31,
2007 | | Year ended
December 31,
2006 | |
Net Income/(Loss) | | $ | 16,329,603 | | $ | 4,516,566 | | $ | 52,243,981 | | $ | 33,801,540 | |
Interest Expense | | | 2,951,565 | | | 3,184,607 | | | 12,741,106 | | | 10,548,616 | |
Depreciation and Amortization | | | 7,356,135 | | | 6,074,496 | | | 26,435,646 | | | 21,812,486 | |
Amortization of Prepaid and Deferred Revenue | | | 500,000 | | | 1,026,500 | | | 3,740,000 | | | 3,462,000 | |
EBITDA | | | 27,137,303 | | | 14,802,169 | | | 95,160,733 | | | 69,624,642 | |
Adjustments for Exceptional Items: | | | | | | | | | | | | | |
Non-cash Compensation Expense (1) | | | 752,584 | | | 7,302,118 | | | 4,256,777 | | | 13,070,473 | |
Credit Agreement EBITDA | | $ | 27,889,887 | | $ | 22,104,287 | | $ | 99,417,510 | | $ | 82,695,115 | |
(1) | Stock-based compensation related to stock options, restricted stock units, and management’s participation in profits interests in Eagle Ventures LLC. |
Capital Expenditures and Drydocking
The Company’s capital expenditures relate to the purchase of vessels and capital improvements to acquired vessels, which are expected to enhance the revenue earning capabilities and safety of these vessels. In addition to the capital expenditures on newbuilding vessels as described above, major capital expenditures include funding the Company’s maintenance program of regularly scheduled drydocking necessary to preserve the quality of our vessels as well as to comply with international shipping standards and environmental laws and regulations. Although the Company has some flexibility regarding the timing of its drydocking, the costs are relatively predictable. Management anticipates that vessels are to be drydocked every two and a half years. Funding of these requirements is anticipated to be met with cash from operations. The Company anticipates that this process of recertification will require it to reposition these vessels from a discharge port to shipyard facilities, which will reduce available days and operating days during that period.
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In the years ended December 31, 2007 and December 31, 2006, the Company has spent $3,624,851 and $2,324,726, respectively, on vessel drydockings. These amounts are amortized to expense on a straight-line basis over the period through the date the next drydockings are scheduled to become due. The following table represents certain information about the estimated costs for anticipated vessel drydockings in 2008 along with the allocation of anticipated off-hire days:
Quarter Ending | | Off-hire Days(1) | | Projected Costs(2) | |
March 31, 2008 | | 15 | | $ | 0.50 million | |
June 30, 2008 | | 15 | | $ | 0.50 million | |
September 30, 2008 | | 60 | | $ | 2.00 million | |
December 31, 2008 | | 15 | | $ | 0.50 million | |
(1) | Actual length of drydocking will vary based on the condition of the vessel, yard schedules and other factors. |
(2) | Actual costs will vary based on various factors, including where the drydockings are actually performed. |
Summary Consolidated Financial and Other Data:
The following table summarizes the Company’s selected consolidated financial and other data for the periods indicated below.
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EAGLE BULK SHIPPING INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| | Year ended
December 31,
2007 | | Year ended
December 31,
2006 | | Three Months
ended
December 31,
2007 | | Three Months
ended
December 31,
2006 | |
Revenues, net of commissions | | $ | 124,814,804 | | $ | 104,648,197 | | $ | 35,612,521 | | $ | 28,393,932 | |
Vessel Expenses | | | 27,143,515 | | | 21,562,034 | | | 7,393,813 | | | 5,819,577 | |
Depreciation and Amortization | | | 26,435,646 | | | 21,812,486 | | | 7,356,135 | | | 6,074,496 | |
General and Administrative Expenses | | | 7,519,734 | | | 5,222,875 | | | 2,731,760 | | | 1,856,467 | |
Non-cash Compensation Expense | | | 4,256,777 | | | 13,070,473 | | | 752,584 | | | 7,302,118 | |
Gain on Sale of Vessel | | | (872,568 | ) | | — | | | — | | | — | |
Total Operating Expenses | | | 64,483,104 | | | 61,667,868 | | | 18,234,292 | | | 21,052,658 | |
Operating Income | | | 60,331,700 | | | 42,980,329 | | | 17,378,229 | | | 7,341,274 | |
Interest Expense | | | 12,741,106 | | | 10,548,616 | | | 2,951,565 | | | 3,184,607 | |
Interest Income | | | (4,653,387 | ) | | (1,369,827 | ) | | (1,902,939 | ) | | (359,899 | ) |
Net Interest Expense | | | 8,087,719 | | | 9,178,789 | | | 1,048,626 | | | 2,824,708 | |
Net Income | | $ | 52,243,981 | | $ | 33,801,540 | | $ | 16,329,603 | | $ | 4,516,566 | |
Weighted Average Shares Outstanding: | | | | | | | | | | | | | |
Basic | | | 42,064,911 | | | 34,543,836 | | | 46,727,153 | | | 35,900,001 | |
Diluted | | | 42,220,160 | | | 34,543,862 | | | 46,948,385 | | | 35,900,678 | |
Per Share Amounts: | | | | | | | | | | | | | |
Basic Net Income | | $ | 1.24 | | $ | 0.98 | | $ | 0.35 | | $ | 0.13 | |
Diluted Net Income | | $ | 1.24 | | $ | 0.98 | | $ | 0.35 | | $ | 0.13 | |
Cash dividends declared and paid | | $ | 1.98 | | $ | 2.08 | | $ | 0.50 | | $ | 0.51 | |
| | | | | | | | | | | | | |
Fleet Operating Data | | | | | | | | | | | | | |
Number of Vessels in Operating fleet | | | 18 | | | 16 | | | 18 | | | 16 | |
Fleet Ownership Days | | | 6,166 | | | 5,288 | | | 1,656 | | | 1,472 | |
Fleet Available Days | | | 6,073 | | | 5,224 | | | 1,633 | | | 1,472 | |
Fleet Operating Days | | | 6,039 | | | 5,203 | | | 1,622 | | | 1,469 | |
Fleet Utilization Days | | | 99.4 | % | | 99.6 | % | | 99.3 | % | | 99.8 | % |
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EAGLE BULK SHIPPING INC.
CONSOLIDATED BALANCE SHEETS
| | | December 31, 2007 | | | December 31, 2006 | |
ASSETS: | | | | | | | |
Current Assets: | | | | | | | |
Cash | | $ | 152,903,692 | | $ | 22,275,491 | |
Accounts Receivable | | | 3,392,461 | | | 616,205 | |
Prepaid Charter Revenue | | | — | | | 3,740,000 | |
Prepaid Expenses | | | 1,158,113 | | | 1,020,821 | |
Total Current Assets | | | 157,454,266 | | | 27,652,517 | |
Fixed Assets: | | | | | | | |
Vessels and Vessel Improvements, at cost, net of Accumulated
Depreciation of $52,733,604 and $31,415,604 respectively | | |
605,244,861
| | |
502,141,951
| |
Advances for Vessel Construction | | | 344,854,962 | | | 25,190,941 | |
Restricted Cash | | | 9,124,616 | | | 6,524,616 | |
Deferred Drydock Costs, net of Accumulated Amortization of
$2,453,253 and $809,109 respectively | | |
3,918,006
| | |
1,937,299
| |
Deferred Financing Costs | | |
14,479,024
| | |
2,406,839
| |
Other Assets | | | 932,638 | | | 2,936,804 | |
Total Assets | | $ | 1,136,008,373 | | $ | 568,790,967 | |
LIABILITIES & STOCKHOLDERS’ EQUITY | | | | | | | |
Current Liabilities: | | | | | | | |
Accounts Payable | | $ | 3,621,559 | | $ | 1,650,159 | |
Accrued Interest | | | 455,750 | | | 800,683 | |
Other Accrued Liabilities | | | 1,863,272 | | | 1,717,124 | |
Unearned Charter Hire Revenue | | | 4,322,024 | | | 2,713,060 | |
Total Current Liabilities | | | 10,262,605 | | | 6,881,026 | |
Long-term Debt | | | 597,242,890 | | | 239,974,820 | |
Other Liabilities | | | 13,531,883 | | | 359,180 | |
Total Liabilities | | | 621,037,378 | | | 247,215,026 | |
Commitment and Contingencies | | | | | | | |
Stockholders’ Equity: | | | | | | | |
Preferred Stock, $.01 par value, 25,000,000 shares authorized, none issued | | | — | | | — | |
Common stock, $.01 par value, 100,000,000 shares authorized, 46,727,153 and 35,900,001 shares issued and outstanding respectively | | |
467,271
| | |
359,000
| |
Additional Paid-In Capital | | | 602,929,530 | | | 364,574,877 | |
Retained Earnings (net of Dividends declared of $168,525,482 and $86,390,500 as of December 31, 2007 and 2006, respectively) | | |
(75,826,561
| ) | |
(45,935,560
| ) |
Accumulated Other Comprehensive (Loss)/Income | | | (12,599,245 | ) | | 2,577,624 | |
Total Stockholders’ Equity | | | 514,970,995 | | | 321,575,941 | |
Total Liabilities and Stockholders’ Equity | | $ | 1,136,008,373 | | $ | 568,790,967 | |
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EAGLE BULK SHIPPING INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | Year Ended 2007 | | | Year Ended 2006 | |
Cash Flows from Operating Activities | | | | | | | |
Net Income | | $ | 52,243,981 | | $ | 33,801,540 | |
Adjustments to Reconcile Net Income to Net Cash provided by Operating Activities: | | | | | | | |
Items included in net income not affecting cash flows: | | | | | | | |
Depreciation | | | 24,791,502 | | | 21,031,357 | |
Amortization of Deferred Drydocking Costs | | | 1,644,144 | | | 781,129 | |
Amortization of Deferred Financing Costs | | | 242,357 | | | 178,246 | |
Amortization of Prepaid and Deferred Charter Revenue | | | 3,740,000 | | | 3,462,000 | |
Gain on Sale of Vessel | | | (872,568 | ) | | — | |
Non-cash Compensation Expense | | | 4,256,777 | | | 13,070,473 | |
Changes in Operating Assets and Liabilities: | | | | | | | |
Accounts Receivable | | | (2,776,256 | ) | | (335,111 | ) |
Prepaid Expenses | | | (137,292 | ) | | (507,676 | ) |
Accounts Payable | | | 1,971,400 | | | (469,199 | ) |
Accrued Interest | | | (344,933 | ) | | 286,052 | |
Accrued Expenses | | | 146,148 | | | 1,292,455 | |
Drydocking Expenditures | | | (3,624,851 | ) | | (2,324,726 | ) |
Unearned Charter Hire Revenue | | | 1,608,964 | | | 268,538 | |
Net Cash Provided by Operating Activities | | | 82,889,373 | | | 70,535,078 | |
Cash Flows from Investing Activities | | | | | | | |
Purchase of Vessels and Improvements | | | (139,033,326 | ) | | (105,591,698 | ) |
Advances for Vessel Construction | | | (319,228,722 | ) | | (25,167,513 | ) |
Proceeds from Sale of Vessel | | | 12,011,482 | | | — | |
Net Cash Used in Investing Activities | | | (446,250,566 | ) | | (130,759,211 | ) |
Cash Flows from Financing Activities | | | | | | | |
Issuance of Common Stock | | | 239,848,264 | | | 33,000,000 | |
Equity Issuance Costs | | | (5,642,117 | ) | | (2,031,920 | ) |
Bank Borrowings | | | 369,708,070 | | | 99,974,820 | |
Repayment of Bank Debt | | | (12,440,000 | ) | | — | |
Changes in Restricted Cash | | | (2,600,000 | ) | | 100,000 | |
Deferred Financing Costs | | | (12,749,841 | ) | | (1,340,304 | ) |
Cash Dividend | | | (82,134,982 | ) | | (71,729,500 | ) |
Net Cash Provided by Financing Activities | | | 493,989,394 | | | 57,973,096 | |
Net Increase/(Decrease) in Cash | | | 130,628,201 | | | (2,251,037 | ) |
Cash at Beginning of Period | | | 22,275,491 | | | 24,526,528 | |
Cash at End of Period | | $ | 152,903,692 | | $ | 22,275,491 | |
Commercial and strategic management of the fleet is carried out by a wholly-owned subsidiary of the Company, Eagle Shipping International (USA) LLC, a Marshall Islands limited liability company with offices in New York City.
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The following table represents certain information about the Company’s revenue earning charters on its operating fleet as of December 31, 2007:
Vessel | | Year
Built | | Dwt | | Delivered to
Charterer | | Time Charter Expiration (1) | | Daily Time
Charter Hire
Rate |
Cardinal | | 2004 | | 55,408 | | June 21, 2007 | | May 2008 to August 2008 | | $28,000 |
Condor (2) | | 2001 | | 50,296 | | March 19, 2007 | | May 2009 to August 2009 | | $20,500 |
Falcon (3) | | 2001 | | 50,296 | | April 22, 2005 | | February 2008 to June 2008 | | $20,950 |
Griffon | | 1995 | | 46,635 | | March 18, 2007 | | March 2009 to June 2009 | | $20,075 |
Harrier (4) | | 2001 | | 50,296 | | June 21, 2007 | | June 2009 to September 2009 | | $24,000 |
Hawk I | | 2001 | | 50,296 | | April 1, 2007 | | April 2009 to June 2009 | | $22,000 |
Heron (5) | | 2001 | | 52,827 | | December 11, 2005 | | December 2007 to February 2008 | | $24,000 |
Jaeger (6) | | 2004 | | 52,248 | | July 12, 2007 | | July 2008 to September 2008 | | $27,500 |
Kestrel I (7) | | 2004 | | 50,326 | | July 1, 2006 | | December 2007 to April 2008 | | $18,750 |
Kite | | 1997 | | 47,195 | | August 11, 2007 | | September 2009 to January 2010 | | $21,000 |
Merlin(8) | | 2001 | | 50,296 | | December 19, 2007 | | December 2010 to March 2011 | | $25,000 |
Osprey I (9) | | 2002 | | 50,206 | | September 1, 2005 | | July 2008 to November 2008 | | $21,000 |
Peregrine | | 2001 | | 50,913 | | December 16, 2006 | | December 2008 to March 2009 | | $20,500 |
Sparrow (10) | | 2000 | | 48,225 | | January 27, 2007 | | December 2007 to March 2008 | | $24,000 |
Tern (11) | | 2003 | | 50,200 | | July 3, 2006 | | December 2007 to April 2008 | | $19,000 |
Shrike (12) | | 2003 | | 53,343 | | April 24, 2007 | | April 2009 to August 2009 | | $24,600 |
Skua (13) | | 2003 | | 53,350 | | June 20, 2007 | | May 2009 to August 2009 | | $24,200 |
Kittiwake (14) | | 2002 | | 53,146 | | June 27, 2007 | | May 2008 to August 2008 | | $30,400 |
(1) | The date range provided represents the earliest and latest date on which the charterer may redeliver the vessel to the Company upon the termination of the charter. |
(2) | The charterer of the CONDOR has exercised its option to extend the charter period by 11 to 13 months at a time charter rate of $22,000 per day. |
(3) | Upon conclusion of the current charter, the FALCON commences a new time charter with a rate of $39,500 per day for 21 to 23 months. The charterer has an option to extend the charter period by 11 to 13 months at a daily time charter rate of $41,000. |
(4) | The daily rate for the HARRIER is $27,000 for the first year and $21,000 for the second year. Revenue recognition is based on an average daily rate of $24,000. |
(5) | Upon conclusion of the current charter, the HERON commences a new time charter with a rate of $26,375 per day for 36 to 39 months. The charterer has an option for a further 11 to 13 months at a time charter rate of $27,375 per day. The charterer has a second option for a further 11 to 13 months at a time charter rate of $28,375 per day. |
(6) | The charter rate for the JAEGER may reset at the beginning of each month based on the average time charter rate for the Baltic Supramax Index, but in no case less than $22,500 per day. |
(7) | The charterer of the KESTREL I has exercised its option to extend the charter period by 11 to 13 months at a daily time charter rate of $20,000 per day. |
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(8) | The daily rate for the MERLIN is $27,000 for the first year, $25,000 for the second year and $23,000 for the third year. Revenue recognition is based on an average daily rate of $25,000. |
(9) | The charterer of the OSPREY I has exercised its option to extend the charter period by 11 to 13 months at a time charter rate of $25,000 per day. The charterer has an additional option to extend for a further 11 to 13 months at a time charter rate of $25,000 per day. |
(10) | The SPARROW is on a time charter at a base rate of $24,000 per day for 11 to 13 months with a profit share of 30% of up to the first $3,000 per day over the base rate. Upon conclusion of the charter, the SPARROW commences a new 24 to 26 month time charter at a rate of $34,500 per day. |
(11) | The charterer of the TERN has exercised its option to extend the charter period by 11 to 13 months at a time charter rate of $20,500 per day. |
(12) | The charterer of the SHRIKE has an option to extend the charter period by 12 to 14 months at a daily time charter rate of $25,600. |
(13) | The charterer of the SKUA has an option to extend the charter period by 11 to 13 months at a daily time charter rate of $25,200. |
(14) | The charter rate for the KITTIWAKE may reset at the beginning of each month based on the average time charter rate for the Baltic Supramax Index, but in no case less than $24,400 per day. |
As of December 31, 2007, the Company has contracted for 35 vessels to be constructed. The following table represents certain information about the Company’s newbuilding vessels and their employment upon delivery:
Vessel | | Dwt | | Year
Built -
Expected
Delivery (1) | | Time Charter Employment
Expiration (2) | | Daily Time
Charter
Hire Rate (3) | | Profit Share | |
Crowned Eagle | | 56,000 | | Nov 2008 | | Charter Free | | — | | — | |
Crested Eagle | | 56,000 | | Feb 2009 | | Charter Free | | — | | — | |
Stellar Eagle | | 56,000 | | Apr 2009 | | Charter Free | | — | | — | |
Golden Eagle | | 56,000 | | Jan 2010 | | Charter Free | | — | | — | |
Imperial Eagle | | 56,000 | | Feb 2010 | | Charter Free | | — | | — | |
Wren | | 53,100 | | Aug 2008 | | Feb 2012 Feb 2012 to Dec 2018/Apr 2019 | | $24,750 $18,000 | | — 50% over $22,000 | |
Woodstar | | 53,100 | | Oct 2008 | | Jan 2014 Jan 2014 to Dec 2018/Apr 2019 | | $18,300 $18,000 | | — 50% over $22,000 | |
Thrush | | 53,100 | | Sep 2009 | | Charter Free | | — | | — | |
Thrasher | | 53,100 | | Nov 2009 | | Feb 2016 | | $18,400 | | — | |
| | | | | | Feb 2016 to Dec 2018/Apr 2019 | | $18,000 | | 50% over $22,000 | |
Avocet | | 53,100 | | Dec 2009 | | Mar 2016 | | $18,400 | | — | |
| | | | | | Mar 2016 to Dec 2018/Apr 2019 | | $18,000 | | 50% over $22,000 | |
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Bittern | | 58,000 | | Sep 2009 | | Dec 2014 | | $18,850 | | — | |
| | | | | | Dec 2014 to Dec 2018/Apr 2019 | | $18,000 | | 50% over $22,000 | |
Canary | | 58,000 | | Oct 2009 | | Jan 2015 | | $18,850 | | — | |
| | | | | | Jan 2015 to Dec 2018/Apr 2019 | | $18,000 | | 50% over $22,000 | |
Crane | | 58,000 | | Nov 2009 | | Feb 2015 | | $18,850 | | — | |
| | | | | | Feb 2015 to Dec 2018/apr 2019 | | $18,000 | | 50% over $22,000 | |
Egret (4) | | 58,000 | | Dec 2009 | | Sep 2012 to Jan 2013 | | $17,650 | | 50% over $20,000 | |
Gannet (4) | | 58,000 | | Jan 2010 | | Oct 2012 to Feb 2013 | | $17,650 | | 50% over $20,000 | |
Grebe(4) | | 58,000 | | Feb 2010 | | Nov 2012 to Mar 2013 | | $17,650 | | 50% over $20,000 | |
Ibis (4) | | 58,000 | | Mar 2010 | | Dec 2012 to Apr 2013 | | $17,650 | | 50% over $20,000 | |
Jay | | 58,000 | | Apr 2010 | | Sep 2015 | | $18,500 | | 50% over $21,500 | |
| | | | | | Sep 2015 to Dec 2018/Apr 2019 | | $18,000 | | 50% over $22,000 | |
Kingfisher | | 58,000 | | May 2010 | | Oct 2015 | | $18,500 | | 50% over $21,500 | |
| | | | | | Oct 2015 to Dec 2018/Apr 2019 | | $18,000 | | 50% over $22,000 | |
Martin | | 58,000 | | Jun 2010 | | Dec 2016 to Dec 2017 | | $18,400 | | — | |
Nighthawk | | 58,000 | | Mar 2011 | | Sep 2017 to Sep 2018 | | $18,400 | | — | |
Oriole | | 58,000 | | Jul 2011 | | Jan 2018 to Jan 2019 | | $18,400 | | — | |
Owl | | 58,000 | | Aug 2011 | | Feb 2018 to Feb 2019 | | $18,400 | | — | |
Petrel (4) | | 58,000 | | Sep 2011 | | Jun 2014 to Oct 2014 | | $17,650 | | 50% over $20,000 | |
Puffin (4) | | 58,000 | | Oct 2011 | | Jul 2014 to Nov 2014 | | $17,650 | | 50% over $20,000 | |
Roadrunner (4) | | 58,000 | | Nov 2011 | | Aug 2014 to Dec 2014 | | $17,650 | | 50% over $20,000 | |
Sandpiper (4) | | 58,000 | | Dec 2011 | | Sep 2014 to Jan 2015 | | $17,650 | | 50% over $20,000 | |
Snipe | | 58,000 | | Jan 2012 | | Charter Free | | — | | — | |
Swift | | 58,000 | | Feb 2012 | | Charter Free | | — | | — | |
Raptor | | 58,000 | | Mar 2012 | | Charter Free | | — | | — | |
Saker | | 58,000 | | Apr 2012 | | Charter Free | | — | | — | |
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Besra (5) | | 58,000 | | Oct 2011 | | Charter Free | | — | | — | |
Cernicalo (5) | | 58,000 | | Jan 2011 | | Charter Free | | — | | — | |
Fulmar (5) | | 58,000 | | Jul 2011 | | Charter Free | | — | | — | |
Goshawk (5) | | 58,000 | | Sep 2011 | | Charter Free | | — | | — | |
(1) | Vessel build and delivery dates are estimates based on guidance received from shipyard. |
(2) | The date range represents the earliest and latest date on which the charterer may redeliver the vessel to the Company upon the termination of the charter. |
(3) | The time charter hire rates presented are gross daily charter rates before brokerage commissions ranging from 2.25% to 6.25% to third party ship brokers. |
(4) | The charterer has an option to extend the charter by two periods of 11 to 13 months each. |
(5) | Options for construction exercised on December 27, 2007. |
Glossary of Terms:
Ownership days: The Company defines ownership days as the aggregate number of days in a period during which each vessel in its fleet has been owned. Ownership days are an indicator of the size of the fleet over a period and affect both the amount of revenues and the amount of expenses that is recorded during a period.
Available days: The Company defines available days as the number of ownership days less the aggregate number of days that its vessels are off-hire due to vessel familiarization upon acquisition, scheduled repairs or repairs under guarantee, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues.
Operating days: The Company defines operating days as the number of its available days in a period less the aggregate number of days that the vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.
Conference Call Information
As previously announced, members of Eagle Bulk’s senior management team will host a teleconference and webcast at 8:30 a.m. ET on February 28, 2008, to discuss these results.
To participate in the teleconference, investors and analysts are invited to call 800-561-2813 in the U.S., or 617-614-3529 outside of the U.S., and reference participant code 32085525. A simultaneous webcast can be accessed by visiting the Company’s website at: www.eagleships.com
IMPORTANT: Investors participating in the teleconference are encouraged to access an accompanying slide presentation, which management will reference during the call. This presentation will be available at www.eagleships.com. A replay will be available following the call until 12:00 a.m. ET on March 5, 2008. To access the replay, call 888-286-8010 in the U.S., or 617-801-6888 outside of the U.S., and reference passcode 90615436.
About Eagle Bulk Shipping Inc.
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Eagle Bulk Shipping Inc. is a Marshall Islands corporation headquartered in New York. The Company is the largest U.S. based owner of Handymax dry bulk vessels. Handymax vessels range in size from 35,000 to 60,000 deadweight tons and transport a broad range of major and minor bulk cargoes, including iron ore, coal, grain, cement and fertilizer, along worldwide shipping routes.
Forward-Looking Statements
Matters discussed in this release may constitute forward-looking statements. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.
The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although Eagle Bulk Shipping Inc. believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, Eagle Bulk Shipping Inc. cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.
Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled drydocking, changes in our vessel operating expenses, including dry-docking and insurance costs, or actions taken by regulatory authorities, potential liability from future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.
Risks and uncertainties are further described in reports filed by Eagle Bulk Shipping Inc. with the US Securities and Exchange Commission.
Visit our website at www.eagleships.com
Contact:
Company Contact:
Alan Ginsberg
Chief Financial Officer
Eagle Bulk Shipping Inc.
Tel. +1 212-785-2500
Investor Relations / Media:
Jon Morgan
Perry Street Communications, New York
Tel. +1 212-741-0014
Source: Eagle Bulk Shipping Inc.
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