EGLE - Earnings call transcript Q2 2018

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Operator

Greetings, and welcome to the Eagle Bulk Shipping Second Quarter 2018 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] And as a reminder, today’s conference is being recorded. I would now like to turn the call over to Mr. Officer Bulk Executive Chief Vogel, of Shipping. Eagle Gary you may begin. Sir,

Gary Vogel

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

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

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

update then environment on first rate an quarter business, fundamentals. on with by brief will detailed with industry our our update a and review second followed We financials, provide you a proceed of the

Please the Slide open call closing some with now We will conclude then and X. up for to questions. turn any remarks,

consecutive performance beat outperformance net or to model period TCE model our drive able superior execute during BSI. marks over and management adjusted our able for of am the value outperform and a $X,XXX that the BSI. the the $XX,XXX day believe second representing the sixth I quarter team’s per Baltic and deliver to to been underscores second it. of which to Supramax continue compared the business our on I fleet renewal being business ability to pleased to report equated to quarter Eagle. per as active day, differentiated significance for Our we’ve TCE in consistency Index,

of terms we a previously purchase, Avocet, sale a on Supramax. XXXX-built the in to and Thrush, the In XX Diamond early agreement Supramax XX sale we and And reported, as XXXX-built of April. into Diamond closed an sell entered the

SDARI-XX totaled driven through value million. for On certain EBITDA, and the for XX% XXX% to from ability non-cash quarter-on-quarter improvement by rate model. margin $XX.X our than but quarter, added higher the both is for also being up XXXX-built Ultramax environment, buy just a over management our below side, active more generate adjusted Operating purchased items, we $XX.X year-on-year. million second

adjusted based EBITDA As the right-hand our bulk the quarter all-time towards the low, million depicted by hit results. has the in the dry for Since EBITDA second on XXXX, side when Eagle’s period. of – market slide, million first of over quarter contributed TCE in our chart $XXX $X on an the annualized approximately increased outperformance

below impact in has the third some today. to had from to able an see. period. ships with average available them essentially strong the approximately to on fix we Looking backhaul This Atlantic, repositioning to about the for quarter index into the fall XX% be rates order day, TCE to historically presently are third fixed as our which quarter, market, date, elected days in per Atlantic backhaul expect we benefit $X,XXX our is for quarter TCE third year, the ahead, to $XX,XXX the of on last voyages Similarly

the to a quarter QX left voyages Looking the similar with the impacting TCE. will profile back note graph, took last on you to on of repositioning year,

$XXX of relative the spoken size, benchmark and index Continuing theme performance, relevant streams to performance for such a against our Given appropriate XX specifications, nature taking our account we believe about trading XX on months fuel day. In we the per to the consistently way into ship equated this the individual business, over last June the most regard, revenue long is outperformance in and ending the of evaluate vessels to have speed importance consumption. as lumpy multi-quarter period.

which investment in Chinese you included the BSI For helpful. will than index. it index, example, the a additional we the Supramax, $X to of deadweight compare hope in Chinese performance find similarly on which slide made Supra are compare needs how insignificantly the on more Supramax/Ultramax million based XX,XXX terms a than cost. to BSI about vessel ship. against Ultramax, provides earnings order which order costs five-year-old earnings to of be encourage the typically some aged types an to appendix, this stated, justify various Ultramax the is In to capacity in a reference a needs and guidance you slide, the more We adjustment Simply

years between our the a publication Since recently performance tool, would performance analysts TCE Vesselindex. Additionally, factors performance BSI Eagle’s by TCE group. entering index newer published, calculate descriptions. evaluating advocating to companies results. outperformance Slide was its plus since we We the much Vesselindex, industry number tool ours a Eagle’s tool believe of ago. BSI highlighting been makeup pleased using XX TCE a to article XX% two utilizing model net QX it’s implementation shift this line time a have per relative report an strategy management the important We Basis turn basic Vesselindex’s stack tool, web-based their evaluation an model. for of to I And towards the active be by helpful across and day the normalized third-party allows up compared users $X,XXX on Vesselindex’s industry inquiries in our an performance, against relative with think peer very and of and a is new adjusted or as investors equate can methodology of number the Please An XX. to charter on approximately for how our index compared performance. own produces to about we’ve figures to ran am calculation X the more ship’s than discussion that in article similar specific TCE received focus something of

to in of strategies performance. previous we number active Slide fleet, historical business the explained include third-party The TCE allow opportunistic encompasses hedging as in with These trading maximize execution dynamic voyage a chartering our As vessel end calls, time strategies, management depicts approach our a different us which own users, base. utilizing and chart both X measured of cargo our charter-in on vessel strategy FFAs and arbitrage, bunker and swaps. chartering

quarter, had vessel XXX During we third-party the a of base. total second

higher arbitrage overall ships market net support itself Although charter-in slightly quarter, to drives we’ve to in business opportunities the own volume charter-in We order and charter. goal, advantage as fleet activity to from not as figure Also if and ships our on fleet dislocations. mentioned in and down third-party was cover take of beneficial supplement its is previously, last a income. well of commitments it comprised as cargo XX is distinct only

profile based our our risk on for turn we breadth, as expect make fleet any opportunities they charter-in we of reward commercial present. vessels X number to we the will on makeup. activity expand in and continue our given Although Slide grow the brief a to Please vary take to overtime quarter update

On depict and the strategic a we of growth started renewal plan. side since left-hand slide, we fleet development the fleet own our implement to

into an entered we’ve call, the on Ultramax. SDARI-XX agreement earlier mentioned As acquire XXXX-built to

and agreement quarter, we age. XXth XX and we the purchase. the fleet last around totals expect X.X this generate remained we’ve purchase this of own our three higher sell take of owners Diamond for sell the ability rates. of that time smaller, acquired larger Thrush, efficient age value March, fleet by divested our efficient modern or a expect ship, vessel XXXX-built her that and XX the age and Ultramax years the rename averaging a the We and on the port years forma more vessels newer, vessel delivery noteworthy implementation vessel the averaging were our Eagle’s sale, and an after efficient the around This we years improve XX operations. now It’s of to the we’ve Each to With of over less of vessel mentioned, oldest In a over fourth Eagle acquisition and least and we’ll TCE home average Supramax renewal for the deliver years and deadweight the based Hamburg in new our makeup over tons averaging to city XX older our a to acquire three September. Pro over smallest, fleet in XX XX,XXX in on marks past our months, to upgrade reached the during age. unchanged deliver strategy. and overall our proposition sale has just ships fleet fleet European

fleet we side company. peer composition our group On profile the right-hand Slide of by X, depict

grow older off a the efficiencies, Supramax/Ultramax ships, on large-scale and will market we our the call results Frank, fleet asset like I will across mixed efficient while Eagle and you operating taken opportunities. ones. executing to developments, to model steps regard, the Subject to uniquely class in exist With date it purchasing over in and growth focused selling simply less owns more continue largest continue position of provides a that, versatile to and we’ve as is I fleet one renewal efficient on fleets. who review financial and Owning vital operational turn In remains As achieved the performance. believe strategy, consolidation would world. note, homogeneous Eagle on and business newer this to don’t our now to our the which ingredient the fleets to act and we’ve intend

Frank De Costanzo

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

came commercial were by drydocks increase quarter prior both XXXX. generated non-cash as per expenses was by increase the in available of million, line to same quarter Total and to was $X.X the Revenue, higher result amortization income compared days, to expenses, depreciation, days offset quarter operating in prior of QX, in million quarter. the the same saw and The in higher driven expenses more which both an in company lower prior and voyage quarter quarter hire voyage that charter $XX,XXX charter a XX% expenses, management Revenue, of of believe results model. XXXX, compared the quarter. We revenue, and of prior costs. driven performed driven hire of charter the versus and top the increase with of all the net $X,XXX quarter. compared hire owned the QX active an BSI and million $XX.X the The the from hire as same outperformance as as in than increase revenue a additional net best $XX.X increase expenses, voyage driven XXXX, of decrease XXXX core net from decrease net of second the both increased Operating partially performance. TCE, The than reflects day XX%. five increase during XX%. was in by a was available at in XX% the by our by a company were voyage the in by OpEx of compensation fewer from we net in an second quarter of The fleet. increase our income The numbers, quarter. higher expenses, and X% by voyage charter for expenses However, net reported along for

quarter, earnings quarter the to line improvement in was in we of an in XXXX the $XX.X million quarter QX in the share, from XXXX. and the prior same EBITDA in million. compared the came of Basic loss saw XXXX, and basic increase second in quarter. second XXXX $X.XX XX% approximately of an $X.X for X at per bottom Adjusted As diluted $X.XX of a versus QX EPS, or

saw income from a As EBITDA Both $X.X by adjusted of of EBITDA in compared XXX%. find net adjusted $XX.X EBITDA to increase XXXX, are In the presentation, will we the and measurements. same our EBITDA million of adjusted walk you to million. appendix non-GAAP quarter

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

revolving the $XXX a bond, of approximately an of is to the and $XX.X was $XX now of company’s from $XX XXXX, Let’s balance sheet debt and up Avocet. had totaling $XX increase June Total of made million review and to our the The million the as Total $XXX.X of total as of from cash $XX.X comprised from operations quarter. of million total The of was increase of Facility million sale as turn million. XXXX, liquidity XX Please Ultraco credit and million of undrawn Shipco end the XXXX. proceeds was Norwegian Slide flow. and Slide is from Shipping result XX liquidity. XX of and overview cash an cash LLC QX cash the The million for June XX, end flow company Facility. June for XX, million vessel $XX.X turn generated Bank unchanged is a of debt Bank facilities of the

in at million, second and million QX positive During of quarter the quarter, from the from net $XX.X from XXXX. second XXXX in provided activities up came positive down $X.X cash operating

consecutive result second cash from was The quarter quarter the operations. positive in fourth

demonstrated QX, QX the and between on QX the cash from operations QX positive with that cash significantly from essentially from and the as capital of bars. for The year. the timing-driven cash chart the operations $XX.X This XXXX. shows gray and negative in trend from blue up the time working shows, improved also of operations QX to the positive by making flow top introduces chart slide over volatility from evens the operations, last million As in numbers in as timing significant variability cash continues difference flow in denoted of issues cash out by

the at to chart of the bottom the slide. moving Now

$X.X The $XX close for QX The the positive million, a bars paid at the the vessel QX clearly covering on Let’s which the at strategy. because and sale offset we quarter are the the for cash our I in it in drydocks million of partially is look left, of like number. EBITDA to large XXXX. operating million very find this To bars in right, bars two the will simple changes the the two the the operations. in look themes driving balance out comes chart by adjusted you $X.X and improvements. expenditures, results company’s we revenue the received lays asset, large and net our

Let’s XXXX breakeven of $XXX The than the than QX breakeven. was review for in increase $X,XXX now drydock was $X,XXX, XX an prior was Cash breakeven $XXX higher ship cash per drydocked driven vessel XXXX XXXX per quarter outlier. day QX largely as Slide year quarter QX versus in per in our we by higher vessels expenditures, and a increase day. per five drydocks second during XXXX. The number full the

XXXX at the just and XXXX came XXXX. four $X,XXX, expect We $XX than for remainder OpEx QX the of than QX in lower year $XX drydocks full result. lower

fleets’ benefit and monitoring and the reliability our costs, OpEx As increased equipment performance such expenses conveyed lumpy before, we expenses, appropriate that at fleet came number have $XX and per to average. to to multi-quarter OpEx QX. believe the is payments related stores upfront per hull G&A items under but day, it $X,XXX as at which ship We coatings, the the nature QX from both certain annual includes of upgrading cash a related advanced with up performance. in look given

ship per days to interest $X,XXX QX day would G&A cash when day that noting per calculation, compared in higher six we XXXX of If or year include expense the G&A months number. It chartered in to marginally is have is and QX remained chartered-in vessels. we $X,XXX For in XXXX, $XXX essentially when been QX. different the ship flat compared the to worth XX our per full first is per cash were lower. QX,

turn as my our financials. year company in shields interest For LIBOR XX% is back significantly provide the call to the half in the was primarily It interest of rates. the PIK that higher and will business context the noting second $XXX QX The industry review average. a the concludes of is will around noncash XXXX, expense fixed interest year from higher full XXXX increases than continue the short-term now discussion Gary, XXXX prior part In of first along the of his worth increase fundamentals. I cash of note. the which elimination versus refinancing, This with who lien is of of debt result

Gary Vogel

Frank. to XX% Please second Thank the year-on-year. quarter-on-quarter X% BSI a Slide turn you, XX review for of averaged day The gross $XX,XXX up and rate the quarter, per environment. for

period, significant as by between dark illustrated green Pacific in the chart fairly depict the is also orange. there and Although static the submarket chart, the regional bold in was the throughout blue a realized in was where on markets. index line Atlantic we volatility depicted the This the broader

well as movements Persian cement such Gulf the of the cargoes, as moving movements coal Gulf, cargo strength was market well the of for a and spread, above May the can As that while overhang few which structural spread is during time. market due due as aggregates, from the be have dynamic, including including cargo requires utilizing Africa, you increasing ships, in reasons, of capital. will significant discount Atlantic. region attributed stronger from typically taken of out to bulk the the traded a Pacific China. note Pacific from a Atlantic the to minor Notwithstanding imbalance, Anecdotally, and the trades increased mentioned all Asia. within the a at number delivered the the in Persian Pacific historical well of as in as the to This chart, period as region the reasons, to discount to investment, general repositioning and new the vessels month specifically to a excess earlier, are The India working relatively an fact Atlantic around relative slag Pacific and ship QX, to a Pacific

Pacific market down While season day. well implementation market the the the the strengthened, as period, on as of of by duties sorghum. North averaging grain the American prior $XX,XXX soybeans was as tariffs of stems of to decrease expectation per the both U.S. based influenced export was on from on well China disruption The as Atlantic ending the actual imported

start South helped Atlantic on a to American grain down a crop based Additionally, rates in season, slow Argentina, short the partially somewhat. push

BSI period, date. Atlantic the be tariffs and in market above quarter third presently trading current by continues overall quarter to $XX,XXX further We While overall the with approximately trades as actions. gross the has the rates per uncertainty flat around as day prior to the believe the have sentiment been rebounded relatively Pacific, talk retaliatory impacted to averaging potential as well to

previously, different indicated we’ve still can although as trade new import we patterns, demand impacted did trading tariffs would and of global be emerge to not expect believe a result will disrupt any traditional patterns positive overall will the to believe tariffs overall We efficiencies, trade can be changes negligible be imposed. such as congestion as in may demand miles ton effect impacts actually delays. and create new trades on and As

stated potential Slide to update As real on impact brief the our turn fundamentals. growth. GDP with to global concern supply for a XX rest Please earlier, would

X.X sequential deliveries, typical roughly XX% drop a and basis of the reflects deadweight XX% book. older vessels, tonnage just while significant year-on-year million Demolition shrinking tons. decrease representing or XXX,XXX prior deadweight the period quarter-on-quarter tons amounted representing totaled or quarter, over the seasonal deadweight during tons of quarterly to effect XX The deliveries quarter Newbuilding in the the vessels XX% approximately reflects decrease deadweight. of order decrease basis XX a year-on-year second during

X in Looking this to months just XX, ending supply-demand at tons. amounting And fundamentals looking believe as simply XX% well the down June ahead. the positive improvement reflects XX rates ongoing scrapping when is we as million last

expected the the X equating rate forecasted fleet. and Given is environment levels, in scrapping for to around to on-the-water just now year-to-date of price figures, below tons, million deadweight year lower at current scrap come demolition X%

increased coming capacity a water well catalyst we the we emissions scrapping indicated XXXX both of also treatment continued will As will for utilization. previously, and as mandated our for act the into as believe as in improvement, ballast regulation January have addition expectation in a to force that implementation decrease reduction sulfur in potentially market

this newbuilding the placed XX for XX-month of important annualized XX. the X% have vessels, In down have months represents the Kamsarmax but tons of approximately placed increase the terms last Capesize ordered, of compared market on of XX just totaled to approximately been it’s over months majority supply XX million is orders Ultramaxs distressed deadweight just last basis of to of from note June tons XXXX. ending which whereas and orders year represents XX% prior XX is during comparison for Year-to-date, forward period order. on-the-water that growth, The million This X.X% same against the an period, and Ultramaxs’ the tonnage XX fleet. as orders represent an only historically been

and number previously, indicated that see of increase not we we in levels. increase a factors, both current significantly given we values As ordering, a material remain see optimistic will secondhand also we’ve cautiously rates unless from

tons. As of as at XX% has The deadweight the fleet, today, while the a stands of the low segment just segment fleet. X% order of book on-the-water overall at over basis order level historical Capesize a percentage highest at Supramax/Ultramax XX%, of the remains the relatively around book,

the in down the net expected is XXXX. favorable growth on-the-water And segment, bulk the is on As overall, dotted expected fleet with be to to growth dry of just where of even net drilling Supramax/Ultramax from XX, more fleet you will growth X.X% net when it low lines on fleet. for Slide the X% note looks graph

remain are supply given becoming fleet fundamentals older be that side an vessels due in are and believe From macro for and global X.X% demand. XXXX, favorable for expectations turn XX commercially XXXX. a we at delivery viable growth remain number summary ahead, even will effect. of a net perspective, robust both XXXX growth coming vessels to less increasing Slide Looking less due and regulations into Please for to on less

and general prices, escalation as call, tariffs. to including have for not concern a expectations earnings yields a surrounding higher the dollar well growth since a changed and somewhat last in an due potential U.S. few Although to have trade tensions a the our oil increased as higher U.S. really stronger risk reasons, forecast

is XXXX, date million a as While it GDP bulk real impact to whether dry actions to will too growth. Dry trade full-scale seen impactful we to been global from not be a there unlikely, to war believe have be calculated bulk remains and demand, any bottom-up grow expansion, over in expected metric be incremental taking perspective, forecasted expected XXX fundamental XXX When X.X% additional at tons ton by trade the demand in over higher to requiring should XXXX X.X%, vessels. representing for consideration year. roughly is mile growth into

Within are by million expected almost the around quarter, increase cargoes year over to million Eagle’s is to demand XXXX. Grains, around which total bulks, and growth, year. the tons iron, expected XX% to we carry ore, expected real X% X.X% X.X by major represented are XX% the the which grains, XXX once of during comprised over the coal which during to Coal, this second billion metric represented of are grow of tons. quarter, in cargoes again tons XX for

bulks. and the total in left-hand cement, and of particularly fleet, overall during second voyages. cargoes fleet This bulk our Supramax/Ultramax XX% grow the makeup. carried and the in the represents million pie on bauxite. towards over to slide, demand of quarter scrap the being It’s incremental the turn metal, order side comprised noteworthy products have. the that bulks, right-hand Supramax/Ultramax depicted is roughly forest to bulks driven Eagle, is of lowest bottom approximately percentage call like last that may trades, improvements would growth combined period. given minor answer for summary, as by X% any of in a the demand we the the XXXX, or the the is as bulks, such the In expected you This metric outpacing X,XXX fertilizers, by Eagle the XX with questions existing bulk in year, growth tons chart I table X% lagged of denoted favored trade dry As having now minor major dry were believe which to on as Operator? a for demand a corner, which are creates minor picture, book dynamic favorable operator over the

Operator

Thank you.

completed, question open prepared questions. line Evercore. of Chappell is first from the remarks the for With line the Instructions] will now Our we of [Operator Jon

open. Your line is

Sean Morgan

Hey, Morgan, Jon. guys. for This on is Sean

Gary Vogel

morning. Good

Sean Morgan

quarter. So, purchase about I ask market a little congrats bit. the to on kind wanted another profitable sales just of and

you’ve and Ultramaxs another on With rates seeing. – assume us detail trying said the of You end it’s the XXXX, aggressively what a XX. since purchase just since sort arising, and kind still for we bit renew And going little you of the to are give XX of Supramaxs, to bought of market XX be fleet? you’re sold still

Gary Vogel

of a Thanks mean, big we louder for was Yes, SDARI absolutely. We the the the last XXXX follow on words. acquired I speak you quarter. question. know than to It end a actions year. I’m a believer during of the ship that acquired at

vessels. And were done continue acquiring the XXXX we’ve and value So XXXX. last in ones modern see to we

And just as positive and of think I as flow Supramax/Ultramax in fundamentals notable belief we that the in our bulk there’s cash Given well significant particularly dry upside in generation the the values. both it’s think X% segment, last about bulk asset continued the more And market. year. of we SDARI that’s – level, about think paid this we than end the in a price XXXX attractive is progression that given the for dry pretty

Sean Morgan

Okay. And ones kind fleets? you seeing are what’s larger follow-up that opportunistically looking Or view same buy are just opportunities to of you theme, on twos, as and the a there? like any at

Gary Vogel

a I time. at and ship the renewing I’ve fleet one said before Yes. growing mean, clearly

more something a demonstrate we in do active where forward our up move it’s the able there’s number those would partner in large-scale And quarter to to have identified Eagle And with owner model, but benefits more But to transactions We to join we definitely continue but on and discussions. clearly operator – every various we makes are that, efficiencies upscale. addition will and a of attractive clearly we think acquisitions. advantages do somebody of our ships exclusively. continue also complex, more for engage we’re groups that to Supramax/Ultramax like of focus to the

– cut the last to have one we’d a of the of larger won’t doing look – acquisitions So won’t something the like nearly to but meantime, over quarters. exclusively scale, couple we idea we on as we out in we’d absolutely, do ship

Sean Morgan

thanks. me. for That’s Okay, all

Gary Vogel

you. Thank

Operator

Thank you.

Our next question comes from the Fyhr line of Global. of Magnus Seaport

is line Your open.

Magnus Fyhr

good Hey, morning.

starting any questions, the do Is guess, number since basis? seasonality I quarterly quarter It’s two on chartered-in been XXXX. fleet. the how on there kind of Just vessels on you of that? Or chartered-in declining, a manage third

Gary Vogel

us Magnus. It’s profile seasonality a to reward to it. thanks, risk the Yes, based presented not that’s There’s on about opportunities. arbitrage

if slightly, the pretty in down graph will And but And XX drive mean, money. I XX ships against fleet and higher again, But the while still shows no expect have lot really could, so our the cost be, a the – would effect and to and some that it’s be reason we probably of easily that will net number about significant, be we wouldn’t would that opportunity. some it’s to, vessels. different. of would increase clearly fluctuate probable, wanted numbers I own quarter be we

it trading men to of really look performance. overall are decisions not. what women I ships on It’s hard and And the doing there, making work those and the what day. kind desk what take to is would contributes the in to at the how who So it’s every as

But focus – go – to to but I’d I So output, to on on that and choppy. repeat, would continue to again trend there. would and number say not up expect number be down not to also just down, be the the I

Magnus Fyhr

still year a And than ago. higher significantly Right.

So…

Gary Vogel

Absolutely.

Magnus Fyhr

Okay.

I Brazil talk the of like impact definitely they and with commodities about soybeans. you a up of implications tariffs and the kind does lot bit the how the infrastructure market? to over the issues Can routes some mile could a on largest China ton them transport, this? still is they the Moving of impose that of It to of China. plan kind the looks that addressing to you mean, of the in ramp further, demand trade that exports on little focus supplier soybeans the

Gary Vogel

as And of well. to we’re export. Yes, here has it’s overall, I mean, trade terms clearly is in Brazil for capacity But further impactful that it’s disruption what routes. seeing seasonal

for on. they seeing for Europe would there’s it’s the quarter, more typically and substitution – be towards cargoes U.S. exporting trade season to not now, exporting soybean, Whereas a So to going season high third the Europe. Brazil going U.S. even and into we’re though

So big there. a not in U.S. ton miles, there’s of terms versus Brazil, though, really difference China Gulf,

new trade efficient seeing actually effectively area and some But Indian And Ocean which in here, can to been cause I as ultimately, its bulks market ballasting and routes, finds prepared things. Ultramax, to minor strong the demand. in Brazil. terms on pricing around that whether talked about has is coming view our that Supramax as keeping ships the trade opposed we – of routes remarks, based in follow towards what we’re We’re most and though, mean, inefficiencies. mentioned the our is is of – we’ve other

exports takes you – so and like or area, ramp out of that up supply market. certain up And end from when a often things with effective congestion, times you the waiting

dry impact for on of greater global that’s going the focused particularly negative that, on. So see the negative, a it we right we’re that specific now GDP impact having don’t on and bulk, said of course, it’s but tariff as

Magnus Fyhr

Great. Okay.

forward. on NAV some main at probably with likely any dividend potentially looks capital going cash to And and fleet improve with close one cash a discount? or question on forward. $XXX trading allocation of I mean, position is start or a like Just rates a starting to going thoughts share stock still building going to still your you million. last priority it the buyback here decent have pretty Is big revolver renewal,

Gary Vogel

We as it with values. upside opportunities – for in as well but previous believe look on there’s today question cash we as time, terms asset of I significant with flow generation at all acquisitions said the

still to through use believe our invest focus you of is ongoing now, an in growth and capital that, return on there policy then vessels, or it’s that the to what’s Ultras dividend, for the shareholders and best look determined. whether not again them – we’re the special that’s that ultimately, dividend, discussion. we that. dividend Supras when use And fleet now, focused be but buyback, clearly and is and, It’s we’ll of that how will But on view to for it’s to renewal. do capital So is acquiring best

Magnus Fyhr

it taking for Okay, for questions. my great. Thanks me. That’s

Gary Vogel

Thank you.

Operator

you. Thank

line from is the Mehrotra Bank. of Amit question next Our Deutsche of

open. Your line is

Chris Synder

one first My for the on is market. still like number Amit. This are priority. is question the S&P acquisitions Chris, around sounds It

seems as has done? felt ability it like March, deals get the Have from this your impacted And price the you last asking owner over months. increased tonnage acquisitions? potential at materially For of pretty couple to you has looked then it

Gary Vogel

if been a that. quarter, the for Ultramax right, paid clearly more. than X% levels done, Yes, same virtually we last at at end price this we I paid higher the of about thanks, done acquired have and we’ve year think, we look acquisitions XXXX XXXX-built at that so There Chris. again, what other I mean,

certain levels, is is maintained think, acquire vessels acquire question. owners, There – view to attractive our we’ve we not ask but amongst So ask quantum. that the higher is at no just

from how think the we willing so is I until the on December see we’re and And June X% market to increase instructive pay.

value, opposed but course, paying of we as the paid the are is we there feel limits And we it, that other continue. fair cycle. are to we So that, quantum given more vessels in where what than

continually inspecting we can been ongoing basis. We’re able think there. And demonstrate again, And we’ve vessels. an on that vessels ample to we execute there’s out so

XX the we’re now up over earlier, As last two mentioned to years. ships

Chris Synder

this potential you ask price vessels? a you how about Thank think there way to And has versus for increase here? a recovery exposure Potentially, to that. chartered-in rising acquisitions changed? Is

Gary Vogel

I shipowner, charter-in, fleet we is we question. think own a great we right, supplement mean, way I it’s And through structured it way. and see that Yes. Eagle, a as in the but do

is earnings really have XX year moved would we had view upside leverage we risk we have fixed exposure negate a every outperformance, to the deck there that through we’ve cash the vessels. itself taken portion for $XX and or we’ve $X,XXX of a whether a market that day operational to the index, ownership incremental just that in increase significant market market of of more, the that sold the or taking time of on that of the done period, one with we charter million lot to And market. every the because hedge is in derivatives flow. a which that, slide in And of about So through that ships significant appendix that hire to about speaks

exposure So we significant feel we there. have

our fleet at supplement charter fleet. look as own we to So the a

not So to to we business long-term ships leave methodology six, number, exposed That’s not and of seven would Bulk. the look take market. on, a let’s pick the Eagle simply them five,

Chris Synder

I – rate the horizon really weighing rates repositionings you down around guys sense. it mostly come around make More That Then appreciate color have more market been second bookings. Okay. speaking, like there sideways environment. tightening question broadly QX feels year. grant moving Is just or expect Ultramax/Supramax you that rates? kind a gradual continued on for Or anything part just hire? large the jumps catalyst the the of do start and potential of

Gary Vogel

we lot operators to and months mean, ultimately, opposed on impact effect, and in. on month that. I next been we that, the six right, things the like noticed contracts X.X I on to think through doing more and month, is think market on the of out. an "buyers" mean, that buyers, as market has Yes, are speak, charter so pulled the have an we’ve I three, tightly things sentiment the tariffs. said what there’s less And short-term cargoes a People

believer So a prevail. – that but ultimately, fundamentals I’m

every growing than are bulks a what growing pace at minor we down coming have is so each dry And month, we have and overall. and supply bulk demand and faster

and movement don’t bulk gradual is moved. market. thing rates believe have That’s in – have the that dry simply historically how we’ll not one this I a So

where on we’ll have around I extremely So that’s ballast summer able of opposed fuel it to the improving back And go the – of higher and the implementation older in mid market is are now. yard catalyst. – is circular which X the effectively we underlying install August the with And to then, supply we’re even therefore, okay, this that to being dry cargo and particularly, there as this have low we’re on out significant scrap install now in to ships we’ll then, post Supramax/Ultramax But will a for vast taking capital lead look clearly, to ultimately, that significant to fundamentals the down, I will been scrapping there. look moment, what reference And impact X, act not as happening the wanting moves majority sulfur year, the see, we’re to prices going believe are January think market. we’ll to expenditure, the likely that bulk and fleets for fitted to though be a course, think, this be ships And and as that capital water of scrubbers. that ships tons And And we rates catalyst forward a XXXX, vessels to as have at a more million for – in is is. the month-over-month. IMO acts look will carry will sharply then higher ships slow market, and necessary. based

in well. catch and positives there’s we of that. the cooling trade So think, number up walk but discussions probably of a will a be that be course, as of And seasonal some that something of positive back think a extremely would we we regard, on catalyst ultimately the down will tariff, on

Chris Synder

could And couple that. on you had off for know the quick grain Atlantic season. demand you color stands on provide Thank your I a just got how next and any to today for slow you but outlook real guys months? start,

Gary Vogel

I mean, over growth. year I X% Yes. this overall, is grain think, bit

So of bulks. overall. the to be not expected mean, major lowest of leading driver I the bulk dry it’s the

but and particularly of a in ultimately, grain we terms consumption – has commodity growing been in so see Asia. that And

seasonal what Russian we’ve be to and continues has robust, it This think catalyst. very the year a we definitely wheat early seen mid-market, the moved a overall, been it’s harvest one. has is So but which Eastern

overall, based as said on that’s to the of going that’s Egypt interesting Western in not think act importer surpassed tends overall, of terms what’s shift in market – see driver this lot things. a grain a imports the we to change wheat in But – be the year And last long-term, things So catalyst and that, it’s is one increasing year. Asia changing into Having growth. that I has the a middle-class as we to largest overall the think move and more a main diet. become Indonesia

this well as said, bulk growth, just to over think year, relative bode So dry overall, things continued X%. I I but muted fairly grain for overall at

Chris Synder

time, it for me. guys. the for Thanks That’s Okay.

Gary Vogel

thank Great, you.

Operator

you. Thank

Our line next the question Stanley. comes of of Morgan Max Yaras from

open. is line Your

Max Yaras

slowing for near-term for Good guys. slowdown Hi, are specifically? And Chinese around would specific routes business any morning slowdown. But specific and what specifically what you. soybean Sticking of and maybe tariffs, mean mentioned stimulus? Chinese that kind your with And are down you there potential other that some thank other is commodities?

Gary Vogel

been U.S. Brazil from as mean, would want sure trade I it slowdown. a seeing just transfer this by Yes, cargoes though U.S. from export make And a then we’re some and the the there’s not isn’t thanks. highest change a clearly, to Europe. being supplemented down, soybean I of season even in to exports

it. you I if demand, the way follow see ultimately, we that’s So think

of obviously, purchase other where – into have kind a really It’s trade se, see impact haven’t tariffs the planning. a on of where but come from. seen impact And not impact on there’s per cargoes, – overall, it’s slowdown disruption an flows we those an China. So don’t But the we an on cargoes from. long-term the on

keeping down, but overall, moment, forward actual flows. on – So the it’s impact seen terms trade think I of in of terms it’s bookings really market in we market haven’t at the and an sentiment-driven period been

Max Yaras

And how for Fair a how Frank. much factor tensions And at one or this you weigh you maybe term of are your modest leverage? a enough. looking in trade they maybe kind or at very in? Okay. long-term of When then leverage now are point. kind acquisitions, are did guys targeting Obviously, acquisitions through-cycle

Frank De Costanzo

the off. then and I’ll Is it’s modest view start finish or will always. leverage is Gary Max, to our up – as moderate on Frank. pick

used fixed future. the last It loan-to-value. view on cycle we where the that You’ll we and transactions the green our about XX% year ships our only And It’s somewhat in target. note in cyclical, no the target. is on there’s are Ultraco based with

manner. should anything I stay we know, underlying that the add a to modest use Gary, there? So you nimble, always don’t in have and belief with but you flexible leverage if

Gary Vogel

No. I would. thing, the you And Max, mentioned only tariffs.

trade We our a unlikely, that our comments. war overall. changed do really think as We haven’t we’ve full-scale said in prepared is view

what’s are need of supply-demand done the we been that on it. why in continue of to extremely amount acquisitions. positive past but is that we’ve that’s And fundamentals short volatile leverage there’s impact, said, moderate a to on we be what an make in So And and overall. we is aware Frank clearly be business. But term, basis, as should instructive, fairly

Max Yaras

Sounds good. Thank guys. you,

Gary Vogel

you. Thank

Operator

Capital Poe Thank our of comes you. NOBLE of line Markets. from And next Fratt the question

Your is line open.

Poe Fratt

about that Gary sort morning, you’d talked number? like had like or we Good move you if – of assume financing Frank. and just the I XX% XX%, and just for is up wonder Hamburg to it you if Or XX%? the would

Gary Vogel

fourth ship made Having the ways into is LTV. the XX% looking quarter. do in other haven’t at to we we that, facility, yet. vessel. finance feature at the have on Ultraco is determination to We an the a said are – fourth The mean, potential deliver which accordion expected I Yes,

be that look would at stage, were an more but we’re if at Ultraco case, think I as we model beneficial but you always a as structures way go the to think – So base to appropriate this with looking Facility that potential, a at XX%, I at view it forward.

Poe Fratt

with was calculation, My that? there driving there – first and $X in first that the – what’s I payment XXXX. And great. appendix debt due that’s what the in on the noticed quarter And quarter Frank, fourth about summary XX% a that the – million in extra a is footnote

Frank De Costanzo

full next there after on Two there – you around then then all that schedule out. – or January in amortization was first to coupon Q essentially there’s There’s we the will color evens one payment, in and out a QX, one timing. a that first comes have and timing of But really some that the facilities, the will the the be quarter. in the later so give

Poe Fratt

curve, that that third my slide. the how repositioning quarter so at that Gary, give just could you look of that leverage on the when was is that actual to on – in changed? number then, like color looks cash mean, about you relative quarter the down because gone Okay, the talked $X.X Is plus million. flow And some that’s leverage great. you it I And operating second slide, first sense me the that about Or it’s potentially far? quarter,

Gary Vogel

Yes.

quarter, flow million? Sorry, you’re talking side about of leverage of cash or forward the $XX the looking quarter-over-quarter the on

Poe Fratt

the slide. on leverage forward Looking

Gary Vogel

document. just illustrative an Yes. That – sorry, that’s

just increase high curve look and you terms at market forward have of cash the the an in very in It’s what no market taking just breakevens we on means showing outperformance If year-to-date, footnoting, level, flows. that.

look is the be help? wouldn’t where in would based to I But And again, performance you meant various and year. performance be, and like pull overlaying earnings back if so those rate are environments, things Eagle’s not today not that that our on for a what of we that. – reflection just Is

Poe Fratt

that then quarter-to-date, quarter, – a the a at quarter? Can of of activity behind the help helps in ahead stage sort you in focus on it And chartering if second that? That’s is lot. or we could on me the color this just give just running

Gary Vogel

around sorry, or Yes. the year-end. covered two-thirds the later quarter, quarter, – call, We be fourth is at our time right for given which earnings always except the of which later first to is seem the

two-thirds say, about time, we’re five in, at weeks covered. So this we’re always

talked the probably and June you you you when back, in market, at quarter. we about to reason And weeks, slide, in performance fixing the a slide the will, this We’ve relative up to ships if that are we’re so hard if how a showing that idea look off vessels of gives performance market. catch if are is rising the part about fixed good of actually it’s now six

obviously, a higher some in the one. and against are then falling your and way, said in market, today’s previously. done outperform market lower market, to revenues rising so in of goes as being and it’s are other captured And the that, benchmarked Having it them too, benchmarked rates easier quarter we’re a a against

impactful to and backhaul so So on reiterate there is track. I just essentially the I think TCE on opportunity use is kind business issue. that of are timing a question, your we though, on would

tonnage months for front As with X. a XX cargoes do as static provider that fix an compared and a revenue stream say, operator, out, backhaul when earns at ship both we you a

a internally build they so as me, we have rates the at And that can are feel value. over our mix coming refer that be up, can then and invest Atlantic released pent-up as, are to ones be that ships build as – $XX,XXX market day. at they a when they And excuse into optimal. And for under the in rates, what we time day in $X,XXX we conditions that are future well up, a low quarter

at If profile look very and TCE look you that then very you’ll back increase. our last similar the a see QX, slide QX go and profound at is and year’s was

million outperformance for Eagle. months, quarter, of at $XX it’s again, why look So $XXX excess in mentioned, but the each over as that’s, important think And last day we not we haul. that’s long to the XX a and the was

to way. at see We continue the working we’re long the things. on that over don’t maximizing haul. look don’t of So looking quarterly we We the it look trading side We value when at revenue. revenue at

Poe Fratt

like your as in XXXX there’s Great. from your no And about it to sounds double-check, that as change IMO just philosophy scrubbers? comments far

Gary Vogel

Yes.

our reiterate I’d And out think that’s carrying I we’re diligence. previous comments. that namely

And to suppliers, significant make a I We potential as the refine to determination the that for to internal, but work very engaged and in views XXXX. lot with best of a stay determine with stakeholders forward our impact we competitive, various dealing is are we actively order the to continue for in industry. Eagle path discussions mean, what’s

our I at in now, it would are. terms plans So I for of what think leave that

Poe Fratt

a Thanks Great. lot.

Gary Vogel

you. Thank

Operator

closing at Mr. like to to further the Vogel And over this for you. Gary conference no back I questions. showing turn I any Thank time, remarks. am

Gary Vogel

you, operator. Thank

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

Operator

Ladies thank participation in program. and for does you your conclude This today’s conference. gentlemen, the

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

Eagle Bulk Shipping (EGLE) 8 Aug 182018 Q2 Earnings call transcript