EGLE - Earnings call transcript Q3 2019

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Operator

Greetings and welcome to the Eagle Bulk Shipping Third Quarter 2019 Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

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

Gary Vogel

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

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

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

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

industry a overview We review a our scrubber with Q&A. you first brief Eagle’s and brief rate financials. We’ll will will fundamentals a quarter and fleet this the third will and with business of detailed up our initiative. update call Frank provide that, be of After followed on provide review wrap environment by then the

and to quarter, of the active a third Eagle fronts. Slide has beginning strategic very turn X. on of Please been number the Since financial

which scrubber six program, execute million comprised European million of million $XX specification offices for modern bond reached facility. raised approximately in on relocated convertible $XXX agreements we our Copenhagen, term to reported, debt, loan a acquire million our continue $XXX to previously and and Ultramaxes upsize was $XXX high our to to installation fleet As

vessels, this taken to all the delivery of Ultramaxes fitted of of which four delivery today, scrubber six quarter. and expect of are two take of we’ve As remaining the

the on relating million. year closed system. vessel spend drydock, deadweight requisite installation treatment the total in as XX well CapEx the also of maintenance $X.X million basis was statutory for saving ton a $X.X sold to sale company a The of Kestrel, ballast approximately as XX,XXX We the old Supramax water

and Please turn over sold our makeup and evolution. a recent fleet roughly we and of and at transactions, least age years Slide years, to X.X divesting of XX XX XX three around average of age XX purchase purchase. X which for the Inclusive total efficient our of sale now Ultramaxes at total our smallest, vessels of of have oldest past Supramaxes, years review of acquired modern a sale acquiring averaging a

largest of it us consumption. vessels, undertaken the owner types and our these globally. Our relates the publicly and capability, of past XX The making has speed fuel fleet operating years vessels totals enhanced also improving generation vessel Supramax/Ultramax while our initiatives fleet over significantly few earnings we’ve growth efficiencies to now as listed renewal

of our third day. on achieved performance. discussion a the TCE a for X Slide to TCE $XX,XXX turn for quarter Please Eagle per

Although per we $XX,XXX net day averaged on of improvement BSI, the approximately basis. which adjusted experienced XX%, we a lagged meaningful a quarter-on-quarter

coming fixed higher. up moving it’s voyages constantly the contracted to a calls, to previous when As XX% we’ve when QX. quarter-on-quarter the market than less of for especially the due mentioned The in revenue BSI rising, This in it’s increased of $X,XXX is from nature low difficult an gaps per owner outperform roughly more market. it day against

including was impacted performance our other by facing to acquisitions. vessel addition during In market, quarter factors, a rising the

which began to incurs delivery delivered relates a the and affected the Atlantic, the in which four weaker relative has the performance BSI. as we of them to program. took our been repositioning Pacific we region of investment of installation by Furthermore, earlier, fleet significant all it to also the mentioned into As our vessels, position scrubber

last two-thirds our China. out fleet located of and This in months, in business optimal open feat about ships approximately for our yard requirements Atlantic. This the most fix adjust notwithstanding, of our the positioned now yards of the meet or to small the we’ve XX is fleet been the nine schedules. in Over in half no in limited to we as next due is to and vessels commercially ability manner

The operations owner-operator program executing and has essentially positioning results, both and of finished The perspective. with an off to business been back freely from our and the upshot is operating now unencumbered. are active this hire impactful model we on to ships that vessels can installation get scrubber year’s

firmly of getting being believe we’ll and next all our almost of scrubbers ahead year. of in we the However, fitted pay dividends that curve XXXX, meaningful advance

achieved As believe it’s all for do this of the creation In regard, we’ve quarter, important. the day, size in we’ve outperformance XX in stated fleet of results our ships. XX quarterly and to $XX $X,XXX of value long-term creation of calls, approximately roughly our third previous equating not TCE fleet annual our per last current average million that’s value an over we months based inclusive manage on

for the a rates we equates based at on for quarter outperformance today, per $XX,XXX the to of Looking curve quarter quarter average the ahead significant XX% balance and and of fourth of the for approximately an days period. forward as the fixed TCE actual This day. of available today

items Slide turn third for XX% non-cash X. an approximately $XX.X quarter million adjusted to Please improvement of the certain for EBITDA totaled quarter-on-quarter.

one-third million totaled outperformance. has XX Over just the TCE $XX last approximately months, from over being derived with EBITDA

scrubber brief Slide on initiative. a fleet to for X our update turn Please

scrubber today, ships in QX. in have January of These commissioned remaining of the all the we we’ve with to XX of date. seven towers additional an to three manufacturing installed end the completed and and first the XXXX XX As XX are commissioned ships by fully more have and of three weeks expect

our XXXX. from at vessels in to partly XX sea scrubber installation shifted substantially within yard full we advised, previously program to As complete order

the install commissioned full those yard in out currently and first have just ships of eight this week retrofits. yards carrying We’ve

scrubbers are well delays caused and doing have backlog to including and installing of shortage reasons, As the yards drydocks the companies being labor now extensive of of it’s due significant those been of China as widely experiencing at ships a in performed. been by number work observed which as reported amount statutory

result While fortunate as during are compared incur days. of off expect were hire additional our we out XXX XX we yards to of fleet aggregate now an shifts and The this there previously an is disclosed off to the October, hire being to average QX XX to have our impacted majority installs days prior also the for of of estimates.

the of or While across impactful, these next XXXX spreading average these numbers, over fleet. January order in an Inclusive retrofits thereby scrubber out IMO per we preferred going completed ship the work already of believe calculating from clearly getting incremental for fuel benefits. we’re hire now off from to XX is year, the to delaying differential installation days X, benefit for

order company and chart As this right beyond. of in up hand as on note, hire year period for in slide, on dramatically the you’ll this of investment IMO side set off the out XXXX the a to stands significant

fuel spreads preparations benefit as management from IMO prepared on active go to turn update we’re to and goes as our regulation scrubber before just approach. particularly effect, XXXX the based an XX for to into well believe Please days Slide on economics. our With we XX well

first As of IMO to that we’ve benefit of also fuel implementation will in period indicated time. scrubbers most the spreads half believe XXXX expected we during widest before previously, of over early the adopters the are moderating year given after be just

but in upward. Fuel trending spreads have late, general of been have as fairly volatile been

the hedged ton. spread currently weeks, per approximately and X.X% about average by of in selling those scrubber the $XXX some Over between hedges to LSFO spread XX% fuel fuel exposure we’ve have our HFO. is the of past fuel XXXX lock X.X% metric begun The of price and

we a supply would the Well, experience of a catalyst believe fleet net there’s market flow will scrubber from fitted XXXX, million. of of spread with calculate slow a $XXX hedging, very effective for basis down likely always acting more we fuel, as with it’s a annual the as this, positive $XX take of of out that in about early rates. result will also cash expensive which only the Separate that being that X% fleet derivatives to Supra/Ultramax about equate risk

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

Frank De Costanzo

scrubbers from you, net Gary. Revenue to of for turn of summary Please commissions of quarter. quarter the X% result higher prior increase results. was XX The of in Thank drydocks on ballast due third offset lower were hire available the off our Slide an our number along a days of charter of XXXX impacted available by financial greater increase days the a third The $XX.X million, is for quarter the quarter statutory days. treatment water to in the vessels. part with less installation hire rates current systems by and

quarter we XXXX same saw the revenue increase to in compared an X%. of As in

hire We decrease both was company the the availability Revenue of X% both $XX.X believe of net in net best voyage top respect, charter charter million, In evaluating revenue hire increase an hire expenses line expenses third and performance. quarter voyage for core came reflects both revenue the of that The hire lower XX% same in expenses charter lower year-on-year quarter. from a voyage was and and and primarily rates by prior in net than charter the quarter of XXXX. decrease days. driven at

The a of the hire QX compares X% for net for $X.X expenses quarter. in by in expenses loss XXXX. The prior and the voyage XXXX same QX were third million of the charter Operating the expenses. prior decrease from compared of XX%. by voyage loss operating increased net lower million driven for prior quarter. company higher was million, in net versus quarter expenses. to the third increase a versus quarter decrease was a to profit reported XXXX by $XX.X quarter Total primarily This a driven million $X The $X.X quarter as of

loss and are per to of third prior $XX.X an the Basic quarter loss per QX appendix million the $XX.X XXXX. were adjusted In diluted million from EBITDA to down a EBITDA quarter EPS the $X.XX at XXXX. of versus million in share loss million presentation, in of for net measurements. compared Adjusted or our and from $X.XX XXXX of non-GAAP $X.XX earnings the from of $X.X third of both quarter $XX.X EBITDA will $XX.X in QX in basics XXXX. EBITDA a adjusted as in And share came million you walk find QX and

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

of turn Let’s with $XX.X overview Slide million XXXX, approximately our XX cash XX, of scrubber second total September million along included from million Kestrel of of offering, delivered an of in QX to result The three of deposits of balance quarter. as QX received by of restricted offset Ultramax an now increase purchase and Ultramax from the increase vessels part the end bond sale the spending cash. a the liquidity. $XX.X program. sheet for to of three the on additional cash proceeds our had $XXX.X the Total the was in be company an cash The convertible vessels in on in

new million, the was bond. comprised $XXX.X liquidity XX, of total facility facilities as and bond, totaling from by and last cash $XXX.X is million quarter. made convertible million million along credit which $XXX.X and revolving is company’s $XXX Total debt Ultraco September as million restricted undrawn The $XXX.X $XX of the of up was Shipco of increased September the Norwegian XXXX XX, debt with million $XXX cash the Total million. debt

an vessels to subsequent new post September. capital in additional delivered in payment purposes. of to intend debt the outstanding the borrowed facility the the Ultraco stands million feature. the corporate million. for the We installation accordion to and additional debt accordion The that company note general an is expenditures $XXX.X the $X to million debt currently quarter, utilizing Ultraco funds $XX.X draw of we have three collateralized The at new amortization scrubbers facility, use Please under relating by

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

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

flows chart negative million the in operations the XXXX. from from improved trending continues operations significantly positive the shows in QX with As cash cash of recorded $XX

from from which capital. operations bars The also cash changes in shows by the reported assets to demonstrated blue cash the light driven ops liabilities, and working chart variability the numbers the difference which out essentially working are the between timing that blue and strip operating as bars, dark capital introduces

As the over by caused capital chart evens demonstrates the working out volatility time. largely

large year-to-date layout Now results. please the Slide walk for a to themes liked in they clearly turn these I XX charts QX because cash our XXXX driving cash walk.

the at large at left, bars cash The a comes are adjusted Company’s two on net is changes to reasonably QX expenditures bars chart the and $XX revenue simple million, of Let’s our in $XX slide the now review top close The QX the operating EBITDA the in the of two for XXXX. the million operations. balance in number. which these look

the Back chart also year-to-date the million top right, the relationship the with the slide, revenues to at expenditures at drydocking holds the at bar at EBITDA $X the in into the chart the million. find and of covering with for quarter. The three $XX you of and will period costs adjusted net the bottom $XX slide operating of ships in the same a million for

bought the we water and systems, million $X a for totaling a and debt million $XXX bar a from bar paid sold bar bond treatment in A convertible a vessels and interest quarter the scrubbers received proceeds for bar totaling on of totaling $XX million ballast totaling net CapEx principal for million and $XX the in QX. cash offering, finally, net the and spending representing

QX offset Slide was now debt for than $X,XXX G&A. Let’s QX The $X,XXX, by Cash full lower than review $XXX XXXX part our day ship increase prior in versus XXXX in vessel in result XXXX in interest an was breakeven. higher per year breakeven quarter breakeven and a expense day. decrease amortization per cash per of per lower XX

occur of the are cash quarter. anticipated six did increase own vessels Please in timing note days the that on not QX Ultramax fully impacted acquisition as in by breakeven the numbers the

We the will by in XXXX. breakeven numbers debt expect QX normalize that G&A of

OpEx $X,XXX of it the to payments than QX full given stores expenses, in than $XX ship appropriate to QX $XX per and and lumpy is average. multi-quarter results. related XXXX OpEx at per a at believe came day, higher annual higher both look year that nature under We

additional to are improvements also We time. perform have will scrubber a over installations vessel impact OpEx leveraging positive the that on

charges of per ship up came $XXX QX was QX one-time from XXXX. G&A $X,XXX the of include per at opening QX full year to and the in day closing for in Ultramax’s G&A If than offices. Copenhagen the Hamburg cash have per newly $XXX the and higher purchased at per quarter, $X,XXX. our were ship for our by day, G&A six would we full impacted come

G&A per chartered-in per be Additionally, days in calculation, our to if day were the we would include ship QX $X,XXX.

per acquired to higher interest when and which the $X,XXX compared result two closed which higher bonds, QX the compared final next XXXX. is shift and in as expense delivered. days, interest full $XXX less to cash year $XXX of Ultramax’s increasing QX over correct the two per a the day, itself when quarters, QX, ownership The cash convertible will is primarily are

and $X,XXX ship than is when per amortization to higher XXXX. year full $XXX per debt $XXX QX day, QX lower compared

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

Gary Vogel

Slide to fundamentals. and industry for turn discussion Frank. Please you, XX rates Thank on

over of quarter, $XX,XXX $XX,XXX rates day The quarter-on-quarter, prior high. market the market $XX,XXX day. per reached XX% increased averaged for a increase $XX,XXX XX% Pacific during an noteworthy period. average averaged the to index by day the the per that period during while six-year same XX% the It’s quarter, the per of Supramax/Ultramax Atlantic

identified on at tend exports amount the where of haul the factors, Australia, Philippines, to to Black grain was to Black driven being look our in along trade. had product of we Australian of purchase These forced strong exports. which our such Sea include improvement and as Countries The due South September call. impacting wheat Indonesia exports, through by large of and part drought which from a volumes some rates which continued number in benefited Sea previous American

almost volatility A XX% export Indonesia September secure normal raise to world’s rates exists is Chinese are the in the and come to going effect of day. around reasons. go to of coal we China. in year-on-year exports with few impacted it inherently export ahead roughly per ore off from of the scheduled which increased Indonesia The have which ban, largest $XX,XXX January X. of out imports ore our as BSI of market, negatively to been and was nickel in peaked into in early believe Apart acted second due all nickel to as products levels buyers has a

abruptly significant forward Pacific the impact now Of may looking Nickel two October note, supposed immediate cargoes. an ore next ore Indonesia alternative brought the to within and the weeks. ban this, Notwithstanding nickel fluid they on exports as market, stated This ships to effect the XX, only go had which for was one into which recently spot to January. Indonesia to situation has allow for resume remains in

addition, the of continue haul however volumes in In relative in restrict ports typically Chinese rates are the of U.S. Brazilian the dropped that supports typically movements. trade There QX. of coal coal with on It’s some and being continuing China. long biggest U.S. quote starting year steam it to for Asia. some is is appears soybean under Unfortunately, and important a reached. surprising what was clear product imports, exports factor not that weakness guidance impacting time Probably to but November period an no is to rates little that as as is we into purportedly have tariffs moving we given carry saw beans, is strong exports year, on last today,

deadweight or a tons an vessels representing totaled XX%. vessels on third quarter-on-quarter. during tons XX.X X% Please XX deliveries vessel older Demolition quarter representing roughly million decrease the Slide turn brief Drybulk million to of quarter, of to tonnage supply. XX deadweight of XXX or just new increase during for update building a X the amounted approximately

fleet from graph, now lower also market. reflects Clarkson, dotted but or were is by for driven X.X% expected underlying August. upward than in As XXXX, X% to light This deliveries higher on to line back by we the net the blue strapping and reach what than note expectations the growth the improvement in projecting you’ll made revisions expected

to a XX Slide at supply. for turn forward Please look

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

built To during by the year are last ordered four the XX XXX for were we for perspective, ship were ordered contract a of carriers, five vessels trades. year, this and quarter time. Ultramaxes which only latest in As information typically have, the Ultramaxes excluding put this specialized

unchanged on will of including the view material Our future increase buildings in as ships the price ordering remains versus new number well we a we foreseeable given see a not there on rates. ordering remain future pickup significant regulatory that unless optimistic of in factors advantage future as requirements, secondhand is uncertainty for

The book of the as segment low. percentage stands which at deadweight Eagle fleet most around order is basis order fleet, tons. at the to segment at Supramax/Ultramax XX%, Capesize book drybulk on-the-water just on-the-water a has the a over of highest books X% order to importantly XX-year while The XX% stands

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

summary since July, last down X% XX for perspective, by as tariffs XX the and basis GDP Slide turn Please trade for call last last IMF when the XXXX, forecasted call. earnings growth From since first again Global U.S.-China macro on our our revised now to imposed since were XX in dispute. down a basis points growth at points forecasted have been global expectations is demand. full

GDP global flu in for the about and impacted swine shocks combined production drybulk to both Vale development. with is from $XXX rate XXXX, of equates demand lost have billion clearly reduction This Asian

the the within an rates in speak drybulk. However, resilience fundamentals we year this underlying believe to and strength

potential be a As we and speak, seems to more positive deal China the there between concrete and news regarding U.S.

be Given development. of the a above, course welcome this would very

call XX U.S. ongoing perspective is for could soybean or points basis think demand in recent fundamental to given up the reach also harvest earnings last fortuitous bottom growth up in XXXX, We August. our roughly since now Drybulk the timing the as from and calculated expected be X.X%

major I and early this the expected by almost all to projected year. minor which grow Vale for trade billion is think comprised the coal that demand of of X%, important by ore note Demand for total part are remain in it’s in ore, impacted to decrease and XX% for overall while to about iron drybulk the coming year grain we’re from bulks is which dam X.XX to iron represent the X.X% collapse expected expected year the of bulks, tons. growth the are by which total flat to

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

improvements demand as fertilizer, denoted line products, increase in almost to two-thirds up cargo us XX nickel agri-bulks representing to being as which importantly and XXXX. again makes ore, overall bulks by and typically once manganese expected trades to minor of forecast the million are incremental growth Eagle drybulk of tons This driven and such X% roughly table the is carries ore, on the metric forest about by surpass Most of bauxite. in last

with the fleet that fleet, Supramax/Ultramaxes’ historically percentage given our the low We towards particularly believe favorites favorable the with combined as exciting This truly existing Eagle, book strategy demand forward supply of company. creates a minor XXXX dynamic positive dynamic makes the demand the vessel is impact combined potential the this for bulks, speeds order for which for period a with slowing picture scrubber impending Eagles our remains of winning regulation makeup. IMO along with a

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

Operator

Jonathan first Instructions] question [Operator Our with Chappell Evercore. from comes

now open. is Your line

Jonathan Chappell

Thank you. morning, Good Gary.

right of The be more you. you’d you roughly seems do two do spreads, there economics. spread liquidity widening now less second multiple ports when XX% fuel ride to the want on XX to quick the able on given we’re oil is just for away to and you Or fuel the XX% your the of to high-sulphur are make And is, And ability that to start be get lock you occurring your still in Just of now? Is of regulations, let than that to fact that and scrubbers call worthwhile it the the days in part that from that? spread hedge confident your enough parter fuel the ships the regulations initiative? start said, a kind out?

Gary Vogel

Thanks that. for Yes.

First in of our liquidity XXXX more. next There demand the at not could moment. hedged scrubber of year, all, we’ve We XX%. market is for definitely about fuel the XX% do

as on But place that and both in its to million, of sits seen almost actually $X.XX thought Singapore. it, do putting make we kind to million Rotterdam some bullish But the $X.XX about this million sense. million, morning, in spread. hovering and actually we’ve $X.XX between We’re start $X.XX of the

Rotterdam So we’re we million price million and falls in may is that are the we at demand around a think X.X off do particular because in $X.XX I likely said, a Singapore. feel don’t where more we fuel drop as to then develop. for $X.XX generally But from bullish when that it as that the today need, forwards things

in One of bunkering wasn’t available. in dynamics. we X% the to major be we we is fleets more that of concerned around have Ultras and have really just hubs business do as lot The Ultras of are the secondary in to fleet XXXX. Supras really scrubbers of the that for tertiary confident compete we terms with. relegated aspect I’d feel fuel and where trades fuel But expect availability had good where be about scrubbers, because would We’re well. a about necessarily we If kind early of the business we world ports XX% competing that in Supras

carry So carry we we fuel North to course, sufficient down around and things up that up, able let’s Singapore into pick And come also that. pass to be and of we’ll China fuel go are can say there. trades then like – and pick think back

we’re about it. spreads quite to we and get X. January feel So developing good excited where the there like on We

Jonathan Chappell

right. All lot. Gary. a sounds great, That Thanks

Operator

Thank you.

comes question Randy Giveans next Jefferies. with from Our

is now line Your open.

Randy Giveans

it you going? How how’s do gentlemen,

Gary Vogel

Good morning, Randy.

Randy Giveans

quarter Good, installations, so slipped it January. fourth quarter now until like obviously some seems good. your Hey, looking the of at scrubber from installations maybe third to those

at off your quarter? off all? know hire hire So many trying was guidance And been to kind then that installations? get your deferring how in be the purely that there’s scrubber the during will fourth Or scrubber was guidance looking XXX quarter, owners some a of at that vessels days I per new average Just that days day to decision shipyards? delayed vessel? hire an of off

Gary Vogel

Yes.

full I XX that’s, the XXX the So yard mean across is fleet. that are doing There is ships in installs. QX

riding third continued they’ve fourth the stuff riding crew during yard. off but been into quarter, had doesn’t quarter. have and would ships in continued we quarter off onboard. the taken economic kept then ships for ships limited impact could second days the those the hire around we’ve have those down early these The wouldn’t gone been well have XX successful has until was the we crews on ships Eagle. towards then a down, period it November, isn’t doesn’t first problem with trade – The program to time was in longer kind days on commissioned that for XX, and – and aspect to because is longer. December, as cost in hire born not quarter, riding originally, of got it crews likely problem The by those That So that, have

spread, we’re at basis. fact cash of an annualized the fuel current flow about million that talked on We the roughly estimating $XX

forgo So if we’d we instead of July on X million. fleets the scrubber let’s our X, say start with January $XX fleet, fitted were, across if

is to long So us the for take term significantly term the hire that we in short benefit. will or was really be the – no To think right? incremental bring significantly off what pain and brainer, of QX more kind forward the

days. XX that of kind from went we So

would per added We now going indicated average. XX expected days of another we’ve be it China. pushed, that XX in delays days and/or because and we’ve on on around We’ve XX ship

it. that’s So around again, economics our decision. the it But was

simply ships of are there. back pushed the sit because so Some yards doesn’t make we’ve full, sense it to

our spin a just doing model. ship. business finished of backup to QX scrubber talk it that to into instead in business retrofit there’s that me the yard arrived basically in have clearly up is so We’ve to the up this about ships and the fact go And a gives opportunity had a yard. ended order But at we the impacted to a of

So we XX days. spin ship the at

Now decision fully it’s anytime here. your And make that’s impact not revenue you happened commercial, to model. what’s that’s going a

So ship Pacific, our But at parts as right think the thing it in I’d XX overall, basket. a when hurts market opposed those of the performance. yard. let’s to overall same it’s a We at sitting different XX spinning the is are say two

Randy Giveans

it. how seen operations? hearing, it, this of drive Got nickel Supramaxes we weakness by is are question, I kind much got impacting most this Indonesia have your of kind ban? off just of this is in right. believe, And industry then kind impacted ore of of All And the trade you the

Gary Vogel

Yes.

area it’s impactful concentrated it’s in happened very the Asia it and So sense overnight. the in of that Southeast

drybulk, the nickel mean at happen it’s January. to it in ore if percentage was a – supposed total to you but all sudden, a ban the I So from small, look of Indonesian

when was this And Indonesia has done with so ended has this. before, and happened up we –

You all literally more wire. ships try get carrying end nickel under stop then to now. in And was this that’s and right, why go it overnight. right said, And the ore Indonesia we’re to going up with

cargoes. way backing their same the free cargoes started on coal for seems At were that the to as other that ships competing time, load off. became it and port So are

in think kind been of – micro because impactful, it’s level, immediate. I it’s So so a it’s

but from And concentrated so that impacts. only overnight. it’s in it – movement area, to it’s cargo it’s hyper that it again, XX million But kind – tons of zero about of about it’s went

Randy Giveans

it for Thanks That’s me. right. All it. Got much. so

Gary Vogel

you. All right. Thank

Operator

comes next Bank. with Instructions] [Operator you. Deutsche Thank Our Amit Mehrotra question from

Your line open. is now

Chris Snyder

Snyder on Amit. This Chris good Hey, is for morning.

the on ability performance TCE your active back how guys you repositioning outperform bit So management a the talked of approach. weighing about is vessel and on to

I high we a small, as guys ports, oil. them and is on sell many So serve touch out high-sulphur you look of as may little but earlier, not of think are to number this fuel a XXXX,

the you I management as trading the how does limit does question that this to So guess potentially and for impact the active your fleet flexibility is reposition refueling need how approach?

Gary Vogel

Yes.

So definitely we always are maximum our But TCE. think operate for the I year. to we differently going fleet last and manage saw

is, cheaper we And more burn cargo so Ultimately, that means money what carry fungible. lucrative is can fuel. whether or

we’re all, as opportunity the So nine to fitted TCE. we and we’ll still in there’s of first highest operating, ships chase charter non-scrubber going If ships well. have an for

scrubber we if So ship, a ships charter that. want fitted we and can see something on non-scrubber we an operate around a opportunity because fitted have do to trade and in

which vessel, on discharging think positioning trade will impactful, our focused now So but I a up for Capesize specific on The into ballasting as It’s think and a I it us. differently, fleet China not often don’t away. will right problem ships then is typically, in we’re instance, hinder area. ends that

when Australia, cargo and you finish you our into our So That’s then ballast towards Brazil. scrubber China, trade. back in you not retrofit go discharging really

the aren’t for So ballast, could China, we that’s from impactful of course, ships why ballast economics Supramax/Ultramax from typically a away China. for it’s there but on us. Getting

backhaul backhaul them. need value are So hence not lower cargoes, prevalent, on we and the which the to find that

a business, now, this for to few the back years forward the looking other we’re on something So of we’ve outperforming notwithstanding get side is index, quarter. and clearly which to what done this get our

Chris Snyder

the Yes. to spread was wide the on sulphur that’s your to relative $XXX about $XXX. that realized, And and the is spread the of XX That chart fuel relative oil And Appreciate consider premium range to shows MGO think low essentially Slide trying we pretty then, as makes as margin. color. scrubber sense. that we’re all when

about a realize. you think to do premium Any how it there appreciated. So come out midpoint there? going color be Is would scrubber to the

Gary Vogel

Sure.

to basis we try is we meaning, me, the isn’t fuel per negotiated beauty excuse the we pay So, cargo. voyage of that get cost. internal carry in an And and operate is rate. What for basis, part fuel ton as is, on that of paid

$XXX less our or $XXX the I ship for that’s business. have own scrubber fuel, and a $XXX own fitted and fuel, ultimately, less for that whether So costs is fact our paying

we business, we so the do because capture voyage ultimately pay to we of at keep speak, we So pump, less believe XXX% when if will that the we value differential.

becomes When it willing seller. buyer, a charter, time do Willing right? you negotiation,

you market time if ship my $X,XXX charter that. a it’s you’re plus a have plus pay say, So – provider worth market will a $X,XXX, and you you tonnage and people ship only scrubber fitted is worth and

that So value. capture we and uniquely model, that active positioned we’re the have maximum of the an fact in to in have desks that trading Stanford amount and Copenhagen fact think owner-operator we the we Singapore,

a capture value So I’m our full voyage charter to that position in don’t won’t do that, we but alternative not where business say if saying the doing can. out, is for will time be we we we

the will confident pretty Eagle. bottom go for vast, we’re line of So vast to that the premium majority

Chris Snyder

But basis? market question business, is kind or are specific? reflective priced be that. the low sum going it’s things Okay. price to lump poor or voyage we’re oil of when the is, lump you when I sum I sulphur the to of Do appreciate in that a basis, going price MGO think guess fuel the it’s be on

Gary Vogel

Yes.

Sorry, yes, good clarification. a it’s

the XX% on price it’s I be be competing going the the XX%, to low think we we’re because going sulphur in are of Supra/Ultra that. based ships to with carrying think

Because much want of ships. on basis, can, we leaving sulphur is money talking right. we majority So price competitive all But that. the to calculations afternoon, to then if to competitive the essentially low our even can more fuel it don’t we more that’s because job about table. be then low too And vast run on than we’re sulphur year allow actually freight yesterday be market the fuel, next we’re

by absolutely of majority we will fuel. the the for ships think paying low that be driven vast oil that’s be where it’ll because So sulphur fuel vast, price

where depending you I scrubber, could have into you potentially the are fitted a different have three Cape to think XX%, with is larger dynamic like of it’s segment you potentially willing ships move lower size is scrubber, XX% whoever price. the competing if and as on five ultimately three –

they but people freight if cheaper are. think maybe you could people a than So sharp fuel, potential are Because it’s and do what seems have fuel. you it I also, are you that to too to have how compared much to how using attractive expensive you offer to attractive pricing burning more

transition new feel, to to capture business to think some that be we market. model, position There’s it. transition in that good totally – a we’re going But and we very quickly. really our going a again, I around make and value teething given It’s be smoothly

Chris Snyder

I it’s quick we about if minor that. trade because bulk shows growth growth higher, relative in the higher. last it one GDP X% doesn’t appreciate seeing positive in And we’re just go On what higher, little causing go falling overall And in XXXX are surprising to trade could. it that’s seeing I you there the seeing major I’m sort XXXX. that go XXXX. one assuming Slide the resolution. factor are a in trade But U.S.-China of bulks any deceleration XX,

Gary Vogel

it X.X% been is trade at bauxite off numbers use a X% – it growing and amount. trade They’re almost to increase quite Cement that’s projecting by next year. coming Clarksons, year. from is we So but dramatically fair

number off. so bulks And coming a of minor within things that are there’s

overall, bulks, at things, bulk others, they XX% is this is have X.X% year analysis down that which of a the X.X%. their capture of it small growing and lot of minor and XX% within dry fact, eight, is In minor aside at of top which from bulk trade,

of a detail Again, everything lot I down So different have don’t basket of of cargoes. to that’s the the a bottom.

don’t account impact trade definitely lifting. there’s think takes war across into those. U.S.-China I that the But it

put from in that’s I million projected $XX in to trade XXXX million is major us, this soybean million XXXX a year. which the went $XX bulk it $XX For soybeans, to course. U.S. of mean, in perspective,

destruction demonstrative pretty So terms volumes. of in

there’s that. now year So accelerated, thing one And of course, Indonesia, been of ore there next ban for minor the be we in on would definitely in bulk course, the wound. which maybe think is on from but upside potential nickel that has

a that’s development. liquid So

Chris Snyder

the All and appreciate right. time. thanks for I the color

Gary Vogel

Thank you.

Operator

question-and-answer our call like would the closing any Ladies to I back to remarks. now over this gentlemen, and session. concludes Gary Vogel for turn

Gary Vogel

Thank you, operator.

us you. thank to like I’d comments. further everyone wish no everyone joining today for have good and day. We Thank a

Operator

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

You may now disconnect.

Eagle Bulk Shipping (EGLE) 7 Nov 192019 Q3 Earnings call transcript