EGLE - Earnings call transcript Q2 2022

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Operator

Good day, and thank you for standing by. Welcome to the Eagle Bulk Shipping Second Quarter Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Gary Vogel, CEO of Eagle Bulk Shipping.

Gary Vogel

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

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

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

the like and war their in loved prayers and our discussing those Eagle ones. dedication the remain by into and so to get seafarers, from being who affected far Ukrainian quarter, while with thoughts commitment this we to opportunity Ukraine, homeland mention our I'd steadfast Before all that to their maintain take including their

address war sourced call, during call. difficult typical regions, from this disrupted As cargoes extra in we market last time. them being as altered we'll families has their indicated and to From on to we've the and provide steps alternative perspective, to taken are the to our trade something support and demand and a sent patterns later assistance

or share. the million, due net derivative able team, our we're quarterly on $XX.X for to of in million, on For at $X.XX with the QX, capitalize our per able $X.XX share we came Adjusting market or in efforts gains noncash coming basic. $XX.X net per results, mark-to-market volatility, hedges, best-ever at achieve income and income were to to

of vessel, in part Pro The sold Supramax our the motor of oldest As strategy, fleet, to being age, is scrubbers, transaction vessel our our later to drydock. competitive totals renewal close with about fleet which Eagle's ahead this XXXX-built we a the XX% Cardinal, just offer of ongoing to expected with X.X averaging fleet advantage. and forma month. years statutory fitted Eagle Slide this continues XX turn for Please X. sale, a ships

of our approximately Our driven record our XX% $XX,XXX day. results, $X,XXX generated of strong represents increase line quarter-on-quarter This benchmark X%. TCE index a or top against outperformance by an performance, an of net per and

third a available As forward approximately TCE we against the third the look to XX% of net quarter, quarter the for indicating a at significant owned outperformance $XX,XXX, we BSI. of fixed days our

term. in near Although remain we believe the volatility will market, remain elevated we the on constructive

such, As coverage more we've of the balance going a the for on conservative year XXXX. and approach taken into

As a on BSI current that the of I'm as given almost yesterday's from believe varying level values It's talking based denote Supramax. as are approach we've nonscrubber-fitted the an at forecasts. of prudent is of the release, press worth well noting XX% macroeconomic as XX, FFA volatility our available We about this you average quarter, totaling market FFAs days $XX,XXX. can owned for fourth June sold

ships out selective charter a to longer on continue also period well. We as on a basis

be revenue turn to from streams TCE the in the of for an surety week, part just to $XX,XXX our last Please combined FFAs X. a utilizing for performance months of of provide fuel spreads, well proven fleet example, revenues from effective bodes The ships, to through of charters, management. and and at fixed year. This FFAs and derived strategy, strong an balance gross earnings TCE a out physical helped we our to approach with October fixed both dynamic per has starting As XX scrubber-fitted day. minimum Ultramax Slide

Given high for record our in the operating noncash and impact led of other business, unrealized in P&L coming performance G&A. in adjusting to robust with $XXX.X QX our revenue operating in leverage at hedges after the items million certain inherent adjusted included EBITDA

trailing is $XXX modest of XX-month million, very X.X. EV/EBITDA implying Our a EBITDA multiple rate run just now

On the leverage around X. to profile cash significant back with of Slide financial Please the generation, net to improve, XX%. at continues turn our estimating

vessels more been Asset months, in the over value. XX-year old fantastic has price XX than performance with past doubling Supramax

prices medium we has elevation with and significant a as on recent the the dynamic, now in given Frank, positive well down call This S&P would will in of as rates the slowed constructive values review notwithstanding, remain spot landscape, financial the in correction our like turn to activity Given call. we'll prices asset plateauing. somewhat macroeconomic later I to market, the performance. the which supply-demand with over term the address who

Frank De Costanzo

financial you, growth XX totaled results. TCE $X.XX million. basic our shares gains per the in significant of $XX.X revenues at our basic noncash prior quarter share quarter. came came income, a net EPS in rates, quarter drove Gary. the The basis, convertible the a to basis, in to versus quarter. $X.XX QX. a in in $X.XX for on million $XXX.X in unrealized Thank market income at Earnings along the summary adjusted or with turn at Adjusted basis. was a the came related line On was On Please includes EPS the derivatives, basis. for top $X.XX QX diluted second million increase diluted quarter, on $XX.X second excludes Net quarter. for and which which second bond, for increase days, for Slide available a for

record than was higher prior EBITDA result million, QX XX% quarter. for adjusted $XXX.X Our

for our $XX.X and Total of $XXX.X now $XX.X results, total QX. strong million please the increase $XXX.X in improvements significant company's the an by driven revolving Total Slide own The is to cash is the offset million, increase overview and and of was in to liquidity repayments XX additional to with our facility. of came $XXX end balance by turn as that Let's liquidity. an balance million operating of at to at million flexibility was million compared of QX end undrawn of million QX of of the comprised us vessel in QX provide we QX. increase sheet cash unencumbered three cash credit $XXX.X dividend. a It important vessels our liquidity fully Total at which debt, note of liquidity. part

In held addition, Cardinal sale. is classified vessel as the a for not

repayment be million end rate the as of Ultraco at of around of new XXXX approximately facility. generating was in the $XX.X expect QX our to cash. in vessel We on a that to debt the $XXX.X debt owner delivered term decrease $XX.X her loan. Total entered We in a August, interest fixed million interest rate of of refi quarterly swaps to the exposures October result global early into the time million,

cash capital. rate and these which timing-driven XX fixed, adverse operating company's points, primarily the blue turn basis cash changes are ops ops, capital rates. to as differences The QX. assets Please of is and $XX million introduces rising interest exposure of dark swaps, highlights by Net us between in result XX insulating operations. for flows the the reported from to an the depicted overview which was in the Slide by operating light working now the activities provided bars, from our from variability averaged liabilities, a As working bars, fully impact of interest strip cash cash that blue chart which out from

inventories be demonstrates, can The the differences primarily bunker values explained chart two QX increases the both by on the values, evens the and between As out the market volatility bars capital value in market prices. in receivables working higher largely and caused over of time. rate by

$XXX an is company's cycle. Please the for strong cash generation the lays our operating turn look in balance the reflected as The net expenditures of cash the of for at company's and of remaining bars, The debt further be in the our The right, Our receivable the these robust the two to can XXXX. Slide two service similarly collection chart conversion slide are bars at adjusted the increase activity. slide the which results. during cumulative revenue a at the bars in cash up dividend QX QX. outstanding, operations, to cash first walk. movements and the coming covers simple quarters the the top of same turn most of with The EBITDA as explain cash bottom overall at QX the million, and found XX

to Slide at $XX,XXX Drydocking The expense. as to to $X,XXX XX day Cash second quarter stores primarily lower our quarter. turn ship OpEx This repairs and quarter. lower prior for the $X,XXX the now $X,XXX decrease as per G&A COVID-related drydocking, face expenses. decrease well day costs we The at vessels three came per for Let's at we in vessel due quarter. in of breakeven than notwithstanding, as per during $XXX in ship QX, Vessel per to came quarter-on-quarter operating than pressures. breakeven or ship per costs, inflationary completed lower prior $X,XXX interest per lower day in day. ship QX, continue per due expenses is came drydocks in for and per was general cash

came payments quarter QX. made tonnage. in due Cash $XXX operate vessels, $X,XXX noting day $X,XXX QX, per a rates solely $X,XXX increase in in than at came also per were we our which larger for ship would at calculation, It that to payments realized we by in prior to calculation per the G&A down cash as days an worth per Cash If is our debt on drydocks. principal $XX day whereas at expense interest day quarter ship of our improve ship ship the fleet, QX. chartered-in based income G&A is in includes and have G&A per in $XXX from quarter. rising ahead came $XX per our chartered-in ship owned increasing advanced QX, to the we QX in lower per interest day include per We per Cash in interest balance. in our

at Cash decline we expense ship Gary. come in on remain drydock is per activity. at interest the expected be day. to Drydocks significantly if expected is QX. expect chartered-in $X,XXX. steady call to This include about turn remain OpEx circa we ships. Looking at lower to per about the Cash will noting expected I $XXX Again, now were $X,XXX come figure per $XXX ahead, it's in concludes per day $XXX. G&A back would amortization $X,XXX. is around in lower the should following at comments. worth to my ship circa debt to to to

Gary Vogel

recent in to effects of imports Slide an grain of year's Notwithstanding led in as Congestion Ukraine to stellar increase the lower turn, the import drybulk last XX. Please performance. in impacted been Concurrently, ports Black in absorb of further a the which due compared BSI early which European demand, Northern to a in has sell-off in call, of with combined vessel continued fleet the miles all Fed period XX% witnessed has Frank. months we've short-term the hikes notably ore same exports and in sentiment. supportive earlier muted coal the segments sharp China imports and cargoes increase over led to increase the averaging iron and, year. as had in turn coal. for expectation par volumes large Year-to-date, last Supramax and ton June, Also, utilization substitution European with struggling and had currently in you, has by coal freight coal from to on the volatility drybulk $XX,XXX, with for the congestion respect for macroeconomic increased Ukraine, Thank outpace other quarter positive effect, on higher COVID-related decrease to has easing rates. environment. second turn imports. to Sea continued European is in war to in particularly to a Separately, which led a a in came meaningful lack mentioned with of restrictions, tightening commodities mixed with

$XX,XXX under being and of period, middle disparate the day. these work in has summer BSI traded down factors the per at to With the

highs, and than given would average compared quarter. based annualized of delivered same VLSFO slowed basis a XX% per high $XXX, ton. illustrative Please above we believe VLSFO $XXX breakeven cash period, meaningful Slide slowly in fleet begin total our could more is from revenues on and by offsetting position, scrubbers well stimulus were cost fleet during we With $X,XXX On The per spread an as our a on supply breakeven the up China see XX were this standards our include between and and fuel roll HSFO averaging about manufacturing reopening While out, hitting an measures quite operating the of recent on XX. to volatile, of million we ton, historically vessels recovery in to first off newbuild grain historical strong and Fuel drybulk demand, down -- American rates activities. $XX spreads as vessels scrapped doesn't turn benefit by Net move into for A to quarter turn, significant in harvest. turn in of supported fourth XX. to and, positive higher head per the during QX. and this, eight a drybulk ton XX% very activity respectively. and realize Please growth year-on-year. Partially quarter remain $XXX close and a the prices prices to we the QX scrubber HSFO then well averaging $XXX the continued to a in to as quarter, with Slide period. $XXX basis, North

As of the need surprising to mentioned the underlying in prices, low of scrapping older scrapped will the record spot number that continues is despite vessel recycled the future. the be ships this given we've scrap strength previously, to -- market. increase in inevitably level Positively, not

growth, forward on-the-water level stands overall the supply order book In just of low at X.X% historically terms drybulk the of fleet. a of

will growth compared X.X%, net be For fleet which year. XXXX, around is as be XX% to with expected drybulk last down

were net ships average increase QX, prior quarter the XX ships drop of just ordered ordered today will the XXX projected driven volumes. Looking last beyond. of further and ships than being down worth of roughly quarter. It's be to compared further total less by the fleet five scrapping during that noting over ahead, XXXX half vast in years is only about XXXX to of growth deliveries to and per the drybulk delivered and majority A XX% muted an in X.X%,

number reasons of Please still have Slide before. some XX. to expect turn to it articulated continue, of remain for we we level ordering a will we Although believe low times

In demand terms down year be multiyear as high to the growth GDP lowered in drybulk for their to last reaching of April. XX of compared After has year, this to macro is demand, flat as IMF the trade estimate growth basis points XXXX. forecast a X.X%, expected

increases However, caused to significant taking effect before X.X%. the ton-mile I Ukraine, into positive consideration the by mentioned in war it

core minor are evident estimates XXXX to versus trade the demand turn XXXX, ton-mile fundamentals XX. growth to down increase basis, effect. to as has to primary X% be any into been excluding major pegging drybulk bulks. compared For Breaking that Slide Please current drybulk market and for to its on continues bulk a superior demand it's components, growth

our bulks. between our typically and exclusive of Given segment, consists midsize minor XX% the on mix cargo XX% of focus

year, the to a Capes about per minor outpacing day and to though bulks, is primary the reason XXXX, core bulk less. even this been compared is the This For Supramaxes is X/X about X.X% $X,XXX class best-performing XX% to size as demand on basis expected why the trade cost reach major asset they're forecasted by which have X.X%. decrease by

the market and supply volatility dynamics demand, order is prospects optimistic about couple the a book years. number these emissions positive next come force improve combined of We near-term side for the the forces scrapping. medium-term remain drybulk over of further a fleet Although terms low we believe regulations record will of given into in will that benefiting with utilization elevated, and

to shareholder you the remain level operator answer to within midsize Eagle's turn per fourth dividend strategy, we $X.XX brings net to like Operator? of to Given and just consecutive Directors strong In total that, forward policy This is leadership share, we're with about With our share. over dividend quarterly we have. last since and Board dividend and to looking segment, closing, consistent distributions outlook, date XX% the position questions over quarter capital to energized per of October call of strong our cash a adopted our income. to shareholders. benefit the our stated any declared the drybulk second equating I'd the our results and may Eagle's execution of continuing allocation $X.XX

Operator

from [Operator question Omar with Jefferies. first Instructions] Our Nokta comes

Omar Nokta

wanted to the market. about I ask

pronounced? that some reduced couple talked uncertainty, broader early recently, some laid we've any maybe of is charter gradual over going snowball headwinds back of the back guess there that availability? week June? of weakness effect shift past more just -- Has to makes anything of with Has to whatnot maybe you June. You in seen changed? more past kind it appetite we've whether more maybe just about pronounced what maybe it's maybe is out or the changed the seen or and something it that cargo Or economic dated I weeks a congestion X. Or

Gary Vogel

I all, there's of wholesale period, for historically market we're Yes. any Black that mean in the middle cargoes think midsize. no here. -- often particularly And is, the of first don't of virtually weak this in from point out which the to Atlantic are I and course, right is we would event by I a summer, Ukraine. seeing buoyed of grain, Sea, summer the particularly, the is

And of as seen impact that that's then in overall. I so we've having And an an market China. unwinding congestion on mentioned,

it's think year. levels early of right? at the part I volatility, this similar in We're So

than all -- a dislocation right is Ukraine. we year export from starting cargoes we event on, And the now also of especially, ton-mile coming in American and earlier typically the because will here be just were North for little think, more and latter a part part said, Brazil of the grain the of the what expect. promising which harvest we is year. longer this than corn of like -- I this has to year segment. quite now the are midsize fundamentals, we significant So It's the in of But

it's let's it, August think along some effect an other we call overlays. at And I'll with leave it it's, So that.

Omar Nokta

highlighted it. think that charter, I week that guess that entered you some October that at I in off within $XX,XXX? And said you of time you FFA contracts the year into Got one was kicks last signed you the it

Gary Vogel

Yes.

Omar Nokta

Yes.

$XX,XXX, rate. -- is, sounds I clearly, what it's answer, that think averages premium And week know market? like I able last it maybe that so even to it that So repeatable from wondering a today's there's broad off be very, year But Just were very dynamics but in be TCE difficult today? change very weeks. just how obviously, past strong the to guess may one was the week, if I'm ago. you rate of the a prevailing but still in a gauge that comparing do say, I short to -- you would secure wholesale market maybe it's any to maybe couple term. over

Gary Vogel

a off right? over week. look the if And similarly, probably market, market's forward you but see dollar the impact, trade the not at the in on period a forward not as exactly. you'd Look, Yes. not I these market, -- index, think similar we the I mean but rate dollar for exactly the change last well,

the around for market Ultramax, off fleet. spot $X,XXX rates meaningful. X.X the we're course, Having charter, at That's an on. day rates said FFA And are Supramax, that scrubber-fitted that X-year of now again, that, is scrubbers charter, weeks. there's over that's which that are, the it's a a Of And ship, but last obviously looking an versus earning Ultramax across a things there. that the And dislocations, a is right? right there's play number

and the It's on we we relet it's and right, when it. based developing in go it. wake So up relationships and just not do like out you morning ships, when

Supramax/Ultramax the go if an value wanted moments pick said, TCEs and might I each that, would unique and fleet but market opportunity value I we an of achieve FFA frankly, that, and part a relet player market. wants demonstrative. the is If slightly enables next FFA. And there's like then to these us reverse And ship. Ultramax, we pure comes segment, is someone each ship more I that's can better wasn't it think dynamic and we to with a be the half for the differentiated in there half we cover, sell we down today, back FFA out pretty our So and And or week, physical our right? that strategy we in have than when our and of in we think buy add think,

Omar Nokta

final here do significant didn't been home it's there's talk, And One on there's that follow-up talk how run. back that substantial to scrubbers. Clearly, definitely. in but just I'm on some XXXX. question Yes, their ships not or one are -- some just a looking been sure maybe scrubbers retrofit XXXX, is, some they owners the it

that XX% guys or plans as fleet another most scrubber been see You Supra/Ultra really here ahead? having think with look the of at unique have Do you in will of you we spot investment any a heard scrubbers. wave from of maybe have shipowners

Gary Vogel

Yes.

slightly definitely is right, the at you'll on So for start imperative is and really segment that, said the there think the an most scrubbers newbuildings see longer. percentage answer and see your a some first very midsize was the retrofitting that to I small you payback Having being us. Being out. and point, coming of

time, We have we're was our at is time, it looked XXXX. are lead nonscrubber-fitted other off-hire it point Supramaxes, all significantly three more doing scrubber-fitted. of today at to when vessels in this decided course, retrofitted We've The fleet we ships it. off-hire than the and expensive not that sister

But So will the don't meaningful. it. on I it I some aspect focused be think see think it but I be economic uptick, from of sizes think will you'll larger the

for I I as think be fleet think, future. a can burning to see, significantly will segment I the that the midsize as continue, VLSFO far

Operator

comes question the Partners. line Our Alliance of next Fratt Poe Global with from

Poe Fratt

I the happens, too. be whenever downtime going or in XXXX of Quick suite, mean, significant that implies you see retrofits more on to is scrubber follow-up if that on some do that

on 'XX And in then book. -- your your on anything do -- triggered frame? time the double almost have quick out a to fourth quarter? index. to you that's that Can about to fourth you Just fleet double for you Is And BSI your then net hedge a secondly, Eagle? in for into of particular basically anything in there time how help hedge the you've hedged quarter book adjust question talked get sort in us what equivalent just charter you the to the thirdly,

Gary Vogel

Sure.

you Omar's our with start me Japanese of is the to let half a right, one value at half specification against a XX. mentioned questions, ship, the Supramax. So is look relative Every has helping which fleet as I fleet. about the mean FFA Ultramax, to index of the I ship

have So what the Japanese a is ship market if nonscrubber-fitted that open FFA day. XX vessel, on any you a is given pretty for good proxy the in worth

worth So to use more would general, There but Ultramaxes, some and are are even are are the than some in XX% about I XX%, worse, that XX% indexed ship. XX%. better that I The can of at around forward $X,XXX scrubber, in curve that. probably slide our terms now, what look is down spreads right and fuel that means from day. a mean you

much can you obviously, possible. much is you owner, -- an of somewhere maximize as you as $X,XXX, south how probably a are but are charter looking from as So able glean to to

the And how based then kind also our outperform you that's so ability methodology platform. to And an Eagle from our and on trading to it. of standpoint, index get

right year the $X,XXX, a scrubber add for $X,XXX roughly, a probably I'd a to quick say about at of on So based a day you're premium one on looking midsize just math. forward period curve, ship to on now,

them include position forward, we report FFA XX% at our any is because time dynamic. In terms our we given say of don't in of coverage, FFAs when we our only covered And June we're our as XX.

and As back. we buy I sell mentioned, may FFA an it

-- building are report coverage So into we I we do and -- but once in that because have at are -- quarter we only as it some remarks, leave mentioned year. we next a it our

right? we're against looking And numbers be backwardated it's general, around of today, may hedge an like that. -- we mean opportunity charter extremely backwardated. those the in ship kinds we find or at today just market trades that our still There year being aside today. index the we fleet which to the severely Next year, significantly off I $XX,XXX something next for to in from not

a increasing see, on, of So more been can of XX% and there's we've physical much let's covered this FFAs. fleet as you focused for our next position of focused I on say, on mentioned, Hopefully, year as where our year, just as as And hedge almost not XX, June also helpful. that's backwardation.

Poe Fratt

in and And Very That had helpful. third significant third then fourth a continue in quarter. build in second you quarters. the should -- the pretty Yes. cash the

that over right maybe you're the a is Board something is support build, that in to being Looking net at capital going debt I each decline. at just X formula of you also debt, while cash wondering in about thinking to in your by likely something now? look context looking quarter-to-quarter cash next some Is dividend likely sort was in how of the decide that to course XXXX? of context of that coming on potentially $X.XX And it's do the the how $X up the quarter? allocating the you're at to decline the is to net end dividend then Or the And year, convert of basis? the to keep allocation -- closer it's now, it

Gary Vogel

And whether I it shows it's we've adjustments past not back start revenue our you. I be me focused it's in had during in of as really I'm significant a capital and $X. let noncash all to quarter on done on what look actions, of get willingness decided the there. easy seriousness, at -- to an but appropriate, on maximizing us think from have the last excess quarter. next cash that's the FFAs So focused not build. think dividend guarantee, will pay Board they've the Board right, our feel decision you so But What what XX% past brought saying when in to quarter that allocate our or if when by you is a mentioned, we they I'm deem

option. You a about. mentioned is convert, shares that something At be converted. will or use company's that combination or in talked of the we and cash we we've both also point, that's the Whether some of likely course, --

cash redemption cost that, we than maturity, the because we around the pricing. building now for get makes of And out, closer which behind an years less early So is modeling as to Black-Scholes two down sense. the think, goes

some as So an cash sheet with optionality around on that makes building sense. we nothing balance having well. think And cash the there's wrong standpoint from

Operator

[Operator I'd at for to turn like questions remarks. this management Instructions] further the back I'm closing showing time. call no to

Gary Vogel

Thank you, operator.

but everyone weekend. I'd and We you. a thank have a wish further, nothing to good everyone joining good us for like day and Thank

Operator

Thank call. you conference today's concludes for participating. This

You may disconnect. now

Eagle Bulk Shipping (EGLE) 5 Aug 222022 Q2 Earnings call transcript