Eagle Bulk Shipping Inc. Reports Fourth Quarter and Fiscal Year 2009 Results.
Eagle Bulk Shipping Inc. yesterday announced its results for the fourth quarter and fiscal year ended December 31, 2009. Subsequent to the end of the 2009 year, in January and February of 2010, the Company took delivery of six newbuilding vessels, Crane, Avocet, Egret Bulker, Thrasher, Golden Eagle, and Imperial Eagle. Four of these vessels entered into their long-term time charters representing minimum aggregate contracted revenues of $198 million, excluding profit sharing, while two vessels entered into one year time charters linked to the Baltic Supramax Index.
Sophocles N. Zoullas, Chairman and Chief Executive Officer, commented, "Eagle Bulk maintained profitability and continuing operational excellence in 2009, despite ongoing challenges in the global dry bulk market during the first half of the year. As the market improved in the latter half of 2009, Eagle Bulk benefited from our well-timed entry into Baltic Supramax Index-linked ("BSI") charters. Additional highlights included the successful deliveries of four newbuild vessels, as well as the favorable amendment to the Company's credit facility that strengthened and added flexibility to the balance sheet.
"These developments have, in turn, allowed us to look forward in 2010 with a focus on unlocking shareholder value. Already in 2010, we have taken delivery of 6 newbuilds with minimum aggregate contracted revenues of approximately $200 million, excluding profit sharing. For the balance of this year, we have scheduled additional deliveries of 7 newbuilds with minimum aggregate contracted revenues in excess of $200 million, excluding profit sharing.
"We are also poised to benefit from direct participation in the spot market, as 28% of our 2010 open days are unfixed while an additional 16% of days are tied to the BSI. In aggregate, this 44% exposure to the spot market occurs against the backdrop of improved industry fundamentals and recovering dry bulk demand. With one of the industry's youngest, most versatile fleets, cash flow stability and a strong operating platform, Eagle Bulk is well-positioned to create value for its shareholders in the year ahead."
Results for the three months ended December 31, 2009 and 2008
For the fourth quarter of 2009, the Company reported net income of $2,190,694 or $0.04 per share, based on a weighted average of 62,084,656 diluted shares outstanding.
In the comparable fourth quarter of 2008, the Company reported net income of $9,159,252 or $0.20 per share, based on a weighted average of 46,915,087 diluted shares outstanding.
All of the Company's revenues were earned from time charters. Gross revenues in the quarter ended December 31, 2009 were $43,550,569, compared to $62,410,576 recorded in the comparable quarter in 2008. Net revenues during the quarter ended December 31, 2009 were $42,024,017 compared to $59,962,501 in the quarter ended December 31, 2008. Revenues in 2009 were impacted by lower time charter rates due to prevailing market conditions. Net revenues recorded in the 2009 quarter include non-cash amortization of fair value below contract value of time charters acquired of $701,542, compared to a non-cash charge of $535,487 recorded in the 2008 quarter which relates to the fair value below contract value of time charters acquired. Brokerage commissions incurred on revenues earned were $2,228,094 and $2,983,561 in the fourth quarters of 2009 and 2008, respectively.
Total operating expenses in the quarter ended December 31, 2009 were $31,592,816 compared to $43,539,354 recorded in the fourth quarter of 2008. The Company operated 27 vessels in the fourth quarter of 2009 compared to 23 vessels in 2008. Despite the increase in fleet size and the corresponding increase in vessel expenses and depreciation, total operating expenses in the fourth quarter of 2009 was lower primarily due to lower general and administrative expenses compared to the previous fourth quarter of 2008, which was also impacted by a one time write-off relating to conversion of newbuilding contracts into options.
EBITDA, adjusted for exceptional items under the terms of the Company's credit agreement, was $25,189,121 for the fourth quarter of 2009, compared to $33,474,374 for the fourth quarter of 2008. (Please see below for a reconciliation of EBITDA to net income).
Results for the years ended December 31, 2009 and 2008
For the year ended December 31, 2009, the Company reported net income of $33,287,271 or $0.60 per share, based on a weighted average of 55,923,308 diluted shares outstanding.
In the comparable year ended December 31, 2008, the Company reported net income of $61,632,809 or $1.31 per share, based on a weighted average of 46,888,788 diluted shares outstanding.
All of the Company's revenues were earned from Time Charters. Gross revenues for the year ended December 31, 2009 were $199,851,763, an increase of 3% from the $194,253,142 recorded in 2008. Net revenues for the year ended December 31, 2009 were $192,574,826 compared to $185,424,949 for 2008, an increase of 4% primarily due to the operation of a larger fleet in 2009, which, however, was offset by lower time charter rates. Net revenues in 2009 include non-cash amortization of the fair value below contract value of time charters acquired of $2,643,820, compared to $799,540 recorded in 2008. Brokerage commissions incurred on revenues earned were $9,920,757 and $9,627,733 in 2009 and 2008, respectively.
Total operating expenses in 2009 increased to $127,204,266 from $108,669,180 in 2008. The increase in expenses is attributable to a larger fleet size in operation for 2009. Costs in 2009 were impacted by higher depreciation expenses and increases in vessel crew costs, insurance costs, costs relating to anti-piracy measures, and general increases in costs of stores and spares. Despite these increases in vessel and depreciation expenses, general and administrative expenses were lower in 2009 compared to 2008, even as the fleet grew in size.
EBITDA, adjusted for exceptional items under the terms of the Company's credit agreement, decreased by 5% to $121,238,582 in 2009, from $127,683,156 in 2008. (Please see below for a reconciliation of EBITDA to net income).
The Company had entered into vessel newbuilding contracts at shipyard in Japan and China. During 2009, four vessels, Crested Eagle, Stellar Eagle, Bittern and Canary were constructed and delivered into the Company's fleet. During the previous year, 2008, three vessels, Wren, Woodstar, and Crowned Eagle, were delivered into the fleet. As of December 31, 2009, the Company's newbuilding program now consists of 20 vessels to be built and delivered during 2010-11. As of December 31, 2009, the Company has recorded advances of $464,173,887 towards the construction cost of these 20 vessels. These costs include progress payments to the shipyards, capitalized interest on debt drawn for the progress payments, insurance, legal, and technical supervision costs. (Table below provides anticipated delivery dates on the newbuilding fleet).
Liquidity and Capital Resources
Net cash provided by operating activities during the years ended December 31, 2009 and 2008 was $90,524,861 and $109,535,918, respectively.
Net cash used in investing activities during 2009 and 2008, was $228,624,263 and $336,657,686, respectively. Investing activities in 2009 related to advances for the newbuilding vessel construction program. Investing activities during 2008 primarily reflected the purchase of the GOLDENEYE and REDWING, which were delivered in the second and third quarter of 2008, respectively, and advances for the newbuilding vessel construction program.
Net cash provided by financing activities during 2009 and 2008 was $200,235,313 and $83,426,938, respectively. In 2009, the Company raised $100 million in equity through its shelf equity program. Gross borrowings in 2009 were $159,215,000 and the Company used part of the proceeds from the equity offering to repay $48,645,523 of debt. In 2008, the Company borrowed $192,358,513 from its revolving credit facility which was used to partly fund the REDWING and fund the advances for the construction of newbuilding vessels. In 2008, the Company also paid $93,592,906 in dividends.
As of December 31, 2009, the cash balance was $71,344,773 compared to a cash balance of $9,208,862 at December 31, 2008. In addition, $13,500,000 in cash deposits are maintained with the Company's lender for loan compliance purposes and this amount is recorded in Restricted Cash on the balance sheet as of December 31, 2009. Also recorded in Restricted Cash is an amount of $276,056 which is collateralizing a letter of credit relating to the Company's office lease.
At December 31, 2009, the Company had outstanding debt of $900,170,880. In August 2009, the Company amended its credit facility which among other things reduced the facility to $1.2 billion with a maturity in July 2014, amended the applicable interest margin to 2.5% over LIBOR, and until the Company is in compliance with the original covenants for two consecutive accounting periods, amended the collateral covenants from market values to book values, reduced the EBITDA to interest coverage ratio, and allocated half the net proceeds from any equity issuance to repay debt and reduce the facility. The repayment of $48.6 million from the last equity offering reduced the facility to $1.151 billion.
Eagle Bulk Shipping Inc. Takes Delivery of Imperial Eagle
Eagle Bulk Shipping Inc. yesterday announced that it has taken delivery of Imperial Eagle, a 'Future-56' class, 56,000 dwt Supramax dry bulk vessel. The vessel has entered into a one-year time charter tied to the Baltic Supramax Index ("BSI"), ensuring Eagle participates directly in strong rates in the spot market while retaining the stability of a one-year charter.
The Imperial Eagle represents the final of five newbuilds constructed under contract with IHI Marine United, Inc., one of Japan's pre-eminent shipyards. Commenting on the milestone, Eagle Bulk's Chairman and CEO Sophocles Zoullas said, "We have been honored to work in partnership with IHI Marine United, which has delivered vessels of impeccable quality and performance."
Eagle Bulk Shipping, Inc., headquartered in New York City, is a leading global owner of Supramax dry bulk vessels, which are dry bulk vessels that range in size from 50,000 to 60,000 deadweight tons, or dwt, and transport a broad range of major and minor bulk cargoes, including iron ore, coal, grain, cement and fertilizer, along worldwide shipping routes.