Eagle Bulk Shipping Inc., one of the world’s largest owner-operators within the midsize drybulk vessel segment, today reported financial results for the quarter ended March 31, 2023.
Quarter Highlights:
- Generated Revenues, net of $105.2 million
- Achieved TCE(1) of $12,917/day based on TCE Revenue(1) of $59.2 million
- Realized net income of $3.2 million, or $0.25 per basic share
- Adjusted net income(1) of $3.4 million, or $0.26 per basic share(1)
- Generated Adjusted EBITDA(1) of $18.7 million
- Executed agreements to acquire two high-specification 2020-built scrubber-fitted Ultramax bulkcarriers for $60.2 million, or $30.1
- million each
- Vessels are to be renamed Halifax Eagle and Vancouver Eagle and are expected to be delivered during the second quarter
- Declared a quarterly dividend of $0.10 per share for the first quarter of 2023
- Dividend is payable on May 25, 2023 to shareholders of record at the close of business on May 17, 2023
Recent Developments:
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- Executed agreements to sell three 2011-built non-core, non-scrubber-fitted Supramax bulkcarriers (Montauk Eagle, Newport Eagle and
- Sankaty Eagle) for $49.8 million, or $16.6 million each
- Sale of the Newport Eagle closed on May 3, 2023, while the remaining two transactions are expected to close during the second quarter
Coverage position for the second quarter of 2023 is as follows:
- 65% of owned available days fixed at an average TCE of $16,030
- Eagle’s CEO Gary Vogel commented, “Against the industry backdrop of a seasonally weak market in the first quarter, we achieved a net
- TCE of $12,917 for the period, representing meaningful outperformance versus the benchmark BSI (Baltic Supramax Index). Based on recent developments and given our general view of market fundamentals for the balance of the year, we believe the first quarter will represent the bottom for freight rates in 2023.
On the vessel sale and purchase front, we continue to act opportunistically to create value for our stakeholders. Following our recent accretive acquisitions of four modern high-specification Ultramaxes, we have taken advantage of a recent increase in both S&P liquidity and ship values to sell three non-core, non-scrubber-fitted Supramax vessels, which were purchased opportunistically just two years ago. Based on our calculations, we generated a levered IRR of 70% on this S&P transaction, inclusive of cash generated.
Looking forward, we remain positive about the medium-term prospects for the drybulk industry, particularly given strong supply side fundamentals. With a fully modern fleet of 52, predominately scrubber-fitted vessels, and $235 million of liquidity, Eagle is in a unique leadership position to continue to take advantage of opportunities for the benefit of our shareholders.”
Results of Operations for the three months ended March 31, 2023 and 2022
For the three months ended March 31, 2023, the Company reported net income of $3.2 million, or basic and diluted net income per share of $0.25 and $0.24, respectively. In the comparable quarter of 2022, the Company reported net income of $53.1 million, or basic and diluted net income per share of $4.09 and $3.27, respectively.
For the three months ended March 31, 2023, the Company reported adjusted net income of $3.4 million, which excludes net unrealized losses on FFAs and bunker swaps of $0.2 million, or basic and diluted adjusted net income per share of $0.26. In the comparable quarter of 2022, the Company reported adjusted net income of $64.5 million, which excludes net unrealized losses on FFAs and bunker swaps of $11.5 million, or basic and diluted adjusted net income per share of $4.97 and $3.97, respectively.
Revenues, net
Revenues, net for the three months ended March 31, 2023 were $105.2 million compared to $184.4 million for the comparable quarter in 2022. Revenues, net decreased $79.2 million primarily due to lower rates on both time and voyage charters, driven by a decline in the drybulk market.
Voyage expenses
Voyage expenses for the three months ended March 31, 2023 were $33.5 million compared to $43.6 million for the comparable quarter in 2022. Voyage expenses decreased $10.2 million primarily due to a $6.0 million reduction in port expenses and a $3.0 million decrease in bunker consumption expenses, each primarily driven by a decrease in voyage charters.
Vessel operating expenses
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Vessel operating expenses for the three months ended March 31, 2023 were $31.3 million compared to $27.9 million for the comparable quarter in 2022. Vessel operating expenses increased $3.3 million as a result of higher ownership days and primarily due to a $2.2 million increase in crewing costs driven by higher crew compensation costs and a $0.8 million increase in stores and spares related to the timing of purchases.
Adjusted vessel operating expenses(1), which excludes one-time, non-recurring expenses related to vessel acquisitions, charges relating to a change in the crewing manager on some of the Company’s vessels and discretionary hull and hold upgrades for the three months ended March 31, 2023 were $30.8 million compared to $27.8 million for the comparable quarter in 2022. Adjusted vessel operating expenses increased $3.0 million primarily due to a $2.2 million increase in crewing costs driven by higher crew compensation costs and a $0.8 million increase in stores and spares driven by the timing of purchases. Average daily adjusted vessel operating expenses(1) (“Adjusted DVOE”) for the three months ended March 31, 2023 were $6,400 compared to $5,821 for the comparable quarter in 2022.
Charter hire expenses
Charter hire expenses for the three months ended March 31, 2023 were $12.4 million compared to $22.7 million for the comparable quarter in 2022. Charter hire expenses decreased $10.3 million primarily due to a decrease in charter hire rates related to a decline in the drybulk market.
Chartered-in days, which is the aggregate number of days in a period during which the Company chartered-in vessels, for the three months ended March 31, 2023 and 2022 were 944 and 960 days, respectively.
Depreciation and amortization
Depreciation and amortization for the three months ended March 31, 2023 was $14.7 million compared to $14.6 million for the comparable quarter in 2022. Depreciation and amortization increased $0.1 million primarily due to a $0.7 million increase in deferred drydocking cost amortization due to higher drydocking expenditures and a $0.3 million increase in depreciation driven by the net impact of vessels acquired and sold during the respective periods. This was partially offset by a $1.0 million decrease in depreciation due to a change in our estimated vessel scrap value from $300 per lwt to $400 per lwt, effective January 1, 2023.
General and administrative expenses
General and administrative expenses for the three months ended March 31, 2023 were $11.0 million compared to $10.1 million for the comparable quarter in 2022. Excluding stock-based compensation expense of $1.9 million and $1.5 million for the three months ended March 31, 2023 and 2022, respectively, general and administrative expenses for the three months ended March 31, 2023 were $9.1 million compared to $8.6 million for the comparable quarter in 2022. General and administrative expenses increased $0.9 million primarily due to a $0.4 million increase in stock-based compensation expense and a $0.2 million increase in professional fees.
Other operating expense
Other operating expense for the three months ended March 31, 2023 and 2022 was $0.1 million.
Gain on sale of vessel
For the three months ended March 31, 2023, the Company recorded a gain on the sale of the vessel Jaeger of $3.3 million.
Interest expense
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Interest expense for the three months ended March 31, 2023 and 2022 was $3.9 million and $4.4 million, respectively. Interest expense decreased $0.6 million due to lower outstanding principal balances driven by principal repayments.
Interest income
Interest income for the three months ended March 31, 2023 and 2022 was $1.8 million and less than $0.1 million, respectively. Interest income increased primarily due to higher interest rates on the Company’s cash balances.
Realized and unrealized loss on derivative instruments, net
Realized and unrealized loss on derivative instruments, net for the three months ended March 31, 2023 was $0.4 million compared to $7.9 million for the comparable quarter in 2022. The realized and unrealized loss on derivative instruments, net decreased $7.5 million due to market movements as well as lower FFA and bunker swap activity.
Source: Eagle Bulk Shipping Inc.
