Eagle Bulk Shipping Inc. Reports Results for the First Quarter of 2022

Research, News, and Market Data on Eagle Bulk Shipping

STAMFORD, Conn., May 05, 2022 (GLOBE NEWSWIRE) — Eagle Bulk Shipping Inc. (NASDAQ: EGLE) (“Eagle Bulk,” “Eagle” or the “Company”), one of the world’s largest owner-operators within the midsize drybulk vessel segment, today reported financial results for the quarter ended March 31, 2022.

Quarter highlights:

• Generated Revenues, net of $184.4 million
• Achieved TCE
  ⁽¹⁾ of $27,407/day basis TCE Revenue⁽¹⁾ of $121.6 million

• Realized net income of $53.1 million, or $4.09 per basic share
• Adjusted net income⁽¹⁾ of $64.5 million, or $4.97 per adjusted basic share⁽¹⁾

• Generated EBITDA
  ⁽¹⁾ of $72.1 million
• Adjusted EBITDA
  ⁽¹⁾ of $85.0 million

• Declared a quarterly dividend of $2.00 per share for the first quarter of 2022. Payable on May 25, 2022 to shareholders of record at the close of business on May 16, 2022

Recent Developments:

• Looking ahead, as of May 3, 2022, our coverage position is as follows:
• Q2 2022 – 83% of available days fixed at an average TCE of $29,300

Eagle’s CEO Gary Vogel commented, “Over the past few months, the tragic situation in Ukraine has had a direct impact on our industry and our Company, with cargo trading patterns being disrupted and altered.  Furthermore, a significant number of our seafarer colleagues are from Ukraine, and they are all affected by what is happening to their country and their loved ones.  The safety and well-being of our crew is of paramount importance, and we are focused on supporting them during this difficult time by providing assistance with temporary housing, transportation, and helping with other needs.

Notwithstanding a volatile rate environment, Eagle posted strong results in the first quarter, in what is typically the weakest period of the year.  We achieved a TCE of $27,407 per day, generating an adjusted net income of $65 million for the quarter.  Based on this result and our expectations for continued strong performance, Eagle’s Board declared a first quarter dividend of $2.00 per share, bringing total distributions to over $6 per share since we initiated our dividend program just seven months ago.

Demand growth for minor bulks remains healthy and continues to outpace demand for the broader drybulk market, resulting in Supramax/Ultramax vessels outperforming the larger dry bulk segments.  Voyage distances have also increased, driven primarily by dislocations caused by the war in Ukraine, which has in turn helped to strengthen spot rates.  On the back of this and our active management approach to trading, Eagle has thus far procured approximately 83% of its available days for the second quarter at a net TCE of $29,300 per day.”

1

These are non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial tables included in this press release. An explanation of these measures and how they are calculated are also included below under the heading “Supplemental Information – Non-GAAP Financial Measures.”

Fleet Operating Data 

Results of Operations for
the three months ended March 31, 2022 and 2021

For the three months ended March 31, 2022, the Company reported net income of $53.1 million, or basic and diluted income of $4.09 per share and $3.27 per share, respectively. In the comparable quarter of 2021, the Company reported net income of $9.8 million, or basic and diluted income of $0.84 per share.

For the three months ended March 31, 2022, the Company reported an adjusted net income of $64.5 million, which excludes unrealized losses on derivative instruments of $11.4 million, or basic and diluted adjusted net income of $4.97 per share and $3.97 per share, respectively. In the comparable quarter of 2021, the Company reported adjusted net income of $9.3 million, which excludes unrealized gains on derivative instruments of $0.5 million, or basic and diluted adjusted net income of $0.80 per share.

Revenues, net

Revenues, net for the three months ended March 31, 2022 were $184.4 million compared to $96.6 million in the comparable quarter in 2021. The increase in revenues was primarily attributable to higher charter rates as a result of the market recovery with increase in demand for drybulk products.

Voyage expenses

Voyage expenses for the three months ended March 31, 2022 were $43.6 million compared to $26.6 million in the comparable quarter in 2021. The increase in voyage expenses was primarily due to an increase in bunker consumption expense as bunker fuel prices increased in the first quarter, as well as an increase in voyage charter business and an increase in broker commission expense as a result of the increase in revenues.

Vessel operating expenses

Vessel operating expenses for the three months ended March 31, 2022 were $27.9 million compared to $21.5 million in the comparable quarter in 2021. The increase in vessel operating expenses was primarily attributable to higher owned days and an increase in vessel upgrades as a result of an increase in repairs and upgrades performed while vessels were in drydock. The Company continues to incur higher costs related to the delivery of stores and spares, as well as crew changes as a result of the ongoing COVID-19 pandemic. The ownership days for the three months ended March 31, 2022 and 2021 were 4,770 and 4,199, respectively.

Average daily vessel operating expenses excluding one-time, non-recurring expenses related to vessel acquisitions for the three months ended March 31, 2022 were $5,821 as compared to $4,894 for the three months ended March 31, 2021.

Charter hire expenses

Charter hire expenses for the three months ended March 31, 2022 were $22.7 million compared to $8.5 million in the comparable quarter in 2021. The increase in charter hire expenses was principally due to an increase in chartered-in days and an increase in charter hire rates due to improvement in the charter hire market. The total chartered-in days for the three months ended March 31, 2022 were 960 compared to 658 for the comparable quarter in the prior year. The Company currently charters in four Ultramax vessels on a long-term basis as of the charter-in commencement date with options to extend the charter period.

Depreciation and
amortization

Depreciation and amortization expense for the three months ended March 31, 2022 and 2021 was $14.6 million and $12.5 million, respectively. Total depreciation and amortization expense for the three months ended March 31, 2022 includes $11.7 million of vessel and other fixed asset depreciation and $2.9 million relating to the amortization of deferred drydocking costs. Comparable amounts for the three months ended March 31, 2021 were $10.5 million of vessel and other fixed asset depreciation and $2.0 million of amortization of deferred drydocking costs. The increase in depreciation expense is due to the acquisition of nine Ultramax vessels in 2021, offset by the sale of one vessel in the third quarter of 2021. The increase in amortization of deferred drydock costs is related to completing eleven drydocks since the first quarter of 2021.

General and administrative
expenses

General and administrative expenses for the three months ended March 31, 2022 and 2021 were $10.1 million and $7.7 million, respectively. General and administrative expenses include stock-based compensation of $1.5 million and $0.9 million for the three months ended March 31, 2022 and 2021, respectively. The increase in general and administrative expenses was mainly attributable to an increase in legal and consulting expenses, compensation and benefits, and stock-based compensation expense.

Other operating expense

Other operating expense for the three months ended March 31, 2022 and 2021 was $0.1 million and $1.0 million, respectively. In March 2021, the U.S. government began investigating an allegation that one of our vessels may have improperly disposed of ballast water that entered the engine room bilges during a repair. The Company posted a surety bond as security for any fines, penalties or associated costs that may be issued. Other operating expense consists of expenses relating to the incident, which include legal fees, surety bond expenses, vessel off-hire, crew changes and travel costs.

Interest expense

Interest expense for the three months ended March 31, 2022 and 2021 was $4.4 million and $8.3 million, respectively. The decrease in interest expense is primarily due to a decrease in outstanding debt and lower interest rates due to the refinancing of the Company’s debt in the fourth quarter of 2021.

Realized and unrealized
loss on derivative instruments, net

Realized and unrealized loss on derivative instruments, net for the three months ended March 31, 2022 and 2021 was $7.9 million and $0.7 million, respectively. The increase in realized and unrealized losses is primarily related to losses incurred on our freight forward agreements as a result of the increase in charter hire rates. The non-cash unrealized losses on forward freight agreements (“FFA”) for the remaining nine months of 2022 amounted to $14.3 million based on 2,520 days hedged at a weighted average FFA contract price of $20,942 per day.

The following table shows our open positions on FFAs as of March 31, 2022:

        
Liquidity and Capital Resources

	Three Months Ended
(In thousands)	March 31, 2022				March 31, 2021
Net cash provided by operating activities  (1)	$	42,254			$	14,333
Net cash used in investing activities  (2)		(3,937	)			(53,385	)
Net cash (used in)/provided by financing activities (3)		(40,862	)			30,916
Net decrease in cash, cash equivalents and restricted cash		(2,545	)			(8,136	)
Cash, cash equivalents and restricted cash at beginning of period		86,222				88,849
Cash, cash equivalents and restricted cash at end of period	$	83,677			$	80,713

 

(1)	Net cash provided by operating activities for the three months ended March 31, 2022 and 2021 was $42.3 million and $14.3 million, respectively. The increase in cash flows provided by operating activities resulted primarily from the increase in revenues due to higher charter hire rates.
(2)	Net cash used in investing activities for the three months ended March 31, 2022 was $3.9 million, compared to $53.4 million in the comparable period in the prior year. During the three months ended March 31, 2022, the Company paid $3.5 million for the purchase of ballast water treatment systems on our fleet. Additionally, the Company paid $0.3 million for vessel improvements and $0.2 million for other fixed assets.
(3)	Net cash used in financing activities for the three months ended March 31, 2022 was $40.9 million compared to net cash provided by financing activities of $30.9 million in the comparable period in 2021. During the three months ended March 31, 2022, the Company repaid $12.5 million of the Global Ultraco Facility. The Company also paid $26.8 million in dividends and $1.9 million to settle net share equity awards.

As of March 31, 2022, our cash and cash equivalents including restricted cash was $83.7 million compared to $86.2 million as of December 31, 2021.

As of March 31, 2022, the Company’s outstanding debt of $389.2 million which excludes debt discount and debt issuance costs consisted of $275.1 million under the Global Ultraco Debt Facility and $114.1 million under the Convertible Bond Debt.

In addition, as of March 31, 2022, we had $100.0 million in an undrawn revolver facility available under the Global Ultraco Debt Facility.

We continuously evaluate potential transactions that we believe will be accretive to earnings, enhance shareholder value or are in the best interests of the Company, including without limitation, business combinations, the acquisition of vessels or related businesses, repayment or refinancing of existing debt, the issuance of new securities, share repurchases or other transactions.

Capital Expenditures and
Drydocking

Our capital expenditures relate to the purchase of vessels and capital improvements to our vessels, which are expected to enhance the revenue earning capabilities and safety of the vessels.

In addition to acquisitions that we may undertake in future periods, the Company’s other major capital expenditures include funding the Company’s program of regularly scheduled drydocking necessary to comply with international shipping standards and environmental laws and regulations. Although the Company has some flexibility regarding the timing of its drydocking, the costs are relatively predictable. Management anticipates that vessels are to be drydocked every two and a half years for vessels older than 15 years and five years for vessels younger than 15 years. Funding of these requirements is anticipated to be met with cash from operations. We anticipate that this process of recertification will require us to reposition these vessels from a discharge port to shipyard facilities, which will reduce our available days and operating days during that period.

Drydocking costs incurred are deferred and amortized to expense on a straight-line basis over the period through the date of the next scheduled drydocking for those vessels. In the three months ended March 31, 2022, four of our vessels completed drydock and one vessel was in drydock as of March 31, 2022, and we incurred drydocking expenditures of $10.8 million. In the three months ended March 31, 2021, four of our vessels completed drydock and we incurred drydocking expenditures of $4.8 million.

The following table represents certain information about the estimated costs for anticipated vessel drydockings, ballast water treatment systems (“BWTS”), and vessel upgrades in the next four quarters, along with the anticipated off-hire days:

 

 

SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

The following table summarizes the Company’s selected condensed consolidated financial and other data for the periods indicated below.

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2022 and 2021
(In thousands, except share and per share data)

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2022 and December 31, 2021
(In thousands, except share data and par values)

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2022 and 2021
(In thousands)

 

Supplemental Information – Non-GAAP Financial Measures

This release includes various financial measures that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission (“SEC”). We believe these measures provide important supplemental information to investors to use in evaluating ongoing operating results. We use these measures, together with accounting principles generally accepted in the United States (“GAAP” or “U.S. GAAP”) measures, for internal managerial purposes and as a means to evaluate period-to-period comparisons. However, we do not, and you should not, rely on non-GAAP financial measures alone as measures of our performance. We believe that non-GAAP financial measures reflect an additional way of viewing aspects of our operations, that when taken together with GAAP results and the reconciliations to corresponding GAAP financial measures that we also provide in our press releases, provide a more complete understanding of factors and trends affecting our business. We strongly encourage you to review all of our financial statements and publicly-filed reports in their entirety and to not rely on any single financial measure.

Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures, even if they have similar names.

Non-GAAP Financial Measures

(1) Adjusted net income and
Adjusted Basic and Diluted income per share

Adjusted net income and Adjusted Basic and Diluted income per share represents Net income and Basic and Diluted income per share, respectively, as adjusted to exclude non-cash unrealized losses/(gains) on derivatives and loss on debt extinguishment. The Company utilizes derivative instruments such as FFAs to partially hedge against its underlying long physical position in ships (as represented by owned and third-party chartered-in vessels). The Company does not apply hedge accounting, and, as such, the mark-to-market gains/(losses) on forward hedge positions impact current quarter results, causing timing mismatches in the Condensed Consolidated Statement of Operations. Additionally, we believe that loss on debt extinguishment is not representative of our normal business operations. We believe that Adjusted net income and Adjusted income per share are more useful to analysts and investors in comparing the results of operations and operational trends between periods and relative to other peer companies in our industry. Our Adjusted net income should not be considered an alternative to net income, operating income, cash flows provided by operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. As noted above, our Adjusted net income may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted net income in the same manner.

The following table presents the reconciliation of our Net income to Adjusted net income:

Reconciliation of GAAP Net income to Adjusted Net income
For the Three Months Ended March 31, 2022 and 2021
(In thousands, except share and per share data)

 

(1)	The number of shares used in the Diluted income per share and Diluted adjusted net income per share calculation for the three months ended March 31, 2022 includes 3,150,381 dilutive shares related to the Convertible Bond Debt based on the if-converted method per U.S. GAAP in addition to the restricted stock awards and restricted stock units based on the Treasury stock method.
(2)	EBITDA and Adjusted EBITDA

We define EBITDA as net income under GAAP adjusted for interest, income taxes, depreciation and amortization.

Adjusted EBITDA is a non-GAAP financial measure that is used as a supplemental financial measure by our management and by external users of our financial statements, such as investors, commercial banks and others, to assess our operating performance as compared to that of other companies in our industry, without regard to financing methods, capital structure or historical costs basis. Our Adjusted EBITDA should not be considered an alternative to net income/(loss), operating income/(loss), cash flows provided by/(used in) operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. Our Adjusted EBITDA may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDA in the same manner. Adjusted EBITDA represents EBITDA adjusted to exclude the items which represent certain non-cash, one-time and other items such as vessel impairment, gain/(loss) on sale of vessels, impairment of operating lease right-of-use assets, unrealized (gain)/loss on derivatives, loss on debt extinguishment and stock-based compensation expenses that the Company believes are not indicative of the ongoing performance of its core operations.

The following table presents a reconciliation of our net income to EBITDA and Adjusted EBITDA:

Reconciliation of GAAP Net income to EBITDA and Adjusted EBITDA
For the Three Months Ended March 31, 2022 and 2021
(In thousands)

 

(1)	One-time and other adjustments to EBITDA for the three months ended March 31, 2022 includes stock-based compensation and unrealized losses on derivatives. One-time and other adjustments to EBITDA for the three months ended March 31, 2021 includes stock-based compensation and unrealized gains on derivatives.
(3)	TCE revenue and TCE

Time charter equivalent (“TCE”) is a non-GAAP financial measure that is commonly used in the shipping industry primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per-day amounts while charter hire rates for vessels on time charters generally are expressed in such amounts. The Company defines TCE as shipping revenues less voyage expenses and charter hire expenses, adjusted for realized gains/(losses) on FFAs and bunker swaps, divided by the number of owned available days. TCE provides additional meaningful information in conjunction with shipping revenues, the most directly comparable GAAP measure, because it assists Company management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance. The Company’s calculation of TCE may not be comparable to that reported by other companies. The Company calculates relative performance by comparing TCE against the Baltic Supramax Index (“BSI”) adjusted for commissions and fleet makeup. Owned available days is the number of our ownership days less the aggregate number of days that our vessels are off-hire due to vessel familiarization upon acquisition, repairs, vessel upgrades or special surveys. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues.

The following table presents the reconciliation of revenues, net to TCE:

Reconciliation of Revenues, net to TCE
For the Three Months Ended March 31, 2022 and 2021
(In thousands, except owned available days and TCE data)

 

(1)	Prior to the third quarter of 2021, the Company adjusted for the impact of one legacy time charter in the TCE revenue and TCE financial measures.

Glossary of Terms:

Ownership days: We define ownership days as the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we recorded during a period.

Chartered-in under operating lease days: We define chartered-in under operating lease days as the aggregate number of days in a period during which we chartered-in vessels. Periodically, the Company charters in vessels on a single trip basis.

Available days: We define available days as the number of our ownership days and chartered-in days less the aggregate number of days that our vessels are off-hire due to vessel familiarization upon acquisition, repairs, vessel upgrades or special surveys and other reasons which prevent the vessel from performing under the relevant charter party such as surveys, medical events, stowaway disembarkation, etc. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues.

Operating days: We define operating days as the number of available days in a period less the aggregate number of days that our vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.

Fleet utilization: We calculate fleet utilization by dividing the number of our operating days during a period by the number of our available days during the period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning. Our fleet continues to perform at high utilization rates.

Definitions of capitalized terms related to our Indebtedness

Global Ultraco Debt Facility: Global Ultraco Debt Facility refers to the senior secured credit facility entered into by Ultraco on October 1, 2021, along with certain of its vessel-owning subsidiaries as guarantors, with the lenders party thereto (the “Lenders”), Credit Agricole Corporate and Investment Bank (“Credit Agricole”), Skandinaviska Enskilda Banken AB (PUBL), Danish Ship Finance A/S, Nordea Bank ABP, Filial I Norge, DNB Markets Inc., Deutsche Bank AG, and ING Bank N.V., London Branch. The Global Ultraco Debt Facility provides for an aggregate principal amount of $400.0 million, which consists of (i) a term loan facility in an aggregate principal amount of $300.0 million and (ii) a revolving credit facility in an aggregate principal amount of $100.0 million. The Global Ultraco Debt Facility is secured by 49 of the Company’s vessels. As of March 31, 2022, $100.0 million of the revolving credit facility remains undrawn.

Convertible Bond Debt: Convertible Bond Debt refers to $114.1 million that the Company raised from its issuance of 5.0% Convertible Senior Notes on July 29, 2019. They are due in 2024.

New Ultraco Debt Facility: New Ultraco Debt Facility refers to senior secured credit facility for $208.4 million entered into by Ultraco Shipping LLC (“Ultraco”), a wholly-owned subsidiary of the Company, as the borrower (the “New Ultraco Debt Facility”), with the Company and certain of its indirectly vessel-owning subsidiaries, as guarantors (the “Guarantors”), the lenders party thereto, the swap banks party thereto, ABN AMRO Capital USA LLC (“ABN AMRO”), Credit Agricole Corporate and Investment Bank, Skandinaviska Enskilda Banken AB (PUBL) and DNB Markets Inc., as mandated lead arrangers and bookrunners, and Credit Agricole Corporate and Investment Bank, as arranger, security trustee and facility agent. The New Ultraco Debt Facility was refinanced on October 1, 2021.

Super Senior Facility: Super Senior Facility refers to the credit facility for $15.0 million, by and among Shipco as borrower, and ABN AMRO Capital USA LLC, as original lender, mandated lead arranger and agent. During the third quarter of 2021, the Company cancelled the Super Senior Revolving Facility. There were no outstanding amounts under the facility.

Conference Call Information

As previously announced, members of Eagle Bulk’s senior management team will host a teleconference and webcast at 8:00 a.m. ET on Friday, May 6, 2022, to discuss the first quarter results.

To participate in the teleconference, investors and analysts are invited to call +1 844-282-4411 in the U.S., or +1 512-900-2336 outside of the U.S., and reference participant code 4384843. A simultaneous webcast of the call, including a slide presentation for interested investors and others, may be accessed by visiting http://www.eagleships.com.

A replay will be available following the call from 11:00 AM ET on May 6, 2022 until 11:00 AM ET on May 16, 2022. To access the replay, call +1 855-859-2056 in the U.S., or +1 404-537-3406 outside of the U.S., and reference passcode 4384843.

About Eagle Bulk Shipping Inc.

Eagle Bulk Shipping Inc. (“Eagle” or the “Company”) is a U.S. based fully integrated, shipowner-operator providing global transportation solutions to a diverse group of customers including miners, producers, traders, and end users. Headquartered in Stamford, Connecticut, with offices in Singapore and Copenhagen, Denmark, Eagle focuses exclusively on the versatile mid-size drybulk vessel segment and owns one of the largest fleets of Supramax/Ultramax vessels in the world. The Company performs all management services in-house (including: strategic, commercial, operational, technical, and administrative) and employs an active management approach to fleet trading with the objective of optimizing revenue performance and maximizing earnings on a risk-managed basis. For further information, please visit our website: www.eagleships.com.

Website Information 

We intend to use our website, 
www.eagleships.com, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in our website’s Investor Relations section. Accordingly, investors should monitor the Investor Relations portion of our website, in addition to following our press releases, filings with the SEC, public conference calls, and webcasts. To subscribe to our e-mail alert service, please click the “Investor Alerts” link in the Investor Relations section of our website and submit your email address. The information contained in, or that may be accessed through, our website is not incorporated by reference into or a part of this document or any other report or document we file with or furnish to the SEC, and any references to our website are intended to be inactive textual references only.

Disclaimer: Forward-Looking Statements

Matters discussed in this release may constitute forward-looking statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements reflect current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. These statements may include words such as “believe,” “estimate,” “project,” “intend,” “expect,” “plan,” “anticipate,” and similar expressions in connection with any discussion of the timing or nature of future operating or financial performance or other events.

The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, examination of historical operating trends, data contained in our records and other data available from third parties. Although Eagle Bulk Shipping Inc. believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, Eagle Bulk Shipping Inc. cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.

Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, changes as a result of COVID-19, including the availability and effectiveness of vaccines on a widespread basis and the impact of any mutations of the virus, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled drydocking, changes in vessel operating expenses, including drydocking and insurance costs, or actions taken by regulatory authorities, ability of our counterparties to perform their obligations under sales agreements, charter contracts, and other agreements on a timely basis, potential liability from future litigation, domestic and international political conditions including the current conflict between Russia and Ukraine, which may impact our ability to retain and source crew, and in turn, could adversely affect our revenue, expenses and profitability, potential disruption of shipping routes due to accidents and political events or acts by terrorists.

Risks and uncertainties are further described in reports filed by Eagle Bulk Shipping Inc. with the SEC.

CONTACT

Company Contact:
Frank De Costanzo
Chief Financial Officer
Eagle Bulk Shipping Inc.
Tel. +1 203-276-8100
Email: 
investor@eagleships.com

Media:
Rose and Company
Tel. +1 212-359-2228
——————————————————————————–

Source: Eagle Bulk Shipping Inc.

Wednesday, May 04, 2022

Euroseas (ESEA)
Euroseas agrees to buy two container vessels

Euroseas Ltd. was formed on May 5, 2005 under the laws of the Republic of the Marshall Islands to consolidate the ship owning interests of the Pittas family of Athens, Greece, which has been in the shipping business over the past 140 years. Euroseas trades on the NASDAQ Capital Market under the ticker ESEA. Euroseas operates in the container shipping market. Euroseas’ operations are managed by Eurobulk Ltd., an ISO 9001:2008 and ISO 14001:2004 certified affiliated ship management company, which is responsible for the day-to-day commercial and technical management and operations of the vessels. Euroseas employs its vessels on spot and period charters and through pool arrangements.

Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Euroseas agreed to acquire two 4,250 teu container vessels for a combined price of $37 million. The acquisitions increase ESEA’s fleet to 18 vessels with 54,621 teu with an additional 7  newbuildings and 16,600 teu to be delivered in 2023-24. The price per teu is in line with recent prices, which have skyrocketed in the last 18 months as shipping rates have risen.

Euroseas has locked in shipping sales contracts to assure the acquisitions are immediately accretive to EBITDA. The M/V Seaspan Manila ship has a contract through February 2025 at prices near $20,000 (with ceiling and floor pricing after April 2024). The M/V Seaspan Melbourne has a contract until  March 2025 at $19,000/day. Combined, management believes the ships will add $20 million to EBITDA, or approximately $2.75 per share….

This Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

Genco Shipping & Trading Limited Announces First Quarter Financial Results

Research, News, and Market Data on Genco Shipping & Trading

Declares Dividend of $0.79 per share for First Quarter 2022

NEW YORK, May 04, 2022 (GLOBE NEWSWIRE) — Genco Shipping & Trading Limited (NYSE:GNK) (“Genco” or the “Company”), the largest U.S. headquartered drybulk shipowner focused on the global transportation of commodities, today reported its financial results for the three months ended March 31, 2022.

The following financial review discusses the results for the three months ended March 31, 2022 and March 31, 2021.

First
Quarter 2022 and Year-to-Date Highlights

• Declared a $0.79 per share dividend for the first quarter of 2022, an increase of 18% compared to the previous quarter
• Represents the second dividend payment under our value strategy and first full payout utilizing our run rate voluntary quarterly debt repayment figure of $8.75 million
• Marks the Company’s 11^th consecutive quarterly payout, reflecting cumulative dividends totaling $2.515 per share
• Q1 2022 dividend represents an annualized yield of 14% on Genco’s closing share price on May 3, 2022
• Payable on or about May 24, 2022 to all shareholders of record as of May 16, 2022
• Prepaid $48.75 million of debt on a voluntary basis during Q1 2022, to reduce our debt to $197.3 million, consisting of:
• $8.75 million: target quarterly voluntary debt prepayment as previously communicated
• $40.00 million: revolver prepayments as part of working capital management to save interest expense without impacting the dividend calculation
• Net loan-to-value of 12%¹ as of May 3, 2022
• Recorded net income of $41.7 million for the first quarter of 2022
• Basic and diluted earnings per share of $0.99 and $0.97, respectively
• Voyage revenues totaled $136.2 million and net revenue² (voyage revenues minus voyage expenses, charter hire expenses and realized gains or losses on fuel hedges) totaled $90.8 million during Q1 2022
• Our average daily fleet-wide time charter equivalent, or TCE², for Q1 2022 was $24,093, 98% higher YOY and our highest first quarter TCE since 2010
• We estimate our TCE to date for Q2 2022 to be $27,596 for 68% of our owned fleet available days, based on both period and current spot fixtures
• Recorded EBITDA of $58.0 million during Q1 2022²
• Maintained a strong liquidity position of $270.9 million as of March 31, 2022, including:
• $49.1 million of cash on the balance sheet
• $221.8 million of revolver availability
• Took delivery of the Genco Mary and the Genco Laddey, two high quality, fuel-efficient Ultramax vessels built in 2022 at Dalian Cosco KHI Ship Engineering Co. Ltd. (DACKS)
• These two deliveries complete the acquisitions of six Ultramax vessels Genco agreed to acquire from April to July 2021
• Completed the transfer of technical management of all of our vessels to our joint venture with the Synergy Group, GS Shipmanagement

John C. Wobensmith, Chief Executive Officer, commented, “During the first quarter we generated strong TCE in a seasonally softer market, as we benefited from our past success fixing forward cargos at attractive rates. We also made further progress implementing our value strategy, resulting in the first full payout based on our quarterly debt repayment run rate. We are pleased with the execution of our value strategy to date, which is focused on growth, financial deleveraging and maintaining low breakeven levels, to position Genco to pay meaningful and sustainable dividends throughout the drybulk cycle. Notably, the first quarter dividend, which marked our eleventh consecutive quarterly payout, increased by 18% over the prior quarter despite the traditional seasonality of freight rates during the period.”

Mr. Wobensmith, continued, “Looking ahead to the second quarter of 2022, we have the majority of our available days booked at over $27,500 per day, highlighting the significant operating leverage of our sizeable fleet, best-in class commercial operating platform and barbell approach to fleet composition. Genco remains well positioned to capitalize on favorable drybulk fundamentals, which remain intact and are driven by the attractive supply and demand balance and, specifically, the historically low newbuilding orderbook. We continue to monitor near-term changes in drybulk trade flows as result of Russia’s war in Ukraine as we meet customer needs and support our crew during these challenging times.”   

¹ Represents the principal amount of our credit facility debt outstanding less our cash and cash equivalents as of March 31, 2022 divided by estimates of the market value of our fleet as of May 3, 2022 from VesselsValue.com. The actual market value of our vessels may vary.

² We believe the non-GAAP measure presented provides investors with a means of better evaluating and understanding the Company’s operating performance. Please see Summary Consolidated Financial and Other Data below for a further reconciliation.

Comprehensive
Value Strategy

Genco’s comprehensive value strategy is centered on three pillars:

• Dividends: paying sizeable quarterly cash dividends to shareholders
• Deleveraging: through voluntary debt prepayments to maintain low financial leverage, and
• Growth: opportunistically growing the Company’s asset base

We believe this strategy is a key differentiator for Genco and will drive shareholder value over the long-term. We therefore believe Genco has created a compelling risk-reward balance positioning the Company to pay a sizeable quarterly dividend across diverse market environments. At the same time, we also maintain significant flexibility to grow the fleet through accretive vessel acquisitions. Key characteristics of our unique platform include:

• Industry low cash flow breakeven rate
• Net loan-to-value of 12% as of May 3, 2022
• Strong liquidity position of $270.9 million consisting of cash and our undrawn revolver as of March 31, 2022
• High operating leverage with our scalable fleet across the major and minor bulk sectors

In 2022 to date, Genco has taken the following steps in line with our corporate strategy:

• Dividends: declared a dividend of $0.79 per share for Q1 2022, marking the first full payout under our value strategy utilizing our run rate voluntary quarterly debt repayment
• Deleveraging: paid down $48.8 million of debt during Q1 2022. Since the beginning of 2021, we have paid down $252.0 million or 56% of our debt
• Growth: completed the acquisition of two high quality, fuel efficient Ultramax vessels in January 2022
• Securing revenue: opportunistically fixed various period time charterers to secure cash flows and de-risk recent acquisitions as shown in the following table:

Vessel	Type	DWT	Year Built	Rate		Duration	Min Expiration
Baltic Wolf	Capesize	177,752	2010	$	30,250	22-28 months	Jun-23
Genco Maximus	Capesize	169,025	2009	$	27,500	24-30 months	Sep-23
Genco Vigilant	Ultramax	63,671	2015	$	17,750	11-13 months	Sep-22
Genco Mary	Ultramax	61,085	2022	$	31,500	6-8 months	Nov-22
Genco Freedom	Ultramax	63,671	2015	$	23,375	20-23 months	Mar-23
Baltic Scorpion	Ultramax	63,462	2015	$	30,500	10-13 months	Mar-23
Baltic Hornet	Ultramax	63,574	2014	$	24,000	20-23 months	Apr-23
Baltic Wasp	Ultramax	63,389	2015	$	25,500	23-25 months	Jun-23
Genco Claudius	Capesize	169,001	2010	94% of BCI + scrubber		11-14 months	Jan-23
Genco Resolute	Capesize	181,060	2015	121% of BCI + scrubber		11-14 months	Jan-23
Genco Defender	Capesize	180,021	2015	121% of BCI + scrubber		11-14 months	Feb-23

Our debt outstanding as of March 31, 2022 was $197.3 million. In Q1 2022, we voluntarily paid down debt totaling $48.75 million consisting of $8.75 million of our run rate quarterly voluntary debt repayment together with an additional prepayment of the revolver of $40.0 million as part of working capital management to save interest expense without impacting the dividend calculation. Importantly, we have no mandatory debt amortization payments until 2026 when the facility matures. Regardless of this favorable mandatory amortization schedule, we plan to continue to voluntarily pay down our debt with the medium-term objective of reducing our net debt to zero and a longer-term goal of zero debt.  

Dividend
policy

For the first quarter of 2022, Genco declared a cash dividend of $0.79 per share. This represents an 18% increase from the $0.67 per share paid during the previous quarter and marks the first full quarterly dividend under our new comprehensive value strategy utilizing our run rate voluntary quarterly debt repayment of $8.75 million.

Under the quarterly dividend policy adopted by our Board of Directors, the amount available for quarterly dividends is to be calculated based on the following formula, which includes the Q1 2022 dividend calculation and estimated amounts for calculation of the dividend for Q2 2022: 

Dividend calculation	Q1 2022 actual			Q2 2022 estimates		Q3 2022 estimates		Q4 2022 estimates
Net revenue	$	90.75		Fixtures + market		Fixtures + market		Fixtures + market
Operating expenses		(35.09	)	(32.61	)	(30.13	)	(30.13	)
Operating cash flow	$	55.66
Less: debt repayments		(8.75	)	(8.75	)	(8.75	)	(8.75	)
Less: capex for dydocking/BWTS/ESDs		(2.75	)	(24.71	)	(3.95	)	(3.50	)
Less: reserve		(10.75	)	(10.75	)	(10.75	)	(10.75	)
Cash flow distributable as dividends	$	33.41		Sum of the above		Sum of the above		Sum of the above
Number of shares to be paid dividends		42.5		42.5		42.5		42.5
Dividend per share	$	0.79
Numbers in millions except per share amounts

For purposes of the foregoing calculation, operating cash flow is defined as net revenue (consisting of voyage revenue less voyage expenses, charter hire expenses, and realized gains or losses on fuel hedges), less operating expenses (consisting of vessel operating expenses, general and administrative expenses other than non-cash restricted stock expenses, technical management fees, and interest expense other than non-cash deferred financing costs). 

Key Q1 2022 dividend items: during the first quarter of 2022, we paid down $48.75 million of debt on a voluntary basis. Of that amount, $8.75 million was the previously announced quarterly debt reduction payment as part of our plan to reduce our debt. This amount was deducted from operating cash flow in our first quarter dividend payment. The remainder of the debt we paid down was $40.00 million which was prepaid to optimize our working capital management, using our significant revolver to keep funds available while saving interest expense. The $40.00 million prepayment of the revolver is not part of the calculation. Drydocking, ballast water treatment system and energy saving device costs related to four vessels that drydocked during the first quarter. Furthermore, our reserve for Q1 2022 was $10.75 million as previously announced in advance. Anticipated uses for the reserve include, but are not limited to, vessel acquisitions, debt repayments, and general corporate purposes. In order to set aside funds for these purposes, we plan to set the reserve on a quarterly basis for the subsequent quarter and is anticipated to be based on future quarterly debt repayments and interest expense
.

Q2 2022 reserve: the quarterly reserve for the second quarter of 2022 is expected to be $10.75 million. The reserve was determined based on $8.75 million for voluntary debt repayments anticipated to be made in Q2 2022 as well as estimated cash interest expense on our debt and remains subject to our Board of Directors’ discretion. The quarterly debt repayment and reserve will be reassessed on a quarterly basis in advance by the Board of Directors and management. Estimated expenses, debt repayments, and capital expenditures for Q2 2022 are estimates presented for illustrative purposes. Maintaining a quarterly reserve as well as optionality for the uses of the reserve are important factors of our corporate strategy that are intended to allow Genco to retain liquidity to take advantage of a variety of market conditions.

Drydocking capex – planned
weighting in softer Q2 ahead of stronger 2H: during Q2 2022, we anticipate completing the majority of our drydocking related capex for the year. This will enable us to perform scheduled maintenance during what is a seasonally softer freight rate environment for these vessels in an effort to maximize Capesize utilization and earnings in a seasonally stronger second half of the year. The amounts shown will vary based on actual results. Looking ahead to Q3 and Q4 2022, we expect drydocking capex to reduce to approximately $4.0 million and $3.5 million, respectively, from $24.7 million in Q2 2022.

The Board expects to reassess the payment of dividends as appropriate from time to time. The quarterly dividend policy and declaration and payment of dividends are subject to legally available funds, compliance with law and contractual obligations and the Board of Directors’ determination that each declaration and payment is at the time in the best interests of the Company and its shareholders. Our quarterly dividend policy and declaration and payment of dividends are subject to legally available funds, compliance with applicable law and contractual obligations (including our credit facilities) and the Board of Directors’ determination that each declaration and payment is at the time in the best interests of the Company and its shareholders after its review of our financial performance. The estimates presented above assume that the Board will maintain the quarterly reserves for Q3 and Q4 2022 at the rate established earlier in the year based on our current expectations. However, this reserve will be reviewed on a quarterly basis by the Board.

Genco’s
active commercial operating platform and fleet deployment strategy

Overall, we utilize a portfolio approach towards revenue generation through a combination of short-term, spot market employment as well as opportunistically booking longer term coverage. Our fleet deployment strategy currently remains weighted towards short-term fixtures, which provide us with optionality on our sizeable fleet. Our barbell approach towards fleet composition enables Genco to gain exposure to both the major and minor bulk commodities with a fleet whose cargoes carried align with global commodity trade flows. This approach continues to serve us well given the upside potential in major bulk rates together with the relative stability of minor bulk rates.

Based on current fixtures to date, our estimated TCE to date for the second quarter of 2022 on a load-to-discharge basis is presented below. Our estimated Q2 TCE based on current fixtures, continue to improve upon the Q1 result highlighting our operating leverage as rates have improved as compared to earlier year lows. Over the last year, we selectively booked period time charter coverage for up to two years on various Capesize and Ultramax vessels. We view these fixtures as part of our portfolio approach to fixture activity and prudent to take advantage of in the firm freight rate environment.

Estimated net TCE – Q2 2022 to Date
Vessel Type	Period		Spot		Fleet-wide		% Fixed
Capesize	$	26,883	$	23,540	$	24,320	60	%
Ultramax/Supramax	$	22,524	$	31,411	$	29,073	72	%
Fleet-wide	$	23,769	$	28,898	$	27,596	68	%

Given several of our vessels are fixed on period time charters for up to two years, we have provided a TCE breakout of the period time charters as well as the spot trading fixtures in the second quarter to date. Actual rates for the first quarter will vary based upon future fixtures.

Fleet
Update

The Company took delivery of the remaining two 2022-built, high specification, fuel efficient Ultramax vessels it agreed to acquire in May 2021, namely the Genco Mary and the Genco Laddey. Both of these vessels were delivered to Genco on January 6, 2022.

Financial
Review: 2022 First Quarter

The Company recorded net income for the first quarter of 2022 of $41.7 million, or $0.99 and $0.97 basic and diluted earnings per share, respectively. Comparatively, for the three months ended March 31, 2021, the Company recorded net income of $2.0 million, or $0.05 basic and diluted earnings per share.

The Company’s revenues increased to $136.2 million for the three months ended March 31, 2022, as compared to $87.6 million recorded for the three months ended March 31, 2021, primarily due to higher rates achieved by both our major and minor bulk vessels, as well as our third-party time chartered-in vessels. The average daily time charter equivalent, or TCE, rates obtained by the Company’s fleet was $24,093 per day for the three months ended March 31, 2022 as compared to $12,197 per day for the three months ended March 31, 2021. During the first quarter of 2022, the drybulk freight market seasonally declined off of 2021’s multi-year highs but remained at firm levels from a historical perspective. The pullback was primarily due to weather related issues in Brazil limiting iron ore cargo availability, the timing of newbuilding vessel deliveries as well as the timing of the Lunar New Year and the Beijing Olympics, further impacted by COVID-19 lockdowns in China which has had a more significant impact on our major bulk vessels. Russia’s war in Ukraine and the humanitarian crisis that has followed commenced in the middle of the first quarter. The impact to date on the drybulk market has been a re-direction of cargo flows particularly for coal and grain shipments lengthening ton miles, higher commodity prices, slower vessel speeds due to increased fuel prices, an urgency to secure commodities given the tightness in the global energy complex as well as global grain supplies, and sanctions on various Russian exports.

Voyage expenses were $38.5 million for the three months ended March 31, 2022 compared to $35.1 million during the prior year period. This increase was primarily due to higher bunker expenses as a result of increased fuel prices during the first quarter of 2022 due to oil supply disruptions as a result of the war in Ukraine. Vessel operating expenses increased to $27.0 million for the three months ended March 31, 2022 from $19.0 million for the three months ended March 31, 2021. The increase was primarily due to higher crew expenses as a result of increased crew wages, COVID-19 related expenses and disruptions, and the timing of crew changes. COVID-19 expenses were higher during this quarter due to costs associated with repatriating Chinese crew during implementation of China’s zero COVID policies as we completed the transition of our crews to Indian and Filipino crews.   Additionally, there were higher repair and maintenance costs, as well as an increase in the purchase of initial stores and spare parts. General and administrative expenses decreased to $6.0 million for the first quarter of 2022 compared to $6.1 million for the first quarter of 2021. Depreciation and amortization expenses increased to $14.1 million for the three months ended March 31, 2022 from $13.4 million for the three months ended March 31, 2021, primarily due to the delivery of eight Ultramax vessels during 2021 and the first quarter of 2022, partially offset by a decrease in depreciation due to the increase in the estimated scrap value of the vessels from $310 per lwt to $400 per lwt effective January 1, 2022. 

Daily vessel operating expenses, or DVOE, amounted to $6,839 per vessel per day for the first quarter of 2022 compared to $4,887 per vessel per day for the first quarter of 2021. The increase was primarily due to higher crew expenses as a result of increased crew wages, COVID-19 related expenses and disruptions, and the timing of crew changes. COVID-19 expenses were higher during this quarter due to costs associated with repatriating Chinese crew during implementation of China’s zero COVID policies as we completed the transition of our crews to Indian and Filipino crews. Additionally, there were higher repair and maintenance costs, as well as an increase in the purchase of initial stores and spare parts. We believe daily vessel operating expenses are best measured for comparative purposes over a 12-month period in order to take into account all of the expenses that each vessel in our fleet will incur over a full year of operation. Based on estimates provided by our technical managers, our DVOE budget for the second quarter of 2022 is $6,000 per vessel per day on a fleet-wide basis including an estimate for COVID-19 related expenses. For 2022, we anticipate meeting our full year budget of $5,825 per vessel per day as we expect vessel operating expenses to be lower and COVID-related expenses to abate in the second half of the year as we have transitioned from Chinese crews. However, the potential impacts of COVID-19 and the war in Ukraine are unpredictable, and the actual amount of our DVOE could be higher or lower than budgeted as a result.

Apostolos Zafolias, Chief Financial Officer, commented, “We continued to reduce our leverage and breakeven levels during a time when we have demonstrated our earnings power and ability to return significant capital to shareholders. Since implementing our value strategy a little more than a year ago, we have reduced debt by $252 million, meaningfully reduced our cash flow breakeven rate and declared $1.46 per share in dividends over the past two quarters. Our first quarter dividend, which was realized in a seasonally slower quarter, was the first full payout based on our voluntary quarterly debt repayment run rate and highlights our significant dividend potential and represented an 18% increase over the previous quarter’s dividend.”

Liquidity
and Capital Resources

Cash
Flow

Net cash provided by operating activities for the three months ended March 31, 2022 and March 31, 2021 was $52.6 million and $13.5 million, respectively. This increase in cash provided by operating activities was primarily due to higher rates achieved by our major and minor bulk vessels and changes in working capital, as well as a decrease in interest expense.

Net cash used in investing activities for the three months ended March 31, 2022 was $47.0 million as compared to net cash provided by investing activities of $20.0 million for the three months ended March 31, 2021.  This fluctuation was primarily due to the purchase of two Ultramax vessels which delivered during the first quarter of 2022.  Additionally, there was a decrease in net proceeds from the sale of vessels as there were no vessels sold during the first quarter 2022, as well as an increase in the purchase of other fixed assets during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.

Net cash used in financing activities during the three months ended March 31, 2022 and 2021 was $77.1 million and $49.1 million, respectively.  The increase was primarily due to a $27.4 million increase in the payment of dividends during the three months ended March 31, 2022 as compared to the same period during 2021.

Capital
Expenditures

As of May 4, 2022, Genco Shipping & Trading Limited’s fleet consists of 17 Capesize, 15 Ultramax and 12 Supramax vessels with an aggregate capacity of approximately 4,636,000 dwt and an average age of 10.2 years.

In addition to acquisitions that we may undertake, we will incur additional capital expenditures due to special surveys and drydockings. Furthermore, we plan to upgrade a portion of our fleet with energy saving devices and apply high performance paint systems to our vessels in order to reduce fuel consumption and emissions. We estimate our capital expenditures related to drydocking, including capitalized costs incurred during drydocking related to vessel assets and vessel equipment, ballast water treatment system costs, fuel efficiency upgrades and scheduled off-hire days for our fleet for 2022 to be:

We have made the strategic decision to frontload a substantial portion of our 2022 drydocking capex in Q2 2022 due to the current seasonal softness in the Capesize earnings environment. We currently have five of our Capesizes in drydocking for scheduled maintenance while we are also installing various energy saving devices and applying high performance paint systems. Of these five drydockings, four of these ships were originally scheduled to drydock during the second half of 2021. By actively managing the timing of these drydockings to early 2022, these vessels are offhire in a seasonally softer Capesize market than what materialized at the end of 2021, reducing opportunity cost and improving our earnings power over the period.

(1) Estimates are based on our budgeted cost of drydocking our vessels in China. Actual costs will vary based on various factors, including where the drydockings are actually performed. We expect to fund these costs with cash on hand. These costs do not include drydock expense items that are reflected in vessel operating expenses.

(2) Estimated costs associated with the installation of ballast water treatment systems is expected to be funded with cash on hand.

(3) Estimated costs associated with the installation of fuel efficiency upgrades are expected to be funded with cash on hand.

(4) Actual length will vary based on the condition of the vessel, yard schedules and other factors. The estimated offhire days per sector scheduled for Q2 2022 consists of 247 days for seven Capesizes and 40 days for two Ultramaxes.

Summary
Consolidated Financial and Other Data

The following table summarizes Genco Shipping & Trading Limited’s selected consolidated financial and other data for the periods indicated below.

   

				Three Months Ended March 31, 2022				Three Months Ended March 31, 2021
				(Dollars in thousands, except share and per share data)
				(unaudited)
INCOME STATEMENT DATA:
Revenues:
	Voyage revenues			$	136,227			$	87,591
		Total revenues			136,227				87,591
Operating expenses:
	Voyage expenses				38,464				35,074
	Vessel operating expenses				27,013				19,046
	Charter hire expenses				7,638				5,435
	General and administrative expenses (inclusive of nonvested stock amortization				6,043				6,102
	expense of $0.7 million, $0.5 million, respectively)
	Technical management fees				917				1,464
	Depreciation and amortization				14,059				13,441
	Loss on sale of vessels				–				720
		Total operating expenses			94,134				81,282
Operating income					42,093				6,309
Other income (expense):
	Other income				1,997				146
	Interest income				17				71
	Interest expense				(2,242	)			(4,541	)
		Other expense, net			(228	)			(4,324	)
Net income				$	41,865			$	1,985
	Less: Net income attributable to noncontrolling interest				176				–
Net income attributable to Genco Shipping & Trading Limited				$	41,689			$	1,985
Net earnings per share – basic				$	0.99			$	0.05
Net earnings per share – diluted				$	0.97			$	0.05
Weighted average common shares outstanding – basic					42,166,106				41,973,782
Weighted average common shares outstanding – diluted					42,867,349				42,276,380

 

				March 31, 2022				December 31, 2021
BALANCE SHEET DATA (Dollars in thousands):				(unaudited)
Assets
	Current assets:
		Cash and cash equivalents		$	43,113			$	114,573
		Restricted cash			5,643				5,643
		Due from charterers, net			20,039				20,116
		Prepaid expenses and other current assets			11,186				9,935
		Inventories			23,337				24,563
		Fair value of derivative instruments			1,822				–
	Total current assets				105,140				174,830
	Noncurrent assets:
		Vessels, net of accumulated depreciation of $265,189 and $253,005, respectively			1,031,948				981,141
		Deposits on vessels			–				18,543
		Deferred drydock, net			14,577				14,275
		Fixed assets, net			7,784				7,237
		Operating lease right-of-use assets			5,144				5,495
		Restricted cash			315				315
		Fair value of derivative instruments			2,594				1,166
	Total noncurrent assets				1,062,362				1,028,172
	Total assets			$	1,167,502			$	1,203,002
Liabilities and Equity
	Current liabilities:
		Accounts payable and accrued expenses		$	25,800			$	29,956
		Deferred revenue			10,133				10,081
		Current operating lease liabilities			1,882				1,858
	Total current liabilities				37,815				41,895
	Noncurrent liabilities
		Long-term operating lease liabilities			5,723				6,203
		Long-term debt, net of deferred financing costs of $7,355 and $7,771, respectively			189,895				238,229
	Total noncurrent liabilities				195,618				244,432
	Total liabilities				233,433				286,327
	Commitments and contingencies
	Equity:
		Common stock			421				419
		Additional paid-in capital			1,674,400				1,702,166
		Accumulated other comprehensive income			4,118				825
		Accumulated deficit			(745,134	)			(786,823	)
	Total Genco Shipping & Trading Limited shareholders’ equity				933,805				916,587
		Noncontrolling interest			264				88
	Total equity				934,069				916,675
	Total liabilities and equity			$	1,167,502			$	1,203,002

 

				Three Months Ended March 31, 2022				Three Months Ended March 31, 2021
STATEMENT OF CASH FLOWS (Dollars in thousands):				(unaudited)
Cash flows from operating activities
		Net income		$	41,865			$	1,985
		Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			14,059				13,441
		Amortization of deferred financing costs			418				976
		Right-of-use asset amortization			351				344
		Amortization of nonvested stock compensation expense			690				522
		Loss on sale of vessels			–				720
		Amortization of premium on derivative			43				69
		Interest rate cap premium payment			–				(240	)
		Insurance proceeds for protection and indemnity claims			99				41
		Change in assets and liabilities:
			Decrease in due from charterers		77				1,748
			Increase in prepaid expenses and other current assets		(1,350	)			(2,692	)
			Decrease (increase) in inventories		1,226				(2,565	)
			(Decrease) increase in accounts payable and accrued expenses		(2,834	)			1,548
			Increase (decrease) in deferred revenue		52				(1,032	)
			Decrease in operating lease liabilities		(456	)			(432	)
			Deferred drydock costs incurred		(1,685	)			(939	)
		Net cash provided by operating activities			52,555				13,494
Cash flows from investing activities
		Purchase of vessels and ballast water treatment systems, including deposits			(45,482	)			(1,190	)
		Purchase of scrubbers (capitalized in Vessels)			–				(41	)
		Purchase of other fixed assets			(1,483	)			(152	)
		Net proceeds from sale of vessels			–				21,272
		Insurance proceeds for hull and machinery claims			–				61
		Net cash (used in) provided by investing activities			(46,965	)			19,950
Cash flows from financing activities
		Repayments on the $450 Million Credit Facility			(48,750	)			–
		Repayments on the $133 Million Credit Facility			–				(22,740	)
		Repayments on the $495 Million Credit Facility			–				(25,470	)
		Cash dividends paid			(28,289	)			(888	)
		Payment of deferred financing costs			(11	)			–
		Net cash used in financing activities			(77,050	)			(49,098	)
Net decrease in cash, cash equivalents and restricted cash					(71,460	)			(15,654	)
Cash, cash equivalents and restricted cash at beginning of period					120,531				179,679
Cash, cash equivalents and restricted cash at end of period				$	49,071			$	164,025

 

				Three Months Ended March 31, 2022
Net Income Reconciliation				(unaudited)
Net income attributable to Genco Shipping & Trading Limited				$	41,689
			Net earnings per share – basic	$	0.99
			Net earnings per share – diluted	$	0.97
			Weighted average common shares outstanding – basic		42,166,106
			Weighted average common shares outstanding – diluted		42,867,349
			Weighted average common shares outstanding – basic as per financial statements		42,166,106
			Dilutive effect of stock options		440,550
			Dilutive effect of restricted stock units		260,693
			Weighted average common shares outstanding – diluted as adjusted		42,867,349

 

				Three Months Ended March 31, 2022				Three Months Ended March 31, 2021
				(Dollars in thousands)
EBITDA Reconciliation:				(unaudited)
	Net income attributable to Genco Shipping & Trading Limited			$	41,689			$	1,985
	+		Net interest expense		2,225				4,470
	+		Depreciation and amortization		14,059				13,441
			EBITDA (1)	$	57,973			$	19,896
	+		Loss on sale of vessels		–				720
			Adjusted EBITDA	$	57,973			$	20,616
				Three Months Ended
				March 31, 2022				March 31, 2021
FLEET DATA:				(unaudited)
Total number of vessels at end of period					44				41
Average number of vessels(2)					43.9				43.3
Total ownership days for fleet(3)					3,950				3,897
Total chartered-in days(4)					311				341
Total available days for fleet(5)					4,078				4,201
Total available days for owned fleet (6)					3,767				3,860
Total operating days for fleet(7)					3,964				4,122
Fleet utilization(8)					94.4	%			97.8	%
AVERAGE DAILY RESULTS:
Time charter equivalent(9)				$	24,093			$	12,197
Daily vessel operating expenses per vessel(10)					6,839				4,887

 

				Three Months Ended
				March 31, 2022				March 31, 2021
FLEET DATA:				(unaudited)
Ownership days
Capesize					1,530.0				1,530.0
Ultramax					1,339.9				731.8
Supramax					1,080.0				1,407.7
Handysize					–				227.5
Total					3,949.9				3,897.0
Chartered-in days
Capesize					–				–
Ultramax					190.3				232.5
Supramax					120.7				108.3
Handysize					–				–
Total					311.0				340.8
Available days (owned & chartered-in fleet)
Capesize					1,502.0				1,505.6
Ultramax					1,452.0				955.6
Supramax					1,123.8				1,512.2
Handysize					–				227.5
Total					4,077.8				4,200.9
Available days (owned fleet)
Capesize					1,502.0				1,505.6
Ultramax					1,261.7				722.7
Supramax					1,003.1				1,403.9
Handysize					–				227.5
Total					3,766.8				3,859.7
Operating days
Capesize					1,458.3				1,499.1
Ultramax					1,433.8				950.0
Supramax					1,071.6				1,482.0
Handysize					–				191.3
Total					3,963.7				4,122.4
Fleet utilization
Capesize					96.5	%			99.6	%
Ultramax					95.0	%			98.5	%
Supramax					90.8	%			97.8	%
Handysize					–				84.1	%
Fleet average					94.4	%			97.8	%
Average Daily Results:
Time Charter Equivalent
Capesize				$	24,627			$	13,595
Ultramax					25,449				10,582
Supramax					21,577				12,292
Handysize					–				7,912
Fleet average					24,093				12,197
Daily vessel operating expenses
Capesize				$	6,616			$	5,208
Ultramax					6,115				4,972
Supramax					8,028				4,484
Handysize					–				4,931
Fleet average					6,839				4,887

1)   EBITDA represents net income attributable to Genco Shipping & Trading Limited plus net interest expense, taxes, and depreciation and amortization. EBITDA is included because it is used by management and certain investors as a measure of operating performance. EBITDA is used by analysts in the shipping industry as a common performance measure to compare results across peers. Our management uses EBITDA as a performance measure in consolidating internal financial statements and it is presented for review at our board meetings. We believe that EBITDA is useful to investors as the shipping industry is capital intensive which often results in significant depreciation and cost of financing. EBITDA presents investors with a measure in addition to net income to evaluate our performance prior to these costs. EBITDA is not an item recognized by U.S. GAAP (i.e. non-GAAP measure) and should not be considered as an alternative to net income, operating income or any other indicator of a company’s operating performance required by U.S. GAAP. EBITDA is not a measure of liquidity or cash flows as shown in our consolidated statement of cash flows. The definition of EBITDA used here may not be comparable to that used by other companies.
2)   Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was part of our fleet during the period divided by the number of calendar days in that period.
3)   We define ownership days as the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.

4)   We define chartered-in days as the aggregate number of days in a period during which we chartered-in third-party vessels.
5)   We define available days as the number of our ownership days and chartered-in days less the aggregate number of days that our vessels are off-hire due to familiarization upon acquisition, repairs or repairs under guarantee, vessel upgrades or special surveys. Companies in the shipping industry generally use available days to measure the number of days in a period during which vessels should be capable of generating revenues.
6)   We define available days for the owned fleet as available days less chartered-in days.
7)   We define operating days as the number of our total available days in a period less the aggregate number of days that the vessels are off-hire due to unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.
8)   We calculate fleet utilization as the number of our operating days during a period divided by the number of ownership days plus chartered-in days less drydocking days.
9)   We define TCE rates as our voyage revenues less voyage expenses, charter hire expenses, and realized gain or losses on fuel hedges, divided by the number of the available days of our owned fleet during the period
. TCE rate is a common shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charterhire rates for vessels on voyage charters are generally not expressed in per-day amounts while charterhire rates for vessels on time charters generally are expressed in such amounts. Our estimated TCE for the second quarter of 2022 is based on fixtures booked to date. Actual results may vary based on the actual duration of voyages and other factors. Accordingly, we are unable to provide, without unreasonable efforts, a reconciliation of estimated TCE for the second quarter to the most comparable financial measures presented in accordance with GAAP.

				Three Months Ended March 31, 2022			Three Months Ended March 31, 2021
Total Fleet				(unaudited)
Voyage revenues (in thousands)				$	136,227		$	87,591
Voyage expenses (in thousands)					38,464			35,074
Charter hire expenses (in thousands)					7,638			5,435
Realized gain on fuel hedges (in thousands)					629			–
					90,754			47,082
Total available days for owned fleet					3,767			3,860
Total TCE rate				$	24,093		$	12,197

10)   We define daily vessel operating expenses to include crew wages and related costs, the cost of insurance expenses relating to repairs and maintenance (excluding drydocking), the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses. Daily vessel operating expenses are calculated by dividing vessel operating expenses by ownership days for the relevant period.

About
Genco Shipping & Trading Limited

Genco Shipping & Trading Limited is a U.S. based drybulk ship owning company focused on the seaborne transportation of commodities globally. We provide a full-service logistics solution to our customers utilizing our in-house commercial operating platform, as we transport key cargoes such as iron ore, grain, steel products, bauxite, cement, nickel ore among other commodities along worldwide shipping routes. Our wholly owned high quality, modern fleet of dry cargo vessels consists of the larger Capesize (major bulk) and the medium-sized Ultramax and Supramax vessels (minor bulk) enabling us to carry a wide range of cargoes. We make capital expenditures from time to time in connection with vessel acquisitions. As of May 4, 2022, Genco Shipping & Trading Limited’s fleet consists of 17 Capesize, 15 Ultramax and 12 Supramax vessels with an aggregate capacity of approximately 4,636,000 dwt and an average age of 10.2 years.

The following table reflects Genco’s fleet list as of May 4, 2022:

	Vessel	DWT	Year Built
Capesize
1	Genco Resolute	181,060	2015
2	Genco Endeavour	181,060	2015
3	Genco Liberty	180,387	2016
4	Genco Defender	180,377	2016
5	Genco Constantine	180,183	2008
6	Genco Augustus	180,151	2007
7	Genco Lion	179,185	2012
8	Genco Tiger	179,185	2011
9	Genco London	177,833	2007
10	Baltic Wolf	177,752	2010
11	Genco Titus	177,729	2007
12	Baltic Bear	177,717	2010
13	Genco Tiberius	175,874	2007
14	Genco Commodus	169,098	2009
15	Genco Hadrian	169,025	2008
16	Genco Maximus	169,025	2009
17	Genco Claudius	169,001	2010
Ultramax
1	Genco Freedom	63,671	2015
2	Genco Vigilant	63,671	2015
3	Baltic Hornet	63,574	2014
4	Genco Enterprise	63,473	2016
5	Baltic Mantis	63,470	2015
6	Baltic Scorpion	63,462	2015
7	Genco Magic	63,446	2014
8	Baltic Wasp	63,389	2015
9	Genco Constellation	63,310	2017
10	Genco Mayflower	63,304	2017
11	Genco Madeleine	63,166	2014
12	Genco Weatherly	61,556	2014
13	Genco Mary	61,085	2022
14	Genco Laddey	61,085	2022
15	Genco Columbia	60,294	2016
Supramax
1	Genco Hunter	58,729	2007
2	Genco Auvergne	58,020	2009
3	Genco Rhone	58,018	2011
4	Genco Ardennes	58,018	2009
5	Genco Brittany	58,018	2010
6	Genco Languedoc	58,018	2010
7	Genco Pyrenees	58,018	2010
8	Genco Bourgogne	58,018	2010
9	Genco Aquitaine	57,981	2009
10	Genco Warrior	55,435	2005
11	Genco Predator	55,407	2005
12	Genco Picardy	55,257	2005

Conference
Call Announcement

Genco Shipping & Trading Limited will hold a conference call on Thursday, May 5, 2022 at 8:30 a.m. Eastern Time to discuss its 2022 first quarter financial results. The conference call and a presentation will be simultaneously webcast and will be available on the Company’s website, www.GencoShipping.com. To access the conference call, dial (646) 828-8193 or (888) 394-8218 and enter passcode 1292605. A replay of the conference call can also be accessed for two weeks by dialing (888) 203-1112 or (719) 457-0820 and entering the passcode 1292605. The Company intends to place additional materials related to the earnings announcement, including a slide presentation, on its website prior to the conference call.

Website
Information

We intend to use our website, 
www.GencoShipping.com, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in our website’s Investor Relations section. Accordingly, investors should monitor the Investor Relations portion of our website, in addition to following our press releases, SEC filings, public conference calls, and webcasts. To subscribe to our e-mail alert service, please click the “Receive E-mail Alerts” link in the Investor Relations section of our website and submit your email address. The information contained in, or that may be accessed through, our website is not incorporated by reference into or a part of this document or any other report or document we file with or furnish to the SEC, and any references to our website are intended to be inactive textual references only.

“Safe Harbor”
Statement under the Private Securities Litigation Reform Act of 1995

This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements use words such as “anticipate,” “budget,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with a discussion of potential future events, circumstances or future operating or financial performance.  These forward-looking statements are based on our management’s current expectations and observations. Included among the factors that, in our view, could cause actual results to differ materially from the forward looking statements contained in this report are the following: (i) declines or sustained weakness in demand in the drybulk shipping industry; (ii)  weakness or declines in drybulk shipping rates; (iii) changes in the supply of or demand for drybulk products, generally or in particular regions; (iv) changes in the supply of drybulk carriers including newbuilding of vessels or lower than anticipated scrapping of older vessels; (v) changes in rules and regulations applicable to the cargo industry, including, without limitation, legislation adopted by international organizations or by individual countries and actions taken by regulatory authorities; (vi) increases in costs and expenses including but not limited to: crew wages, insurance, provisions, lube oil, bunkers, repairs, maintenance, general and administrative expenses, and management fee expenses; (vii) whether our insurance arrangements are adequate; (viii) changes in general domestic and international political conditions; (ix) acts of war, terrorism, or piracy, including without limitation the ongoing war in Ukraine; (x) changes in the condition of the Company’s vessels or applicable maintenance or regulatory standards (which may affect, among other things, our anticipated drydocking or maintenance and repair costs) and unanticipated drydock expenditures; (xi) the Company’s acquisition or disposition of vessels; (xii) the amount of offhire time needed to complete maintenance, repairs, and installation of equipment to comply with applicable regulations on vessels and the timing and amount of any reimbursement by our insurance carriers for insurance claims, including offhire days; (xiii) the completion of definitive documentation with respect to charters; (xiv) charterers’ compliance with the terms of their charters in the current market environment; (xv) the extent to which our operating results are affected by weakness in market conditions and freight and charter rates; (xvi) our ability to maintain contracts that are critical to our operation, to obtain and maintain acceptable terms with our vendors, customers and service providers and to retain key executives, managers and employees; (xvii) completion of documentation for vessel transactions and the performance of the terms thereof by buyers or sellers of vessels and us; (xviii) the relative cost and availability of low sulfur and high sulfur fuel, worldwide compliance with sulfur emissions regulations that took effect on January 1, 2020 and our ability to realize the economic benefits or recover the cost of the scrubbers we have installed.; (xix) our financial results for the year ending December 31, 2022 and other factors relating to determination of the tax treatment of dividends we have declared; (xx) the financial results we achieve for each quarter that apply to the formula under our new dividend policy, including without limitation the actual amounts earned by our vessels and the amounts of various expenses we incur, as a significant decrease in such earnings or a significant increase in such expenses may affect our ability to carry out our new value strategy; (xxi) the exercise of the discretion of our Board regarding the declaration of dividends, including without limitation the amount that our Board determines to set aside for reserves under our dividend policy; (xxii) the duration and impact of the COVID-19 novel coronavirus epidemic, which may negatively affect general global and regional economic conditions; our ability to charter our vessels at all and the rates at which are able to do so; our ability to call on or depart from ports on a timely basis or at all; our ability to crew, maintain, and repair our vessels, including without limitation the impact diversion of our vessels to perform crew rotations may have on our revenues, expenses, and ability to consummate vessel sales, expense and disruption to our operations that may arise from the inability to rotate crews on schedule, and delay and added expense we may incur in rotating crews in the current environment; our ability to staff and maintain our headquarters and administrative operations; sources of cash and liquidity; our ability to sell vessels in the secondary market, including without limitation the compliance of purchasers and us with the terms of vessel sale contracts, and the prices at which vessels are sold; and other factors relevant to our business described from time to time in our filings with the Securities and Exchange Commission; and (xxiii) other factors listed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 2021 and subsequent reports on Form 8-K and Form 10-Q. Our ability to pay dividends in any period will depend upon various factors, including the limitations under any credit agreements to which we may be a party, applicable provisions of Marshall Islands law and the final determination by the Board of Directors each quarter after its review of our financial performance, market developments, and the best interests of the Company and its shareholders. The timing and amount of dividends, if any, could also be affected by factors affecting cash flows, results of operations, required capital expenditures, or reserves. As a result, the amount of dividends actually paid may vary. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

CONTACT:
Apostolos Zafolias
Chief Financial Officer
Genco Shipping & Trading Limited
(646) 443-8550