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ESG Investing Has a Blind Spot that Puts the $35 Trillion Industry’s Sustainability Promises in Doubt: Supply Chains

 

If you own stocks, chances are good you have heard the term ESG. It stands for environmental, social and governance, and it’s a way to laud corporate leaders who take sustainability – including climate change – and social responsibility seriously, and ignore those who do not.

In less than two decades since a United Nations report drew attention to the concept, ESG investing has evolved into a US$35 trillion industry. Money managers overseeing one-third of total U.S. assets under management said they used ESG criteria in 2020, and by 2025 global assets managed in portfolios labeled “ESG” are expected to reach $53 trillion.

 

This article was republished with permission from The Conversation, a news site dedicated to sharing ideas from academic experts. It was written by and represents the research-based opinions of Tinglong Dai, Professor of Operations Management & Business Analytics, Carey Business School, Johns Hopkins University and Christopher S. Tang, Professor of Supply Chain Management, University of California, Los Angeles.

 

These investments have gained momentum in part because they cater to investors’ growing desire to have a positive impact on society. By quantifying a company’s actions and outcomes on environmental, social and governance issues, ESG measures offer investors a way to make informed trading decisions.

However, investors’ trust in ESG funds may be misplaced. As scholars in the field of supply chain management and sustainable operations, we see a major flaw in how rating agencies, such as Bloomberg, MSCI and Sustainalytics, are measuring companies’ ESG risk: the performance of their supply chains.

 

Chart : Bloomberg Intelligence

 

The Problem with Ignoring Supply Chains

Nearly every company’s operations are backed by a global supply chain that consists of workers, information and resources. To accurately measure a company’s ESG risks, its end-to-end supply chain operations must be considered.

Our recent examination of ESG measures shows that most ESG rating agencies do not measure companies’ ESG performance from the lens of the global supply chains supporting their operations. For example, Bloomberg’s ESG measure lists “supply chain” as an item under the “S” (social) pillar. By this measure, supply chains are treated separately from other items, such as carbon emissions, climate change effects, pollutants, and human rights. This means all those items, if not captured in the ambiguous “supply chain” metric, reflect each company’s own actions but not their supply chain partners.

Even when companies collect their suppliers’ performance, “selective reporting” can arise because there is no unified reporting standard. One recent study found that companies tend to report environmentally responsible suppliers and conceal “bad” suppliers, effectively “greenwashing” their supply chain.

Carbon emissions are another example. Many companies, such as Timberland, have claimed great successes in reducing emissions from their own operations. Yet the emissions from their supply chain partners and customers, known as “Scope 3 emissions,” may remain high. ESG rating agencies have not been able to adequately include Scope 3 emissions because of a lack of data: Only 19% of companies in the manufacturing industry and 22% in the service industry disclose this data.

More broadly, without accounting for a company’s entire supply chain, ESG measures fail to reflect global supply chain networks that today’s big and small companies alike depend on for their day-to-day operations.

 

 

Amazon and the Third-Party-Supplier Problem

Amazon, for example, is among ESG funds’ largest and favorite holdings. As a company bigger than Walmart in terms of annual sales, Amazon has reported emissions from shipping that are only one-seventh of Walmart’s. But when researchers for two advocacy groups reviewed public data on imports, they found only about 15% of Amazon’s ocean shipments could be tracked.

In addition, Amazon’s figure does not reflect emissions generated by its many third-party sellers and their suppliers who operate outside the U.S. This difference matters: Whereas Walmart’s supply chain relies on a centralized procurement strategy, Amazon’s supply chain is highly decentralized – a large percentage of its revenue comes from third-party suppliers, about 40% of which sell directly from China, which further complicates emissions tracking and reporting.

Another important ESG metric concerns consumer protection. Amazon prides itself as “Earth’s most customer-centric company.” However, when its customers have been injured by products sold by third-party sellers on its platform, Amazon has argued that it should not be held liable for the damage, because it functions as an “online marketplace” matching buyers and sellers. Amazon’s foreign third-party sellers are often not subject to U.S. jurisdiction so can’t be held accountable.

Yet major ESG rating agencies do not appear to reflect the supply chain implication on customer protection when measuring Amazon supply chain performance.

For example, in 2020, MSCI, the largest ESG ratings agency, upgraded Amazon’s ESG rating from BB to BBB, reflecting its strength in areas such as corporate governance and data security, despite its consumer liability risk.

These gaps are also concerns for ratings of companies such as 3M, ExxonMobil and Tesla.

 

Other Countries are Adding Pressure

Currently, there is no unified reporting standard, so different companies may cherry-pick certain ESG performance measures to report to boost their sustainability and social ratings.

To improve consistency, the next step would be for ESG rating agencies to redesign their methodology to take into account what may be environmentally harmful and unethical operations across the entire global supply chain. ESG rating agencies could, for example, create incentives for companies to collect and disclose their supply chain partners’ activities, such as Scope 3 emissions.

In June 2021, the German Parliament passed the Supply Chain Due Diligence Act, which will become effective in 2023. Under this new law, large companies based in Germany will be responsible for social and environmental issues arising from their global supply chain networks.

This includes prohibitions on child labor and forced labor and attention to occupational health and safety throughout the entire supply chain. Those who violate the law face a fine of up to 2% of their annual revenues.

The European Union’s new Sustainable Finance Disclosure Regulation, which went into effect in March 2021, adds pressure in a different way. It requires funds to report details on how they integrate ESG characteristics into their investment decisions. That has led some money managers to drop the phrase “ESG integrated” from some of their assets, Bloomberg reported.

Without similar laws in the U.S., we believe ESG rating agencies could fill an important gap. To be sure, surveying a company’s entire supply chain’s ESG performance is far more complex. Yet by tying all the ESG dimensions to a company’s supply chain end-to-end operations, rating agencies can nudge corporate leaders to be responsible for actions across their supply chains that would otherwise be kept in the dark.

 

Suggested Reading:

What’s an ESG Score?

Five Reasons Investors Increasingly Use ESG Standards

Biofuels, Biodiversity and Climate Change

Can Mining be Green and Sustainable?

 

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Eagle Bulk Shipping Inc. Reports Record Results for the Third Quarter of 2021

 

STAMFORD, Conn., 
Nov. 04, 2021 (GLOBE NEWSWIRE) — 
Eagle Bulk Shipping Inc. (NASDAQ: EGLE) (“Eagle Bulk”, “Eagle” or the “Company”), one of the world’s largest owner-operators within the drybulk vessel segment, today reported financial results for the quarter ended 
September 30, 2021.

Quarter highlights:

• Generated Revenues, net of 
  $183.4 million
  • Generated TCE Revenue ⁽¹⁾ of 
    $127.1 million
  • Achieved TCE ⁽¹⁾ of 
    $29,088/day
    
    
• Realized record net income of 
  $78.3 million, or 
  $6.12 per basic share
  
  • Adjusted net income⁽¹⁾ of 
    $72.1 million, or 
    $5.63⁽¹⁾ per adjusted basic share

• Generated Adjusted EBITDA⁽¹⁾ of 
  $91.0 million
  
  
• Declared a quarterly dividend of 
  $2.00 per share for the third quarter of 2021. Payable on 
  November 24, 2021 to shareholders of record at the close of business on 
  November 15, 2021
  
  
• Took delivery of previously announced vessel acquisitions, the M/V Antwerp Eagle, M/V Newport Eagle and M/V Valencia Eagle
  

Recent Developments:

• Executed 
  $400.0 million comprehensive refinancing, lowering cost of debt and extending maturity duration
  • New facility consists of 
    $300.0 million term loan and 
    $100.0 million revolver facility out of which 
    $50.0 million was drawn on the date of closing

• Repaid the 
  $50.0 million revolver with the cash generated from operations bringing our revolver availability to 
  $100.0 million
  
  
• Established new dividend policy and 
  $50.0 million share repurchase program
  
  
• Looking ahead, fixed 75% of Q4 2021 available days at an average TCE of 
  $32,400 as of 
  November 4, 2021
  

Eagle’s CEO  Gary Vogel commented, “Drybulk freight rates continued to strengthen in the third quarter, and Eagle’s strong leverage to the market produced 
$78 million of net income for the quarter. Not only does this represent the highest quarterly net income Eagle has achieved, it also eclipses the Company’s best ever annual result!

Following our recently adopted dividend policy of paying quarterly cash dividends equal to a minimum of 30% of net income, our Board has authorized a quarterly dividend of 
$2.00 per share for the third quarter. We have also fully paid down our 
$100 million revolving credit facility, delivering on our commitment to simultaneously de-lever and return capital to our shareholders. It is particularly gratifying to be in position to deliver a meaningful cash distribution to shareholders following the multi-year transformation of the Company.

Looking ahead, our TCE performance continues to improve, and as of today, we have covered approximately 75% of our available days for the fourth quarter at a net TCE of 
$32,400. As such, we are on track to exceed our third quarter performance, which will support continued value creation and return of capital to our shareholders. Notwithstanding short-term volatility, which is an inherent part of our markets, we maintain an optimistic outlook on market developments going forward, based on both positive demand and historically low supply side fundamentals.”

Fleet Operating Data 

Fleet Development

Vessels acquired and delivered into the fleet in the third quarter of 2021

• Newport Eagle, a Supramax (58K DWT / 2011-built)
• Antwerp Eagle, an Ultramax (64K DWT / 2015-built)

Vessels acquired and delivered in the fourth quarter of 2021

• Valencia Eagle, an Ultramax (64K DWT / 2015-built)
  

Vessels sold and delivered in the third quarter of 2021

• Tern, a Supramax (50K DWT / 2003-built)

Results of Operations for the three and nine months ended September 30, 2021 and 2020

For the three months ended 
September 30, 2021, the Company reported net income of 
$78.3 million, or basic and diluted income of 
$6.12 per share and 
$4.92 per share, respectively. In the comparable quarter of 2020, the Company reported a net loss of 
$11.2 million, or basic and diluted loss of 
$1.09 per share.

For the three months ended 
September 30, 2021, the Company reported an adjusted net income of 
$72.1 million, which excludes the unrealized gain on derivative instruments and loss on debt extinguishment of 
$6.3 million and 
$0.1 million, respectively, or basic and diluted adjusted income of 
$5.63 per share and 
$4.52 per share, respectively.

For the nine months ended 
September 30, 2021, the Company reported net income of 
$97.4 million, or basic and diluted income of 
$7.96 per share and 
$6.34 per share, respectively. In the comparable period of 2020, the Company reported a net loss of 
$35.2 million, or basic and diluted loss of 
$3.42 per share.

For the nine months ended 
September 30, 2021, the Company reported an adjusted net income of 
$121.7 million, which excludes the unrealized loss on derivative instruments and loss on debt extinguishment of 
$24.2 million and 
$0.1 million, respectively, or basic and diluted adjusted income of 
$9.95 per share and 
$7.93 per share, respectively.

Revenues, net

Revenues, net for the three months ended 
September 30, 2021 were 
$183.4 million compared with 
$68.2 million recorded in the comparable quarter in 2020. 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.

Revenues, net for the nine months ended 
September 30, 2021 and 2020 were 
$409.8 million and 
$200.0 million, respectively. The increase in revenues was primarily due to higher charter rates offset by a decrease in available days due to fewer owned days.

Voyage expenses

Voyage expenses for the three months ended 
September 30, 2021 and 2020 were 
$30.3 million compared to 
$19.6 million in the comparable quarter in 2020. The increase in voyage expenses was primarily due to an increase in bunker consumption expense as bunker fuel prices increased in the current year as well as an increase in voyage charter business and an increase in broker commission expense as a result of the increase in revenues.

Voyage expenses for the nine months ended 
September 30, 2021 were 
$81.4 million compared to 
$70.0 million in the comparable period in 2020. The increase in voyage expenses was primarily due to an increase in bunker consumption expense 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 
September 30, 2021 were 
$28.1 million compared to 
$21.7 million in the comparable quarter in 2020. The increase in vessel operating expenses was primarily attributable to increases in lubes expense as a result of an increase in prices as well as higher inventory levels and vessel start-up expenses as the Company purchased two vessels in the third quarter of 2021. 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 
September 30, 2021 and 2020 were 4,697 and 4,546, respectively.

Average daily vessel operating expenses excluding one-time, non-recurring expenses related to vessel acquisitions and sales and termination charges relating to change in crewing manager on some of our vessels for the three months ended 
September 30, 2021 was 
$5,401 as compared to 
$4,784 for the three months ended 
September 30, 2020.

Vessel operating expenses for the nine months ended 
September 30, 2021 were 
$73.3 million compared to 
$65.7 million in the comparable period in 2020. The increase in vessel expenses was primarily attributable to an increase in lubes expense as a result of an increase in prices, consumption due to increase in vessel speeds as well as higher inventory levels, increase in stores and spares delivery costs, crew wages, crew changes due to ongoing COVID-19 pandemic, and vessel start-up expenses as the Company purchased and took delivery of eight vessels during 2021. The ownership days for the nine months ended 
September 30, 2021 and 2020 were 13,407 and 13,646, respectively.

Average daily vessel operating expenses excluding one-time, non-recurring expenses related to vessel acquisitions and sales and termination charges relating to change in crewing manager on some of our vessels for the nine months ended 
September 30, 2021 was 
$5,114 as compared to 
$4,813 for the nine months ended 
September 30, 2020.

Charter hire expenses

Charter hire expenses for the three months ended 
September 30, 2021 were 
$10.7 million compared to 
$5.1 million in the comparable quarter in 2020. The increase in charter hire expenses was principally due to an increase in charter hire rates due to improvement in the charter hire market and a marginal increase in chartered-in days. The total chartered-in days for the three months ended 
September 30, 2021 were 563 compared to 535 for the comparable quarter in the prior year. The Company currently charters in four Ultramax vessels on a long term basis with remaining lease term of approximately one year each.

Charter hire expenses for the nine months ended 
September 30, 2021 were 
$25.4 million compared to 
$15.8 million in the comparable period in 2020. The increase in charter hire expenses was primarily due to an increase in charter hire rates due to improvement in the charter hire market and an increase in the number of chartered-in days. The total chartered-in days for the nine months ended 
September 30, 2021 were 1,718 compared to 1,664 for the comparable period in the prior year.

Depreciation and amortization

Depreciation and amortization expense for the three months ended 
September 30, 2021 and 2020 was 
$13.6 million and 
$12.6 million, respectively. Total depreciation and amortization expense for the three months ended 
September 30, 2021 includes 
$11.4 million of vessel and other fixed asset depreciation and 
$2.2 million relating to the amortization of deferred drydocking costs. Comparable amounts for the three months ended 
September 30, 2020 were 
$10.8 million of vessel and other fixed asset depreciation and 
$1.8 million of amortization of deferred drydocking costs.

Depreciation and amortization expense for the nine months ended 
September 30, 2021 and 2020 was 
$39.2 million and 
$37.6 million, respectively. Total depreciation and amortization expense for the nine months ended 
September 30, 2021 includes 
$33.0 million of vessel and other fixed asset depreciation and 
$6.2 million relating to the amortization of deferred drydocking costs. Comparable amounts for the nine months ended 
September 30, 2020 were 
$32.1 million of vessel and other fixed asset depreciation and 
$5.5 million of amortization of deferred drydocking costs.

General and administrative expenses

General and administrative expenses for the three months ended 
September 30, 2021 and 2020 were 
$7.9 million and 
$8.0 million, respectively. General and administrative expenses included stock-based compensation of 
$0.8 million and 
$0.7 million for the three months ended 
September 30, 2021 and 2020, respectively.

General and administrative expenses for the nine months ended 
September 30, 2021 and 2020 were 
$23.6 million and 
$22.7 million, respectively. General and administrative expenses included stock-based compensation of 
$2.2 million and 
$2.3 million for the nine months ended 
September 30, 2021 and 2020, respectively. The increase in general and administrative expenses relates to an increase in office expenses as our employees returned to our offices, compensation expenses and fees for legal and professional services.

Other operating expense

Other operating expense for the three and nine months ended 
September 30, 2021 was 
$0.8 million and 
$2.3 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 and penalties. 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 
September 30, 2021 and 2020 was 
$8.5 million and 
$9.0 million, respectively. The decrease in interest expense is mainly due to lower outstanding debt under the Norwegian Bond and the New Ultraco Debt Facility as we repaid the 
$55.0 million revolver loan under the New Ultraco Debt Facility as well as quarterly debt amortization of the term loan. In addition, we repaid 
$15.0 million under the Super Senior Facility in the first quarter of 2021.

Interest expense for the nine months ended 
September 30, 2021 and 2020 was 
$25.6 million and 
$26.9 million, respectively. The decrease in interest expense was primarily due to a decrease in outstanding debt under the Norwegian Bond Debt and a decrease in interest rates as well as the outstanding debt under the New Ultraco Debt Facility.

Realized and unrealized loss/(gain) on derivative instruments, net

Realized and unrealized loss on derivative instruments, net for the three months ended 
September 30, 2021 and 2020 was 
$9.0 million and 
$3.0 million, respectively. The increase in realized and unrealized losses on derivative instruments was primarily due to the sharp increase in charter hire rates. The non-cash unrealized losses on forward freight agreements (“FFA”) related to the last quarter of 2021 and full year 2022 amounted to 
$24.4 million based on 2,520 days hedged at a weighted average FFA contract price of 
$20,309 per day.

Realized and unrealized loss on derivative instruments, net for the nine months ended 
September 30, 2021 was 
$45.6 million compared to a realized and unrealized gain on derivative instruments, net of 
$4.0 million for the nine months ended 
September 30, 2020. The increase in realized and unrealized losses on derivative instruments was primarily due to the sharp increase in charter hire rates.        

Liquidity and Capital Resources

⁽¹⁾ Net cash provided by operating activities for the nine months ended 
September 30, 2021 was 
$120.9 million, compared with net cash used in operating activities of 
$2.3 million in the comparable period in 2020. The cash flows from operating activities increased as compared to the same period in the prior year primarily due to the increase in charter hire rates.

⁽²⁾ Net cash used in investing activities for the nine months ended 
September 30, 2021 was 
$106.8 million, compared to 
$17.5 million in the comparable period in the prior year. During the nine months ended 
September 30, 2021, the Company purchased eight vessels for 
$107.8 million and paid 
$2.2 million as an advance for the purchase of one vessel delivered in the fourth quarter of 2021. The Company paid 
$4.6 million for the purchase of ballast water treatment systems on our fleet. Additionally, the Company paid 
$1.6 million for vessel improvements. This use of cash was partially offset by the proceeds from the sale of one vessel for net proceeds of 
$9.2 million. The Company also received insurance proceeds of 
$0.2 million for hull and machinery claims.

⁽³⁾ Net cash provided by financing activities for the nine months ended 
September 30, 2021 was 
$22.6 million compared to 
$46.0 million in the comparable period in 2020. During the nine months ended 
September 30, 2021, the Company received 
$55.0 million in proceeds from the revolver loan under the New Ultraco Debt Facility, 
$16.5 million in proceeds from the term loan under the New Ultraco Debt Facility, 
$24.0 million in proceeds from the Holdco Revolving Credit Facility and 
$27.2 million in net proceeds from the ATM offering. The Company repaid 
$24.3 million of the New Ultraco Debt Facility, 
$4.0 million of the Norwegian Bond Debt, 
$55.0 million of the revolver loan under the New Ultraco Debt Facility and 
$15.0 million of the revolver loan under the Super Senior Facility. The Company also paid 
$1.0 million to settle net share equity awards. Additionally, the Company paid 
$0.3 million to the lenders of the Holdco Revolving Credit Facility, 
$0.3 million to the lenders of the New Ultraco Debt Facility and 
$0.3 million in financing costs relating to the equity offerings in 
December 2020.

As of 
September 30, 2021, our cash and cash equivalents including restricted cash was 
$125.6 million compared to 
$88.8 million as of 
December 31, 2020.

As of 
September 30, 2021, the Company’s debt consisted of 
$176.0 million in outstanding bonds under the Norwegian Bond Debt, 
$158.7 million under the New Ultraco Debt Facility, 
$24.0 million under the Holdco Revolving Credit Facility and the Convertible Bond Debt of 
$114.1 million.

On 
October 1, 2021, we entered into a new credit agreement that 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 to be used for refinancing the outstanding debt including accrued interest and commitment fees under the existing facilities and for general corporate purposes. Pursuant to the credit agreement, the Company borrowed 
$350.0 million and together with cash on hand repaid the outstanding debt, accrued interest and commitment fees under the existing facilities. As of the date of this press release, the revolver availability under the new credit agreement is 
$100.0 million.

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 nine months ended 
September 30, 2021, six of our vessels completed drydock and two vessels were in drydock as of 
September 30, 2021, and we incurred drydocking expenditures of 
$10.7 million. In the nine months ended 
September 30, 2020, eight of our vessels completed drydock and we incurred drydocking expenditures of 
$10.8 million.

The following table represents certain information about the estimated costs for anticipated vessel drydockings, 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

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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 GAAP measures, for internal managerial purposes and as a means to evaluate period-to-period comparisons. These non-GAAP financial measures are also used as supplemental financial measures 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. However, we do not, and you should not, rely on non-GAAP financial measures alone as measures of our performance, and these non-GAAP financial measures should not be considered an alternative to other measures of financial performance or liquidity presented in accordance with GAAP. Additionally, because non-GAAP financial measures are not standardized, these non-GAAP financial measures may not be comparable to similarly titled measures of another company. Nonetheless, 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.

Non-GAAP Financial Measures

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

Adjusted net income/(loss) and Adjusted Basic and Diluted income/(loss) per share represents Net income and Basic and Diluted income/(loss) 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 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/(loss) and Adjusted income/(loss) 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/(loss) should not be considered an alternative to net income/(loss), operating income/(loss), cash flows provided by/(used in) 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/(loss) may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted net income/(loss) in the same manner.

The following table presents the reconciliation of our Net income/(loss) to Adjusted net income/(loss):

Reconciliation of GAAP Net income/(loss) to Adjusted Net income/(loss)

⁽¹⁾ The number of shares used in the Diluted income per share and Diluted adjusted net income per share calculation for the three and nine months ended 
September 30, 2021 includes 2,906,035 dilutive shares related to the Convertible Bond Debt based on If-converted method per US GAAP in addition to the restricted stock awards and options based on 
Treasury stock method.

(2) EBITDA and Adjusted EBITDA

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

Our Adjusted EBITDA should not be considered an alternative to net income/(loss), operating income/(loss), cash flows provided by/(used in) by operating activities or any other measure of financial performance or liquidity presented in accordance with 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, unrealized loss/(gains) on derivative instruments, operating lease impairment, (gain)/loss on sale of vessels, loss on debt extinguishment and stock-based compensation expense that the Company believes are not indicative of the ongoing performance of its core operations. The Adjusted EBITDA for prior periods has been retroactively adjusted to exclude non-cash unrealized gains and losses on derivative instruments. The following table presents a reconciliation of our net income/(loss) to EBITDA and Adjusted EBITDA.

Reconciliation of GAAP Net income/(loss) to EBITDA and Adjusted EBITDA

(1) One-time and other adjustments to EBITDA for the three and nine months ended 
September 30, 2021 includes stock-based compensation, loss on debt extinguishment, gain on sale of vessel and unrealized (gains)/losses on derivatives. One-time and other adjustments to EBITDA for the three and nine months ended 
September 30, 2020 includes stock-based compensation, loss on sale of vessel, unrealized losses on derivatives and an operating lease impairment.

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 and 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

⁽¹⁾ The lease term of the legacy time charter concluded in the third quarter of 2021.

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

Norwegian Bond Debt: Norwegian Bond Debt refers to the Senior Secured Bonds issued by 
Eagle Bulk Shipco LLC, a wholly-owned subsidiary of the Company (“Shipco”), as borrower, certain wholly-owned vessel-owning subsidiaries of Shipco, as guarantors (“Shipco Vessels”), on 
November 28, 2017 for 
$200.0 million, pursuant to those certain Bond Terms, dated as of 
November 22, 2017, by and between Shipco, as issuer, and 
Nordic Trustee AS, a company existing under the laws of 
Norway (the “Bond Trustee”).

The Company issued a ten day call notice to redeem the outstanding bonds under the Norwegian Bond Debt at a redemption price of 102.475% of the nominal amount of each bond. Pursuant to the bond terms, the Company paid 
$185.6 million consisting of 
$176.0 million par value of the outstanding bonds, accrued interest of 
$5.2 million and 
$4.4 million of call premium into a defeasance account to be further credited to the bondholders upon expiry of notice period. Out of the 
$185.6 million, the Company funded 
$25.6 million to the defeasance account as of 
September 30, 2021. The remaining 
$160.0 million was funded on 
October 1, 2021. The bonds outstanding under the Norwegian Bond Debt were repaid in full on 
October 18, 2021 after the expiry of the requisite notice period.

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 provides for an aggregate principal amount of 
$208.4 million, which consists of (i) a term loan facility of 
$153.4 million and (ii) a revolving credit facility of 
$55.0 million. The New Ultraco Debt Facility is secured by 29 vessels. The New Ultraco Debt Facility was refinanced on 
October 1, 2021.

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.

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.

Holdco Revolving Credit Facility: Holdco Revolving Credit Facility refers to the senior secured revolving credit facility for 
$35.0 million, by and among 
Eagle Bulk Holdco LLC (“Holdco”), a wholly-owned subsidiary of the Company, as borrower, and Crédit 
Agricole Corporate and Investment Bank, as lender, facility agent, security trustee and mandated lead arranger with Nordea Bank ABP, 
New York Branch. The Holdco Revolving Credit Facility is secured by three vessels and had an outstanding debt of 
$24.0 million as of 
September 30, 2021. The Holdco Revolving Credit Facility was refinanced on 
October 1, 2021.

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, November 5, 2021, to discuss the third 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 7077196. 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 
November 5, 2021 until 
11:00 AM ET on 
November 15, 2021. 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 7077196.

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, 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: mailto:investor@eagleships.com 

Media:

Rose and Company
Tel. +1 212-359-2228

Source: Eagle Bulk Shipping Inc. 

Eagle Bulk Shipping Inc. Reports Record Results for the Third Quarter of 2021

 

STAMFORD, Conn., 
Nov. 04, 2021 (GLOBE NEWSWIRE) — 
Eagle Bulk Shipping Inc. (NASDAQ: EGLE) (“Eagle Bulk”, “Eagle” or the “Company”), one of the world’s largest owner-operators within the drybulk vessel segment, today reported financial results for the quarter ended 
September 30, 2021.

Quarter highlights:

• Generated Revenues, net of 
  $183.4 million
  • Generated TCE Revenue ⁽¹⁾ of 
    $127.1 million
  • Achieved TCE ⁽¹⁾ of 
    $29,088/day
    
    
• Realized record net income of 
  $78.3 million, or 
  $6.12 per basic share
  
  • Adjusted net income⁽¹⁾ of 
    $72.1 million, or 
    $5.63⁽¹⁾ per adjusted basic share

• Generated Adjusted EBITDA⁽¹⁾ of 
  $91.0 million
  
  
• Declared a quarterly dividend of 
  $2.00 per share for the third quarter of 2021. Payable on 
  November 24, 2021 to shareholders of record at the close of business on 
  November 15, 2021
  
  
• Took delivery of previously announced vessel acquisitions, the M/V Antwerp Eagle, M/V Newport Eagle and M/V Valencia Eagle
  

Recent Developments:

• Executed 
  $400.0 million comprehensive refinancing, lowering cost of debt and extending maturity duration
  • New facility consists of 
    $300.0 million term loan and 
    $100.0 million revolver facility out of which 
    $50.0 million was drawn on the date of closing

• Repaid the 
  $50.0 million revolver with the cash generated from operations bringing our revolver availability to 
  $100.0 million
  
  
• Established new dividend policy and 
  $50.0 million share repurchase program
  
  
• Looking ahead, fixed 75% of Q4 2021 available days at an average TCE of 
  $32,400 as of 
  November 4, 2021
  

Eagle’s CEO  Gary Vogel commented, “Drybulk freight rates continued to strengthen in the third quarter, and Eagle’s strong leverage to the market produced 
$78 million of net income for the quarter. Not only does this represent the highest quarterly net income Eagle has achieved, it also eclipses the Company’s best ever annual result!

Following our recently adopted dividend policy of paying quarterly cash dividends equal to a minimum of 30% of net income, our Board has authorized a quarterly dividend of 
$2.00 per share for the third quarter. We have also fully paid down our 
$100 million revolving credit facility, delivering on our commitment to simultaneously de-lever and return capital to our shareholders. It is particularly gratifying to be in position to deliver a meaningful cash distribution to shareholders following the multi-year transformation of the Company.

Looking ahead, our TCE performance continues to improve, and as of today, we have covered approximately 75% of our available days for the fourth quarter at a net TCE of 
$32,400. As such, we are on track to exceed our third quarter performance, which will support continued value creation and return of capital to our shareholders. Notwithstanding short-term volatility, which is an inherent part of our markets, we maintain an optimistic outlook on market developments going forward, based on both positive demand and historically low supply side fundamentals.”

Fleet Operating Data 

Fleet Development

Vessels acquired and delivered into the fleet in the third quarter of 2021

• Newport Eagle, a Supramax (58K DWT / 2011-built)
• Antwerp Eagle, an Ultramax (64K DWT / 2015-built)

Vessels acquired and delivered in the fourth quarter of 2021

• Valencia Eagle, an Ultramax (64K DWT / 2015-built)
  

Vessels sold and delivered in the third quarter of 2021

• Tern, a Supramax (50K DWT / 2003-built)

Results of Operations for the three and nine months ended September 30, 2021 and 2020

For the three months ended 
September 30, 2021, the Company reported net income of 
$78.3 million, or basic and diluted income of 
$6.12 per share and 
$4.92 per share, respectively. In the comparable quarter of 2020, the Company reported a net loss of 
$11.2 million, or basic and diluted loss of 
$1.09 per share.

For the three months ended 
September 30, 2021, the Company reported an adjusted net income of 
$72.1 million, which excludes the unrealized gain on derivative instruments and loss on debt extinguishment of 
$6.3 million and 
$0.1 million, respectively, or basic and diluted adjusted income of 
$5.63 per share and 
$4.52 per share, respectively.

For the nine months ended 
September 30, 2021, the Company reported net income of 
$97.4 million, or basic and diluted income of 
$7.96 per share and 
$6.34 per share, respectively. In the comparable period of 2020, the Company reported a net loss of 
$35.2 million, or basic and diluted loss of 
$3.42 per share.

For the nine months ended 
September 30, 2021, the Company reported an adjusted net income of 
$121.7 million, which excludes the unrealized loss on derivative instruments and loss on debt extinguishment of 
$24.2 million and 
$0.1 million, respectively, or basic and diluted adjusted income of 
$9.95 per share and 
$7.93 per share, respectively.

Revenues, net

Revenues, net for the three months ended 
September 30, 2021 were 
$183.4 million compared with 
$68.2 million recorded in the comparable quarter in 2020. 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.

Revenues, net for the nine months ended 
September 30, 2021 and 2020 were 
$409.8 million and 
$200.0 million, respectively. The increase in revenues was primarily due to higher charter rates offset by a decrease in available days due to fewer owned days.

Voyage expenses

Voyage expenses for the three months ended 
September 30, 2021 and 2020 were 
$30.3 million compared to 
$19.6 million in the comparable quarter in 2020. The increase in voyage expenses was primarily due to an increase in bunker consumption expense as bunker fuel prices increased in the current year as well as an increase in voyage charter business and an increase in broker commission expense as a result of the increase in revenues.

Voyage expenses for the nine months ended 
September 30, 2021 were 
$81.4 million compared to 
$70.0 million in the comparable period in 2020. The increase in voyage expenses was primarily due to an increase in bunker consumption expense 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 
September 30, 2021 were 
$28.1 million compared to 
$21.7 million in the comparable quarter in 2020. The increase in vessel operating expenses was primarily attributable to increases in lubes expense as a result of an increase in prices as well as higher inventory levels and vessel start-up expenses as the Company purchased two vessels in the third quarter of 2021. 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 
September 30, 2021 and 2020 were 4,697 and 4,546, respectively.

Average daily vessel operating expenses excluding one-time, non-recurring expenses related to vessel acquisitions and sales and termination charges relating to change in crewing manager on some of our vessels for the three months ended 
September 30, 2021 was 
$5,401 as compared to 
$4,784 for the three months ended 
September 30, 2020.

Vessel operating expenses for the nine months ended 
September 30, 2021 were 
$73.3 million compared to 
$65.7 million in the comparable period in 2020. The increase in vessel expenses was primarily attributable to an increase in lubes expense as a result of an increase in prices, consumption due to increase in vessel speeds as well as higher inventory levels, increase in stores and spares delivery costs, crew wages, crew changes due to ongoing COVID-19 pandemic, and vessel start-up expenses as the Company purchased and took delivery of eight vessels during 2021. The ownership days for the nine months ended 
September 30, 2021 and 2020 were 13,407 and 13,646, respectively.

Average daily vessel operating expenses excluding one-time, non-recurring expenses related to vessel acquisitions and sales and termination charges relating to change in crewing manager on some of our vessels for the nine months ended 
September 30, 2021 was 
$5,114 as compared to 
$4,813 for the nine months ended 
September 30, 2020.

Charter hire expenses

Charter hire expenses for the three months ended 
September 30, 2021 were 
$10.7 million compared to 
$5.1 million in the comparable quarter in 2020. The increase in charter hire expenses was principally due to an increase in charter hire rates due to improvement in the charter hire market and a marginal increase in chartered-in days. The total chartered-in days for the three months ended 
September 30, 2021 were 563 compared to 535 for the comparable quarter in the prior year. The Company currently charters in four Ultramax vessels on a long term basis with remaining lease term of approximately one year each.

Charter hire expenses for the nine months ended 
September 30, 2021 were 
$25.4 million compared to 
$15.8 million in the comparable period in 2020. The increase in charter hire expenses was primarily due to an increase in charter hire rates due to improvement in the charter hire market and an increase in the number of chartered-in days. The total chartered-in days for the nine months ended 
September 30, 2021 were 1,718 compared to 1,664 for the comparable period in the prior year.

Depreciation and amortization

Depreciation and amortization expense for the three months ended 
September 30, 2021 and 2020 was 
$13.6 million and 
$12.6 million, respectively. Total depreciation and amortization expense for the three months ended 
September 30, 2021 includes 
$11.4 million of vessel and other fixed asset depreciation and 
$2.2 million relating to the amortization of deferred drydocking costs. Comparable amounts for the three months ended 
September 30, 2020 were 
$10.8 million of vessel and other fixed asset depreciation and 
$1.8 million of amortization of deferred drydocking costs.

Depreciation and amortization expense for the nine months ended 
September 30, 2021 and 2020 was 
$39.2 million and 
$37.6 million, respectively. Total depreciation and amortization expense for the nine months ended 
September 30, 2021 includes 
$33.0 million of vessel and other fixed asset depreciation and 
$6.2 million relating to the amortization of deferred drydocking costs. Comparable amounts for the nine months ended 
September 30, 2020 were 
$32.1 million of vessel and other fixed asset depreciation and 
$5.5 million of amortization of deferred drydocking costs.

General and administrative expenses

General and administrative expenses for the three months ended 
September 30, 2021 and 2020 were 
$7.9 million and 
$8.0 million, respectively. General and administrative expenses included stock-based compensation of 
$0.8 million and 
$0.7 million for the three months ended 
September 30, 2021 and 2020, respectively.

General and administrative expenses for the nine months ended 
September 30, 2021 and 2020 were 
$23.6 million and 
$22.7 million, respectively. General and administrative expenses included stock-based compensation of 
$2.2 million and 
$2.3 million for the nine months ended 
September 30, 2021 and 2020, respectively. The increase in general and administrative expenses relates to an increase in office expenses as our employees returned to our offices, compensation expenses and fees for legal and professional services.

Other operating expense

Other operating expense for the three and nine months ended 
September 30, 2021 was 
$0.8 million and 
$2.3 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 and penalties. 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 
September 30, 2021 and 2020 was 
$8.5 million and 
$9.0 million, respectively. The decrease in interest expense is mainly due to lower outstanding debt under the Norwegian Bond and the New Ultraco Debt Facility as we repaid the 
$55.0 million revolver loan under the New Ultraco Debt Facility as well as quarterly debt amortization of the term loan. In addition, we repaid 
$15.0 million under the Super Senior Facility in the first quarter of 2021.

Interest expense for the nine months ended 
September 30, 2021 and 2020 was 
$25.6 million and 
$26.9 million, respectively. The decrease in interest expense was primarily due to a decrease in outstanding debt under the Norwegian Bond Debt and a decrease in interest rates as well as the outstanding debt under the New Ultraco Debt Facility.

Realized and unrealized loss/(gain) on derivative instruments, net

Realized and unrealized loss on derivative instruments, net for the three months ended 
September 30, 2021 and 2020 was 
$9.0 million and 
$3.0 million, respectively. The increase in realized and unrealized losses on derivative instruments was primarily due to the sharp increase in charter hire rates. The non-cash unrealized losses on forward freight agreements (“FFA”) related to the last quarter of 2021 and full year 2022 amounted to 
$24.4 million based on 2,520 days hedged at a weighted average FFA contract price of 
$20,309 per day.

Realized and unrealized loss on derivative instruments, net for the nine months ended 
September 30, 2021 was 
$45.6 million compared to a realized and unrealized gain on derivative instruments, net of 
$4.0 million for the nine months ended 
September 30, 2020. The increase in realized and unrealized losses on derivative instruments was primarily due to the sharp increase in charter hire rates.        

Liquidity and Capital Resources

⁽¹⁾ Net cash provided by operating activities for the nine months ended 
September 30, 2021 was 
$120.9 million, compared with net cash used in operating activities of 
$2.3 million in the comparable period in 2020. The cash flows from operating activities increased as compared to the same period in the prior year primarily due to the increase in charter hire rates.

⁽²⁾ Net cash used in investing activities for the nine months ended 
September 30, 2021 was 
$106.8 million, compared to 
$17.5 million in the comparable period in the prior year. During the nine months ended 
September 30, 2021, the Company purchased eight vessels for 
$107.8 million and paid 
$2.2 million as an advance for the purchase of one vessel delivered in the fourth quarter of 2021. The Company paid 
$4.6 million for the purchase of ballast water treatment systems on our fleet. Additionally, the Company paid 
$1.6 million for vessel improvements. This use of cash was partially offset by the proceeds from the sale of one vessel for net proceeds of 
$9.2 million. The Company also received insurance proceeds of 
$0.2 million for hull and machinery claims.

⁽³⁾ Net cash provided by financing activities for the nine months ended 
September 30, 2021 was 
$22.6 million compared to 
$46.0 million in the comparable period in 2020. During the nine months ended 
September 30, 2021, the Company received 
$55.0 million in proceeds from the revolver loan under the New Ultraco Debt Facility, 
$16.5 million in proceeds from the term loan under the New Ultraco Debt Facility, 
$24.0 million in proceeds from the Holdco Revolving Credit Facility and 
$27.2 million in net proceeds from the ATM offering. The Company repaid 
$24.3 million of the New Ultraco Debt Facility, 
$4.0 million of the Norwegian Bond Debt, 
$55.0 million of the revolver loan under the New Ultraco Debt Facility and 
$15.0 million of the revolver loan under the Super Senior Facility. The Company also paid 
$1.0 million to settle net share equity awards. Additionally, the Company paid 
$0.3 million to the lenders of the Holdco Revolving Credit Facility, 
$0.3 million to the lenders of the New Ultraco Debt Facility and 
$0.3 million in financing costs relating to the equity offerings in 
December 2020.

As of 
September 30, 2021, our cash and cash equivalents including restricted cash was 
$125.6 million compared to 
$88.8 million as of 
December 31, 2020.

As of 
September 30, 2021, the Company’s debt consisted of 
$176.0 million in outstanding bonds under the Norwegian Bond Debt, 
$158.7 million under the New Ultraco Debt Facility, 
$24.0 million under the Holdco Revolving Credit Facility and the Convertible Bond Debt of 
$114.1 million.

On 
October 1, 2021, we entered into a new credit agreement that 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 to be used for refinancing the outstanding debt including accrued interest and commitment fees under the existing facilities and for general corporate purposes. Pursuant to the credit agreement, the Company borrowed 
$350.0 million and together with cash on hand repaid the outstanding debt, accrued interest and commitment fees under the existing facilities. As of the date of this press release, the revolver availability under the new credit agreement is 
$100.0 million.

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 nine months ended 
September 30, 2021, six of our vessels completed drydock and two vessels were in drydock as of 
September 30, 2021, and we incurred drydocking expenditures of 
$10.7 million. In the nine months ended 
September 30, 2020, eight of our vessels completed drydock and we incurred drydocking expenditures of 
$10.8 million.

The following table represents certain information about the estimated costs for anticipated vessel drydockings, 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

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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 GAAP measures, for internal managerial purposes and as a means to evaluate period-to-period comparisons. These non-GAAP financial measures are also used as supplemental financial measures 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. However, we do not, and you should not, rely on non-GAAP financial measures alone as measures of our performance, and these non-GAAP financial measures should not be considered an alternative to other measures of financial performance or liquidity presented in accordance with GAAP. Additionally, because non-GAAP financial measures are not standardized, these non-GAAP financial measures may not be comparable to similarly titled measures of another company. Nonetheless, 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.

Non-GAAP Financial Measures

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

Adjusted net income/(loss) and Adjusted Basic and Diluted income/(loss) per share represents Net income and Basic and Diluted income/(loss) 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 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/(loss) and Adjusted income/(loss) 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/(loss) should not be considered an alternative to net income/(loss), operating income/(loss), cash flows provided by/(used in) 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/(loss) may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted net income/(loss) in the same manner.

The following table presents the reconciliation of our Net income/(loss) to Adjusted net income/(loss):

Reconciliation of GAAP Net income/(loss) to Adjusted Net income/(loss)

⁽¹⁾ The number of shares used in the Diluted income per share and Diluted adjusted net income per share calculation for the three and nine months ended 
September 30, 2021 includes 2,906,035 dilutive shares related to the Convertible Bond Debt based on If-converted method per US GAAP in addition to the restricted stock awards and options based on 
Treasury stock method.

(2) EBITDA and Adjusted EBITDA

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

Our Adjusted EBITDA should not be considered an alternative to net income/(loss), operating income/(loss), cash flows provided by/(used in) by operating activities or any other measure of financial performance or liquidity presented in accordance with 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, unrealized loss/(gains) on derivative instruments, operating lease impairment, (gain)/loss on sale of vessels, loss on debt extinguishment and stock-based compensation expense that the Company believes are not indicative of the ongoing performance of its core operations. The Adjusted EBITDA for prior periods has been retroactively adjusted to exclude non-cash unrealized gains and losses on derivative instruments. The following table presents a reconciliation of our net income/(loss) to EBITDA and Adjusted EBITDA.

Reconciliation of GAAP Net income/(loss) to EBITDA and Adjusted EBITDA

(1) One-time and other adjustments to EBITDA for the three and nine months ended 
September 30, 2021 includes stock-based compensation, loss on debt extinguishment, gain on sale of vessel and unrealized (gains)/losses on derivatives. One-time and other adjustments to EBITDA for the three and nine months ended 
September 30, 2020 includes stock-based compensation, loss on sale of vessel, unrealized losses on derivatives and an operating lease impairment.

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 and 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

⁽¹⁾ The lease term of the legacy time charter concluded in the third quarter of 2021.

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

Norwegian Bond Debt: Norwegian Bond Debt refers to the Senior Secured Bonds issued by 
Eagle Bulk Shipco LLC, a wholly-owned subsidiary of the Company (“Shipco”), as borrower, certain wholly-owned vessel-owning subsidiaries of Shipco, as guarantors (“Shipco Vessels”), on 
November 28, 2017 for 
$200.0 million, pursuant to those certain Bond Terms, dated as of 
November 22, 2017, by and between Shipco, as issuer, and 
Nordic Trustee AS, a company existing under the laws of 
Norway (the “Bond Trustee”).

The Company issued a ten day call notice to redeem the outstanding bonds under the Norwegian Bond Debt at a redemption price of 102.475% of the nominal amount of each bond. Pursuant to the bond terms, the Company paid 
$185.6 million consisting of 
$176.0 million par value of the outstanding bonds, accrued interest of 
$5.2 million and 
$4.4 million of call premium into a defeasance account to be further credited to the bondholders upon expiry of notice period. Out of the 
$185.6 million, the Company funded 
$25.6 million to the defeasance account as of 
September 30, 2021. The remaining 
$160.0 million was funded on 
October 1, 2021. The bonds outstanding under the Norwegian Bond Debt were repaid in full on 
October 18, 2021 after the expiry of the requisite notice period.

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 provides for an aggregate principal amount of 
$208.4 million, which consists of (i) a term loan facility of 
$153.4 million and (ii) a revolving credit facility of 
$55.0 million. The New Ultraco Debt Facility is secured by 29 vessels. The New Ultraco Debt Facility was refinanced on 
October 1, 2021.

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.

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.

Holdco Revolving Credit Facility: Holdco Revolving Credit Facility refers to the senior secured revolving credit facility for 
$35.0 million, by and among 
Eagle Bulk Holdco LLC (“Holdco”), a wholly-owned subsidiary of the Company, as borrower, and Crédit 
Agricole Corporate and Investment Bank, as lender, facility agent, security trustee and mandated lead arranger with Nordea Bank ABP, 
New York Branch. The Holdco Revolving Credit Facility is secured by three vessels and had an outstanding debt of 
$24.0 million as of 
September 30, 2021. The Holdco Revolving Credit Facility was refinanced on 
October 1, 2021.

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, November 5, 2021, to discuss the third 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 7077196. 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 
November 5, 2021 until 
11:00 AM ET on 
November 15, 2021. 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 7077196.

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, 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: mailto:investor@eagleships.com 

Media:

Rose and Company
Tel. +1 212-359-2228

Source: Eagle Bulk Shipping Inc. 

Friday, November 05, 2021

Eagle Bulk Shipping (EGLE)
Strongest Quarter Ever and High 4Q021 Forward Cover

Eagle Bulk Shipping Inc. is a US-based drybulk owner-operator focused on the Supramax/Ultramax mid-size asset class, which ranges from 50,000 and 65,000 deadweight tons in size; these vessels are equipped with onboard cranes allowing for the self-loading and unloading of cargoes, a feature which distinguishes them from the larger classes of drybulk vessels and provides for greatly enhanced flexibility and versatility- both with respect to cargo diversity and port accessibility. The Company transports a broad range of major and minor bulk cargoes around the world, including coal, grain, ore, pet coke, cement, and fertilizer. Eagle operates out of three offices, Stamford (headquarters), Singapore, and Hamburg, and performs all aspects of vessel management in-house including: commercial, operational, technical, and strategic.

Poe Fratt, Senior Research Analyst, Noble Capital Markets, Inc.

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

Strong quarter ever. Adjusted EBITDA was $91.0 million was driven by TCE rates of $29.1k/day. Results would have been even higher absent realized FFA/bunker swap hedging losses of $15.4 million. Opex also increased due to acquisition activity. The dry bulk market has pulled back this quarter, but 4Q2021 forward cover is high and management comments should remain positive on today’s 8:00am EST call. Number is 833-282-4411 and code is 7077196.


Limited changes to EBITDA estimates.  Despite recent weakness, forward cover of 75% of available days booked at $32.4k/day supports our 4Q2021 EBITDA estimate of $108.4 million based on TCE rates of $30.6k/day and our 2021 EBITDA estimate of $293.6 million based on TCE rates of $24.3/day. With visibility into next year limited and typical seasonality likely to return, our 2022 EBITDA is $304.0 …

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 Third Quarter Financial Results

 

Increases Quarterly Dividend and Approaches Full Execution of Genco’s Comprehensive Value Strategy

Reports Highest Quarterly Earnings Per Share Since 2008

NEW YORK, Nov. 03, 2021 (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 and nine months ended September 30, 2021.

The following financial review discusses the results for the three months and nine months ended September 30, 2021 and September 30, 2020.

Third Quarter 2021 and Year-to-Date Highlights

• As part of Genco’s comprehensive value strategy announced in April 2021, we have taken the following steps in the year-to-date:
  • Closed our $450 Million Credit Facility in August 2021, which provides additional flexibility for capital allocation, lowers our cash flow breakeven rate, and improves key terms
  • Took delivery of four modern, fuel efficient Ultramax vessels in Q3 2021
  • Repaid $144.2 million of debt during the first nine months of 2021, or 32% of the beginning year debt balance
    • We plan to pay down debt to $246 million by year-end 2021
  • Fixed seven vessels on period TCs for ~1 to ~2 years at rates between $23,375 and $32,000 per day to secure cash flows and de-risk acquisitions

• Genco increased its regular quarterly cash dividend to $0.15 per share for the third quarter of 2021
  • Payable on or about November 22, 2021 to all shareholders of record as of November 15, 2021
  • We have now declared cumulative dividends totaling $1.055 per share over the last nine quarters
  • The first dividend under Genco’s value strategy, is to be based on Q4 2021 results and be payable in Q1 2022
• We recorded net income of $57.1 million for the third quarter of 2021
  • Basic and diluted earnings per share of $1.36 and $1.34, respectively
  • Adjusted net income¹ of $61.7 million or basic and diluted earnings per share of $1.47 and $1.44, respectively, excluding $4.4 million in loss on debt extinguishment and a $0.2 million loss on sale of vessels
  • Represents our highest quarterly earnings per share result since Q3 2008
• Voyage revenues totaled $155.3 million and net revenue¹ (voyage revenues minus voyage expenses and charter hire expenses) totaled $108.8 million during Q3 2021
  • Our average daily fleet-wide time charter equivalent, or TCE¹, for Q3 2021 was $29,287, marking our highest quarterly TCE since 2010
  • We estimate our TCE to date for Q4 2021 to be $36,879 for 71% of our owned fleet available days, based on both period and current spot fixtures
• Recorded adjusted EBITDA of $79.8 million during Q3 2021, which is greater than the comparable figure for all of 2020¹
• Maintained a strong liquidity position with $80.5 million of cash as of September 30, 2021, after $144.2 million of debt repayments as well as $108.7 million paid for vessels acquired in the year to date
• Established a new joint venture, GS Shipmanagement Pte. Ltd., with The Synergy Group (“Synergy”) for the technical management of our fleet, which aims to unlock further value for shareholders through its differentiated approach to ship management
• Became a signatory to the Call to Action for Shipping Decarbonization

John C. Wobensmith, Chief Executive Officer, commented, “During the third quarter, Genco maintained its upward earnings trajectory posting its best quarter since 2008. We continue to capitalize on both our leading platform and the favorable drybulk market, which has moved from strength-to-strength in recent quarters. While we anticipate normal seasonality in the coming months, the overall fundamentals, including a historically low orderbook, remain supportive of Genco further taking advantage of its strong earnings power for the benefit of shareholders. Against this favorable backdrop, we are progressing towards the full execution of our comprehensive value strategy. Importantly, we have laid the groundwork over the course of the year, have once again increased our quarterly dividend and are on schedule to declare our first dividend under our new policy.”

Mr. Wobensmith, continued, “With our expected debt balance of $246 million by year-end 2021, representing a planned 45% pay down of our debt outstanding at the start of the year, we will have meaningfully reduced our financial leverage creating an attractive risk-reward profile for the Company. Based on this success and our significant operating leverage, we believe we are well-positioned to distribute compelling dividends to shareholders through diverse market environments while continuing to opportunistically grow the Company.”

¹ 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 Update

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

• Low financial leverage
• Paying sizeable quarterly cash dividends to shareholders, and
• Growth of the Company’s asset base
  
  

We believe this strategy is a key differentiator for the Company and will drive shareholder value over the long-term creating a compelling risk-reward balance.

Drawing on one of the strongest balance sheets in the industry, Genco has utilized a phased in approach to further reduce its debt and refinance its current credit facilities in order to lower its cash flow breakeven levels 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. The first dividend under the Company’s new corporate strategy will be based on Q4 2021 results and be payable in Q1 2022.

In implementing this strategy, the Company has taken the following measures to date:

• Deleveraging: paid down $144.2 million of debt during the first nine months of 2021, or approximately 32% of our outstanding debt
• Refinancing: closed on a new global credit facility to increase flexibility, improve key terms and lower cash flow breakeven rates
• Revolver: our new $450 million credit facility has a substantial revolver in place with $137.5 million of availability as of September 2021
• Growth: agreed to acquire six modern, fuel efficient Ultramaxes since April 2021
• Securing revenue: opportunistically fixed various period time charterers to secure cash flows and de-risk recent acquisitions
  

We plan to have $246 million of debt outstanding at December 31, 2021 following voluntary debt repayments totaling $59 million in the fourth quarter of 2021. Importantly, following these repayments, we will have no mandatory debt amortization payments until December 2025, or later, if we continue to make additional voluntary paydowns. 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 third quarter of 2021, Genco declared a cash dividend of $0.15 per share. This represents an increase of $0.05 per share compared to the previous quarter. 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.

As part of Genco’s value strategy, the Board of Directors adopted a new quarterly dividend policy for dividends payable commencing in the first quarter of 2022 in respect to the Company’s financial results for the fourth quarter of 2021.  Under the new quarterly dividend policy, the amount available for quarterly dividends is to be calculated based on the following formula: 

Operating cash flow
Less: Debt repayments
Less: Capital expenditures for drydocking
Less: Reserve
Cash flow distributable as dividends

For purposes of the foregoing calculation, operating cash flow is defined as voyage revenue less voyage expenses, charter hire expenses, 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.  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, the reserve will be set on a quarterly basis in advance of the subsequent quarter and is anticipated to be based on future quarterly debt repayments and interest expense. The quarterly reserve for the fourth quarter of 2021, which is set in and remains subject to our Board of Directors’ discretion, is expected to be $10.75 million, which was determined based on $8.75 million for voluntary debt repayments anticipated to be made in Q1 2022 as well as estimated cash interest expense on our debt. The quarterly debt repayment and reserve will be reassessed on a quarterly basis in advance by the Board of Directors and management. Maintaining a quarterly reserve as well as optionality for the uses of the reserve are important factors of the corporate strategy as it enables Genco to be flexible depending on market conditions and provide a more tailored approach to Genco’s overall business model.

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.

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 experienced in major bulk rates together with the continued improvement and relative stability of minor bulk rates.

Based on current fixtures to date, our estimated TCE to date for the fourth quarter of 2021 on a load-to-discharge basis is presented below. Our estimated Q4 TCE based on current fixtures is 26% higher than Q3, highlighting our opportunistic and mostly spot oriented approach to fixture activity. In the year-to-date, we have selectively booked period time charter coverage for approximately one to two years on four Capesize and four 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. Specifically, the three Ultramax time charters for two years each were booked to de-risk the purchase of the three Ultramax vessels we agreed to purchase in July 2021 and are expected to result in an unlevered cash-on-cash return of approximately 50% over the two year period.

As we have fixed eight vessels on one to two year period time charters, we have provided a TCE breakout of the period time charters as well as the spot trading fixtures in the fourth quarter to date. Actual rates for the fourth quarter will vary based upon future fixtures. We have approximately eight Capesize vessels coming open in the coming weeks, of which we plan to ballast select vessels to the Atlantic basin. As the market has declined from the highs seen during the third quarter and early October, we anticipate the unfixed portion of our available days to be contracted at lower rates than those reflected above in our fixtures to date.

Fleet Update

Since April 2021, the Company has entered agreements to purchase six modern, fuel efficient Ultramax vessels. To date, we have taken delivery of the following Ultramax vessels:

• Genco Enterprise (2016-built) on August 23, 2021
• Genco Madeleine (2014-built) on August 23, 2021
• Genco Mayflower (2017-built) on August 24, 2021
• Genco Constellation (2017-built) on September 3, 2021

We anticipate taking delivery of the final two Ultramaxes in January 2022 at which point we expect to pay the remaining $40.8 million to acquire these two vessels. Since December 2020, we have grown our core Ultramax fleet by nine vessels to a total of 15 vessels as we continue to modernize and expand our fleet at an attractive point in the drybulk cycle.

Regarding vessel divestitures, we completed the sale of the Genco Provence on November 2, 2021, for gross proceeds of $13.25 million. With this sale, we have now divested the oldest vessel in our fleet and in the process have avoided drydocking capex scheduled for 2022 of approximately $0.8 million.

Financial Review: 2021 Third Quarter

The Company recorded net income for the third quarter of 2021 of $57.1 million, or $1.36 and $1.34 basic and diluted earnings per share, respectively. Comparatively, for the three months ended September 30, 2020, the Company recorded a net loss of $21.1 million, or $0.50 basic and diluted net loss per share.

The Company’s revenues increased to $155.3 million for the three months ended September 30, 2021, as compared to $87.5 million recorded for the three months ended September 30, 2020, primarily due to higher rates achieved by both our major and minor bulk vessels, as well as our third-party time chartered-in vessels, which was partially offset by the operation of fewer vessels in our fleet. The average daily time charter equivalent, or TCE, rates obtained by the Company’s fleet was $29,287 per day for the three months ended September 30, 2021 as compared to $11,456 per day for the three months ended September 30, 2020. During the third quarter of 2021, drybulk freight rates reached decade highs led by a seasonal rise in iron ore shipments from Brazil and Australia, strong global economic activity, a reduction of fleet-wide productivity due to COVID-19 restrictions and port congestion, increased demand for coal ahead of peak winter season and manageable fleet growth due to the historically low orderbook. Rates continued to show strength going into the fourth quarter, with the BCI reaching a peak on October 7^th, but have since come off their highs due to easing iron ore exports, a decline in port congestion together with reduced steel output in China from the record levels seen earlier in the year. These factors have been partially offset by an increase in coal shipments.

Voyage expenses were $37.8 million for the three months ended September 30, 2021 compared to $33.5 million during the prior year period. This increase was primarily due to higher bunker expenses, partially offset by the operation of fewer vessels. Vessel operating expenses decreased to $21.8 million for the three months ended September 30, 2021 from $23.5 million for the three months ended September 30, 2020, primarily due to fewer owned vessels during the third quarter of 2021 as compared to the third quarter of 2020, partially offset by higher crew expenses as a result of COVID-19 related expenses and disruptions. General and administrative expenses increased to $5.7 million for the third quarter of 2021 compared to $5.1 million for the third quarter of 2020, primarily due to higher legal and professional fees. Depreciation and amortization expenses decreased to $14.2 million for the three months ended September 30, 2021 from $16.1 million for the three months ended September 30, 2020, primarily due to a decrease in depreciation for certain vessels in our fleet that were impaired during 2020, as well as a decrease in the depreciation of vessels due to the operation of a smaller fleet during the third quarter of 2021 as compared to the third quarter of 2020.

Daily vessel operating expenses, or DVOE, amounted to $5,833 per vessel per day for the third quarter of 2021 compared to $4,961 per vessel per day for the third quarter of 2020. This increase is primarily attributable to higher crew expenses as a result of COVID-19 related expenses and disruptions, as well as higher spares. 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 Q4 2021 is $5,100 per vessel per day on a fleet-wide basis reflecting the larger weighting of our fleet towards Capesize vessels following the sales of smaller Supramax and Handysize vessels as well as an anticipated increase in COVID-19 related expenses. The potential impacts of COVID-19 are beyond our control and are difficult to predict due to uncertainties surrounding the pandemic.

Apostolos Zafolias, Chief Financial Officer, commented, “During the quarter, we took important steps to strengthen our capital structure and further reduce our financial leverage. We closed our new $450 million credit facility, which will further reduce our cash flow break evens to among the lowest in the industry and provide additional flexibility through improved terms and a sizeable revolver. We entered the fourth quarter with a strong cash position and the financial flexibility to continue to execute on all components of our comprehensive value strategy related to distributing sizeable dividends to shareholders and opportunistically growing the fleet. Our focus remains on improving the strength of our balance sheet and shareholder returns. We are pleased with our ongoing success and will focus on continuing to pay down debt with a medium-term objective of reducing our net debt to zero.”

Financial Review: Nine Months 2021

The Company recorded net income of $91.2 million or $2.17 and $2.14 basic and diluted net earnings per share for the nine months ended September 30, 2021, respectively. This compares to a net loss of $159.7 million or $3.81 basic and diluted net loss per share for the nine months ended September 30, 2020. Net income for the nine months ended September 30, 2021 includes a $0.9 million loss on sale of vessels as well as a $4.4 million loss on debt extinguishment. Net loss for the nine months ended September 30, 2020 includes $134.7 million in non-cash vessel impairment charges and a $0.8 million loss on sale of vessels. Revenues increased to $363.9 million for the nine months ended September 30, 2021 compared to $260.1 million for the nine months ended September 30, 2020, primarily due to higher rates achieved by our fleet as well as our third party time chartered-on vessels, which was partially offset by the operation of fewer vessels in our fleet. Voyage expenses decreased to $109.6 million for the nine months ended September 30, 2021 from $123.6 million for the same period in 2020. TCE rates obtained by the Company increased to $20,761 per day for the nine months ended September 30, 2021 from $9,307 per day for the nine months ended September 30, 2020. Total operating expenses for the nine months ended September 30, 2021 and 2020 were $255.9 million and $402.3 million, respectively. Total operating expenses include a loss on sale of vessels of $0.9 million for the nine months ending September 30, 2021. For the nine months ended September 30, 2020, total operating expenses include $134.7 million in non-cash vessel impairment charges, as well as a loss on sale of vessels of $0.8 million for the nine months ending September 30, 2020. General and administrative expenses for the nine months ended September 30, 2021 increased to $17.6 million as compared to the $16.4 million in the same period of 2020, primarily due to higher legal and professional fees. DVOE was $5,286 for the year-to-date period in 2021 versus $4,576 in 2020. The increase in daily vessel operating expense was predominantly due to higher crew expenses as a result of COVID-19 related expenses and disruptions. As a result of COVID-19 restrictions during the first half of 2020, we were unable to perform our regularly scheduled crew changes, resulting in an abnormally low DVOE for that period. EBITDA for the nine months ended September 30, 2021 amounted to $145.4 million compared to $(93.5) million during the prior period. During the nine months of 2021 and 2020, EBITDA included non-cash impairment charges, gains and losses on sale of vessels as well as a loss on debt extinguishment as mentioned above. Excluding these items, our adjusted EBITDA would have amounted to $150.7 million and $42.1 million, for the respective periods.

Liquidity and Capital Resources

Cash Flow

Net cash provided by operating activities for the nine months ended September 30, 2021 was $135.0 million as compared to $16.0 million for the nine months ended September 30, 2020. This increase in cash provided by operating activities was primarily due to higher rates achieved by our major and minor bulk vessels, changes in working capital, as well as a decrease in drydocking related expenditures and interest expense.

Net cash used in investing activities for the nine months ended September 30, 2021 was $77.3 million as compared to net cash provided by investing activities of $12.3 million for the nine months ended September 30, 2020.  This fluctuation was primarily due to the purchase of four Ultramax vessels which delivered during the third quarter of 2021, as well as deposits made for the two Ultramax vessels that are expected to be delivered during the first quarter of 2022.  These fluctuations were partially offset by a decrease in scrubber related expenses and an increase in net proceeds from the sale of vessels during the nine months ended September 30, 2021 as compared to the same period during 2020.

Net cash used in financing activities during the nine months ended September 30, 2021 and 2020 was $156.9 million and $29.8 million, respectively.  The increase was primarily due to the refinancing of the $495 Million Credit Facility and the $133 Million Credit Facility with the $450 Million Credit Facility on August 31, 2021.  During the nine months ended September 30, 2021, the increase in total net cash used in financing activities related to our credit facilities was $123.8 million as compared to the same period during 2020.  Additionally, there was a $5.0 million increase in the payment of deferred financing costs paid in relation to the $450 Million Credit Facility during the nine months ended September 30, 2021.  These increases were partially offset by a $1.8 million decrease in the payment of dividends during the nine months ended September 30, 2021 as compared to the same period during 2020.

Capital Expenditures

We make capital expenditures from time to time in connection with vessel acquisitions. As of November 3, 2021, Genco Shipping & Trading Limited’s fleet consists of 17 Capesize, 13 Ultramax and 12 Supramax vessels with an aggregate capacity of approximately 4,514,000 dwt and an average age of 10.1 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 the balance of 2021 and 2022 to be:

(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. Estimated drydocking costs for 2022 exclude the $0.8 million in relation to the agreed upon sale of the Genco Provence.

(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 Q4 2021 consists of 40 days for two Ultramaxes and 20 days for one Supramax. Estimated offhire days for 2022 relate to 12 vessels drydocking during the year and exclude days related to the Genco Provence due to the vessel’s agreed upon sale.

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.

1) EBITDA represents net income (loss) 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 and charter hire expenses, 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 fourth quarter of 2021 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 fourth quarter to the most comparable financial measures presented in accordance with GAAP.

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 November 3, 2021, Genco Shipping & Trading Limited’s fleet consists of 17 Capesize, 13 Ultramax and 12 Supramax vessels with an aggregate capacity of approximately 4,514,000 dwt and an average age of 10.1 years.

The following table reflects Genco’s fleet list as of November 3, 2021:

Conference Call Announcement

Genco Shipping & Trading Limited will hold a conference call on Thursday,
November 4, 2021 at 8:30 a.m. Eastern Time to discuss its 2021 third 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 (334) 777-6978 or (800) 367-2403 and enter passcode 8667167. 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 8667167. 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) continuation of 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; (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 continue to be 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, 2021 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 (xxiv) 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, 2020 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. 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

Source: Genco Shipping & Trading Limited