Category: Transportation

Updating 2020 EBITDA estimate. We are moving our 2020 EBITDA estimate to $19.8 million to reflect updated TCE rate guidance based on voyage charters that shift some revenue out of 3Q2020 into 4Q2020. Our revised EBITDA estimate also includes the delivery of the Goodship in August and the fixing of the Lordship at $22,000/day for the months of September and October. We also incorporated the likely impact of voyage charters on four vessels (Fellowship, Geniuship, Goodship, and Leadership) on the next two quarters. This accounting treatment does not impact the overall profitability of the voyage charter, but it creates a timing issue. As a result, our EBITDA estimate is lower at $8.2 million in 3Q2020, but higher at $12.7 million in 4Q2020. While there is no impact on our EBITDA estimate, a $5.6 million gain on the July refinancing will be recognized in 3Q2020.

Financial leverage and refinancing risk remain high.  While significant capital was raised in 2Q2020 and a total of $59.9 million of debt has extended/refinanced this year, the capital structure remained highly levered. More importantly, total debt of ~$64 million matures before year end 2020; bank debt of ~$38 million, related party debt of $23.4 million and related party convert debt of …

JV Acquisition Closed. PANL acquired an additional one-third equity interest in Nordic Bulk Holding Company (NBHC), a joint venture that owns six 1-A ice-class panamaxes, to increase its ownership to 66.7%. While the opportunity was unexpected, PANL was well positioned to execute quickly and make a very positive strategic move. All six panamaxes were built at Oshima Shipyard in Japan and PANL has a long history of operating the NBHC fleet. The acquisition price of $22.5 million is payable in four installments; cash of $15.0 million paid at closing and payments of $2.5 million over the next three years. There will be limited adjustments to our estimates since the joint venture is already consolidated.

Fleet renewal program intact.  Combined with the sale of the Beothuk, a 2002-built Supramax in early August for $5.4 million, the acquisition improves the fleet profile and enhances the leading position in the ice-class market. We expect other older assets to be sold, especially as we approach the new build delivery dates next year …

3Q2020 awards now total $427.7 million. The scope of work is broad and it includes a total of 20 projects, including four capital awards for $180.6 million, seven coastal protection awards for $130.8 million and nine maintenance awards for $116.3 million. A coastal protection award for $10.6 million was posted yesterday and we had overlooked the awards announced in July in our last research note. Also, the 3Q2020 award number is even higher since there was an unquantified award in July from Bechtel for work on a LNG project.

July awards Awards for $51.1 million were announced on July 6th, including two coastal protection projects for $44.0 million and two maintenance projects for $7.1 million.  August awards. Awards for $117.8 million were announced on August 20th, including two coastal protection projects for $39.2 million and four maintenance project for …

New container contracts improve late 2020 outlook and extend into next year. Two intermediate feeders have been contracted at higher-than-expected charter rates. The Akinada Bridge was extended for a minimum of 12 months (and maximum of 13 months) at $17,250/day. The charterer was granted an option to extend for an additional 10-12 months at $20,000/day. In addition, the Synergy Oakland was extended for an additional 8-12 months through the exercise of an option. The rate is based on the CONTEX-4,250 index minus 10% (the index adjusts twice weekly, but the rate will be adjusted every three months). The new fixture will begin on October 23rd, and the current CONTEX-4,250 index is $15,369.

Adjusting 2020 EBITDA estimate to reflect new contracts and scrapping of an older feeder.  To reflect the positive 2Q2020 variance and current container market fundamentals, we are forecasting 2020 EBITDA of $13.7 million based on TCE rates of $9,240/day and operating days of 5,941, up from our previous estimate of $13.1 million based on TCE rates of $9,220/day. Also, the retirement of the Ninos …

Recent CEO Interview focused on the active fleet management strategy, fleet renewal program and solid financial position. Strong corporate governance was also highlighted as a positive. Investors can review the full interview with CEO Gary Vogel, including Q&A, on our research portal at channelchek.com.

The active fleet management, or cargo-centric, strategy embraces dry bulk market volatility to generate TCE outperformance and temper periodic weakness. Versus the adjusted BSI index, the active fleet management strategy has generated above average TCE rates and created ~$37 million of incremental EBITDA over the past year.

Fleet renewal program is ongoing.  The sale of Goldeneye, an 18-year old Supramax, improved the fleet profile and generated proceeds of $5 million. Also, the scrubber program enhanced the fleet and adds a potential competitive advantage if fuel spreads widen again …

New low bids could trigger awards of $102 million. Over the past month, low apparent bids of $102 million have been posted to government web sites. The largest chunk of work was posted late last week on the DoD web site. GLDD was awarded a $52.90 million firm-fixed-price contract for maintenance and new dredging in Charleston, South Carolina, with an estimated completion date of August 2022.

In addition, several other low bids have been posted. They are South Atlantic Regional work in four harbors, including Brunswick, Morehead City, Savannah, and Wilmington $14.66 million, Shore Protection Project (SPP) in Brevard County for $10.6 million with options, Mobile Harbor channel deepening and widening – Phase 1 for $8.30 million, and Fernandian Harbor work in Nassau County, Florida for $4.32 million. On August 10th, a low bid of $15.5 million on work at Freeport (TX) Harbor was opened.

Combined with awards announced in mid-August that totaled ~$118 million, the new low bids pending award should help stabilize backlog in 3Q2020.  In mid-August, new awards for $118 million were announced. The work includes a total of six projects, including four maintenance awards for $78.6 million and two coastal protection awards for $39.2 million. In total, the new awards and low bids approach …

Reported adjusted 1H2020 EBITDA of $28.8 million was a sharp improvement over 1H2019 number of $14.7 million and strong dry bulk TCE rate outperformance continued. Adjusting for IFRS 16 adoption, we calculate that adjusted EBITDA was $21.2 million in 1H2020, which was above expectations due to forward cover and the cargo centric focus.

TCE rate outperformance continued in 1H2020, with Handysize TCE rates $2,067 (56%) above the BHSI index, and Supramax/Ultramax TCE rates $3,444 (60%) above the BSI-58 index. The outperformance versus the indices generated almost $20.0 million of additional TCE revenue, or $7.0 million in Handysize and $12.2 million in Supramax/Ultramax.

Adjusting 2020 EBITDA to reflect better than expected 1H2020 operating results and firmer dry bulk market. Given the positive variance in 1H2020 and the firmer state of the dry bulk market, we are increasing our 2020 EBITDA to $46.0 million from $39.8 million. There is some visibility into the 2H2020 due to forward cover, but the majority of …

Insurance claim pushed adjusted 2Q2020 EBITDA of $4.7 million above expectations. Excluding dry dock expenses, EBITDA of $4.7 million was $1.7 million ahead of our estimate.  Reported adjusted EBITDA was $4.4 million, which excluded unamortized, below-market time charters acquired of $0.3 million and included derivative adjustments of $0.5 million. We also added back drydock expenses of $0.4 million to adjusted EBITDA. The insurance recovery of $2.7 million from a fire on the Oinousses had a positive impact on the quarterly results.

Adjusting 2020 EBITDA estimate. Positive 2Q2020 variance more than offset soft container market fundamentals and scrapping activity.  To reflect the positive 2Q2020 variance and current container market fundamentals, we are forecasting 2020 EBITDA of $13.1 million based on TCE rates of $9,220/day and operating days of 5,941, up from our previous estimate of …

Click to get the full report

Bounce back from a challenging quarter. Unique and consistent business model continues to deliver TCE rate outperformance. While the 2Q020 environment for the dry bulk market was challenging, the unique business model once again delivered positive operating results and adjusted 2Q2020 EBITDA of $10.7 million was well ahead of expectations, mainly due to an overly cautious stance that we took when 1Q2020 operating results were lower than expected in May.

Adjusting 2020 EBITDA estimate to reflect current dry bulk market weakness and near-term uncertainty.  Similar to last year, we have seen a robust recovery off the lows of last quarter. We are reversing the conservative stance, which proved way too cautious, taken after 1Q2020 operating results were announced in May and our EBITDA estimate moves back up to …

Click to get the full report

Adjusted 2Q2020 EBITDA of $1.2 million slightly ahead of expectations due to lower opex, G&A expenses and other costs. TCE revenue was $4.54 million was slightly below our estimate, but the shortfall was more than offset by positive variances in opex of $0.09 million, G&A expense of $0.08 million, and other expenses of $0.7 million, or a total of $0.24 million.

Moving 2020 EBITDA estimate to $5.9 million (from $6.2 million) based on TCE rates of $12,406/day (down from $13,064/day) to reflect 2Q2020 operating results, softer rates and the timing of dry dockings on the two small tankers. As of August 6th, 62% of available 3Q2020 days booked at an average MR2 gross TCE rate of …

Click to get the full report

Adjusted 2Q2020 EBITDA of $0.2 million was weaker than expected due to lower TCE rates of $7,297/day.  1Q2020 TCE revenue of $4.3 million was below expectations by $0.5 million, as TCE rates tied to indices were lower than expected. The fleet included 7.0 vessels and ownership days were 637, while TCE rates dropped to $7,297/day from $7,885/day in 1Q2020. Relative to our estimates, TCE rates were ~$600/day lower, and shipping days of 595 were 17 lower.

Fine-tuning 2020 estimate mainly due to 2Q2020 shortfall.  Following the management call, we are moving our adjusted 2020 EBITDA estimate lower to $5.4 million based on TCE rates of $8,724/day, down from $5.7 million based on TCE rates of $8,684/day. We are forecasting that TCE rates …

Click to get the full report

Adjusted 2Q2020 EBITDA was lower than expected due to lower-than-expected TCE rates that more than offset positive variances in opex and G&A expenses. The dry bulk market abruptly recovered in June, but reported 2Q2020 EBITDA of $1.8 million was lower than expected due to lower TCE rates that more than offset lower opex and G&A expenses.

Adjusting 2020 estimates to reflect 2Q2020 shortfall, 3Q2020 forward cover and firmer 2H2020 dry bulk market. While the dry bulk market moved up strongly over the past two months and 3Q2020 forward cover of 66% of available days booked at $9,220/day is positive, we are lowering estimated 2020 EBITDA to …

Click to get the full report.