Tuesday, July 30, 2019

Eagle Bulk Shipping (EGLE)

Tough Quarter But Set Up for 2H2019 Rebound

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.

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

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

• Another solid quarter of TEC rate outperformance, but light of expectations. TCE revenue of $38.9 million and TCE rates of $9,732/day were below our estimates of $40.6 million and $10,000/day, respectively. Adjusted 2Q2019 EBITDA of $10.4 million was below our estimate and down sequentially from $15.3 million in 1Q2019. 8AM EST call today (7/30) — number is 844-282-4411 and code is 6173884.
• Adjusting estimates to reflect current dry bulk market outlook, expanded scrubber program and pending acquisition. We are moving our 2019 EBITDA estimate to $70.5 million from $75.8 million. Estimate is based on…
  
  
  

  
  

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Monday, July 29, 2019

Eurodry (EDRY)

Positive Impact from Preferred Changes and Recent Dry Bulk Market Rebound.

EuroDry Ltd. was formed on January 8, 2018 under the laws of the Republic of the Marshall Islands and trades on the NASDAQ Capital Market under the ticker EDRY. EDRY is the product of a spin-off of the dry bulk fleet by Euroseas (ESEA) completed in May 2018.

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

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

• Recent preferred restructuring improves cost structure. ~$4.3 million of Series B Preferred Shares was redeemed and the dividend rate was lowered by 275 basis points through January 2021. There is a positive impact on the cost structure; the reduced dividend saves $0.54 million, or ~$212/day, and the lower Series B Preferred saves $0.41 million, or ~$163/day.
• EuroDry stands to benefit if dry bulk market rebound extends into next year. To counteract the market weakness and reduce exposure to TCE rate volatility, Panamax forward freight agreements (FFA) were secured and effective coverage is close to…
  
  
  

  
  

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Friday, July 26, 2019

Eagle Bulk Shipping (EGLE)

Convert Debt Funds Another Acquisition, But Pressures Stock Price.

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.

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

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

• Convert debt priced yesterday despite 18% stock price drop after offering was announced. Unsecured convert debt of $100 million due in 2024 was priced with a coupon of 5% and conversion premium of 25%, or $5.61/share. Green shoe is $15 million.
• Convert debt funds another acquisition to extend fleet renewal program. Six Ultramaxes (four built in 2015 and two in 2016) will be acquired for $122 million. There is an option to issue…
  
  
  

  
  

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Freight shipments fell 5.3% in June after having fallen 6.0% in May.  June was the seventh month in a row of year-over-year declines.  Transportation is viewed as a leading indicator of the economic activity because it reflects buyer optimism regarding the future.  A study by the Bureau of Transportation Statistics estimates that transportation volumes lead business cycles by approximately four months.  Should investors view the decline in transportation shipments as a sign of upcoming economic weakness or even a recession?

Tuesday, July 23, 2019

Scorpio Bulkers (SALT)

Worst Has Passed and Rebound Underway

Scorpio Bulkers Inc is a shipping company based in Monaco. It owns and operates a fleet of modern mid to large-size dry bulk carriers which provide marine transportation for major bulks, which include iron ore, coal and grain and minor bulks which include bauxite, fertilizers and steel products internationally.

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

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

• 2Q2019 results slightly below expectations. Scorpio Tankers (STNG) investment performed well and non-cash gain of $53.1 million recognized. Adjusted EBITDA of $16.9 million was below our estimate of $19.7 million mainly due to lower TCE rates, which drove a $3.0 million revenue variance, and higher G&A expenses ($0.6 million), which more than offset lower opex (-$0.5 million) and other expenses (-$0.3 million).
• Increasing 2019 EBTDA estimate to $103.0 million to reflect recent strong dry bulk market rebound. Introducing our 2020 EBITDA estimate of $150.4 million, which is based on …
  
  
  

  
  

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Monday, July 22, 2019

Seanergy Maritime (SHIP)

Cape Market Moving Sharply Higher, SHIP Should Move Up Too

Seanergy Maritime Holdings Corp., an international shipping company, provides marine dry bulk transportation services through the ownership and operation of dry bulk vessels. The company owns a modern fleet of 10 Capesize dry bulk vessels with a combined cargo-carrying capacity of approximately 1,748,581 dwt and an average fleet age of 9.8 years. The company was formerly known as Seanergy Maritime Corp. and changed its name to Seanergy Maritime Holdings Corp. in January 2009.

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

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

• Cape market has rebounded strongly over the past quarter and spot rates exceed $30k/day. Despite the overhang of trade tensions and sluggish global economic growth, the dry bulk market has been stronger than expected. The Baltic Capesize Index (BCI) has exploded higher over the past month and is near a multi-year high. At 4,256, the BCI is well above the extraordinary low of 92 on April 4th and ~25% above the current 3Q2019 average.
• Increasing 2019 EBITDA estimate to $17.08 million (from $15.05 million) and introducing 2020 EBITDA estimate of $40.59 million. Given the strong rebound in the cape market, we are forecasting cape TCE rates of…
  
  
  

  
  

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Along with electric vehicles, the concept of autonomous vehicles is garnering significant media attention as technology leaders, including Apple (AAPL), Google (GOOG), Amazon (AMZN), and Uber (UBER) seek to establish market leading positions in the nascent technology. While concepts include driverless taxis and/or delivery trucks, the technology has already advanced from driver assistance to an ability to pilot automated vehicles in a controlled environment. While still too early for practical application and mass adoption, technology advancements in this area could have profound implications for not just urban planning, jobs and convenience, but for social and political policies as well. Are there parallels to be drawn from President Trump’s statement following the tragic Boeing 737 Max incident when he tweeted “I see it all the time in many products. Always seeking to go one unnecessary step further, when often old and simpler is better”? Below we scratch the surface on each side of the argument.

Monday, July 1, 2019

Seanergy Maritime Holding Corp. (SHIP)

Class C Warrants Expanding Share Count

Seanergy Maritime Holdings Corp., an international shipping company, provides marine dry bulk transportation services through the ownership and operation of dry bulk vessels. The company owns a modern fleet of 10 Capesize dry bulk vessels with a combined cargo-carrying capacity of approximately 1,748,581 dwt and an average fleet age of 9.8 years. The company was formerly known as Seanergy Maritime Corp. and changed its name to Seanergy Maritime Holdings Corp. in January 2009. 

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

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

• May equity offering raised $14.3 million, but Class C warrants expand the share count. As of late Friday, 1.68 million Class C warrants (about 35%) from the equity offering were exercised and 4.61 million common shares were issued. About 3.15 million Class C warrants could be exercised for an additional 8.62 million common shares.
• Class C warrant exercise by Jelco creates room for exercise of others. With 18.44 million common shares outstanding, Jelco clearly exercised all…
  
  

  
  

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Tuesday, June 25, 2019

Great Lakes Dredge & Dock (GLDD)

More Awards Announced. Expect 2H2019 Backlog Rebound.

Great Lakes Dredge & Dock Corp is a provider of dredging services in the United States. The Company operates in two operating segments namely Dredging and Environmental, and Infrastructure.

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

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

• New contracts announced. 2Q2019 awards total at least $91 million and confidence in the 2019 outlook remains solid. Late yesterday, six projects with a total of $91 million were awarded. In addition to two awards for $41.5 million that we discussed last week, another $49.0 million of work was added in 2Q2019. The total awards consisted of $42.9 million in Coastal Protection, $25.8 million in Maintenance and $21.8 million in Rivers&Lakes awards. 
• Backlog rebound expected over 2H019. While backlog dropped about $132 million in 1Q2019 to $575 million, we expect the backlog to stabilize in…
  

  
  
  
  
  

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Monday, June 24, 2019

Euroseas Ltd. (ESEA)

Acquisition and Financing Activity Are Positives

Euroseas Ltd. provides ocean-going transportation services worldwide. The company owns and operates containerships that transport dry and refrigerated containerized cargoes, including manufactured products and perishables; and drybulk carriers that transport iron ore, coal, grains, bauxite, phosphate, and fertilizers.

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

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

• Pending acquisition adds scale, lowers cost structure, and improves age profile. Acquisition of four feeder vessels for ~$30 million (22.5 million common shares and $15 million term loan) should close in 3Q2019.
• Refinancing done and acquisition financing lined up. New debt matures in 2023. As a follow on to the 2018 refinancing, ~$8 million of debt on the Astoria and Evridiki was refinanced with…
  
  
  

  
  

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Thursday, June 20, 2019

Great Lakes Dredge & Dock (GLDD)

Two New Awards Bolster Confidence in 2019 Outlook

Great Lakes Dredge & Dock Corp is a provider of dredging services in the United States. The Company operates in two operating segments namely Dredging and Environmental, and Infrastructure.

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

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

• New contracts announced and 2019 outlook remains solid. Two new contracts for $41.3 million of work were awarded over the past several days. The first award is a $20.97 million contract for hopper dredging in Galveston, Texas and the second award is a $20.3 million contract for a beach rehab project in Virginia Beach, Virginia. 
• Backlog dropped in 1Q2019, but should rebound over 2H019. 1Q2019 backlog dropped about $132 million to $575 million in 1Q2019. Arguably, bidding activity is…
  

  
  
  
  
  

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Monday, June 17, 2019

Seanergy Maritime Holding Corp. (SHIP)

Upgrading the Shares – High Risk but High Upside Potential

Seanergy Maritime Holdings Corp., an international shipping company, provides marine dry bulk transportation services through the ownership and operation of dry bulk vessels. The company owns a modern fleet of 11 dry bulk carriers consisting of 9 Capesizes and 2 Supramaxes with a combined cargo-carrying capacity of approximately 1,682,582 dwt and an average fleet age of 8.1 years. The company was formerly known as Seanergy Maritime Corp. and changed its name to Seanergy Maritime Holdings Corp. in January 2009. 

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

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

• Weaker Than Expected 1Q2019 Results. Reported adjusted 1Q2019 EBITDA of $0.4 million was below our estimate of $1.0 million and well below 4Q2018 EBITDA of $6.3 million, mainly due to lower time equivalent (TCE) rates..
• Adjusting 2019 EBITDA estimate to reflect lower rates. Market improvement expected later this year. To incorporate weak 1Q2019 operating results and the current cape market environment, our EBITDA estimate moves down…
  

  
  
  
  
  

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Thursday, May 30, 2019

Euroseas Ltd. (ESEA)

Heading for a Rebound?

Euroseas Ltd. provides ocean-going transportation services worldwide. The company owns and operates containerships that transport dry and refrigerated containerized cargoes, including manufactured products and perishables; and drybulk carriers that transport iron ore, coal, grains, bauxite, phosphate, and fertilizers. 

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

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

• Quarterly results up sequentially due to stabilizing container market. Excluding drydock expenses, adjusted EBITDA was $2.0 million was line with our estimate of $2.1 million and sequentially above 4Q2018 adjusted EBITDA of $1.6 million, mainly due to slightly higher time equivalent (TCE) rates.
• Fine-tuning 2019 EBITDA estimate to reflect quarterly results and market improvement later this year. We estimate adjusted EBITDA of $9.4 mill…

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