Eagle Bulk Shipping Inc. Reports First Quarter 2013 Results PR Newswire NEW YORK, May 15, 2013 NEW YORK, May 15, 2013 /PRNewswire/ --Eagle Bulk Shipping Inc. (Nasdaq: EGLE) today announced its results for the first quarter ended March 31, 2013. For the First Quarter: oNet reported income of $1.4 million or $0.08 per share (based on a weighted average of 16,966,070 diluted shares outstanding for the quarter), compared with net loss of $17.4 million, or $1.11 per share, for the comparable quarter of 2012. oNet revenues of $72.2 million, compared to $52.6 million for the comparable quarter in 2012. Gross time charter and freight revenues of $73.6 million, compared with $54.8 million for the comparable quarter of 2012. oEBITDA, as adjusted for exceptional items under the terms of the Company's credit agreement, was $32.5 million for the first quarter of 2013, compared with $13.8 million for the first quarter of 2012. oFleet utilization rate of 99.1%. Sophocles N. Zoullas, Chairman and CEO, commented, "Conditions in the dry bulk market remain challenging and, for the most part, unchanged from our most recent earnings report. Though vessel supply dynamics are steadily improving, they have not yet aligned with demand fundamentals. Our focus in this environment continues to emphasize a flexible, opportunistic chartering strategy, access to the relatively stable minor bulk trade, and operational excellence and efficiency." Results of Operations for the three-month period ended March 31, 2013 and 2012 For the first quarter of 2013, the Company reported net income of $1,374,270 or $0.08 per share, based on a weighted average of 16,966,070 diluted shares outstanding. In the comparable first quarter of 2012, the Company reported net loss of $17,433,529 or $1.11 per share, based on a weighted average of 15,750,821 diluted shares outstanding. Gross time and voyage charter revenues in the quarter ended March 31, 2013 were $73,618,991, compared with $54,823,130 recorded in the comparable quarter in 2012. The increase in revenue is attributable to the settlement agreement with KLC, pursuant to which the Company recognized revenue of approximately $32.8 million, offset by lower time charter rates earned by the fleet and a marginal decrease in voyage charter revenues. Gross revenues recorded in the quarter ended March 31, 2013 and 2012 include an amount of $10,280,559 and $1,228,764, respectively, relating to the non-cash amortization of fair value below contract value of time charters acquired of which $10,106,247 relates to the KLC settlement agreement in the quarter ended March 31, 2013. Brokerage commissions incurred on revenues earned in the quarter ended March 31, 2013 and 2012 were $1,396,638 and $2,206,730, respectively. Net revenues during the quarter ended March 31, 2013 and 2012, were $72,222,353 and $52,616,400, respectively. Total operating expenses for the quarter ended March 31, 2013 were $47,420,291 compared with $60,118,356 recorded in the first quarter of 2012. The Company operated 45 vessels in both first quarters of 2013 and 2012. The decrease in operating expenses resulted primarily from a reduction in the allowance for accounts receivable of approximately $3,438,145, lower professional fee costs and compensation expenses in general and administrative expenses and a gain realized from the settlement agreement with KLC of $3,331,692. The decrease in depreciation and amortization expense is attributable to a lower drydock amortization. In addition, there was a reduction in charter hire expenses as none was incurred during the quarter ended March 31, 2013. EBITDA, adjusted for exceptional items under the terms of the Company's credit agreement, was $32,524,714 for the first quarter of 2013, compared with $13,813,999 for the first quarter of 2012. (Please see below for a reconciliation of EBITDA to net income / (loss). Liquidity and Capital Resources Net cash provided by operating activities during the three-month period ended March 31, 2013, was $1,248,839, compared with net cash provided by operating activities of $2,653,413 during the corresponding three-month period ended March 31, 2012. The decrease was primarily due to lower rates on charter renewals. Net cash used by investing activities during the three-month period endedMarch 31, 2013, was $49,994, compared with net cash provided by investing activities of $338,400 during the corresponding three-month period ended March 31, 2012. Net cash used by financing activities during the three-month period ended March 31, 2013, was $48,000, compared to none in 2012. As of March 31, 2013, our cash balance was $19,270,813, compared to a cash balance of $18,119,968 at December 31, 2012. Also recorded in Restricted Cash is an amount of $276,056, which collateralizes letters of credit relating to our office leases. At March 31, 2013, the Company's debt consisted of $1,129,478,741 in term loans and $22,561,496 paid-in-kind loans. Disclosure of Non-GAAP Financial Measures EBITDA represents operating earnings before extraordinary items, depreciation and amortization, interest expense, and income taxes, if any. EBITDA is included because it is used by certain investors to measure a company's financial performance. EBITDA is not an item recognized by U.S. GAAP and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity. EBITDA is presented to provide additional information with respect to the Company's ability to satisfy its obligations including debt service, capital expenditures, and working capital requirements. While EBITDA is frequently used as a measure of operating results and the ability to meet debt service requirements, the definition of EBITDA used herein may not be comparable to that used by other companies due to differences in methods of calculation. Our term loan agreement requires us to comply with financial covenants based on debt and interest ratio with extraordinary or exceptional items, interest, taxes, non-cash compensation, depreciation and amortization ("Credit Agreement EBITDA"). Therefore, we believe that this non-U.S. GAAP measure is important for our investors as it reflects our ability to meet our covenants. The following table is a reconciliation of net income/(loss), as reflected in the consolidated statements of operations, to the Credit Agreement EBITDA: Three Months Ended March 31,2013 March 31,2012 Net Income/(Loss) $ 1,374,270 $ (17,433,529) Interest Expense 20,539,035 10,960,910 Depreciation and Amortization 18,936,577 19,433,357 Amortization of fair value (below) above market (10,280,559) (1,228,764) of time charter acquired EBITDA 30,569,323 11,731,974 Non-cash Compensation Expense (1) 1,955,391 2,082,025 Credit Agreement EBITDA $ 32,524,714 $ 13,813,999 (1)Stock based compensation related to stock options and restricted stock units. 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 these vessels. In addition to acquisitions that we may undertake in future periods, the Company's other major capital expenditures include funding the Company's maintenance program of regularly scheduled drydocking necessary to preserve the quality of our vessels as well as to comply with international shipping standards and environmental laws and regulations. Although the Company has some flexibility regarding the timing of its dry docking, the costs are relatively predictable. Management anticipates that vessels are to be drydocked every two and a half 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. One vessel drydocked in the three months ended March 31, 2013. The following table represents certain information about the estimated costs for anticipated vessel drydockings in the next four quarters, along with the anticipated off-hire days: Quarter Ending Off-hire Days^(1) Projected Costs^(2) June 30, 2013 44 $1.20 million September 30, 2013 22 $0.60 million December 31, 2013 44 $1.20 million March 31, 2014 44 $1.20 million ^(1) Actual duration of drydocking will vary based on the condition of the vessel, yard schedules and other factors ^(2) Actual costs will vary based on various factors, including where the drydockings are actually performed Summary Consolidated Financial and Other Data: The following table summarizes the Company's selected consolidated financial and other data for the periods indicated below. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended March 31, 2013 March 31, 2012 Revenues, net of commissions $72,222,353 $52,616,400 Voyage expenses 8,204,657 7,017,793 Vessel expenses 20,494,412 22,442,06 Charter hire expenses — 590,484 Depreciation and amortization 18,936,577 19,433,357 General and administrative expenses 3,116,337 10,634,660 Gain on time charter agreement termination (3,331,692) — Total operating expenses 47,420,291 60,118,356 Operating income (loss) 24,802,062 (7,501,956) Interest expense 20,539,035 10,960,910 Interest income (64,170) (8,038) Other expense (income) 2,952,927 (1,021,299) Total other expense, net 23,427,792 9,931,573 Net income (loss) $1,374,270 $(17,433,529) Weighted average shares outstanding: Basic 16,966,070 15,750,821* Diluted 16,966,070 15,750,821* Per share amounts: Basic net income (loss) $0.08 $(1.11) Diluted net income (loss) $0.08 $(1.11) * Adjusted to give effect to the 1 for 4 reverse stock split that became effective on May 22, 2012, see Note 1. Fleet Operating Data Three Months Ended March 31, 2013 March 31, 2012 Ownership Days 4,050 4,095 Chartered-in under operating lease Days - 32 Available Days 4,030 4,094 Operating Days 3,992 4,041 Fleet Utilization 99.1% 98.7% CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31, 2013 December 31, 2012 ASSETS: Current assets: Cash and cash equivalents $19,270,813 $18,119,968 Accounts receivable, net 10,755,027 9,303,958 Prepaid expenses 4,255,287 3,544,810 Inventories 12,719,310 12,083,125 Investment and other current asset 6,267,836 197,509 Fair value above contract value of time — 549,965 charters acquired Total current assets 53,268,273 43,799,335 Noncurrent assets: Vessels and vessel improvements, at cost, net of accumulated depreciation of $333,169,297 and 1,695,889,031 1,714,307,653 $314,700,681, respectively Other fixed assets, net of accumulated amortization of $595,242 and $515,896, 401,242 447,716 respectively Restricted cash 276,056 276,056 Deferred drydock costs 2,392,520 2,132,379 Deferred financing costs 23,036,131 25,095,469 Fair value above contract value of time — 2,491,530 charters acquired Other assets 1,318,333 594,012 Total noncurrent assets 1,723,313,313 1,745,344,815 Total assets $1,776,581,586 $1,789,144,150 LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $8,142,372 $10,235,007 Accrued interest 1,047,546 2,430,751 Other accrued liabilities 10,868,808 14,330,141 Deferred revenue and fair value below — 3,237,694 contract value of time charters acquired Unearned charter hire revenue 3,948,943 3,755,166 Total current liabilities 24,007,669 33,988,759 Noncurrent liabilities: Long-term debt 1,129,478,741 1,129,478,741 Payment-in-kind loans 22,561,496 15,387,468 Deferred revenue and fair value below — 13,850,772 contract value of time charters acquired Fair value of derivative instruments 1,420,611 2,243,833 Total noncurrent liabilities 1,153,460,848 1,160,960,814 Total liabilities 1,177,468,517 1,194,949,573 Commitment and contingencies Stockholders' equity: Preferred stock, $.01 par value, 25,000,000 — — shares authorized, none issued Common stock, $.01 par value, 100,000,000 shares authorized, 16,638,092 and 16,638,092 shares issued 166,378 166,378 and outstanding, respectively Additional paid‑in capital 764,268,421 762,313,030 Retained earnings (net of historical (163,901,119) (165,275,389) dividends declared of $262,118,388) Accumulated other comprehensive loss (1,420,611) (3,009,442) Total stockholders' equity 599,113,069 594,194,577 Total liabilities and stockholders' equity $1,776,581,586 $1,789,144,150 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, 2013 March 31, 2012 Cash flows from operating activities: Net income (loss) $1,374,270 $(17,433,529) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Items included in net income (loss) not affecting cash flows: Depreciation 18,515,090 18,728,907 Amortization of deferred drydocking costs 421,487 704,450 Amortization of deferred financing costs 2,075,338 1,135,491 Amortization of fair value below contract value (10,280,559) (1,228,764) of time charter acquired Payment-in-kind interest on debt 7,174,028 — Unrealized gain from forward freight — (142,560) agreements, net Investment and other current asset (4,925,953) — Realized loss from investment 2,952,927 — Gain on time charter agreement termination (3,331,692) — Allowance for accounts receivable — 3,438,145 Non‑cash compensation expense 1,955,391 2,082,025 Drydocking expenditures (681,628) (527,465) Changes in operating assets and liabilities: Accounts receivable (1,451,069) (2,444,647) Other assets (724,321) 436,455 Prepaid expenses (710,477) 565,346 Inventories (636,185) (533,862) Accounts payable (2,092,635) (138,469) Accrued interest (1,383,205) (580,140) Accrued expenses (3,429,333) 902,638 Deferred revenue (3,766,412) (124,548) Unearned revenue 193,777 (2,186,060) Net cash provided by operating activities 1,248,839 2,653,413 Cash flows from investing activities: Vessels and vessel improvements and advances (49,994) (54,659) for vessel construction Purchase of other fixed assets — (1,303) Changes in restricted cash — 394,362 Net cash (used in) provided by investing (49,994) 338,400 activities Cash flows from financing activities: Deferred financing costs (48,000) — Net cash used in financing activities (48,000) — Net increase in cash 1,150,845 2,991,813 Cash at beginning of period 18,119,968 25,075,203 Cash at end of period $19,270,813 $28,067,016 We have employed all of our vessels in our operating fleet on time and voyage charters. The following table represents certain information about our revenue earning charters with respect to our operating fleet as of March 31, 2013: Year Charter Daily Charter Hire Vessel Dwt Expiration (1) Rate Built Avocet 2010 53,462 Apr 2013 Voyage(2) Bittern 2009 57,809 May 2013 $ 8,150 Canary 2009 57,809 Apr 2013 $ 7,100 (2) Cardinal 2004 55,362 May 2013 $ 8,000 Condor 2001 50,296 Apr 2013 $ 4,700(2) Crane 2010 57,809 Apr 2013 $ 7,500(2) Crested Eagle 2009 55,989 May 2013 $ 11,000 Crowned Eagle 2008 55,940 - Spot Egret Bulker 2010 57,809 July 2013 $ 10,250 Falcon 2001 50,296 May 2013 $ 7,200 Gannet Bulker 2010 57,809 Apr 2013 $ 10,000(2) Golden Eagle 2010 55,989 May 2013 $ 12,400 Goldeneye 2002 52,421 May 2013 Index(3) Grebe Bulker 2010 57,809 Apr 2013 $ 15,000(2) Harrier 2001 50,296 May 2013 $ 10,000 Hawk I 2001 50,296 Apr 2013 Voyage(2) Ibis Bulker 2010 57,775 Jun 2013 $ 8,900 Imperial Eagle 2010 55,989 Apr 2013 $ 11,150(2) Jaeger 2004 52,248 Apr 2013 $ 13,000(2) Jay 2010 57,802 Apr 2013 Voyage(2) Kestrel I 2004 50,326 Apr 2013 $ 9,500(2) Kingfisher 2010 57,776 Apr 2013 Voyage(2) Kite 1997 47,195 Apr 2013 Voyage(2) Kittiwake 2002 53,146 Aug 2013 $ 9,500 Martin 2010 57,809 Apr 2013 Voyage(2) Merlin 2001 50,296 Apr 2013 $ 10,000(2) Nighthawk 2011 57,809 May 2013 $ 8,350 Oriole 2011 57,809 Apr 2013 $ 7,000(2) Osprey I 2002 50,206 Apr 2013 $ 8,000(2) Owl 2011 57,809 Apr 2013 $ 12,500(2) Peregrine 2001 50,913 Jun 2013 $ 8,250 $17,650(4) (with 50% Petrel Bulker 2011 57,809 May 2014 to Sep 2014 profit share over $20,000) $17,650(4) (with 50% Puffin Bulker 2011 57,809 May 2014 to Sep 2014 profit share over $20,000) Redwing 2007 53,411 Apr 2013 $ 9,800(2) $17,650(4) (with 50% Roadrunner Bulker 2011 57,809 Aug 2014 to Dec 2014 profit share over $20,000) $17,650(4) (with 50% Sandpiper Bulker 2011 57,809 Aug 2014 to Dec 2014 profit share over $20,000) Shrike 2003 53,343 Apr 2013 Voyage(2) Skua 2003 53,350 Apr 2013 $ 4,500(2) Sparrow 2000 48,225 Jun 2013 $ 8,400 Stellar Eagle 2009 55,989 Nov 2013 Index(3) Tern 2003 50,200 Apr 2013 $ 12,000(2) Thrasher 2010 53,360 May 2013 $ 12,500 Thrush 2011 53,297 Apr 2013 $ 13,000(2) Woodstar 2008 53,390 - Spot(2) Wren 2008 53,349 Apr 2013 $ 10,500(2) The date range provided represents the earliest and latest date on which the charterer may redeliver the vessel to the Company upon the (1) termination of the charter. The time charter hire rates presented are gross daily charter rates before brokerage commissions, ranging from 0.625% to 5.00%, to third party ship brokers. (2) Upon conclusion of the previous charter the vessel will commence a short term charter for up to six months. (3) Index, an average of the trailing Baltic Supramax Index. (4) The charterer has an option to extend the charter by two periods of 11 to 13 months each. Glossary of Terms: Ownership days: The Company defines ownership days as the aggregate number of days in a period during which each vessel in its fleet has been owned. Ownership days are an indicator of the size of the fleet over a period and affect both the amount of revenues and the amount of expenses that is recorded during a period. Chartered-in under operating lease days: The Company defines chartered-in under operating lease days as the aggregate number of days in a period during which the Company chartered-in vessels. Available days: The Company defines available days as the number of ownership days less the aggregate number of days that its vessels are off-hire due to vessel familiarization upon acquisition, scheduled repairs or repairs under guarantee, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels. 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: The Company defines operating days as the number of its available days in a period less the aggregate number of days that the 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: The Company calculates 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 very high utilization rates. Conference Call Information Members of Eagle Bulk's senior management team will host a teleconference and webcast at 8:30 a.m. ET on Thursday, May 16th to discuss the results. To participate in the teleconference, investors and analysts are invited to call 866-510-0707 in the U.S., or 617-597-5376 outside of the U.S., and reference participant code 49839481. 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 until 11:59 PM ET on May 23, 2013. To access the replay, call 888-286-8010 in the U.S., or 617-801-6888 outside of the U.S., and reference passcode 43657265. About Eagle Bulk Shipping Inc. Eagle Bulk Shipping Inc. is a Marshall Islands corporation headquartered in New York. The Company is a leading global owner of Supramax dry bulk vessels that range in size from 50,000 to 60,000 deadweight tons and transport a broad range of major and minor bulk cargoes, including iron ore, coal, grain, cement and fertilizer, along worldwide shipping routes. Forward-Looking Statements Matters discussed in this release may constitute forward-looking statements. Forward-looking statements reflect our 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. 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, management's 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 in demand that may affect attitudes of time charterers to scheduled and unscheduled drydocking, changes in our vessel operating expenses, including dry-docking and insurance costs, or actions taken by regulatory authorities, 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 US Securities and Exchange Commission. Visit our website at www.eagleships.com SOURCE Eagle Bulk Shipping Inc. Website: http://www.eagleships.com Contact: Company Contact: Adir Katzav, Chief Financial Officer, Eagle Bulk Shipping Inc., Tel. +1 212-785-2500, Investor Relations / Media: Jonathan Morgan, Perry Street Communications, New York, Tel. +1 212-741-0014
Eagle Bulk Shipping Inc. Reports First Quarter 2013 Results
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