Eagle Bulk Shipping Inc. Reports Results for the Fourth Quarter of 2023
- None.
- None.
Insights
The report from Eagle Bulk Shipping Inc. reveals several key financial metrics that are critical for assessing the company's performance and future prospects. The generated net revenue of $104.6 million, alongside a Time Charter Equivalent (TCE) of $16,169 per day, indicates a competitive operational efficiency within the midsize drybulk vessel segment. The reported net income of $6.7 million, or $0.71 per basic share and an adjusted net income of $13.0 million, or $1.39 per basic share, reflect a solid financial position, despite a year-over-year decrease from 2022 figures.
The merger with Star Bulk represents a significant strategic move, potentially creating a leading entity in the drybulk shipping sector with a pro-forma market cap of over $2.7 billion. The expected revenue and cost synergies of more than $50 million per annum could enhance shareholder value. However, the market must consider the risks associated with such mergers, including integration challenges and potential antitrust concerns.
From an investment perspective, the conversion of convertible bond debt and the executed agreements to sell two Supramax bulk carriers could indicate a strategic shift in the company's asset management and capital allocation. These moves, combined with a strong TCE performance relative to the Baltic Supramax Index (BSI), suggest that Eagle Bulk Shipping is actively managing its portfolio to optimize financial performance in a fluctuating market.
The drybulk shipping industry is subject to cyclical trends and volatility, influenced by factors such as global economic conditions, commodity demand and shipping rates. Eagle Bulk Shipping's performance, with a net TCE outperforming the BSI by 28% for 2023, indicates a robust competitive stance within its market segment. However, the reported decrease in revenues and net income compared to the previous year highlights the impact of declining freight rates and market challenges.
The sale of two vessels is a tactical decision likely aimed at capitalizing on current asset values and streamlining the fleet in preparation for the merger with Star Bulk. This could be a strategic maneuver to enhance liquidity and financial flexibility. The coverage position for Q1 2024, with 90% of owned available days fixed at an average TCE of $15,000, provides a short-term visibility of earnings, which is crucial for market analysts and investors seeking to understand the company's immediate revenue prospects.
The broader economic implications of Eagle Bulk Shipping's financial results and strategic decisions, such as the merger with Star Bulk, can have ripple effects across the shipping industry and commodity markets. The merger could lead to increased pricing power and operational efficiencies, potentially affecting global supply chains and the cost of transported goods. However, the decline in drybulk market rates observed in 2023 underscores the sensitivity of the shipping sector to macroeconomic headwinds, including trade tensions and shifts in commodity consumption patterns.
The increase in interest expenses, reflective of higher interest rates and increased borrowing, is consistent with the current rising interest rate environment, which could lead to higher capital costs for the shipping industry. This factor, coupled with the reported decrease in revenues and net income, suggests that Eagle Bulk Shipping and its peers may face tighter margins and increased financial scrutiny in the near term.
STAMFORD, Conn., March 01, 2024 (GLOBE NEWSWIRE) -- Eagle Bulk Shipping Inc. (NYSE: EGLE) (“Eagle” or the “Company”), one of the world’s largest owner-operators within the midsize drybulk vessel segment, today reported financial results for the quarter and year ended December 31, 2023.
Quarter Highlights:
- Generated Revenues, net of
$104.6 million - Achieved TCE(1) of
$16,169 / day based on TCE Revenues(1) of$74.8 million
- Achieved TCE(1) of
- Realized net income of
$6.7 million , or$0.71 per basic share- Adjusted net income(1) of
$13.0 million , or$1.39 per basic share(1)
- Adjusted net income(1) of
- Generated EBITDA(1) of
$28.2 million - Adjusted EBITDA(1) of
$36.3 million
- Adjusted EBITDA(1) of
- Declared a quarterly dividend of
$0.60 per share for the fourth quarter of 2023- Dividend is payable on March 21, 2024 to shareholders of record at the close of business on March 13, 2024
Annual Highlights:
- Generated Revenues, net of
$393.8 million - Achieved TCE(1) of
$13,738 / day based on TCE Revenues(1) of$253.0 million
- Achieved TCE(1) of
1 A non-GAAP financial measure. A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial tables included in this press release. An explanation of non-GAAP financial measures and how they are calculated are also included below under the heading "Supplemental Information - Non-GAAP Financial Measures."
Merger Update:
- On December 11, 2023, the Company announced that it had entered into a definitive agreement to combine with Star Bulk (NASDAQ: SBLK) in an all-stock merger.
- Under the terms of the Merger Agreement, Eagle shareholders will receive 2.6211 shares of Star Bulk common stock for each share of Eagle common stock owned.
- Currently equates to a total consideration of approximately
$62.57 per share, or a40% premium over the Company’s closing price of$44.85 on December 8, 2023.
- Currently equates to a total consideration of approximately
- A special meeting of Eagle shareholders will be held on April 5, 2024 to vote on the proposals necessary to complete the merger.
- Following the close of the transaction, Star Bulk and Eagle shareholders will own approximately
71% and29% of the combined company on a fully diluted basis, respectively(2).
2 As of the date of the proxy statement/prospectus filed by the Company with the SEC on February 12, 2024.
Recent Developments:
- Converted
$34.75 million of Convertible Bond Debt into 1.1 million shares of Common Stock
- Executed agreement to sell a 2009-built scrubber-fitted Supramax bulkcarrier (Crested Eagle) for
$14.4 million
- Sale is expected to close in the second quarter
- Executed agreement to sell a 2009-built scrubber-fitted Supramax bulkcarrier (Stellar Eagle) for
$14.7 million - Sale is expected to close in the second quarter
- Coverage position for the first quarter of 2024 is as follows:
90% of owned available days fixed at an average TCE of$15,000
Eagle’s CEO Gary Vogel commented, “We saw a meaningful improvement to our bottom line in Q4, reflecting both a strong recovery in freight rates and an increase in our relative performance against the market. We outperformed the benchmark BSI (Baltic Supramax Index) by
Following two extraordinary years for the drybulk market during which Eagle generated record profits, freight rates came off significantly in 2023 against a backdrop of unwinding congestion. Notwithstanding the weaker landscape, we generated a net TCE of
On the strategic front, 2023 turned out to be a pivotal year for our company. In May, we increased our financial flexibility by executing a
Looking ahead, although Q1 is historically the weakest period, the 2024 market is off to a strong start on the back of supply side disruptions. As of today, we have fixed approximately
3 As of February 29, 2024.
Fleet Operating Data
| Three Months Ended | Year Ended | |||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||
| Ownership Days | 4,784 | 4,837 | 19,209 | 19,261 | ||||
| Owned Available Days | 4,627 | 4,644 | 18,418 | 18,243 | ||||
Results of Operations for the three months and years ended December 31, 2023 and 2022
For the three months ended December 31, 2023, the Company reported net income of
For the three months ended December 31, 2023, the Company reported adjusted net income of
For the year ended December 31, 2023, the Company reported net income of
For the year ended December 31, 2023, the Company reported adjusted net income of
Revenues, net
Revenues, net for the three months ended December 31, 2023 were
Revenues, net for the year ended December 31, 2023 were
Voyage expenses
Voyage expenses for the three months ended December 31, 2023 were
Voyage expenses for the year ended December 31, 2023 were
Vessel operating expenses
Vessel operating expenses for the three months ended December 31, 2023 were
Adjusted vessel operating expenses(1), which excludes one-time, non-recurring expenses related to vessel acquisitions, charges relating to a change in the crewing manager on some of the Company’s vessels and discretionary hull and hold upgrades for the three months ended December 31, 2023 were
1 These are non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial tables included in this press release. An explanation of these measures and how they are calculated are also included below under the heading “Supplemental Information - Non-GAAP Financial Measures.”
Vessel operating expenses for the year ended December 31, 2023 were
Adjusted vessel operating expenses for the year ended December 31, 2023 were
Charter hire expenses
Charter hire expenses for the three months ended December 31, 2023 were
Charter hire expenses for the year ended December 31, 2023 were
Depreciation and amortization
Depreciation and amortization for the three months ended December 31, 2023 was
Depreciation and amortization for the year ended December 31, 2023 was
General and administrative expenses
General and administrative expenses for the three months ended December 31, 2023 were
General and administrative expenses for the year ended December 31, 2023 were
Other operating expense
Other operating expense for the three months ended December 31, 2023 was
Other operating expense for the year ended December 31, 2023 was
Interest expense
Interest expense for the three months ended December 31, 2023 was
Interest expense for the year ended December 31, 2023 was
Interest income
Interest income for the three months ended December 31, 2023 was
Interest income for the year ended December 31, 2023 was
Realized and unrealized (gain)/loss on derivative instruments, net
For the three months ended December 31, 2023, the Company recorded a net realized and unrealized loss on derivatives of
For the year ended December 31, 2023, the Company recorded a net realized and unrealized gain on derivatives of
A summary of outstanding FFAs as of December 31, 2023 is as follows:
| FFA Period | Average FFA Contract Price | Number of Days Hedged | |||
| Quarter ending March 31, 2024 - Buy Positions | $ | — | — | ||
| Quarter ending March 31, 2024 - Sell Positions | $ | 13,479 | 540 | ||
Liquidity and Capital Resources
The following table presents the cash flow information for the years ended December 31, 2023 and 2022 (in thousands):
| Year Ended | ||||||||
| December 31, 2023 | December 31, 2022 | |||||||
| Net cash provided by operating activities | $ | 55,937 | $ | 298,283 | ||||
| Net cash used in investing activities | (29,120 | ) | (23,692 | ) | ||||
| Net cash used in financing activities | (95,381 | ) | (171,059 | ) | ||||
| Net (decrease)/increase in cash, cash equivalents and restricted cash | (68,564 | ) | 103,532 | |||||
| Cash, cash equivalents and restricted cash at beginning of year | 189,754 | 86,222 | ||||||
| Cash, cash equivalents and restricted cash at end of year | $ | 121,190 | $ | 189,754 | ||||
Net cash provided by operating activities for the year ended December 31, 2023 was
Net cash used in investing activities for the year ended December 31, 2023 was
Net cash used in financing activities for the year ended December 31, 2023 was
As of December 31, 2023, our cash and cash equivalents including noncurrent restricted cash was
A summary of the Company’s debt as of December 31, 2023 and December 31, 2022 is as follows:
| December 31, 2023 | December 31, 2022 | |||||||||||
| Principal Amount Outstanding | Carrying Value | Principal Amount Outstanding | Carrying Value | |||||||||
| Convertible Bond Debt (1) | $ | 104,119 | $ | 103,890 | $ | 104,119 | $ | 103,499 | ||||
| Global Ultraco Debt Facility - Term Facility (2) | 262,950 | 257,645 | 237,750 | 230,983 | ||||||||
| Global Ultraco Debt Facility - Revolving Facility (3) | 125,000 | 122,268 | — | — | ||||||||
| $ | 492,069 | $ | 483,803 | $ | 341,869 | $ | 334,482 | |||||
(1)
(2)
(3) As of December 31, 2023 and December 31, 2022, the undrawn revolving facility under the Global Ultraco Debt Facility was
As of December 31, 2023, the effective conversion price of the Convertible Bond Debt equals
The Company continuously evaluates potential transactions that it expects to be accretive to earnings, enhance shareholder value or are in the best interests of the Company, including without limitation, business combinations, the acquisition of vessels or related businesses, repayment or refinancing of existing debt, the issuance of new securities, share and debt repurchases or other transactions.
Capital Expenditures and Drydocking
Our capital expenditures primarily relate to the purchase of vessels and capital improvements to our vessels, which are expected to enhance their revenue earning capabilities, efficiency and/or safety and to comply with relevant regulations.
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 and vessel improvements necessary to comply with international shipping standards and environmental laws and regulations. Although the Company has some flexibility regarding the timing of its drydockings, drydocking costs are relatively predictable. In accordance with statutory requirements, we expect vessels less than 15 years old are to be drydocked every five years and vessels greater than 15 years old every two and a half years. We intend to fund future drydocking costs with operating cash flows. Generally, drydocking requires us to reposition vessels from a discharge port to shipyard facilities, which will reduce our available days and operating days during that period.
The following table provides certain information about the estimated costs for anticipated vessel drydockings and improvements in the next four quarters, along with the anticipated off-hire days:
| Projected Costs (1) ($ in millions) | ||||||||
| Quarters Ending | Off-hire Days (2) | Drydocks | Vessel Improvements | |||||
| March 31, 2024 | 195 | $ | 2.3 | $ | 0.8 | |||
| June 30, 2024 | 205 | $ | 7.0 | $ | 0.1 | |||
| September 30, 2024 | 186 | $ | 5.2 | $ | — | |||
| December 31, 2024 | 294 | $ | 14.0 | $ | — | |||
(1) We intend to fund these costs with cash from operations, cash on hand or with amounts available under the Global Ultraco Debt Facility.
(2) Actual duration of off-hire days will vary based on the age and condition of the vessel, yard schedules and other factors. Projected off-hire days includes an allowance for unforeseen events.
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
The following tables summarize the Company’s selected consolidated financial and other data for the periods indicated below.
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (in thousands, except share and per share data) | ||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||
| Revenues, net | $ | 104,589 | $ | 151,441 | $ | 393,799 | $ | 719,847 | ||||||||
| Voyage expenses | 23,949 | 42,676 | 106,686 | 163,385 | ||||||||||||
| Vessel operating expenses | 29,384 | 35,718 | 120,461 | 123,932 | ||||||||||||
| Charter hire expenses | 5,520 | 17,336 | 36,534 | 81,103 | ||||||||||||
| Depreciation and amortization | 15,486 | 15,914 | 60,521 | 61,155 | ||||||||||||
| General and administrative expenses | 10,715 | 11,574 | 43,586 | 41,184 | ||||||||||||
| Impairment of operating lease right-of-use assets | — | 2,212 | 722 | 2,212 | ||||||||||||
| Other operating expense | 6,486 | 1,159 | 7,346 | 3,802 | ||||||||||||
| Loss/(gain) on sale of vessels | — | 28 | (19,731 | ) | (9,308 | ) | ||||||||||
| Total operating expenses | 91,540 | 126,616 | 356,125 | 467,465 | ||||||||||||
| Operating income | 13,049 | 24,825 | 37,674 | 252,382 | ||||||||||||
| Interest expense | 7,597 | 3,959 | 23,602 | 16,981 | ||||||||||||
| Interest income | (1,565 | ) | (1,818 | ) | (6,704 | ) | (2,918 | ) | ||||||||
| Realized and unrealized loss/(gain) on derivative instruments, net | 366 | (578 | ) | (1,952 | ) | (13,859 | ) | |||||||||
| (Gain)/loss on debt extinguishment | — | (4 | ) | — | 4,169 | |||||||||||
| Total other expense, net | 6,398 | 1,560 | 14,946 | 4,373 | ||||||||||||
| Net income | $ | 6,651 | $ | 23,265 | $ | 22,728 | $ | 248,009 | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 9,320,404 | 13,003,666 | 11,090,064 | 12,989,951 | ||||||||||||
| Diluted | 12,720,902 | 16,361,040 | 14,473,631 | 16,313,447 | ||||||||||||
| Per share amounts: | ||||||||||||||||
| Basic net income | $ | 0.71 | $ | 1.79 | $ | 2.05 | $ | 19.09 | ||||||||
| Diluted net income | $ | 0.63 | $ | 1.50 | $ | 1.96 | $ | 15.57 | ||||||||
Note: Minor differences in totals may exist due to rounding.
| CONSOLIDATED BALANCE SHEETS | |||||||
| (in thousands, except share data and par values) | |||||||
| December 31, 2023 | December 31, 2022 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 118,615 | $ | 187,155 | |||
| Accounts receivable, net of a reserve of | 30,917 | 32,311 | |||||
| Prepaid expenses | 5,525 | 4,531 | |||||
| Inventories | 24,988 | 28,081 | |||||
| Collateral on derivatives | 2,219 | 909 | |||||
| Fair value of derivative assets – current | 6,824 | 8,479 | |||||
| Other current assets | 458 | 558 | |||||
| Total current assets | 189,546 | 262,024 | |||||
| Noncurrent assets: | |||||||
| Vessels and vessel improvements, at cost, net of accumulated depreciation of | 904,298 | 891,877 | |||||
| Advances for vessel purchases | — | 3,638 | |||||
| Operating lease right-of-use assets | 7,182 | 23,006 | |||||
| Other fixed assets, net of accumulated depreciation of | 1,086 | 310 | |||||
| Restricted cash – noncurrent | 2,575 | 2,599 | |||||
| Deferred drydock costs, net | 38,717 | 42,849 | |||||
| Fair value of derivative assets – noncurrent | 3,136 | 8,184 | |||||
| Advances for BWTS and other assets | 1,414 | 2,722 | |||||
| Total noncurrent assets | 958,408 | 975,185 | |||||
| Total assets | $ | 1,147,954 | $ | 1,237,209 | |||
| LIABILITIES & STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 21,245 | $ | 20,129 | |||
| Accrued interest | 3,472 | 3,061 | |||||
| Other accrued liabilities | 23,496 | 24,097 | |||||
| Fair value of derivative liabilities – current | 479 | 163 | |||||
| Current portion of operating lease liabilities | 6,153 | 22,045 | |||||
| Unearned charter hire revenue | 4,312 | 9,670 | |||||
| Current portion of long-term debt – Global Ultraco Debt Facility | 49,800 | 49,800 | |||||
| Current portion of long-term debt – Convertible Bond Debt, net of debt discount and debt issuance costs | 103,890 | — | |||||
| Total current liabilities | 212,847 | 128,965 | |||||
| Noncurrent liabilities: | |||||||
| Long-term debt – Global Ultraco Debt Facility, net of debt discount and debt issuance costs | 330,113 | 181,183 | |||||
| Convertible Bond Debt, net of debt discount and debt issuance costs | — | 103,499 | |||||
| Fair value of derivative liabilities – noncurrent | 1,505 | — | |||||
| Noncurrent portion of operating lease liabilities | 2,576 | 3,173 | |||||
| Other noncurrent accrued liabilities | 695 | 1,208 | |||||
| Total noncurrent liabilities | 334,889 | 289,063 | |||||
| Total liabilities | 547,736 | 418,028 | |||||
| Commitments and contingencies | |||||||
| Stockholders’ equity: | |||||||
| Preferred stock, | — | — | |||||
| Common stock, | 93 | 130 | |||||
| Additional paid-in capital | 748,401 | 966,058 | |||||
| Accumulated deficit | (156,727 | ) | (163,556 | ) | |||
| Accumulated other comprehensive income | 8,451 | 16,549 | |||||
| Total stockholders’ equity | 600,218 | 819,181 | |||||
| Total liabilities and stockholders’ equity | $ | 1,147,954 | $ | 1,237,209 | |||
Note: Minor differences in totals may exist due to rounding.
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (in thousands) | ||||||||
| Year Ended | ||||||||
| December 31, 2023 | December 31, 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 22,728 | $ | 248,009 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 46,522 | 47,911 | ||||||
| Noncash operating lease expense | 22,616 | 30,233 | ||||||
| Amortization of deferred drydocking costs | 13,999 | 13,244 | ||||||
| Amortization of debt discount and debt issuance costs | 2,738 | 2,130 | ||||||
| Loss on debt extinguishment | — | 4,169 | ||||||
| Impairment of operating lease right-of-use assets | 722 | 2,212 | ||||||
| Gain on sale of vessels | (19,731 | ) | (9,308 | ) | ||||
| Unrealized loss on derivative instruments, net | 496 | 1,933 | ||||||
| Stock-based compensation expense | 7,492 | 6,108 | ||||||
| Drydocking expenditures | (14,397 | ) | (18,422 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable | 1,364 | (257 | ) | |||||
| Accounts receivable | 1,384 | (4,141 | ) | |||||
| Accrued interest | 411 | 185 | ||||||
| Inventories | 3,092 | (10,429 | ) | |||||
| Operating lease liabilities current and noncurrent | (24,732 | ) | (30,227 | ) | ||||
| Collateral on derivatives | (1,310 | ) | 14,172 | |||||
| Fair value of derivatives, other current and noncurrent assets | 36 | (105 | ) | |||||
| Other accrued liabilities | (1,140 | ) | 4,452 | |||||
| Prepaid expenses | (994 | ) | (1,170 | ) | ||||
| Unearned charter hire revenue | (5,359 | ) | (2,416 | ) | ||||
| Net cash provided by operating activities | 55,937 | 298,283 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchase of vessels and vessel improvements | (82,355 | ) | (27,676 | ) | ||||
| Advances for vessel purchases | — | (3,638 | ) | |||||
| Purchase of scrubbers and ballast water treatment systems | (2,648 | ) | (7,307 | ) | ||||
| Proceeds from hull and machinery insurance claims | 174 | 286 | ||||||
| Net proceeds from sale of vessels | 56,609 | 14,917 | ||||||
| Purchase of other fixed assets | (900 | ) | (274 | ) | ||||
| Net cash used in investing activities | (29,120 | ) | (23,692 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from Revolving Facility, net of debt issuance costs – Global Ultraco Debt Facility | 123,361 | — | ||||||
| Proceeds from Term Facility, net of debt issuance costs – Global Ultraco Debt Facility | 73,125 | — | ||||||
| Repayment of Term Facility – Global Ultraco Debt Facility | (49,800 | ) | (49,800 | ) | ||||
| Repurchase of Convertible Bond Debt | — | (14,181 | ) | |||||
| Debt issuance costs paid to lenders | — | (18 | ) | |||||
| Other financing costs | (103 | ) | — | |||||
| Repurchase of Common Stock and associated fees – related party | (222,889 | ) | — | |||||
| Proceeds from equity offerings, net of issuance costs | — | 201 | ||||||
| Cash paid for taxes related to net share settlement of equity awards | (2,297 | ) | (2,355 | ) | ||||
| Cash received from exercise of stock options | — | 85 | ||||||
| Dividends paid | (16,778 | ) | (104,991 | ) | ||||
| Net cash used in financing activities | (95,381 | ) | (171,059 | ) | ||||
| Net (decrease)/increase in cash, cash equivalents and restricted cash | (68,564 | ) | 103,532 | |||||
| Cash, cash equivalents and restricted cash at beginning of year | 189,754 | 86,222 | ||||||
| Cash, cash equivalents and restricted cash at end of year | $ | 121,190 | $ | 189,754 | ||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | 30,074 | $ | 25,967 | ||||
Note: Minor differences in totals may exist due to rounding.
Supplemental Information - Non-GAAP Financial Measures
This release includes various financial measures that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission (“SEC”). We believe these measures provide important supplemental information to investors to use in evaluating ongoing operating results. We use these measures, together with accounting principles generally accepted in the United States (“GAAP” or “U.S. GAAP”) measures, for internal managerial purposes and as a means to evaluate period-to-period comparisons. However, we do not, and you should not, rely on non-GAAP financial measures alone as measures of our performance. We believe that non-GAAP financial measures reflect an additional way of viewing aspects of our operations, that when taken together with GAAP results and the reconciliations to corresponding GAAP financial measures that we also provide and 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 solely rely on any single non-GAAP financial measure.
Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures, even if they have similar names.
Non-GAAP Financial Measures
(1) Adjusted net income and Basic and Diluted adjusted net income per share
Adjusted net income and Basic and Diluted adjusted net income per share represent Net income and Basic and Diluted net income per share, respectively, as adjusted to exclude costs incurred directly associated with the Proposed Merger, unrealized gains and losses on FFAs and bunker swaps, gains and losses on debt extinguishment, and impairment of operating lease right-of-use assets. The Company utilizes derivative instruments such as FFAs and bunker swaps to partially hedge against its underlying long physical position in ships (as represented by owned and third-party chartered-in vessels). As the Company does not apply hedge accounting to these derivative instruments, unrealized mark-to-market gains and losses on forward hedge positions impact current quarter results, causing timing mismatches in the Consolidated Statements of Operations. Additionally, we believe that gains and losses on debt extinguishment and impairment of operating lease right-of-use assets are not representative of our normal business operations. We believe that Adjusted net income and Adjusted net income per share are more useful to analysts and investors in comparing the results of operations and operational trends between periods and relative to other peer companies in our industry. Our Adjusted net income should not be considered an alternative to net income/(loss), operating income/(loss), cash flows provided by/(used in) operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. As noted above, our Adjusted net income and Adjusted net income per share may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted net income in the same manner.
The following table presents the reconciliation of our Net income to Adjusted net income:
| Reconciliation of GAAP Net income to Adjusted net income | |||||||||||||
| (in thousands, except share and per-share data) | |||||||||||||
| Three Months Ended | Year Ended | ||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||
| Net income | $ | 6,651 | $ | 23,265 | $ | 22,728 | $ | 248,009 | |||||
| Adjustments to reconcile net income to adjusted net income: | |||||||||||||
| Costs incurred directly associated with the Proposed Merger | 6,283 | — | 6,283 | — | |||||||||
| (Gain)/loss on debt extinguishment | — | (4 | ) | — | 4,169 | ||||||||
| Unrealized loss on FFAs and bunker swaps | 60 | 10,449 | 496 | 1,933 | |||||||||
| Impairment of operating lease right-of-use assets | — | 2,212 | 722 | 2,212 | |||||||||
| Adjusted net income | $ | 12,994 | $ | 35,922 | $ | 30,229 | $ | 256,322 | |||||
| Weighted average shares outstanding: | |||||||||||||
| Basic | 9,320,404 | 13,003,666 | 11,090,064 | 12,989,951 | |||||||||
| Diluted (1) | 12,720,902 | 16,361,040 | 14,473,631 | 16,313,447 | |||||||||
| Per share amounts: | |||||||||||||
| Basic adjusted net income | $ | 1.39 | $ | 2.76 | $ | 2.73 | $ | 19.73 | |||||
| Diluted adjusted net income | $ | 1.13 | $ | 2.28 | $ | 2.48 | $ | 16.08 | |||||
(1) Diluted weighted average shares outstanding for the three months and year ended December 31, 2023 and 2022 includes dilutive potential common shares related to the Convertible Bond Debt based on the if-converted method and potential common shares related to stock awards and options based on the treasury stock method, unless to do so would have been anti-dilutive to Diluted adjusted net income per share.
Note: Minor differences in totals may exist due to rounding.
EBITDA and Adjusted EBITDA
We define EBITDA as Net income under GAAP adjusted for interest, income taxes and depreciation and amortization.
Adjusted EBITDA is a non-GAAP financial measure that is used as a supplemental financial measure by our management and by external users of our financial statements, such as investors, commercial banks and others, to assess our operating performance as compared to that of other peer companies in our industry, without regard to financing methods, capital structure or historical costs basis. Our Adjusted EBITDA should not be considered an alternative to net income/(loss), operating income/(loss), cash flows provided by/(used in) operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. Our Adjusted EBITDA may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDA in the same manner. Adjusted EBITDA represents EBITDA adjusted to exclude certain non-cash, one-time and other items that the Company believes are not indicative of the ongoing performance of its core operations such as costs incurred directly associated with the Proposed Merger, vessel impairment, gains and losses on sale of vessels, impairment of operating lease right-of-use assets, unrealized gains and losses on FFAs and bunker swaps, gains and losses on debt extinguishment and stock-based compensation expense.
The following table presents a reconciliation of our Net income to EBITDA and Adjusted EBITDA:
| Reconciliation of GAAP Net income to EBITDA and Adjusted EBITDA | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||
| Net income | $ | 6,651 | $ | 23,265 | $ | 22,728 | $ | 248,009 | ||||||||
| Adjustments to reconcile net income to EBITDA: | ||||||||||||||||
| Interest expense | 7,597 | 3,959 | 23,602 | 16,981 | ||||||||||||
| Interest income | (1,565 | ) | (1,818 | ) | (6,704 | ) | (2,918 | ) | ||||||||
| Income taxes | — | — | — | — | ||||||||||||
| EBIT | 12,683 | 25,406 | 39,626 | 262,071 | ||||||||||||
| Depreciation and amortization | 15,486 | 15,914 | 60,521 | 61,155 | ||||||||||||
| EBITDA | 28,169 | 41,320 | 100,147 | 323,227 | ||||||||||||
| Non-cash, one-time and other adjustments to EBITDA(1): | 8,155 | 14,251 | (4,738 | ) | 5,113 | |||||||||||
| Adjusted EBITDA | $ | 36,324 | $ | 55,571 | $ | 95,409 | $ | 328,339 | ||||||||
(1) One-time and other adjustments to EBITDA for the three months and year ended December 31, 2023 and 2022 includes costs incurred directly associated with the Proposed Merger, (gain)/loss on sale of vessels, impairment of operating lease right-of-use assets, unrealized (gain)/loss on FFAs and bunker swaps, (gain)/loss on debt extinguishment, and stock-based compensation expense.
Note: Minor differences in totals may exist due to rounding.
TCE revenue and TCE
Time charter equivalent revenue (“TCE revenue”) and time charter equivalent (“TCE”) are non-GAAP financial measures that are 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 revenue as revenues, net less voyage expenses and charter hire expenses, adjusted for realized gains and losses on FFAs and bunker swaps and defines TCE as TCE revenue divided by the number of owned available days. 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. TCE provides additional meaningful information in conjunction with Revenues, net, 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 performance. Our TCE revenue and TCE should not be considered alternatives to net income/(loss), operating income/(loss), cash flows provided by/(used in) operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. Our TCE revenue and TCE may not be comparable to similarly titled measures of another company because all companies may not calculate TCE revenue and TCE in the same manner.
The following table presents the reconciliation of our Revenues, net to TCE:
| Reconciliation of Revenues, net to TCE revenue and TCE | ||||||||||||||||
| (in thousands, except Owned available days and TCE) | ||||||||||||||||
| For the Three Months Ended | For the Years Ended | |||||||||||||||
| December 31, |2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||
| Revenues, net | $ | 104,589 | $ | 151,441 | $ | 393,799 | $ | 719,847 | ||||||||
| Less: | ||||||||||||||||
| Voyage expenses | (23,949 | ) | (42,677 | ) | (106,686 | ) | (163,385 | ) | ||||||||
| Charter hire expenses | (5,520 | ) | (17,337 | ) | (36,534 | ) | (81,103 | ) | ||||||||
| Realized (loss)/gain on FFAs and bunker swaps | (307 | ) | 11,027 | 2,448 | 15,791 | |||||||||||
| TCE revenue | $ | 74,813 | $ | 102,455 | $ | 253,027 | $ | 491,150 | ||||||||
| Owned available days | 4,627 | 4,644 | 18,418 | 18,243 | ||||||||||||
| TCE | $ | 16,169 | $ | 22,062 | $ | 13,738 | $ | 26,923 | ||||||||
Note: Minor differences in totals may exist due to rounding.
Adjusted vessel operating expenses and Adjusted DVOE
Adjusted vessel operating expenses and Adjusted DVOE are non-GAAP financial measures that are used as supplemental financial measures by our management and by external users of our financial statements to assess our operating performance as compared to that of other peer companies in our industry. The Company defines Adjusted vessel operating expenses as vessel operating expenses presented in accordance with U.S. GAAP, adjusted to exclude one-time, non-recurring expenses related to vessel acquisitions, charges relating to a change in the crewing manager on some of our vessels and discretionary spending associated with hull and hold upgrades and defines Adjusted DVOE as Adjusted vessel operating expenses divided by the number of ownership days. Ownership days is the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Adjusted vessel operating expenses and Adjusted DVOE provide additional meaningful information in conjunction with Vessel operating expenses, the most directly comparable GAAP measure. Our Adjusted vessel operating expenses and Adjusted DVOE should not be considered alternatives to net income/(loss), operating income/(loss), cash flows provided by/(used in) operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. Our Adjusted vessel operating expenses and Adjusted DVOE may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted vessel operating expenses and Adjusted DVOE in the same manner.
The following table presents the reconciliation of our Vessel operating expenses to Adjusted vessel operating expenses and Adjusted DVOE:
| Reconciliation of Vessel operating expenses to Adjusted vessel operating expenses and Adjusted DVOE | ||||||||||||||||
| (in thousands, except Ownership days and Adjusted DVOE) | ||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||
| Vessel operating expenses | $ | 29,384 | $ | 35,718 | $ | 120,461 | $ | 123,932 | ||||||||
| Less: | ||||||||||||||||
| Adjustments to vessel operating expenses(1): | (12 | ) | (1,878 | ) | (3,559 | ) | (3,673 | ) | ||||||||
| Adjusted vessel operating expenses | $ | 29,372 | $ | 33,840 | $ | 116,902 | $ | 120,259 | ||||||||
| Ownership Days | 4,784 | 4,837 | 19,209 | 19,261 | ||||||||||||
| Adjusted DVOE | $ | 6,140 | $ | 6,996 | $ | 6,086 | $ | 6,244 | ||||||||
Note: Minor differences in totals may exist due to rounding.
Important Information and Where to Find It
This communication may be deemed to be solicitation material in respect of the proposed transaction between Star Bulk Carriers Corp. (“Star Bulk”) and Eagle. In connection with the proposed transaction, Star Bulk filed with the Securities and Exchange Commission (the “SEC”) a registration statement on Form F-4 that includes a proxy statement of Eagle that also constitutes a prospectus of Star Bulk. After the registration statement was declared effective, the definitive proxy statement/prospectus was mailed to shareholders of Eagle on or about February 12, 2024. Star Bulk and Eagle may also file other documents with the SEC regarding the proposed transaction. This communication is not a substitute for the proxy statement/prospectus, Form F-4 or any other document which Star Bulk or Eagle have or may file with the SEC. Investors and security holders of Star Bulk and Eagle are urged to read the proxy statement/prospectus, Form F-4 and all other relevant documents filed or to be filed with the SEC carefully when they become available because they will contain important information about Star Bulk, Eagle, the transaction and related matters. Investors are able to obtain free copies of the proxy statement/prospectus and Form F-4 and other documents filed with the SEC by Star Bulk and Eagle through the website maintained by the SEC at www.sec.gov. Copies of documents filed with the SEC by Star Bulk are available free of charge on Star Bulk’s investor relations website at https://www.starbulk.com/gr/en/ir-overview/. Copies of documents filed with the SEC by Eagle are available free of charge on Eagle’s investor relations website at https://ir.eagleships.com.
Participants in the Solicitation
Star Bulk, Eagle and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the holders of Eagle securities in connection with the proposed transaction. Information regarding these directors and executive officers and a description of their direct and indirect interests, by security holdings or otherwise, are included in the Form F-4 and proxy statement/prospectus regarding the proposed transaction and other relevant materials filed and to be filed with the SEC by Star Bulk and Eagle. Information regarding Star Bulk’s directors and executive officers is available in “Part I. Item 6. Directors, Senior Management and Employees” of Star Bulk’s Annual Report on Form 20-F for the fiscal year ended December 31, 2022 filed with the SEC on March 7, 2023. Information regarding Eagle’s directors and executive officers is available in the sections entitled “Corporate Governance—The Board of Directors” and “Executive Officers” of Eagle’s proxy statement relating to its 2023 annual meeting of shareholders filed with the SEC on April 27, 2023. These documents are available free of charge from the sources indicated above.
No Offer or Solicitation
This communication is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Glossary of Terms:
Chartered-in days: We define chartered-in days as the aggregate number of days in a period during which we charter-in vessels under operating leases. The Company charters-in vessels on a long-term and short-term basis.
Owned available days: We define owned available days as the number of ownership days less the aggregate number of days that our owned 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 a charter party in a period. The shipping industry uses owned available days to measure the number of days in a period during which owned vessels should be capable of generating revenues.
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 record during a period.
Definitions of Capitalized Terms
Convertible Bond Debt: Convertible Bond Debt refers to
Global Ultraco Debt Facility: Global Ultraco Debt Facility refers to the senior secured credit facility entered into by Eagle Bulk Ultraco LLC (“Eagle Ultraco”), a wholly-owned subsidiary of the Company, along with certain of its vessel-owning subsidiaries as guarantors, with the lenders party thereto (the “Lenders”), Credit Agricole Corporate and Investment Bank (“Credit Agricole”) as security trustee, structurer, sustainability coordinator and facility agent. The Global Ultraco Debt Facility provides for an aggregate principal amount of
Proposed Merger: On December 11, 2023, the Company, Star Bulk, and Star Infinity Corp., a wholly-owned subsidiary of Star Bulk (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, subject to approval of the Company’s shareholders and the satisfaction or (to the extent permitted by law) waiver of other specified closing conditions, Merger Sub will be merged with and into the Company, with the Company surviving the merger and becoming a wholly-owned subsidiary of Star Bulk.
Conference Call
Following the previously announced entry into the Merger Agreement and pendency of the merger, which remains subject to shareholder approval and the satisfaction of or (to the extent permitted by law) waiver of other specified closing conditions, the Company will not be hosting a conference call in conjunction with its fourth quarter earnings release. Please direct any questions regarding this earnings release to Eagle Bulk Shipping Inc.’s Investor Relations department at investor@eagleships.com.
About Eagle Bulk Shipping Inc.
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, the Company focuses exclusively on the versatile midsize 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 (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, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbor provided for under these sections. 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. Forward-looking statements in this release reflect management’s current expectations and observations with respect to future events and financial performance. Where we express an expectation or belief as to future events or results, including future plans with respect to financial performance, the payment of dividends and/or repurchase of shares, or future actions of holders of the Convertible Bond Debt, including whether or not to elect to convert any portion of the Convertible Bond Debt prior to its maturity date, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed, projected, or implied by those forward-looking statements.
Where we express an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by those forward-looking statements. The principal factors that affect our financial position, results of operations and cash flows include market freight rates, which fluctuate based on various economic and market conditions, periods of charter hire, vessel operating expenses and voyage costs, which are incurred primarily in U.S. dollars, depreciation expenses, which are a function of the purchase price of our vessels and our vessels’ estimated useful lives and scrap value, general and administrative expenses, and financing costs related to our indebtedness. The accuracy of the Company’s assumptions, expectations, beliefs and projections depends on events or conditions that change over time and are thus susceptible to change based on actual experience, new developments and known and unknown risks. The Company gives no assurance that the forward-looking statements will prove to be correct, does not undertake any duty to update them and disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors which could include the following: (i) volatility of freight rates driven by changes in demand for seaborne transportation of drybulk commodities and in supply of drybulk shipping capacity; (ii) changes in drybulk carrier capacity driven by levels of newbuilding orders, scrapping rates or fleet utilization; (iii) changes in rules and regulations applicable to the drybulk industry, including, without limitation, regulations of the International Maritime Organization and the European Union (the “EU”), requirements of the Environmental Protection Agency and other governmental and quasi-governmental agencies; (iv) changes in U.S., United Kingdom, United Nations and EU economic sanctions and trade embargo laws and regulations as well as equivalent economic sanctions laws of other relevant jurisdictions; (v) actions taken by regulatory authorities including, without limitation, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”); (vi) changes in the typical seasonal variations in drybulk freight rates; (vii) changes in national and international economic and political conditions including, without limitation, the current conflicts between Russia and Ukraine and Israel and Hamas, the current economic and political environment in China and the environment in historically high-risk geographic areas such as the South China Sea, the Indian Ocean, the Gulf of Guinea and the Gulf of Aden; (viii) changes in the condition of the Company’s vessels or applicable maintenance or regulatory standards (which may affect, among other things, our anticipated drydocking costs); (ix) the duration and impact of the novel coronavirus (“COVID-19”) pandemic and measures implemented by governments of various countries in response to the COVID-19 pandemic; (x) volatility of the cost of fuel; (xi) volatility of costs of labor and materials needed to operate our business due to inflation; (xii) any legal proceedings which we may be involved from time to time; and (xiii) other factors listed from time to time in our filings with the Securities and Exchange Commission (the “SEC”).
We have based these statements on assumptions and analyses formed by applying our experience and perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate in the circumstances. The Company’s future results may be impacted by adverse economic conditions, such as inflation, deflation, or lack of liquidity in the capital markets, that may negatively affect it or parties with whom it does business. Should one or more of the foregoing risks or uncertainties materialize in a way that negatively impacts the Company, or should the Company’s underlying assumptions prove incorrect, the Company’s actual results may vary materially from those anticipated in its forward-looking statements, and its business, financial condition and results of operations could be materially and adversely affected.
Risks and uncertainties are further described in reports filed by Eagle Bulk Shipping Inc. with the SEC.
CONTACT
Company Contact:
Constantine Tsoutsoplides
Chief Financial Officer
Eagle Bulk Shipping Inc.
Tel. +1 203-276-8100
Email: investor@eagleships.com
--------------------------------------------------------------------------------
Source: Eagle Bulk Shipping Inc.
FAQ
What were Eagle Bulk Shipping Inc.'s quarterly revenues and net income for the period ended December 31, 2023?
What was the adjusted net income for Eagle Bulk Shipping Inc. in the same quarter?
What was the total consideration per share for Eagle Bulk Shipping Inc.'s merger with Star Bulk?
When is the special meeting of Eagle Bulk Shipping Inc. shareholders scheduled to vote on the merger proposals?
What recent developments have occurred for Eagle Bulk Shipping Inc.?
