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Eagle Bulk Shipping Inc. Reports Record Fourth Quarter 2021 Results

Eagle Bulk Shipping Inc., one of the world’s largest owner-operators within the midsize drybulk segment, today reported financial results for the three months and year ended December 31, 2021.

Quarter Highlights:

Generated Revenues, net of $184.7 million
Achieved TCE(1) of $29,407/day basis TCE Revenue(1) of $133.0 million
Realized record net income of $87.5 million, or $6.79 per basic share
Adjusted net income(1) of $69.3 million, or $5.38(1) per adjusted basic share
Generated EBITDA(1) of $108.5 million
Adjusted EBITDA(1) of $91.6 million
Declared a quarterly dividend of $2.05 per share for the fourth quarter of 2021. Payable on March 25, 2022 to shareholders of record at the close of business on March 15, 2022

Executed a $400.0 million comprehensive refinancing, lowering cost of debt and extending maturity duration

New facility consists of a $300.0 million term loan and a $100.0 million revolver facility
Recent Developments:

Looking ahead, as of March 2, 2022, our coverage position is as follows:
Q1 2022 – 95% of available days fixed at an average TCE of $27,200
Eagle’s CEO Gary Vogel commented, “Eagle achieved record results once again this quarter as we were able to capitalize on the continued strength of the drybulk market. Our record $88 million of net income for the fourth quarter capped off a truly extraordinary year for the Company – in terms of fleet growth, balance sheet optimization, and TCE performance. Since October, we have paid down more than $70 million in debt and declared cumulative cash dividends of $53 million, including a fourth quarter dividend of $2.05 per share, equating to 30% of Net Income generated in the quarter.

Looking ahead, we have experienced increased volatility in Q1 on the back of short-term demand impacts in addition to typical seasonal weakness. I believe we have navigated these well, and as of today, we have fixed about 95 percent of our available days for the first quarter of 2022 at a net TCE of $27,200 per day.

Notwithstanding near-term geopolitical risks, we maintain our constructive outlook, based on the positive drybulk supply/demand dynamics and particularly for the midsize Supramax/Ultramax segment in which Eagle exclusively operates.”

Results of Operations for the three months and years ended December 31, 2021 and 2020

For the three months ended December 31, 2021, the Company reported net income of $87.5 million, or basic and diluted income of $6.79 per share and $5.40 per share, respectively. In the comparable quarter of 2020, the Company reported net income of $0.1 million, or $0.01 per basic and diluted share.

For the three months ended December 31, 2021, the Company reported adjusted net income of $69.3 million, which excludes unrealized gains on derivative instruments and loss on debt extinguishment of $24.1 million and $6.0 million, respectively, or basic and diluted adjusted net income of $5.38 per share and $4.28 per share, respectively. In the comparable quarter of 2020, the Company reported adjusted net loss of $3.0 million, which excludes unrealized gains on derivative instruments of $3.2 million, or basic and diluted adjusted net loss of $0.29 per share.

For the year ended December 31, 2021, the Company reported net income of $184.9 million, or basic and diluted income of $14.91 per share and $11.79 per share, respectively. For the year ended December 31, 2020, the Company reported a net loss of $35.1 million, or $3.40 per basic and diluted share.

For the year ended December 31, 2021, the Company reported adjusted net income of $191.1 million, which excludes unrealized losses on derivative instruments and loss on debt extinguishment of $0.1 million and $6.1 million, respectively, or basic and diluted adjusted net income of $15.41 per share and $12.18 per share, respectively. For the year ended December 31, 2020, the Company reported adjusted net loss of $35.0 million, which excludes unrealized gains on derivative instruments and impairment of operating lease right-of-use assets of $0.3 million and $0.4 million, respectively, or basic and diluted adjusted net loss of $3.40 per share.

Revenues, net

Revenues, net for the three months ended December 31, 2021 were $184.7 million compared to $75.2 million in the comparable quarter in 2020. The increase in revenue was primarily due to a significant increase in charter hire rates and an increase in available days. The available days including chartered-in days for the three months ended December 31, 2021 were 5,135 as compared to 4,794 for the three months ended December 31, 2020.

Revenues, net for the year ended December 31, 2021 were $594.5 million compared to $275.1 million for the prior year, an increase of 116% compared to the prior year ended December 31, 2020. The increase was primarily due to an increase in charter hire rates as rates recovered from the economic downturn caused by the COVID-19 pandemic in 2020, partly offset by a decrease in available days. The available days including chartered-in days for the year ended December 31, 2021 were 19,538 as compared to 19,612 for the year ended December 31, 2020.

Voyage expenses

Voyage expenses for the three months ended December 31, 2021 were $23.2 million compared to $19.6 million in the comparable quarter in 2020. The increase was primarily due to an increase in brokerage commissions as a result of the higher charter hire rates and an increase in bunker consumption expense driven by an increase in bunker prices during 2021.

Voyage expenses for the years ended December 31, 2021 and 2020 were $104.6 million and $89.5 million, respectively. Voyage expenses have primarily increased due to an increase in bunker consumption expense, an increase in broker commission expense and an increase in port expenses.

Vessel operating expenses

Vessel operating expenses for the three months ended December 31, 2021 were $30.6 million compared to $20.8 million in the comparable quarter in 2020. The increase in vessel operating expenses is mainly attributable to higher owned days, an increase in lubes expense, and an increase in vessel startup expenses related to the acquisition of three vessels during the third and fourth quarters of 2021. The Company continued to incur higher costs related to the delivery of stores and spares, as well as crew changes as a result of the ongoing COVID-19 pandemic. The ownership days for the three months ended December 31, 2021 and 2020 were 4,851 and 4,419, respectively.

Average daily vessel operating expenses excluding one-time, non-recurring expenses related to vessel acquisitions and sales and termination charges relating to change in crewing manager on some of our vessels for the three months ended December 31, 2021 was $6,028 as compared to $4,718 for the three months ended December 31, 2020.

Vessel operating expenses for the years ended December 31, 2021 and 2020 were $103.9 million and $86.5 million, respectively. The increase in vessel operating expenses is primarily attributable to an increase in lubes expense, an increase in stores and spares delivery costs, crew wages, and crew changes due to the ongoing COVID-19 pandemic, and vessel start-up expenses as the Company purchased and took delivery of nine vessels during 2021. The ownership days for the years ended December 31, 2021 and 2020 were 18,258 and 18,065, respectively.

Average daily vessel operating expenses excluding one-time, non-recurring expenses related to vessel acquisitions and sales and termination charges relating to change in crewing manager on some of our vessels for the year ended December 31, 2021 was $5,357 as compared to $4,790 for the year ended December 31, 2020.

Charter hire expenses

Charter hire expenses for the three months ended December 31, 2021 were $11.7 million compared to $5.5 million in the comparable quarter in 2020. The increase in charter hire expense was due to an increase in charter hire rates due to improvement in the charter hire market and an increase in chartered-in days. The total chartered-in days for the three months ended December 31, 2021 were 613 compared to 515 for the comparable quarter in the prior year.

Charter hire expenses for the years ended December 31, 2021 and 2020 were $37.1 million and $21.3 million, respectively. The increase in charter hire expenses in 2021 compared with 2020 was mainly due to an increase in charter hire rates due to improvement in the charter hire market and an increase in the number of chartered-in days. The chartered-in days for the year ended December 31, 2021 were 2,331 compared to 2,179 for the year ended December 31, 2020. As of December 31, 2021, the Company chartered-in four vessels on a long-term basis as of the charter-in commencement date with options to extend the charter period.

Depreciation and amortization

Depreciation and amortization expense for the three months ended December 31, 2021 and 2020 was $14.3 million and $12.6 million, respectively. Total depreciation and amortization expense for the three months ended December 31, 2021 includes $11.9 million of vessel and other fixed asset depreciation and $2.4 million relating to the amortization of deferred drydocking costs. Comparable amounts for the three months ended December 31, 2020 were $10.7 million of vessel and other fixed asset depreciation and $1.9 million of amortization of deferred drydocking costs. The increase in depreciation expense is attributable to the increase in cost base due to the purchase of nine vessels during 2021, partially offset by the sale of six vessels since the third quarter of 2020. The increase in drydock amortization is due to the completion of eleven additional drydocks since the end of 2020.

Depreciation and amortization expense for the years ended December 31, 2021 and 2020 was $53.5 million and $50.2 million, respectively. Total depreciation and amortization expense for the year ended December 31, 2021 includes $44.9 million of vessel and other fixed assets depreciation and $8.7 million relating to the amortization of deferred drydocking costs. Comparable amounts for the year ended December 31, 2020 were $42.8 million of vessel and other fixed assets depreciation and $7.4 million of amortization of deferred drydocking costs. The increase in depreciation expense is due to an increase in the cost base of our owned fleet due to the capitalization of scrubbers and BWTS on our vessels, and the acquisition of nine vessels in 2021, offset by the sale of five vessels in the third and fourth quarters of 2020 and the sale of one vessel in the third quarter of 2021. The increase in drydock amortization is due to the completion of eleven additional drydocks since the end of 2020.

General and administrative expenses

General and administrative expenses for the three months ended December 31, 2021 and 2020 were $11.6 million and $8.8 million, respectively. General and administrative expenses include stock-based compensation of $1.2 million and $0.7 million for the three months ended December 31, 2021 and 2020, respectively. The increase in general and administrative expenses was mainly attributable to an increase in legal expenses, compensation and benefits and an increase in stock-based compensation expense.

General and administrative expenses for the years ended December 31, 2021 and 2020 were $35.2 million and $31.5 million, respectively. The increase in general and administrative expenses in 2021 was primarily due to an increase in legal expenses, compensation and benefits and an increase in stock-based compensation expense. General and administrative expenses include stock-based compensation of $3.5 million and $3.0 million for 2021 and 2020, respectively. These stock-based compensation charges relate to the stock options, restricted stock awards and performance-based stock awards granted to certain members of management, employees, and certain directors of the Company.

Other operating expense

Other operating expense for the three months and year ended December 31, 2021 was $0.5 million and $2.8 million, respectively, with no other operating expense incurred for the same periods in 2020. In March 2021, the U.S. government began investigating an allegation that one of our vessels may have improperly disposed of ballast water that entered the engine room bilges during a repair. The Company posted a surety bond as security for any fines and penalties. Other operating expense consists of expenses relating to the incident, which include legal fees, surety bond expenses, vessel off-hire, crew changes and travel costs.

Interest expense

Interest expense for the three months ended December 31, 2021 and 2020 was $6.7 million and $8.5 million, respectively. The decrease in interest expense was primarily due to a decrease in outstanding debt and lower interest rates due to the refinancing of the Company’s debt in the fourth quarter of 2021.

Interest expense for the years ended December 31, 2021 and 2020 was $32.3 million and $35.4 million, respectively. The decrease in interest expense was primarily due to a decrease in outstanding debt and lower interest rates due to the refinancing of the Company’s debt in the fourth quarter of 2021.

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

Realized and unrealized gain on derivative instruments, net, which the Company entered into to hedge its freight and bunker exposuresfor the three months ended December 31, 2021 and 2020 was $7.3 million and $0.8 million, respectively. The increase in realized and unrealized gains on derivative instruments was primarily due to the increase in positions and a change in rates.

Realized and unrealized loss on derivative instruments, net, which the Company entered into to hedge its freight and bunker exposures for the year ended December 31, 2021 was $38.2 million compared to a realized and unrealized gain on derivative instruments, net of $4.8 million for the year ended December 31, 2020. The change from realized and unrealized gains in 2020 to losses in 2021 on derivative instruments was primarily due to the sharp increase in charter hire rates.

Loss on debt extinguishment

In October 2021, the Company repaid the outstanding debt together with accrued interest as of that date under the Norwegian Bond Debt and discharged the debt in full from the proceeds of the Global Ultraco Debt Facility and cash on hand. As a result, the Company expensed $1.6 million representing the unamortized balance of debt discount and debt issuance costs, as well as a $4.4 million call premium on the Norwegian Bond Debt as a loss on debt extinguishment in the fourth quarter of 2021.
Full Report

Source: Eagle Bulk Shipping Inc.

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