Eagle Bulk Shipping Inc. Reports Results for the Second Quarter of 2023

STAMFORD, Conn., Aug. 03, 2023 (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 ended June 30, 2023.

Quarter Highlights:

• Generated Revenues, net of $101.4 million
  • Achieved TCE⁽¹⁾ of $14,434/day based on TCE Revenue⁽¹⁾ of $65.0 million

• Realized net income of $18.0 million, or $1.42 per basic share
  • Adjusted net income⁽¹⁾ of $16.7 million, or $1.31 per basic share⁽¹⁾

• Generated Adjusted EBITDA⁽¹⁾ of $24.8 million
  
  
  
  
• Closed on the purchase and took delivery of two high-specification 2020-built scrubber-fitted Ultramax bulkcarriers
  
  
  • Vessels were renamed the Halifax Eagle and Vancouver Eagle

• Completed the sale of two non-core, non-scrubber-fitted Supramax bulkcarriers (Montauk Eagle and Newport Eagle)
  
  
  
  
• Executed upsize and extension of credit facility
  
  
  • Increased borrowing capacity by $175 million, reduced margin and extended maturity to September 2028

• Repurchased 3.8 million shares of common stock, representing 28% of outstanding shares (prior to purchase)
  
  
  
  
• Declared a quarterly dividend of $0.58 per share for the second quarter of 2023
  
  
  • Dividend is payable on August 24, 2023 to shareholders of record at the close of business on August 16, 2023

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."}

Recent Developments:

• Completed the sale of the Sankaty Eagle, a non-core, non-scrubber-fitted Supramax bulkcarrier (July 2023)
  
  
  
  
• Coverage position for the third quarter of 2023 is as follows:
  
  
  • 67% of owned available days fixed at an average TCE of $10,900

Eagle's CEO Gary Vogel commented, "We meaningfully outperformed the benchmark BSI (Baltic Supramax Index) as we achieved a net TCE of $14,434 in the second quarter, in what proved to be a challenging market for the industry due to lackluster demand from China and ongoing easing of congestion.

While earnings for the quarter were muted, in line with the market, dividends per share were impacted positively by over 40% as a result of our significant share repurchase effected during the quarter. We also finalized the acquisition of two 2020-built scrubber fitted Ultramax vessels as well as the sale of three non-scrubber fitted Supramaxes.

Looking ahead, the forward curve for the balance of the year remains in contango reflecting the market's continued expectation for a recovery in rates as supply/demand dynamics continue to strengthen. With congestion now back to pre-COVID levels, and essentially fully unwound, we see rates pushing back-up above the forward curve. We remain positive about the medium-term prospects for the drybulk industry, particularly given the historically strong supply side fundamentals.

With a fully modern fleet of 52, predominately scrubber-fitted vessels, and $195 million of liquidity, Eagle is in a unique leadership position to continue to take advantage of opportunities for the benefit of our shareholders."

Fleet Operating Data 

		Three Months Ended				Six Months Ended
		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Ownership Days		4,805		4,823		9,616		9,593
Owned Available Days		4,502		4,574		9,083		9,011

Fleet Development

• Halifax Eagle, a 2020-built, scrubber-fitted Ultramax (64k DWT)
  • Acquired in first quarter of 2023 for $30.1 million and delivered to the Company in second quarter of 2023

• Vancouver Eagle, a 2020-built, scrubber-fitted Ultramax (64k DWT)
  • Acquired in first quarter of 2023 for $30.1 million and delivered to the Company in second quarter of 2023

• Montauk Eagle, a 2011-built Supramax (58k DWT)
  • Sold in second quarter of 2023 for $16.7 million and delivered to new owners in second quarter of 2023

• Newport Eagle, a 2011-built Supramax (58k DWT)
  • Sold in second quarter of 2023 for $16.7 million and delivered to new owners in second quarter of 2023

• Sankaty Eagle, a 2011-built Supramax (58k DWT)
  • Sold in second quarter of 2023 for $16.4 million and delivered to new owners in third quarter of 2023

• Pro forma owned fleet totals 52 vessels with an average age of 10.0 years
  
  
  
  

Results of Operations for the three and six months ended June 30, 2023 and 2022

For the three months ended June 30, 2023, the Company reported net income of $18.0 million, or basic and diluted net income per share of $1.42 and $1.21, respectively. In the comparable quarter of 2022, the Company reported net income of $94.5 million, or basic and diluted net income per share of $7.27 and $5.77, respectively.

For the three months ended June 30, 2023, the Company reported adjusted net income of $16.7 million, which excludes net unrealized gains on FFAs and bunker swaps of $2.0 million and impairment of operating lease right-of-use assets of $0.7 million, or basic and diluted adjusted net income per share of $1.31 and $1.13, respectively. In the comparable quarter of 2022, the Company reported adjusted net income of $81.6 million, which excludes net unrealized gains on FFAs and bunker swaps of $12.8 million, or basic and diluted adjusted net income per share of $6.28 and $4.98, respectively.

For the six months ended June 30, 2023, the Company reported net income of $21.2 million, or basic and diluted net income per share of $1.65 and $1.48, respectively. For the six months ended June 30, 2022, the Company reported net income of $147.5 million, or basic and diluted net income per share of $11.36 and $9.01, respectively.

For the six months ended June 30, 2023, the Company reported adjusted net income of $20.2 million, which excludes net unrealized gains on FFAs and bunker swaps of $1.8 million and impairment of operating lease right-of-use assets of $0.7 million, or basic and diluted adjusted net income per share of $1.56 and $1.42, respectively. For the six months ended June 30, 2022, the Company reported adjusted net income of $146.1 million, which excludes net unrealized gains on FFAs and bunker swaps of $1.4 million, or basic and diluted adjusted net income per share of $11.26 and $8.93, respectively.

Revenues, net 

Revenues, net for the three months ended June 30, 2023 were $101.4 million compared to $198.7 million for the comparable quarter of 2022. Revenues, net decreased $97.3 million primarily due to lower rates on both time and voyage charters, driven by a decline in the drybulk market.

Revenues, net for the six months ended June 30, 2023 were $206.6 million compared to $383.1 million for the six months ended June 30, 2022. Revenues, net decreased $176.5 million primarily due to lower rates on both time and voyage charters, driven by a decline in the drybulk market.

Voyage expenses

Voyage expenses for the three months ended June 30, 2023 were $25.5 million compared to $36.3 million for the comparable quarter of 2022. Voyage expenses decreased $10.8 million primarily due to a $7.4 million reduction in bunker consumption expenses due to a decrease in bunker prices, a $2.3 million reduction in port expenses due to a decrease in voyage charters and a $1.1 million decrease in broker commissions due to lower revenues.

Voyage expenses for the six months ended June 30, 2023 were $58.9 million compared to $79.9 million for the six months ended June 30, 2022. Voyage expenses decreased $21.0 million primarily due to a $10.5 million reduction in bunker consumption expenses due to a decrease in bunker prices, a $8.3 million reduction in port expenses due to a decrease in voyage charters and a $2.2 million decrease in broker commissions due to lower revenues.

Vessel operating expenses

Vessel operating expenses for the three months ended June 30, 2023 were $31.0 million compared to $27.2 million for the comparable quarter of 2022. Vessel operating expenses increased $3.8 million due to a $3.8 million increase in costs primarily driven by certain repairs and discretionary spending on upgrades to six vessels, including newly acquired ships and a $0.9 million increase in crewing costs driven by higher compensation and increased crew changes as a result of crewing manager transitions, partially offset by a $0.5 million decrease in lube costs driven by lower purchase volume.

Vessel operating expenses for the six months ended June 30, 2023 were $62.3 million compared to $55.1 million for the six months ended June 30, 2022. Vessel operating expenses increased $7.1 million as a result of higher ownership days and due to a $4.5 million increase in costs driven by certain repairs and discretionary spending on upgrades to six vessels, including newly acquired ships and a $3.3 million increase in crewing costs driven by higher compensation and increased crew changes as a result of crewing manager transitions, partially offset by a $0.5 million decrease in lube costs driven by lower purchase volume.

Adjusted vessel operating expenses⁽²⁾, 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 June 30, 2023 were $28.3 million compared to $26.9 million for the comparable quarter in 2022. Adjusted vessel operating expenses increased $1.3 million primarily due to a $2.7 million increase in costs driven by certain repairs on six vessels, partially offset by a $0.7 million decrease in stores and spares due to the timing of purchases and a $0.7 million decrease in lube costs driven by lower purchase volume. Average daily adjusted vessel operating expenses⁽²⁾ ("Adjusted DVOE") for the three months ended June 30, 2023 were $5,882 compared to $5,584 for the comparable quarter in 2022.

Adjusted vessel operating expenses⁽²⁾, 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 six months ended June 30, 2023 were $59.1 million compared to $54.7 million for the six months ended June 30, 2022. Adjusted vessel operating expenses increased $4.4 million primarily due to a $3.4 million increase in costs driven by certain repairs to six vessels and a $2.6 million increase in crewing costs driven by higher compensation, partially offset by a $0.8 million decrease in lube costs driven by lower purchase volume. Adjusted DVOE for the six months ended June 30, 2023 were $6,141 compared to $5,702 for the six months ended June 30, 2022.

² _{This is 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 this measure and how it is calculated is also included below under the heading "Supplemental Information - Non-GAAP Financial Measures."}

Charter hire expenses

Charter hire expenses for the three months ended June 30, 2023 were $11.7 million compared to $21.3 million for the comparable quarter of 2022. Charter hire expenses decreased $9.6 million primarily due to decreases in both charter hire rates and chartered-in days related to a decline in the drybulk market.

Charter hire expenses for the six months ended June 30, 2023 were $24.1 million compared to $44.0 million for the six months ended June 30, 2022. Charter hire expenses decreased $19.9 million primarily due to decreases in both charter hire rates and chartered-in days related to a decline in the drybulk market.

Chartered-in days, which is the aggregate number of days in a period during which the Company chartered-in vessels, for the three months ended June 30, 2023 and 2022 were 782 and 1,142 days, respectively. Chartered-in days for the six months ended June 30, 2023 and 2022 were 1,726 and 2,102, respectively.

Depreciation and amortization

Depreciation and amortization for the three months ended June 30, 2023 was $14.8 million compared to $15.3 million for the comparable quarter of 2022. Depreciation and amortization decreased $0.4 million primarily due to a $1.0 million decrease in depreciation due to a change in our estimated vessel scrap value from $300 per lwt to $400 per lwt, effective January 1, 2023, partially offset by a $0.4 million increase in depreciation from the net impact of vessels acquired and sold during the respective periods.

Depreciation and amortization for the six months ended June 30, 2023 was $29.6 million compared to $29.8 million for the six months ended June 30, 2022. Depreciation and amortization decreased $0.3 million primarily due to a $2.0 million decrease in depreciation due to a change in our estimated vessel scrap value from $300 per lwt to $400 per lwt, effective January 1, 2023, partially offset by a $0.7 million increase in depreciation from the net impact of vessels acquired and sold during the respective periods and a $0.7 million increase in deferred drydocking cost amortization due to higher drydocking expenditures and a $0.2 million increase in depreciation driven by an increase in installed vessel improvements.

General and administrative expenses 

General and administrative expenses for the three months ended June 30, 2023 were $11.3 million compared to $9.9 million for the comparable quarter of 2022. Excluding stock-based compensation expense of $2.2 million and $1.6 million for the three months ended June 30, 2023 and 2022, respectively, general and administrative expenses for the three months ended June 30, 2023 were $9.1 million compared to $8.3 million for the comparable quarter of 2022. General and administrative expenses increased $1.4 million primarily due to a $0.9 million increase in employee-related costs and a $0.6 million increase in stock-based compensation expense.

General and administrative expenses for the six months ended June 30, 2023 were $22.2 million compared to $19.9 million for the six months ended June 30, 2022. Excluding stock-based compensation expense of $4.0 million and $3.1 million for the six months ended June 30, 2023 and 2022, respectively, general and administrative expenses for the six months ended June 30, 2023 were $18.2 million compared to $16.9 million for the six months ended June 30, 2022. General and administrative expenses increased $2.3 million primarily due to a $0.9 million increase in stock-based compensation expense, a $0.9 million increase in employee-related costs and other small increases across professional fees, corporate travel and office expenses.

Other operating expense

Other operating expense for the three months ended June 30, 2023 and 2022 was $0.1 million and less than $0.1 million, respectively.

Other operating expense for each of the six months ended June 30, 2023 and 2022 was $0.2 million.

Gain on sale of vessels

For the three months ended June 30, 2023, the Company recorded a gain on the sale of the vessels Montauk Eagle and Newport Eagle of $11.6 million.

For the six months ended June 30, 2023, the Company recorded a gain on the sale of the vessels Jaeger, Montauk Eagle and Newport Eagle of $14.9 million.

Interest expense

Interest expense for the three months ended June 30, 2023 and 2022 was $4.4 million and $4.3 million, respectively. Interest expense increased $0.1 million due to higher interest rates on amounts outstanding under the Global Ultraco Debt Facility, partially offset by the impact of interest rate hedging instruments.

Interest expense for the six months ended June 30, 2023 and 2022 was $8.3 million and $8.8 million, respectively. Interest expense decreased $0.5 million due to lower average outstanding principal balances driven by principal repayments and the impact of interest rate hedging instruments, partially offset by the impact of higher interest rates on amounts outstanding under the Global Ultraco Debt Facility.

Interest income

Interest income for the three months ended June 30, 2023 and 2022 was $1.8 million and $0.2 million, respectively. Interest income increased primarily due to higher interest rates on the Company's cash balances.

Interest income for the six months ended June 30, 2023 and 2022 was $3.7 million and $0.2 million, respectively. Interest income increased primarily due to higher interest rates on the Company's cash balances.

Realized and unrealized gain on derivative instruments, net

Realized and unrealized gain on derivative instruments, net for the three months ended June 30, 2023 was $2.8 million compared to $9.9 million for the comparable quarter of 2022. The realized and unrealized gain on derivative instruments, net decreased $7.1 million due to market movements as well as lower FFA and bunker swap activity.

Realized and unrealized gain on derivative instruments, net for the six months ended June 30, 2023 was $2.4 million compared to $2.0 million for the six months ended June 30, 2022. The realized and unrealized gain on derivative instruments, net increased $0.4 million due to market movements as well as lower FFA and bunker swap activity.

A summary of outstanding FFAs as of June 30, 2023 is as follows:

FFA Period		Average FFA Contract Price			Number of Days Hedged
Quarter ending September 30, 2023 - Buy Positions		$	14,289		(720	)
Quarter ending September 30, 2023 - Sell Positions		$	14,976		765
Quarter ending December 31, 2023 - Buy Positions		$	13,896		(705	)
Quarter ending December 31, 2023 - Sell Positions		$	14,855		795

Liquidity and Capital Resources

		Six Months Ended
($ in thousands)		June 30, 2023				June 30, 2022
Net cash provided by operating activities		$	32,158			$	140,214
Net cash used in investing activities			(42,290	)			(5,543	)
Net cash used in financing activities			(61,344	)			(79,363	)
Net (decrease)/increase in cash, cash equivalents and restricted cash			(71,476	)			55,308
Cash, cash equivalents and restricted cash at beginning of period			189,754				86,222
Cash, cash equivalents and restricted cash at end of period		$	118,278			$	141,530

Net cash provided by operating activities for the six months ended June 30, 2023 was $32.2 million, compared to $140.2 million for the six months ended June 30, 2022. The decrease is primarily due to a decrease in net income driven by lower freight rates, partially offset by changes in operating assets and liabilities primarily driven by decreases in accounts receivable and inventories for the six months ended June 30, 2023 compared to increases for the comparable period in 2022.

Net cash used in investing activities for the six months ended June 30, 2023 was $42.3 million, compared to $5.5 million for the six months ended June 30, 2022. During the six months ended June 30, 2023, the Company (i) paid $81.7 million to purchase three vessels and other vessel improvements and (ii) paid $1.4 million to purchase BWTS. These uses of cash were partially offset by $40.7 million in net proceeds from the sale of three vessels. During the six months ended June 30, 2022, the Company (i) paid $4.8 million to purchase BWTS, (ii) paid $0.5 million to purchase vessel improvements and (iii) paid $0.2 million to purchase other fixed assets.

Net cash used in financing activities for the six months ended June 30, 2023 was $61.3 million, compared to $79.4 million for the six months ended June 30, 2022. During the six months ended June 30, 2023, the Company (i) paid $221.2 million to repurchase Common Stock, inclusive of fees, (ii) repaid $24.9 million of term loan under the Global Ultraco Debt Facility, (iii) paid $10.0 million in dividends and (iv) paid $1.7 million for taxes related to net share settlement of equity awards. These uses of cash were partially offset by (i) $123.4 million of proceeds, net of debt issuance costs, from the Revolving Facility under the Global Ultraco Debt Facility and (ii) $73.1 million of proceeds, net of debt issuance costs, from the Term Facility under the Global Ultraco Debt Facility. During the six months ended June 30, 2022, the Company (i) paid $52.8 million in dividends, (ii) repaid $24.9 million of term loan under the Global Ultraco Debt Facility and (iii) paid $1.9 million for taxes related to net share settlement of equity awards. As it relates to amounts paid for taxes related to net share settlement of equity awards, the Company withholds a number of shares earned by employees with a value equal to amounts paid.

As of June 30, 2023, cash and cash equivalents including noncurrent restricted cash was $118.3 million compared to $189.8 million as of December 31, 2022.

A summary of the Company's debt as of June 30, 2023 and December 31, 2022 is as follows:

		June 30, 2023												December 31, 2022
($ in thousands)		Principal Amount Outstanding				Debt Discounts and Debt Issuance Costs				Carrying Value				Principal Amount Outstanding				Debt Discounts and Debt Issuance Costs				Carrying Value
Convertible Bond Debt		$	104,119			$	(426	)		$	103,693			$	104,119			$	(620	)		$	103,499
Global Ultraco Debt Facility - Term Facility			287,850				(6,273	)			281,577				237,750				(6,767	)			230,983
Global Ultraco Debt Facility - Revolving Facility			125,000				(3,159	)			121,841				—				—				—
Total debt			516,969				(9,858	)			507,111				341,869				(7,387	)			334,482
Less: Current portion - Global Ultraco Debt Facility			(49,800	)			—				(49,800	)			(49,800	)			—				(49,800	)
Total long-term debt		$	467,169			$	(9,858	)		$	457,311			$	292,069			$	(7,387	)		$	284,682

(1)

As of June 30, 2023 and December 31, 2022, the undrawn revolving facility under the Global Ultraco Debt Facility was $60 million and $100 million, respectively.

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 as well as regularly scheduled drydocking and other vessel improvements, which are expected to enhance their revenue earning capabilities, efficiency and/or safety and to comply with international shipping standards and environmental laws and regulations. Certain vessel improvement costs and costs incurred in connection with drydocking are necessary to comply with international shipping standards and environmental laws and regulations, while others are discretionary in nature and evaluated on a business case-by-case basis.

During the fourth quarter of 2022, the Company entered into a memorandum of agreement to acquire a high-specification 2015-built Ultramax bulkcarrier for total consideration of $24.3 million. The vessel was delivered to the Company during the first quarter of 2023.

On January 30, 2023, the Company entered into a memorandum of agreement to acquire a high-specification 2020-built scrubber-fitted Ultramax bulkcarrier for total consideration of $30.1 million. The vessel was delivered to the Company during the second quarter of 2023.

On February 28, 2023, the Company entered into a memorandum of agreement to acquire a high-specification 2020-built scrubber-fitted Ultramax bulkcarrier for total consideration of $30.1 million. The vessel was delivered to the Company during the second quarter of 2023.

Although the Company has some flexibility regarding the timing of vessel drydockings, the timing of costs are relatively predictable. In accordance with statutory requirements, we expect vessels less than 15 years old to be drydocked every 60 months and vessels older than 15 years to be drydocked every 30 months. We intend to fund drydocking costs with cash from operations, cash on hand or with amounts available under the Global Ultraco Debt Facility. In addition, drydocking typically requires us to reposition vessels from a discharge port to shipyard facilities, which will reduce our owned available days and revenues during that period.

Drydocking costs incurred are deferred and amortized through depreciation and amortization on the condensed consolidated statements of operations on a straight-line basis over the period through the date the next drydocking is required to become due. During the six months ended June 30, 2023, five of our vessels completed drydock and we incurred $8.3 million for drydocking costs. During the six months ended June 30, 2022, seven of our vessels completed drydock and we incurred $16.1 million for drydocking costs.

Vessel improvements generally include systems and equipment intended to enhance a vessel's efficiency and revenue earning capability. We intend to fund these costs through cash from operations, cash on hand or amounts available under the Global Ultraco Debt Facility.

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(3)
September 30, 2023		201		$	3.2		$	1.2
December 31, 2023		241		$	3.9		$	0.8
March 31, 2024		218		$	6.9		$	—
June 30, 2024		143		$	0.1		$	—

(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.
(3)		Projected costs for vessel improvements are primarily comprised of costs for ballast water treatment systems ("BWTS").

SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

The following table summarizes the Company's selected condensed consolidated financial statements and other data for the periods indicated below.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except share and per share data)
		Three Months Ended								Six Months Ended
		June 30, 2023				June 30, 2022				June 30, 2023				June 30, 2022
Revenues, net		$	101,406			$	198,695			$	206,604			$	383,093
Voyage expenses			25,471				36,290				58,946				79,917
Vessel operating expenses			30,998				27,207				62,255				55,122
Charter hire expenses			11,726				21,285				24,146				43,996
Depreciation and amortization			14,831				15,254				29,563				29,834
General and administrative expenses			11,269				9,891				22,219				19,945
Impairment of operating lease right-of-use assets			722				—				722				—
Other operating expense			93				41				183				174
Gain on sale of vessels			(11,558	)			—				(14,876	)			—
Total operating expenses, net			83,552				109,968				183,158				228,988
Operating income			17,854				88,727				23,446				154,105
Interest expense			4,434				4,338				8,291				8,785
Interest income			(1,815	)			(174	)			(3,651	)			(219	)
Realized and unrealized gain on derivative instruments, net			(2,791	)			(9,890	)			(2,422	)			(1,988	)
Total other (income)/expense, net			(172	)			(5,726	)			2,218				6,578
Net income		$	18,026			$	94,453			$	21,228			$	147,527
Weighted average shares outstanding:
Basic			12,734,230				12,988,200				12,892,793				12,981,202
Diluted			16,058,606				16,376,517				16,223,841				16,373,458
Per share amounts:
Basic net income		$	1.42			$	7.27			$	1.65			$	11.36
Diluted net income		$	1.21			$	5.77			$	1.48			$	9.01

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except share data and par values)
		June 30, 2023				December 31, 2022
ASSETS:
Current assets:
Cash and cash equivalents		$	115,703			$	187,155
Accounts receivable, net of a reserve of $2,965 and $3,169, respectively			28,396				32,311
Prepaid expenses			6,533				4,531
Inventories			21,695				28,081
Collateral on derivatives			676				909
Fair value of derivative assets – current			9,814				8,479
Vessel held for sale			11,052				—
Other current assets			440				558
Total current assets			194,309				262,024
Noncurrent assets:
Vessels and vessel improvements, at cost, net of accumulated depreciation of $277,924 and $261,725, respectively			925,632				891,877
Advances for vessel purchases			—				3,638
Advances for BWTS and other assets			1,622				2,722
Deferred drydock costs, net			40,469				42,849
Other fixed assets, net of accumulated depreciation of $1,706 and $1,623, respectively			291				310
Operating lease right-of-use assets			15,472				23,006
Restricted cash – noncurrent			2,575				2,599
Fair value of derivative assets – noncurrent			6,331				8,184
Total noncurrent assets			992,392				975,185
Total assets		$	1,186,701			$	1,237,209
LIABILITIES & STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable		$	22,520			$	20,129
Accrued interest			3,567				3,061
Other accrued liabilities			20,920				24,097
Fair value of derivative liabilities – current			8				163
Current portion of operating lease liabilities			14,274				22,045
Unearned charter hire revenue			6,002				9,670
Current portion of long-term debt			49,800				49,800
Total current liabilities			117,091				128,965
Noncurrent liabilities:
Long-term debt – Global Ultraco Debt Facility, net of debt discount and debt issuance costs			353,618				181,183
Convertible Bond Debt, net of debt discount and debt issuance costs			103,693				103,499
Noncurrent portion of operating lease liabilities			2,847				3,173
Other noncurrent accrued liabilities			695				1,208
Total noncurrent liabilities			460,853				289,063
Total liabilities			577,944				418,028
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, 25,000,000 shares authorized, none issued as of June 30, 2023 and December 31, 2022			—				—
Common stock, $0.01 par value, 700,000,000 shares authorized, 9,310,443 and 13,003,702 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively			93				130
Additional paid-in capital			745,636				966,058
Accumulated deficit			(151,697	)			(163,556	)
Accumulated other comprehensive income			14,725				16,549
Total stockholders' equity			608,757				819,181
Total liabilities and stockholders' equity		$	1,186,701			$	1,237,209

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
		Six Months Ended
		June 30, 2023				June 30, 2022
Cash flows from operating activities:
Net income		$	21,228			$	147,527
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			22,633				23,573
Noncash operating lease expense			13,322				12,664
Amortization of deferred drydocking costs			6,930				6,261
Amortization of debt discount and debt issuance costs			1,146				1,092
Impairment of operating lease right-of-use assets			722				—
Gain on sale of vessels			(14,876	)			—
Unrealized gain on derivative instruments, net			(1,785	)			(1,393	)
Stock-based compensation expense			4,010				3,092
Drydocking expenditures			(8,259	)			(16,098	)
Changes in operating assets and liabilities:
Accounts payable			2,172				1,793
Accounts receivable			3,741				(15,492	)
Accrued interest			506				51
Inventories			6,385				(7,542	)
Operating lease liabilities current and noncurrent			(14,607	)			(12,664	)
Collateral on derivatives			233				(1,689	)
Fair value of derivatives, other current and noncurrent assets			434				(453	)
Other accrued liabilities			(6,105	)			(868	)
Prepaid expenses			(2,002	)			(1,162	)
Unearned charter hire revenue			(3,670	)			1,522
Net cash provided by operating activities			32,158				140,214
Cash flows from investing activities:
Purchase of vessels and vessel improvements			(81,708	)			(495	)
Purchase of BWTS			(1,391	)			(4,807	)
Proceeds from hull and machinery insurance claims			174				—
Net proceeds from sale of vessels			40,698				—
Purchase of other fixed assets			(63	)			(241	)
Net cash used in investing activities			(42,290	)			(5,543	)
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			(24,900	)			(24,900	)
Repurchase of Common Stock and associated fees – related party			(221,196	)			—
Dividends paid			(9,979	)			(52,816	)
Debt issuance costs paid to lenders – Original Global Ultraco Debt Facility			—				(18	)
Cash paid for taxes related to net share settlement of equity awards			(1,652	)			(1,915	)
Other financing costs paid			(103	)			—
Cash received from exercise of stock options			—				85
Proceeds from equity offerings, net of issuance costs			—				201
Net cash used in financing activities			(61,344	)			(79,363	)
Net (decrease)/increase in cash, cash equivalents and restricted cash			(71,476	)			55,308
Cash, cash equivalents and restricted cash at beginning of period			189,754				86,222
Cash, cash equivalents and restricted cash at end of period		$	118,278			$	141,530
Cash paid for interest		$	11,184			$	7,123

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

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 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 Condensed 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 or Adjusted net income per share 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								Six Months Ended
		June 30, 2023				June 30, 2022				June 30, 2023				June 30, 2022
Net income		$	18,026			$	94,453			$	21,228			$	147,527
Adjustments to reconcile net income to adjusted net income:
Unrealized gain on FFAs and bunker swaps, net			(2,021	)			(12,842	)			(1,785	)			(1,393	)
Impairment of operating lease right-of-use assets			722				—				722				—
Adjusted net income		$	16,727			$	81,611			$	20,165			$	146,134
Weighted average shares outstanding:
Basic			12,734,230				12,988,200				12,892,793				12,981,202
Diluted (1)			16,058,606				16,376,517				16,223,841				16,373,458
Per share amounts:
Basic adjusted net income		$	1.31			$	6.28			$	1.56			$	11.26
Diluted adjusted net income		$	1.13			$	4.98			$	1.42			$	8.93

(1)			Diluted weighted average shares outstanding for the three and six months ended June 30, 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.

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 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								Six Months Ended
		June 30, 2023				June 30, 2022				June 30, 2023				June 30, 2022
Net income		$	18,026			$	94,453			$	21,228			$	147,527
Adjustments to reconcile net income to EBITDA:
Interest expense			4,434				4,338				8,291				8,785
Interest income			(1,815	)			(174	)			(3,651	)			(219	)
Income taxes			—				—				—				—
EBIT			20,645				98,617				25,868				156,093
Depreciation and amortization			14,831				15,254				29,563				29,834
EBITDA			35,476				113,871				55,431				185,927
Non-cash, one-time and other adjustments to EBITDA(1)			(10,702	)			(11,237	)			(11,929	)			1,699
Adjusted EBITDA		$	24,774			$	102,634			$	43,502			$	187,626

(1)			One-time and other adjustments to EBITDA for the three and six months ended June 30, 2023 and 2022 includes a gain on sale of vessels, net unrealized gains on FFAs and bunker swaps, impairment of operating lease right-of-use assets and stock-based compensation expense.

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 (in thousands, except for Owned available days and TCE data)
		Three Months Ended								Six Months Ended
		June 30, 2023				June 30, 2022				June 30, 2023				June 30, 2022
Revenues, net		$	101,406			$	198,695			$	206,604			$	383,093
Less:
Voyage expenses			(25,471	)			(36,290	)			(58,946	)			(79,917	)
Charter hire expenses			(11,726	)			(21,285	)			(24,146	)			(43,996	)
Realized gain/(loss) on FFAs and bunker swaps, net			770				(2,952	)			637				596
TCE revenue		$	64,979			$	138,168			$	124,149			$	259,776
Owned available days			4,502				4,574				9,083				9,011
TCE		$	14,434			$	30,207			$	13,669			$	28,829

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 GAAP Vessel operating expenses to Adjusted vessel operating expenses and Adjusted DVOE (in thousands, except for Ownership days and Adjusted DVOE data)
		Three Months Ended								Six Months Ended
		June 30, 2023				June 30, 2022				June 30, 2023				June 30, 2022
Vessel operating expenses		$	30,998			$	27,207			$	62,255			$	55,122
Less:
Adjustments to vessel operating expenses(1):			(2,734	)			(277	)			(3,201	)			(425	)
Adjusted vessel operating expenses		$	28,264			$	26,930			$	59,054			$	54,697
Ownership days			4,805				4,823				9,616				9,593
Adjusted DVOE		$	5,882			$	5,584			$	6,141			$	5,702

(1)			Adjustments to vessel operating expenses includes 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.

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 5.0% Convertible Senior Notes due 2024 issued by the Company on July 29, 2019 that will mature on August 1, 2024.

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 $485.3 million, which consists of (i) a term loan facility in an aggregate principal amount of $300.3 million (the "Term Facility") and (ii) a revolving credit facility in an aggregate principal amount of $185.0 million (the "Revolving Facility"). The Global Ultraco Debt Facility is secured by 52 of the Company's vessels. As of June 30, 2023, $60.0 million of the revolving credit facility remains undrawn.

Conference Call Information 

As previously announced, members of Eagle's senior management team will host a teleconference and webcast at 8:00 a.m. ET on Friday, August 4, 2023, to discuss the second quarter results.

A live webcast of the call will be available on the Investor Relations page of the Company's website at ir.eagleships.com. To access the call by phone, please register at https://register.vevent.com/register/BIbc2c6bc5ee744332af06f25ac2417e22 and you will be provided with dial-in details. A replay of the webcast will be available on the Investor Relations page of the Company's website.

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, Eagle 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, 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 conflict between Russia and Ukraine, 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 our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 10, 2023.

CONTACT

Company Contact:

Constantine Tsoutsoplides

Chief Financial Officer

Eagle Bulk Shipping Inc.

Tel. +1 203-276-8100

Email: [email protected]

Source: Eagle Bulk Shipping Inc.