Eagle Bulk Reports Fourth Quarter 2019 Results

Eagle-Bulk

Eagle Bulk, one of the world’s largest owner-operators within the Supramax/Ultramax segment, reported financial results for the three months and year ended December 31, 2019.

Highlights for the Quarter:

  • Generated net revenues of $71.5 million for the quarter
    —  TCE revenues (1) for the quarter equated to $41.9 million.
    —  Achieved a TCE (1) of $11,292 for the quarter.
  • Realized a net loss for the quarter of $11.2 million or $0.16 per basic and diluted share
  • Adjusted EBITDA(1) of $9.8 million for the quarter
  • Took delivery of three Ultramax drybulk vessel acquisitions
  • Upsized term loan by $34.3 million in order to fund vessel acquisitions and capital expenditures relating to the installation of scrubbers

Looking ahead into the first quarter of 2020, the Company has attained a TCE of $10,300 with approximately 85% of the available days fixed for the period thus far.

Gary Vogel, Eagle Bulk’s CEO, commented, “With the onset of IMO2020, the fourth quarter proved to be a dynamic period for the shipping markets and one of major transition for Eagle. While our financial results in Q4 were impacted by increased offhire days due to our scrubber installations, I’m pleased to report that our program is now substantially complete with 38 ships commissioned.

From the outset, we were targeting to complete the scrubber retrofit project by IMO2020 implementation in order to maximize the benefit from our investment.  We now own and operate the largest scrubber-fitted Supramax/Ultramax fleet in the world, and believe we have a competitive advantage with just 7% of the vessels in this segment being fitted.  Two months into the new year, notwithstanding a challenging environment, we have thus far achieved a strong market outperformance, with our scrubber vessels contributing significantly.”

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”

Fleet Operating Data 

Three Months Ended For the Years Ended
December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018
Ownership Days 4,460 4,303 16,945 17,213
Chartered-in Days 646 850 3,583 3,294
Available Days 4,358 5,077 19,214 20,083
Operating Days 4,316 5,041 19,058 19,921
Fleet Utilization 99.0 % 99.3 % 99.2 % 99.2 %

Fleet Development 

Vessels delivered into the fleet

  • Hong Kong Eagle, an Ultramax (64k DWT / 2016-built) for $20.0 million
  • Santos Eagle, an Ultramax  (64K DWT / 2015-built) for $21.1 million
  • Shanghai Eagle, an Ultramax (64K DWT / 2016-built) for $20.1 million

Results of Operations for the three months and years ended December 31, 2019 and 2018

For the three months ended December 31, 2019, the Company reported a net loss of $11.2 million, or $0.16 per basic and diluted share, compared to net income of $6.5 million, or $0.09 per basic and diluted share, in the same period for the prior year.

For the year ended December 31, 2019, the Company reported a net loss of $21.7 million, or $0.30 per basic and diluted share, compared to net income of $12.6 million, or $0.18 per basic and diluted share, for the year ended December 31, 2018.

Revenues, net

Revenues, net for the three months ended December 31, 2019 were $71.5 million compared with $86.7 million in the comparable quarter in 2018. The decrease in revenue was primarily due to a decrease in charter hire rates as well as available days due to off-hire days for scrubber installations.

Revenues, net for the year ended December 31, 2019 were $292.4 million compared to $310.1 million for the prior year. Revenues, net decreased by 6% compared to the prior year ended December 31, 2018 primarily due to a decrease in charter hire rates and a decrease in available days due to offhire related to scrubber installations. The decrease in available days was also due to the sale of four Supramax vessels during 2019, offset by the purchase of seven Ultramax vessels in 2019. The chartered-in days for the year ended December 31, 2019 were 3,583 compared to 3,294 in the prior year.

Voyage expenses

Voyage expenses for the three months ended December 31, 2019 were $21.4 million compared to $24.7 million in the comparable quarter in 2018. The decrease was mainly attributable to a lower number of available days due to scrubber installations and decreased bunker prices year over year.

Voyage expenses for the years ended December 31, 2019 and 2018 were $87.7 million and $79.6 million, respectively. Voyage expenses have primarily increased due to an increase in bunker consumption due to an increase in voyage charter days offset by a decrease in bunker prices in the current year compared to the prior year.

Vessel expenses

Vessel expenses for the three months ended December 31, 2019 were $22.3 million compared to $20.1 million in the comparable quarter in 2018. The increase in vessel expenses is mainly attributable to higher owned days, higher crew wages as well as start up costs related to the acquisition of six Ultramax vessels during the third and fourth quarters of 2019. The ownership days for the three months ended December 31, 2019 and  2018 were 4,460 and 4,303, respectively.

Average daily vessel operating expenses for our fleet for the three months ended December 31, 2019 and December 31, 2018 were $5,008 and $4,674, respectively.

Vessel expenses for the years ended December 31, 2019 and 2018 were $82.3 million and $81.3 million, respectively. The increase in vessel expenses is attributable to an increase in average daily vessel expenses due to increases in crew wages and vessel start-up expenses for the seven Ultramax vessels purchased in 2019, offset by a decrease in ownership days. The ownership days for the year ended December 31, 2019 were 16,945 compared to 17,213 for the prior year ended December 31, 2018.

Average daily vessel operating expenses for our fleet for the year ended December 31, 2018 were $4,859 compared to $4,725 for the year ended December 31, 2018.

Charter hire expenses

Charter hire expenses for the three months ended December 31, 2019 were $8.2 million compared to $10.2 million in the comparable quarter in 2018. The decrease in charter hire expense was due to a decrease in the number of chartered in days partially offset by higher charter hire rates. The total chartered in days for the three months ended December 31, 2019 were 646 compared to 850 for the comparable quarter in the prior year.

Charter hire expenses for the years ended December 31, 2019 and 2018 were $42.2 million and $38.0 million, respectively. The increase in charter hire expenses in 2019 compared with 2018 was mainly due to an increase in charter hire operating days and a marginal increase in charter hire rates. The chartered-in operating days for 2018 were 3,583 compared to 3,294 in 2018. The Company currently charters in three vessels on a long-term basis.

Depreciation and amortization

Depreciation and amortization expense for the three months ended December 31, 2019 and 2018 was $11.3 million and $9.7 million, respectively. Total depreciation and amortization expense for the three months ended December 31, 2019 includes $9.5 million of vessel and other fixed asset depreciation and $1.8 million relating to the amortization of deferred drydocking costs. Comparable amounts for the three months ended December 31, 2018 were $8.2 million of vessel and other fixed asset depreciation and $1.5 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 seven Ultramax vessels during 2019 partially offset by the sale of four vessels.

Depreciation and amortization expense for the years ended December 31, 2019 and 2018 was $40.5 million and $37.7 million, respectively. Total depreciation and amortization expense for the year ended December 31, 2019 includes $34.3 million of vessel and other fixed assets depreciation and $6.2 million relating to the amortization of deferred drydocking costs. Comparable amounts for the year ended December 31, 2018 were $32.4 million of vessel and other fixed assets depreciation and $5.4 million of amortization of deferred drydocking costs. The increase in depreciation expense is primarily due to an increase in the cost base of our owned fleet due to the acquisition of a total of nine vessels in 2018 and 2019 offset by the sale of two vessels in 2018 and four vessels in 2019.

General and administrative expenses

General and administrative expenses for the three months ended December 31, 2019 and 2018 were $10.1 million and $8.5 million, respectively. General and administrative expenses include stock-based compensation of $1.0 million and $1.2 million for 2019 and 2018, respectively. The increase in general and administrative expenses was mainly attributable to higher payroll expenses due to an increase in headcount and certain non recurring legal charges.

General and administrative expenses for the years ended December 31, 2019 and 2018 were $35.0 million and $36.2 million, respectively. General and administrative expenses include stock-based compensation of $4.8 million and $9.2 million for 2019 and 2018, respectively. The decrease in general and administrative expenses in 2019 was primarily due to a decrease in stock-based compensation expense. The general and administrative expenses excluding stock-based compensation expense are higher compared to the prior year primarily because of higher payroll expenses and certain non recurring legal charges.

Other operating expense

Other operating expense for the year ended December 31, 2019 was $1.1 million. The expense relates to the settlement of our legal case with Office of Foreign Assets Control (“OFAC”).

Interest expense

Interest expense for the three months ended December 31, 2019 and 2018 was $9.0 million and $6.5 million, respectively.

Interest expense for the years ended December 31, 2019 and 2018 was $30.6 million and $25.7 million, respectively.

The increase in cash interest expense for both the quarter and the year is primarily due to an increase in our outstanding debt due to the acquisition of seven Ultramax vessels during 2019. The amortization of debt issuance costs and debt discount increased compared to prior year primarily due to the issuance of convertible bonds during the third quarter of 2019.

Liquidity and Capital Resources

The following table presents the cash flow information for the years ended December 31, 2019 and 2018 (in thousands):

  For the Years Ended
December 31, 2019 December 31, 2018
Net cash provided by operating activities (1) $ 21,686 $ 45,470
Net cash used in investing activities (2) (168,619 ) (31,014 )
Net cash provided by financing activities (3) 127,900 7,381
Net (decrease)/increase in cash, cash equivalents and restricted cash (19,033 ) 21,838
Cash and cash equivalents including restricted cash, beginning of year 78,164 56,326
Cash and cash equivalents including restricted cash, end of year $ 59,130 $ 78,164

(1) The decrease in cash flows provided by operations resulted from a decrease in charter rates achieved by the Company in the current year as well as lower available days year over year as a result of scrubber installations and higher drydocking expenditures in the current year.

(2) During 2019, the Company purchased seven Ultramax vessels for $143.5 million offset by the proceeds from the sale of four vessels for $29.6 million and $3.8 million of insurance proceeds received on hull and machinery claims. Additionally, the Company paid $58.2 million for the purchase and installation of scrubbers and ballast water treatment systems on our fleet.

(3) On January 25, 2019, the Company completed a debt refinancing transaction and received net proceeds of $153.4 million by entering into new term and revolver loan facilities under the New Ultraco Debt Facility and repaying all outstanding debt under the Original Ultraco Debt Facility and New First Lien Facility of $82.6 million and $65.0 million, respectively. The Company paid $3.5 million as debt issuance costs to the lenders under the New Ultraco Debt Facility. The Company repaid $8.0 million of the Norwegian Bond Debt and $15.1 million under the New Ultraco Debt Facility. On July 29, 2019, the Company received $112.5 million in net proceeds from the Convertible Bond Debt, net of debt discount. On October 1, 2019, the Company entered into the First Amendment to the New Ultraco Debt Facility and received $34.3 million in proceeds. The Company utilized the proceeds from the Convertible Bond Debt and the New Ultraco Debt Facility for partial financing of six Ultramax vessels delivered in the third and fourth quarters of 2019. The Company incurred $1.7 million of other financing costs relating to the issuance of the Convertible Bond Debt and the New Ultraco Debt Facility. Additionally, the Company paid $1.4 million towards shares withheld for taxes due to the vesting of restricted shares.

Capital Expenditures and Drydocking

Our capital expenditures relate to the purchase of vessels and capital improvements to our vessels, which are expected to enhance the revenue earning capabilities and safety of these vessels.

In addition to acquisitions that we may undertake in future periods, the Company’s other major capital expenditures include funding the Company’s 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 drydocking, the costs are relatively predictable. Management anticipates that vessels are to be drydocked every two and a half years for vessels older than 15 years and five years for vessels younger than 15 years. Funding of these requirements is anticipated to be met with cash from operations. We anticipate that the process of recertification will require us to reposition these vessels from a discharge port to shipyard facilities, which will reduce our available days and operating days during that period.

Drydocking costs incurred are deferred and amortized on a straight-line basis over the period through the date of the next scheduled drydocking for those vessels. Vessel improvements are capitalized and depreciated on a straight-line basis over the remaining useful life of the vessel. In 2019, 11 of our vessels were drydocked, three vessels were undergoing drydock as of December 31, 2019 and we incurred $11.9 million in drydock related costs. In 2018, 11 of our vessels were drydocked and we incurred $8.3 million in drydocking related costs.

The following table represents certain information about the estimated costs for anticipated vessel drydockings, ballast water treatment systems (“BWTS”), and scrubber installations in the next four quarters, along with the anticipated off-hire days:

Projected Costs(2) (in millions)
Quarter Ending Off-hire Days(1) BWTS Scrubbers Drydocks
March 31, 2020 231 $ 1.4 $ 16.2 $ 3.2
June 30, 2020 66 1.8 7.6 2.4
September 30, 2020 165 2.9 4.4
December 31, 2020 45 2.5 1.6
(1) Actual duration of off-hire days will vary based on the age and condition of the vessel, yard schedules and other factors.
(2) Actual costs will vary based on various factors, including where the drydockings are actually performed.

 

SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

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

CONSOLIDATED STATEMENTS OF OPERATIONS
(in U.S. dollars except share and per share data)

For the Three Months Ended For the Years Ended
December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018
Revenues, net $ 71,486,350 $ 86,692,209 $ 292,377,638 $ 310,094,258
Voyage expenses 21,441,817 24,720,609 87,701,407 79,566,452
Vessel expenses 22,336,329 20,111,526 82,342,123 81,336,260
Charter hire expenses 8,151,640 10,209,535 42,168,642 38,045,778
Depreciation and amortization 11,321,536 9,708,395 40,545,904 37,717,462
General and administrative expenses 10,140,435 8,464,401 35,041,996 36,156,660
Other operating expense 1,125,000 1,125,000
Gain on sale of vessels 65,913 5,608 (5,978,566 ) (335,160 )
Total operating expenses, net 74,582,670 73,220,074 282,946,506 272,487,452
Operating (loss)/income (3,096,320 ) 13,472,135 9,431,132 37,606,806
Interest expense 8,965,038 6,520,625 30,577,489 25,743,531
Interest income (399,624 ) (247,920 ) (1,867,326 ) (585,168 )
Other expense/(income) (490,281 ) 713,080 149,632 (126,241 )
Loss on debt extinguishment 2,268,452
Total other expense, net 8,075,133 6,985,785 31,128,247 25,032,122
Net (loss)/income $ (11,171,453 ) $ 6,486,350 $ (21,697,115 ) $ 12,574,684
Weighted average shares outstanding:
Basic 71,478,865 71,034,069 71,365,618 70,665,212
Diluted 71,478,865 72,067,130 71,365,618 71,802,173
Per share amounts:
Basic net (loss)/income $ (0.16 ) $ 0.09 $ (0.30 ) $ 0.18
Diluted net (loss)/income $ (0.16 ) $ 0.09 $ (0.30 ) $ 0.18

CONSOLIDATED BALANCE SHEETS
(in U.S. dollars except share and per share data)

December 31, 2019 December 31, 2018
ASSETS:
Current assets:
Cash and cash equivalents $ 53,583,898 $ 67,209,753
Restricted cash – current 5,471,470
Accounts receivable, net of a reserve of $2,472,345 and $2,073,616, respectively 19,982,871 19,785,582
Prepaid expenses 4,631,416 4,635,879
Inventories 15,824,278 16,137,785
Vessels held for sale 8,458,444
Other current assets 1,039,430 2,246,740
Total current assets 100,533,363 118,474,183
Noncurrent assets:
Vessels and vessel improvements, at cost, net of accumulated depreciation of $153,029,544 and $124,907,998, respectively 835,959,084 682,944,936
Advances for vessel purchase 2,040,000
Operating lease right-of-use assets 20,410,037
Other fixed assets, net of accumulated depreciation of $832,541 and $547,452, respectively 740,654 692,803
Restricted cash – noncurrent 74,917 10,953,885
Deferred financing costs – Super Senior Facility 166,111 285,342
Deferred drydock costs, net 17,495,270 12,186,356
Advances for scrubbers and ballast water systems and other assets 26,707,700 18,631,655
Total noncurrent assets 901,553,773 727,734,977
Total assets $ 1,002,087,136 $ 846,209,160
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 13,483,397 $ 14,161,169
Accrued interest 5,321,089 1,735,631
Other accrued liabilities 28,996,836 10,064,017
Fair value of derivatives 756,229 929,313
Current portion of operating lease liabilities 13,255,978
Unearned charter hire revenue 4,692,259 6,926,839
Current portion of long-term debt 35,709,394 29,176,230
Total current liabilities 102,215,182 62,993,199
Noncurrent liabilities:
Norwegian Bond Debt, net of debt discount and debt issuance costs 175,867,310 182,469,155
New First Lien Facility, net of debt discount and debt issuance costs 48,189,307
New Ultraco Debt Facility, net of debt issuance costs 141,396,770
Original Ultraco Debt Facility, net of debt discount and debt issuance costs 70,924,885
Convertible Bond Debt, net of debt discount and debt issuance costs 92,803,144
Operating lease liabilities 8,301,793
Other liabilities 208,651
Fair value below contract value of time charters acquired 1,818,114
Total noncurrent liabilities 418,369,017 303,610,112
Total liabilities 520,584,199 366,603,311
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.01 par value, 25,000,000 shares authorized, none issued as of December 31, 2019 and 2018
Common stock, $.01 par value, 700,000,000 shares authorized, 71,502,206 and 71,055,400 shares issued and outstanding as of December 31, 2019 and 2018, respectively 715,022 710,555
Additional paid-in capital 917,862,269 894,272,533
Accumulated deficit (437,074,354 ) (415,377,239 )
Total stockholders’ equity 481,502,937 479,605,849
Total liabilities and stockholders’ equity $ 1,002,087,136 846,209,160

CONSOLIDATED STATEMENTS OF CASH FLOWS 

For the Years Ended
December 31, 2019 December 31, 2018
Cash flows from operating activities:
Net (loss)/income $ (21,697,115 ) $ 12,574,684
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Depreciation 34,318,053 32,364,359
Amortization of deferred drydocking costs 6,227,851 5,353,102
Amortization of operating lease right-of-use asset 12,764,596
Amortization of debt discount and debt issuance costs 3,783,939 1,913,651
Loss on debt extinguishment 2,268,452
Amortization of fair value below contract value of time charter acquired (681,898 )
Gain on sale of vessels (5,978,566 ) (335,160 )
Net unrealized loss/(gain) on fair value of derivatives (75,537 ) 315,748
Stock-based compensation expense 4,826,324 9,207,480
Drydocking expenditures (11,903,474 ) (8,323,191 )
Changes in operating assets and liabilities:
Accounts payable 3,199,113 993,557
Accounts receivable (6,902 ) (3,465,025 )
Accrued interest 3,585,458 (54,684 )
Inventories 313,507 (2,024,706 )
Operating lease liabilities short and long-term (13,475,534 )
Other current and non-current assets 1,503,904 (207,234 )
Other accrued liabilities and other non-current liabilities 4,261,774 (1,125,638 )
Prepaid expenses 4,463 (1,625,113 )
Unearned revenue (2,234,580 ) 590,531
Net cash provided by operating activities 21,685,726 45,470,463
Cash flows from investing activities:
Purchases of vessels and vessel improvements (143,477,720 ) (41,404,328 )
Advance for vessel purchase (2,040,000 )
Purchase of scrubbers and ballast water treatment systems (58,196,164 ) (12,342,317 )
Proceeds from hull and machinery insurance claims 3,845,967
Proceeds from redemption of short-term investment 4,500,000
Proceeds from sale of vessels 29,560,746 20,545,202
Purchase of other fixed assets (351,434 ) (272,067 )
Net cash used in investing activities (168,618,605 ) (31,013,510 )
Cash flows from financing activities:
Proceeds from the revolver loan under New First Lien Facility 5,000,000
Payment of revolver under New First Lien Facility (5,000,000 ) (5,000,000 )
Proceeds from Convertible Bond Debt, net of debt discount 112,482,586
Proceeds from New Ultraco Debt Facility 187,760,000
Proceeds from Original Ultraco Debt Facility 21,400,000
Proceeds from Share Lending Agreement 35,829
Repayment of New First Lien Facility – term loan (60,000,000 )
Repayment of Norwegian Bond Debt (8,000,000 ) (4,000,000 )
Repayment of Original Ultraco Debt Facility (82,600,000 )
Repayment of term loan under New Ultraco Debt Facility (15,146,013 )
Financing costs paid to lenders (3,533,770 )
Other financing costs (1,655,353 ) (2,465,037 )
Cash received from exercise of stock options 4,865
Cash used to settle net share equity awards (1,443,753 ) (2,559,104 )
Net cash provided by financing activities 127,899,526 7,380,724
Net (decrease)/increase in cash, cash equivalents and restricted cash (19,033,353 ) 21,837,677
Cash, cash equivalents and restricted cash at beginning of year 78,163,638 56,325,961
Cash, cash equivalents and restricted cash at end of year $ 59,130,285 $ 78,163,638
Supplemental cash flow information:
Accruals for Scrubbers, ballast water systems and drydock included in Accounts payable and Other accrued liabilities $ 16,380,168 $ 5,801,867
Cash paid during the period for interest $ 23,208,093 $ 23,884,565

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 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 in our press releases 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 rely on any single 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

EBITDA and Adjusted EBITDA

We define EBITDA as net (loss)/income under GAAP adjusted for interest, income taxes, 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 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 (loss)/income, 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 the items which represent certain non-cash, one-time and other items such as vessel impairment, gain /(loss) on sale of vessels, restructuring expenses, loss on debt extinguishment and stock-based compensation expenses that the Company believes are not indicative of the ongoing performance of its core operations. The following table presents a reconciliation of our net income/(loss) to EBITDA and Adjusted EBITDA.

Three Months Ended For the Years Ended
December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018
Net (loss)/income $ (11,171,453 ) $ 6,486,350 $ (21,697,115 ) $ 12,574,684
Adjustments to reconcile net (loss)/income to EBITDA:
Interest expense 8,965,038 6,520,625 30,577,489 25,743,531
Interest Income (399,624 ) (247,920 ) (1,867,326 ) (585,168 )
Income taxes
EBIT (2,606,039 ) 12,759,055 7,013,048 37,733,047
Depreciation and amortization 11,321,536 9,708,395 40,545,904 37,717,462
EBITDA 8,715,497 22,467,450 47,558,952 75,450,509
Non-cash, one-time and other adjustments to EBITDA(1): 1,064,334 1,022,047 1,116,210 8,190,420
Adjusted EBITDA $ 9,779,831 $ 23,489,497 $ 48,675,162 $ 83,640,929

(1)   One-time and other adjustments to EBITDA includes; loss on debt extinguishment, vessel impairment, stock-based compensation, (gain)/loss on sale of vessels and amortization of fair value below contract value of time charter acquired.

TCE revenue and TCE

Time charter equivalent (“TCE”) is a non-GAAP financial measure that is 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 as shipping revenues less voyage expenses and charter hire expenses, adjusted for the impact of one legacy time charter and realized gains/(losses) on FFAs and bunker swaps, divided by the number of owned available days. TCE provides additional meaningful information in conjunction with shipping revenues, 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 financial performance. The Company’s calculation of TCE may not be comparable to that reported by other companies. The Company calculates relative performance by comparing TCE against the Baltic Supramax Index (“BSI”) adjusted for commissions and fleet makeup. 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.

The following table presents the reconciliation of revenues, net to TCE:

Three Months Ended For the Years Ended
December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018
Revenues, net $ 71,486,350 $ 86,692,209 $ 292,377,638 $ 310,094,258
Less:
Voyage expenses (21,441,817 ) (24,720,609 ) (87,701,407 ) (79,566,452 )
Charter hire expenses (8,151,640 ) (10,209,535 ) (42,168,642 ) (38,045,778 )
Reversal of one legacy time charter (269,504 ) (225,746 ) (36,527 ) (410,116 )
Realized gain/(loss) on FFAs and bunker swaps 294,056 (210,573 ) (126,231 ) 535,234
TCE revenue $ 41,917,445 $ 51,325,746 $ 162,344,831 $ 192,607,146
Owned available days 3,712 4,227 15,631 16,790
TCE $ 11,292 $ 12,142 $ 10,386 $ 11,472

 

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