GoodBulk posts USD 1.2 million net loss in Q3

GoodBulk

GoodBulk Ltd., a leading owner and operator of dry bulk vessels, announced its financial results for the third quarter 2020.

3rd Quarter Highlights
• Generated $16.0 million EBITDA and $5.7 million profit from operations; net result was a loss of $1.2 million ($0.04 per share) after $6.9 million of net financial expenses, of which
$5.2 million were a one–off amount deriving from the refinancing of the fleet. Before such one– off item, the result of the Group was a profit of $4.0 million.
• Ended the period with a cash balance of $26.9 million.
• Earned an average gross Time Charter Equivalent (TCE) rate of $15,908 per vessel per day on its Capesize vessels, an increase of 79% compared to the second quarter of 2020, and $6,412 per day on its Panamax vessel, a decrease of 12% compared to the second quarter of 2020.
• Employed the M/V Aquakatana on a period charter of 15 to 18 months at $15,000 per day.

Recent Developments
• On 16 October 2020, the Company entered into an agreement to sell the oldest vessel in its fleet, the M/V Aquacharm, a 2003 built Capesize vessel of 171,009 DWT built in Sasebo (Japan) to a third party for net consideration of $10.6 million. The vessel was delivered to its new owners on 29 October 2020. The transaction will generate $5.6 million of free cash, $2.6 million profit from disposal and an annualized IRR of 23%.
• On 17 November 2020, the Board of Directors authorized the payment to shareholders of $6.0 million ($0.20 per share) as capital repatriation.
• As of 8 November 2020, for the fourth quarter of 2020 the Company has fixed approximately 62% of its Capesize days at about $18,000 per vessel per day (equivalent to reported gross TCE).
• Employed the M/V Aquanavigator on a period charter until minimum 1 November 2021 to maximum 31 January 2022 at $14,050 per day

GoodBulk is a leading owner of dry bulk vessels executing a strategy combining low financial leverage with active portfolio management to optimize operational leverage to the dry bulk freight market. The Company’s strict financial discipline resulted in industry leading cash general and administrative expenses of $237 per vessel per day, which compares with $265 per vessel per day for the same period in 2019.

Market Commentary
For the quarter ending 30 September 2020, the Baltic Capesize Index averaged $20,761 per day, 29.3% below $29,365 per day for the same period 2019 and 109.0% above $9,932 per day for the quarter ending 30 June 2020. The dry bulk market has benefitted from the Chinese government’s stimulus measures among which there has been an emphasis to accelerate infrastructure projects, from increasing long-haul iron ore volumes from Brazilian miner, Vale, and from a firm grain trade.

Economic indicators in China point to an economy that has regained its footing with third quarter gross domestic product (GDP) growing by 4.9%, a significant rebound from the first quarter which contracted by an unprecedented 6.8% due to the measures brought in to contain Covid-19. The main driver for the global iron ore trade is China’s steel output which has increased by 5.7% this year to over 875 million tonnes in the January to October period and in particular, in the third quarter of 2020, output was up a very strong 10.0% year-on-year. The sequential improvement in the Capesize market during the third quarter occurred on the back of rebounding iron ore exports from Brazil which saw a 19.1 million tonne increase compared to the second quarter. The Capesize market’s improvement comes despite the substantial contraction in the coal trade due to lockdown-led declines in industrial power demand in significant areas such as India and Europe as well as lower quarter-on-quarter iron ore volumes out of Australia in the third quarter which is mainly attributable to maintenance at ports. Difficulties in performing crew changes and increased congestion which have resulted in effective fleet reductions have also been factors that have benefitted freight rates.

Over the remaining one and a half months of 2020, the dry bulk market will be shaped by how much iron ore Vale will export in November and December ahead of the usual Q1 rainy season in Brazil and by China’s policies regarding their domestic coal market – will the Chinese loosen import restrictions or will they stringently control imports like last year?

Going into 2021, fleet growth across all dry bulk segments will decelerate significantly thanks to an orderbook which is at a 25-year low, at least, and trade volumes are expected to rebound and exceed fleet growth benefitting the dry bulk market.

Results of Operations Third Quarter 2020

For the three months ended 30 September 2020, the Company reported revenues and other income
(expenses) of $44.0 million and net loss of $1.2 million, resulting in a loss per share of $0.04 based on 30,015,021 weighted average number of shares outstanding. This result compares to a profit of $19.9 million for the third quarter 2019. Ship ownership days were 2,208 in the third quarter 2020, compared to 2,423 in the third quarter 2019. Following the sale of the M/V Aquacharm, ship ownership days are expected to decrease to an estimated 2,144 for the fourth quarter 2020, resulting in an estimated 8,872 and 8,395 ship ownership days for the full years ending 31 December 2020 and 2021, respectively.

The Company earned an average gross TCE of $15,908 per day on its Capesize vessels and $6,412 per day on its Panamax vessel for the three months ended 30 September 2020. Comparatively, for the three months ended 30 September 2019, the Company earned an average gross TCE of $20,634 per day on its Capesize vessels, $12,012 per day on its Panamax vessel, and $8,981 per day on its Supramax vessels. During the third quarter 2020, fifteen of the Company’s Capesize vessels were traded on the spot market, the majority employed in Capesize Chartering Ltd. (“CCL”) via the CTH Capesize Revenue Sharing Agreement (“Capesize RSA”); the Panamax vessel was also traded on the spot market whilst eight Capesize vessels were employed on period charters.

Net loss for the three months ended 30 September 2020 included non-cash depreciation expense of $10.2 million. Direct vessel operating expenses for the period totaled $11.6 million or $5,265 per vessel per day.

General and administrative expenses (“G&A”) for the three months ended 30 September 2020 were $0.8 million, or $362 per vessel per day compared to $382 per vessel per day for the same period in 2019. Cash general and administrative expenses (“G&A”) for the three months ended 30 September 2020 were $0.5 million, or $237 per vessel per day.

Nine months ended 30 September 2020
For the nine months ended 30 September 2020, the Company reported revenues and other income (expenses) of $127.7 million, and net loss of $12.2 million, resulting in a loss per share of $0.41 based on 30,012,380 weighted average number of issued and outstanding shares. This result compares to a profit of
$22.7 million for the nine months ended 30 September 2019. Ship ownership days decreased to 6,728 for the nine months ended 30 September 2020, from 7,310 for the same period in 2019.

For the nine months ended 30 September 2020, the Company earned an average gross TCE of $11,744 per day on its Capesize vessels and $5,201 per day on its Panamax vessel. This compares to $15,649 per day on its Capesize vessels, $11,389 per day on its Panamax vessel, and $8,322 per day on its Supramax vessels for the nine months ended 30 September 2019. Most of the Company’s vessels were traded on the spot market, with fourteen Capesize vessels employed in Capesize Chartering Ltd. (“CCL”) via the CTH Capesize Revenue Sharing Agreement (“Capesize RSA”); the Panamax vessel was also traded on the spot market. Eight Capesize vessels were employed on period charters and one was in drydock.

Net loss for the nine months ended 30 September 2020 included non-cash depreciation expense of $30.5 million. Direct vessel operating expenses for the period totaled $36.7 million or $5,450 per vessel per day.

General and administrative expenses (“G&A”) for the nine months ended 30 September 2020 were $2.4 million, or $361 per vessel per day compared to $347 per vessel per day for the same period 2019. Cash general and administrative expenses (“G&A”) for the nine months ended 30 September 2020 were $1.8 million, or $262 per vessel per day.

GoodBulk Fleet
GoodBulk controls a fleet of 23 dry bulk vessels with an average age of 11.1 years consisting of 22 Capesize vessels and one Panamax vessel.

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