Eagle Bulk posts strong results in Q4

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Eagle Bulk Shipping Inc., one of the world’s largest owner-operators within the midsize drybulk vessel segment, reported financial results for the quarter and year ended December 31, 2023.

Quarter Highlights:

Generated Revenues, net of $104.6 million

Achieved TCE(1) of $16,169 / day based on TCE Revenues(1) of $74.8 million

Realized net income of $6.7 million, or $0.71 per basic share

Adjusted net income(1) of $13.0 million, or $1.39 per basic share(1)

Generated EBITDA(1) of $28.2 million

Adjusted EBITDA(1) of $36.3 million

Declared a quarterly dividend of $0.60 per share for the fourth quarter of 2023

Dividend is payable on March 21, 2024 to shareholders of record at the close of business on March 13, 2024

Annual Highlights:

  • Generated Revenues, net of $393.8 million
  • Achieved TCE(1) of $13,738 / day based on TCE Revenues(1) of $253.0 million

1 A non-GAAP financial measure. A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial tables included in this press release. An explanation of non-GAAP financial measures and how they are calculated are also included below under the heading “Supplemental Information – Non-GAAP Financial Measures.”

Merger Update:

On December 11, 2023, the Company announced that it had entered into a definitive agreement to combine with Star Bulk (NASDAQ: SBLK) in an all-stock merger.

Under the terms of the Merger Agreement, Eagle shareholders will receive 2.6211 shares of Star Bulk common stock for each share of Eagle common stock owned.

Currently equates to a total consideration of approximately $62.57 per share, or a 40% premium over the Company’s closing price of $44.85 on December 8, 2023.

A special meeting of Eagle shareholders will be held on April 5, 2024 to vote on the proposals necessary to complete the merger.

Following the close of the transaction, Star Bulk and Eagle shareholders will own approximately 71% and 29% of the combined company on a fully diluted basis, respectively(2).

2 As of the date of the proxy statement/prospectus filed by the Company with the SEC on February 12, 2024.

Recent Developments:

  • Converted $34.75 million of Convertible Bond Debt into 1.1 million shares of Common Stock
  • Executed agreement to sell a 2009-built scrubber-fitted Supramax bulkcarrier (Crested Eagle) for $14.4 million
  • Sale is expected to close in the second quarter
  • Executed agreement to sell a 2009-built scrubber-fitted Supramax bulkcarrier (Stellar Eagle) for $14.7 million
  • Sale is expected to close in the second quarter
  • Coverage position for the first quarter of 2024 is as follows:
    • 90% of owned available days fixed at an average TCE of $15,000

Eagle’s CEO Gary Vogel commented, “We saw a meaningful improvement to our bottom line in Q4, reflecting both a strong recovery in freight rates and an increase in our relative performance against the market. We outperformed the benchmark BSI (Baltic Supramax Index) by 20% during the period, achieving a net TCE of $16,169.

Following two extraordinary years for the drybulk market during which Eagle generated record profits, freight rates came off significantly in 2023 against a backdrop of unwinding congestion. Notwithstanding the weaker landscape, we generated a net TCE of $13,738 for 2023, representing an outperformance of 28% against the BSI. The strength of our commercial platform coupled with our well-timed vessel sale and purchase activities, helped us secure Eagle’s third straight year of positive earnings with total net income exceeding $450 million for the 2021-2023 period.

On the strategic front, 2023 turned out to be a pivotal year for our company. In May, we increased our financial flexibility by executing a $175 million upsize and extension to our credit facility. In June, we opportunistically repurchased $220 million worth of our common stock, or 3.8 million shares, at a meaningful discount to our Net Asset Value (“NAV”). And, in December, we entered into a definitive agreement to merge with Star Bulk. This transformative transaction, which awaits shareholder approval, has been well received by the market, unlocking immediate value for our investors. We see further benefits to the equity resulting from the proforma company’s scale and the expectation that it will achieve meaningful revenue and cost synergies of more than $50 million per annum. This merger will create a global leader in drybulk shipping, boasting a fleet of nearly 170 vessels and a pro-forma market cap of over $2.7 billion(3).

Looking ahead, although Q1 is historically the weakest period, the 2024 market is off to a strong start on the back of supply side disruptions. As of today, we have fixed approximately 90% of our owned available days, at a net TCE of $15,000.”

Results of Operations for the three months and years ended December 31, 2023 and 2022

For the three months ended December 31, 2023, the Company reported net income of $6.7 million, or basic and diluted net income per share of $0.71 and $0.63, respectively. In the comparable quarter of 2022, the Company reported net income of $23.3 million, or basic and diluted net income per share of $1.79 and $1.50, respectively.

For the three months ended December 31, 2023, the Company reported adjusted net income of $13.0 million, which excludes costs incurred directly related to the Proposed Merger of $6.3 million and net unrealized losses on FFAs and bunker swaps of $0.1 million, or basic and diluted adjusted net income per share of $1.39 and $1.13, respectively. In the comparable quarter of 2022, the Company reported adjusted net income of $35.9 million, which excludes net unrealized losses on FFAs and bunker swaps and impairment of operating lease right-of-use assets of $10.4 million and $2.2 million, respectively, or basic and diluted adjusted net income per share of $2.76 and $2.28, respectively.

For the year ended December 31, 2023, the Company reported net income of $22.7 million, or basic and diluted net income per share of $2.05 and $1.96, respectively. For the year ended December 31, 2022, the Company reported net income of $248.0 million, or basic and diluted net income per share of $19.09 and $15.57, respectively.

For the year ended December 31, 2023, the Company reported adjusted net income of $30.2 million, which excludes costs incurred directly related to the Proposed Merger of $6.3 million, impairment of operating lease right-of-use assets and net unrealized losses on FFAs and bunker swaps of $0.7 million and $0.5 million, respectively, or basic and diluted adjusted net income per share of $2.73 and $2.48, respectively. For the year ended December 31, 2022, the Company reported adjusted net income of $256.3 million, which excludes a loss on debt extinguishment, impairment of operating lease right-of-use assets and net unrealized losses on FFAs and bunker swaps of $4.2 million, $2.2 million and $1.9 million, respectively, or basic and diluted adjusted net income per share of $19.73 and $16.08, respectively.