GoodBulk announces profitable quarter

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GoodBulk Ltd., a leading owner and operator of dry bulk vessels, announces its financial results for the fourth quarter of 2022.

Highlights

  • For the year ended 31 December 2022, the Company reported revenues and net other operating income of $227.6 million and net income of $72.9 million generating EPS of $2.43 based on 29,962,416 weighted average number of shares outstanding.
  • On 28 February 2023 the Board of Directors authorized the payment to Shareholders of $2.25 per share ($60.9 million) as dividend. Cumulative distributions will be at $15.34 per share, for a total of $452.9 million, amounting to 139.5% of the price of the Company’s March 2017 Norwegian OTC offering and 153.4% of the price of the Company’s initial December 2016 private placement fully repaying the original founders of the Company in cash plus a 53.4% return while still controlling 11 Capesize vessels with a leverage ratio at around 30%.
  • On 10 January 2023, GoodBulk bought back 2,570,812 of its own shares, or 8.7% of the company, at a significant discount to NAV and later cancelled the shares making it an accretive transaction for shareholders.
  • GoodBulk has benefited tremendously from its participation in Capesize Chartering Ltd. (“CCL”) via the CTH Capesize Revenue Sharing Agreement (“Capesize RSA”) as the company’s spot vessels outperformed the Baltic Capesize Index (BCI) by 14% in 2022, net of fees and differentials.
  • Since the second quarter of 2022, the entire GoodBulk fleet has been open on the spot market; at the same time the Company took advantage of the most lucrative period in second hand assets since 2014 to monetize some of its investments. In 2022 GoodBulk sold nine vessels (eight Capesizes and one Panamax) and all of them have delivered to their new owners at the time of this release; the nine sales have generated $155.0 million in free cash and $67.0 million in profit from disposals. In 2023 so far GoodBulk has sold three Capesize vessels, all of which have delivered to their new owners generating $47.8 million in free cash and $4.4 million in profit from disposals.

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. This strategy has resulted in GoodBulk announcing a profitable quarter, with $11.9 million net profit ($0.40 per share). The Company’s strict financial discipline resulted in industry leading pure cash general and administrative expenses of $282 per vessel per day, which compares with $242 per vessel per day for the same period in 2021.

Market Commentary

For the quarter ending 31 December 2022, the Baltic Capesize Index averaged $14,906 per day, 65.0% below $42,645 per day for the same period 2021 and 8.8% above $13,695 per day for the quarter ending 30 September 2022. The Baltic Capesize Index averaged $16,177 per day in 2022, 51.5% below $33,333 per day in 2021. In the fourth quarter of 2022, the Capesize market was very volatile going from $16,924 per day at the beginning of October subsequently reaching lows of $9,000 per day followed peaks in the

$20,000s per day and finally ending the quarter at $18,749 per day. During this period, the Baltic Panamax Index and the Baltic Supramax Index were on a downtrend closing the quarter 26% and 36% below where they opened at $13,813 per day and.$11,685 per day respectively. The most important factors behind the decline in freight rates have been the decline in major bulk (iron ore and coal) volumes to China, China’s zero Covid policy, less Brazilian iron ore exports, lower congestion, and negative news surrounding the global economic environment that negatively affected sentiment in the market.

This decline in rates continued into the first two months of 2023, i.e. a typical first quarter slowdown, but eventually bottomed out in the middle of February, with the main broad culprits being, less iron ore exports from Brazil, China’s Lunar New Year holidays and a slow recovery of the Chinese economy post lifting of Covid restrictions. Average rates across all segments have improved in February and March 2022, with Capesize rates seeing the largest bounce up, going from a low of $2,246 per day on 17 February to $12,851 per day at time of writing on 8 March 2023.

Currently, the outlook for 2023 is for an improving rate environment with expectations for a stronger second half of the year owing to the fleet undergoing the slowest growth in over 20 years, growth in the Chinese economy quickening to 5% from 3% in 2022 and stronger coal and grain trades mainly. We view the main risks to rates as being the following: uncertainty surrounding China’s economic recovery, continuing geopolitical tensions mainly Russia’s invasion of Ukraine which is a drag on commodity exports and heightened risk of recession following aggressive interest rate rises in US and Europe.

Results of Operations Fourth Quarter 2022

For the three months ended 31 December 2022, the Company reported revenues and net other operating income of $43.3 million, and net income of $11.9 million generating EPS of $0.40 based on 29,758,111 weighted average number of shares outstanding. This result compares with net income of $36.5 million for the fourth quarter of 2021. Ship ownership days were 1,355 in the fourth quarter of 2022 compared to 2,116 in the fourth quarter of 2021 as the Company sold eight Capesize vessels and one Panamax in the interim period. Ship ownership days are expected to be an estimated 1,116 in the first quarter of 2023 as a further three Capesize vessels have been sold and delivered in this period. In 2023 ship ownership days are expected be at 4,141.

The Company earned an average gross TCE of $9,953 per day on its Capesize vessels for the three months ended 31 December 2022. Comparatively for the three months ended 31 December 2021, the Company earned an average gross TCE of $31,666 per day on its Capesize vessels and $27,223 per day on its Panamax vessel, sold in the second quarter of 2022. During the fourth quarter 2022, all the Company’s Capesize vessels were traded on the spot market, in Capesize Chartering Ltd. (“CCL”) via the CTH Capesize Revenue Sharing Agreement (“Capesize RSA”).

Net income for the three months ended 31 December 2022 included non-cash depreciation expense of $11.5 million. Direct vessel operating expenses for the period totalled $7.1 million or $5,245 per vessel per day.

General and administrative expenses (“G&A”) for the three months ended 31 December 2022 were $1.6 million, or $1,182 per vessel per day, compared to $1.7 million, or $827 per vessel per day for the same period in 2021. Pure cash G&A for the three months ended 31 December 2022 were $0.4 million, or $282 per vessel per day.

Year ended 31 December 2022

For the year ended 31 December 2022, the Company reported revenues and net other operating income of $227.6 million and net income of $72.9 million generating EPS of $2.43 based on 29,962,416 weighted average number of shares outstanding. This result compares with a net profit of $92.1 million for the year ended 31 December 2021. Ship ownership days decreased to 7,126 in the twelve months of 2022, from 8,395 in the same period of 2021; ship ownership days are expected to decline to 4,141 for the full year of 2023 following the disposition of twelve vessels.

The Company earned an average gross TCE of $16,694 per day on its Capesize vessels and $19,377 per day on its Panamax vessel (until its sale in the second quarter of 2022) for the year ended 31 December 2022. Comparatively, for the year ended 31 December 2021 the Company earned a gross TCE of $24,770 per day on its Capesize vessels and $22,730 per day on its Panamax vessel. During the year ended 31 December 2022, all 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.

Net income for the year ended 31 December 2022 included non-cash depreciation expense of $38.5 million. Direct vessel operating expenses for the period totalled $45.0 million or $6,312 per vessel per day.

General and administrative expenses (“G&A”) for the year ended 31 December 2022 were $4.3 million, or $601 per vessel per day, which compares with $4.8 million for the same period in 2021, or $575 per vessel per day. Pure cash G&A in 2022 were $1.8 million or $258 per vessel per day.

GoodBulk Fleet

As of 8 March 2023, GoodBulk controlled a fleet of 11 Capesize vessels with an average age of 12.2 years.

Investments

GoodBulk’s regularly scheduled drydocking and maintenance program is a continuing area of investment. This capital expenditure is necessary to ensure the proper, safe and efficient operation of our vessels and to comply with international shipping standards and environmental laws and regulations. Installation of Ballast Water Treatment Systems (“BWTS”) are to be evaluated on a case-by-case basis depending upon the age of each ship and the market conditions at the time of the required installation. In 2022 GoodBulk installed BWTs on 10 Capesizes. No BWTS installations are envisioned for 2023.

The following table includes our estimated drydock expense and off hire days for 2022 and 2023. These estimates are based upon our technical manager’s experience and can vary based upon yard schedules, condition of the vessel at the time of drydocking, location of the drydocking, and other factors and include the cost of installing BWTS.

Liquidity and Capital Resources

Net cash used in the quarter ended 31 December 2022 was $25.3 million, which compares to $2.9 million cash produced in the same period for 2021. Net cash provided by operating activities in the fourth quarter of 2022 was $4.8 million, compared to $54.6 million produced in the same period in 2021. Net cash produced in investing activities in the fourth quarter of 2022 was $49.4 million compared to $0.7 million used in the same period in 2021. Net cash used by financing activities in the fourth quarter of 2022 was

$79.5 million, compared to $51.0 used in the same period in of 2021. GoodBulk ended the quarter with cash and cash equivalents of $15.7 million.

Dividend distribution

On 28 February 2023, the Board of Directors declared a shareholders dividend distribution of $2.25 per common share to shareholders of record as of 14 March 2023 and payable on 14 April 2023.

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