GoodBulk Posts $32 Million Q3 Net Profit

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GoodBulk Ltd., a leading owner and operator of dry bulk vessels, announced its financial results for the third quarter 2021.

3rd Quarter Highlights
• Generated $32.0 million profit, resulting in EPS of $1.06, after $10.4 million depreciation; generated $44.3 million EBITDA.
• On 27 July 2021 the Board of Directors authorized the payment to Shareholders of $30.0 million ($1.0 per share) as capital repatriation.
• Ended the period with a cash balance of $36.7 million and net working capital of $31.5 million, totalling $68.2 million.
• Earned an average gross Time Charter Equivalent (TCE) rate of $29,083 per vessel per day on its Capesize vessels and $28,997 per day on its Panamax vessel.
• Averaged direct vessel operating expenses for the period of $5,872 per vessel per day.

Recent Developments
• On 26 October 2021 the Board of Directors authorized the payment to Shareholders of $30.0 million ($1.0 per share) as capital repatriation.

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 $186 per vessel per day, which compares with $237 per vessel per day for the same period in 2020.

Market Commentary
For the quarter ending 30 September 2021, the Baltic Capesize Index averaged $42,379 per day, 104.1% above $20,761 per day for the same period 2020 and 36.2% above $31,120 per day for the quarter ending 30 June 2021. The strong rise in Capesize rates which reached close to 12-year highs have been underpinned by the strongest congestion in a decade mainly the result of Covid protection protocols, rebounding demand, surging commodity prices, low fleet growth and by the shortage in containers that has led to their cargoes being shipped on bulk carriers as well. Heightened congestion has been the result of Covid restrictions with some countries, particularly China, requiring quarantine days for incoming vessels, the duration of which depends on where a vessel is coming from and even not allowing some vessels to dock for up to 3 months after departure from a country with a variant of concern. This has inflated trip durations and consequently reduced vessel supply in the dry bulk market hence improving the supply and demand balance. China’s zero tolerance on Covid has led to entire ports being shut down on only a handful of cases.

Coal has taken center stage over the last few months with demand increasing since June on the back of higher industrial activity and increasing demand, first for summer cooling and then for winter heating requirements. Coal inventories in the major import demand centers of China and India are critically low creating power crunches in both countries. China has already taken steps to alleviate the power situation and we can expect coal imports to tick higher during the winter months. On the other end of the equation, supply of coal has also been tight with some exporters, such as Indonesia, Mongolia and South Africa experiencing weather, Covid or social issues in bringing the commodity to market. Major supplier, Australia, has also seen its coal exports fall because of the political rift with major buyer, China.

The iron ore trade saw robust growth in the first five months of the year with China absorbing the majority of the global trade to feed its mammoth steel industry. However, once the Chinese government started imposing steel production cuts to tackle pollution iron ore imports started to fall and the year-on-year import gains became declines from June onwards. Nevertheless, imports from South Korea, Japan and the EU have all been growing steadily as steel demand in these countries has been rebounding post peak Covid helping the iron ore trade to see a slight growth in the year-to-date (looking at the major importers, the trade is up around +12 million tonnes).

Fleet growth for this year and next year remains low and by now we have good visibility of the orderbook in 2022. Fleet growth this year will average around 3.5% and around 1.5% next year. Fleet growth in 2022 will be the lowest in 6-7 years in the Capesize and Panamax segments and the Supramax fleet growth is expected to reach the slowest growth in over two decades. The contained fleet growth combined with the positive global economic outlook will mean that the robust rate environment will continue throughout this year and next, barring unforeseen circumstances of course.

Results of Operations

Third Quarter 2021
For the three months ended 31 September 2021, the Company reported revenues and other income (expenses) of $83.0 million and net profit of $32.0 million, resulting in EPS of $1.06 based on 30,025,087 weighted average number of shares outstanding. This result compares to a loss of $1.2 million for the third quarter 2020. Ship ownership days were 2,116 in the third quarter 2021, compared to 2,208 in the third quarter 2020. Ship ownership days are expected to be 2,116 for the fourth quarter 2021, resulting in an estimated 8,395 and 8,395 ship ownership days for the full years ending 31 December 2021 and 2022, respectively.

The Company earned an average gross TCE of $29,083 per day on its Capesize vessels and $28,997 per day on its Panamax vessel for the three months ended 30 September 2021. Comparatively, for the three months ended 30 September 2020, 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. During the third quarter 2021, sixteen 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 six Capesize vessels were employed on period charters. Net profit for the three months ended 30 September 2021 included non-cash depreciation expense of $10.4 million. Direct vessel operating expenses for the period totaled $12.4 million or $5,872 per vessel per day. General and administrative expenses (“G&A”) for the three months ended 30 September 2021 were $1.0 million, or $457 per vessel per day compared to $362 per vessel per day for the same period in 2020. Cash general and administrative expenses (“G&A”) for the three months ended 30 September 2021 were $0.4 million, or $186 per vessel per day.

Nine months ended 30 September 2021
For the nine months ended 30 September 2021, the Company reported revenues and other income (expenses) of $203.1 million, and net profit of $55.6 million, resulting in EPS of $1.85 based on 30,023,217 weighted average number of issued and outstanding shares. This result compares to a loss of $12.2 million for the nine months ended 30 September 2020. Ship ownership days decreased to 6,279 for the nine months ended 30 September 2021, from 6,728 for the same period in 2020. For the nine months ended 30 September 2021, the Company earned an average gross TCE of $22,446 per day on its Capesize vessels and $21,216 per day on its Panamax vessel. This compares to $11,744 per day on its Capesize vessels and $5,201 per day on its Panamax vessel for the nine months ended 30 September 2020. Most of the Company’s vessels were traded on the spot market, with sixteen 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 whilst six Capesize were employed on period charters. Net profit for the nine months ended 30 September 2021 included non-cash depreciation expense of $31.0 million. Direct vessel operating expenses for the period totaled $36.3 million or $5,788 per vessel per day. General and administrative expenses (“G&A”) for the nine months ended 30 September 2021 were $3.1 million, or $490 per vessel per day compared to $361 per vessel per day for the same period 2020. Cash general and administrative expenses (“G&A”) for the nine months ended 30 September 2021 were $1.4 million, or $220 per vessel per day.

GoodBulk Fleet
GoodBulk controls a fleet of 23 dry bulk vessels with an average age of 12.1 years consisting of 22 Capesize vessels and one Panamax vessel.