GoodBulk Sees Strong 2022 Dry Bulk Market

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

4th Quarter Highlights
•Generated $36.5 million of net profit resulting in earnings per share (EPS) of $1.22. EBITDA for the period was $48.8 million.
•Declared a $1.50 per share capital repatriation, resulting in cumulative distribution of $6.84 per share, or 62.18% of the price of the Company’s March 2017 Norwegian OTC initial offering.
•Earned an average gross Time Charter Equivalent rate (TCE) of $31,666 per day on our Capesize vessels and $27,223 per day on our Panamax vessel.
•Averaged direct vessel operating expenses for the period of $5,638 per vessel per day.
•Ended the period with a cash balance of $39.7 million.

Recent Developments
•On 18 March 2022 the Board of Directors authorized the payment to Shareholders of $30.0 million ($1.0 per share) as capital repatriation, resulting in cumulative distributions of $7.84 per share, or 71.27% of the price of the Company’s March 2017 Norwegian OTC initial offering, for a total of
$235.3 million.
•As of 29 March 2022, for the first quarter of 2022 the Company has fixed approximately 98% of its Capesize days at about $18,000 per vessel per day (equivalent to reported gross TCE) about a 23% premium to the market.1

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 $36.5 million net profit ($1.22 per share). The Company’s strict financial discipline resulted in industry leading pure cash general and administrative expenses of $242 per vessel per day, which compares with $208 per vessel per day for the same period in 2020.

Market Commentary
For the quarter ending 31 December 2021, the Baltic Capesize Index averaged $42,645 per day, 151.7% above $16,944 per day for the same period 2020 and 0.6% above $42,379 per day for the quarter ending 30 September 2021. The Baltic Capesize Index averaged $33,333 per day in 2021, 155.0% above $13,070 per day in 2020. In the fourth quarter of 2021, the dry bulk market saw a reversal in the uptrend that had featured for most of the year until October which can be attributed to a few broad factors including a decline in congestion, industrial curbs in China (to tackle pollution) that reduced demand for some raw materials (particularly construction related like iron ore) and a widespread slowdown in activity as a result of the ongoing energy crunch in China which led to many factories operating below capacity.

This decline in rates continued into January 2022, as is often the case, but eventually bottomed out at the end of the month, with the main broad culprits being, heavier-than-normal rainfall in southern Brazil over the month hampering mining and logistical operations which led to the weakest January in 7 years in terms of iron ore exports, Indonesia’s ban on coal exports during the first month of the year to plug a domestic shortage and China’s Lunar New Year holidays as well as hosting of the Winter Olympics necessitating a slowdown in industrial activity to improve air quality. Average Capesize rates improved in February and March 2022, from January’s lows, due to the combination of rising volumes in the coal, bauxite and grain trades and favourable vessel supply fundamentals.

Currently, the outlook for 2022 is for a strong rate environment and much like in 2021 this is owing to low fleet growth, possible strong congestion that will be maintained by the record high container rates (at least for part of the year) and good demand volumes. We view the main risks to rates as being the following: potential aggressive moves by China to cap commodity imports to prioritise domestic output instead, industrial production being affected by a resurgence in Covid-19 cases, the drought in South America that will reduce grain exports from the region and the Russian invasion on Ukraine that can have a negative impact on grain exports and on other commodities. These tensions, on the other hand, could also be a positive for dry bulk tonne miles in the longer term if they reshuffle trade flows and lengthen tonne miles.

Results of Operations Fourth Quarter 2021
For the three months ended 31 December 2021, the Company reported revenues and net other operating income (expenses) of $95.0 million, and net income of $36.5 million generating EPS of $1.22 based on 30,026,746 weighted average number of shares outstanding. This result compares with net income of $7.6 million for the fourth quarter of 2020. Ship ownership days were 2,116 in the fourth quarter of 2021 compared to 2,144 in the fourth quarter of 2020 as the Company sold one Capesize vessel (M/V Aquacharm) in October 2020. Ship ownership days are expected to be an estimated 2,070 in the first quarter of 2022. In 2022 ship ownership days are expected be the same as in 2021 at 8,395.

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 for the three months ended 31 December 2021. Comparatively for the three months ended 31 December 2020, the Company earned an average gross TCE of $15,971 per day on its Capesize vessels and $15,374 per day on its Panamax vessel. During the fourth 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 income for the three months ended 31 December 2021 included non-cash depreciation expense of $10.4 million. Direct vessel operating expenses for the period totalled $11.9 million or $5,638 per vessel per day.

General and administrative expenses (“G&A”) for the three months ended 31 December 2021 were $1.7 million, or $827 per vessel per day, compared to $0.7 million, or $322 per vessel per day for the same period in 2020. Pure cash G&A for the three months ended 31 December 2021 were $0.5 million, or $242 per vessel per day.

Year ended 31 December 2021
For the year ended 31 December 2021, the Company reported revenues and net other operating income (expenses) of $298.0 million and net income of $92.1 million generating EPS of $3.07 based on 30,024,106 weighted average number of shares outstanding. This result compares with a net loss of $4.5 million for the year ended 31 December 2020. Ship ownership days decreased to 8,395 in the twelve months of 2021, from 8,872 in the same period of 2020; ship ownership days are expected remain at 8,395 for the full year of 2022.

The Company earned an average gross TCE of $24,770 per day on its Capesize vessels and $22,730 per day on its Panamax vessel for the year ended 31 December 2021. Comparatively, for the year ended 31 December 2020 the Company earned a gross TCE of $12,764 per day on its Capesize vessels and $7,758 per day on its Panamax vessel. During the year ended 31 December 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 income for the year ended 31 December 2021 included non-cash depreciation expense of $41.4 million. Direct vessel operating expenses for the period totalled $48.3 million or $5,750 per vessel per day.

General and administrative expenses (“G&A”) for the year ended 31 December 2021 were $4.8 million, or $575 per vessel per day, which compares with $3.1 million for the same period in 2020, or $351 per vessel per day. Pure cash G&A in 2021 were $1.9 million or $225 per vessel per day.

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”) will 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. Upon the advice of our technical manager GoodBulk will install BWTS on 10 Capesize vessels and on the one Panamax vessel in 2022 during their scheduled drydocks.

The following table includes our estimated drydock expense and off hire days for 2021 and 2022. 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 produced in the quarter ended 31 December 2021 was $2.9 million, which compares to $10.8 million cash produced in the same period for 2020. Net cash provided by operating activities in the fourth quarter of 2021 was $54.6 million, compared to $16.7 million produced in the same period in 2020. Net cash used in investing activities in the fourth quarter of 2021 was $0.7 million compared to $5.3 million produced in the same period in 2020. Net cash used by financing activities in the fourth quarter of 2021 was $51.0 million, compared to $11.2 used in the same period in of 2020. GoodBulk ended the quarter with cash and cash equivalents of $39.7 million.

Capital repatriation

On 18 March 2022, the Board of Directors declared a shareholders contribution repayment of $1.0 per common share to shareholders of record as of 4 April 2022 and payable on 29 April 2022.