Investor Presentation • Aug 25, 2022
Investor Presentation
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RESULTS Q2 - 2022
August 25, 2022
Matters discussed in this presentation may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995, or the PSLRA, provides safe harbor protections for forwardlooking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.
The Company is taking advantage of the safe harbor provisions of the PSLRA and is including this cautionary statement in connection therewith. This document and any other written or oral statements made by the Company or on its behalf may include forward-looking statements, which reflect the Company's current views with respect to future events and financial performance. This earnings report includes assumptions, expectations, projections, intentions and beliefs about future events. These statements are intended as "forward-looking statements." The Company cautions that assumptions, expectations, projections, intentions and beliefs about future events may and often do vary from actual results and the differences can be material. When used in this document, the words "believe," "expect," "anticipate," "estimate," "intend," "plan," "targets," "projects," "likely," "will," "would," "could" and similar expressions or phrases may identify forward-looking statements.
The forward-looking statements in this report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in the Company's records and other data available from third parties. Although the Company believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Company's control, the Company cannot assure you that it will achieve or accomplish these expectations, beliefs or projections. As a result, you are cautioned not to rely on any forward-looking statements.
In addition to these important factors and matters discussed elsewhere herein, important factors that, in the Company's view, could cause actual results to differ materially from those discussed in the forward-looking statements, include among other things: the Company's future operating or financial results; the Company's continued borrowing availability under its debt agreements and compliance with the covenants contained therein; the Company's ability to procure or have access to financing, the Company's liquidity and the adequacy of cash flows for the Company's operations; the Company's ability to successfully employ its existing and newbuilding dry bulk vessels and replace its operating leases on favorable terms, or at all; changes in the Company's operating expenses and voyage costs, including bunker prices, fuel prices (including increases costs for low sulfur fuel), dry docking, crewing and insurance costs; the Company's ability to fund future capital expenditures and investments in the construction, acquisition and refurbishment of the Company's vessels (including the amount and nature thereof and the timing of completion thereof, the delivery and commencement of operations dates, expected downtime and lost revenue); planned, pending or recent acquisitions, business strategy and expected capital spending or operating expenses, including drydocking, surveys, upgrades and insurance costs; risks associated with vessel construction; the Company's expectations regarding the availability of vessel acquisitions and its ability to complete acquisition transactions planned; vessel breakdowns and instances of off-hire; potential differences in interest by or among certain members of the Company's board of directors, or the Board, executive officers, senior management and shareholders; potential liability from pending or future litigation; potential exposure or loss from investment in derivative instruments; general dry bulk shipping market trends, including fluctuations in charter hire rates and vessel values; changes in supply and demand in the dry bulk shipping industry, including the market for the Company's vessels and the number of newbuildings under construction; the strength of world economies; stability of Europe and the Euro; the overall impact of inflation and the rise in interest rates and foreign exchange rates; changes in seaborne and other transportation; changes in governmental rules and regulations or actions taken by regulatory authorities; general domestic and international political conditions; potential disruption of shipping routes due to accidents, climate-related (acute and chronic), political instability, terrorist attacks, piracy or international hostilities, including the ongoing aggression between Russia and Ukraine; the length and severity of epidemics and pandemics, including COVID-19 and its impact on the demand for seaborne transportation in the dry bulk sector; the impact of increasing scrutiny and changing expectations from investors, lenders, charterers and other market participants with respect to our Environmental, Social and Governance practices; new environmental regulations and restrictions, whether at a global level stipulated by the International Maritime Organization, and/or regional/national imposed by regional authorities such as the European Union or individual countries; and other important factors described from time to time in the reports filed by the Company with the U.S. Securities and Exchange Commission, including the Company's most recently filed Annual Report on Form 20-F for the year ended December 31, 2021.
The Company cautions readers of this report not to place undue reliance on these forward-looking statements, which speak only as of their dates. Except to the extent required by applicable law or regulation, the Company undertakes no obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events. These forward-looking statements are not guarantees of the Company's future performance, and actual results and future developments may vary materially from those projected in the forward-looking statements.
COMPANY AND FINANCIAL UPDATE
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| Quarterly | |||
|---|---|---|---|
| (in thousands of \$) | Q2 2022 | Q1 2022 | Variance |
| Operating revenues and other operating income/expenses | 316 665 | 264 771 | 51 894 |
| Voyage expenses | (66 628) | (56 273) | (10 355) |
| Net revenues | 250 037 | 208 498 | 41 539 |
| Gain from disposal of vessels | 9 516 | - | 9 516 |
| Ship operating expenses | (50 369) | (58 165) | 7 796 |
| Administrative expenses | (5 497) | (5 127) | (370) |
| Charter hire expenses | (15 380) | (10 303) | (5 077) |
| Depreciation | (32 534) | (32 434) | (100) |
| Net operating expenses | (103 780) | (106 029) | 2 249 |
| Net operating income | 155 773 | 102 469 | 53 304 |
| Net financial expenses | (11 873) | (9 987) | (1 886) |
| Derivatives and other income | 19 879 | 32 876 | (12 997) |
| Net income before taxation | 163 779 | 125 358 | 38 421 |
| Income tax expense | (30) | (35) | 5 |
| Net income | 163 749 | 125 323 | 38 426 |
| Earnings per share: basic and diluted | \$0.82/\$0.81 | \$0.63/\$0.62 | \$0.19 |
| Adjusted EBITDA | 191 643 | 149 359 | 42 284 |
| TCE per day | 29 431 | 24 330 | 5 101 |
| Quarterly | |||
|---|---|---|---|
| (in thousands of \$) | Q2 2022 | Q1 2022 | Variance |
| ASSETS | |||
| Short term | |||
| Cash and cash equivalents (incl. restricted cash) | 168 321 | 115 721 | 52 600 |
| Other current assets | 186 784 | 182 846 | 3 938 |
| Long term | |||
| Vessels and equipment, net (incl. held for sale) | 2 784 845 | 2 855 375 | (70 530) |
| Newbuildings | 49 830 | 35 890 | 13 940 |
| Leases, right of use assets | 116 775 | 121 653 | (4 878) |
| Other long -term assets |
81 150 | 49 956 | 31 194 |
| Total assets | 3 387 705 | 3 361 441 | 26 264 |
| LIABILITIES AND EQUITY | |||
| Short term | |||
| Current portion of long -term debt |
96 070 | 104 355 | (8 285) |
| Current portion of finance lease obligations | 18 517 | 20 147 | (1 630) |
| Current portion of operating lease obligations | 11 695 | 19 240 | (7 545) |
| Other current liabilities | 103 943 | 102 635 | 1 308 |
| Long term | - - |
||
| Long -term debt |
1 101 399 | 1 125 567 | (24 168) |
| Non -current portion of finance lease obligations |
96 823 | 101 400 | (4 577) |
| Non -current portion of operating lease obligations |
21 150 | 14 277 | 6 873 |
| Equity | 1 938 108 | 1 873 820 | - 64 288 |
| Total liabilities and equity | 3 387 705 | 3 361 441 | 26 264 |
No bank maturities before 2024 - equity capex funded by sale of vessels
MARKET REVIEW & OUTLOOK
Freight rates have come under pressure as a result of demand disruption in China and reduced port congestion; new trade lanes emerging for grains and coal as a result of the war in Ukraine
Growth forecasts from emerging economies, particularly India, remain above pre-pandemic levels and will likely be supportive of continued demand for dry bulk commodities
The orderbook for the next several years is highly visible and is set to continue to decline further as we move through 2022
Declining trend of reduced sailing speeds will be amplified by the 2023 IMO regulations - decreasing the effective fleet supply
Fleet utilization is forecast to increase, supporting continued strong freight rate environment
Significant cash flow secured for the third quarter and the forth quarter protecting against near-term headwinds and securing dividend capacity
Significant earnings potential with modern on-the-water fleet comprised almost exclusively of Capesize and Panamax vessels
Cash flow Yield
QUESTIONS & ANSWERS
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