Earnings Release • Feb 16, 2022
Earnings Release
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RESULTS Q4 - 2021
February 16, 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 presentation 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 presentation 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; fluctuations 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 or political events; 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, 2020.
The Company cautions readers of this presentation 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 presentation 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 UPDATE
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| (in thousands of \$) | FY 2021 | Q4 2021 | Q3 2021 | Quarterly Variance |
|---|---|---|---|---|
| Operating revenues and other operating income / expenses |
1,201,173 | 375,450 | 388,410 | (12,960) |
| Voyage expenses | (252,865) | (68,942) | (81,734) | 12,792 |
| Net revenues | 948,308 | 306,508 | 306,676 | (168) |
| Gain from disposal of vessels | 9,788 | 4,928 | 4,860 | 68 |
| Ship operating expenses | (208,894) | (57,622) | (52,371) | (5,251) |
| Administrative expenses | (18,149) | (4,827) | (4,602) | (225) |
| Charter hire expenses |
(89,559) | (11,247) | (31,240) | 19,993 |
| Depreciation | (123,699) | (33,354) | (33,299) | (55) |
| Impairment loss on vessels | (4,187) | - | - | - |
| Net operating expenses | (444,488) | (107,050) | (121,512) | 14,462 |
| Net operating income | 513,608 | 204,386 | 190,024 | 14,362 |
| Net financial expenses |
(39,425) | (10,355) | (10,770) | 415 |
| Derivatives and other financial income |
53,424 | 10,096 | 16,105 | (6,009) |
| Net income before taxation | 527,607 | 204,127 | 195,359 | 8,768 |
| Income tax expense |
(389) | (309) | (30) | (279) |
| Net income | 527,218 | 203,818 | 195,329 | 8,489 |
| Earnings per share: basic and diluted | \$2.74/\$2.73 | \$1.02/\$1.01 | \$0.97 | \$0.05 |
| Adjusted EBITDA | 658,242 | 243,544 | 229,652 | 13,892 |
| TCE per day | 27,582 | 35,256 | 32,262 | 2,994 |
| (in thousands of \$) | Q4 2021 | Q3 2021 | Quarterly Variance |
|---|---|---|---|
| ASSETS | |||
| Short term | |||
| Cash and cash equivalents (incl. restricted cash) |
210,017 | 262,462 | (52,445) |
| Other current assets | 159,373 | 186,056 | (26,683) |
| Long term | |||
| Vessels and equipment, net (incl. held for sale) |
2,880,321 | 2,939,818 | (59,497) |
| Newbuildings | 35,678 | - | 35,678 |
| Leases, right of use of assets |
118,500 | 120,658 | (2,158) |
| Other long -term assets |
50,288 | 39,622 | 10,666 |
| Total assets | 3,454,177 | 3,548,616 | (94,439) |
| LIABILITIES AND EQUITY | |||
| Short term | |||
| Current portion of long -term debt |
105,864 | 107,534 | (1,670) |
| Current portion of finance lease obligations |
21,755 | 23,332 | (1,577) |
| Current portion of operating lease obligations | 13,860 | 15,107 | (1,247) |
| Other current liabilities | 106,594 | 136,362 | (29,768) |
| Long term | |||
| Long -term debt |
1,156,481 | 1,244,735 | (88,254) |
| Non -current portion of finance lease obligations |
105,975 | 110,347 | (4,372) |
| Non -current portion of operating lease obligations |
14,907 | 16,036 | (1,129) |
| Equity | 1,928,741 | 1,895,163 | 33,578 |
| Total liabilities and equity | 3,454,177 | 3,548,616 | (94,439) |
No maturities before 2023 and remaining marginal newbuilding equity capex
MARKET REVIEW & OUTLOOK
Fleet inefficiencies amid continued healthy demand across most commodity groups continued to support a strong rate environment
Expectations for continued healthy GDP growth through at least 2023, supporting expectations for a strong dry bulk markets for years to come
Orderbook is likely to stay muted due to limited slot availability before 2024, increasing prices, limited availability of financing and new emissions regulations
Fleet utilization is forecast to increase, supporting continued strong freight rate environment
Significant cash flow secured in first half of the year. Effectively building a bridge into the second half of the year, which is expected to be much stronger
Achieved through well timed acquisitions, modern attractive fleet and access to competitive financing
Significant earnings potential with modern on-the-water fleet comprised almost exclusively of Capesize and Panamax vessels
Cash flow Yield
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