AI Terminal
Golden Ocean Group
Investor Presentation • May 20, 2021
6243_rns_2021-05-20_b6a004a6-4a85-4ee4-884c-d22801a261f4.pdf
Investor Presentation
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RESULTS Q1 - 2021
May 20, 2021
FORWARD LOOKING STATEMENTS
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 forward-looking 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; changes in the Company's operating expenses, including bunker prices, dry docking 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 conflicts of interest involving members of the Company's board of directors, or the Board, and senior management; 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; 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
HIGHLIGHTS
- Adjusted EBITDA in the first quarter of 2021 was \$54.6 million, compared with \$59.3 million in the fourth quarter of 2020
- The Company reports net income of \$23.6 million and earnings per share of \$0.14 for the first quarter of 2021, compared with net income of \$25.4 million and earnings per share of \$0.18 for the fourth quarter of 2020
- Represents the highest first quarter result in the history of the Company
- Entered into a Heads of Agreement to acquire 15 modern dry bulk vessels and three newbuildings for a total consideration of \$752 million
- Raised gross ~\$355 million in equity capital through a private placement and a subsequent offering
- Took delivery of three Capesize- and five Panamax vessels subsequent to the end of the first quarter of 2021; remaining vessels expected to be delivered by the end of Q2
- Reported TCE rates for Capesize and Panamax vessels of \$16,611 per day and \$14,777 per day, respectively, in the first quarter of 2021
- Converted time charters from floating rates to fixed rates of \$28,500, \$32,250 and \$31,000 per day until Q2 2022 for the Capesize vessels Golden Fulham, Golden Incus and Golden Bexley, respectively, taking advantage of recent market strength.
- Estimated TCE rates for the second quarter of 2021 calculated on a load-to-discharge basis and inclusive of charter coverage are:
- approximately \$29,000 per day contracted for 64% of the available days for Capesize vessels*
- approximately \$18,800 per day contracted for 84% of the available days for Panamax vessels*
*We expect the spot TCEs for the full first quarter of 2021 to be lower than the TCEs currently contracted, due to the impact of ballast days at the end of the second quarter of 2021 as well as current weaker rates.
Announces a dividend of \$0.25 per share for the first quarter of 2021
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PROFIT & LOSS
| (in thousands of \$) | Q1 2021 | Q4 2020 | Quarterly Variance |
|---|---|---|---|
| Operating revenues and other operating income / expenses |
158,702 | 168,001 | (9,299) |
| Voyage expenses | (39,233) | (42,904) | 3,671 |
| Net revenues | 119,469 | 125,097 | (5,628) |
| Ship operating expenses | (48,617) | (47,632) | (985) |
| Administrative expenses | (4,115) | (4,024) | (91) |
| Charter hire expenses |
(13,920) | (17,130) | 3,210 |
| Depreciation | (26,798) | (27,592) | 794 |
| Impairment loss on vessels |
(4,187) | (721) | (3,466) |
| Net operating expenses | (97,638) | (97,099) | (539) |
| Net operating income | 21,832 | 27,998 | (6,166) |
| Net financial expenses |
(8,714) | (9,352) | 638 |
| Derivatives and other financial income |
10,481 | 6,736 | 3,745 |
| Net income before taxation | 23,599 | 25,381 | (1,782) |
| Income tax expense |
(20) | (11) | (9) |
| Net income | 23,579 | 25,370 | (1,791) |
| Earnings per share: basic and diluted | \$0.14 | \$0.18 | (\$0.04) |
| Adjusted EBITDA | 54,589 | 59,328 | (4,739) |
| TCE per day | 15,886 | 15,893 | (7) |
CASH FLOW – Q1 2021
BALANCE SHEET
| (in thousands of \$) | Q1 2021 | Q4 2020 | Quarterly Variance |
|---|---|---|---|
| ASSETS | |||
| Short term | |||
| Cash and cash equivalents (incl. restricted cash) |
328,546 | 175,102 | 153,444 |
| Other current assets | 156,415 | 109,427 | 46,988 |
| Long term | |||
| Vessels and equipment, net (incl. held for sale) |
2,241,633 | 2,277,190 | (35,557) |
| Newbuildings | 43,602 | - | 43,602 |
| Leases, right of use of assets |
130,970 | 136,219 | (5,249) |
| Other long term assets | 88,114 | 23,129 | 64,985 |
| Total assets | 2,989,280 | 2,721,067 | 268,213 |
| LIABILITIES AND EQUITY | |||
| Short term | |||
| Current portion of long -term debt |
85,414 | 87,831 | (2,417) |
| Current portion of finance lease obligations |
23,832 | 23,475 | 357 |
| Current portion of operating leases obligations | 16,677 | 16,783 | (106) |
| Other current liabilities | 113,103 | 113,586 | (483) |
| Long term | |||
| Long -term debt |
878,620 | 957,652 | (79,032) |
| Non -current portion of finance lease obligations |
121,547 | 127,730 | (6,183) |
| Non -current portion of operating lease obligations |
21,684 | 25,254 | (3,570) |
| Equity | 1,728,403 | 1,368,756 | 359,647 |
Total liabilities and equity 2,989,280 2,721,067 268,213
MARKET REVIEW & OUTLOOK
Q1 MARKET DEVELOPMENTS
The strong recovery in global trade is reflected in increasing freight rates, which recently reached levels not seen since 2010
WEEKLY DRY BULK SHIPPING RATES – LAST 12 MONTHS
MULTIPLE YEARS OF STRONG DEMAND GROWTH
Rebound in global GDP growth led by strong growth in emerging economies, which have historically been primary drivers of dry bulk demand
SOURCE: INTERNATIONAL MONETARY FUND WORLD ECONOMIC OUTLOOK, APRIL 2021
STRONG DEMAND GROWTH ACROSS ALL COMMODITIES
Strong rebound in demand expected across all commodity groups as the global economy continues restart
ANNUAL DEMAND GROWTH BY COMMODITY GROUP
DRY BULK NET GROWTH IS THE LOWEST IN 30 YEARS
Orderbook is likely to stay muted due to limited slot availability before 2024, increasing prices, availability of financing and new emissions regulations
ESTIMATED NET FLEET GROWTH OF ~1.7% (2021), ~1.3% (2022) AND 2.8% (2023)
DEMAND TO OUTPACE SUPPLY THROUGH 2023
Fleet utilization is forecast to increase, supporting continued strong freight rate environment
SUPPLY / DEMAND MARKET BALANCE
RECENT ACQUISITION OF 18 VESSELS FURTHER ENHANCES EARNINGS POTENTIAL
Timely acquisition as vessels are being delivered in an exceptionally strong market
INDUSTRY LOW CASH BREAK-EVEN SUPPORTS CASH GENERATION
Achieved through well timed acquisitions, economies of scale and access to competitive financing
POST TRANSACTION CASH BREAK EVEN CAPESIZE 1YR TC RATES (USD/DAY)
STRONG CASH FLOW POTENTIAL
Accretive acquisition strengthens dividend potential
ANNUALIZED ESTIMATED FREE CASH FLOW ABOVE CBE AT DIFFERENT ACHIEVED RATES
QUESTIONS & ANSWERS
THANK YOU FOR YOUR ATTENTION!
