Results Q3 - 2016
November 22, 2016
Forward-Looking Statements
- Matters discussed in this presentation may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements, which 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. Words such as "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect," "pending" and similar expressions identify forward-looking statements. The forward-looking statements in this presentation are based upon various assumptions. Although we believe 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 our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. The information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication.
- In addition to these important factors and matters discussed elsewhere herein, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies, fluctuations in currencies and interest rates, general market conditions, including fluctuations in charter hire rates and vessel values, changes in demand in the dry bulk market, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents, political events or acts by terrorists, and other important factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission.
- Certain shipping, steel, Chinese and global industry information, statistics and charts contained herein have been derived from several sources. You are hereby advised that such industry data, charts and statistics have not been prepared specifically for inclusion in these materials and Golden Ocean has not undertaken any independent investigation to confirm the accuracy or completeness of such information
Company update
Highlights for Q3 2016
- The Company reports a net loss of \$26.7 million and a loss per share of \$0.25 for the third quarter of 2016, an improvement of \$12.5 compared with a net loss of \$39.2 million for the second quarter 2016.
- In August, the company effected a 1-for-5 reverse share split in order to comply with Nasdaq regulations.
- In September, the Company took delivery of the Ultramax Golden Leo and paid a final installment of \$15.7 million on delivery.
- In October, the Company took delivery of the Capesize Front Mediterranean and immediately delivered it to its new owner according to the previously reported sale.
|
2016 |
2016 |
2016 |
|
Jul - Sep |
Apr-Jun |
Jan-Sep |
| (in thousands of \$) |
|
|
|
| Operating revenues |
71,007 |
55,569 |
171,586 |
| Gain on sale of newbuildings and amortization of deferred gain |
56 |
65 |
222 |
| Operating expenses |
|
|
|
| Voyage expenses |
28,068 |
16,224 |
66,010 |
| Ship operating expenses |
27,975 |
25,574 |
78,642 |
| Charter hire expense |
12,504 |
15,911 |
39,424 |
| Administrative expenses |
2,712 |
3,861 |
9,598 |
| Impairment loss on vessels and newbuildings |
0 |
985 |
985 |
| Provision for uncollectible receivables |
0 |
0 |
1,800 |
| Depreciation |
16,207 |
15,848 |
47,001 |
| Total operating expenses |
87,466 |
78,403 |
243,460 |
| Net operating loss |
-16,403 |
-22,769 |
-71,652 |
| Other income (expenses) |
|
|
|
| Interest income |
449 |
574 |
1,280 |
| Interest expense |
-11,718 |
-11,038 |
-32,070 |
| Impairment loss on marketable securities |
0 |
0 |
-10,050 |
| Loss/gain on derivatives |
412 |
-4,937 |
-17,409 |
| Equity results of associated companies, including impairment |
130 |
118 |
-2,822 |
| Other financial items |
425 |
-1,184 |
-1,414 |
| Total other expenses |
-10,302 |
-16,467 |
-62,485 |
| Income tax expense |
-29 |
20 |
-49 |
| Net loss |
-26,734 |
-39,216 |
-134,186 |
- Revenues net of voyage expenses and charterhire expenses increased by \$7.0 million compared to Q2-16
- Ship operating expenses increased by \$2.4 million due to two vessels docked and fleet additions
- Mark to market on interest rate hedges turned positive in Q3-16
- Net results better than Q2-16 due to improved market conditions and positive contribution from interest rate derivatives
Balance Sheet
|
2016 |
2016 |
2015 |
|
|
Sep 30 |
Jun 30 |
Dec 31 |
|
| (in thousands of \$) |
|
|
|
ƒ
\$245.9 million in cash including |
| ASSETS |
|
|
|
cash classified as restricted, a |
| Short term |
|
|
|
decrease of \$34.7 million from
June 30, 2016 |
| Cash and cash equivalents |
178,299 |
210,773 |
102,617 |
|
| Restricted cash |
13,920 |
15,779 |
351 |
|
| Other current assets |
92,925 |
89,559 |
100,692 |
ƒ
Vessels, increased by \$10 million |
| Long term |
|
|
|
net following delivery of
Golden |
| Restricted cash |
53,714 |
54,129 |
48,521 |
Leo
and depreciation |
| Vessels, net |
1,774,933 |
1,764,813 |
1,488,205 |
|
| Vessels under capital lease, net |
3,182 |
6,880 |
8,354 |
|
| Newbuildings |
190,600 |
188,609 |
338,614 |
ƒ
Newbuildings increased due to |
| Other long term assets |
68,930 |
73,770 |
85,516 |
installments paid and accrued at |
| Total assets |
2,376,503 |
2,404,312 |
2,172,870 |
quarter end |
| LIABILITIES AND EQUITY |
|
|
|
|
| Short term |
|
|
|
|
| Current portion of long-term debt and obligations under |
|
|
|
ƒ
Decrease in short term debt due to |
| capital lease |
4,766 |
14,601 |
36,129 |
delivery of
Golden Lyderhorn |
| Other current liabilities |
63,761 |
57,382 |
43,905 |
|
| Long term |
|
|
|
|
| Long-term debt and obligations under capital lease |
1,069,522 |
1,067,983 |
925,647 |
ƒ
No bank debt classified as Short |
| Other long term liabilities |
8,346 |
8,385 |
8,540 |
Term |
| Equity |
1,230,108 |
1,255,961 |
1,158,649 |
|
| Total liabilities and equity |
2,376,503 |
2,404,312 |
2,172,870 |
|
Fleet Development and Newbuildings
Recent developments
- Acquired the Golden Lyderhorn in August 2016 following the owner's exercise of its option to sell the vessel to the Company
- The vessel was subsequently sold to an unrelated third party
- Took delivery of the Ultramax Golden Leo, built at Chengxi shipyard in September 2016
- A final instalment payment of \$15.7 million was paid with available cash at delivery
- Took delivery of the Capesize Front Mediterranean, built at Dalian Shipbuilding Industry Co. in October 2016
- A final instalment of \$33.5 million was paid at delivery, and the vessel was sold to an unrelated third party upon delivery for a net sales price of \$46.2 million
600
500
400
m
D
300
S
U
200
100 |
220 |
5
112
34 |
69 |
|
63 |
67 |
5
311
254 |
| 0 |
YTD
Q3'16 |
Q4'16 |
Q1'17 |
Q2'17 |
Q3'17 |
Q4'17 |
Total |
|
|
Paid-in |
|
Recourse |
|
Non-recourse |
|
Remaining newbuilding CAPEX
- All remaining Capesize newbuildings are financed with \$25 million each
- The two Ultramax newbuildings are unfinanced
- The Company is continuing its discussions on further postponement of deliveries into 2017, following the postponement of six other vessels to 2017 earlier this year
|
Newbuilding delivery schedule |
|
|
2016 |
2017 |
| Capesize |
2 |
6 |
| Ultramax |
2 |
- |
| Total |
4 |
6 |
Young, fuel efficient fleet with average age of ~4 years
| Fleet profile |
|
|
|
|
|
|
|
Capesize |
Kamsarmax |
Ice-class Panamax |
Supramax / Ultramax |
Total |
|
| Owned sailing vessels |
22 |
8 |
10 |
6 |
46 |
|
| Newbuilding |
8 |
- |
- |
2 |
10 |
|
| Bareboat charter |
0 |
1 |
- |
- |
1 |
|
| Time charter in |
10 |
- |
- |
1 |
11 |
|
| Joint venture |
1 |
- |
- |
- |
1 |
|
| Total |
41 |
9 |
10 |
9 |
69 |
|
Chartering profile
- 10 Capesizes on index-linked long term TC-out
- Four Kamsarmax vessels on long term TC-out at fixed rate
- Two Panamax vessels on long term TC out, with one contracts expiring within the next 6 months
- Remaining fleet is trading spot or short term charters; Capesize fleet is included in Capesize Chartering RSA agreement
Vessel Operating Expenses
Maintaining competitive OPEX levels
- Based on 6 Ultramaxes, 20 Panamax / Kamsarmax and 30 Capesize vessels
- One vessel dry docked in Q1 2016 and two in Q3 2016, no vessels scheduled for DD in Q4 2016
- G&A net of management fees below \$12 million per year gives a cost of \$550 per day over owned fleet
Dry bulk market
Dry Bulk Rates & Utilization
Historically low utilization, but indications that market may be bottoming
Supply, demand and utilization rate - dry bulk ships 10,000 dwt +
Seaborne Trade Growth Continues
Raw Material Prices Imply Improving Demand
World Steel Production Showing Recent Improvement
World steel production
Chinese Iron Ore Imports Grow as Production Slows
Coal Imports Trending Higher
China and India are behind recent increase in imports
Decrease in Chinese Coal Production Spurs Imports
Coal Stocks in Decline
Potential for further downside in coal stocks in winter months
Minor Bulk Trade Support Demand Growth
Exports of grains and soybean (major exporting countries)
Net Fleet Growth has Slowed Significantly
Low Fleet Growth Expected for Capesize and Panamax
Source: Clarksons Platou, November 2016
Downside Case for Supply Growth
- Construction has not even commenced on 28% of the orders (in dwt) scheduled for delivery within end of Q2 2017.
- Financial difficulties are forcing shipyards to scale back capacity or cease operations
- Lack of availability of financing is contributing to delays and limiting new ordering
Increasing S&P Volume at Historically Low Prices
Capesize values and earnings
Summary
Cautiously optimistic based on reduced supply growth and expected demand growth
Upside potential Downside risks
Potential for near-term headwinds remains with expectation of seasonally slow first quarter exaccerbated by influx of newbuilding deliveries.
Well Positioned for Market Recovery
Breakeven levels well below historical rate environment
Q & A
Thank you for your attention !