RESULTS Q1 - 2018
May 30, 2018
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. We desire to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are including this cautionary statement in connection with this safe harbor legislation. Words such as "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "will," "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 Golden Ocean Group Limited with the U.S. Securities and Exchange Commission.
- Certain third-party shipping, steel 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 Group Limited has not undertaken any independent investigation to confirm the accuracy or completeness of such information
COMPANY UPDATE
HIGHLIGHTS
- The Company reports net income of \$16.7 million and earnings per share of \$0.12 for the first quarter of 2018, compared with net income of \$27.1 million and earnings per share of \$0.19 for the fourth quarter of 2017
- Adjusted EBITDA in the first quarter was \$53.3 million, compared with \$65.3 million in the fourth quarter of 2017 and \$17.5 million in the first quarter 2017
- Completed the newbuilding program by taking delivery of the remaining five Capesize newbuildings.
- Took delivery of the Golden Monterrey, a Capesize vessel acquired in October 2017
- Agreed a \$120 million loan facility to refinance 10 vessels at favorable terms
- Agreed to sell the Golden Eminence, a Panamax vessel, for \$14.7 million to an unrelated third party
- Announces a cash dividend of \$0.10 per share for the first quarter
4
PROFIT & LOSS
| (in thousands of \$) |
Q1 2018 |
Q4 2017 |
Quarterly
Variance |
|
|
|
|
Operating
revenues |
147,888 |
150,712 |
(2,824) |
| Voyage expenses |
(30,841) |
(28,949) |
(1,893 |
| Net revenues |
117,047 |
121,763 |
(4,717) |
| Ship operating expenses |
(37,279) |
(36,383) |
(896) |
| Administrative expenses |
(3,668) |
(3,279) |
(389) |
Charter
hire expenses |
(27,642) |
(20,382) |
(7,260) |
Depreciation
/ impairment |
(22,113) |
(20,873) |
(1,239) |
| Other gains (losses) |
65 |
(505) |
570 |
| Net operating expenses |
(90,637) |
(81,423) |
(9,214) |
| Net operating income (loss) |
26,409 |
40,340 |
(13,931) |
Net financial
expenses |
(15,903) |
(15,619) |
284 |
Derivatives and other
financial income (loss) |
6,190 |
2,386 |
(3,804) |
| Net income before taxation (loss) |
16,696 |
27,107 |
(10,411) |
Income Tax
expense |
13 |
(16) |
23 |
| Net income (loss) |
16,683 |
27,124 |
(17,878) |
| Earnings (loss) per share: basic and diluted |
\$0.12 |
\$0.19 |
|
| Adjusted EBITDA |
53,273 |
65,325 |
(12,053) |
| TCE per day |
15,593 |
16,444 |
(851) |
CASH FLOW DURING THE QUARTER
Q1 2018
BALANCE SHEET
| (in thousands of \$) |
Q1 2018 |
Q4 2017 |
Quarterly
Variance |
| ASSETS |
|
|
|
| Short term |
|
|
|
| Cash and cash equivalents (incl. restricted cash) |
306,192 |
317,139 |
(10,947) |
| Other current assets |
144,019 |
127,361 |
16,658 |
| Long term |
|
|
|
| Restricted cash |
52,193 |
54,845 |
(2,652) |
Vessels
(incl. newbuildings and held-for-sale) |
2,489,836 |
2,320,730 |
169,106 |
| Other long term assets |
44,988 |
49,983 |
(4,995) |
| Total assets |
3,037,228 |
2,870,058 |
167,170 |
| LIABILITIES AND EQUITY |
|
|
|
| Short term |
|
|
|
Current portion of long
term debt and capital lease |
306,636 |
114,910 |
191,726 |
| Other current liabilities |
71,284 |
66,817 |
4,467 |
| Long term |
|
|
|
Long
term debt and capital lease |
1,143,060 |
1,186,223 |
(43,163) |
| Other long term liabilities |
7,944 |
8,059 |
(115) |
| Equity |
1,508,304 |
1,494,049 |
14,255 |
| Total liabilities and equity |
3,037,228 |
2,870,058 |
167,170 |
MODERN, EFFICIENT FLEET
- Fully-burdened Opex includes dry docking and management fees
- One vessel dry docked in the first quarter of 2018, and five more to be docked later this year
- Average fleet age of ~5 years and majority of the fleet designed with fuel-efficient engines and ballast water treatment systems
OPERATING EXPENSES (Q1 2018) BWTS INSTALLATION SCHEDULE
FLEET DEPLOYMENT
Fleet heavily skewed towards spot exposure to capture market upside
CHARTERING PROFILE
NOTE: CHARTERING PROFILE AS OF FEBRUARY 2018; GROSS RATES SHOWN ARE FOR 2018; FOUR PANAMAX CHARTERS EXPIRE BETWEEN JANUARY 2020 AND DECEMBER 2021 * GOLDEN EMINENCE TO BE DELIVERED TO THE NEW OWNER LATER THIS YEAR 9
CREDIT FACILITIES
CREDIT FACILITY SUMMARY(1)
RECOURSE DEBT
Selected covenants
- Resumed ordinary amortization of 16.5 million per quarter
- No further cash sweep or outstanding deferred debt
- 125 135% MVC
- Convertible Bond matures in January 2019
NON-RECOURSE DEBT
Selected covenants through July 1, 2019
- No amortization payments
- Cash sweep mechanism
- 105% MVC
Selected covenants post July 1, 2019
- Amortization payments resume
- 125 135% MVC
RECENT DEVELOPMENTS
- New \$120 million loan facility to refinance \$58.3 million due under two loan facilities maturing in 2018 and seller credit loans of \$65.5 million
- 20-year amortization profile with seven year tenor and interest of L + 2.25%
DRY BULK MARKET UPDATE
DRY BULK SUPPLY / DEMAND & UTILIZATION
Utilization decreased in the first quarter following increased capacity due to easing of port delays
SUPPLY, DEMAND AND UTILIZATION RATE - DRY BULK SHIPS 10,000 DWT +
GROWTH IN SEABORNE TRADE CONTINUES
First quarter import increased due to discharge after port delayed and overall increases in year-over-year imports
SEABORNE TRADE OF DRY BULK COMMODITIES (MAJOR IMPORTERS)
WORLD STEEL PRODUCTION TRENDS INTACT
Synchronised growth both in Chinese and Rest of World production
ANNUAL CHANGE IN STEEL PRODUCTION
STEEL MARGINS AND IRON ORE PRICE DIFFERENTIALS SUPPORTIVE
GROSS PROFIT (STEEL PRICE MINUS COST OF COKING COAL AND IRON ORE; ALL PRICES SPOT)
IRON ORE PRICE DIFFERENTIALS
AUSTRALIA AND BRAZIL REMAIN MAJOR IRON ORE EXPORTERS
QUARTERLY EXPORTED IRON ORE VOLUMES PER COUNTRY
COAL IMPORTS REMAINS HEALTHY, AND INVENTORIES REMAIN AT LOW LEVELS AHEAD OF COOLING SEASON
SEASONALLY STRONG ELECTRICITY CONSUMPTION SUPPORTS COAL DEMAND
CHINESE ELECTRICITY OUTPUT
CHINESE ELECTRICITY OUTPUT BY SOURCE
Coal-derived electricity output Hydropower output Other output sources
U.S. GRAIN EXPORTS SURGED AHEAD OF THREATENED TARIFFS
GRAIN EXPORTS BY SOURCE
SOYBEAN AND SOYBEAN MEAL EXPORTS BY SOURCE
DELIVERIES WERE DOWN COMPARED TO THE FIRST QUARTER OF 2017 DESPITE LOW SCRAPPING YTD
HANDYMAX / SUPRAMAX HANDYSIZE
CAPESIZE PANAMAX / POST-PANAMAX
DOWNSIDE CASE FOR SUPPLY GROWTH
Continued slippage is expected as ~22% of vessels scheduled for delivery in 2018 have not even commenced construction
STATUS OF ORDERBOOK
PROJECTED FLEET GROWTH STILL MODERATE
Forecasted fleet growth is still moderate, despite new ordering observed; any additional capacity from now expected to be placed in 2020 or later
FLEET GROWTH (ASSUMES NO SCRAPPING OR NEW ORDERING)
CAPESIZE VALUES AND EARNINGS
S&P PRICES STABLE, YET STILL LOW
OUTLOOK AND STRATEGY
EXPECTATION FOR CONTINUED IMPROVEMENT WITH INHERENT SEASONALITY AND VOLATILITY
UPSIDE POTENTIAL DOWNSIDE RISKS
COMPETITIVE CASH COSTS DRIVE EARNINGS
- Fully-burdened Opex includes dry docking and management fees
- G&A net of management fees are estimated to be approximately \$400 per day in 2018 on a fully delivered fleet
- Average margin above LIBOR on bank financing is competitive at ~2.3%
- Majority of bank debt has 20 year profile (adjusted for year of age)
CASH BREAKEVEN LEVELS VS. INDEXES(1)
(1) ESTIMATED CASH BREAKEVEN LEVELS AT TODAYS INTEREST LEVEL, INCLUDING FULL CASH-SWEEP FOR NON-RECOURSE DEBT AND EXCLUDING PROFITABLE CHARTERS WHICH WILL REDUCE THE CASH BREAKEVEN FROM THESE LEVELS SOURCE: CLARKSONS
QUESTIONS & ANSWERS
THANK YOU FOR YOUR ATTENTION!