Results Q4 - 2016
February 28, 2017
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
- The Company reports net income of \$6.5 million and earnings per share of \$0.06 for the fourth quarter of 2016, an improvement of \$33.2 compared with a net loss of \$26.7 million for the third quarter of 2016.
- Adjusted EBITDA in the fourth quarter was \$24.2 million, compared with \$8.6 million in the third quarter of 2016.
- 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, resulting in a net positive cash flow of \$12.7 million in the fourth quarter.
- Agreements were reached with shipyards to defer the delivery of ten newbuildings and achieve aggregate price reductions of \$15.3 million.
- In January 2017, the Company took delivery of two Ultramax newbuildings, Golden Virgo and Golden Libra, paying a total of \$31.8 million in final installments. The vessels are not financed and were funded by equity.
- In February 2017, the Company took delivery of two Capesize newbuildings, Golden Surabaya and Golden Savannah. Final installments of \$69.2 million were paid in total, and \$50 million was drawn down in debt.
Profit & Loss
|
2016
Oct -
Dec |
2016
Jul -
Sep |
2016
Jan -
Dec |
| (in thousands of \$) |
|
|
|
| Operating revenues |
86,222 |
71,007 |
257,808 |
| Gain on sale of newbuildings and amortization of deferred gain |
78 |
56 |
300 |
| Operating expenses |
|
|
|
| Voyage expenses |
23,876 |
28,068 |
89,886 |
| Ship operating expenses |
27,202 |
27,975 |
105,843 |
| Charter hire expense |
14,267 |
12,504 |
53,691 |
| Administrative expenses |
3,130 |
2,712 |
12,728 |
| Impairment loss on vessels and newbuildings |
0 |
0 |
985 |
| Provision for uncollectible receivables |
0 |
0 |
1,800 |
| Depreciation |
16,431 |
16,207 |
63,433 |
| Total operating expenses |
84,906 |
87,466 |
328,367 |
| Net operating loss |
1,395 |
(16,403) |
(70,258) |
| Other income (expenses) |
|
|
|
| Interest income |
386 |
449 |
1,666 |
| Interest expense |
(12,096) |
(11,718) |
(44,166) |
| Impairment loss on marketable securities |
0 |
0 |
(10,050) |
| Loss/gain on derivatives |
16,734 |
412 |
(675) |
| Equity results of associated companies, including impairment |
299 |
130 |
(2,523) |
| Other financial items |
(445) |
425 |
(1,860) |
| Total other expenses |
4,879 |
(10,302) |
(57,607) |
| Tax expense |
203 |
(29) |
155 |
| Net profit (loss) |
6,476 |
(26,734) |
(127,711) |
| Basic and diluted loss per share (\$) |
0.06 |
(0.25) |
(1.34) |
| Adjusted EBITDA |
24,209 |
8,571 |
17,828 |
- Operating revenues less voyage expenses (TCE) increased by \$19.4 million in the fourth quarter compared to the prior quarter. Primary due to increased in freight rates
- Charterhire expenses are up mainly due to increase in short term trading activity
- Ship operating expenses is down by \$0.8 million due to no dry dockings in the fourth quarter (Q3: 2)
- US interest rates increased in fourth quarter leading to a significant gain on on interest rate hedges
Balance Sheet
|
2016
Dec-31 |
2016
Sep-30 |
2015
Dec 31 |
|
|
|
|
| (in thousands of \$) |
|
|
|
| ASSETS |
|
|
|
| Short term |
|
|
|
| Cash and cash equivalents |
212,942 |
178,299 |
102,617 |
| Restricted cash |
315 |
13,920 |
351 |
| Other current assets |
86,674 |
92,925 |
100,692 |
| Long term |
|
|
|
| Restricted cash |
53,797 |
53,714 |
48,521 |
| Vessels, net |
1,758,939 |
1,774,933 |
1,488,205 |
| Vessels under capital lease, net |
2,956 |
3,182 |
8,354 |
| Newbuildings |
180,562 |
190,600 |
338,614 |
| Other long term assets |
65,437 |
68,930 |
85,515 |
| Total assets |
2,361,621 |
2,376,503 |
2,172,869 |
| LIABILITIES AND EQUITY |
|
|
|
| Short term |
|
|
|
| Current portion of long-term debt and obligations |
|
|
|
| under capital lease |
4,858 |
4,766 |
36,129 |
| Other current liabilities |
38,747 |
63,761 |
43,908 |
| Long term |
|
|
|
| Long-term debt and obligations under capital lease |
1,071,092 |
1,069,522 |
925,648 |
| Other long term liabilities |
8,212 |
8,346 |
8,540 |
| Equity |
1,238,712 |
1,230,108 |
1,158,644 |
| Total liabilities and equity |
2,361,621 |
2,376,503 |
2,172,869 |
- \$267.1 million in cash including cash classified as restricted, an increase of \$21.1 million from September 30, 2016
- No new vessels delivered to the company in fourth quarter and vessels is down due to ordinary depreciation
- Newbuildings decreased due to the delivery and immediately sale of Front Mediterranean, off set by installments paid on newbuildings
- Expected payment on cash sweep is not included current portion of long term debt
- 6 Current liabilities down mainly due to increased forward US interest rates
Fleet Development and Newbuildings
Recent developments
- Took delivery of the Capesize Front Mediterranean, built at Dalian Shipbuilding Industry Co. in October 2016
- A final installment 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 \$12.7 million
- Took delivery of two Ultramaxes Golden Virgo and Golden Libra, built at Chengxi shipyard in January 2017
- Final installments of \$31.8 million in total were paid with available cash at delivery with no financing
- Took delivery of two Capesize newbuildngs, Golden Savannah and Golden Surabaya, built at SWS shipyard, in February 2017
- Final installments of \$69.2 million in total were paid, and \$50 million was drawn down in debt
Accomplishments since February 2016
- The Company has reached agreements to further postpone newbuildings by an aggregate of 128 months*
- Aggregate Capex reductions of \$15.3 million have been achieved
- All remaining six Capesize newbuildings are scheduled to be delivered in 2018* and are financed with \$25 million each
0 50 100 150 200 250 300 350 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 TOTAL USDm Paid-in Non-recourse 101 101 10 10 174 194
Remaining newbuilding CAPEX*
Newbuilding delivery schedule
|
2017 |
2018 |
Capesize
vessels* |
- |
6 |
Note: Newbuilding delivery schedule and remaining CAPEX as of February 28, 2017.
* Delivery schedule is subject to final approval from the yard's refund banks
Young, fuel efficient fleet with average age of ~4 years
| Fleet profile |
|
|
|
|
|
|
|
|
Capesize |
Kamsarmax |
Ice-class Panamax |
Supramax
/ Ultramax |
Total |
|
|
Owned
sailing vessels |
24 |
8 |
10 |
8 |
50 |
|
|
| Newbuilding |
6 |
- |
- |
- |
6 |
|
|
| Bareboat charter |
0 |
1 |
- |
- |
1 |
|
|
| Time charter in |
8 |
- |
- |
1 |
9 |
|
|
| Joint venture |
1 |
- |
- |
- |
1 |
|
|
| Total |
39 |
9 |
10 |
9 |
67 |
|
|
Chartering profile
- 10 Capesizes on index-linked long term TC-out
- Two Capesize fixed on 1-year time charters at an average daily gross rate of \$14,175
- Four Kamsarmax vessels on long term TC-out at fixed rate
- One Panamax vessels on long term TC out expiring in Q3 2017
- Remaining fleet is trading spot, in spot pools or on short term charters
Vessel Operating Expenses
Maintaining competitive OPEX levels
- Fully-burdened Opex includes dry docking and management fees
- Based on 6 Ultramaxes, 19 Panamax / Kamsarmax and 30 Capesize vessels
- One vessel dry docked in Q1 2016 and two in Q3 2016; no vessels dry docked in Q4 2016
- G&A net of management fees below \$11 million per year gives a cost of \$480 per day over owned fleet
Dry bulk market
Utilization improved in the fourth quarter; still at historically low levels
Supply, demand and utilization rate - dry bulk ships 10,000 dwt +
Seaborne trade of dry bulk commodities (major importers)
Source: Maritime Analytics
China Rest of the world
Chinese apparent steel consumption & rebar prices
Gross profit (steel price minus cost of coking coal and iron ore; all prices spot)
Gross profit using Cn coking coal price, Au iron ore price and Tangshan steel billett price
Iron Ore Exports – Australia and Brazil Keep Market Share
Iron ore exports by region
Imports into Asia were strong throughout 2016; Europe turned in the second half of 2016
Seaborne coal imports by major importing countries
Strong Electricity Consumption Supports Coal Demand
Net Fleet Growth has Slowed Significantly
Handymax / Supramax Handysize
The orderbook may be reduced to 3% of the global fleet by the end of 2017
Downside Case for Supply Growth
- Construction has not even commenced on 25% of the orders (in dwt) scheduled for delivery within end of H1 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
Panamax values and earnings
Cautiously optimistic based on improved supply / demand balance
Upside potential Downside risks
Expect rate volatility in the near term as supply / demand balance is still fragile and single events will impact the market. Longer term fundamentals stronger as long as new ordering is minimal.
Breakeven levels well below historical rate environment
Thank you for your attention!