Eagle Bulk Shipping Inc. (NYSE:EGLE) Q2 2023 Earnings Conference Call August 4, 2023 8:00 AM ET

Company Participants

Gary Vogel - CEO

Costa Tsoutsoplides - CFO

Conference Call Participants

Omar Nokta - Jefferies

Greg Lewis - BTIG

Liam Burke - B. Riley Financial

Poe Fratt - Alliance Global Partners

Operator

Good day, and welcome to Eagle Bulk’s Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there’ll be a question-and-answer session. Instructions will be given at that time. As a reminder, this call is being recorded.

I would now like to turn the call over to Gary Vogel, CEO. You may begin.

Gary Vogel

Thank you, and good morning. I would like to welcome everyone to Eagle Bulk’s second quarter 2023 earnings call. To supplement our remarks today, I would encourage participants to access the slide presentation that is available on our website at Eagleships.com. Please note that part of our discussion today will include forward-looking statements. These statements are not guarantees of future performance and are inherently subject to risk and uncertainties. You should not place undue reliance on these forward-looking statements. Please refer to our filings with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties that may have a direct bearing on our operating results, our performance, and our financial condition. Our discussion today also includes certain non-GAAP financial measures, including TCE, TCE revenues, adjusted net income, EBITDA, and adjusted EBITDA. Please refer to the appendix in the presentation and our earnings release filed with the Securities and Exchange Commission for more information concerning non-GAAP financial measures and a reconciliation to the most comparable GAAP financial measures. Please turn to Slide 6.

Today, we'll start with a discussion of operations. Against the backdrop of a modest recovery in rates relative to first quarter averages, we generated net income of $18 million or $1.42 per share basic. Based on this result, and consistent with our stated capital allocation strategy, Eagle's board of directors declared a cash dividend of $0.58 per share, equal to 30% of net income. I'm pleased to report that we successfully concluded the transfer of crew management on 18 of our ships, resulting in a more balanced nationality makeup, and improved crew sourcing opportunities, which support our ongoing efforts to offset challenges arising from geopolitical events such as the Russia-Ukraine War. This was a significant undertaking and one which we were able to complete with limited impact to operations. On the vessel S&P front, we closed on the purchase and took delivery of two 2020-built scrubber-fitted Ultramaxes during the quarter. We also closed on the sale and delivered two of our mid-age non-scrubber-fitted Supramaxes to the new owners. Additionally, and subsequent to quarter end, we closed on the sale and delivered a third mid-age non-scrubber-fitted Supramax. As reported previously, the purchase and subsequent sale of these three vessels generated a levered IRR of roughly 70% over the past 24 months. As of today, we have no pending S&P activity, and our fleet totals 52 ships, 96% of which are scrubber-fitted. Lastly, from a balance sheet perspective, we executed an upsize and extension to our credit facility as previously disclosed. Costa will provide more detail on this later in the call.