GoodBulk ltd. Announces Third Quarter 2020 Financial Results

<p>GoodBulk Ltd., a leading owner and operator of dry bulk vessels, announced its financial results for the third quarter of 2020.

Third quarter highlights
• Generated $ 16.0 million of EBITDA and $ 5.7 million of profit from operations; The net result was a loss of $ 1.2 million ($ 0.04 per share) after $ 6.9 million of net financial expenses, of which
$ 5.2 million was an exceptional amount derived from the refinancing of the fleet. Prior to such a single item, the Group’s result was a profit of $ 4.0 million.
• The period ended with a cash balance of $ 26.9 million.
• Obtained a Gross Average Time Equivalent Rental Rate (TCE) of $ 15,908 per vessel per day on its Capesize vessels, a 79% increase compared to the second quarter of 2020, and $ 6,412 per day on its Panamax vessel, a decrease of 12% compared to the second quarter of 2020.
• Employed the M / V Aquakatana for a 15-18 month contract period at $ 15,000 per day.

Recent developments
• On October 16, 2020, the Company entered into an agreement to sell the oldest vessel in its fleet, the M / V Aquacharm, a Capesize vessel built in 2003 of 171,009 DWT built in Sasebo (Japan) to a third party for a consideration net of $ 10.6 million. The vessel was delivered to its new owners on October 29, 2020. The transaction will generate $ 5.6 million of free cash, $ 2.6 million of gains on disposal and an annualized IRR of 23%.
• On November 17, 2020, the Board of Directors authorized the payment to shareholders of $ 6.0 million ($ 0.20 per share) as capital repatriation.
• As of November 8, 2020, for the fourth quarter of 2020, the Company has set approximately 62% of its Capesize days at approximately $ 18,000 per vessel per day (equivalent to the reported gross TCE).
• Employed the M / V Aquanavigator in a charter period from the low of November 1, 2021 to the high of January 31, 2022 at $ 14,050 per day

GoodBulk is a leading dry bulk ship owner executing a strategy that combines low financial leverage with active portfolio management to optimize operating leverage in the dry bulk market. The Company’s strict financial discipline resulted in industry-leading cash general and administrative expenses of $ 237 per vessel per day, compared to $ 265 per vessel per day for the same period in 2019.

Market Commentary
For the quarter ending September 30, 2020, the Baltic Capesize Index averaged $ 20,761 per day, 29.3% below $ 29,365 per day for the same period in 2019 and 109.0% above $ 9,932 per day for the quarter ended June 30, 2020. The dry bulk market has benefited from the Chinese government‘s stimulus measures, among which the emphasis has been on accelerating infrastructure projects, since the increase from long-haul iron ore volumes from Brazilian miner Vale, and from a strong grain trade.

Economic indicators in China point to an economy that has recovered its equilibrium with a growth of the gross domestic product (GDP) in the third quarter of 4.9%, a significant rebound compared to the first quarter that contracted 6.8% without precedents due to the measures implemented to contain Covid -19. The main driver of global iron ore trade is China’s steel production, which increased 5.7% this year to more than 875 million tonnes in the January-October period and, in particular, in the third quarter. In 2020, production increased a very strong 10.0. % year with year. The sequential improvement in the Capesize market during the third quarter was driven by the recovery of iron ore exports from Brazil, which registered an increase of 19.1 million tonnes compared to the second quarter. The Capesize market improvement comes despite the substantial contraction in the coal trade due to declines caused by the lockdown in industrial power demand in major areas such as India and Europe, as well as lower volumes of iron ore. QoQ in Australia in the third quarter. which is mainly attributed to maintenance in ports. Difficulties in making crew changes and increased congestion that have led to effective fleet reductions have also been factors that have benefited freight rates.

During the remaining month and a half of 2020, the dry bulk market will be determined by the amount of iron ore Vale will export in November and December prior to the usual first quarter rainy season in Brazil and by China’s policies regarding to its domestic coal market. Will the Chinese loosen import restrictions or strictly control imports like last year?

Looking ahead to 2021, fleet growth in all dry bulk segments will slow significantly thanks to an order book that is at a 25-year low at least, and trade volumes are expected to recover and exceed the growth of the fleet to the benefit of the dry bulk market.

Results of Operations Third Quarter 2020

For the three months ended September 30, 2020, the Company reported income and other income
(expenses) of $ 44.0 million and a net loss of $ 1.2 million, resulting in a loss per share of $ 0.04 based on 30,015,021 weighted average shares outstanding. This result compares with a profit of $ 19.9 million for the third quarter of 2019. The days of ownership of the ship were 2,208 in the third quarter of 2020, compared to 2,423 in the third quarter of 2019. After the sale of the M / V Aquacharm, days of ownership of the boat are expected. to decrease to an estimated 2,144 for the fourth quarter of 2020, resulting in an estimated 8,872 and 8,395 days of ship ownership for the full years ending December 31, 2020 and 2021, respectively.

The Company earned an average gross TCE of $ 15,908 per day on its Capesize vessels and $ 6,412 per day on its Panamax vessel during the three months ended September 30, 2020. Comparatively, for the three months ended September 30, 2019 , the Company earned an average gross TCE of $ 20,634 per day on its Capesize vessels, $ 12,012 per day on its Panamax vessel and $ 8,981 per day on its Supramax vessels. During the third quarter of 2020, fifteen of the Company’s Capesize vessels were traded on the spot market, the majority employed by Capesize Chartering Ltd. (“CCL”) through the CTH Capesize Revenue Sharing Agreement (“Capesize RSA “); the Panamax vessel was also traded on the spot market, while eight Capesize vessels were used for period charters.

The net loss for the three months ended September 30, 2020 included a non-cash depreciation expense of $ 10.2 million. Direct vessel operating expenses for the period amounted to $ 11.6 million or $ 5,265 per vessel per day.

General and Administrative (“G&A”) expenses for the three months ended September 30, 2020 were $ 0.8 million, or $ 362 per vessel per day compared to $ 382 per vessel per day for the same period in 2019. Cash General and Administrative Expenses (“G&A”) for the three months ended September 30, 2020 were $ 0.5 million, or $ 237 per vessel per day.

Nine months ended September 30, 2020
For the nine months ended September 30, 2020, the Company reported income and other income (expenses) of $ 127.7 million, and a net loss of $ 12.2 million, resulting in a loss per share of $ 0.41 based on 30,012,380 weighted average of issued and outstanding shares. This result is compared to a gain of
$ 22.7 million for the nine months ended September 30, 2019. Ship ownership days decreased to 6,728 for the nine months ended September 30, 2020, from 7,310 for the same period in 2019.

For the nine months ended September 30, 2020, the Company earned an average gross TCE of $ 11,744 per day on its Capesize vessels and $ 5,201 per day on its Panamax vessel. This compares to $ 15,649 per day on its Capesize vessels, $ 11,389 per day on its Panamax vessel, and $ 8,322 per day on its Supramax vessels during the nine months ended September 30, 2019. Most of the Company’s vessels traded in the spot market, with fourteen Capesize Vessels employed by Capesize Chartering Ltd. (“CCL”) through the CTH Capesize Revenue Sharing Agreement (“Capesize RSA”); the Panamax vessel was also traded on the spot market. Eight Capesize vessels were employed on vintage charters and one was in dry dock.

The net loss for the nine months ended September 30, 2020 included a non-cash depreciation expense of $ 30.5 million. Direct ship operating expenses for the period amounted to $ 36.7 million or $ 5,450 per ship per day.

General and Administrative (“G&A”) expenses for the nine months ended September 30, 2020 were $ 2.4 million, or $ 361 per vessel per day compared to $ 347 per vessel per day for the same period of 2019. Cash General and Administrative Expenses (“G&A”) for the nine months ended September 30, 2020 were $ 1.8 million, or $ 262 per vessel per day.

GoodBulk fleet
GoodBulk controls a fleet of 23 bulk carriers with an average age of 11.1 years consisting of 22 Capesize vessels and one Panamax vessel.

Full report

Source: GoodBulk