STAMFORD, Conn. - Eagle Bulk Shipping Inc. (Nasdaq: EGLE) today announced its results for the first quarter ended March 31, 2016.  First Quarter Highlights:
  • Net reported loss of $39.3 million, or $1.04 per share, compared to a net loss of $20.7 million, or $0.55 per share, for the comparable quarter in 2015.
  • Adjusted net loss of $27.5 million, or $0.73 per share, which excludes one-time refinancing expenses of $5.6 million and non-cash vessel impairment of $6.2 million.
  • Net revenues of $21.3 million, compared to $26.3 million for the comparable quarter in 2015.
  • Fleet utilization rate of 98.4%.
  • As previously reported, completion of a comprehensive balance sheet recapitalization that provides Eagle Bulk with approximately $105 million in incremental liquidity and enhanced financial flexibility.
Events Subsequent to the Close of the First Quarter Include:
  • The sale of the vessel Peregrine for $2.7 million net after brokerage commissions.
  • Agreement to sell two additional vessels, MV Harrier and MV Falcon, for $6.5 million net, after brokerage commissions.
Gary Vogel, Eagle Bulk’s CEO, commented, “In a quarter which saw dry bulk indices hit all-time lows in February – coupled with the uncertainty and negative business impact of a protracted forbearance with certain of our lenders - Eagle Bulk acted decisively to significantly enhance our liquidity position and improve our long-term financial flexibility through the execution of a comprehensive balance sheet restructuring.  In addition, as part of this transaction, we formed a new corporate structure to facilitate the Company’s ability to capitalize on market opportunities going forward. “In this regard, and in line with our objective to become the premier Supramax owner/operator, we continued to build out the Company’s operating platform through the recruitment of top-tier talent in both chartering and operations. We have also focused on technical enhancements, which includes bringing substantially all vessels under in-house management to help actively pursue operational excellence and cost efficiencies over the long-term.” Results of Operations for the three-month period ended March 31, 2016 and 2015 For the first quarter of 2016, the Company reported a net loss of $39,278,670 or $1.04 per share, based on a weighted average of 37,829,257 diluted shares outstanding. In the comparable first quarter of 2015, the Company reported a net loss of $20,667,064 or $0.55 per share, based on a weighted average of 37,527,010 diluted shares outstanding. Net revenues in the quarter ended March 31, 2016 were $21,278,288 compared with $26,331,166 recorded in the comparable quarter in 2015. The decrease in revenue is attributable to lower time charter hire rates in the first quarter of 2016. Total operating expenses for the quarter ended March 31, 2016 were $57,742,766 compared with $43,839,019 recorded in the first quarter of 2015. The increase in operating expenses was primarily due to increase in voyage expenses, refinancing expenses and vessel impairment. Liquidity and Capital Resources Net cash used in operating activities during the three-month period ended March 31, 2016 was $19,494,868, compared with net cash used in operating activities of $9,636,748 during the corresponding three-month period ended March 31, 2015. The increase is primarily due to lower charter rates and professional fees with regard to the refinancing transaction.   Net cash used in investing activities during the three-month period ended March 31, 2016, was $508,792, compared with $742,014 during the corresponding three-month period ended March 31, 2015. Net cash provided by financing activities during the three-month period ended March 31, 2016 was $11,876,073 compared to net cash used in financing activities of $5,191,756 during the corresponding three-month period ended March 31, 2015. The increase in financing activities is due to $60,000,000 received from our Second Lien Loan facility offset by repayment of $15,625,000 of our term loan and $30,158,500 of our revolver loan. The Company also paid $2,340,427 in deferred financing costs. As of March 31, 2016, our cash balance was $16,768,574, compared to a cash balance of $24,896,161 at December 31, 2015. As of March 31, 2016 our total availability in the revolving credit facility under the First Lien Facility was $40,158,500. Capital Expenditures and Drydocking Our capital expenditures relate to the purchase of vessels and capital improvements to our vessels which are expected to enhance the revenue earning capabilities and safety of these vessels. In addition to acquisitions that we may undertake in future periods, the other major capital expenditures include funding the Company’s program of regularly scheduled drydocking necessary to comply with international shipping standards and environmental laws and regulations. Although the Company has some flexibility regarding the timing of its dry docking, the costs are relatively predictable. The Company anticipates that vessels are to be drydocked every five years for vessels younger than 15 years and every two and a half years for vessels older than 15 years, accordingly, these expenses are deferred and amortized over that period. Funding of these requirements is anticipated to be met with cash from operations. We anticipate that this process of recertification will require us to reposition these vessels from a discharge port to shipyard facilities, which will reduce our available days and operating days during that period. Drydocking costs incurred are deferred and amortized to expense on a straight-line basis over the period through the date of the next scheduled drydocking for those vessels. In the three months ended March 31, 2016, three of our vessels were drydocked, and we incurred $1,276,178 in drydocking related costs. In the three months ended March 31, 2015, five of our vessels were drydocked, three other vessels were still in drydock as of March 31, 2015 and we incurred $3,060,384 in drydocking related costs. The following table represents certain information about the estimated costs for anticipated vessel drydockings in the next four quarters, along with the anticipated off-hire days:  
Quarter Ending Off-hire Days(1) Projected Costs(2)
June 30, 2016 22 $0.65 million
September 30, 2016 66 $1.95 million
December 31, 2016 22 $0.65 million
March 31, 2017 none none
(1) Actual duration of drydocking will vary based on the condition of the vessel, yard schedules and other factors.
(2) Actual costs will vary based on various factors, including where the drydockings are actually performed.
  Summary Consolidated Financial and Other Data: The following table summarizes the Company’s selected consolidated financial and other data for the periods indicated below.  
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended March 31, 2016 Three Months Ended March 31, 2015
Revenues, net $ 21,278,288 $ 26,331,166
Voyage expenses 9,244,047 5,182,175
Vessel expenses 20,480,635 20,448,706
Charter hire expenses 1,488,518 1,215,964
Depreciation and amortization 9,396,701 10,557,171
General and administrative expenses 5,331,343 6,435,003
Refinancing expenses 5,634,260 -
Vessel impairment 6,167,262 -
Total operating expenses 57,742,766 43,839,019
Operating loss (36,464,478) (17,507,853)
Interest expense 2,817,646 3,162,166
Interest income (3,454) (2,955)
Total other expense, net 2,814,192 3,159,211
Net loss $ (39,278,670) $ (20,667,064)
Weighted average shares outstanding:
Basic 37,829,257 37,527,010
Diluted 37,829,257 37,527,010
Per share amounts:
Basic net loss $ (1.04) $ (0.55)
Diluted net loss $ (1.04) $ (0.55)
   
Fleet Operating Data
Three Months Ended Three Months Ended
March 31, 2016 March 31, 2015
Ownership Days 4,004 4,050
Chartered in Days 151 90
Available Days 4,096 4,021
Operating Days 4.030 3,904
Fleet Utilization (%) 98.4% 97.1%
   
CONSOLIDATED BALANCE SHEETS
March 31, 2016 December 31, 2015
ASSETS:
Current assets:
Cash and cash equivalents $ 16,768,574 $ 24,896,161
Accounts receivable 7,096,206 7,076,528
Prepaid expenses 2,633,930 3,232,763
Inventories 5,596,345 5,574,406
Other assets 112,486 245,569
Total current assets 32,207,541 41,025,427
Noncurrent assets:
Vessels and vessel improvements, at cost, net of accumulated depreciation of $58,027,166 and $49,148,080, respectively 719,026,871 733,960,731
Other fixed assets, net of accumulated amortization of $183,670 and $159,827, respectively 592,970 220,509
Restricted cash 141,161 141,161
Deferred drydock costs 11,928,415 11,146,009
Other assets 117,113 109,287
Total noncurrent assets 731,806,530 745,577,697
Total assets $ 764,014,071 $ 786,603,124
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 11,411,500 $ 8,216,473
Accrued interest 327,283 401,232
Other accrued liabilities 10,798,848 10,827,075
Fair value below contract value of time charters acquired 820,313 1,283,926
Unearned charter hire revenue 2,144,022 1,560,402
Current portion of long-term debt - 15,625,000
Total current liabilities 25,501,966 37,914,108
Noncurrent liabilities:
First Lien Facility, net of debt issuance costs 193,591,587 225,577,491
Second Lien Facility, net of debt issuance costs 59,795,481 -
Other liabilities 720,915 672,941
Fair value below contract value of time charters acquired 4,511,717 4,094,122
Total noncurrent liabilities 258,619,700 230,344,554
Total liabilities 284,121,666 268,258,662
Commitments and contingencies
Stockholders’ equity:
Common stock, $.01 par value, 150,000,000 shares authorized, 45,091,578 and 37,666,059 shares issued and outstanding, respectively 450,916 376,661
Additional paid-in capital 678,565,852 677,813,494
Accumulated deficit (199,124,363) (159,845,693)
Total stockholders’ equity 479,892,405 518,344,462
Total liabilities and stockholders’ equity $ 764,014,071 $ 786,603,124
   
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended    
March 31, 2016 March 31, 2015
Cash flows from operating activities:
Net loss $ (39,278,670) $ (20,667,064)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 8,902,929 10,271,775
Amortization of deferred drydocking costs 493,772 285,396
 Amortization of debt issuance costs 308,504 724,425
Amortization of fair value below contract value of time charter acquired (46,018) (335,330)
Impairment of Vessels 6,167,262 -
Non-cash compensation expense 826,613 1,884,452
Drydocking expenditures (1,276,178) (3,060,384)
Changes in operating assets and liabilities:
Accounts receivable (19,678) 3,833,086
Other assets 125,257 947,830
Prepaid expenses 598,833 715,445
  Inventories (21,939) (672,954)
Accounts payable 3,195,027 (3,860,279)
Accrued interest (73,949) 34,882
Accrued expenses 19,747 1,138,665
Unearned revenue 583,620 (876,693)
  Net cash used in operating activities (19,494,868) (9,636,748)
Cash flows from investing activities:
  Vessel Improvements (112,488) (742,014)
Purchase of Other Fixed ass