Eagle Bulk Shipping Inc. Reports Third Quarter 2016 Results

STAMFORD, Conn. - Eagle Bulk Shipping Inc. (NASDAQ: EGLE) today announced its results for the third quarter ended September 30, 2016.  Third Quarter Highlights:

• Net loss of $19.4 million, or $0.52 net loss per share, compared to a net loss of $20.4 million, or a $10.83 net loss per share, for the comparable quarter in 2015. 
• Net revenues of $35.8 million compared to $29.1 million for the comparable quarter in 2015.
• Fleet utilization rate of 98.9%.
• The sale of MV Harrier and MV Kittiwake for net proceeds of $3.2 million and $4.2 million, respectively.
• The closing of a previously-announced private common stock placement for gross proceeds of $88 million.
• The appointment of Mr. Frank De Costanzo as Chief Financial Officer on September 30, 2016.
• On November 7, 2016, Eagle Bulk announced the acquisition of a 2016 built 61,000 deadweight NACKS-61 Ultramax vessel constructed at Nantong COSCO Kawasaki Heavy Industries Engineering Co., Ltd. (“NACKS”) for $18.85 million. The vessel is scheduled to be delivered to the Company in November and will be renamed the M/V Stamford Eagle.

Gary Vogel, Eagle Bulk’s CEO, commented, “Amid tentative signs of a recovery in charter rates, Eagle Bulk’s third quarter results reflect continued progress in building out our Owner-Operator model. This is evident across several key metrics, including a notable increase in voyage business and chartered-in days – both of which contributed to a net revenue increase despite operating four fewer vessels compared to the same period a year ago.  At the same time, we achieved tangible cost savings through the continued development of our in-house technical management.  We also continued to develop our organization by adding top-tier management in key positions, highlighted by the addition of Frank De Costanzo as Chief Financial Officer. “Looking ahead, we believe that our strengthened balance sheet, now inclusive of the $88 million in growth capital raised during the quarter, will enable us to take advantage of market opportunities, such as the recently-announced acquisition of a 2016 built NACKS-61 Ultramax vessel.” Results of Operations for the three-month period ended September 30, 2016 and 2015 For the third quarter of 2016, the Company reported a net loss of $19,359,044 or $0.52 loss per share, based on a weighted average of 37,031,096 diluted shares outstanding. In the comparable third quarter of 2015, the Company reported a net loss of $20,376,620 or $10.83 Net loss per share, based on a weighted average of 1,881,968 diluted shares outstanding. Net revenues in the quarter ended September 30, 2016 were $35,788,181 compared with $29,127,482 recorded in the comparable quarter in 2015. The increase in revenue is attributable to increased number of freight voyages as well as increased available days due to chartered in vessels. Total operating expenses for the quarter ended September 30, 2016 were $47,512,409 compared with $46,135,325 recorded in the third quarter of 2015. The increase is primarily due to increase in voyage expenses and charter hire expenses offset by savings in vessel operating expenses. Liquidity and Capital Resources Net cash used by operating activities during the nine-month period ended September 30, 2016 was $40,092,760, compared with net cash used by operating activities of $29,809,434 during the corresponding nine-month period ended September 30, 2015. The increase in cash used by operating activities is primarily due to lower charter rates. Net cash provided by investing activities during the nine-month period ended September 30, 2016 was $12,411,444, compared with net cash provided by investing activities of $9,621,753, during the corresponding nine-month period ended September 30, 2015. The increase in cash provided by investing activities is mainly attributable to the sale of four vessels in 2016 compared to one vessel in the comparable period in 2015 offset by the sale of KLC investments in 2015. Net cash provided by financing activities during the nine-month period ended September 30, 2016 was $ 101,353,950, compared with $5,495,744 during the corresponding nine-month period ended September 30, 2015. The increase in cash from financing activities is due to net proceeds from the private common stock placements closed on August 10, 2016 of $85,700,535, $60,000,000 received from our Second Lien Loan facility and $10,158,500 from the revolver under the First Lien Facility offset by repayment of $21,276,000 of our term loan and $30,158,500 of our revolver each under the First Lien Facility. The Company also paid $3,067,647 in deferred financing costs. As of September 30, 2016, our cash balance was $98,568,795, compared to a cash balance of $24,896,161 at December 31, 2015. Also recorded in Restricted cash is an amount of $74,917, which collateralizes letters of credit relating to our office lease. At September 30, 2016, the Company’s debt consisted of $204,099,000 in term loans, net of $5,184,565 debt discount and debt issuance costs under the First Lien Facility and $60,000,000 under the Second Lien Facility net of $16,719,722 debt discount and debt issuance costs. As of September 30, 2016, our total availability in the revolving credit facility under the First Lien Facility was $30,000,000. 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. On September 30, 2016, the Company, through a newly formed subsidiary, Eagle Bulk Shipco LLC (‘Eagle Shipco”), signed a memorandum of agreement to acquire a 2016 NACKS-built Ultramax 61,000 dwt for $18.85 million. The Company is expected to take delivery of the vessel in the fourth quarter of 2016. Eagle Bulk Shipco, is not one of the guarantors under the First Lien Facility or the Second Lien Facility. 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 dry-docking 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 dry docked 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 dry-docking for those vessels.  Eight vessels completed dry-docking in the nine months ended September 30, 2016, with one vessel still in dry-docking as of September 30, 2016 and we incurred $3,715,179 in dry-docking related costs. Seventeen vessels completed dry-docking in the nine months ended September 30, 2015 and we incurred $9,680,582 in dry-docking related costs. The following table represents certain information about the estimated costs for anticipated vessel dry dockings in the next four quarters, along with the anticipated off-hire days:     SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA The following table summarizes the Company’s selected consolidated financial and other data for the periods indicated below.     *Adjusted to give effect for the 1 for 20 reverse stock split that became effective at the open of trading on August 5, 2016. Fleet Operating Data