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Eagle Bulk Shipping Inc EGLE
Q3 2012 Earnings Call Transcript

Transcript Call Date 11/09/2012

Operator: Good day, ladies and gentlemen, and welcome to the Third Quarter 2012 Eagle Bulk Shipping Incorporated Earnings Conference Call. At this time, all participants are in listen-only mode. Later we will facilitate a question-and-answer session. As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the call over to Sophocles Zoullas, Chairman and Chief Executive Officer. You may proceed.

Sophocles N. Zoullas - Chairman, CEO and Director: Thank you and good morning. I would like to welcome everyone to Eagle Bulk Shipping's third quarter 2012 earnings call. To supplement our remarks today, I encourage participants to access a slide presentation that is available on our website at www.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. We refer all of you to our filings with the Securities and Exchange Commission for more detailed discussion of the risks and uncertainties that may have a direct bearing on our operating results, our performance and our financial condition.

On Slide 3, you will note the agenda for today's call. I will first review our third quarter 2012 results and highlights. We'll then proceed with an update of our commercial operations and finally present our current views of the market. Adir will then give an overview of our financials before we open the call to questions.

Please turn to Slide 5, for a review of our financial results and highlights. The dry bulk market experienced increased pressure during the third quarter with newbuilding deliveries continuing to hit the water at a robust albeit slower pace. In addition, trade deteriorated on the back of lower global steel production and reduced grain exports out of the U.S. Newbuilding deliveries, which now appeared to have peaked during the second quarter totaled 20 million deadweight tons or over 240 vessels in the third quarter. This represents a decrease of almost 40% sequentially and 25% year-on-year. On the demand side global economic weakness has led to lower steel consumption during the third quarter and hence lower demand for iron ore, metallurgical coal and thermal coal. I would like to point out that we have seen a resurgence as of late in iron ore demand post China's economic stimulus announcement in September, but we view this as more opportunistic purchasing and do not believe it is sustainable in the medium-term.

In addition, the drought experienced by the U.S. during the summer months severely impacted grain imports out of the U.S. The Baltic Dry Index or BDI averaged 846 points for the third quarter representing a decrease of 17% sequentially and 45% year on year. Supermaxes fared better posting a decrease of 8% sequentially and 26% year-on-year.

Turning to Eagle Bulk, the Company reported a net loss of $29.8 million or $1.77 per share for the third quarter of 2012. Earnings for the period were primarily impacted by the Company's exposure to the depressed spot market. Net revenue for the third quarter was $46.9 million and EBITDA for the quarter amounted to $12.5 million. Fleet utilization, which is calculated as the number of operating days divided by the number of available days remained in at an impressive level of close to 99.4%.

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