Thursday, July 1, 2010

Baltic Trading Limited (BALT) - Coverage Initiation & Earnings Estimate For 2010 Q2

We are initiating coverage on Baltic Trading Limited (NYSE:BALT), a publicly traded bulk shipping company. As of June 30th, 2010, BALT was operating a modern fleet of 5 dry cargo vessels, consisting of 4 supramax size vessels and one cape size vessel. In addition the company had agreed to acquire 3 handy size vessels from Metrostar and had a cape size vessel under construction.

Following the delivery of the four new acquisitions during the second half of 2010, BALT will have a total capitalization of about $390 million, and it will operate a fleet of 9 dry cargo vessels with a total carrying capacity of 671,000 DWT and an average age of 1.2 years.
Even though the company’s vessels are chartered for medium term periods to first class charterers, substantially all the charters have floating rate agreements in place, in effect offering spot freight market exposure to investors.

We estimate that for the quarter ending June 30th, 2010, BALT generated net income of approximately $2.4 million or basic earnings of $0.11 per common share. The company plans to return a substantial portion of its cash flow to shareholders. We estimate that BALT generated approximately $4.6 million from operating activities, and approximately $3.25 million in cash available for distribution to shareholders, or the equivalent cash dividend of $0.14 per common share.

The company ended the quarter with approximately $60 million cash on hand and an available credit line of about $90 million (for a total liquidity of about $150 million) to finance operations and pay the remaining capital expenses of $147 million from its acquisition program.