Eagle Bulk Shipping Inc. - Earnings Estimate For 2011 Q2

For the quarter ended June 30th, 2011, we estimate that Eagle Bulk Shipping Inc. (NASDAQ: EGLE) generated basic earnings per common share of $0.04 on net income of $2,200,000.

We estimate that the company’s fleet of 41 owned-vessels generated net TCE Revenues of approximately $58,700,000 for an average TCE of $16,100. We also estimate that EBITDA for the quarter was $29,200,000, and Adjusted EBITDA (for credit agreement purposes) was $31,400,000.

Our estimate is based on the following key assumptions: (I) It excludes the results of the company’s freight trading operations, (II) The new-building vessel M/V ORIOLE was delivered during the second quarter as scheduled, and (III) Two of the company’s vessels were dry-docked during the quarter, resulting in 22 total days off-hire.

As of June 30th, 2011, we estimate that book capitalization was $1.82 billion, including shareholders’ equity of $0.67 billion and total debt of $1.15 billion. We also estimate that its debt to total capitalization ratio was 63.1%.

As of June 30th, 2011, Eagle Bulk Shipping owned a modern diversified fleet of 41 SUPRAMAX dry cargo vessels with a total DWT capacity of approximately 2,215,000 MT, and an average age per vessel of 4.9 years. It also had on order 5 new building vessels, scheduled for delivery during 2011, with a total DWT capacity of approximately 290,000 MT. With the delivery of M/V ORIOLE, its remaining capital expenditures were approximately $73 million.

We estimate that, following the delivery of M/V ORIOLE, EGLE had approximately $63 million of unrestricted cash on hand as of the end of the second quarter. The company intends to finance its capital expenditures with cash on hand and cash generated from operations.

Diana Shipping Inc. - Earnings Estimate For 2011 Q2

For the quarter ended June 30th, 2011, we estimate that Diana Shipping Inc. (NYSE: DSX) generated basic earnings per common share of $0.34 on net income of $27,200,00.

We estimate that TCE Revenues for the quarter were $61,500,000 and the net average TCE rate was $30,700.

As of June 30th, 2011, we estimate that book capitalization was $1.522 billion including shareholders’ equity of $1.160 billion, and long-term debt of $362 million. We also estimate that its debt to capitalization ratio stood at 23.8%. In addition to its existing debt, DSX has entered into a loan agreement for an amount of $82.6 million, to finance its two new-building vessels that are scheduled for delivery in 2012.

Following the recent acquisition of M/V ARETHUSA, the company presently owns a modern diversified fleet of 24 dry cargo vessels (consisting of 15 PANAMAX size vessels, one POST-PANAMAX vessel, and 8 CAPE SIZE vessels), with a total DWT carrying capacity of approximately 2,610,000 MT, and an average age per vessel of 6.4 years as of June 30th, 2011. The company also has two specialized CAPE SIZE vessels on order, with a total DWT carrying capacity of 412,000 MT, scheduled for delivery in 2012.

In addition, Diana Shipping has a 14.5% interest in Diana Containerships (NASDAQ: DCIX), a publicly traded company specializing in container ships.

Following the acquisition of M/V ARETHUSA we estimate that DSX has approximately $382 million cash on hand to finance future vessel acquisitions.

Genco Shipping & Trading Limited - Earnings Estimate For 2011 Q2

For the quarter ended June 30th, 2011, we estimate that Genco Shipping & Trading Limited (NYSE: GNK) generated basic earnings per common share of $0.22 on net income attributable to GNK shareholders of $7,600,000.

We estimate that the company generated net consolidated TCE Revenues of $96,400,000 and that the average TCE rate was $17,900 (including the vessels owned by the company’s subsidiary Baltic Trading Limited). We also estimate that EBITDA for the quarter was $62,800,000.

At the parent level and as of June 30th, 2011, we estimate that book capitalization was $2.80 billion, including shareholders’ equity of $1.15 billion, and total debt of $1.65 billion. We also estimate that the debt to capitalization ratio was 58.9%.

As of June 30th, 2011, Genco Shipping & Trading owned a modern diversified fleet of 51 dry cargo vessels with a total DWT capacity of approximately 3,740,000 MT, and an average age per vessel of 6.4 years. On July 24th, 2011, GNK took delivery of the HANDYMAX vessel GENCO MARE (DWT capacity 35,000 MT) and is scheduled to complete its existing new-building program with the delivery of a HANDYMAX vessel during the fourth quarter of the year.

In addition, the company’s subsidiary Baltic Trading Limited (NYSE: BALT) owns a fleet of nine dry cargo vessels with a total DWT capacity of approximately 670,000 MT, and an average age per vessel of 1.7 years as of June 30th, 2011. GNK has a 25% ownership interest in Baltic Trading Limited.

Safe Bulkers Inc. - Earnings Estimate For 2011 Q2

For the quarter ended June 30th, 2011, we forecast that Safe Bulkers Inc. (NYSE: SB) generated net income of $22,350,000 or $0.32 earnings per share. We estimate that the company’s net TCE Revenues for the quarter were $41,100,000 & the fleet average TCE was $28,500. We also forecast that during the second quarter of 2011, Safe Bulkers generated EBITDA of $29,300,000.

Our forecast is based on the following two key assumptions: Two vessels were off-hire for scheduled dry-dock repairs & inspections during the quarter, resulting in a total of 14 days off-hire. Also the company generated a net loss from derivatives of $3,500,000.

During the second quarter of 2011, the company issued 5,000,000 new shares in a secondary offering raising net proceeds of approximately $39.9 million. We also estimate that the company drew $24 million from its “Maxdekatria” Credit Facility. Based on these transactions and the company’s operating results, we estimate that SB’s total book capitalization as of June 30th, 2011 stood at $818.6 million, including long-term debt of $505.4 million. We finally estimate that SB will declare a regular quarterly dividend of $0.15 per share.

As of June 30th, 2011, Safe Bulkers was operating a modern diversified fleet of 16 bulk carriers (consisting of 4 PANAMAX, 3 KAMSARMAX, 8 POST-PANAMAX, & one CAPE size vessels), with a total DWT capacity of 1,443,800 MT, and an average age of 4.3 years.

In addition, the company has embarked on an extensive $480 million new-building program for an additional 11 vessels with a total DWT capacity of 1,097,200 MT. Three of the company’s new-building vessels are scheduled for delivery during the second half of 2011.

Diana Containerships Inc. - Earnings Estimate For 2011 Q2

For the quarter ended June 30th, 2011, we forecast that Diana Containerships Inc. (NASDAQ: DCIX) generated a net loss of $165,000 or ($0.02) basic earnings per common share. We also forecast that TCE Revenues for the quarter were $3,970,000 and the net average TCE rate was $18,300.

As of June 30th, 2011, we estimate that the company had a total book capitalization of $206.5 million. Following the company’s secondary offering at $7.50 per share in June 2011 (the company received net proceeds of approximately $121.5 million), DCIX repaid its bank loan and currently has no debt outstanding. We estimate that as of the end of the second quarter the company had $44.5 million cash on hand to finance future vessel acquisitions.

DCIX intends to declare a variable quarterly dividend equal to 70% of it operating cash flow. According to our estimates for the second quarter the company generated cash from operations of $1,600,000. On this basis, we forecast that DCIX will declare a quarterly dividend of $0.05 per share.

Diana Containerships owns a fleet of two new building, intermediate size vessels and three older panamax vessels, with an aggregate capacity of 20,486 TEU. Diana Shipping Inc. (NYSE: DSX) has a 14.5% ownership in the company.

Baltic Trading Limited – Earnings Estimate For 2011 Q2

For the quarter ended June 30th, 2011, we forecast that Baltic Trading Limited (NYSE: BALT) generated a net loss of $1,150,000 or ($0.05) basic earnings per share. We estimate that the company’s net TCE revenues for the quarter were $9,700,000 & the fleet average TCE was $11,800. We also forecast that during the second quarter of 2011 BALT generated EBITDA of $3,600,000.

Based on our earnings forecast and the company’s formula for declaring quarterly dividends, we project that BALT will not have cash available for dividend distribution. However, in the previous quarter and under similar circumstances, BALT did declare a dividend of $0.06 per share. After taking into account that BALT generated sufficient free cash flow during this quarter to pay a similar dividend, and given the company’s intention to declare a dividend quarterly, we forecast a dividend of $0.06 per share for the second quarter of 2011.
As of June 30th, 2011, we forecast that the company had $101,250,000 in long-term debt and a total capitalization of $384,000,000. Its debt to capitalization ratio stood at 26.4%. BALT had a remaining $48,750,000 under its amended 2010 credit facility, to finance future vessel acquisitions and for working capital purposes.

BALT operates a modern diversified fleet of 9 dry cargo vessels, consisting of 3 handy size vessels, 4 supramax size vessels and two cape size vessels, with a total DWT capacity of approximately 670,000 MT, and an average age of 1.7 years as of June 30th, 2011.

Baltic Dry Index - A Leading Economic Indicator?

In recent years, the Baltic Dry Index (“BDI”) has gained a lot of notoriety outside its narrow audience of ship-owners, freight traders, or even investors in publicly traded shipping companies. Many economists and analysts now view the BDI as a leading indicator of world economic activity in general, and industrial growth among emerging economies in particular. What does the Baltic Dry Index really measure, and should analysts & investors use it as a leading economic indicator?

The Baltic Dry Index (“BDI”) is a spot assessment of the ocean transportation cost for dry bulk commodities. The BDI is published every business day by the Baltic Exchange, a 250 year-old London-based maritime association. Dry bulk commodities consist of the three major bulk commodities (iron ore, coal & grain products), and the minor bulk commodities (fertilizers, steel products, scrap iron, bauxite & alumina, cement, petroleum coke, etc).

By definition, the Baltic Dry Index represents the current balance between the supply of ocean going vessels and the transportation demand for raw materials. Now, it is true that transportation demand for dry bulk commodities is driven to a large degree by industrial growth in emerging economies such as China, India, etc. Thus higher industrial growth should lead to higher demand for ocean transportation and an increase in the BDI.

It is also true that at any given point in time the supply of ocean going vessels, i.e. the size of the dry bulk carrier fleet, is fixed. Any short-term changes in the BDI should then mostly reflect changes in industrial activity. Case is closed: We just proved that BDI is a leading economic indicator, or did we?

First we have not said anything about the supply of ocean going vessels. The size of the dry bulk carrier fleet is not constant over time. Its size changes with the delivery of new-building vessels, and the scrapping of older tonnage. Also the overall fleet size may or may not be correlated to current industrial activity. It is the sum of investment decisions made over several years, since the lead-time to build a new vessel is approximately two years, and the average economic life of a bulk carrier is 25 years.

Once a vessel is built it stays in the fleet during good times and bad. When the market becomes oversupplied, like we are witnessing this year, the BDI tends to be depressed irrespective of overall industrial activity! As a matter of fact, the BDI is currently being assessed at below historical average levels, not-withstanding a very robust demand for raw materials. Which means that at times of tonnage over-supply or under-supply, the absolute BDI level becomes uncorrelated to industrial activity.

Also short-term changes in the BDI can be caused by several factors other than underlying industrial activity. Changes in trading patterns, seasonality, inventory management, port delays, weather and/or political disruptions, can add more to short-term volatility than mere changes in industrial activity.

For publicly traded shipping companies that have exposure to the spot freight market, the BDI is a perfect proxy for their short-term earnings capacity. But as a leading economic indicator, the BDI does a rather poor job. (Originally Published April 25th, 2011)