Friday, January 17, 2014

Baltic Trading Limited - Earnings Preview 2013-Q4

Spot-market oriented dry cargo shipping company Baltic Trading Limited (BALT) is expected to return to profitability snapping a seven-quarter losing streak. I estimate that BALT generated net income of $2,150,000 or $0.04 basic earnings per share during the last quarter of 2013. I also expect the company to double its cash distribution for the fourth quarter of 2013 to $0.04 per share. 


Following a slew of recent vessel acquisitions, including its first new-building order for four eco-design Ultramax vessels (DWT 64,000 MT), BALT is poised to capitalize on its chartering strategy. All of its vessels have spot exposure, being employed in spot index-related time charters or in commercial pools. The company currently operates 13 dry cargo vessels, with a total DWT capacity of 1,100,000 MT and an average age of just 3.8 years as of December 31st, 2013.

Baltic Trading had a very busy year last year. It acquired four vessels at a total cost of approximately $145.5 million. It also ordered four new-building vessels at a contract price of $112 million. To finance its fleet growth, BALT raised $136 million in net proceeds from three equity offerings. It also borrowed $66 million under two credit facilities.

Baltic Trading has a very conservative balance sheet. Its total debt outstanding at year-end stood at $168 million. This compares favorably to its current market capitalization of $356 million (based on last Friday’s closing price of $6.18 per share).