Eagle Bulk Shipping Inc.

only mode. Later we will conduct a question and answer session and instructions will follow at that time. To ask a question during a session, you will need to press star 1 on your telephone. As a reminder, this conference call is being recorded. I would now like to turn the call over to Gary Vogel, Chief Executive Officer, and Frank DeConstanzo, Chief Financial Officer of Eagle Bulk Shipping. Mr. Vogel, you may begin.

Thank you and good morning. I'd like to welcome everyone to Eagle Bolt's first quarter 2021 earnings call. To supplement our remarks today, I would encourage participants to access the slide presentation that is available on our website at eagleships.com. Please note that part of our discussion today will include forward-looking statements. These statements are not guaranteed of future performance and are inherently subject to risk and uncertainties. You should not place undue reliance on these forward-looking statements. Please refer to our filings with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties that may have a direct bearing on our operating results, our performance, and our financial condition. Our discussion today also includes certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, and TCE. Please refer to the appendix in the presentation and our earnings release filed with the Securities and Exchange Commission for more information concerning non-GAAP financial measures and a reconciliation to the most comparable GAAP financial measures. Please turn now to slide five. Dry bulk rates saw continued and significant upward momentum in Q1 as trade demand continued to increase thanks to both the ongoing reopening of economies and general restocking of inventories, as well as the effects of unprecedented amounts of fiscal and monetary stimulus getting put to work around the world. The Baltic Supermax Index averaged $16,633 in the first quarter, up almost 6,000, or 55 percent, as compared to Q4, representing one of the best historic quarterly increases on both a dollar and percentage basis. Asset prices followed suit, where, as an example, values for 10-year-old Supermaxes are up about 35 percent on the quarter. This represents the third highest percent quarter-on-quarter increase in the last 20 years, the first two being in early 2004 at the beginning of the 2000s dry bulk super cycle. I think it's important to highlight that values are moving higher on the back of a significant increase in the volumes of sale and purchase transactions as well. Year to date, over 115 Supermax Ultra Max vessels have been bought and sold, implying an annualized run rate of almost 400 ships. If maintained, this would be by far the largest amount of ships transacted within a year. Notwithstanding the dramatic increase in asset prices over the last few months, the chart on this slide would indicate significant potential upside remains. Spot rates are around 10-year highs, but prices remain well discounted to 2010 levels when spot rates were similar. Assuming a return to 2010-type levels, we could see further upside in secondhand values of around 50 percent, which would, of course, translate to increased NAV. Please turn to slide six. As mentioned in our last earnings call, we purchased a total of seven vessels between late November and early February. These acquisitions appear to be well-timed with current values up 35% on average or around $34 million basis recent transactions. To date, we've taken delivery of four of these ships with the remaining three expected to deliver between late May and June. Performer for pending deliveries, our fleet now totals 52 ships, 87% of which are scrubber fitted and overall averaging 8.9 years of age. Please turn to slide 7 for a review of the quarter. EGLE generated a net TC for the first quarter of 15,124, the highest level in more than 10 years. As we've discussed in previous calls, it's challenging to catch and beat a rapidly rising market as a percentage of days are fixed in advance. I've often said I'd love to have to explain why we didn't beat a market that shot up 10,000 over a few months, and that's exactly what has happened. Looking ahead, the strong upward momentum in the market has continued into Q2. Given our short-duration exposure and our active management approach to trading our ships, we've been able to successfully capture this move up. As of today, we fixed about 71% of our available days for the second quarter, at a net TC of 20,100 per day. Please turn to slide eight. In terms of operating performance, we generated $31.5 million of EBITDA, representing a 40% improvement over the prior quarter. I believe this increased performance really underscores the significant operating leverage inherent in our business. With that, I'd now like to turn the call over to Frank, who will review our financial performance.

Thank you, Gary. Please turn to slide 10 for a summary of our first quarter financial results. The continued improvement in the chartering market and our short duration profile drove our top line growth in Q1, with revenue net of both voyage and charter hire expenses totaling $61.5 million, an increase of 23 percent from the prior quarter. Net income came in at $9.8 million, for the first quarter, our most profitable quarter in more than 10 years. Earnings per share, or EPS, for the first quarter was 84 cents on both a basic and diluted basis. Adjusted EBITDA improved in Q1, coming in at 31.5 million as compared to 22 million in the prior quarter and 18.8 million for the first quarter of 2020. Let's now turn to slide 11 for an overview of our balance sheet and liquidity. Total cash, inclusive of $4.5 million of restricted cash, was $80.7 million at the end of Q1, representing a decrease of $8.1 million as compared to the year end. The decrease in cash was primarily a result of the $7.8 million principal payment on the ultra-co debt facility and the repayment of $15 million for the super senior revolving credit facility. In addition, we paid $47.7 million for the acquisition of three vessels, plus a further $4.7 million for advanced deposits on four vessels expected to be delivered in the second quarter of 2021. The outlays were offset by cash provided by operating activities of $14.3 million and $55 million drawn from the UltraCo revolving credit facility. Total liquidity remains strong at $119.7 million at the end of Q1. Total liquidity is comprised of total cash of $80.7 million and $39 million in undrawn revolving credit facility availability, $15 million on CHIPCO, and $24 million on the HOLCO RCFs. As previously reported, we have funded the acquisition of one vessel with restricted cash. In addition, we have secured new debt facilities totaling $51.5 million for six of our newly acquired vessels. We intend to draw down on these facilities as the vessels are delivered to us, and as of the date of this earnings call, we have drawn $29.5 million against three ships. Total gross debt, excluding debt issuance costs at the end of Q1, was $507.7 million, an increase of $32.2 million from the prior quarter. The increase is due to the $55 million we drew down on the UltraCo revolving credit facility offset by principal repayments of $7.8 million on the UltraCo debt facility and a repayment of $15 million on the Super Senior revolver. Please now turn to slide 12 for an overview of our cash flow from operations for the first quarter of 2021. Net cash provided by operating activities was 14.3 million in Q1. Cash flow was strong in the quarter on the back of improving charter hire rates. The chart highlights the timing-driven variability that working capital introduces to cash from operations, as depicted by the difference between the dark blue bars, which are the reported cash from ops numbers, and the light blue bars, which strip out changes in operating assets and liabilities, primarily working capital. As the chart demonstrates, the volatility caused by working capital largely evens out over time. Please turn to slide 13 for a Q121 cash walk. This chart lays out the changes in the company's cash balances during the first quarter. The revenue and operating expenditure bars are a simple look at the operations. The net of these two numbers is positive $33 million, which is close to our adjusted EBITDA number. Moving to the right, we incurred $5 million of dry dock costs in the quarter. The $53 million for vessel S&P represents the acquisition of three vessels for $47.7 million, plus deposits of $4.7 million paid for four additional vessels, and vessel improvements of $300,000. We repaid $15 million drawn from our super senior revolving credit facility and drew down $55 million from the ultra-co debt facility revolver. And we paid $12 million in debt principal and interest in the quarter. Let's now review slide 14 for our cash breakeven per ship per day. Cash breakeven per ship per day came in at $11,101 for the first quarter. Vessel expenses, excluding certain one-time non-recurring expenses related to vessel acquisition and sales, came in at $4,894 per ship per day in Q1. We continue to face higher operating expenses related to the COVID-19 pandemic as we are incurring higher lodging and transportation costs related to crew changes. Dry docking came in at $1,148 per ship per day in Q1, $364 higher than prior quarter on an increase in the number of dry docks completed in the quarter. Cached G&A came in at $1,626 per ship per day in Q1, down $198 from Q4. It is worth noting that our G&A per ship calculation is based on our owned vessels, whereas we operate a larger fleet including our chartered-in tonnage. If we were to include the chartered-in days in our calculation, G&A per ship per day would decrease by about $221. Cash interest expense came in at $1,573 per ship per day in Q1, which is marginally higher on a decrease in ownership days in the quarter. Cash debt principal payments came in at $1,860 per shipper day in Q1, $813 lower than prior quarter. The decrease is attributable to amortization repayments on the Norwegian bond debt, which are only paid semi-annually in Q2 and Q4. This concludes my comments. I will now turn the call back to Gary.