Eagle Bulk Shipping Inc.

Good day and welcome to Eagle Bulk's second quarter 2023 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Instructions will be given at that time. As a reminder, this call is being recorded. I would like to turn the call over to Gary Vogel, CEO. You may begin.

Thank you and good morning. I'd like to welcome everyone to Eagle Bolt's second quarter 2023 earnings call. To supplement our remarks today, I would encourage participants to access a 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 guarantees 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 TCE, TCE revenues, adjusted net income, EBITDA, and adjusted EBITDA. 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 reconciliation to the most comparable GAAP financial measures. Please turn to slide six. Today we'll start with a discussion of operations. Against the backdrop of a modest recovery in rates relative to first quarter averages, we generated net income of $18 million or $1.42 per share basic. Based on this result and consistent with our stated capital allocation strategy, EGLE's board of directors declared a cash dividend of 58 cents per share equal to 30% of net income. I'm pleased to report that we successfully concluded the transfer of crew management on 18 of our ships, resulting in a more balanced nationality makeup and improved crew sourcing opportunities, which support our ongoing efforts to offset challenges arising from geopolitical events, such as the Russia Ukraine war. This was a significant undertaking and one which we were able to complete with limited impact operations. On the vessel S&P front, we closed on the purchase and took delivery of two 2020-built scrubber-fitted Ultramaxes during the quarter. We also closed on the sale and delivered two of our mid-aged non-scrubber-fitted Supermaxes to the new owners. Additionally, and subsequent to quarter end, we closed on the sale and delivered a third mid-aged non-scrubber-fitted Supermax. As reported previously, the purchase and subsequent sale of these three vessels generated a levered IRR of roughly 70% over the past 24 months. As of today, we have no pending S&P activity, and our fleet totals 52 ships, 96% of which are scrub refitted. Lastly, from a balance sheet perspective, we executed an upsize and extension to our credit facility as previously disclosed. Costa will provide more detail on this later in the call. Please turn to slide seven. For Q2, we achieved a net TC of $14,434, representing an outperformance versus the benchmark BSI of roughly 35%, or $3,748 per ship per day. Although the BSI at the beginning of April was trading around 13,000, it declined significantly during the second quarter, falling to roughly $8,000 by the end of June. The weakness we saw in market freight rates during the quarter can primarily be attributed to lackluster demand growth out of China and a continued easing in congestion, which has effectively increased vessel supply into the market. As we look to the third quarter, spot rates remain weak with the BSI presently hovering around 8,000. As of today, we fixed approximately 67% of our own available days for Q3 at a net TC of 10,900. Before turning the call to Costa, I want to take a moment and briefly mention the transaction we announced in June, whereby we repurchased Oaktree's 3.8 million shares, which represented a 28% strategic shareholding position. Given we were able to conclude the transaction at a discount to NAV, and based on our constructive view of the medium-term fundamentals, we believe this deal will be highly accretive for our shareholders. With that, I would now like to turn the call over to Costa, who will discuss our second quarter financials.

Thank you, Gary. Please turn to slide 9. TCE revenues improved 10% on the quarter to total $64.9 million. This translates to a TCE of $14,434 based on 4502 owned available days for the period in line with our previous guidance. As mentioned earlier, Our cheap TCE represents a significant outperformance against the benchmark BSI index and continues to demonstrate the strength of our commercial platform. Vessel operating expenses improved roughly 1% quarter-on-quarter to a total of $31 million, or $64.51 per day, in line with our outlook. It's important to note that OpEx was impacted by a number of non-recurring items for the period, including startup and improvement costs on recently acquired vessels, costs related to the previously mentioned crew management transition, and discretionary upgrades on some vessels. Excluding these non-recurring items, adjusted outbacks equated to $58.82 per day, which is in line with our previous guidance. General and administrative expenses increased $300,000 in the quarter to total $11.3 million with cash G&A costs coming in flat at $9.1 million. We incurred a $700,000 mark-to-market adjustment on right-of-use assets, which related to one of our chartering chips. This non-cash charge was driven primarily by the weaker freight environment. During Q2, we closed on the sales of the Montauk Eagle and Newport Eagle, realizing a total gain on these sales of $11.6 million. As indicated earlier, Subsequent to the quarter end, we sold and delivered the Sanctity Eagle and expect to realize a gain on sale of $4.9 million in Q3. Net interest expense, inclusive of cash interest expense, cash interest income, and non-cash deferred financing fees came in at $2.6 million for the quarter, in line with our prior guidance. The unrealized net P&L and derivatives for Q2 was positive $2 million. This was primarily attributed to our outstanding FFA position as of June 30. Adjusted net income, which is net income adjusted for the unrealized P&L in derivatives and the non-cash mark-to-market adjustment on the right-of-use asset came in at $16.7 million or $1.31 per share basic and $1.13 per share diluted. Please note that the convertible bond was deemed to be dilutive this quarter from the EPS perspective and as such, the shares underlying the security were included in the diluted share count. Adjusted EBITDA amounted to $24.8 million. Please turn to slide 10. We ended the quarter with a total cash position of $118 million, down 37.5 as compared to March 31st. We generated 24.7 million from operations, used 23.7 million in investing activities, which was primarily comprised of $54.4 million spent on two vessel purchases, offset by $32.3 million received from two vessel sales. We used $38.6 million in financing, which is comprised of the following. $184 million in net debt proceeds received, $221 million spent on the share repurchase, inclusive of deal fees, and $1.4 million in total dividends paid. Please turn to slide 11. After taking into consideration the sale of the Sanctity Eagle, which took place in July, our pro forma June 30 liquidity position totals $195 million, inclusive of $60 million in undrawn RCF availability. Total debt outstanding as of quarter end was $517 million, comprised of the following. $104 million on the convertible bond face amount, $288 million on the term loan, and 125 million on the RCF. As reported previously, during Q2, we executed an upsize and extension of our credit facility, which provided for an increase of 175 million in total borrowing capacity, a reduction in margin, and an extension of maturity to September of 2028. The margin on our credit facility can now range between 2.05 and 2.75% based on leverage and certain sustainability criteria. Presently, our margin is at the lowest threshold of 2.05%. Inclusive of interest rate swaps we have in place, the all-in weighted average interest rate on our total debt position is approximately 5.25% today. For more information on our debt facilities, please reference the debt term summary slide in the appendix. Please turn to slide 12. As we look ahead into Q3, we're providing you with the following informational outlook. Owned available days is projected to be 4608 after taking into consideration S&P activity and estimates for both scheduled and unscheduled off-hire. As Gary indicated earlier, as of today, we have fixed approximately 67% of our owned available days at a TCE of 10,900. Please note that this figure is inclusive of our pro rata estimate for realized FFA gains and losses, the period on a mark-to-market basis. On the expense side, we are projecting the following on a per vessel per day basis. Vessel operating expenses are expected to improve further and normalize as we anticipate less impact from the non-recurring items. We estimate OPX to range between 5900 and 6200. And excluding non-recurring items, adjusted OPX is expected to come in between 5800 and 6100. Non-cash depreciation and amortization expense is projected to come in between $3,200 and $3,400. DNA cash expenses is forecasted to come in between $1,700 and $1,900. Non-cash stock-based compensation is estimated to come in between $300 and $400. Net interest expense is expected to come in between $1,600 and $1,900. As of June 30, we had 9.3 million basic shares outstanding and 12.9 million diluted shares outstanding after taking into account the shares underlying the convertible bond and unvested equity awards. This concludes my remarks. I will now turn the call back to Gary, who will discuss industry fundamentals.