Monday, August 08, 2022
Eagle Bulk Shipping (EGLE)
Eagle Bulk Shipping reports strong 2022-2Q results
Eagle Bulk Shipping Inc. (“Eagle”) is a US-based drybulk owner-operator focused on the Supramax/Ultramax mid-size asset class, which ranges from 50,000 and 65,000 deadweight tons in size; these vessels are equipped with onboard cranes allowing for the self-loading and unloading of cargoes, a feature which distinguishes them from the larger classes of drybulk vessels and provides for greatly enhanced flexibility and versatility- both with respect to cargo diversity and port accessibility. The Company transports a broad range of major and minor bulk cargoes around the world, including coal, grain, ore, pet coke, cement, and fertilizer. Eagle operates out of three offices, Stamford (headquarters), Singapore, and Hamburg, and performs all aspects of vessel management in-house including: commercial, operational, technical, and strategic.
Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Results were up sharply versus last year and slightly above our forecast. Net revenues were $198.7m in the most recent quarter, up 53% versus last year and in line with our $205.0m estimate. Improved sales reflect higher TCE shipping rates ($30,207 vs. $21,580) and more operating days (5,707 vs. 4,778) due to more owned and chartered-in vessels (60 vs. 55). Favorable sales led to a jump in adjusted EBITDA (which excludes hedges) to $102.6m from $6.6m surpassing our $93.4m estimate. The EBITDA surprise was due to lower-than-expected voyage expenses. Adjusted net income was $81.6m ($4.98/diluted share) versus our $73m.
Charter rates have slipped but still remain above historical averages. Shipping rates declined in the second quarter as fighting in Ukraine and overall global economic concerns affected prices. Eagle has locked in 72% of its shipping rates for the third quarter as compared to an 83% rate in the second quarter leaving it a bit more exposed to spot prices. The fourth quarter is typically the highest-priced quarter due to North American grain shipments. Management believes the market for dry bulk shipping is also favorable with China opening up, Russian and Ukraine grain shipments resuming, and Brazil iron ore supply growing. Management points out that new vessel construction is limited and new orders wouldn’t be completed until 2024….
This Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
