Golden Ocean (GOGL 7.93 +0.29) is trading 4% higher this morning following
quarterly earnings results.
Also, peers Diana Shipping (DSX) and Navios Maritime (NM) reported this morning as well, proving additional action to the group today.
Aside from all of this, shipping stocks have seen some severe volatility, which began in early November, basically after Diana Containership's (DCIX) reverse split went into effect. Following this action, a lot of highly speculative shipping stocks began to show some short squeezing, such as DCIX, TOPS, GLBS and DRYS.
Today, shipping stocks are trading in a more typical way. However, don't forget that this group can get quite volatile. As one quick example, during the last severe short-squeezing action that we saw in early November, DCIX rose over 1700% in a few sessions.
- On November 1, 2017, shares of DCIX closed at $2.10/share
- On November 2, 2017, DCIX 1/7 split went into effect and shares closed 19% higher at $2.50/share
- Over the next two sessions (Friday Nov. 3 and Monday, Nov 6), shares of DCIX surged 708% to close yesterday at $20.19/share... yes, the stocks surged 708% from $2.50 to just over $20.00/share in two days
- Between the session low of $1.56 seen last Thursday, November 2, 2017 and the session high seen yesterday, Monday, November 6, 2017, of $28.48/share, DCIX surged as much as 1726%
Back to GOGL...
The company reported third quarter earnings of $0.4 million (or $0.00) early this morning, coming in above the loss the Street was expecting. On the top line, revenue rose 79.1% to $127.0 million, also beating expectations.
The improvement in operating revenues was due to an $18.2 million contribution from 16 recently acquired vessels that were delivered in the second and third quarters, as well as improving market rates.
Voyage expenses increased by $6.4 million compared with the prior quarter, primarily due to an increase in vessels trading on voyage charter instead of time charter contracts. The average TCE rate for the fleet was $12,958 per day in the third quarter compared with $12,237 per day in the second quarter.
Adjusted EBITDA was reported at $40.4 million for the third quarter of 2017 compared with $29.7 million in the second quarter of 2017 and $8.6 million for the third quarter of 2016.
Golden Ocean returned to profitability in the third quarter of 2017 and significantly improved the operating cash flow in an improving freight environment.
The company has taken a series of steps to maximize its market leverage by focusing commercial efforts on the vessel segments we believe provide the greater exposure to a recovery in the dry bulk shipping market. The company's financial position has also been enhanced significantly over the past twelve months following improved operating results, strategic asset sales, and the equity issuance completed last month.
The company has also been able to terminate waivers on its recourse debt and return to normal financial covenants as well as removing restrictions on new acquisitions, new debt and dividend payments one year ahead of the timeline the Company previously agreed to with the lenders.
With its strong cash balance and continued debt amortization payments, its balance sheet should continue to strengthen. This provides the company the financial flexibility with respect to the majority of its free cash flow to pursue additional opportunities and build shareholder value.
At the same time, long-term debt increased by $40.3 million, net of $2.9 million in debt repayments, in the third quarter as a result of the assumption of new bank debt financing for the three remaining vessels delivered from Quintana.
As of September 30, 2017, accumulated deferred debt repayments, comprising the two prior quarters' deferrals under the Company's loan facilities, amounted to $28.8 million. The company prepaid the full balance in October 2017, and the $28.8 million was classified as current portion of the long-term debt as of September 30, 2017.
Some overall industry color...
Total seaborne transportation of dry bulk goods in the third quarter increased to 1,142 mt compared to 1,107 mt in the second quarter and 1,099 mt in the third quarter of 2016, according to Maritime Analytics. Seaborne demand for all major commodity groups increased in the third quarter compared to the second quarter, following the trend of positive global growth.
The company returned to profitability in the third quarter and achieved time charter rates above our cash break even levels including debt repayments. Thus far in the fourth quarter, rates have continued to improve, which should contribute positively to the Company's earnings in the quarter.
The gradual improvement in the dry bulk market continues, and in particular the growth in the demand of seaborne transportation has exceeded expectations so far this year.