Dry bulk shipper Eagle Bulk Shipping (EGLE 4.60, -0.24, -4.87%) is trading lower today following fourth quarter results, despite beating on the top and
bottom lines and turning from unprofitable to profitable.
After the close yesterday, the company reported fourth quarter earnings of $0.09, which came in ahead of expectations. On the top line, revenue rose 16.2% year/year to $86.69 mln, which easily surpassed expectations.
The gain was nice to see considering that the fourth quarter in 2017, as well as 2017 as a whole, was unprofitable.
After dropping over 57% between mid-December and mid-February (from 1406 to 598), the Baltic Dry Index (BDI), has shown some stabilization. Since then, the index has been in a tight range and is now at 669.00. The BDI is the benchmark that shows what type of pricing dry bulk shippers are receiving for renting out their ships.
So, dry bulk shippers such as EGLE, as well as its peers SBLK, GOGL, SB, SALT, DSX, NM, DCIX, GLBS, SINO, GNK, NMM, SHIP, SFL, ESEA, and DRYS, have been feeling some pain given this recent pullback. The U.S./China trade dispute has certainly been a factor weighing on this industry.
Moving back to the quarter, for the fourth quarter, the BDI declined 17.5%, which is why the company's Time Charter Equivalent (TCE) is being locked in at lower rates for the first quarter.
In the fourth quarter, the company's TCE rose 16% year/year top $12,142/day. However, in the first quarter, the company has received a TCE of $9,124/day, with approximately 90% of available days fixed for the period so far. Also, this is just barely above the company's fourth quarter 2018 total cash breakeven rate of $9,060/day.
This is all heaping on the stock today.
Separately, the company said, "We continue to execute on our fleet renewal program with the objective to optimize and modernize the fleet, and during the first quarter of 2019, we have acquired a 2015-built Ultramax and sold two 18 year-old vessels. In addition, we executed a refinancing which has allowed us to continue to strengthen our balance sheet - generating roughly $65.0 million in incremental liquidity, while lowering our cost of debt and extending maturity."
Overall, the company showed a nice beat today on the top and bottom line, but it is locked in at lower TCE rates for the next quarter. We will want to watch for any positive developments with the U.S./China trade dispute and watch overall demand for the key commodities that these companies ships, which include coal, iron ore, and grains.
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