SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 7, 2006
EAGLE BULK SHIPPING INC.
(Exact name of each Registrant as specified in its Charter)
Marshall Islands 000-51366 98-0453513
(State or other jurisdiction of (Commission File (IRS employer identification
incorporation or organization) Number) no.)
477 Madison Avenue 10022
Suite 1405 (Zip Code)
New York, New York
(Address of principal executive
offices)
(Registrant's telephone number, including area code): (212) 785-2500
Item 2.02 Results of Operations and Financial Condition.
On August 7, 2006, the Eagle Bulk Shipping Inc. (the "Company") issued a press
release relating to its second quarter of 2006 results. Further, the press
release also announced that the members of the Company's senior management team
will host a teleconference and webcast at 8:30 a.m. ET on August 8, 2006 to
discuss the second quarter 2006 results. A copy of the press release is attached
hereto as Exhibit 99.1.
Exhibit 99.1
Eagle Bulk Shipping Inc. Reports Second Quarter 2006 Results
NEW YORK, NY, August 7, 2006 -- Eagle Bulk Shipping Inc. (Nasdaq: EGLE), a
global marine transportation company specializing in the Supramax segment of the
dry bulk shipping industry, today announced its results for the second quarter
of 2006.
Second quarter 2006 highlights included:
----------------------------------------
o Net Income of $9.4 million or $0.28 per share (based on a weighted
average of 33,180,898 diluted shares outstanding for the quarter) on
net revenues of $24.1 million.
o Adjusting for a non-cash, non-dilutive compensation charge of
$1.9 million, net income was $11.3 million or $0.34 per share.
o EBITDA, as adjusted for exceptional items under the terms of the
Company's credit agreement, of $19.2 million. Please see below for a
reconciliation of EBITDA to net income.
o Dividend of $0.50 per share, paid on August 3, 2006, to shareholders
of record as of July 28, 2006.
o Gross time charter revenue of $26.2 million.
o Acquisition of three Supramax vessels - one on June 30, 2006,
remaining two in early July 2006 bringing the fleet to 16 vessels with
an average age under 6 years.
o Successfully raised $33 million in equity to finance growth
initiatives.
o Increased revolving credit facility from $330 million to $450 million
providing over $235 million in availability.
Sophocles Zoullas, Chairman and Chief Executive Officer, commented, "We are
extremely pleased with our performance and free cash flow for the second
quarter, which enabled us to pay a dividend to shareholders of $0.50 per share.
We have now paid aggregate dividends of $2.11 per share, in just four quarters.
Mr. Zoullas continued, "At present, 97.5% of our fleet's projected 2006 earnings
are covered by fixed rate time charters at an average daily rate in excess of
$21,600, providing significant insulation from volatility in the dry bulk spot
market as well as earnings visibility. Our amended and enhanced credit facility
of $450 million lowers our overall cost of capital and currently provides us
with an undrawn commitment of over $235 million. We continue to maintain one of
the lowest cash break-evens in the dry bulk sector, and our recently expanded
fleet and very strong capital structure positions us well to continue to make
additional opportunistic investments to grow the business."
Results for the three and six months period ended June 30, 2006
For the second quarter of 2006, the Company reported net income of $9,391,736 or
$0.28 per share, based on a weighted average of 33,180,988 diluted shares
outstanding. Net income included a non-cash, non-dilutive compensation expense
of $1,938,970. Excluding this non-cash charge, net income for the quarter was
$11,330,706 or $0.34 per share.
For the six-months ended June 30, 2006, the Company reported a net income of
$20,184,237 or $0.61 per share, based on a weighted average of 33,165,246
diluted shares outstanding. Excluding a non-cash, non-dilutive compensation
expense of $2,691,656, net income for the six-months is $22,875,893 or $0.69 per
share.
In the three-months ended June 30, 2005 the Company reported a net loss of
$12,088,544 or $0.87 per share, based on a weighted average of 13,857,692 basic
and diluted shares. In the quarter ended June 30, 2005, the Company recorded a
non-cash, non-dilutive compensation expense of $7,640,847. In the period from
January 26, 2005 (inception) to June 30, 2005 the Company reported a net loss of
$12,894,757 or $0.96 per share, based on a weighted average of 13,396,154 basic
and diluted shares.
Revenues
All of the Company's revenues for the quarter ended June 30, 2006 were
earned from time charters. Net revenues, for the three-month period ended June
30, 2006, of $24,105,383 includes billed time charter revenues of $26,199,776
and deductions for brokerage commissions of $1,320,894 and $773,500 in
amortization of net prepaid and deferred charter revenue. Net revenues for the
three-month period ended June 30, 2006 were 127% greater than net revenues for
the three-month period ended June 30, 2005, primarily due to a larger fleet size
as reflected by increased operating days. Net revenue, for the same three-month
period ended June 30, 2005, was $10,615,879 which included time charter revenues
of $11,486,411 and deductions for brokerage commissions of $665,532 and $205,000
in amortization of net prepaid and deferred charter revenue.
Net revenues, for the six-month period ended June 30, 2006, of $47,895,435
includes billed time charter revenues of $52,247,893 and deductions for
brokerage commissions of $2,641,958 and $1,710,500 in amortization of net
prepaid and deferred charter revenue. Net revenue, for the period from January
26, 2005 (inception) to June 30, 2005, was $11,486,411 which included billed
time charter revenues of $10,615,879 and deductions for brokerage commissions of
$665,532 and $205,000 in amortization of net prepaid and deferred charter
revenue. Net revenues for the six-month period ended June 30, 2006 were greater
than net revenues for the period from January 26, 2005 (inception) to June 30,
2005 primarily due to a larger fleet size and to reflect the shorter operating
period in 2005 as operations commenced only in April 2005.
As is common in the shipping industry, the Company pays commissions ranging
from 1.25% to 6.25% of the total daily charter hire rate of each charter to
unaffiliated ship brokers and in-house brokers associated with the charterers,
depending on the number of brokers involved with arranging the charter.
Vessel Expenses
For the three-month period ended June 30, 2006, total vessel expenses
incurred amounted to $4,919,422. These expenses included $4,584,922 in vessel
operating costs and $334,500 in technical management fees. Total vessel expenses
for the three-month period ended June 30, 2006 were higher than the same
three-month period ended June 30, 2005 due to the increase in fleet size and
corresponding increase in vessel ownership days. Total vessel expenses for the
three-month period ended June 30, 2005 were $3,066,188.
For the six-month period ended June 30, 2006, total vessel expenses
incurred amounted to $9,624,419. These expenses included $8,954,919 in vessel
operating costs and $669,500 in technical management fees. Total vessel expenses
for the six-month period ended June 30, 2006 were higher than the period from
January 26, 2005 (inception) to June 30, 2005 due to the increase in fleet size
and the increase in vessel ownership days. Total vessel expenses for the period
from January 26, 2005 (inception) to June 30, 2005 were $3,115,399.
Vessel operating expenses include crew wages and related costs, the cost of
insurance, expenses relating to repairs and maintenance, the cost of spares and
consumable stores, tonnage taxes, other miscellaneous expenses, and technical
management fees. With regard to vessel operating expenses, the Company has
entered into technical management agreements for each of its vessels with V.
Ships Management Ltd, an independent technical manager. In conjunction with
management, V. Ships has established an operating expense budget for each vessel
and performs the technical management of the Company's vessels. All deviations
from the budgeted amounts are for the Company's account.
Depreciation and Amortization
The cost of the Company's vessels is depreciated on a straight-line basis
over the expected useful life of each vessel. Depreciation is based on the cost
of the vessel less its estimated residual value. The Company estimates the
useful life of its vessels to be 28 years from the date of initial delivery from
the shipyard to the original owner. Furthermore, the Company estimates the
residual values of its vessels to be $150 per lightweight ton, which it believes
is common in the dry bulk shipping industry. Depreciation charges will increase
as the fleet is enlarged, which will also lead to an increase of ownership days.
For the three-month period ended June 30, 2006, total depreciation and
amortization expense was $4,937,661 of which amount, $4,749,665 relates to
depreciation and $187,996 relates to the amortization of deferred drydocking
costs. Depreciation expenses increased from the corresponding three-month period
ended June 30, 2005 due to the growth in our fleet. Total depreciation expense
for the three-month period ended June 30, 2005 was $2,020,572.
Amortization of deferred financing costs for the three-month period ended
June 30, 2006 is included in interest expense. These costs of $33,275 relate to
the amortization of financing costs associated with our revolving credit
facility. Amortization of deferred financing costs for the corresponding
three-month period ended June 30, 2005 was $1,130,713 which related to the
financing costs associated with the then existing term loan.
For the six-month period ended June 30, 2006, total depreciation and
amortization expense was $9,757,243 of which amount, $9,447,136 relates to
depreciation and $310,107 relates to the amortization of deferred drydocking
costs. Depreciation expenses increased from the corresponding period from
January 26, 2005 (inception) to June 30, 2005 due to the growth in our fleet.
Total depreciation expense for the period from January 26, 2005 (inception) to
June 30, 2005 was $2,020,572.
Amortization of deferred financing costs for the six-month period ended
June 30, 2006 is included in interest expense. These costs of $66,225 relate to
the amortization of financing costs associated with our revolving credit
facility. Amortization of deferred financing costs for the corresponding period
from January 26, 2005 (inception) to June 30, 2005 was $1,130,713 which related
to the financing costs associated with the then existing term loan.
General and Administrative Expenses
The Company's General and Administrative Expenses include recurring
administrative costs and non-recurring formation and advisory costs. Recurring
costs include onshore vessel administration related expenses such as legal and
professional expenses and administrative and other expenses including payroll
and expenses relating to the Company's executive officers and office staff,
office rent and expenses, directors and officers insurance and directors fees
and expenses. Non-recurring costs include costs relating to the formation of the
Company and related advisory costs. The Company expects general and
administrative expenses to increase as its fleet is expanded.
General and Administrative Expenses for the three-month periods ended June
30, 2006 and 2005 were $1,114,024 and $663,034 respectively. The increase in
such expenses was primarily due to increase in recurring administrative costs as
our fleet expanded. For the three-month period ended June 30, 2006, all of our
general and administrative costs were recurring in nature. For the corresponding
three-month period ended June 30, 2005, recurring administrative costs amounted
to $363,327. We did not incur any non-recurring costs in the three-months ended
June 30, 2006. For the corresponding three-month period ended June 30, 2005,
non-recurring costs amounted to $299,707.
General and Administrative Expenses for the six-month period ended June 30,
2006 and period from January 26, 2005 (inception) to June 30, 2005 were
$2,099,503 and $1,420,036 respectively. The increase in such expenses was
primarily due to increase in recurring administrative costs as our fleet
expanded. For the six-month period ended June 30, 2006, all of our general and
administrative costs were recurring in nature. For the corresponding period from
January 26, 2005 (inception) to June 30, 2005, recurring administrative costs
amounted to $609,769. We did not incur any non-recurring costs in the six-months
ended June 30, 2006. For the corresponding period from January 26, 2005
(inception) to June 30, 2005, non-recurring costs amounted to $810,267.
Non-Cash Compensation Expense
For the three-month periods ended June 30, 2006 and June 30, 2005, the
Company recorded non-cash compensation charges of $1,938,970 and $7,640,847
respectively. For the six-month period ended June 30, 2006 and the period from
January 26, 2005 (inception) to June 30, 2005 the Company recorded a non-cash
compensation charge of $2,691,656 and $7,640,847. The expense for the six-month
period ended June 30, 2006 includes $2,644,623 in non-cash, non-dilutive charges
relating to profits interests awarded to members of the Company's management by
the Company's principal shareholder Eagle Ventures LLC, and a non-cash amount of
$47,033 which relates to the fair value of the stock options granted on March
17, 2006 to certain directors of the Company under the 2005 Stock Incentive
Plan.
The profits interests dilute only the interests of the owners of Eagle
Ventures LLC, and not holders of the Company's common stock. However, Generally
Accepted Accounting Principles require that share-based awards to an employee of
the Company by a shareholder (such as Eagle Ventures LLC) be accounted for as
compensation for services provided to the Company. Consequently, the Company's
income statement reflects such non-cash charges for compensation related to the
profits interests in Eagle Ventures LLC.
Interest Expense
Interest expense for the three-month period ended June 30, 2006, of
$2,117,322 includes loan interest of $1,893,185 incurred on our borrowings from
our revolving credit facility, commitment fees of $190,862 incurred on the
unused portion of the revolving credit facility, and costs of $33,275 relating
to the amortization of financing costs associated with our revolving credit
facility. Interest expense for the three-month period ended June 30, 2005, was
$3,233,596. These costs included loan interest costs of $1,353,306, commitment
fees of $141,355, amortization charges of $1,130,713 relating to financing costs
associated with the then existing term loan and the revolving credit facility,
and $608,222 in interest costs associated with a Note from Eagle Ventures.
Interest expense for the six-month period ended June 30, 2006, of
$4,183,673 includes loan interest of $3,734,475 incurred on our borrowings from
our revolving credit facility, commitment fees of $382,973 incurred on the
unused portion of the revolving credit facility, and costs of $66,225 relating
to the amortization of financing costs associated with our revolving credit
facility. Interest expense for the previous period from January 26, 2005
(inception) to June 30, 2005, was $3,233,596. These costs included loan interest
costs of $1,353,306, commitment fees of $141,355, amortization charges of
$1,130,713 relating to financing costs associated with the then existing term
loan and the revolving credit facility, and $608,222 in interest costs
associated with a Note from Eagle Ventures.
As of June 30, 2006, the Company's debt consisted of $182,400,000 drawn
under its 10-year revolving credit facility. On July 3, 2006 and July 7, 2006,
respectively, the Company took delivery of two Supramax class vessels, TERN and
JAEGER. The Company funded the balance of the purchase price of $62,100,000 for
the two vessels with a combination of proceeds from cash on hand and additional
borrowings of $32,400,000 from its revolving credit facility. Following the
completion of these acquisitions the Company's borrowings under the revolving
credit facility stood at $214,800,000.
The facility bears interest at LIBOR plus a margin of 0.95%. The Company
also pays a commitment fee of 0.4% per annum on the unused portion of the
revolving credit facility. For the three-month period ended June 30, 2006,
interest rates applicable on the Company's debt ranged from 5.17% to 6.29%,
including the margin. The weighted average effective interest rate was 5.30%.
For the six-month period ended June 30, 2006, interest rates applicable on the
Company's debt ranged from 5.17% to 6.29%, including the margin. The weighted
average effective interest rate was 5.28%.
The Company has entered into interest rate swaps to effectively convert a
portion of its debt from a floating to a fixed-rate basis. The swaps are
designated and qualify as cash flow hedges. Interest rate swap contracts for
notional amounts of $100,000,000 and $30,000,000 were entered into in 2005.
These contracts mature in September 2010. Exclusive of a margin of 0.95%, the
Company will pay fixed-rate interest of 4.22% and 4.54% respectively, and
receive floating-rate interest amounts based on three month LIBOR settings (for
a term equal to the swaps' reset periods). The Company records the fair value of
the interest rate swap as an asset or liability on the balance sheet. The
effective portion of the swap is recorded in accumulated other comprehensive
income. Accordingly, $6,027,014 has been recorded in Other Assets in the
financial statements as of June 30, 2006.
On July 6, 2006, the Company received a commitment from its current lender
to increase and amend its 10-year revolving credit facility to $450,000,000 from
$330,000,000. The entire $450,000,000 facility will be available for a period of
six years from July 31, 2006, compared to four years remaining in the commitment
period of the Company's existing facility. There are no principal repayment
obligations during this initial six-year period. Over the remaining four years,
the facility will reduce in semi-annual amounts of $25,000,000 with a final
reduction of $250,000,000 occurring simultaneously with the last semi-annual
reduction.
We are permitted to borrow up to $15,000,000 (increased from $10,000,000
under its existing facility) at any one time for working capital purposes during
an initial period of 18 months from the first draw down date, after which time
our ability to borrow amounts for working capital purposes is subject to review
and reapproval on an annual basis.
The amended facility will bear interest at the rate of 0.75% to 0.85%
over LIBOR (decreased from 0.95% over LIBOR under its existing facility),
depending upon the amount of debt drawn as a percentage of the value of the
Company's vessels. The Company will pay a commitment fee of 0.25% per annum
(decreased from 0.40% under its existing facility) on the undrawn amount of the
amended facility. We paid our lender an arrangement fee of $900,000 in
connection with the amended credit facility.
Disclosure of Non-GAAP Financial Measures
EBITDA represents operating earnings before extraordinary items,
depreciation and amortization, interest expense, and income taxes, if any.
EBITDA is included because it is used by certain investors to measure a
company's financial performance. EBITDA is not an item recognized by GAAP and
should not be considered a substitute for net income, cash flow from operating
activities and other operations or cash flow statement data prepared in
accordance with accounting principles generally accepted in the United States or
as a measure of profitability or liquidity. EBITDA is presented to provide
additional information with respect to the Company's ability to satisfy its
obligations including debt service, capital expenditures, and working capital
requirements. While EBITDA is frequently used as a measure of operating results
and the ability to meet debt service requirements, the definition of EBITDA used
here may not be comparable to that used by other companies due to differences in
methods of calculation.
The Company's revolving credit facility permits it to pay dividends in
amounts up to its earnings before extraordinary or exceptional items, interest,
taxes, depreciation and amortization (Credit Agreement EBITDA), less the
aggregate amount of interest incurred and net amounts payable under interest
rate hedging agreements during the relevant period and an agreed upon reserve
for dry-docking, provided that there is not a default or breach of loan covenant
under the credit facility and the payment of the dividends would not result in a
default or breach of a loan covenant. Therefore, the Company believes that this
non-GAAP measure is important for its investors as it reflects its ability to
pay dividends. The following table is a reconciliation of net income, as
reflected in the consolidated statements of operations, to the Credit Agreement
EBITDA for the three-month periods ended June 30, 2006 and 2005 and for the
six-month period ended June 30, 2006 and the period from January 26, 2005
(inception) to June 30, 2005 respectively:
Period from
Three-Month Three-Months Six-Months January 26
ended June 30, ended June 30, ended June 30, (inception) to
2006 2005 2006 June 30, 2005
------------- ------------- ------------- -------------
Net Income ................................. $9,391,736 $(12,088,544) $20,184,237 $(12,894,757)
Interest Expense ........................... 2,117,322 3,233,596 4,183,673 3,233,596
Depreciation and Amortization .............. 4,937,661 2,020,572 9,757,243 2,020,572
Amortization of Prepaid and Deferred Revenue 773,500 205,000 1,710,500 205,000
------------- ------------- ------------- -------------
EBITDA ..................................... 17,220,219 (6,629,376) 35,835,653 (7,435,589)
Adjustments for Exceptional Items:
Management and Other Fees to Affiliates (1) -- 6,175,046 -- 6,175,046
Non-cash Compensation Expense (2) .......... 1,938,970 7,640,847 2,691,656 7,640,847
------------- ------------- ------------- -------------
Credit Agreement EBITDA .................... $19,159,189 $7,186,517 $38,527,309 $6,380,304
============= ============= ============= =============
(1) One-time charge
(2) Management's participation in profits interests in Eagle Ventures LLC
and Options Expense
(see Notes to our financial statements)
Liquidity and Capital Resources
Net cash provided by operating activities during the six-month period ended
June 30, 2006, was $32,993,258 compared to $1,559,570 during the same period
from inception on January 26, 2005 to June 30, 2005. This increase was primarily
due to cash generated from the operation of a fleet of 13 vessels for 2,297
operating days in the review period for 2006 compared to 477 operating days from
9 vessels during the corresponding review period in 2005.
Net cash used in investing activities during the six-month period ended
June 30, 2006, was $42,900,000 as the Company acquired its fourteenth vessel,
KESTREL I, a Supramax class vessel and placed deposits for two additional
Supramax class vessels, TERN and JAEGER, which were delivered in July 2006. Net
cash used in investing activities during the corresponding period from inception
on January 26, 2005 to June 30, 2005 was $302,241,893 as the Company acquired
its nine initial vessels and placed deposits for two additional vessels .
Net cash provided by financing activities during the six-month period ended
June 30, 2006, was $39,927,970 as the Company borrowed $42,400,000 from its
revolving credit facility, raised $33,000,000 from a private placement of its
common stock, and paid $35,470,500 in dividends. Net cash provided by investing
activities during the corresponding period from inception on January 26, 2005 to
June 30, 2005 was $311,613,286 primarily consisting of net proceeds of
$186,529,290 from the initial public offering, capital contributions of
$40,843,662 and net borrowings of $88,500,000 from its credit facilities.
As of June 30, 2006, our cash balance was $54,547,756 compared to a cash
balance of $24,526,528 at December 31, 2005. In addition, $6,500,000 in cash
deposits are maintained with our lender for loan compliance purposes and this
amount is recorded in Restricted Cash in our financial statements as of June 30,
2006 and December 31, 2005. Also recorded in Restricted Cash is an amount of
$124,616 which is collateralizing a letter of credit relating to our office
lease.
The Company anticipates that its current financial resources together with
cash generated from operations and, if necessary, borrowings under the amended
and increased revolving credit facility will be sufficient to fund the
operations of its fleet, including working capital requirements, for at least
the next 12 months.
It is the Company's intention to fund its future acquisition related
capital requirements initially through borrowings under the amended and
increased revolving credit facility and to repay all or a portion of such
borrowings from time to time with the net proceeds of equity issuances. The
Company believes that funds will be available to support its growth strategy,
which involves the acquisition of additional vessels, and will allow it to pay
dividends to its stockholders as contemplated by its dividend policy.
Capital Expenditures and Drydocking
The Company's capital expenditures relate to purchase of vessels and
capital improvements to acquired vessels, which are expected to enhance the
revenue earning capabilities of these vessels. In addition to acquisitions that
the Company may undertake in future periods, other major capital expenditures
include funding the Company's maintenance program of regularly scheduled
drydocking necessary to preserve the quality of our vessels as well as to comply
with international shipping standards and environmental laws and regulations.
Although the Company has some flexibility regarding the timing of its dry
docking, the costs are relatively predictable. Management anticipates that
vessels are to be drydocked every two and a half years. Funding of these
requirements is anticipated to be met with cash from operations. The Company
anticipates that this process of recertification will require it to reposition
these vessels from a discharge port to shipyard facilities, which will reduce
available days and operating days during that period.
During the three-month period ended June 30, 2006, we did not drydock any
vessels. In the six-month period ended June 30, 2006, we have spent $1,464,473
on vessel drydockings and this amount is amortized to expense on a straight-line
basis over the period through the date the next drydocking is scheduled to
occur. The following table represents certain information about the estimated
costs for anticipated vessel drydockings in the remainder of 2006 and calendar
2007 along with the anticipated off-hire days:
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Quarter Ending Off-hire Days(1) Projected Costs(2)
September 30, 2006........ 15 $0.35 million
December 31, 2006......... 15 $0.35 million
March 31, 2007............ 30 $0.70 million
June 30, 2007............. -- --
September 30, 2007........ 30 $0.70 million
December 31, 2007......... 15 $0.35 million
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(1) Actual length of drydocking will vary based on the condition
of the vessel, yard schedules and other factors.
(2) Actual costs will vary based on various factors, including
where the drydockings are actually performed.
------------------------------------------------------------------
Dividends
The Company's policy is to declare quarterly dividends to stockholders in
February, April, July and October in amounts that are substantially equal to its
available cash from operations during the previous quarter less any cash
reserves for drydocking and working capital.
The Company's revolving credit facility permits us to pay quarterly
dividends in amounts up to our quarterly earnings before extraordinary or
exceptional items, interest, taxes, depreciation and amortization (Credit
Agreement EBITDA), less the aggregate amount of interest incurred and net
amounts payable under interest rate hedging agreements during the relevant
period and an agreed upon reserve for dry-docking for the period, provided that
there is not a default or breach of loan covenant under the credit facility and
the payment of the dividends would not result in a default or breach of a loan
covenant. Depending on market conditions in the dry bulk shipping industry and
acquisition opportunities that may arise, the Company may be required to obtain
additional debt or equity financing which could affect its dividend policy.
On April 14, 2006 the Company's Board of Directors declared a cash dividend
for the first quarter of 2006 of $0.50 per share, based on 33,150,000 shares of
common stock outstanding, payable on May 3, 2006 to all shareholders of record
as of April 28, 2006. The aggregate amount of the cash dividend paid to the
Company's shareholders on May 3, 2006 was $16,575,000.
On July 18, 2006 the Company's Board of Directors declared a cash dividend
for the second quarter of 2006 of $0.50 per share, based on 35,900,000 shares of
common stock outstanding, payable on August 3, 2006 to all shareholders of
record as of July 28, 2006. The aggregate amount of the cash dividend paid to
the Company's shareholders on August 3, 2006 was $17,950,000.
Summary Consolidated Financial and Other Data:
The following table summarizes the Company's selected consolidated financial and
other data for the periods indicated below.
Period from
Three Months Three Months Six Months January 26, 2005
ended ended ended (inception) to
June 30, 2006 June 30, 2005 June 30, 2006 June 30, 2005
------------- ------------- ------------- -------------
Revenues, net of commissions ........ $24,105,383 $10,615,879 $47,895,435 $10,615,879
Vessel Expenses ..................... 4,919,422 3,066,188 9,624,419 3,115,399
Depreciation and Amortization ....... 4,937,661 2,020,572 9,757,243 2,020,572
General and Administrative Expenses . 1,114,024 663,034 2,099,503 1,420,036
Management and Other Fees to
Affiliates ......................... -- 6,175,046 -- 6,175,046
Non-cash Compensation Expense ....... 1,938,970 7,640,847 2,691,656 7,640,847
------------- ------------- ------------- --------------
Total Operating Expenses ......... 12,910,077 19,565,687 24,172,821 20,371,900
------------- ------------- ------------- --------------
Operating Income/(Loss) ............. 11,195,306 (8,949,808) 23,722,614 (9,756,021)
Interest Expense .................... 2,117,322 3,233,596 4,183,673 3,233,596
Interest Income ..................... (313,752) (94,860) (645,296) (94,860)
------------- ------------- ------------- --------------
Net Interest Expense ............. 1,803,570 3,138,736 3,538,377 3,138,736
------------- ------------- ------------- --------------
Net Income/(Loss) ................... $9,391,736 $(12,088,544) $20,184,237 $(12,894,757)
============= ============= ============= ==============
Weighted Average Shares Outstanding:
Basic ............................... 33,180,220 13,857,692 33,165,193 13,396,154
Diluted ............................. 33,180,898 13,857,692 33,165,246 13,396,154
Per Share Amounts:
Basic Net Income/(Loss) ............. $0.28 $(0.87) $0.61 $(0.96)
Diluted Net Income/(Loss) ........... $0.28 $(0.87) $0.61 $(0.96)
Cash dividends declared and paid .... $0.50 -- $1.07 --
Fleet Operating Days
--------------------
Ownership Days ...................... 1,183 490 2,353 490
Available Days ...................... 1,183 479 2,309 479
Operating Days ...................... 1,181 477 2,297 477
Fleet Utilization ................... 99.9% 99.6% 99.5% 99.6%
Condensed Consolidated Balance Sheet:
-------------------------------------
December 31,
June 30, 2006 2005
------------- -------------
(Unaudited)
ASSETS:
Current Assets:
Cash ........................................ $ 54,547,756 $ 24,526,528
Accounts Receivable ......................... 458,916 281,094
Prepaid Charter Revenue ..................... 5,983,000 8,508,000
Prepaid Expenses ............................ 1,679,846 513,145
------------- -------------
Total Current Assets ......................... 62,669,518 33,828,767
Fixed Assets:
Advances for Vessel Acquisitions .............. 6,900,000 --
Vessels and Vessel Improvements, at cost,
net of Accumulated Depreciation of $19,831,383
at June 30, 2006 and $10,384,247 at
December 31, 2005 ............................ 444,134,474 417,581,610
Restricted Cash ............................... 6,624,616 6,624,616
Deferred Drydock Costs, net of Accumulated
Amortization of $338,087 at June 30, 2006,
and $27,980 at December 31, 2005 ............. 1,548,068 393,702
Deferred Financing Costs, net of Accumulated
Amortization of $164,290 at June 30, 2006 and
$98,065 at December 31, 2005 ................. 1,203,514 1,268,209
Other Assets .................................. 6,027,014 2,647,077
------------- -------------
Total Assets .................................. $ 529,107,204 $ 462,343,981
============= =============
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable .............................. $ 4,368,281 $ 1,861,145
Accrued Interest .............................. 624,412 514,631
Other Accrued Liabilities ..................... 594,275 424,669
Deferred Revenue .............................. 491,500 1,306,000
Unearned Charter Hire Revenue ................. 2,590,937 2,444,522
------------- -------------
Total Current Liabilities .................... 8,669,405 6,550,967
Long-term Debt ................................ 182,400,000 140,000,000
------------- -------------
Total Liabilities ............................. 191,069,405 146,550,967
Commitment and Contingencies
Stockholders' Equity:
Preferred Stock, $.01 par value, 25,000,000
shares authorized, none
issued ....................................... -- --
Common stock, $.01 par value, 100,000,000
shares authorized, 35,900,000 shares
issued and outstanding as of June 30,
2006 and 33,150,000 shares issued and
outstanding as of December 31, 2005,
respectively ................................. 359,000 331,500
Additional Paid-In Capital .................... 354,945,648 320,822,037
Retained Earnings (net of cumulative
Dividends declared of $50,131,500 at June
30, 2006 and $14,661,000 at December 31, 2005) (23,293,863) (8,007,600)
Accumulated Other Comprehensive Income ........ 6,027,014 2,647,077
------------- -------------
Total Stockholders' Equity ................... 338,037,799 315,793,014
------------- -------------
Total Liabilities and Stockholders' Equity .... $ 529,107,204 $ 462,343,981
============= =============
Consolidated Statement of Cashflows
-----------------------------------
Period from
Six Months January 26, 2005
ended (inception) to
June 30, 2006 June 30, 2005
------------- -------------
Cash Flows from Operating Activities
Net Income ............................................. $ 20,184,237 $ (12,894,757)
Adjustments to Reconcile Net Income
(Loss) to Net Cash provided by (used
in) Operating Activities:
Items included in net income not affecting
cash flows:
Depreciation ............................................ 9,447,136 2,020,572
Amortization of Deferred Drydocking Costs ............... 310,107 --
Amortization of Deferred Financing Costs ................ 66,225 1,130,713
Amortization of Prepaid and Deferred Charter Revenue .... 1,710,500 205,000
Non-cash Compensation Expense ........................... 2,691,656 7,640,847
Changes in Operating Assets and Liabilities:
Accounts Receivable ..................................... (177,822) (22,034)
Prepaid Revenue ......................................... -- (1,489,000)
Prepaid Expenses ........................................ (1,166,701) (186,373)
Accounts Payable ........................................ 966,591 1,823,761
Accrued Interest ........................................ 109,781 430,984
Accrued Expenses ........................................ 169,606 235,775
Deferred Revenue ........................................ -- 914,000
Drydocking Expenditures ................................. (1,464,473) --
Unearned Charter Hire Revenue ........................... 146,415 1,790,082
------------- -------------
Net Cash Provided by/(Used in) Operating Activities .... 32,993,258 (1,599,570)
Cash Flows from Investing Activities
Advances for Vessel Deposits ............................ (6,900,000) (7,018,100)
Advances for Vessel Improvements ........................ -- (640,000)
Purchase of Vessels ..................................... (36,000,000) (294,583,793)
------------- -------------
Net Cash Used in Investing Activities .................. (42,900,000) (302,241,893)
Cash Flows from Financing Activities
Capital Contribution .................................... -- 40,843,662
Issuance of Common Stock ................................ 33,000,000 201,600,000
Equity Issuance Costs ................................... -- (13,949,161)
Bank Borrowings ......................................... 42,400,000 214,450,000
Rapayment of Bank Debt .................................. -- (125,950,000)
Increase in Restricted Cash ............................. -- (4,000,000)
Deferred Financing Costs ................................ (1,530) (1,381,215)
Borrowings from Eagle Ventures LLC ...................... -- 58,730,434
Repayment of Eagle Ventures LLC Note .................... -- (58,730,434)
Cash Dividends .......................................... (35,470,500) --
------------- -------------
Net Cash Provided by Financing Activities .............. 39,927,970 311,613,286
Net Increase in Cash ................................... 30,021,228 10,970,963
Cash at Beginning of Period ............................ 24,526,528 --
------------- -------------
Cash at End of Period .................................. $ 54,547,756 $ 10,970,963
============= =============
Supplemental Cash Flow Information:
Cash paid during the period for Interest (including Fees) $ 4,007,482 $ 1,671,899
The Fleet
The Company owns and operates a fleet of 16 vessels with a combined
carrying capacity of 796,663 deadweight tons and an average age of under 6
years. All of the Company's vessels are employed on time charters.
--------------------------------------------------------------------------------
Daily Time
Delivered to Charter Hire
Vessel Charterer Time Charter Expiration(1) Rate
------ ------------ -------------------------- ----
Cardinal April 19, 2005 March 2007 to June 2007 $26,500
Condor April 30, 2005 November 2006 to March 2007 $24,000
Falcon April 22, 2005 February 2008 to June 2008 $20,950
Griffon February 17, 2006 January 2007 to February 2007 $13,550
Harrier April 21, 2005 March 2007 to June 2007 $23,750
Hawk I April 28, 2005 March 2007 to June 2007 $23,750
Kite(2) April 17, 2006 March 2007 to May 2007 $14,750
Osprey I(3) September 1, 2005 May 2008 to September 2008 $21,000
Peregrine(4) July 1, 2005 October 2006 to January 2007 $24,000
Shikra(5) April 30, 2005 August 2006 to November 2006 $22,000
Sparrow July 20, 2005 November 2006 to February 2007 $22,500
Merlin October 26, 2005 October 2007 to December 2007 $24,000
Heron December 11, 2005 December 2007 to February 2008 $24,000
Kestrel I(6) July 1, 2006 December 2007 to April 2008 $18,750
Tern(7) July 3, 2006 December 2007 to April 2008 $19,000
Jaeger July 7, 2006 April 2007 to June 2007 $18,550
--------------------------------------------------------------------------------
----------
(1) The date range provided represents the earliest and latest date on which
the charterer may redeliver the vessel to the Company upon the termination
of the charter.
(2) The initial charter on the KITE at a daily charter rate of $25,000 ended in
April 2006.
(3) The charterer of the OSPREY I has an option to extend the charter period by
up to 26 months at a daily time charter rate of $25,000.
(4) Upon the conclusion of the current charter the PEREGRINE commences a new
time charter at $20,500 per day for 24 to 26 months.
(5) Upon conclusion of the current charter the SHIKRA commences a new time
charter at $14,800 for 11 to 13 months.
(6) The charterer of the KESTREL I has an option to extend the charter period
by 11 to 13 months at a daily time charter rate of $20,000 per day.
(7) The charterer of the TERN has an option to extend the charter period by 11
to 13 months at a daily time charter rate of $20,500 per day.
Commercial and strategic management of the fleet is carried out by a
wholly-owned subsidiary of the Company, Eagle Shipping International (USA) LLC,
a Marshall Islands limited liability company with offices in New York City.
Glossary of Terms:
Ownership days: The Company defines ownership days as the aggregate number of
days in a period during which each vessel in its fleet has been owned. Ownership
days are an indicator of the size of the fleet over a period and affect both the
amount of revenues and the amount of expenses that is recorded during a period.
Available days: The Company defines available days as the number of ownership
days less the aggregate number of days that its vessels are off-hire due to
vessel familiarization upon acquisition, scheduled repairs or repairs under
guarantee, vessel upgrades or special surveys and the aggregate amount of time
that we spend positioning our vessels. The shipping industry uses available days
to measure the number of days in a period during which vessels should be capable
of generating revenues.
Operating days: The Company defines operating days as the number of its
available days in a period less the aggregate number of days that the vessels
are off-hire due to any reason, including unforeseen circumstances. The shipping
industry uses operating days to measure the aggregate number of days in a period
during which vessels actually generate revenues.
Conference Call Information
As previously announced, members of Eagle Bulk's senior management team will
host a teleconference and webcast at 8:30 a.m. ET tomorrow, August 8th to
discuss these results.
To participate in the teleconference, investors and analysts are invited to call
866-831-6291 in the U.S., or 617-213-8860 outside of the U.S., and reference
participant code 43153660. A simultaneous webcast of the call, including a slide
presentation for interested investors and others, may be accessed by visiting
http://www.eagleships.com.
IMPORTANT: Investors participating in the teleconference are encouraged to
access an accompanying slide presentation, which management will reference
during the call. This presentation will be available Tuesday morning at
www.eagleships.com. A telephonic replay will be available following the call
until 12:00 a.m. ET on August 15th, 2006. To access the replay, call
888-286-8010 in the U.S., or 617-801-6888 outside of the U.S., and reference
passcode 95623863.
About Eagle Bulk Shipping Inc.
Eagle Bulk Shipping Inc. is a Marshall Islands corporation headquartered in New
York. The Company is the largest U.S. based owner of Handymax dry bulk vessels.
Handymax vessels range in size from 35,000 to 60,000 deadweight tons and
transport a broad range of major and minor bulk cargoes, including iron ore,
coal, grain, cement and fertilizer, along worldwide shipping routes.
Forward-Looking Statements
Matters discussed in this release may constitute forward-looking statements.
Forward-looking statements reflect our current views with respect to future
events and financial performance and may include statements concerning plans,
objectives, goals, strategies, future events or performance, and underlying
assumptions and other statements, which are other than statements of historical
facts.
The forward-looking statements in this release are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, management's examination of historical operating
trends, data contained in our records and other data available from third
parties. Although Eagle Bulk Shipping Inc. believes that these assumptions were
reasonable when made, because these assumptions are inherently subject to
significant uncertainties and contingencies which are difficult or impossible to
predict and are beyond our control, Eagle Bulk Shipping Inc. cannot assure you
that it will achieve or accomplish these expectations, beliefs or projections.
Important factors that, in our view, could cause actual results to differ
materially from those discussed in the forward-looking statements include the
strength of world economies and currencies, general market conditions, including
changes in charter hire rates and vessel values, changes in demand that may
affect attitudes of time charterers to scheduled and unscheduled drydocking,
changes in our vessel operating expenses, including dry-docking and insurance
costs, or actions taken by regulatory authorities, potential liability from
future litigation, domestic and international political conditions, potential
disruption of shipping routes due to accidents and political events or acts by
terrorists.
Risks and uncertainties are further described in reports filed by Eagle Bulk
Shipping Inc. with the US Securities and Exchange Commission.
Visit our website at www.eagleships.com
Contact:
Company Contact:
Alan Ginsberg
Chief Financial Officer
Eagle Bulk Shipping Inc.
Tel. +1 212-785-2500
Investor Relations / Media:
Jon Morgan
Mandelbaum & Morgan, New York
Tel. +1 212-741-0014
----------
Source: Eagle Bulk Shipping Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
August 9, 2006
Eagle Bulk Shipping Inc.
By: /s/ Sophocles N. Zoullas
------------------------
Sophocles N. Zoullas
Chief Executive Officer and President
SK 25083 0001 693346