Download - COMPANY UPDATE - GlobeNewswire
RESULTS Q4 - 2019
February 18, 2020
FORWARD LOOKING STATEMENTS
2
Matters discussed in this presentation may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements, which 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. Words such as "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect," "pending" and similar expressions identify forward-looking statements. The forward-looking statementsin this presentation are based upon various assumptions. Although we believe 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, we cannot assure you that we will achieve or accomplish these expectations,beliefs or projections. The information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication.
In addition to these important factors and matters discussed elsewhere herein, 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, fluctuations in currencies and interest rates, general market conditions, including fluctuations in charter hire rates and vessel values, changes in demand in the dry bulk market, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents, political events or acts by terrorists, and other important factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission.
Certain shipping, steel, Chinese and global industry information, statistics and charts contained herein have been derived from several sources. You are hereby advised that such industry data, charts and statistics have not been prepared specifically for inclusion in these materials and Golden Ocean has not undertaken any independent investigation to confirm the accuracy or completeness of such information
COMPANY UPDATE
4
HIGHLIGHTS
4
The Company reports net income of $41.0 million and earnings per
share of $0.29 for the fourth quarter of 2019, compared with net income
of $36.7 million and earnings per share of $0.26 for the third quarter of
2019
Net income of $37.2 million and earnings per share of $0.26 for the
full year 2019, compared with net income of $84.5 million and earnings
per share of $0.59 for the full year 2018
Adjusted EBITDA in the fourth quarter of 2019 was $73.9 million,
compared with $81.1 million in the third quarter of 2019
Completed refinancing of $284 million loan facility financing 15
vessels on attractive terms
Completed charter amendment for seven Capesize vessels leased from
SFL Corporation Ltd. (“SFL”) whereby SFL will fund the scrubber
investments previously announced by the Company in exchange for
increased charter rates
Announces a cash dividend of $0.05 per share for the fourth quarter of
2019, the 9th consecutive quarterly dividend announced
(in thousands of $) Q4 2019 Q3 2019Quarterly
Variance
Operating revenues 240,123 219,898 20,225
Voyage expenses (60,322) (57,661) (2,661)
Net revenues 179,801 162,237 17,564
Ship operating expenses (56,565) (45,755) (10,810)
Administrative expenses (4,057) (3,260) (797)
Charter hire expenses (49,707) (36,457) (13,250)
Depreciation (23,665) (23,327) (338)
Net operating expenses (133,994) (108,799) (25,195)
Net operating income (loss) 45,807 53,438 (7,631)
Net financial expenses (12,265) (13,312) 1,047
Derivatives and other financial income (loss) 7,625 (3,389) 11,014
Net income before taxation (loss) 41,167 36,737 4,430
Income Tax expense 124 38 86
Net income (loss) 41,043 36,699 4,344
Earnings (loss) per share: basic and diluted $0.29 $0.26 $0.03
Adjusted EBITDA 73,860 81,118 (7,258)
TCE per day 21,668 19,727 1,941
PROFIT & LOSS
5
CASH FLOW DURING THE QUARTER
6
¹ INCLUDES RESTRICTED CASH
² INCLUDES INVESTMENTS IN SCRUBBERS AND OWN SHARES
Q4 2019
139,3
163,2
84,1 (12,2)
(21,5)
(25,4)
(1,1)
100,0
120,0
140,0
160,0
180,0
200,0
220,0
Cash and cashequiv at beginning
of period¹
Cash fromoperation
Repayment ofordinary debt
Dividends paid Investments Other Cash and cashequiv at end of
period¹
US
D (
mill
ios)
2
BALANCE SHEET
(in thousands of $) Q4 2019 Q3 2019Quarterly
Variance
ASSETS
Short term
Cash and cash equivalents (incl. restricted cash) 104,381 87,156 17,225
Other current assets 168,696 186,409 (17,713)
Long term
Restricted cash 58,864 52,112 6,752
Vessels and equipment, net 2,340,753 2,347,087 (6,334)
Leases, right of use of assets 248,840 210,964 37,876
Other long term assets 44,523 51,506 (6,983)
Total assets 2,966,057 2,935,234 30,823
LIABILITIES AND EQUITY
Short term
Current portion of long term debt 87,787 84,797 2,990
Current portion of finance lease obligations 17,502 3,250 14,252
Current portion of operating lease obligations 14,377 28,094 (13,717)
Other current liabilities 113,701 112,001 1,700
Long term
Long term debt 1,026,083 1,042,246 (16,163)
Non-current portion of finance lease obligations 151,206 0 151,206
Non-current portion of operating lease obligations 42,010 169,884 (127,874)
Equity 1,513,391 1,494,962 18,429
Total liabilities and equity 2,966,057 2,935,234 30,823
7
CREDIT FACILITES
8
SELECTED COVENANTS
Free cash of at least $20 million or 5% of interest bearing
debt
Market Value Clause of 135%
Value adjusted equity of at least 25% of its value adjusted
total assets
Draw down completed on the new $155.3 million term loan
facility, which refinanced the outstanding amount of the
original $284 million loan facility.
Terms on the new loan facility:
Interest rate of LIBOR + 210 bps
Tenor of five years
20 year age adjusted repayment profile
Completed charter amendment for seven Capesize vessels
leased from SFL Corporation Ltd. (“SFL”) whereby SFL will
fund the scrubber investments previously announced by
the Company in exchange for increased charter rate
Draw down on all available scrubber financings completed
RECENT DEVELOPMENTSDEBT MATURITIES AS OF 12/31/2018
DEBT MATURITIES AS OF 12/31/2019
-
50
100
150
200
250
300
350
400
450
2019* 2020 2021 2022 2023 2024 2025
-
50
100
150
200
250
300
350
400
450
2019 2020 2021 2022 2023 2024 2025
*INCLUDES $168.2 MILL IN CONVERTIBLE BOND FULLY REPAID BY CASH IN JANUARY 2019
MODERN, EFFICIENT FLEET
9
BWTS INSTALLATION SCHEDULEOPERATING EXPENSES (2019)
Fully-burdened Opex includes dry docking and management fees
19 vessels completed dry-dock during 2019. 18 vessels scheduled for docking in 2020
14 Capesize vessels have installed scrubbers, one is currently at yard and additional eight are scheduled for installation during 2020
Average fleet age of six years and majority of the fleet designed with fuel-efficient engines and ballast water treatment systems
Additional advantage to be gained through scrubber installations
SCRUBBER INSTALLATION SCHEDULE
$ 1
$ 8
$ 5$ 4 $ 4
-
5
10
15
20
25
-
10
20
30
40
50
60
Expecte
d c
ost by y
ear
($ m
illio
ns)
# o
f vessels
# of vessels Expected cost
3
2
3
6
1
8
-
1
2
3
4
5
6
7
8
2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020Remaining
Completed In progress Scheduled
5 2005 800
200
1 000
-
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
Supramax &Panamax
Capesize
OPEX Drydock & Surveys
FLEET DEPLOYMENT
10
CONTRACTED EARNINGS
Opportunistic chartering strategy with significant operating leverage
Age 5.6 years
Age 7.4 years
Age 4.9 years
• All trading in pool
Capesize Panamax Ultramax
25,000
days
Capesize (46 vessels)
Panamax (30 vessels)
Ultramax (3 vessels)
2020 OPERATING LEVERAGE
$63
$126
$190
$253
$316
$0,44
$0,88
$1,31
$1,75
$2,19
$-
$0,5
$1,0
$1,5
$2,0
$2,5
$-
$50
$100
$150
$200
$250
$300
$350
$2 500 $5 000 $7 500 $10 000 $12 500
Cash f
low
per
share
Cash f
low
($ m
illio
ns)
Incremental daily TCE above breakeven levels
Cash flow Cash flow per share
*See note• Equivalent of two vessels at a fixed rate for 2020 of $22,750 per
day
• Equivalent of two vessels on floor/ceiling contracts for 2020
• Equivalent of 9 vessels on time charter that expire between
second quarter 2020 and the end of 2021 at an average gross rate
of $17,600 per day
DRY BULK MARKET UPDATE
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
J-19 F-19 M-19 A-19 M-19 J-19 J-19 A-19 S-19 O-19 N-19 D-19 J-20 F-20
Weekly Capesize Rates Weekly Panamax Rates
NEAR TERM MARKET OUTLOOK
12
WEEKLY DRY BULK SHIPPING RATES – JAN 1, 2019 TO PRESENT
A confluence of factors have increased uncertainty and created market
headwinds
SOURCE: CLARKSONS
11/15/19: China
announces restrictions
on further coal imports
for balance of 2018
1/25/19: Vale reports
breach to dam in
Brumadinho;
announces
decommissioning of
further dams
1/28/19: Start of 20+
day Chinese New Year
celebration; China
closed for business
1/15/2020: US and
China sign Phase 1
trade deal
1/1/2020: Chinese
New Year celebration
begins
IMO 2020 in effect
1/23/2020: Wuhan
quarantine begins
6/21/19: Vale
announces that it will
resume wet processing
at Brucutu mine
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
J-19 A-19 S-19 O-19 N-19 D-19 J-20 F-20
Benchmark avg. 2010-built
2015-built 'ECO' 2015-built 'ECO' w/scrubber
CURRENT MARKET CONDITIONS ARE PARTICULARLY CHALLENGING FOR OWNERS OF OLDER VESSELS
13SOURCE: CLARKSONS PLATOU
CAPESIZE RATES BY VESSEL SPECIFICATION CAPESIZE VALUES AND ‘ECO’ PREMIUM
(0.8m dwt)
0
1
2
3
4
5
6
7
8
9
10
28
30
32
34
36
38
40
42
44
M-1
8
J-1
8
J-1
8
A-1
8
S-1
8
O-1
8
N-1
8
D-1
8
J-1
9
F-1
9
M-1
9
A-1
9
M-1
9
J-1
9
J-1
9
A-1
9
S-1
9
O-1
9
N-1
9
D-1
9
"EC
O"
pre
miu
m (
mm
US
D)
Ve
sse
l p
rice
(m
m U
SD
)
180K 5 Yr (‘Eco’ Design) S/H Prices 180K 5 Yr S/H Prices 'ECO' Spread
Benefits of fuel efficiency reflected in freight rates and increasing premium
value of ‘ECO’ vessels
2%
4%
8%
2%3% 3% 3%
5%
8%
10%11%
7%
5% 5%5%
4%
3%
4%
3%
5%
1%
0%
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
25+ 20 -25
15 -20
14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 - 1 2019 2020 2021 2022+
Vessel age in years
LARGE PORTION OF THE FLEET IS NOT FUEL EFFICIENT
FLEET AGE DISTRIBUTION
SOURCE: SSY 14
Potential for older vessels to be phased out under new sulphur regulations
30% of fleet modern ‘ECO’
14.0% of fleet
On the water fleet
Orderbook
THANK YOU FOR YOUR ATTENTION!