UNITED STATES
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): July 30, 2019
Eagle Bulk Shipping Inc. | ||
(Exact name of registrant as specified in its charter) | ||
Republic of the Marshall Islands | 001-33831 | 98-0453513 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (IRS employer identification no.) |
300 First Stamford Place, 5th Floor Stamford, CT 06902 | ||
(Address of principal executive offices, including zip code) | ||
(Registrant's telephone number, including area code): (203) 276-8100
(Former Name or Former Address, if Changed Since Last Report): None
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[_] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
[_] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
[_] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[_] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company. ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $0.01 per share | EGLE | The Nasdaq Stock Market LLC |
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On July 30, 2019, Eagle Bulk Shipping Inc., a Republic of the Marshall Islands corporation (the “Company”), posted to its website a corporate presentation including certain financial results and other information for the quarter ended June 30, 2019. A copy of the corporate presentation is attached as Exhibit 99.1 hereto.
The information in this Item 2.02 of this Current Report on Form 8-K, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or otherwise subject to the liabilities of such section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing. By filing this Current Report on Form 8-K and furnishing this information, the Company makes no statement or admission as to the materiality of any information in this Item 2.02 or the exhibit attached hereto.
Additionally, Exhibit 99.1 contains various non-GAAP financial measures as defined by Regulation G. Reconciliations of each non-GAAP financial measure to its comparable GAAP financial measure can be found in the attached corporate presentation.
This Current Report on Form 8-K and Exhibit 99.1 hereto contain forward-looking statements within the meaning of the federal securities laws. These forward looking statements are based on current expectations and are not guarantees of future performance. Further, the forward-looking statements are subject to the limitations listed in Exhibit 99.1 and in the other reports of the Company filed with the Securities and Exchange Commission, including that actual events or results may differ materially from those in the forward-looking statements.
ITEM 7.01. REGULATION FD DISCLOSURE.
On July 30, 2019, the Company posted to its website a corporate presentation described above in Item 2.02 of this Current Report on Form 8-K. A copy of the corporate presentation is attached hereto as Exhibit 99.1.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
Exhibit Number | Description | |
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 hereunto duly authorized.
EAGLE BULK SHIPPING INC. | ||
(registrant) | ||
Dated: July 30, 2019 | By: | /s/ Frank De Costanzo |
Name: | Frank De Costanzo | |
Title: | Chief Financial Officer | |
providing optimized global transportation of drybulk commodities Earnings Presentation Second Quarter 2019 30 July 2019
Disclaimer This presentation contains certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbor provided for under these sections. These statements may include words such as “believe,” “estimate,” “project,” “intend,” “expect,” “plan,” “anticipate,” and similar expressions in connection with any discussion of the timing or nature of future operating or financial performance or other events. Forward-looking statements reflect management’s current expectations and observations with respect to future events and financial performance. Where we express an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed, projected, or implied by those forward-looking statements. The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, 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. The principal factors that affect our financial position, results of operations and cash flows include, charter market rates, which have declined significantly from historic highs, periods of charter hire, vessel operating expenses and voyage costs, which are incurred primarily in U.S. dollars, depreciation expenses, which are a function of the cost of our vessels, significant vessel improvement costs and our vessels’ estimated useful lives, and financing costs related to our indebtedness. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors which could include the following: (i) changes in demand in the drybulk market, including, without limitation, changes in production of, or demand for, commodities and bulk cargoes, generally or in particular regions; (ii) greater than anticipated levels of drybulk vessel newbuilding orders or lower than anticipated rates of drybulk vessel scrapping; (iii) changes in rules and regulations applicable to the drybulk industry, including, without limitation, legislation adopted by international bodies or organizations such as the International Maritime Organization and the European Union or by individual countries; (iv) actions taken by regulatory authorities including without limitation the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”); (v) changes in trading patterns significantly impacting overall drybulk tonnage requirements; (vi) changes in the typical seasonal variations in drybulk charter rates; (vii) changes in the cost of other modes of bulk commodity transportation; (viii) changes in general domestic and international political conditions; (ix) changes in the condition of the Company’s vessels or applicable maintenance or regulatory standards (which may affect, among other things, our anticipated drydocking costs); (x) significant deteriorations in charter hire rates from current levels or the inability of the Company to achieve its cost-cutting measures; and (xi) the outcome of legal proceeding in which we are involved; and other factors listed from time to time in our filings with the Securities and Exchange Commission. We disclaim any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable security laws. 2
Agenda 1 Highlights 2 Financial Summary 3 Industry Review * Appendix 3
Highlights
Capital Raise Funding Growth Initiative Transaction Overview CAPITAL RAISE ▪ Raised USD 114 million of 5yr Senior Unsecured Convertible Bonds carrying a coupon of 5% and a conversion premium of +25% to July 24th 2019 closing price, or USD 5.61 per share ▪ Net proceeds to be used for vessel acquisitions and general corporate purposes ACQUISITIONS ▪ Entered into two agreements to acquire a total of six high-specification SDARI-64 Ultramax vessels (the “Acquisition Vessels”) for an aggregate purchase price of ~USD 122 million ▪ Fleet is comprised of two groups of sister ships, four and two vessels, respectively ▪ Average age of ~3.3yrs ▪ Four vessels are fitted with Exhaust Gas Cleaning Systems (or “scrubbers”) ▪ Expect to take delivery of the first vessel in August ▪ The purchase of the Acquisition Vessels remain subject to final documentation and customary closing conditions 5
Transactions Provide Long Term Benefits to Eagle Transaction Benefits FINANCING ▪ Borrowing unsecured debt at an attractive level and significantly below secured bond cost ▪ Funds the majority of the Acquisition Vessels’ purchase price, along with providing incremental capacity for future growth FLEET ▪ Increasing fleet count by six vessels, or ~13%, bringing total to 50 vessels ▪ Increasing % of the fleet comprised of Ultramaxes by ~26%, bringing total count to 20 vessels ▪ Reducing average age by ~0.6 years, or ~7%, bringing proforma average age down to ~8.3 years ▪ Increasing % of fleet which is to be fitted with scrubbers from 78 to 82%, bringing total to 41 vessels OPERATING RESULTS ▪ Improving earnings generation capacity by adding larger/more efficient, scrubber-fitted ships to fleet ▪ Reducing OPEX per vessel per day by adding younger and more efficient tonnage to the fleet ▪ Reducing G&A per vessel per day with little-to-no incremental overhead expected ▪ Generating incremental P&L earnings- accretive to EPS ▪ Proforma average age as of June 30, 2019. ▪ Benefits to operating results expected to be realized on a run-rate basis 6
Proforma Liquidity and Debt Transaction Summary Pre-Transactions Transactions Pro-Forma 30-Jun-19 Sells Purchases 30-Jun-19 Supramax 31.0 (1.0) - 30.0 Number of Ultramax 14.0 - 6.0 20.0 Vessels Total Number of Vessels 45.0 (1.0) 6.0 50.0 Cash $ 65,462.9 $ 7,254.0 $ (7,880.0) $ 64,836.9 USD 55 million Ultraco RCF- amount available $ 55,000.0 $ - $ - $ 55,000.0 Liquidity USD 15 million Shipco RCF- amount available $ 15,000.0 $ - $ - $ 15,000.0 Total Liquidity $ 135,462.9 $ 7,254.0 $ (7,880.0) $ 134,836.9 Cost of Debt 3m LIBOR Margin All-in Cost Term Loan 2.25% 2.50% 4.75% $ 148,391.3 $ - $ - $ 148,391.3 Bond 8.25% $ 192,000.0 $ - $ - $ 192,000.0 Debt Convertible 5.00% - - $ 114,120.0 $ 114,120.0 Debt $ 340,391.3 $ - $ 114,120.0 $ 454,511.3 Cost of Debt 6.72% 0.00% 5.00% 6.29% # of ships 45.0 (1.0) - 44.0 Collateral as a % of total ships 100.0% 100.0% 0.0% 88.0% ▪ All dollar amounts above are in thousands ▪ Calculations do not include transaction costs 7 ▪ 3m LIBOR is approximate, as of July 26, 2019
S&P Activity Significantly Improving Fleet Makeup Eagle Proforma Fleet: 50 vessels | ~8.3yrs Fleet Renewal and Growth Program ▪ Thirty-four vessels bought and sold 3 ▪ Twenty Ultramaxes acquired averaging ~3yrs old ▪ Fourteen Supramaxes sold averaging ~13yrs old 8 19 - 6 9 3 7 5 3 - 1 - - <5 5-7.5 7.5-10 10-12.5 12.5-15 >15 Age Grouping Existing Fleet Vessels Bought Vessels Sold ▪ Fleet stats as of June 30, 2019, proforma for: 1) sale of KESTREL expected to close in 3q19 and 2) the 6 Acquisition Vessels ▪ Average age of vessels sold at time of sale was ~13yrs- chart depicts the age of these ships as of June 30, 2019 8 ▪ Fleet renewal and growth program commenced in April 2016
Ten Consecutive Quarters of TCE Outperformance Eagle Revenue + Cost Performance ▪ 1q19 TCE outperformance of USD 1,955 per day 1200 $12,142 3q19 ~57% ▪ 1q19 LTM TCE outperformance of USD 1,440 per day Fixed $12,000 $11,453 $11,281 $11,052 $10,452 $10,285 1000 $9,607 $9,731 $10,000 $9,142 $8,660 800 $7,825 $8,000 TC - in Days in 600 BSI $6,000 $6,049 $5,670 400 $4,000 $4,425 $2,938 $2,000 200 $- 0 1q16 2q16 3q16 4q16 1q17 2q17 3q17 4q17 1q18 2q18 3q18 4q18 1q19 2q19 3q19e TC-in Days (RHS) Adj. net BSI Eagle TCE Eagle OPEX + G&A ▪ TCE relative performance is benchmarked against Adj. net BSI = gross BSI net of commission, adjusted for owned-fleet makeup. BSI-52 index used up through 4q18, and BSI-58 index used as from 1q19 ▪ 3q19 EGLE TCE as of July 25, 2019 with 1) ~57% of available days fixed and 2) TC-in days fixed to date 9 ▪ G&A excludes stock-based compensation. | Please refer to Appendix for TCE definition and reconciliation
EBITDA Benefiting from TCE Outperformance Adjusted EBITDA $30 $14,000 TCE Outperformance has contributed ~33% of Adjusted EBITDA during the twelve months ending June 30, 2019 $25 $23.5 $21.1 $20.2 $12,000 $20 $18.8 $17.2 $15.4 $15 $10,000 $10.4 $9.3 $10 $8.4 $4.6 BSI $5 $8,000 $- $6,000 Adjusted EBITDA AdjustedEBITDA millions) (in $(5) $(3.4) $(2.0) $(6.7) $(10) $4,000 $(15) $(14.5) $(20) $2,000 1q16 2q16 3q16 4q16 1q17 2q17 3q17 4q17 1q18 2q18 3q18 4q18 1q19 2q19 Core Business TCE Outperformance TCE Underperformance Adj. Net BSI (RHS) ▪ Please refer to Appendix for definition of Adjusted EBITDA and reconciliation ▪ Core Business reflects EBITDA based on index commercial performance (i.e. no out/under-performance) less OPEX and cash G&A 10
Scrubber Program Update ▪ Total scrubber-fitted fleet to be increased from 37 to 41, including all six Acquisition Vessels ▪ Targeting to have 38 scrubbers installed by the end of 2019: 34 from Eagle’s installation program and 4 of the Acquisition Vessels Status as of July 29th, 2019 Scrubbers manufactured 28 Vessels at yard for scrubber install 3 Scrubbers installed, riding crews onboard 9 Operational scrubbers 1 Near-term Outlook— projected by September 30th, 2019 Scrubbers installed, riding crews onboard 16 Total installations completed from Eagle 9 program ▪ Budget remains at USD 2.25 million per unit for scrubbers ordered by Eagle ▪ Total program cost estimated at ~USD 83 million ▪ Cost of scrubbers on four of the Acquisition Vessels is embedded in purchase price (i.e. no incremental CAPEX to be incurred). The remaining two vessels will receive scrubbers utilizing Eagle’s existing contracts. ▪ Installation figures in the table are exclusive of the 4 Acquisition Vessels that will be scrubber-fitted upon delivery ▪ Please see appendix for information on offhire days and capex cost related to scrubber program 11
Financial Summary
Earnings USD in Thousands except EPS 2q19 1q19 2q18 2019 YTD 2018 YTD REVENUES, net of commissions $ 69,391 $ 77,390 $ 74,939 $ 146,781 $ 154,309 EXPENSES Voyage expenses 20,907 25,906 17,205 46,813 39,720 Charter hire expenses 11,179 11,492 10,108 22,671 20,376 Vessel expenses 19,958 20,094 20,577 40,052 41,656 Depreciation and amortization 9,761 9,407 9,272 19,168 18,549 General and administrative expenses 8,041 8,410 8,896 16,451 18,809 Gain on sale of vessels (967) (4,107) (105) (5,073) (105) Total operating expenses 68,879 71,202 65,953 140,082 139,005 OPERATING INCOME / (LOSS) 512 6,187 8,986 6,699 15,304 OTHER EXPENSES Interest expense, net 6,340 6,328 6,275 12,668 12,441 Loss/(Gain) on derivatives 163 (2,438) (740) (2,275) (640) Loss on debt extinguishment - 2,268 - 2,268 - Total other expense, net 6,503 6,158 5,535 12,661 11,801 Net Income / (Loss) $ (5,991) $ 29 $ 3,451 $ (5,962) $ 3,503 Weighted average shares outstanding (Basic) 71,349 71,283 70,515 71,316 70,484 EPS (Basic) $ (0.08) $ 0.00 $ 0.05 $ (0.08) $ 0.05 Adjusted EBITDA* $ 10,370 $ 15,372 $ 21,132 $ 25,741 $ 39,968 ▪ Please see the Definitions slide in the Appendix for an explanation of Adjusted EBITDA 13
Balance Sheet + Liquidity Liquidity Position (June 30, 2019)1 Liquidity Trend (USD millions) $180 Cash (Includes Restricted Cash) $160 Revolver Availability Cash2 65,463 $140 Undrawn availability 70,000 $120 Total Liquidity 135,463 $100 $80 1 Balance Sheet (June 30, 2019) $60 $40 2 Cash 65,463 $20 Accounts receivable 17,736 $- Inventory 12,994 1q16 2q16 3q16 4q16 1q17 2q17 3q17 4q17 1q18 2q18 3q18 4q18 1q19 2q19 Other current assets 6,414 Net Debt/Adjusted EBITDA4 (USD millions) Vessels, net 678,421 Right of use assets - lease 22,462 300 10.0 Other assets 60,267 250 8.0 Total assets 863,758 200 6.0 Accounts payable 6,196 150 4.0 Current liabilities 25,758 100 Debt (including $29.7M current)3 332,421 50 2.0 Lease liability ($14.0M current) 23,944 - - Total Liabilities 388,320 2q17 3q17 4q17 1q18 2q18 3q18 4q18 1q19 2q19 Stockholder's Equity 475,438 Net Debt (LHS) Adj EBITDA Annualized & TFQ (LHS) Total Liabilities and Stockholder's Equity 863,758 Net Debt/Annualized & TFQ (RHS) 1 – Liquidity and Balance sheet figures are in thousands USD 2 – Cash balance includes cash, cash equivalents and restricted cash 3 – Debt is net of $8.0m of debt discount and deferred financing costs 4 – Adj EBITDA Annualized is basis quarterly figure * 4 for 2q17-3q18, and basis trailing four quarters (TFQ) starting 4q18. Please see the Definitions slide in the 14 Appendix for an explanation of Adjusted EBITDA and further information relating to the use of TFQ for Adj. EBITDA versus annualized Adj. EBITDA
Cash Flow from Operations Cash Flow from Operations – Quarterly (USD millions) 16 15 14 13 12 12 12 12 10 10 7 7 7 5 6 2 3 (2) (4) (3) (5) (4) (7) (7) (10) (13) (20) (24) Cash flow from operations ex Changes in operating assets and liabilities 1q16 2q16 3q16 4q16 1q17 2q17 3q17 4q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 *Cash Includes restricted cash 15
Cash Flow 2q19 Cash Flows ($ Millions) YTD 2019 Cash Flows ($ Millions) ▪ Cash balances at beginning and end of period include 1) cash, 2) cash equivalents, and 3) restricted cash 16
Cash Breakeven per Vessel per Day USD In Thousands YTD 2019 2q19 1q19 FY 2018 OPERATING Vessel Expenses $ 4,809 $ 4,787 $ 4,830 $ 4,725 Drydocking 541 475 608 484 G&A 1,654 1,634 1,674 1,566 Total Operating 7,004 6,896 7,112 6,775 Interest Expense 1,385 1,371 1,400 1,351 Debt Principal Repayment 1,595 2,170 1,018 232 TOTAL CASH BREAKEVEN $ 9,984 $ 10,437 $ 9,530 $ 8,358 2q 2019 Cash Breakeven by Category G&A Drydocking 16% 4% Debt Service 34% Vessel Expenses 46% ▪ G&A excludes stock-based compensation. 17
Industry Review
Historical Rates Baltic Supramax Index (BSI-58) $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $- Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 BSI-58 Atlantic Pacific ▪ Source(s): Clarksons. FFA curve as of July 25, 2019 ▪ Atlantic market calculated based on BSI routes S4A and S4B. Pacific market calculated based on routes S2, S8, and S10. 19
Supramax/Ultramax 2019f Net Fleet Growth ~2.3% Drybulk Deliveries + Scrapping (DWT) 100 80 60 2019f total Drybulk net fleet growth of 2.5% 40 20 0 -20 2019f Supramax/Ultramax net fleet growth of 2.3% -40 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019f 2020f Total Deliveries Total Demolition Drybulk Net Supply Supramax/Ultramax Net Supply ▪ Figures are in million DWT ▪ Source(s): Clarksons June 2019 20
Drybulk Orderbook ~11% of Fleet / Ultramax ~8% Drybulk Contracting (in DWT) vs BDI 120.0 ▪ As a % of the OTW fleet, total drybulk orderbook at 11% (near 15yr low) 3,000 100.0 2,500 80.0 2,000 60.0 1,500 40.0 1,000 20.0 500 - 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD Drybulk ordering (m DWT) BDI (RHS) Ultramax Contracting (in DWT) vs BSI 35.0 ▪ As a % of the OTW fleet, Supramax/Ultramax orderbook stands at just 8% ( near 20yr low) 25,000 30.0 20,000 25.0 20.0 15,000 15.0 10,000 10.0 5,000 5.0 - 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD Ultramax Ordering (m DWT) BSI (RHS) ▪ Contracting figures are in million DWT ▪ BSI history is basis BSI-58 from 2015-present and BSI-52 for 2009-2014 21 ▪ Source: Clarksons
Minor Bulk Demand Leading Drybulk Growth Drybulk Trade (DT) vs. Global GDP 14.0% 2.75 12.0% 2.25 10.0% 8.0% 1.75 6.0% 1.25 4.0% 2.0% 0.75 0.0% 0.25 -2.0% -4.0% (0.25) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019f 2020f DT / GDP ratio (RHS) GDP Y/Y % (LHS) DT Y/Y % (LHS) DT/GDP ratio avg.(RHS) Annualized Growth Rates Historical Last Current Next 2015-17 2018 2019f 2020f Global GDP 3.5% 3.6% 3.2% 3.5% China 6.8% 6.6% 6.2% 6.0% India 7.8% 6.8% 7.0% 7.2% Dry Bulk Trade 1.9% 2.4% 1.3% 2.3% Iron Ore 3.2% 0.2% -1.8% 1.4% Coal -0.3% 5.1% 0.6% 1.5% Grains 5.4% -1.1% 1.3% 1.9% Minor Bulk 1.5% 3.7% 3.8% 3.4% ▪ Source(s): Clarksons (June 2019), IMF (July 2019) ▪ Drybulk Trade growth in top chart adjusted for ton miles 22 ▪ Drybulk Trade / Global GDP ratio for 2009 excluded from historical average calculation
APPENDIX
Corporate Structure Eagle Bulk Shipping Inc. (Parent | NASDAQ: EGLE) Convertible Bond: USD 114m Eagle Bulk Mgmt. LLC 100% (EBM) 100% 100% 100% Eagle Bulk Shipco LLC Eagle Bulk Ultraco LLC Acquisition Vessels (EBSC) (EBUC) 23 vessels 21 vessels 6 vessels Bond: USD 192m TL: USD 148m RCF: USD 15m available RCF: USD 55m available EBSC debt is non- recourse to the parent All management services (strategic / commercial / operational / technical / administrative) are performed inhouse by EBM, a wholly-owned subsidiary of the Parent ▪ Bond, Term Loan, and RCF figures as of June 30, 2019. Convertible Bond issued on July 29, 2019 ▪ Final structure of Acquisition Vessel ownership pending 24
Eagle Debt Terms DATE CLOSED November 2017 January 2019 July 2019 PARENT Eagle Bulk Shipping Inc. ISSUER/ Eagle Bulk Shipco LLC Eagle Bulk Ultraco LLC Eagle Bulk Shipping Inc. BORROWER LOAN TYPE Bond RCF Term Loan RCF Convertible Note AMOUNT USD 200m USD 15m USD 153m USD 55m USD 114m OUTSTANDING USD 192m - USD 148m - USD 114m Super Senior SECURITY Senior Secured Senior Secured Senior Unsecured Secured Ringfenced and non-recourse to the RECOURSE Parent Guarantee Parent Guarantee Parent COLLATERAL 23 vessels 21 vessels N/A INTEREST RATE 8.25% fixed L+200bps L+250bps 5.0% fixed TENOR 5 years 5 years 5 years MATURITY 2022 2024 2024 USD 20.2m - 1st yr (starting Apr 2019) AMORTIZATION USD 8m/year N/A N/A USD 26.1m/year thereafter 178.1737 shares common stock per CONVERSION N/A N/A USD 1,000 principal (approx. share price of USD 5.61) ▪ Bond, Term Loan, and RCF figures as of June 30, 2019 ▪ Convertible Bond issued on July 29, 2019 25
Leader in the Supramax/Ultramax Segment Eagle Fleet by Age Grouping Peer Group Supramax/Ultramax Fleets Proforma Fleet = 50 Vessels | ~8.3 yrs 3 6 8 19 - 6 44 9 3 38 37 7 26 5 3 - 12 12 1 - - 2 <5 5-7.5 7.5-10 10-12.5 12.5-15 >15 Eagle Star Scorpio Genco Navios Pangaea Golden Diana Safe Bulk Bulk Ocean Bulkers Age Grouping Existing Fleet Vessels Bought Vessels Sold Supramax / Ultramax Handysize Panamax Capesize ▪ Eagle fleet stats as of June 2019, proforma for: 1) sale of KESTREL expected to close in 3q19 and 2) the 6 Acquisition Vessels ▪ Average age of vessels sold at time of sale was ~13yrs- the chart depicts the age of these ships as of June 30, 2019 26 ▪ Peer Group basis U.S.-listed companies only | Source(s): Company filings
Owned Fleet Consolidated Fleet: 44 Vessels 2565 DWT 8.9 Age EBSC EBUC Vessel DWT Age Vessel DWT Age 1 Singapore Eagle 63.4 2.5 1 New London Eagle 63.1 3.9 2 Stamford Eagle 61.5 3.4 2 Cape Town Eagle 63.7 4.1 3 Sandpiper Bulker 57.8 7.7 3 Westport Eagle 63.3 4.4 4 Roadrunner Bulker 57.8 7.8 4 Hamburg Eagle 63.3 5.1 5 Puffin Bulker 57.8 7.9 5 Madison Eagle 63.3 5.7 6 Petrel Bulker 57.8 8.0 6 Greenwich Eagle 63.3 5.8 7 Owl 57.8 8.0 7 Groton Eagle 63.3 6.0 8 Oriole 57.8 8.1 8 Fairfield Eagle 63.3 6.0 9 Egret Bulker 57.8 9.5 9 Southport Eagle 63.3 6.1 10 Crane 57.8 9.5 10 Rowayton Eagle 63.3 6.3 11 Canary 57.8 9.5 11 Mystic Eagle 63.3 6.3 12 Bittern 57.8 9.7 12 Stonington Eagle 63.3 7.1 13 Stellar Eagle 56.0 10.3 13 Nighthawk 57.8 8.4 14 Crested Eagle 56.0 10.4 14 Martin 57.8 8.9 15 Crowned Eagle 55.9 10.6 15 Kingfisher 57.8 9.0 16 Jaeger 52.5 14.7 16 Jay 57.8 9.0 17 Cardinal 55.4 15.0 17 Ibis Bulker 57.8 9.1 18 Skua 53.4 16.1 18 Grebe Bulker 57.8 9.2 19 Shrike 53.3 16.3 19 Gannet Bulker 57.8 9.2 20 Tern 50.2 16.5 20 Imperial Eagle 56.0 9.4 21 Osprey I 50.2 17.0 21 Golden Eagle 56.0 9.5 22 Goldeneye 52.4 17.5 23 Hawk I 50.3 18.5 23 Vessels 1,288.6 10.8 21 Vessels 1,276.6 7.0 ▪ Fleet count and age as of June 2019, proforma for sale of KESTREL expected to close in 3q19 ▪ Acquisition Vessels not included in fleet list above 27
EBITDA Reconciliation USD in Thousands 1q16 2q16 3q16 4q16 1q17 2q17 3q17 4q17 Net Income / (Loss) $(39,279) $(22,496) $(19,359) $(142,389) $(11,068) $ (5,888) $(10,255) $(16,584) Less adjustments to reconcile: Interest expense 2,818 4,903 7,434 6,644 6,445 6,859 7,837 8,236 Interest income (3) - (88) (124) (190) (186) (143) (133) EBIT (36,464) (17,593) (12,013) (135,868) (4,813) 785 (2,561) (8,481) Depreciation and amortization 9,397 9,654 9,854 9,979 7,493 8,021 8,981 9,196 EBITDA (27,068) (7,939) (2,159) (125,889) 2,680 8,805 6,420 715 Less adjustments to reconcile: Stock-based compensation 827 842 (735) 1,273 2,171 2,478 2,350 1,740 One-time and non-cash adjustments 11,756 436 (509) 122,656 (297) (1,977) (373) 14,764 Adjusted EBITDA* $(14,486) $ (6,661) $ (3,403) $ (1,961) $ 4,553 $ 9,307 $ 8,397 $ 17,219 USD in Thousands 1q18 2q18 3q18 4q18 1q19 2q19 Net Income / (Loss) $ 53 $ 3,451 $ 2,585 $ 6,486 $ 29 $ (5,992) Less adjustments to reconcile: Interest expense 6,261 6,387 6,574 6,521 6,762 6,733 Interest income (95) (112) (129) (248) (434) (393) EBIT 6,219 9,726 9,030 12,759 6,357 348 Depreciation and amortization 9,276 9,272 9,460 9,708 9,407 9,761 EBITDA 15,495 18,998 18,490 22,467 15,764 10,109 Less adjustments to reconcile: Stock-based compensation 3,511 2,410 2,100 1,187 1,445 1,227 One-time and non-cash adjustments (170) (276) (406) (165) (1,838) (967) Adjusted EBITDA* $ 18,835 $ 21,132 $ 20,184 $ 23,489 $ 15,372 $10,370 ▪ Please see the Definitions slide in the Appendix for an explanation of Adjusted EBITDA 28
TCE Reconciliation $ Thousands except TCE and days 1q16 2q16 3q16 4q16 1q17 2q17 3q17 4q17 Revenues, net $ 21,278 $ 25,590 $ 35,788 $ 41,836 $ 45,855 $ 53,631 $ 62,711 $ 74,587 Less: Voyage expenses (9,244) (7,450) (11,208) (14,192) (13,353) (13,380) (17,463) (18,155) Charter hire expenses (1,489) (1,668) (3,822) (5,866) (3,873) (6,446) (9,652) (11,312) Reversal of one legacy time charter 1,045 793 670 432 (302) 584 329 426 Realized gain/(loss) - Derivatives - - (449) (113) - 83 248 (349) TCE revenue $ 11,590 $ 17,265 $ 20,979 $ 22,097 $ 28,326 $ 34,473 $ 36,173 $ 45,197 Owned available days * 3,945 3,902 3,700 3,653 3,620 3,771 4,177 4,324 TCE $ 2,938 $ 4,425 $ 5,670 $ 6,049 $ 7,825 $ 9,142 $ 8,660 $ 10,452 $ Thousands except TCE and days 1q18 2q18 3q18 4q18 1q19 2q19 Revenues, net $ 79,371 $ 74,939 $ 69,093 $ 86,692 $ 77,390 $ 69,391 Less: Voyage expenses (22,515) (17,205) (15,126) (24,721) (25,906) (20,907) Charter hire expenses (10,268) (10,108) (7,460) (10,209) (11,492) (11,179) Reversal of one legacy time charter (86) (404) 497 (226) (414) 767 Realized gain/(loss) - Derivatives 117 345 284 (211) (475) 861 TCE revenue $ 46,619 $ 47,567 $ 47,288 $ 51,326 $ 39,102 $ 38,933 Owned available days * 4,218 4,153 4,192 4,227 4,070 4,001 TCE $ 11,052 $ 11,453 $ 11,281 $ 12,142 $ 9,607 $ 9,731 ▪ Please see the Definitions slide in the Appendix for an explanation of Owned Available Days 29
CAPEX Schedule Count of Dry Dockings, Ballast Water Treatment/Scrubber Installations, Estimated Offhire Days 18 300 16 287 267 14 250 12 200 10 191 193 8 17 16 150 6 11 12 100 4 9 9 6 50 2 5 5 4 3 - - - 3q19 4q19 2020 2021 Statutory Drydock Count BWTS Count Scrubber Count Total Offhire Days (RHS) Estimated Capital Expenditure $45.0 $37.9 $40.0 $35.0 $30.0 $25.0 $19.8 $19.9 $20.0 $15.0 $12.3 $10.0 $5.0 $- 3q19 4q19 2020 2021 Drydock Capex BWTS Capex Scrubber Capex ▪ Actual duration of off-hire days will vary based on the condition of the vessel, yard schedules and other factors ▪ Actual costs will vary based on various factors, including where the drydockings are actually performed 30 ▪ BWTS and Scrubbers require advance payments as per the contract terms. Excludes vessels sold in 2019.
Evaluating TCE Relative Performance This page is meant to assist analysts/investors on how to potentially evaluate and forecast vessel/fleet TCE relative performance within the Supramax/Ultramax segment ▪ Since the Supramax/Ultramax segment is comprised of a number of different ship types / sizes / designs, TCE generation ability can differ significantly from the standard vessel used to calculate the BSI-58 benchmark ▪ For example, a 2013-built Chinese 60-65k DWT Ultramax should be expected to earn a significant premium to a 2013-built 55-60k Supramax, particularly given the incremental cost of the 60-65k DWT vessel ▪ Ultimately, it’s about yield – the expected earnings ability of a vessel versus its cost Supramax/Ultramax TCE Performance Matrix Matrix depicts the estimated TCE Earnings Performance range for a VESSEL TYPE INDEX FACTOR generic Supramax/Ultramax vessel type SIZE (DWT) (AS COMPARED TO THE BSI VESSEL) as compared to the BSI-58 ship SHIP TYPE JAPAN CHINA FROM TO FROM TO FROM TO The BSI-58 is based on the 58k DWT Japanese BSI-58 58,000 100.0% TESS-58 design Supramax and is gross of 1 50,000 55,000 86.0% 95.0% 81.0% 87.0% commissions 2 55,000 60,000 96.0% 106.0% 88.0% 97.0% A Chinese 60-65k DWT Ultramax should earn a 3 60,000 65,000 106.0% 118.0% 102.0% 113.0% premium of 2-13% to the net BSI-58, depending on its specific design characteristics, due to cargo carrying capacity, speed, and fuel consumption differences For Illustrative Purposes Only ▪ The Matrix is meant to capture general ship types but there are likely some vessels which fall outside the stated figures ▪ Index Factors can change somewhat with movements in both fuel prices and (spot) rate environment 31
Scrubber Economics Basis Fuel Spreads Fuel Spreads Scrubber Cash Flow Effect $450 0.1% Marine Gas Oil (MGO) vs. 3.5% High Sulphur $60.0 5.0 Fuel Oil (HSFO) 2020 forward curve spread= $301/ton $50.0 4.0 $400 0.1% MGO vs. 3.5% HSFO 10-yr historical $40.0 average spread= $240/ton 3.0 $30.0 millions) 2.0 $350 $20.0 $10.0 1.0 301 Annualizedincremental CF ($ $300 $0.0 - Paybackperiod(years) $100 $150 $200 $250 $300 Fuel spread ($/MT) $250 Total Annualized Incremental CF (LHS) Payback period-years (RHS) Scrubber TCE Benefit $200 $4,500 5.0 193 $4,000 $150 $3,500 4.0 $3,000 3.0 $2,500 $2,000 $100 2.0 0.5% (“compliant”) marine fuel: $1,500 2020 forward curve spread= $193/ton $1,000 1.0 $0,500 $50 $0,000 - Incremental Incremental Daily TCE $100 $150 $200 $250 $300 Paybackperiod(years) Fuel spread ($/MT) HSFO v.MGO (Historical) HSFO v.MGO (Fwd) Incremental Daily TCE per Ship (LHS) Payback period-years (RHS) ▪ Source: Clarksons. Forward curve data as of July 24, 2019 ▪ Scrubber Cash Flow Effect and TCE Benefit based on fleet of 37 scrubber-fitted vessels and assume average of 200 annual sailing days per 32 ship for Supramax/Ultramax vessels with daily consumption of 25 MT/day
Update on Scrubber Orderbook ▪ DNB’s June update reflects additional 54 scrubbers ordered for drybulk for installation by end-2019 (vs. March update) ▪ Additional ~ 120 installs by end-2020 and end-2021 ▪ Of these just 18 for Supramax / Ultramax Scrubber Uptake by end-2020 4,000 40% 3,638 37% 3,375 3,500 35% 3,000 2,673 30% 2,352 2,500 25% 2,000 1,801 20% 1,457 1,500 16% 16% 15% 13% 2,207 1,000 10% 662 10% 420 359 1,213 500 5% 602 16 291 296 - 0% 0% Fleet Scrubbers Fleet Scrubbers Fleet Scrubbers Fleet Scrubbers All Other Drybulk Ships Capesize Panamax/ Kamsarmax Supramax/ Ultramax Handysize Totals Current Orders Forecast Orders (end 2020) ▪ Scrubber uptake source: DNB Markets (June 2019), Clarksons 33
Definitions Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that is used as a supplemental financial measure by our management and by external users of our financial statements, such as investors, commercial banks and others, to assess our operating performance as compared to that of other companies in our industry, without regard to financing methods, capital structure or historical costs basis. Our Adjusted EBITDA should not be considered an alternative to net income/(loss), operating income/(loss), cash flows provided by/(used in) operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. Our Adjusted EBITDA may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDA in the same manner. Adjusted EBITDA represents EBITDA adjusted to exclude the items which represent certain non-cash, one-time and other items such as vessel impairment, gain/(loss) on sale of vessels, stock-based compensation and restructuring expenses that the Company believes are not indicative of the ongoing performance of its core operations. For purposes of the Net Debt/Adjusted EBITDA calculation included in this presentation, Adjusted EBITDA is annualized for the second quarter of 2017 through the fourth quarter of 2018. Starting with the first quarter of 2019, the Company uses trailing four quarters (TFQ) to calculate Net Debt/Adjusted EBITDA. The Company used the prior practice of annualizing the Adjusted EBITDA because it did not have positive Adjusted EBITDA until first quarter of 2017, which made it impossible to use TFQ during 2017. We believe using the TFQ for purposes of this calculation aligns us with market practice in our industry and provides more meaningful information to our investors. However, the change in calculation affects the comparability of this calculation between periods that annualize Adjusted EBITDA and periods that utilize TFQ Adjusted EBITDA. TCE Time charter equivalent ("TCE") is a non-GAAP financial measure that is commonly used in the shipping industry primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per-day amounts while charter hire rates for vessels on time charters generally are expressed in such amounts. The Company defines TCE as shipping revenues less voyage expenses and charter hire expenses, adjusted for the impact of one legacy time charter and realized gains on FFAs and bunker swaps, divided by the number of owned available days. TCE provides additional meaningful information in conjunction with shipping revenues, the most directly comparable GAAP measure, because it assists Company management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance. The Company's calculation of TCE may not be comparable to that reported by other companies. The Company calculates relative performance by comparing TCE against the Baltic Supramax Index ("BSI") adjusted for commissions and fleet makeup. The BSI was initiated in 2006 based on the Tess 52 design. The index for the Tess 58 design has been published commencing on April 3, 2017, and transition was completed as of December 2018, when the Baltic stopped publishing a dynamic Tess 52 daily rate. The Company has now switched to the Tess 58 index for valuation modeling as of January 1, 2019. The change in the BSI may affect comparability of our TCE against BSI in periods prior to Company switching to the Tess 58 index. Owned available days is the aggregate number of days in a period during which each vessel in our fleet has been owned by us less the aggregate number of days that our vessels are off-hire due to vessel familiarization upon acquisition, repairs, vessel upgrades or special surveys. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues. 34
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