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Exhibit 99.1

 

CONTACT:

John C. Wobensmith

President and Chief Financial Officer

Baltic Trading Limited

(646) 443-8555

 

 

BALTIC TRADING LIMITED ANNOUNCES

THIRD QUARTER FINANCIAL RESULTS

Declares $0.02 per Share Dividend for Q3 2013

New York, New York, November 6, 2013 – Baltic Trading Limited (NYSE:BALT) ("Baltic Trading" or the "Company") today reported its financial results for the three and nine months ended September 30, 2013.

 

The following financial review discusses the results for the three and nine months ended September 30, 2013 and September 30, 2012.

 

 

·	Declared a $0.02 per share dividend payable on or about November 22, 2013 to all  shareholders of record as of November 18, 2013 based on Q3 2013 results;

·	Recorded a net loss of $2.3 million, or $0.08 basic and diluted net loss per share for the third quarter;

·	Agreed to acquire two modern Capesize vessels to be renamed the Baltic Lion and the Baltic Tiger, for an aggregate purchase price of $103.0 million;

·	Completed the acquisition of the Baltic Hare and the Baltic Fox, two modern Handysize vessels;

·	Executed a $22 million credit agreement with DVB on favorable terms;

·	Amended the 2010 Credit Facility with Nordea Bank Finland plc to allow for additional indebtedness; and

·	Raised $63.5 million of gross proceeds in a follow-on equity offering.

 

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The Company recorded a net loss for the third quarter of 2013 of $2.3 million, or $0.08 basic and diluted net loss per share. Comparatively, for the three months ended September 30, 2012, the Company recorded a net loss of $4.8 million, or $0.22 basic and diluted net loss per share.

EBITDA was $2.7 million for the three months ended September 30, 2013 versus $(31,000) for the three months ended September 30, 2012.

 

John C. Wobensmith, President and Chief Financial Officer, commented, "During the third quarter, we expanded our modern high-quality fleet and strengthened our financial position while implementing our fleet deployment strategy that provides the ability to drive future performance upon improvement in the prevailing freight rate environment. Specifically, we capitalized on favorable asset prices by completing the acquisition of two Handysize vessels. With this acquisition, combined with our recent agreement to acquire two Capesize vessels, we are poised to expand Baltic Trading's fleet approximately 63% on a tonnage basis and increase the Company's long-term earnings potential. In support of our growth initiatives, we completed a $63.5 million share offering during the quarter, our second successful offering this year. We also closed a new $22 million credit facility with a global lending institution and amended our 2010 credit facility to allow us to incur additional indebtedness. As we maintain our focus on preserving a sound capital structure and taking advantage of attractive acquisition opportunities, we declared a third quarter dividend of $0.02 per share."

Baltic Trading Limited's revenues increased by 45% to $9.1 million for the three months ended September 30, 2013 compared to $6.3 million for the three months ended September 30, 2012.  The rise was primarily due to higher spot market rates achieved by our Capesize vessels as well as the increase in the size of our fleet during the third quarter of 2013.

 

The average daily time charter equivalent, or TCE, rates obtained by the Company's fleet was $9,984 per day for the three months ended September 30, 2013 as compared to $7,193 for the three months ended September 30, 2012. The increase in TCE was primarily due to higher spot rates achieved by the Capesize vessels in our fleet during the third quarter of 2013 versus the third quarter of 2012 partially offset by the operation of two additional smaller class vessels delivered to the Company in September 2013. Although there still remains excess vessel supply in the market, we believe the declining pace of fleet growth has caused freight rates to be more correlated to increases in cargo demand. We believe that during the third quarter, reduced supply growth in combination with increased shipments of iron ore volumes from Brazil and Australia as a result of higher Chinese steel production contributed to the Baltic Capesize Index reaching its highest point since 2010.

 

Total operating expenses were $10.2 million for the three months ended September 30, 2013 compared to $10.0 million for the three months ended September 30, 2012. Vessel operating expenses slightly declined to $4.2 million for the three months ended September 30, 2013 from $4.3 million for the three months ended September 30, 2012 due to the timing of purchases of stores and supplies. General, administrative and technical management expenses were $1.1 million for the third quarter of 2013 and 2012. Depreciation and amortization expenses increased to $3.8 million for the three months ended September 30, 2013 versus $3.7 million for the three months ended September 30, 2012 due to the increase in the size of our fleet.

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Daily vessel operating expenses, or DVOE, decreased to $4,805 per vessel per day for the third quarter of 2013 from $5,171 per vessel per day for the same quarter of 2012 due to lower crew related expenses as well as the timing of purchases of stores and spare parts. We note that our third quarter 2013 DVOE is below our budget set forth at the beginning of the year. We believe daily vessel operating expenses are best measured for comparative purposes over a 12‑month period in order to take into account all of the expenses that each vessel in our fleet will incur over a full year of operation. Based on estimates provided by our technical managers and management's expectations, our DVOE budget for 2013 is $5,400 per vessel per day on a weighted average basis.

The Company recorded a net loss of $12.0 million or $0.46 basic and diluted net loss per share for the nine months ended September 30, 2013, compared to a net loss of $12.9 million or $0.58 basic and diluted net loss per share for the nine months ended September 30, 2012. Voyage revenues increased to $21.5 million for the nine months ended September 30, 2013 compared to $20.2 million for the nine months ended September 30, 2012 due to higher spot market rates achieved by our Capesize vessels and the increase in the size of our fleet during the first nine months of 2013. EBITDA was $2.4 million for the nine months ended September 30, 2013 versus $1.4 million for the nine months ended September 30, 2012. TCE rates obtained by the Company increased to $8,129 per day for the nine months ended September 30, 2013 from $7,833 per day for the nine months ended September 30, 2012 mainly due to higher rates achieved by our Capesize vessels during the nine months of 2013 as well as the operation of two additional smaller class vessels as compared to the prior year period. Total operating expenses were $30.3 million for the nine months ended September 30, 2013 compared to $29.9 million for the nine months ended September 30, 2012, and daily vessel operating expenses per vessel were $4,919 versus $5,058 in the comparative periods due to lower crew related expenses as well as timing of purchases of stores and spare parts.

Net cash used in operating activities for the nine months ended September 30, 2013 was $2.7 million as compared to net cash provided by operating activities of $0.2 million for the nine months ended September 30, 2012. The $2.9 million change in cash from operating activities was primarily a result of an increase of receivables in the amount of $4.1 million for the nine months ended September 30, 2013 when compared to the nine months ended September 30, 2012 mainly due to the timing of payments from charterers and the higher rates achieved by our fleet towards the end of the quarter ended September 30, 2013. This was partially offset by a lower recorded net loss in the amount of $12.0 million for the nine months ended September 30, 2013 compared to a net loss of $12.9 million for the nine months ended September 30, 2012.

Net cash used in investing activities for the nine months ended September 30, 2013 was $41.6 million and primarily related to the purchase of two Handysize vessels.  For the nine months

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ended September 30, 2012, net cash used in investing activities was $5,000 for the purchase of fixed assets.

Net cash provided by financing activities for the nine months ended September 30, 2013 was $102.9 million as compared to net cash used in financing activities of $5.2 million for the nine months ended September 30, 2012. The increase in net cash provided by financing activities was primarily a result of $81.3 million of net proceeds from our follow-on offerings in May and September 2013, $22.0 million of proceeds from our 2013 Credit Facility as well as a $1.0 million draw down under our 2010 Credit Facility. Cash dividends paid during the first nine months of 2013 were $0.8 million compared to $5.2 million for the same period last year.

We make capital expenditures from time to time in connection with vessel acquisitions. Currently, our fleet consists of two Capesize, four Supramax, and five Handysize vessels with an aggregate capacity of approximately 736,000 dwt. After the expected delivery of the two Capesize vessels that Baltic Trading has agreed to acquire, we will own 13 drybulk vessels, consisting of four Capesize, four Supramax and five Handysize vessels with a total carrying capacity of approximately 1,095,000 dwt.

In addition to acquisitions that we may undertake in future periods, we will incur additional capital expenditures due to special surveys and drydockings for our fleet.  None of our vessels were drydocked in the third quarter of 2013 and we currently expect one of our vessels to be drydocked in the fourth quarter of 2013.  We further anticipate that five of our vessels will be drydocked in 2014.

In our continuous effort to provide superior service to customers and enhance our long-term commercial prospects, we have initiated a fuel efficiency upgrade program for certain of our vessels. We believe this program will generate considerable fuel savings going forward and increase the future earnings potential for these vessels. The cost of the upgrades, which will be performed under the planned drydocking schedule, is expected to be approximately $250,000 per vessel and is included in our estimated drydocking costs below.

We estimate our drydocking costs for our fleet through 2014 to be:

(1) Estimates are based on our budgeted cost of drydocking our vessels in China.  Actual costs will vary based on various factors, including where the drydockings are actually performed.  We expect to fund these costs with cash from operations.

(2) Assumes 20 days per drydocking per vessel.  Actual length will vary based on the condition of the vessel, yard schedules and other factors.

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The following table summarizes Baltic Trading Limited's selected consolidated financial and other data for the periods indicated below.

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(1) Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was part of our fleet during the period divided by the number of calendar days in that period.

(2) We define ownership days as the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.

(3) We define available days as the number of our ownership days less the aggregate number of days that our vessels are off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels between time charters. Companies in the shipping industry generally use available days to measure the number of days in a period during which vessels should be capable of generating revenues.

(4) We define operating days as the number of our available days in a period less the aggregate number of days that our vessels are off-hire due to unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.

(5) We calculate fleet utilization by dividing the number of our operating days during a period by the number of our available days during the period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the number of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning.

(6) We define TCE rates as our net voyage revenue (voyage revenues less voyage expenses (including voyage expenses to Parent)) divided by the number of our available days during the period, which is consistent with industry standards. TCE rate is a common shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charterhire rates for vessels on voyage charters are generally not expressed in per-day amounts while charterhire rates for vessels on time charters generally are expressed in such amounts.

(7) We define daily vessel operating expenses to include crew wages and related costs, the cost of insurance expenses relating to repairs and maintenance (excluding drydocking), the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses. Daily vessel operating expenses are calculated by dividing vessel operating expenses by ownership days for the relevant period.

(8)  EBITDA represents net (loss) income plus net interest expense, taxes, and depreciation and amortization. EBITDA is included because it is used by management and certain investors as a measure of operating performance. EBITDA is used by analysts in the shipping industry as a common performance measure to compare results across peers. Our management uses EBITDA as a performance measure in consolidating internal financial statements and it is presented for review at our board meetings. For these reasons, we believe that EBITDA is a useful measure to present to our investors. EBITDA is not an item recognized by U.S. GAAP and should not be considered as an alternative to net income, operating income or any other indicator of a company's operating performance required by U.S. GAAP. EBITDA is not a source of liquidity or cash flows as shown in our consolidated statement of cash flows. The definition of EBITDA used here may not be comparable to that used by other companies.

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Baltic Trading Limited transports iron ore, coal, grain, steel products and other drybulk cargoes along worldwide shipping routes. Baltic Trading Limited's current fleet consists of two Capesize, four Supramax and five Handysize vessels with an aggregate carrying capacity of approximately 736,000 dwt. After the expected delivery of the two Capesize vessels that Baltic Trading has agreed to acquire, we will own 13 drybulk vessels, consisting of four Capesize, four Supramax and five Handysize vessels with a total carrying capacity of approximately 1,095,000 dwt.

Our current fleet contains four groups of sister ships, which are vessels of virtually identical sizes and specifications. We believe that maintaining a fleet that includes sister ships reduces costs by creating economies of scale in the maintenance, supply and crewing of our vessels. As of November 6, 2013, the average age of our current fleet was 3.9 years, as compared to the average age for the world fleet of approximately 10 years for the drybulk shipping segments in which we compete.

 

The following table reflects the current employment of Baltic Trading's fleet:

(1)

The charter expiration dates presented represent the earliest dates that our charters may be terminated in the ordinary course.  Under the terms of each contract, the charterer is entitled to extend the time charters from two to four months in order to complete the vessel's final voyage plus any time the vessel has been off-hire.

(2)	The dates for vessels being delivered in the future are estimates based on guidance received from the sellers.

(3)	We have agreed to an extension with Swissmarine Services S.A. on a spot market-related time charter based on 101.5% of the average of the daily rates of the Baltic Capesize Index (BCI), published by the Baltic Exchange, as reflected in daily reports.  Hire is paid in arrears net

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of a 6.25% brokerage commission which includes the 1.25% commission payable to Genco Shipping & Trading Limited (Genco).  The minimum and maximum expiration dates of the time charter are February 1, 2015 and April 15, 2015, respectively.

(4)

We have reached an agreement with Cargill International S.A. on a spot market-related time charter based on 100% of the average of the daily rates of the BCI, as reflected in daily reports.  Hire is paid every 15 days in arrears net of a 5.00% brokerage commission, which includes the 1.25% commission payable to Genco.  The duration of the spot market-related time charter is 21.5 to 26.5 months.

(5)

We have reached an agreement with Resource Marine PTE Ltd. on a spot market-related time charter for a minimum of 18.5 months to a maximum end date of May 30, 2014 based on 95% of the average of the daily rates of the Baltic Supramax Index (BSI), published by the Baltic Exchange, as reflected in daily reports.  Hire is paid every 15 days in arrears net of a 6.25% brokerage commission, which includes the 1.25% commission payable to Genco.

(6)

We have reached an agreement to enter the vessel into the Bulkhandling Handymax A/S Pool, a vessel pool trading in the spot market of which Torvald Klaveness acts as the pool manager. The vessel has to remain in the pool for a minimum of six months, after which Baltic Trading can withdraw the vessel with three months' notice.  The vessel entered the pool on August 4, 2013.

(7)

We have reached an agreement with Resource Marine PTE Ltd. on a spot market-related time charter for a minimum of 20.5 months to a maximum end date of July 11, 2014 based on 95% of the average of the daily rates of the BSI, as reflected in daily reports.  Hire is paid every 15 days in arrears net of a 6.25% brokerage commission, which includes the 1.25% commission payable to Genco.

(8)

We have reached an agreement to enter the vessel into the Bulkhandling Handymax A/S Pool, a vessel pool trading in the spot market of which Torvald Klaveness acts as the pool manager. The vessel has to remain in the pool for a minimum of six months, after which Baltic Trading can withdraw the vessel with three months' notice.  The vessel entered the pool on August 6, 2013.

(9)

We have reached an agreement with Pioneer Navigation Ltd. on a short term spot market-related time charter for 3.5 to 5.5 months in order to position the vessel for its upcoming drydocking.  Hire is paid in arrears net of a 6.25% brokerage commission which includes the 1.25% commission payable to Genco.  The vessel delivered to charterers on October 4, 2013.

(10)

The rate for each of these spot market-related time charters is based on 115% of the average of the Baltic Handysize Index (BHSI), published by the Baltic Exchange, as reflected in daily reports.  Hire is paid every 15 days in advance net of a 6.25% brokerage commission, which includes the 1.25% commission payable to Genco.

(11)	We have reached an agreement to enter these vessels into the Clipper Logger Pool, a vessel pool trading in the spot market of which Clipper Group acts as the pool manager.  The vessels will remain in the pool for a minimum period of two years.

The Company's Board of Directors declared a dividend for the third quarter of 2013 of $0.02 per share payable on or about November 22, 2013 to all shareholders of record as of November 18, 2013.  Our dividend policy is to pay a variable quarterly dividend equal to our Cash Available for Distribution, during the previous quarter, subject to any reserves our board of directors may from time to time determine are required. The application of the formula in our policy would not have resulted in a dividend for the third quarter of 2013.  However, our Board of Directors nonetheless determined to declare a $0.02 per share dividend after taking into account our cash flow and our liquidity and capital resources. Dividends will be paid equally on a per-share basis between our common stock and our Class B stock. Cash Available for Distribution represents our net income less cash expenditures for capital items related to our fleet, such as drydocking or special surveys, other than vessel acquisitions and related expenses, plus non-cash compensation. For purposes of calculating Cash Available for Distribution, we may disregard non-cash adjustments to our net income, such as those that would result from acquiring a vessel subject to a charter that was above or below market rates. We intend to pay dividends on a quarterly basis.

The declaration and payment of any dividend will be subject to the discretion of our board of directors. The timing and amount of dividend payments will depend on our earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in our loan agreements, the provisions of Marshall Islands law affecting the payment of distributions to shareholders and other factors. Our board of directors may review and amend our dividend policy from time to time in light of our plans for future growth and other factors.

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Baltic Trading Limited is a drybulk company focused on the spot charter market. Baltic Trading transports iron ore, coal, grain, steel products and other drybulk cargoes along global shipping routes. Baltic Trading's fleet currently consists of two Capesize, four Supramax and five Handysize vessels with an aggregate carrying capacity of approximately 736,000 dwt. After the expected delivery of the two Capesize vessels that Baltic Trading has agreed to acquire, we will own 13 drybulk vessels, consisting of four Capesize, four Supramax and five Handysize vessels with a total carrying capacity of approximately 1,095,000 dwt.

 

Baltic Trading Limited announced that it will hold a conference call on Thursday, November 7, 2013 at 10:00 a.m. Eastern Time, to discuss its 2013 third quarter financial results.  The conference call and a presentation will be simultaneously webcast and will be available on the Company's website, www.BalticTrading.com. To access the conference call, dial (888) 287-5563 or (719) 457-2648 and enter passcode 9971772.  A replay of the conference call can also be accessed for two weeks by dialing (888) 203-1112 or (719) 457-0820 and entering the passcode 9971772. The Company intends to place additional materials related to the earnings announcement, including a slide presentation, on its website prior to the conference call.

 

 

We intend to use our website, www.BalticTrading.com, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in our website's Investor Relations section. Accordingly, investors should monitor the Investor Relations portion of our website, in addition to following our press releases, SEC filings, public conference calls, and webcasts. To subscribe to our e-mail alert service, please click the "Receive E-mail Alerts" link in the Investor Relations section of our website and submit your email address.  The information contained in, or that may be accessed through, our website is not incorporated by reference into or a part of this document or any other report or document we file with or furnish to the SEC, and any references to our website are intended to be inactive textual references only.

 

 

This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements use words such as "anticipate," "budget," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with a discussion of potential future events, circumstances or future operating or financial performance.  These forward looking statements are based on management's current expectations and observations. Included among the factors that, in our view, could cause actual results to differ materially from the forward looking statements contained in this report are the following: (i) declines in demand or rates in the drybulk shipping industry; (ii) prolonged weakness in drybulk shipping rates; (iii) changes in the supply of or demand for drybulk products, generally or in particular regions; (iv) changes in the supply of drybulk carriers including newbuilding of vessels or lower than anticipated scrapping of older vessels; (v) changes in rules and regulations applicable to the

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cargo industry, including, without limitation, legislation adopted by international organizations or by individual countries and actions taken by regulatory authorities; (vi) increases in costs and expenses including but not limited to: crew wages, insurance, provisions, lube, oil, bunkers, repairs, maintenance and general, administrative, and management fee expenses; (vii) whether our insurance arrangements are adequate; (viii) changes in general domestic and international political conditions; (ix) acts of war, terrorism, or piracy; (x) changes in the condition of the Company's vessels or applicable maintenance or regulatory standards (which may affect, among other things, our anticipated drydocking or maintenance and repair costs) and unanticipated drydock expenditures; (xi) the amount of offhire time needed to complete repairs on vessels and the timing and amount of any reimbursement by our insurance carriers for insurance claims, including offhire days; (xii) the Company's acquisition or disposition of vessels; (xiii) our ability to leverage Genco's relationships in the shipping industry; (xiv) the completion of definitive documentation with respect to charters; and (xv) charterers' compliance with the terms of their charters in the current market environment; (xvi) the fulfillment of the closing conditions under, or the execution of additional documentation for, the Company's agreements to acquire vessels; (xvii) completion of definitive documentation for and funding of financing for the vessel acquisitions on acceptable terms; and other factors listed from time to time in our public filings with the Securities and Exchange Commission including, without limitation, the Company's Annual Report on Form 10-K for the year ended December 31, 2012 and its reports on Form 10-Q and Form 8-K. Our ability to pay dividends in any period will depend upon various factors, including the limitations under any credit agreements to which we may be a party, applicable provisions of Marshall Islands law and the final determination by the Board of Directors each quarter after its review of our financial performance.  The timing and amount of dividends, if any, could also be affected by factors affecting cash flows, results of operations, required capital expenditures, or reserves.  As a result, the amount of dividends actually paid may vary.  We do not undertake any obligation to update or revise any forward‑looking statements, whether as a result of new information, future events or otherwise.

 

 

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