Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH
Eagle Bulk Shipping Inc. Oppenheimer 3rd Annual Industrials Conference
3 October 2008
DELIVERING SUSTAINABLE GROWTH
Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH 1
Forward Looking Statements Forward Looking Statements
This presentation contains certain statements that may be deemed to be “forward-looking statements” within the meaning of the Securities Acts. Forward-looking statements reflect management’s 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 presentation 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 charterhire 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, ability of our counterparties to perform their obligations under sales agreements and charter contracts on a timely basis, 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.
Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH
Agenda Agenda
2
Investment Thesis
The Fleet
Industry View
Financial Overview
Conclusion
Investment Thesis
Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH
The Eagle Story – Delivering Sustainable GrowthThe Eagle Story – Delivering Sustainable Growth
Modern Fleet Focus on Supramax Class
4
Newbuilding Program
One of the largest Supramax owners On-the-water fleet’s average age of 6 years45 vessels acquired over last 3 years
35 new vessels (one delivered)Remaining delivery schedule:
2 vessels - 2008 9 vessels - 20109 vessels - 2009 10 vessels - 2011
4 vessels - 2012
Chartering Strategy Provides Revenue Stability and Visibility
Launch of Our First Newbuilding Vessel “Wren” in China - April 200810-year revenue visibility
All charters insured until mid-2010
Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH
Newbuilding Program UpdateNewbuilding Program Update
5
Highly Accretive to Earnings, EBITDA and Free Cash Flow per Share
Launch of Our Second Newbuilding Vessel –“Woodstar” in China - July 2008
Launch of Our Third Newbuilding Vessel –“Crowned Eagle” in Japan - July 2008
Launched first three newbuilding vessels:
Wren - delivered in June 08, 70 days ahead of contract dateCommenced 10 year profit-sharing time charter
Woodstar- launched July 08
Crowned Eagle – launched July 08
The Fleet
Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH 7
Modern, High Quality Geared Fleet of Supramax VesselsModern, High Quality Geared Fleet of Supramax Vessels
One Delivered, 34 More Vessels to Come
On-the-Water Fleet *No. of Vessels Deadweight Tons (dwt) Vessel Type Delivery
21 Vessels 1.08 million dwt 18 Supramaxes 3 Handymaxes
Supramax Newbuilding - 3 Groups of Sister Vessels
4 Vessels 0.21 million dwt 53,100 dwt Series 2008-09
5 Vessels 0.28 million dwt 56,000 dwt Series 2008-10
25 Vessels 1.45 million dwt 58,000 dwt Series 2009-12
* Includes Redwing delivery in September 2008
Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH 8
Eagle On a Solid Growth TrajectoryEagle On a Solid Growth Trajectory
Fleet CAGR of > 20% ● 3x increase in Owned Days
(6,000)
(4,000)
(2,000)
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2005 2006 2007 2008 2009 2010 2011 2012
♦ Owned Days$ m EBITDA
44
83100
Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH 9
10-year Revenue Visibility10-year Revenue Visibility
Contracted Gross Revenues in Excess of $1 Billion Support Dividends
♦ No. of ships
-
5,000
10,000
15,000
20,000
25,000
-
20
40
60
80
100
120
140
160
180
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
$ m Owned DaysContracted Revenues
18
32
23
41
51
55 5555 55 55 55 55
Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH 10
Secure and Increasing RevenuesSecure and Increasing Revenues
New vessel deliveries increase revenues
Supramax vessels are currently outearning Panamax vessels
Current charter rates are higher than Eagle's average expiring time-charter rates
All charters are covered by insurance until mid-2010
Industry View
Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH
Internal Demand Drives Chinese Economy Internal Demand Drives Chinese Economy
12
0
4,000
8,000
12,000
16,000
20,000
24,000
28,000
2000 2001 2002 2003 2004 2005 2006 2007
Net exports
Investment
Consumption (Government)
Consumption (household)
8.9%
42.1%
13.7%
35.3%
Domestic demand accounted for over 70% of China’s economic growth in 2007
China plans to spend RMB 5.1 trn ($744 bn) on infrastructure expansion during the current five-year plan
RMB 3.8 trn($555 bn) investment in transportation infrastructureAdd 12,000km railways by 2010Increase port capacity from 3.4 bn tons to potential 5.4 bn tons
China’s GDP by Expenditure (RMB bn)11th Five Year Plan Infrastructure
Investment (RMB trn)Source: Ministry of Railway, Ministry of Construction, JPMorgan research, BHP
Infrastructure Expansion Supports Demand for Dry Bulk Commodities
Roads 2.1
Railway 1.25
Power grid 1.0
Waterway
Others
Roads RailwayPower gridWaterwayOthers
0.3
0.45
Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH
China’s Post-earthquake Rebuilding Plan Totals $147 blnChina’s Post-earthquake Rebuilding Plan Totals $147 bln
13
Source: National Development and Reform Commission
$ 147 bln three-year rebuilding
plan
Demand for Cement and Steel Expected to Benefit Supramax Class
Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH
Charterers Attracted by Versatility of Supramax VesselsCharterers Attracted by Versatility of Supramax Vessels
14
57% of Eagle’s 1H Cargoes were “Capesize and Panamax cargoes”
Handymax/Supramax
Panamax
Capesize
Eagle vessels carried 3.6 million tons of cargo in 1H 2008 MISC. cargoes include potash and alumina
IRON ORE COAL GRAINS
OTHER ORES CEMENT COKE STEELS
SCRAP IRON AGGREGATES MISC.
In m tons 975,610 576,170 491,846 431,707 133,507 193,145 99,596 92,550 101,004 514,307
CardinalCondorFalconGoldeneyeGriffonHarrierHawk I HeronJaegerKestrel IKiteKittiwakeMerlinOsprey IPeregrineShrikeSkuaSparrowTern
Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH
Handymax Class Vessels – India’s Dry Bulk Trade WorkhorseHandymax Class Vessels – India’s Dry Bulk Trade Workhorse
15
Eagle Vessels First to Call at new Indian Port of Krishnapatnam (near Chennai)
Source: Indian Ports Association, Portworld, Braemar, May 2008
India to Invest $500B in Infrastructure between Now and 2012 *
58%
5%14%
23%
Cape Handymax Panamax Handysize
111
985
3,003
1,496
94
1,115
3,015
1,600
102
913
3,282
1,553
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
C apes P anamax Handymax Handysiz e
2005 2006 2007
Port Calls
Dry Bulk Vessel Port Calls
* Source: Reuters, Sep17 2008
Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH
Supply Cancellations = Fewer Ships for Global DemandSupply Cancellations = Fewer Ships for Global Demand
16
Rising labor costs, material costs, and tighter financing cause orderbook cancellations
Labor costs rose 18% y-on-y
Steel prices surged 51%
Other raw material and component costs up 24%
Steel component cost of a newbuilding has risen from 30% to 75% in the last five years
In order to pass on higher cost, SLS Shipbuilding became the first yard in S. Korea to include steel-price escalations clauses in contract.
Limited survey of 19 Chinese shipyard managers confirms that in 1H08, 10 shipyards realize 21 vessel order cancellations. July report estimates that 150 capesizes on order will not be delivered.
Many orders do not have refund guarantees in place (all Eagle Bulk’s refund guarantees are issued)
Source: Hong Kong brokerage CLSA, Shipbroker Gibsons, Lloyd’s List
Financial Overview
Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH
1H 2008 Financial Highlights1H 2008 Financial Highlights
18
Net Income of $29.3 million or $0.62 per share, up 43% from 1H2007
Net Time Charter Revenues of $73.9 million, up 34% from 1H 2007
EBITDA1 of $55.4 million, up 24% y-on-y
Declared and paid Cash Dividend of $1.00 per share
Fleet Utilization of 99.8%
1 EBITDA, as defined by our credit agreement, is Net Income plus Interest Expense, Depreciation and Amortization, and Exceptional Items
Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH
2H 2008 Estimated Cash Break-Even Levels2H 2008 Estimated Cash Break-Even Levels
19
$9,400 per day cash breakeven cost for 2H 2008
Vessel expenses include crew wages and related costs, the cost of insurance including credit risk insurance, expenses relating to repairs and maintenance, the cost of spares and consumable stores and related inventory, tonnage taxes, pre-operating costs associated with the delivery of acquired vessels including providing the newly acquired vessels with initial provisions and stores, and other miscellaneous expenses. The Company is anticipating higher crewing costs and higher costs for oil based supplies including lubes and paints. The Company is also making allowance for constraints in yard drydocking capacity which has driven up drydocking costs.
$548
$296
$1,650
$2,200
$4,704
Dry-Dock
Vessel Expenses
Technical Mgt Fees
Cash G&A
Cash Interest (net)
Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH
Strong Balance SheetStrong Balance Sheet
20
Secure Growth
1 Newbuild Costs to be Capitalized eliminating any impact on current cash flows2 Net Debt is pro forma after taking into effect 2Q Dividend payments of $23.4 million (‘08), $19.6million (‘07)
BALANCE SHEET DATA June 30, 2008 June 30, 2007(in $ 000's)
Cash $62,997 $22,879Other Current Assets 6,418 3,984Vessels, net 725,388 618,572Advances for Vessel Construction1 380,672 64,785Restricted Cash 10,276 7,325Other Assets 22,640 9,109 TOTAL ASSETS 1,208,391 726,654 Current Liabilities 14,771 8,843 Long-term Debt 665,695 302,377 Other Liabilities 21,017 4,693 Stockholders' Equity 506,908 410,741
Book Capitalization 1,172,603 713,118 Net Debt 2 / Capitalization 53% 41%
Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH
$1.6 billion 10-year Revolver at Favorable Terms$1.6 billion 10-year Revolver at Favorable Terms
Syndicated by Royal Bank of Scotland
* Thereafter semi-annual reduction in availability to Balloon
Ample Liquidity for Growth
Amount $1.6 billion
Maturity July 2017
Interest Only until (at least) July 2012
Interest MarginLibor + 95 basis points (base grid pricing)
Commitment Fees on undrawn amounts 31.25 basis points
Availabilty in full for next * 4 years
Balloon $850 million
21
Conclusion
Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTHDELIVERING SUSTAINABLE GROWTH 23
Conclusion – Ongoing Operating StrengthConclusion – Ongoing Operating Strength
Eagle Bulk – Delivering Sustainable Growth
Fleet growth begins in Q3 - 2008
Current charter rates are higher than Eagle’s average expiring time-charter rates
New vessel deliveries increase revenues
CLEAR BENEFITS TO SHAREHOLDERS
Significant increase in EBITDA
Eagle Bulk Shipping Inc.