Golden Ocean Group Limited (GOGL) 25 Aug 222022 Q2 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Q2 2022 Golden Ocean Group Limited Earnings Call and Webcast. [Operator Instructions] Please note that today's conference is being recorded. I would now like to hand over the conference to speaker, Mr. Ulrik Andersen. ahead. go Please

this rate. average were achieved of above the of time our an Worth equivalents And Panamax bulk or highlights profit that, an XX In secured $X,XXX in Andersen, Welcome CFO. XXXX, XX% fixed $XX,XXX having uncertain everyone. a weather key $XXX Ocean's pay cover release Golden quarter. we continue Peder side. or for $X.XX of per the per another that the next share. per With is at you forward fundamentals second to out let's QX paying and of to despite delivered constructive, We taken headwinds. also dividends. is per and while TCE Good we I in $XX,XXX Ocean QX chief QX, main me, the we noticing net to achieved near-term In the Golden resulted an message will XX the in we supply million, belief have our to Ulrik and name EBITDA to longer-term average My respect where by QX of main to given the our in are Golden a minutes, vessels in day has charter benchmark finally, the $XXX mainly quarter look market the show talk strong million fundamentals call which will meaningful CEO; attractive Capesize rate our next Ocean's our manage that dry of afternoon, day sheet, near-term Simonsen, results. Golden take Capesize while day. Ocean That, that I'm Today's you the context, strong highlights recorded uncertainty. cover that macroeconomic vessels, driven through rates is balance

were the program. total from have cash have and segment, newbuilding and vessels to by outside in divested we months, Panamax to vessels, XXXX. XX our Ultramax also These Cape. adding in X Including past have tonnage our releasing We competitive continue ships more modern vessels we X been which these core sold

history main our We decarbonization targets of of our highlights introducing one by net-zero XXXX. report, being emission the by commitment emissions XXXX also XX% to XXXX and published by reduction

for we Looking have $XX,XXX so days. secured Cape day at our Panamax our per of QX, day quarter, for XX% far this days, $XX,XXX XX% of per

$XX,XXX of year XX% Panamax have I next good other we at secured days in will later Cape quarter, uncertainty, and day to remainder the into cover against presentation. our for hedge of Looking the QX, per of have for paying out fixed XX% near-term discuss words, the per the for our taken something we $XX,XXX day rates In days.

dividend. another announced we Finally,

out We million. QX. takes $X.XX paid underlines longer-term for we $XXX the will per than share since fundamentals and The the to more pay dividend XXXX in our belief dividend

numbers Now dive the of of over to and quarter. the financial some who Peder, into will details

Thank you, Ulrik.

of revenues rate profit coverage, base to a If QX. for at $XXX.X in million and $XXX QX, TCE total ending fuel-efficient by modern million fleet-wide a driven TCE $XX,XXX. move solid was we to our of loss, achieved revenues a you TCE fleet and compared This of

see dry do, which $XX.X $XXX dry we to resulted a down in however, million ships day versus QX costs per in in XXX was Looking COVID-XX-related also ships of $X.X largely being We expenses. off-hire $XX.X in continue and docked continue, result QX QX impact. quarter. docked resulted docked, X COVID to -- million, previous the in at days by X days versus for expenses, days which We was which at lower ship XXX QX. had our fewer in This operating dry came from million

QX. Our $XX of $XXX $X,XXX per day dry day versus was in and OpEx over consisted per for QX, costs dock ex dry dock

expenses. Moving at per from day to net QX. was day. personnel administrative the million sharing and $XXX amounting $X.X Daily million, our is $X.X in which ship impacted We profit $XXX general in per came recharge, accruals saw and G&A G&A at day, by expenses of slightly which up per end one-off to

EBITDA million This ended million, from million reflects up rates. charter resulted our average at an charter-in of higher QX, Looking million $XX.X hire QX. which $XXX in in versus expense. at mainly $XX.X adjusted This in $XXX.X

up saw costs Moving pushing at our million $XX.X expenses. We SOFR of million slightly, financial and LIBOR rates, versus QX. to impact ending our interest $XX the reference rate higher in

from other the per declared And investments for mainly was mentioned, and we notable associates, QX. of the gain to TFG this which QX, $XX.X we $XXX.X a $XX.X interest a also of rate from quarter with as And seen, swaps also SwissMarine, per share came which last financial quarters $X.XX this P&L derivatives of impacted gain relates net and million. in million, that, with compares of came in in share in million profit, with most driver a changes and below have just came our in main million million, $XX or gain which UFC. The and a $X.X of down income, Ulrik investments dividend in results $XX.X gain Our million a in of a to derivative in QX. of significantly was $X.XX with and

Slide cash to our on X. Moving flow

up from in which that QX. This see in by increase had $XXX cash from million. million of net can the of You is $XX.X result a $XXX million, flow of -- cash we was operations

we quarter of relates which was vessels net of flow million flow QX. of from newbuilding our the includes $XX.X million. sold on in million Panamax vessel we repayments X and the of related sale of of of investments proceeds the Cash Panamax million million the million, saw that vessels last provided million. proceeds X financing in $XX.X $XX.X by X $XX of payment repayments mentioned debt to sale of $XXX refinanced the which of used $XX.X facility debt which saw repaid and offset also million, program in in was lease to $XXX.X refinancing cash Our We $X.X and

to in Slide cash. was at at quarter restricted Moving Cash we balance in $X.X includes addition, And end X. million credit quarter million, of position $XXX.X have facilities our sheet on available which $XXX undrawn million end.

during on a billion cash at equity breakeven, total and that debt quarter $X.X equity book liabilities see by Our assets of our we can totaled with to of maturities next ratio CapEx we slide, and lease a approximately the quarter. $X.X of our a the And by had look of billion, XX% Having end. the our end debt refinancing the XXXX. following first XXXX. vessels, debt consider million Debt quarter, next on is X to due the last funded. our falls the our basis, On maturity debt be of sale we $XXX on to Ultramax established in expected fully financing be financing of newbuilding newbuildings the half the QX program and newbuildings

on $XX,XXX our we at had lease the the Cape has right-hand -- reduction level unchanged cash graph, Looking our at then per see our charter keeps general in rates, have Offsetting the increase a rate breakeven that our which Capes, impacted interest can this breakevens. we cash day. breakeven on cash

I quarter, we $XXX breakeven you, above While give maintain industry word in last our we still Ulrik. our to see come the but Panamax With best-in-class cost absolute cash back that, levels.

also emerging market in Panamax of The demand invasion an begin May. strong In Also and Russian driver. Cape quarter, second We at market $XX,XXX the of from just market Peder. the you, Ukraine. in market with peaking coal to Panamax a routes important per off quick built for review developments QX. Capes, QX the $XX,XXX shy day of started new day by well, the trade quarter. continued the per well, mainly The and coal on averaged Thank driven was the the fare healthy in

facing prospects inflation What latest to to banks This under economy both recently higher pressure also to growth and And COVID. moving in bulk world market has strong of to transformed These port global be monetary continued a factors and the are contributing unwinding vessels dry to fleet. inefficiencies as policy recovery the the of is which to is for the COVID-related been Ukraine due with aftermath energy the to still to of prospects though, demand stalling come tame pertaining expected tighten in slower China, on Towards crisis inflation. eased the congestions in quarter was the has markets are the the end into and well. came released crew Simultaneously, and quarantine central short-term naturally and current global pressure. change, densing weakness. war so caused the challenges segments under

X.X% economy next our we landing soft However, the to a historical in optimistic context. remains is that forecasted which high year, grow global possible are with

and stimulus to effect of take dry of importer while largest in the It lending the rates restrictions specifically, will trimmed. year. measures been take policy undoubtedly, commodities. China next tougher increased eased, these economic for have required fall at Looking will and be bulk more COVID measures and time

year. the market iron that, likely However, rebound with world continued inefficient turn we conclusion, the combined the and normalizes levels dry rest is until a be more battled the said the market from done challenged short output will In inflation. the rebound already to Vale believe has year. ore believe we what the the before the in growth Having China's of increasing in profitable actually the with and of China, allocation of been turn of coal, has current levels term before will

modest likely lows. at delivery based order scrapping supply supply In growth fleet The in prices. global already bulk fundamentals rate is in orders spectacular supply significantly, because Turning likely of increased Slide with by would XX. book as mainly for demand. the growth with account below Capesize years, Ocean side outpace the bulk the strong to the the slowing end is Golden very growth dry This into this COVID. order extremely -- positive taking to newbuilding for minimal caused dry limited runway of nor the the other largest and owners, situation take supply doesn't yards XXXX, supply words, market book XX-year little net owner the need segment, newbuilding the the sorry, of growth but only of vessels highly persists. In does X.X among enough attention Naturally, growth for on create fleet is XXXX, is and Normalized at be points Cape and most longer schedules vessels. the appetite least the for X% growth on the the the high market. with delays to not projected demand

reason regulations, next dynamics by EEXI, known year, coming vessel. is at the to book also are play be there well. XXXX optimistic, the as on supply order but the side are So From other If IMO the in need short, vessel to In force. paths as into compliance. main is as that XXXX-built not a two stipulate vessels are to all new a there be energy-efficient compliance, regulations

this The sailing limitation cap the is you and top an on top EPL. constitute reduction an vessel, power engine up Depending speed. or to in the first will XX% speed. one Essentially, lower the

so the and lubrication The second systems, better Think on. upgrading vortex path propeller is air vessel.

some Some upgrades require dock, dry do not.

cargo. a that at global least XX% will For carry thus, have majority flexibility the vast to an EEXI will of cost fast good of be EPL. will vessels the The is anyway. is fleet. to gradually majority it the it in will since ships the less is full fleet vessels likely longer option doesn't no would course, It owners, much more as be not full of of power to be are steaming as the means XXXX. be come the EPL, same impact. bulk depressed engine will will that and be anything. and preferred dry sail the markets, effect in It noncompliant The limitation, amount efficient fleet and of effect through of able XXXX in estimated But it in there no In less require market,

for sustainable, economies, of So it putting believe. to slowing be but outlooks offset terms bulk, period supply earnings. an inflation healthy longer-term enough headwinds expect and we not the The is together, facing dry extended in demand we and may of world

expect type recession be we to prolonged would regulations we deep demand not from the inefficient time, short Combined While not a outlook, a trades, historically there the the with in are we vessel will XXXX, it at nothing capacity and continue can side we an have demand the supply IMO pace in we a acknowledge but change coal on a was just expect is looking factors, short, same steady of view, the will supply the lack in macroeconomic prices. of newbuilding growth the environment of have that side and strong ago to do equation. continued at At grow, sufficient. overweight years will that impact forecasted that positive come. and view the negative support that month high think maybe term, the grain the In impossible impact to is and freight practically favorable supply. shipyard on our In given

As being possible to fixed calls, at we prior take no to It earning contracts have in market conditions. on seek any have the time. of our risks, visibility improves we our discussed exposed protects dividend. spot best fully intentions mitigates capacity and pay out We

as worked secure the year. to through cash QX, weakened, the actively rates balance we During flows of

Thus, the days half of QX as of at a are the Cape per daily Panamax better trade well our market. likely fleet-wide than have levels QX, booked a basis current the our pick rates. particular, $XX,XXX thing benchmark in as fleet XXXX vessel coverage coal to above are On to XX% QX to was the and do. earnings taking and QX available we per the fixed. are day, than average, of $XX,XXX of In state rates more up in While the result and prudent today, seasonality in on

Looking fleet FFA the fourth of quarter, into than curve. the above forward have we more levels on fixed contracts paying the XX% well on

exposure to risk. We with much manage actively towards our attract the lowest X segments continue to value will possible as the as possible

we to we achieved breakeven. economics cash cash acquisitions, focus flow competitive on generation. Finally, finance, scale of and industry-low will access have

flow substantial despite is generation weakening cash As potential the Golden environment. Ocean's appears, freight it

list. seen that does million not if instance, reminded generate forward we rates Golden $XXX achieving our Ocean over year-to-date, book stands the are cash take the have For the next we free to months. same made strong in graph top Be decision XX we today's dividends have we future is dividend into of do With that since dividends we XXXX. million a earnings, in priority have what paid is account. It but for Board $XXX announcement, clear our out

Golden at Before And insulated strong we rate up main therefore in Thank acknowledge positioned we of to fixed XXXX back the shortly of and release. have we I the near-term growing forward well million book, been available up start X delivered solid now in weakness points for on base a a very the strategy. purposeful of session. Ocean I'd QX operator. questions, believe with modern to Overall, and in company healthy and commercial the slowdown they better fundamentals while the we decades. Q&A fleet the XX% like Despite than around open back this The a word profit in future world, wrap net $XXX industry-leading has economies cash are levels. a supply-side hand a for are we the current breakeven headwinds, levels. the well you. are from from

Nokta from first the have of We Omar line Instructions] from [Operator Jefferies. question coming the

As an the you've strong, especially trade ask -- market towards energy been prices Clearly, you here. a off give, if Capes seen the if coal said, But lot to of wanted steel a you but the driving the And has I You and as weakness just with highlighted, on has a very seeing ship day. here, well? weakness as good guys going overview, completely I Panamaxes? to yourself of I have at the maybe ask a been in what's we've insulating just on we're Panamax characterize down your But done the obviously you where moment. could are. here, come fixing issue. good very what's a think, charters wanted market job did the now sub-$XX,XXX with from tough

It's Yes. here. Ulrik

Capes of correlation there crisis pretty the course, on to has a the And is been the deep. So as between begin you with. segments say,

flows, the have and that's So this reflected seen, would has also Panamaxes the we well. so first can I the point poorly grain you Otherwise, to. weaker Russian Ukrainian as say conflict, given on

reasons. the are X of these So

we seen point efficiencies. as Capesizes. to would last we on combined all here, also and Panamax pressure as the one congestion the pressure market on not the seen well, as decreasing Finally, have I much have And albeit is higher

Okay, got it.

the bit a period a a bit of of So tough congestion. then and grains cascading,

seeing things we've some term? kind what and soft see patch gains how think Obviously, ships are you market? values of past near that sale secondhand the are seen you As This currently, about in you moment, the in purchase values. the seeing we're do the year at over that affecting here in how for

correlation X:X, certainly is the secondhand the There directly a a spot and not market but prices. albeit the correlation, prices asset between for

now the on see see as we effect well. we the it that market an when S&P So has on rate, the pressure

I is out most time a on a first market buy bit employ think vessel first the go buying that good so they cools that a the in the a that it strong vessel. because can to picture are that -- make people like and happens first market thing that they would the the

the cooling here and on the a it's So soaring statement. do much also, you It impacted and the I also of the near activity. cetera. cooling depends we see of secondhand But by say, may fair a market, in can et market. how the the slightly. size that cooling, prices But age, the to and think class course, term the How little be say spot it's

Ocean just a And follow-up have Okay. a today, sizable Golden obviously, -- sits then for as pretty fleet. you

said Panamax in an you few mass to happy earlier? focus off critical sit and period returning your more and segments. flow Capes this as more harvest back, you percentage that In cash coming are see of potentially points, values got capital, a do you the Or cooling-off the You've as asset opportunity? on

on secondhand gone have size, very I side, journey value. class that depending as some and the steep have vessels have mean, right? -- up from on on you asset been Yes, XX%, remember more maybe say, XX%, we again, to we

I So this you we tonnage, a a that points. we see that It's makes can so something asking not are categorically cooling for no. panic. as opportunity say percentage us whether secondhand of couple that hear I buying

looking snap up tonnage. not are to We

are we contrary, a, phase we a gone the harvesting X, have communicated in On phase. of growing that is we have you strategy more say, can past, which true the from to staying the to months, well, X

for an opportunities meeting the we markets. will, So now. recover some we outlined have life in which may markets today, for which is divest look expectations and we timing, we as the that to look of continue which But good high presentation, will older future-proof. the market where right tonnage, could just course, strategy firm I will a the spark of be again in not and not right to divesting be S&P from continue are our to opportunity in And

Yes. good. clear. That’s very very Well,

Instructions] time. further I'll appear have to closing at Thank the [Operator hand questions to back any for this We conference you remarks. you. no

slide, for everyone, everyone dialing mistake. I written it or out. Otherwise, you, It's this little for a tuning at our Thank on in. I session, actually XX% May reach good was our said thanks website have in. add have a in Please and look for said on I Thank as a All Panamaxes need that quarter. the information this -- right. for that. made also apologize you for I day. just further cover if I you XX%

for our participating. Thank Ladies for and today. does you gentlemen, conference that conclude

now Thank you. may You disconnect.