6-K
Himalaya Shipping Ltd. (HSHP)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2024
Commission File Number 001-41676
Himalaya Shipping Ltd.
(Exact name of Registrant as specified in its charter)
Not applicable
(Translation of Registrant’s name into English)
S. E. Pearman Building
2nd floor, 9 Par-la-Ville Road
Hamilton HM 11
Bermuda
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F o
Exhibits.
| Exhibit | Description |
|---|---|
| 99.1 | Himalaya Shipping Ltd. Earnings Release for the Second Quarter of 2024 |
| 99.2 | Himalaya Shipping Ltd. Results Presentation for the Second Quarter of 2024 |
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, thereunto duly authorized.
| Himalaya Shipping Ltd. | ||
|---|---|---|
| By: | /s/ Herman Billung | |
| Name: | Herman Billung | |
| Title: | Chief Executive Officer | |
| Date: August 16, 2024 |
Document
Himalaya Shipping Ltd. (HSHP) Announces its Preliminary Results for the Three and Six Months Ended June 30, 2024
Hamilton, Bermuda, August 16, 2024
Himalaya Shipping Ltd. (“Himalaya,” “Himalaya Shipping” or the “Company”) announces preliminary unaudited results for the three and six months ended June 30, 2024.
Highlights for the Second Quarter of 2024
•Successful delivery and commencement of operations of the remaining three 210,000 dwt Newcastlemax dual fuel newbuildings in the second quarter of 2024, ordered from New Times Shipyard, resulting in a total delivered fleet of 12 vessels.
•Total operating revenues of $31.2 million, which is an average time charter equivalent (“TCE”) earnings of approximately $34,600 per day, gross1. Average Baltic 5TC Capesize Index was $23,482 per day.
•Net income of $6.9 million and Adjusted EBITDA2 of $24.0 million for the second quarter of 2024.
•Conversion of index linked charters on Mount Blanc and Mount Neblina to fixed charters from May 1, 2024 to June 30, 2024 at an average rate of $37,275 per day. The vessels will continue to earn scrubber premium according to the terms of their existing time charter agreements.
•Draw down of financing on the three delivered vessels by sale leaseback facilities provided by CCB Financial Leasing Company Limited (“CCBFL”), totaling $147.6 million.
•Declaration and payment of cash distributions for March and April 2024 of $0.03 and $0.04 per common share, respectively.
•Declaration of cash distributions for May 2024 of $0.04 per common share, which was paid in July 2024.
Subsequent events
•Conversion of index linked charters on Mount Blanc and Mount Neblina to fixed charters from July 1, 2024 to July 31, 2024 at an average of $35,000 per day. The vessels will continue to earn scrubber premium according to the terms of their existing time charter agreements.
•Declaration of cash distributions for June and July 2024 of $0.05 and $0.06 per common share, respectively.
Contracted CEO, Herman Billung commented:
“All of our 12 ships have been successfully delivered from New Times Shipyard and are now generating revenue. We are pleased with the performance of the fleet and the relationship we are experiencing with our four reputable counterparties. Out of our 12 vessels, 10 are exposed to the spot market earning on average a premium of 42.25% to the Baltic 5TC (BCI) index.
In the first half of 2024, the Baltic 5TC Capesize index averaged $23,482 per day compared to $12,249 in the same period last year. This represents the second strongest first half we have witnessed in a decade, only behind 2021, and reflects a well-balanced market and a solid fundamental for an upward cycle that potentially could last for years to come.
The Company has continued its strategy with paying monthly distributions to its shareholders. With limited need for capital investments, we expect that a sizeable amount of free cash-flow can be paid to the shareholders. On August 8, 2024, we declared cash distributions of $0.06 per share, and if our positive market outlook materializes, there may be an upside on these payments.”
1 The Company uses certain financial information calculated on a basis other than in accordance with accounting principles generally accepted in the United States (US GAAP) including average daily TCE earnings, gross and Adjusted EBITDA. Average daily TCE earnings, gross, as presented above, represents time charter revenues and voyage charter revenues adding back address commissions and divided by fleet operational days. Please refer to the appendix of this release for a reconciliation of this non-GAAP measure to the most directly comparable financial measures prepared in accordance with US GAAP.
2 Adjusted EBITDA as presented above represents our net income (loss) plus depreciation of vessels and equipment; total financial expenses, net; and income tax expense. Please refer to the appendix of this report for a reconciliation of this non-GAAP financial measure to the most directly comparable financial measures prepared in accordance with US GAAP.
Management discussion and analysis
The discussion below compares the preliminary unaudited results for the second quarter of 2024 to the unaudited results of the first quarter of 2024:
| (in $ thousands) | Three months ended June 30, 2024 | Three months ended March 31, 2024 | Change ($) | Change (%) | |
|---|---|---|---|---|---|
| Total operating revenues | 31,202 | 23,581 | 7,621 | 32 | % |
| Vessel operating expenses | (5,610) | (4,928) | (682) | 14 | % |
| Voyage expenses | (346) | (334) | (12) | 4 | % |
| General and administrative expenses | (1,261) | (1,472) | 211 | (14) | % |
| Depreciation and amortization | (6,469) | (5,430) | (1,039) | 19 | % |
| Total operating expenses | (13,686) | (12,164) | (1,522) | 13 | % |
| Operating income | 17,516 | 11,417 | 6,099 | 53 | % |
| Total financial expenses, net | (10,653) | (8,925) | (1,728) | 19 | % |
| Net income | 6,863 | 2,492 | 4,371 | 175 | % |
| Adjusted EBITDA | 23,985 | 16,847 | 7,138 | 42 | % |
| (in $ thousands) | June 30, 2024 | March 31, 2024 | Change ($) | Change (%) | |
| --- | --- | --- | --- | --- | --- |
| Cash and cash equivalents | 21,946 | 25,727 | (3,781) | (15) | % |
| Vessels and Equipment | 867,721 | 647,665 | 220,056 | 34 | % |
| Newbuildings | — | 67,116 | (67,116) | (100) | % |
| Total Debt | 725,451 | 583,255 | 142,196 | 24 | % |
| Total Equity | 157,245 | 155,067 | 2,178 | 1 | % |
Total operating revenues for the second quarter of 2024 were $31.2 million, a $7.6 million increase compared to the first quarter of 2024. The increase is a result of the delivery and commencement of operations of three additional vessels during the second quarter of 2024, Mount Denali, Mount Aconcagua and Mount Emai. The average gross TCE earnings increased from $30,600/day in the first quarter of 2024 to $34,600/day in the second quarter of 2024.
Vessel operating expenses for the second quarter of 2024 were $5.6 million, a $0.7 million increase compared to the first quarter of 2024. The increase is a result of the commencement of operations of the three additional vessels during the quarter. The Company achieved an average vessel operating cost per day rate3 of $6,000 for the second quarter of 2024 compared to $6,200 in the first quarter of 2024.
General and administrative expenses for the second quarter of 2024 were $1.3 million, a $0.2 million decrease compared to the first quarter of 2024. The decrease is primarily a result of lower management fees to 2020 Bulkers compared to the first quarter of 2024, when payment of yearly bonuses to contracted employees occurred.
Depreciation and amortization for the second quarter of 2024 were $6.5 million, a $1.0 million increase compared to the first quarter of 2024. The overall increase is a result of the commencement of depreciation on the additional three vessels delivered during the current quarter.
3 Average vessel operating cost per day is calculated by dividing vessel operating expenses by the number of calendar days in the quarter.
Total financial expenses for the second quarter of 2024 were $10.7 million, a $1.7 million increase compared to the first quarter of 2024. This is mainly due to the increase in interest expense as a result of the increase in outstanding debt following the delivery of three vessels in the second quarter of 2024. Upon delivery of the three remaining vessels, the Company closed its sale and leaseback financing arrangements with subsidiaries of CCBFL whereby upon delivery, the vessels were sold to special purpose vehicles owned by CCBFL and leased back to the Company under bareboat charters. In addition, we had fewer assets qualifying for interest capitalization following the vessel deliveries, resulting in a smaller proportion of interest expense qualifying for capitalization.
Vessels and equipment as of June 30, 2024 was $867.7 million, a $220.1 million increase compared to $647.7 million as of March 31, 2024. During the period, the Company took delivery of Mount Denali, Mount Aconcagua and Mount Emai, and upon delivery, total value of the newbuildings upon completion of $226.8 million were transferred from newbuildings to vessels and equipment and commenced depreciation.
Newbuildings as of June 30, 2024 was $nil, a $67.1 million decrease compared to $67.1 million as of March 31, 2024. During the quarter, expenditures including milestone payments of $159.0 million and interest of $0.7 million were capitalized. Upon delivery of the last three vessels, total value of newbuildings amounting to $226.8 million was transferred to vessels and equipment,
Total debt as of June 30, 2024 was $725.5 million, a $142.2 million increase compared to $583.3 million as of March 31, 2024. The overall increase is primarily due to the draw down of $147.6 million from CCBFL on the delivery of Mount Denali, Mount Aconcagua and Mount Emai, offset by repayments of $4.9 million on the sale and leaseback arrangements and movement in deferred finance costs of $0.5 million.
Cash Flows for the second quarter of 2024
Net cash provided by operating activities was $17.6 million, compared to $11.2 million in the first quarter of 2024. The increase is primarily a result of the increase in operating profit in the current quarter due to an increase in the number of operating vessels and operating days.
Net cash used in investing activities was $159.4 million, primarily consisting of $155.7 million for the final installment payments on the delivery of the three vessels (of which $147.7 million was financed by the sale and leaseback arrangements with CCBFL). The remaining amount includes costs of preparation of the vessels for delivery.
Net cash provided by financing activities was $138.0 million primarily consisting of $147.7 million drawn down from the sale and leaseback financing arrangements to pay scheduled delivery installments for the additional three vessels delivered in the second quarter, offset by repayments on the sale and leaseback financings of $4.9 million, deferred financing costs of $0.4 million and payments of cash distributions of $4.4 million.
Liquidity and financing
The Company had cash and cash equivalents of $21.9 million as of June 30, 2024 and $10.0 million available to drawdown under the revolving credit facility with Drew Holdings Ltd (the “Drew Facility”).
After 180 days following the delivery of each newbuilding, each subsidiary under the sale and leaseback arrangements with CCBFL and Jiangsu Financial Leasing Co. Ltd (“Jiangsu”) is required to maintain a minimum cash balance equivalent to the bareboat hire payable within the next three months which amounts to approximately $1.5 million per vessel. As of June 30, 2024, cash and cash equivalents include $3.0 million which the Company is required to maintain as minimum cash balance under the sale and leaseback arrangements with CCBFL and Jiangsu. In July 2024, the total minimum cash balance required under the sale and leaseback arrangements increased to $7.6 million following the delivery of three vessels in January 2024. This is expected to increase to $9.1 million in October 2024 and further to $12.3 million in December 2024 for all eight vessels under sale and leaseback arrangements with CCBFL and Jiangsu.
The remaining newbuildings were delivered in June 2024 and there are no further installments payable to New Times Shipyard.
All the vessels have been financed by Chinese leasing houses at a fixed bareboat rate with a maturity of seven years from the delivery of each vessel. This gives the Company a fixed financing cost for the delivered vessels until maturity of the lease.
Since February 2024, the Company has declared and paid monthly cash distributions to our shareholders. It is the Company’s intention to pay a regular dividend in support of our main objective which is to return most of the cash generated after debt service to our shareholders. Any dividends will be at the sole discretion of the Board and will depend upon earnings, market prospects, capital expenditure requirements, available liquidity and distributable reserves, covenants in our debt instruments and other relevant factors. The timing and amount of dividends, if any, is at the discretion of the Board and there is no assurance that the Board will declare dividends in the future or as to the amount or timing of any dividends.
Commercial update
In the second quarter of 2024 the Company achieved average gross TCE earnings of approximately $34,600 per day, gross, including average daily scrubber and LNG benefits of approximately $2,400 per day.
In addition, in the second quarter of 2024, the Company’s vessels trading on index linked time charters earned approximately $35,600 per day, gross, including average daily scrubber and LNG benefits. Following the conversion of the index linked charters to fixed rate time charters, the Company’s vessels trading on fixed rate time charters earned approximately $33,200 per day, gross, including average daily scrubber and LNG benefits.
The Baltic 5TC Capesize Index averaged $22,665 per day in the second quarter of 2024.
Fleet status
In the first quarter of 2024, the Company agreed to convert its index linked charters to fixed rate time charters for Mount Bandeira and Mount Hua from February 1, 2024 to June 30, 2024, and for Mount Etna from April 1, 2024 to December 31, 2024.
In April 2024, the Company agreed to convert its index linked charters to fixed rate time charters for Mount Blanc and Mount Neblina from May 1, 2024 to June 30, 2024. The Company also further agreed to convert the index linked charters to fixed charter rates for these two vessels from July 1, 2024 to July 31, 2024.
The table below sets forth information about our fleet and charters.
| Vessel name | Built | Type | 2025 | 2026 | 2027 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q3 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | |||||||
| Mount Norefjell | 2023 | DF Newcastlemax | 30,0001 | ||||||||||||||
| Mount Ita | 2023 | DF Newcastlemax | Index | ||||||||||||||
| Mount Etna2 | 2023 | DF Newcastlemax | 40,810 | Index1 | |||||||||||||
| Mount Blanc2 | 2023 | DF Newcastlemax | 3 | ||||||||||||||
| Mount Matterhorn | 2023 | DF Newcastlemax | Index | ||||||||||||||
| Mont Neblina2 | 2023 | DF Newcastlemax | 3 | ||||||||||||||
| Mount Bandeira | 2024 | DF Newcastlemax | Index1 | ||||||||||||||
| Mount Hua | 2024 | DF Newcastlemax | Index1 | ||||||||||||||
| Mount Elbrus | 2024 | DF Newcastlemax | Index | ||||||||||||||
| Mount Denali | 2024 | DF Newcastlemax | Index1 | ||||||||||||||
| Mount Aconcagua | 2024 | DF Newcastlemax | Index | ||||||||||||||
| Mount Emai | 2024 | DF Newcastlemax | Index |
All values are in US Dollars.
| Option | Available |
|---|
1 Evergreen structure
2 These vessels will continue to earn scrubber premiums according to the terms of their existing time charter agreements
3 $35,000 fixed rate per day
Market commentary
The Baltic 5TC Capesize index as of August 8, 2024 stands at $20,396 having averaged $23,645 year to date, an increase from $12,496 during the same period in 2023.
Following unseasonably strong Capesize demand (measured in tonne miles) in the first quarter of 2024, demand has somewhat slowed from a 9.7% year-on-year increase to a 5.5% year-on-year increase in the second quarter of 2024. Overall, Capesize demand during the first half of 2024 increased by 7.4% compared to the same period last year.
Demand in the second quarter of 2024 was driven by strong shipments of iron ore and bauxite, with volumes increasing by 20.9mt and 4.1mt year-on-year, respectively.
This was partially offset by the decrease in coal shipments, with volumes falling by 11.4mt or 11.8% year-on-year. The impact in tonne-miles was more modest with a decline of 7.2% which was due to the increase in front haul volumes, particularly from Colombia to the buyers in the Pacific basin led by China, which saw imports from Colombia rising from practically zero in the second quarter of 2023 to 3.8mt in the second quarter of 2024. However, that was offset by the significant decrease in exports out of Australia, Russia and the United States.
Overall, Capesize shipments were up by 16.4mt or by 3.3% year-on-year in the second quarter of 2024 compared to the same period last year.
Although still minimal compared to iron ore and bauxite, manganese ore shipments from West Africa have been growing rapidly in recent quarters, contributing to Capesize demand in the Atlantic. During the first half of 2024, Capesize manganese ore shipments increased by 1.6mt or by 73% year-on-year. While it is small in volume, tonne-mile effect was significant, with manganese trades accounting for over 4% of the growth in Capesize tonne-miles in the second quarter of 2024.
Imports to China continue to drive the Capesize market. Chinese imports in Capesize tonnage were up by just over 40mt in the second quarter of 2024, but import volumes in the rest of the world were down by 8.3mt.
Growth in vessel supply for large bulk carriers is still expected to be moderate in the coming years with expected Capesize deliveries of 2.2 million dwt (or 0.6 % of existing fleet) for the remainder of 2024, 7.3 million dwt in 2025 (or 1.8 % of existing fleet), 8.2 million dwt for 2026 (or 2.1% of existing fleet) and 11.6 million dwt (or 2.9% of existing fleet) after 2026.
Following a few recent domestic Chinese orders for Newcastlemax vessels, available newbuilding berths with delivery before the second half of 2028 are expected to be limited. Current newbuilding costs for a dual-fuel Newcastlemax in China are believed to be approximately $95 million.
We see potential upside to the future development in the Capesize market from current levels in the event of continued strong exports of iron ore and bauxite from Brazil and West Africa. The Simandou project in Guinea is reported to be advancing at a good pace, with the first shipment expected in 2025 with the 30-month ramp-up to 60 million tonnes per annum for phase 1, and an additional 60 million tonnes per annum for phase 2. In addition, Vale is targeting 50 million tonnes per annum increase in capacity by 2026 from Vargem Grande, Capanema and S11D mine.
In addition, we could see increased coal imports following new restrictions being put in place for Chinese domestic coal miners starting May 1, 2024.
Key downside risks to the Capesize market include a continued economic slowdown in China, as well as heightened geopolitical tensions. Continued weakness in the Chinese property sector also represents an ongoing risk to Chinese steel demand.
Capesize fleet development
The global Capesize fleet stands at 399 million dwt as of August 1, 2024, up from 391 million dwt in August 2023. The current orderbook for Capesize dry bulk vessels currently stands at 7.2% of the existing fleet, up from 5.3% in 2023.
9.8 million dwt has been ordered so far in 2024, compared to 3.2 million dwt during the same period in 2023. 0.53 million dwt has been scrapped so far in 2024, compared to 0.85 million dwt during the same period in 2023.
Operational update
In the second quarter of 2024, our fleet had 935 operational days, and a utilization rate of 99.9% of our delivered vessels.
Outlook
Less than 120 large bulk carriers are due for delivery prior to 2028 and we expect a significant number of vessels to be due for dry docking in the next couple of years. For comparison, more than 675 Capesize vessels which were delivered between 2010 and 2012 are due for their third special survey in the coming years, which potentially also implies steel renewals. According to Clarksons, more than 52% of the fleet will be older than 15 years by 2027.
The demand volume growth is expected to be moderate, but sourcing of raw materials in the Atlantic basin with demand in the Far East is expected to continue to support longer sailing distances. The potential 160 mt per year incremental iron ore supply from Guinea and Brazil could, if all ending up in China and displacing domestically produced iron ore, mean demand for approximately 250 incremental Capesize equivalent ships.
Himalaya Shipping has one of the most modern Newcastlemax fleets in the world. The dual fuel LNG capability means that when a vessel is running on LNG, the CO2 emissions are more than halved compared to a standard Capesize index ship. Our modern fleet should be well positioned to take advantage of the regulatory challenges facing a majority of the Capesize fleet.
We believe that Himalaya’s structure, with index linked charters earning on average a 42.25% premium to the Baltic 5TC (BCI) index, low G&A costs and financing with seven-year fixed bareboat rates, positions us well to continue delivering solid returns to our shareholders in the coming years in what we believe will be an improving spot market.
Forward looking statements
This press release and any related discussions contain forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements that do not reflect historical facts and may be identified by words such as “aim”, “believe,” “assuming,” “anticipate,” “could”, “expect”, “intend,” “estimate,” “forecast,” “project,” “likely to”, “plan,” “potential,” “will,” “may,” “should,” or other similar expressions and include statements about plans, objectives, goals, strategies, future events or performance, including outlook, prospects, statements about the benefits of our vessels, including the ability to bunker with LNG, LSFO, or HSFO, the terms of our charters and chartering activity, dry bulk industry trends and market outlook, including activity levels in the industry, expected demand for vessels and expected drivers of demand including projects, utilization of the global fleet and our fleet, new orderings and expected cost of newbuild, yard capacity, statements about our capital strategy, dividend objectives and plans, statements made in the sections above entitled “Market commentary,” “Capesize fleet development,” and “Outlook,” including expected trends in vessel supply and trends in the global fleet, including expected drydocking, and other non-historical statements. These forward-looking statements are not statements of historical fact and are based upon current estimates, expectations, beliefs, and various assumptions, many of which are based, in turn, upon further assumptions, and a number of such assumptions are beyond our control and are difficult to predict. These statements involve significant risks, uncertainties, contingencies and factors that are difficult or impossible to predict and are beyond our control, and that may cause our actual results, performance or achievements to be materially different from what is expressed, implied or forecasted in such forward-looking statements including:
•general economic, political and business conditions;
•general dry bulk market conditions, including fluctuations in charter hire rates and vessel values;
•our ability to meet the conditions and covenants in our financing agreements;
•changes in demand in the dry bulk shipping industry, including the market for our vessels;
•changes in the supply of dry bulk vessels;
•our ability to successfully re-employ our dry bulk vessels at the end of their current charters and the terms of future charters;
•changes in our operating expenses, including fuel or bunker prices, dry docking and insurance costs;
•changes in governmental regulation, tax and trade matters and actions taken by regulatory authorities;
•compliance with, and our liabilities under, governmental, tax, environmental and safety laws and regulations;
•potential disruption of shipping routes due to accidents, hostilities or political events;
•our ability to refinance our debt as it falls due;
•our continued borrowing availability under our sale and leaseback agreements in connection with our vessels and compliance with the financial covenants therein;
•fluctuations in foreign currency exchange rates;
•potential conflicts of interest involving members of our board and management and our significant shareholder;
•our ability to pay dividends and the amount of dividends we ultimately pay;
•risks related to climate change, including climate-change or greenhouse gas related legislation or regulations and the impact on our business from climate-change related physical changes or changes in weather patterns, and the potential impact of new regulations relating to climate change, as well as the impact of the foregoing on the performance of our vessels;
•other factors that may affect our financial condition, liquidity and results of operations; and
•other risks described under "Item 3. Key Information - D. Risk Factors" in our Annual Report on Form 20-F for the year ended December 31, 2023 filed with the U.S. Securities and Exchange Commission on March 27, 2024.
You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Himalaya Shipping undertakes no and expressly disclaims any obligation to update publicly any forward-looking statements after the date of this press release whether as a result of new information, future events or otherwise, except as required by law.
About Himalaya Shipping Ltd.
Himalaya Shipping Ltd. is an independent bulk carrier company, incorporated in Bermuda. Himalaya Shipping has twelve vessels in operation.
Responsibility statement
We confirm that, to the best of our knowledge, the interim condensed consolidated financial statements for the first half of 2024, which have been prepared in accordance with accounting principles generally accepted in the United States (US GAAP) give a true and fair view of the Company’s consolidated assets, liabilities, financial position and results of operations. To the best of our knowledge, the interim report for the first half year of 2024 includes a fair review of the information required under the Norwegian Securities Trading Act section 5-6 fourth paragraph.
August 16, 2024
The Board of Directors
Himalaya Shipping Ltd.
Hamilton, Bermuda
Bjorn Isaksen (Chairman of the Board)
Carl Erik Steen (Director)
Georgina Sousa (Director)
Jehan Mawjee (Director)
Mi Hong Yoon (Director)
Questions should be directed to:
Herman Billung: Contracted CEO, +47 9183 1590
INTERIM FINANCIAL INFORMATION
SECOND QUARTER 2024
Himalaya Shipping Ltd.
Unaudited Consolidated Statements of Operations
(In $ thousands except share and per share data)
| Three months ended June 30, 2024 | Three months ended June 30, 2023 | Six months ended June 30, 2024 | Six months ended June 30, 2023 | |
|---|---|---|---|---|
| Operating revenues | ||||
| Time charter revenues | 31,202 | 6,732 | 54,783 | 8,174 |
| Total operating revenues | 31,202 | 6,732 | 54,783 | 8,174 |
| Operating expenses | ||||
| Vessel operating expenses | (5,610) | (1,784) | (10,538) | (2,036) |
| Voyage expenses and commissions | (346) | (143) | (680) | (153) |
| General and administrative expenses | (1,261) | (1,283) | (2,733) | (1,814) |
| Depreciation and amortization | (6,469) | (1,965) | (11,899) | (2,357) |
| Total operating expenses | (13,686) | (5,175) | (25,850) | (6,360) |
| Operating income | 17,516 | 1,557 | 28,933 | 1,814 |
| Financial income (expenses), net | ||||
| Interest income | 393 | 248 | 585 | 258 |
| Interest expense, net of amounts capitalized | (11,037) | (2,587) | (20,169) | (2,885) |
| Other financial income (expenses), net | (9) | (333) | 6 | (325) |
| Total financial expenses, net | (10,653) | (2,672) | (19,578) | (2,952) |
| Net income (loss) before income tax | 6,863 | (1,115) | 9,355 | (1,138) |
| Income tax (expense) / credit | — | — | — | — |
| Net income (loss) attributable to shareholders of Himalaya Shipping Ltd. | 6,863 | (1,115) | 9,355 | (1,138) |
| Total comprehensive income (loss) attributable to shareholders of Himalaya Shipping Ltd. | 6,863 | (1,115) | 9,355 | (1,138) |
| Basic and diluted earnings (loss) per share | 0.16 | (0.03) | 0.21 | (0.03) |
Himalaya Shipping Ltd.
Unaudited Consolidated Balance Sheets
(In $ thousands except share and per share data)
| June 30, 2024 | December 31, 2023 | |
|---|---|---|
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 21,946 | 25,553 |
| Trade receivables | 1,034 | 811 |
| Other current assets | 6,551 | 6,443 |
| Total current assets | 29,531 | 32,807 |
| Non-current assets | ||
| Newbuildings | — | 132,646 |
| Vessels and equipment, net | 867,721 | 428,617 |
| Other non-current assets | — | 5,136 |
| Total non-current assets | 867,721 | 566,399 |
| Total assets | 897,252 | 599,206 |
| LIABILITIES AND SHAREHOLDER’S EQUITY | ||
| Current liabilities | ||
| Current portion of long-term debt | 23,467 | 19,795 |
| Trade payables | 1,977 | 1,693 |
| Accrued expenses | 9,222 | 2,531 |
| Other current liabilities | 3,357 | 1,281 |
| Total current liabilities | 38,023 | 25,300 |
| Non-current liabilities | ||
| Long-term debt | 701,984 | 419,701 |
| Total non-current liabilities | 701,984 | 419,701 |
| Total liabilities | 740,007 | 445,001 |
| Shareholders’ Equity | ||
| Common shares of par value $1.00 per share: authorized 140,010,000 (2023: 140,010,000) shares, issued and outstanding 43,900,000 (2023: 43,900,000) shares | 43,900 | 43,900 |
| Additional paid-in capital | 14,182 | 111,788 |
| Contributed surplus | 91,291 | — |
| Retained earnings (Accumulated deficit) | 7,872 | (1,483) |
| Total shareholders’ equity | 157,245 | 154,205 |
| Total liabilities and shareholders’ equity | 897,252 | 599,206 |
Himalaya Shipping Ltd.
Unaudited Consolidated Statements of Cash Flows
(In $ thousands except share and per share data)
| Three months ended June 30, 2024 | Three months ended June 30, 2023 | Six months end of June 30, 2024 | Six months ended June 30, 2023 | |
|---|---|---|---|---|
| Cash Flows from Operating Activities | ||||
| Net income (loss) | 6,863 | (1,115) | 9,355 | (1,138) |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||
| Non-cash compensation expense related to stock options | 144 | 112 | 270 | 253 |
| Depreciation of vessels | 6,469 | 1,965 | 11,899 | 2,357 |
| Amortization of deferred finance charges | 581 | 566 | 1,087 | 686 |
| Change in assets and liabilities: | ||||
| Accounts receivable | 261 | (272) | (222) | (301) |
| Amounts due to/from related parties | — | (2,695) | — | (2,696) |
| Accounts payable | (78) | (1,728) | (472) | 583 |
| Accrued expenses | 1,345 | (350) | 4,934 | 266 |
| Other current and non-current assets | 232 | (888) | (108) | (3,434) |
| Other current liabilities | 1,829 | (1,668) | 2,076 | (81) |
| Net cash provided by (used in) operating activities | 17,646 | (6,073) | 28,819 | (3,505) |
| Cash Flows from Investing Activities | ||||
| Additions to newbuildings | (159,408) | (125,770) | (313,221) | (256,585) |
| Net cash used in investing activities | (159,408) | (125,770) | (313,221) | (256,585) |
| Cash Flows from Financing Activities | ||||
| Proceeds from issuance of common shares, net of paid issuance costs | — | 46,195 | — | 46,195 |
| Proceeds from issuance of long-term and short-term debt (net of deferred finance charges paid to lender) | 147,650 | 119,796 | 295,500 | 251,669 |
| Other deferred finance charges paid | (410) | (1,033) | (1,558) | (1,753) |
| Proceeds from issuance of long-term debt from related party | — | — | — | 1,020 |
| Repayment of long-term debt from related party | — | — | — | (2,020) |
| Repayment of long-term debt | (4,869) | (2,364) | (8,318) | (3,552) |
| Repayment of short-term debt | — | (7,500) | — | (7,500) |
| Payment of cash distributions | (4,390) | — | (4,829) | — |
| Net cash provided by financing activities | 137,981 | 155,094 | 280,795 | 284,059 |
| Net (decrease) increase in cash, cash equivalents and restricted cash | (3,781) | 23,251 | (3,607) | 23,969 |
| Cash, cash equivalents and restricted cash at the beginning of the period | 25,727 | 981 | 25,553 | 263 |
| Cash, cash equivalents and restricted cash at the end of the period | 21,946 | 24,232 | 21,946 | 24,232 |
| Supplementary disclosure of cash flow information | Three months ended March 31, 2024 | Three months ended March 31, 2023 | Six months end of June 30, 2024 | Six months ended June 30, 2023 |
|---|---|---|---|---|
| Non-cash additions in respect of newbuildings | — | (13,783) | — | (13,783) |
| Issuance of liabilities for newbuilding installments | — | 13,783 | — | 13,783 |
| Interest paid, net of capitalized interest | (9,579) | (2,799) | (15,219) | (4,265) |
Himalaya Shipping Ltd.
Unaudited Consolidated Statements of Changes in Shareholders' Equity
(In $ thousands except share and per share data)
| Number of outstanding shares | Common shares | Additional paid in capital | Contributed surplus | Accumulated deficit | Total equity | |
|---|---|---|---|---|---|---|
| Balance as at December 31, 2022 | 32,152,857 | 32,153 | 61,171 | — | (2,997) | 90,327 |
| Share-based compensation | — | 141 | — | — | 141 | |
| Total comprehensive loss | — | — | — | (23) | (23) | |
| Balance as at March 31, 2023 | 32,152,857 | 32,153 | 61,312 | — | (3,020) | 90,445 |
| Issuance of common shares | 8,630,000 | 8,630 | 41,424 | — | — | 50,054 |
| Equity issuance costs | (5,082) | — | — | (5,082) | ||
| Share based compensation | 112 | — | — | 112 | ||
| Total comprehensive loss | — | — | — | (1,115) | (1,115) | |
| Balance as of June 30, 2023 | 40,782,857 | 40,783 | 97,766 | — | (4,135) | 134,414 |
| Balance as of December 31, 2023 | 43,900,000 | 43,900 | 111,788 | — | (1,483) | 154,205 |
| Transfer to contributed surplus | — | (97,876) | 97,876 | — | — | |
| Share based compensation | — | 126 | — | — | 126 | |
| Cash distributions to shareholders | — | — | (1,756) | — | (1,756) | |
| Total comprehensive income | — | — | — | 2,492 | 2,492 | |
| Balance as at March 31, 2024 | 43,900,000 | 43,900 | 14,038 | 96,120 | 1,009 | 155,067 |
| Share based compensations | — | 144 | — | — | 144 | |
| Cash distributions to shareholders | — | — | (4,829) | — | (4,829) | |
| Total comprehensive income | — | — | — | 6,863 | 6,863 | |
| Balance as of June 30, 2024 | 43,900,000 | 43,900 | 14,182 | 91,291 | 7,872 | 157,245 |
APPENDIX
UNAUDITED NON GAAP MEASURES AND RECONCILIATIONS
Average TCE earnings is a non-U.S. GAAP measure of the average daily revenue performance of a vessel. Set forth below is a reconciliation of average TCE earnings to total operating revenues for the periods presented.
| In thousands, except per day and number of days | Three months ended | |||||||
|---|---|---|---|---|---|---|---|---|
| March 31, 2024 | Change | % Change | ||||||
| Total operating revenues | 31,202 | 23,581 | 7,621 | 32 | % | |||
| Add: Address commissions | 1,132 | 840 | 292 | 35 | % | |||
| Total operating revenues, gross | 32,334 | 24,421 | 7,913 | 32 | % | |||
| Fleet operational days | 935 | 798 | 137 | 17 | % | |||
| Average TCE earnings | 34,600 | 30,600 | 4,000 | 13 | % |
All values are in US Dollars.
We present Adjusted EBITDA because we believe this measure increases comparability of total business performance from period to period and against the performance of other companies. Set forth below is a reconciliation of Adjusted EBITDA to net income for the periods presented.
| Three months ended | |||||
|---|---|---|---|---|---|
| In $ thousands | June 30, 2024 | March 31, 2024 | Change | % Change | |
| Net income | 6,863 | 2,492 | 4,371 | 175 | % |
| Depreciation and amortization | 6,469 | 5,430 | 1,039 | 19 | % |
| Total financial expenses, net | 10,653 | 8,925 | 1,728 | 19 | % |
| Income tax | — | — | — | — | % |
| Adjusted EBITDA | 23,985 | 16,847 | 7,138 | 42 | % |
Non-GAAP financial measures may not be comparable to similarly titled measures of other companies and have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our operating results as reported under U.S. GAAP.
himalayashippingq2invest
1 Himalaya Shipping Ltd. Q2 2024 Results Presentation 16 August 2024
2 DISCLAIMER Forward Looking Statements This results presentation and any related discussions, including any related written or oral statements made by us, contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 that involve risks and uncertainties. Forward-looking statements are statements that do not reflect historical facts and may be identified by words such as “aim”, “believe,” “assuming,” “anticipate,” “could”, “expect”, “intend,” “estimate,” “forecast,” “project,” “likely to”, “plan,” “potential,” “will,” “may,” “should,” “indicative,” “illustrative,” “potential” or other similar expressions and include statements about plans, objectives, goals, strategies, future events or performance, including outlook, prospects, financing agreements associated with our vessels and expected cash break-even, illustrative free cash flow per share and earnings potential based on different scenarios and assumptions, statements about the benefits of our vessels, including the flexibility and ability to bunker with LNG, LSFO, or HSFO, the terms of our charters and chartering activity, dry bulk industry trends and market outlook, including activity levels in the industry, expected trends, including trends in the global fleet, expected demand for and offer of vessels and utilization of the global fleet and our fleet, including expected average rates, fleet growth, new orderings, the impact of an aging global fleet, expected trends regarding iron ore demand, demand outlook and expectations, limited supply growth of dry bulk vessels and yard capacity, replacement needs, statements about our dividend objectives and plans, and other non-historical statements. These forward-looking statements are not statements of historical fact and are based upon current estimates, expectations, beliefs, and various assumptions, many of which are based, in turn, upon further assumptions, and a number of such assumptions are beyond our control and are difficult to predict. These statements involve significant risks, uncertainties, contingencies and factors that are difficult or impossible to predict and are beyond our control, and that may cause our actual results, performance or achievements to be materially different from what is expressed, implied or forecasted in such forward-looking statements. Numerous factors, risks and uncertainties that could cause our actual results, level of activity, performance or achievements to differ materially from those expressed, implied or forecasted in the forward-looking statements include but are not limited to: general economic, political and business conditions; general dry bulk market conditions, including fluctuations in charter hire rates and vessel values; our ability to meet the conditions and covenants in our financing agreements; changes in demand in the dry bulk shipping industry, including the market for our vessels; changes in the supply of dry bulk vessels; our ability to successfully re-employ our dry bulk vessels at the end of their current charters and the terms of future charters; changes in our operating expenses, including fuel or bunker prices, dry docking and insurance costs; changes in governmental regulation, tax and trade matters and actions taken by regulatory authorities; compliance with, and our liabilities under governmental, tax, environmental and safety laws and regulations; potential disruption of shipping routes due to accidents, hostilities or political events; our ability to refinance our debt as it falls due; our compliance with the financial covenants in our sale and leaseback agreements; fluctuations in foreign currency exchange rates; potential conflicts of interest involving members of our board and management and our significant shareholder; our ability to pay dividends and the amount of dividends we ultimately pay; risks related to climate change, including climate-change or greenhouse gas related legislation or regulations and the impact on our business from climate-change related physical changes or changes in weather patterns, and the potential impact of new regulations relating to climate change, as well as the impact of the foregoing on the performance of our vessels; other factors that may affect our financial condition, liquidity and results of operations; and other risks described under “Item 3. Key Information — D. Risk Factors” in our Annual Report on Form 20-F for the year ended December 31, 2023 filed with the U.S. Securities and Exchange Commission on March 27, 2024. The foregoing factors that could cause our actual results to differ materially from those contemplated in any forward-looking statement included in this report should not be construed as exhaustive. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this investor presentation. Except as required by law, Himalaya Shipping undertakes no and expressly disclaims any obligation to update publicly any forward-looking statements after the date of this investor presentation whether as a result of new information, future events or otherwise. Non-GAAP Financial Measures This presentation contains certain selected financial measures on a basis other than U.S. generally accepted accounting principles (“GAAP”), including Adjusted EBITDA, average daily TCE earnings, gross, and illustrative free cash flow. Adjusted EBITDA represents our net income/(loss) plus depreciation of vessels and equipment; total financial expenses, net; and income tax expense. Adjusted EBITDA is presented here because the Company believes this measure increases comparability of total business performance from period to period and against the performance of other companies. Average daily TCE earnings, gross, as presented here, represents time charter revenues and voyage charter revenues adding back address commissions and divided by operational days. Average daily TCE earnings, gross, is presented here because the Company believes this measure provides additional meaningful information for investors to analyse our fleets’ daily income performance. For a reconciliation of Adjusted EBITDA and average daily TCE earnings, gross, to the most directly comparable financial measures prepared in accordance with US GAAP, please see the section of our preliminary results for the quarter ended June 30, 2024, Appendix entitled “Unaudited Non-GAAP Measures And Reconciliations”. Illustrative free cash flow per share is presented here because the Company believes this provides investors with expected levels of cash per share that may be available for distribution based on Capesize index rates. For a discussion of illustrative free cash flow per share, see slide 15 including the footnotes thereto. We are unable to prepare a reconciliation of illustrative free cash flow per share without unreasonable efforts.
3 Highlights Q2 2024 Highlights: • Generated total operating revenues of $31.2 million, an average time charter equivalent earnings of approximately US$34,600/day, gross. • Net income of $6.9 million and adjusted EBITDA of $24.0 million for the quarter ended June 30, 2024. • Successful delivery and commencement of operations of the remaining three Newcastlemax dual fuel newbuildings in the second quarter of 2024, resulting in a total delivered fleet of 12 vessels. • Final instalment for the three delivered vessels financed by sale and leaseback facility provided by wholly-owned subsidiaries of CCB Financial Leasing Co. Ltd. (“CCBFL”) totalling $147.6 million. • Conversion of index linked charters on Mount Neblina and Mount Blanc to fixed charters from May 1, 2024 to June 30, 2024 at $36,750 and $37,800 per day respectively. • Declaration and payment of cash distributions for March and April 2024 of $0.03 and $0.04 per common share, respectively. • Declaration of cash distributions for May 2024 of $0.04 per common share, which was paid in July 2024. Subsequent events: • Declaration of cash distributions for June 2024 and July 2024 of $0.05 and $0.06, respectively, per common share. • Conversion of index linked charters on Mount Neblina and Mount Blanc to fixed charters from July 1, 2024 to July 31, 2024 at an average of $35,000 per day.
4 Key Financials Q2 2024 Income statement Comments US$ millions, except per share data Q2 2024 Q1 2024 Variance Operating revenues 31.2 23.6 7.6 Vessel operating expenses (5.6) (4.9) (0.7) Voyage expenses and commission (0.3) (0.4) 0.1 General and administrative expenses (1.3) (1.5) 0.2 Depreciation and amortization (6.5) (5.4) (1.1) Total operating expenses (13.7) (12.2) (1.5) Operating profit 17.5 11.4 6.1 Interest expense (11.0) (9.1) (1.9) Other financial items 0.4 0.2 0.2 Total financial expense, net (10.6) (8.9) (1.7) Tax expense - - - Net income (loss) 6.9 2.5 (4.4) Earnings per share 0.16 0.06 Adjusted EBITDA 24.0 16.8 7.2 • Increase in operating revenues of $7.6 million in Q2 2024, due to additional 3 vessels delivered in Q2 2024. Average TCE, gross of approx. US$34,600/day in Q2 2024 vs US$30,600/day in Q1 2024. • Cash break-even TCE estimated to be approximately $24,600/ day. • Increase in vessel operating expenses of $0.7 million in Q2 2024 due to additional 3 vessels delivered in Q2 2024. Average vessel operating expenses of approx. $6,000/day per vessel in Q2 2024 vs $6,200/day per vessel in Q1 2024. • General and administrative expenses decreased by $0.2 million in Q2 2024 mainly due to bonuses paid in Q1 2024. • Increase in Interest expense of $1.9 million in Q2 2024 due to higher loan principal following the sale and leaseback financing on the 3 vessels delivered in Q2 2024. • Adjusted EBITDA of $24.0 million in Q2 2024, an increase of $7.2 million over Q1 2024. • Increase in operating profit by $6.1 million in Q2 2024. • Net income of $6.9 million in Q2 2024 vs $2.5 million in Q1 2024.
5 Key Financials Q2 2024 Balance Sheet Summary Comments US$ millions June 30, 2024 March 31, 2024 Variance Cash and cash equivalents 21.9 25.7 3.8 Vessels and equipment 867.7 647.7 220.0 Newbuildings -- 67.1 (67.1) Total assets 897.3 748.6 148.7 Short-term and long-term debt 725.5 583.3 142.2 Total equity 157.2 155.1 2.1 • Net cash generated by operating activities in Q2 2024 of $17.6 million. • Net cash used in investing activities in Q2 2024 was $159.4 million, primarily relating to the final instalment on the 3 vessels delivered in Q2 2024. • Net cash provided by financing activities in Q2 2024 was $138.0 million of which $147.6 million was from the sale and leaseback financing on the 3 vessels delivered in Q2 2024, partially offset by deferred loan costs of $0.4 million, loan repayments of $4.8 million and cash distributions paid of $4.4 million; • Vessels and equipment increased primarily due to the delivery of 3 vessels in Q2 2024. • Decrease in newbuildings was mainly due to the delivery of 3 vessels in Q2 2024. • Increase in short-term and long-term debt was mainly due to the sale and leaseback financing on the 3 vessels delivered in Q2 2024, offset by loan repayments. • $10 million available to draw-down under the RCF with Drew Holdings Ltd.
6 Source: Company Data Fleet status report – Current Chartering position
7 Strong start to the year and strong seasonality ahead Baltic 5TC Index Baltic 5TC Index Seasonality Source: Clarksons Shipping Intelligence Index -13% -23% -11% -13% -5% -6% -4% -2% 11% 26% 21% 21% -30% -20% -10% 0% 10% 20% 30% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Capesize Earnings Seasonality (1990-Present) Average Monthly deviation vs. yearly average Historically Q4 is ~25% better than July rates due to higher exports from Brazil and West- Africa0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 J F M A M J J A S O N D 2015-23 max-min range 2015-23 average 2024 2023 YTD average rate $23k/day up 90% Y/Y
8 7.40% 1.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Container LNG LPG Capesize Total Dry Bulk Car Carriers Tankers H 1 2 02 4 y/ y G ro w th Tonne-mile demand Fleet growth 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Iron ore Coal Grains Minor Bulk Demand has been growing Tonne-mile demand historically outpaced volume growth Capesize have favorable supply/demand dynamics Source: Clarksons Shipping Intelligence Network, AIS, Arrow 3.9% 4.2% Tonnes (CAGR 2000 – 2023) Tonne-mile (CAGR 2000 – 2023) Global seaborne trade volume (billion tonne-miles)
9 Significant iron ore volumes coming – driving tonne-mile demand Addition iron ore volumes in Atlantic basin (MT/y) – 3x longer than from Australia Source: Clarksons, Rio Tinto, Vale, Himalaya Shipping. 1) Assumed 170MT pr year carried on 210k DWT Newcastlemaxes (95% fully loaded). Each ship able to do 3.65 round voyages pr year Required # ships 50% > orderbook1 Simandou project – Guinea Start-up 2025 – full volumes 2028 Vale capacity increases by 2026 232 136 # of Ships for these volumes Current Capesize+ Orderbook
10 0 50 100 150 200 250 300 350 400 450 2000 2003 2006 2009 2012 2015 2018 2021 2024 Capesize fleet mDWT Capesize orderbook mDWT Limited supply of new ships 25-year low orderbook Highly supportive Order Book to Fleet Ratio Source: Clarksons Shipping Intelligence Network (https://sin.clarksons.net/) Orderbook 7.2% of fleet 54% 41% 32% 22% 20% 12% 10% 9% 7.2%
11 0 50 100 150 200 250 300 350 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 Delivered Newbuildings Significant replacement needs Capesize+ fleet by delivery year in # ships Source: Clarksons Shipping Intelligence Network (https://sin.clarksons.net/) 60% of the fleet >20 years by 2033 Year # ships turning 20 years % of fleet >20 years Current 77 4% 2024 22 1% 2025 47 7% 2026 58 10% 2027 56 13% 2028 45 15% 2029 110 21% 2030 212 31% 2031 251 44% 2032 214 55% 2033 103 60% Vessels built before 20093 Vessels built between 2009 and 20153 Vessels built post-2016 unaffected by 20303 305 ships – 14% 1,072 ships – 50% 780 ships – 36% Unlikely to be able to build significant capacity before 2028
12 Himalaya have the right ships - gives premium rates The youngest fleet – Firmly positioned for distributions Solid Premium to Index Source: Bloomberg, Clarksons Shipping Intelligence Index - Owned fleets only - Fleet age adjusted for Newbuilding orders The 11 “index ships” fixed on average at 42.25% premium to Baltic Cape index Youngest fleet Dual Fuel LNG enables HSHP to run on LNG/HFO/VLSFO giving optionality 0.8 5.4 7.9 10.8 12.3 12.4 12.9 14.8 15.6 HSHP Peer A Peer B Peer C Peer D Peer E Peer F Peer G Peer H Global Fleet average age 23,482 34,600 15,000 20,000 25,000 30,000 35,000 40,000 BCI5 Index Peer 1 Peer 2 Himalaya Shipping Q2 reported Time-Charter income $/day
13 Ordered at the right time – financed long-term at fixed price Modest leverage Financing fixed for 7 years gives attractive break-even Source; Himalaya Shipping. Clarksons. Debt based on $725.5m total debt net of deferred financing costs. Based on Company estimated average debt financing for 12 vessels, including scrubber financing for four vessels. 2. Blended fixed bareboat day-rate. 3. Floating interest rate scrubber financing for four vessels. 4. VLSFO – HSFO spread of $110 basis Singapore bunkering for a consumption of 10,000 tons per year with 75% benefit to the Shipowner. Platts quoted bunker spread 14 Aug 2024 is $120/t. 5. 11 index-linked charters with a contracted premium to BCI 5TC of 42%. Source: Clarksons Shipping Intelligence Network (https://sin.clarksons.net/) as of January 26, 2023 and Company estimates. 5. Capesize index rate adjusted for 5% commission $71.6m $95m $60.4m Order price Current valuation Current debt pr ship 64% LTV Fixed bareboat day-rate2 $/day 16,567 Scrubber financing3 $/day 841 Estimated Opex " 6,400 Estimated SG&A " 732 Estimated cash break-even " 24,540 Estimated scrubber benefit when sailing4 $/day (2,200) Earnings premium5 42% (6,300) Capesize index eq cash break-even rate $/day ~16.3005
14 1) Drew Holdings Limited holds 30.7% of the Company’s common shares as of June 30, 2024. Capital discipline Alignment between shareholders and management – board and significant shareholder own ~1/3 of the equity1 No reinvestment plans – youngest fleet in the industry means limited capital needs Cash flow from operation targets to be distributed in monthly dividends Already announced 7 monthly dividends - $0.06c for July 2024 Attractive cash-break even of ~$16k/day on Capesize index equivalent
15 Solid dividend capacity Illustrative FCF $ per share based on Capesize index rate 1. This information has been prepared for illustrative purposes only and does not represent the Company’s forecast. It is based, among other things, on industry data, internal data and estimates of the Company and is inherently subject to risk and uncertainties. Actual results may differ materially from the assumptions and circumstances reflected in the above illustrative financial information. 2. Assumes BCI5 Index rates + 42% premium (less 5%) commission) + $2,200 in scrubber benefit less $24,540/d in cash breakeven x 12 ships, divided by 43,900,000 shares outstanding 0 50,000 100,000 150,000 200,000 250,000 2003 2004 2005 2006 2007 2008 2009 Capesize index rate CBE 0.0 0.5 1.2 1.9 2.6 3.2 3.9 4.6 5.3 16,300 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000