Eagle Bulk Shipping Inc. 3Q 2005 Results Presentation November 14, 2005
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 forwardlooking 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. 1
Agenda Third Quarter 2005 Highlights The Fleet Industry View Financial Overview Conclusion 2
3Q 2005 Highlights
3Q 2005 Highlights Net Revenues of $21.1 million Net Income of $7.4 million EBITDA 1 of $16.8 million $0.54 dividend declared and paid Acquired two 2001-built Supramax vessels at a purchase price of $35 million each One vessel delivered on October 26, 2005 and immediately deployed on a 2-year time charter at $24,000 per day 1 EBITDA, as defined by our credit agreement, is Net Income less Interest Expense, Depreciation and Amortization, and Exceptional Items. 4
Acquisition of 2 vessels for $70 million Transaction Highlights Fleet Impact September acquisition of two Supramax vessels, to be delivered* in the fourth quarter of 2005 Vessels on time charters for 24-26 months at $24,000/day Acquisitions financed by the equity offering of October 28, 2005 which raised a net of $75 million Offering de-levered the Company and provides firm base for further accretive acquisitions Number of vessels increases from 11 to 13 Cargo carrying capacity expands by 19% to 643,980 Dwt Fleet's average age decreases from 5.8 to 5.5 years Increases our number of sister ships from 5 to 6 2006 contract coverage increases from 74% to 78% * MERLIN was delivered in October 2005 and the HERON expected to be delivered in December 2005 5
Eagle Delivers on Promises Made at IPO Objective Stated at IPO Achieved Take delivery of initial 11 vessels on time Efficient turnaround between acquisition of vessel and delivery to time charterer Beat Q3 dividend projection of $0.53 per share, reaffirm Q4 dividend guidance of $0.57 per share Make acquisitions that are accretive to EPS and DPS Focus on acquisitions of quality, modern Handymax dry bulk vessels Focus on sistership acquisitions Increase charter cover for additional earnings visibility 6
The Fleet
Modern, High Quality Fleet of Handymax Vessels Average fleet age of only 5.5 years compared to industry average age of over 15 years Sistership strategy provides economies of scale Supramax Vessel's Name Dwt Age (Years) Daily Charter Rate (US$) Condor 50,296 4.0 24,000 Falcon 50,296 4.0 20,950 Harrier 50,296 4.0 23,750 Hawk I 50,296 4.0 23,750 Merlin* 50,296 4.0 24,000 Osprey I 50,206 3.0 21,000 Cardinal 55,408 1.0 26,500 Peregrine 50,913 4.0 24,000 Heron* 52,827 4.0 24,000 Handymax Sparrow 48,225 5.0 22,500 Griffon 46,635 10.0 28,000 Kite 47,195 8.0 25,000 Shikra 41,096 21.0 22,000 Fleet Total/Average 643,980 5.5 1 23,800 Fleet Median 4.0 Sister Ships Similar Ships * = Recent acquisitions Notes: 1 Represents weighted average age 8
Time Charter Contracts Provide Stable and Visible Cashflows Fleet covered by contracted revenues from TC s at 100% for 2005 and 78% for 2006 Vessel acquisitions lengthen fleet charter coverage and increase revenue visibility Chartering strategy limits exposure to spot market seasonality and volatility Condor Falcon Harrier Supramax Hawk I Merlin* Osprey I Cardinal Heron* Peregrine Handymax Sparrow Griffon Kite Shikra 2005 * = Recent acquisitions 1Q 2006 2Q 2006 3Q 2006 4Q 2006 9
Industry View
Steadily Increasing Demand Total World Demand for Dry Bulk Shipping Capacity 3,000 CAGR Annual Growth 2000 2002 Total 2003 2004 2005E 2.1% Dry Bulk Demand 5.1% 6.8% 4.5% 2006E 2007E 4.2% 3.7% 2,000 1,000 1.4% (2.3%) 4.2% Minor Bulks (Cement, fertilizers, scrap iron, etc.) Grain Coal 3.6% (2.3%) 5.1% 3.8% 6.2% 4.7% 4.1% 0.5% 3.7% 2.9% 2.0% 3.9% 3.0% 2.0% 3.8% 3.0% Iron Ore 11.0% 14.0% 7.4% 6.9% 5.1% 0 2000 2001 2002 2003 2004 2005E 2006E 2007E Source: Drewry Note: Demand based on million tons 11
Strong Demand Fundamentals Intensive material growth in an industrializing China Rapidly expanding Indian economy Expanding global economy Low demand elasticity 12 10 8 6 4 2 2005E GDP Growth 1 (%) 9.6% 7.1% 6.6% 4.5% 4.2% 3.7% 2.5% 1.6% Restructuring of trade patterns Port congestion continues due to strained global infrastructure 0 China Asia² India Latin World US Australia Japan America Source: UBS research Notes: 1 Represents 2004 2005E year-over-year growth 2 Excludes Japan, includes Australia & New Zealand Handymax sector critical to a number of global markets 12
Handymax Vessels Play Across All Cargoes Size (dwt) Coal & Iron Ore Primary Cargos Carried Grain & Produce Minor Bulk Capesize >100,000 Panamax 60,000 80,000 Handymax 35,000 60,000 Handysize <35,000 = Moderate = Strong 13
New Supramax Asset Class Services Growing Global Needs 9 of the 13 vessels owned by the Company are Supramaxes 120 World Dry Bulk Fleet 667 Vsls Smallest segment of the drybulk market provides opportunities Orderbook and Fleet Age Fleet DWT (Million Tons) 100 80 60 40 20 2,283 Vsls 55.8 1,434 Vsls 60.8 Eagle s focus 351 Vsls 1,321 Vsls 93.4 110.2 18.4 Orderbook as % of Fleet % of Fleet > 20 years 0 Handy (10,000/34,999 dwt) Handymax (35,000/49,999 dwt) Supramax (50,000/59,999 dwt) Panamax (60,000/89,999 dwt) Capesize (>90,000 dwt) 31% Aging Handymax fleet 31% of capacity > 20 years old 26% 22% 25% 18% Number of Handymax vessels over 14% 20 years old is 235% of the orderbook Capesize Panamax Handymax Source: Clarksons as of October 2005 14
Baltic Dry Index in Seasonal Uptrend 6000 5000 4000 3000 2000 1000 0 4-Jan-05 23-Feb-05 14-Apr-05 3-Jun-05 23-Jul-05 11-Sep-05 31-Oct-05 Source: Clarksons 15
Financial Overview
3rd Quarter and Year-to-Date Fleet Data Fleet Operating Days Three months ended June 30, 2005 Three months ended September 30, 2005 Period from January 26, 2005 (inception) to September 30, 2005 Ownership Days 490 932 1,422 Available Days 479 929 1,408 Operating Days 477 926 1,403 Fleet Utilization 99.6% 99.7% 99.6% The 2 vessel acquisitions will increase available days by 10% in 4Q 2005 and 18% in 2006 Ownership days: The Company defines ownership days as the aggregate number of days in a period during which each vessel in its fleet has been owned. Available days: The Company defines available days as the number of ownership days less the aggregate number of days that its vessels are off-hire due to vessel familiarization upon acquisition, scheduled repairs or repairs under guarantee, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels. Operating days: The Company defines operating days as the number of its available days in a period less the aggregate number of days that the vessels are off-hire due to any reason, including unforeseen circumstances. 17
3rd Quarter and Year-to-Date 2005 Earnings ($000's) Three months ended September 30, 2005 Period from January 26, 2005 (inception) to September 30, 2005 REVENUES Net Time Charter Revenues $21,138 $31,753 EXPENSES Vessel Expenses 3,733 6,848 General & Administrative Expenses 833 2,253 Depreciation 3,859 5,880 One-time Fees to Affiliates - 6,175 Non-cash Compensation Expense 3,736 11,377 12,161 32,533 OPERATING INCOME 8,977 (780) Interest Expense 1,727 4,961 Interest Income (145) (240) NET INCOME/(Loss) $7,395 ($5,501) Basic and Diluted Income per share $0.27 ($0.30) Weighted Average Shares Outstanding 27,150,000 18,498,387 NET INCOME, excluding Non-cash Expense $11,131 $5,876 Basic and Diluted Income per share $0.41 $0.32 18
Low Breakeven Cost Strategy Achieve daily cash breakeven cost of $6,731 per day per vessel* No principal repayments for five years $276 $1,865 Dry-Dock Vessel Expenses Technical Mgt Fees G&A Cash Interest $3,500 $816 $274 * Pro forma for 13 vessels and debt of $150 million 19
Full Pay-out Dividend Policy Reconciliation of 3Q Net Income to Credit Agreement EBITDA Dividend Per Share ($) (in $ 000's) Net Income $7,395 Interest Expense 1,727 Depreciation 3,859 Amortization of Pre-paid Revenue 123 EBITDA 13,104 Adjustments for exceptional items Non-cash Compensation Expense 3,736 Credit Agreement EBITDA $16,840 $0.54 $0.57 Free Cashflow Credit Agreement EBITDA $16,840 Less : Interest Expense (1,727) Reserve for Dry Docking (392) $14,721 Dividend Paid $14,661 Q3-2005 Actual Q4-2005 Re-affirmed For Tax purposes, an estimated 40% of 2005 dividends represents a return of capital 20
Strong Balance Sheet Pro Forma As Adjusted* for the Acquisitions BALANCE SHEET DATA 30-Sep-05 30-Sep-05 (unaudited in $000's) (unaudited in $000's) Cash $21,175 $25,738 Other Current Assets 1,712 $1,712 Advances for Vessels 7,000 - Vessels, net 360,675 430,675 Restricted Cash 5,500 5,500 Other Assets 2,812 2,812 TOTAL ASSETS 398,874 466,437 Current Liabilities 7,120 7,120 Long-term Debt 157,000 150,000 Stockholders' Equity 234,754 309,317 Book Capitalization 391,754 459,317 Debt / Capitalization 40.08% 32.66% * As adjusted to give effect to our issuance and sale of 5.5 million common shares at $14.50 each and after giving effect to the application of (i) a portion of the net proceeds therefrom to repay indebtedness associated with the acquisition of the 2 Supramax vessels and (ii) use $4.6 million for general corporate and working capital purposes. 21
Conclusion
Conclusion Strong 3Q 2005 results surpasses prior dividend guidance Secure and stable cash flow from medium to long-term contracts Among the lowest daily cash costs per vessel among dry bulk peers Healthy and sustainable dry bulk industry dynamics Strong balance sheet provides flexibility for future growth Management team has demonstrated ability to identify business opportunities and execute acquisitions 23
Eagle Bulk Shipping Inc.