Golden Ocean(GOGL) - 2024 Q2 - Quarterly Report

Report Overview Highlights Golden Ocean reported Q2 2024 net income of $62.5 million, adjusted EBITDA of $120.3 million, strong TCE rates, and a $0.30 cash dividend, with healthy forward estimates Financial Performance Summary (Q2 2024 vs Q1 2024) | Financial Metric | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $62.5 million | $65.4 million | | Earnings Per Share (basic) | $0.31 | $0.33 | | Adjusted EBITDA | $120.3 million | $114.3 million | | Adjusted Net Income | $63.4 million | $58.4 million | Q2 2024 Time Charter Equivalent (TCE) Rates | Vessel Type | Q2 2024 TCE Rate (per day) | | :--- | :--- | | Capesize | $28,005 | | Panamax | $15,721 | | Entire Fleet | $23,535 | - Announced a cash dividend of $0.30 per share for the second quarter of 2024[2] Forward TCE Rate Estimates and Coverage | Period | Vessel Type | Estimated TCE Rate (per day) | Coverage (%) | | :--- | :--- | :--- | :--- | | Q3 2024 | Capesize | $26,200 | 83 | | Q3 2024 | Panamax | $17,200 | 94 | | Q4 2024 | Capesize | $25,800 | 29 | | Q4 2024 | Panamax | $17,900 | 18 | CEO Commentary Interim CEO noted a healthy dry bulk market, strong performance from a modern fleet, and a positive outlook for market strengthening - The dry bulk shipping market remains healthy, and Golden Ocean continues to deliver above-market performance due to its modern, fuel-efficient fleet and strong commercial capabilities[3] - The market is expected to strengthen, supported by constructive demand drivers like Chinese bauxite and Atlantic iron ore projects, and a favorable supply side with moderating fleet growth and new environmental regulations[4] Operational and Corporate Development Fleet Development & Performance The company's fleet comprises 93 vessels, with one Panamax sold for $20.8 million and one Kamsarmax newbuilding on order - The company's fleet consists of 93 vessels with an aggregate capacity of approximately 14.0 million dwt, comprising 84 owned vessels, 8 chartered-in vessels, and 1 newbuilding on order[5] - In June 2024, the company agreed to sell one Panamax vessel for a net consideration of $20.8 million, with an expected $4.3 million gain to be recorded in Q3 2024[5] - Six drydocks are scheduled for Q3 2024 (five Capesize, one Panamax)[6] Forward TCE Rate Estimates and Coverage | Period | Vessel Type | Estimated TCE Rate (per day) | Coverage (%) | | :--- | :--- | :--- | :--- | | Q3 2024 | Capesize | $26,200 | 83 | | Q3 2024 | Panamax | $17,200 | 94 | | Q4 2024 | Capesize | $25,800 | 29 | | Q4 2024 | Panamax | $17,900 | 18 | Corporate Development The company refinanced six Newcastlemax vessels with a new $180 million credit facility and announced a $0.30 per share cash dividend - The company entered into a $180 million sustainability-linked credit facility to refinance six Newcastlemax vessels, with a five-year tenor and priced at SOFR plus 160 basis points per annum[9] - A cash dividend of $0.30 per share for Q2 2024 was announced, payable in September 2024[9] Financial Results Second Quarter 2024 Results Q2 2024 net income was $62.5 million, adjusted EBITDA increased to $120.3 million due to higher TCE rates, with cash decreasing from financing activities Income Statement Analysis Net income was $62.5 million, with operating revenues rising to $250.1 million due to higher TCE rates, offset by increased operating expenses Key Income Statement Metrics (Q2 2024 vs Q1 2024) | Metric | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $62.5 million | $65.4 million | | Basic EPS | $0.31 | $0.33 | | Adjusted Net Income | $63.4 million | $58.4 million | | Adjusted EBITDA | $120.3 million | $114.3 million | | Operating Revenues | $250.1 million | $246.7 million | - The average TCE rate for the entire fleet increased to $23,535 per day in Q2 2024 from $22,628 per day in Q1 2024, driving the rise in operating revenues[10] - Ship operating expenses rose to $66.3 million from $62.6 million in Q1, mainly due to a $1.7 million increase in drydocking expenses and a $3.4 million increase in energy saving and digitalization expenses[12][13] Cash Flow and Balance Sheet Analysis Cash and cash equivalents decreased by $44.4 million to $103.1 million, with strong operating cash flow offset by investing and financing activities Q2 2024 Cash Flow Summary | Cash Flow Activity (Q2 2024) | Amount (in millions) | | :--- | :--- | | Cash provided by operating activities | $76.9 | | Net cash used in investing activities | ($25.5) | | Net cash used in financing activities | ($95.8) | | Net decrease in cash | ($44.4) | - As of June 30, 2024, the company had cash and cash equivalents of $103.1 million and undrawn available credit lines of $150.0 million[15] - Total long-term debt stood at $1,335.5 million, and finance lease obligations were $77.8 million at the end of the quarter[16] Market and Strategy The Dry Bulk Market The dry bulk market remained strong in Q2 2024, with 89.0% fleet utilization driven by demand growth and longer sailing distances, and a favorable supply side with a 9.8% global orderbook - Global dry bulk fleet utilization was 89.0% in Q2 2024, indicating a continued tight market, with total seaborne transportation of dry bulk goods increasing by 3.3% increase compared to Q2 2023[17] - Demand was supported by strong Chinese iron ore imports (+6.9% YoY) and significant growth in bauxite exports from West Africa to China, which primarily utilizes Capesize vessels[19][20] - The global fleet orderbook stood at 9.8% of the existing fleet at the end of Q2, well below the 25-year average of approximately 24%, with the Capesize orderbook was the lowest among segments at 7.3%[21] Strategy and Outlook Golden Ocean maintains a positive outlook, forecasting 4.2% tonne-mile demand growth in 2024, driven by new projects and constrained supply. Its strategy leverages a modern fleet and low $13,900/day breakeven to generate cash and shareholder returns - Global tonne-mile demand is forecast to increase by 4.2% in 2024 and 3.1% in 2025, implying continued strength in dry bulk freight rates[23] - New iron ore projects, particularly the Simandou mine in Guinea, are expected to drive significant tonne-mile demand for the Capesize segment[25] - The company's strategy focuses on maintaining low daily cash breakeven levels of approximately $13,900 for the full fleet, ensuring resilience and high cash generation potential[28] - The Board intends to continue distributing a significant portion of earnings to shareholders through dividends, contingent on financial performance and market conditions[28] Financial Statements and Notes Unaudited Interim Condensed Consolidated Financial Statements Unaudited Q2 2024 financial statements include Consolidated Statements of Operations with $62.5 million net income, Balance Sheets with $3.46 billion total assets, and Cash Flow Statements showing a $44.4 million net cash decrease Consolidated Statement of Operations (Q2 2024) | Statement of Operations (Q2 2024) | Amount (in thousands) | | :--- | :--- | | Total operating revenues | $250,091 | | Net operating income | $85,902 | | Net income | $62,494 | Consolidated Balance Sheet (as of June 30, 2024) | Balance Sheet (as of June 30, 2024) | Amount (in thousands) | | :--- | :--- | | Total current assets | $284,483 | | Total assets | $3,461,860 | | Total liabilities | $1,531,463 | | Total equity | $1,930,397 | Consolidated Cash Flow Statement (Q2 2024) | Cash Flow Statement (Q2 2024) | Amount (in thousands) | | :--- | :--- | | Net cash provided by operating activities | $76,946 | | Net cash used in investing activities | ($25,531) | | Net cash used in financing activities | ($95,767) | Selected Notes to the Financial Statements Selected notes detail the $20.8 million Panamax vessel sale, newbuilding deliveries, and financing activities including a new $180 million credit facility, sale-and-leaseback, investments, and related party transactions - In June 2024, the company agreed to sell a Panamax vessel for $20.8 million, with an expected $4.3 million gain to be recorded in Q3 2024[48] - As of June 30, 2024, the book value of long-term debt was $1,335.5 million, and during the first half of 2024, the company entered into a new $180 million credit facility and a $360 million sustainability-linked credit facility to refinance existing debt[52][53][54] - As of June 30, 2024, the company had outstanding contractual commitments of $43.2 million for two vessels under construction, due by Q4 2024[56] Reconciliation of Non-GAAP Measures This section reconciles non-GAAP financial measures, including Net Income of $62.5 million to Adjusted EBITDA of $120.3 million and Adjusted Net Income of $63.4 million, and operating revenues to TCE income of $196.7 million for an average TCE rate of $23,535 per day Reconciliation to Adjusted EBITDA (Q2 2024) | Reconciliation to Adjusted EBITDA (Q2 2024) | Amount (in thousands) | | :--- | :--- | | Net income | $62,494 | | Add: Net interest, taxes, depreciation | $60,492 | | EBITDA | $122,593 | | Adjustments (derivatives, etc.) | ($2,313) | | Adjusted EBITDA | $120,280 | Reconciliation to Adjusted Net Income (Q2 2024) | Reconciliation to Adjusted Net Income (Q2 2024) | Amount (in thousands) | | :--- | :--- | | Net income | $62,494 | | Adjustments (derivatives, etc.) | $906 | | Adjusted net income | $63,400 | Reconciliation to Time Charter Equivalent (TCE) Income (Q2 2024) | Reconciliation to TCE Income (Q2 2024) | Amount (in thousands) | | :--- | :--- | | Total operating revenues | $250,091 | | Less: Voyage expenses & commission | $52,743 | | Other adjustments | ($664) | | Time charter equivalent income | $196,684 |