Baltic Trading Limited Q1 2010 Results

Tuesday, May 04, 2010

Baltic Trading Limited (NYSE: BALT) reported its financial results for the three months ended March 31, 2010. The following financial review discusses the results for the three months ended March 31, 2010. As expected, the company had no vessels in operation during the quarter. The company took delivery of its first two vessels on April 8, 2010 and April 29, 2010, respectively and expects to take delivery of three of the remaining vessels to be acquired by May 15, 2010, and one Capesize newbuilding in October 2010.

First Quarter 2010 and Year-to-Date Highlights
  --  Recorded a net loss of $0.5 million, or $0.09 basic and diluted loss per share for the first quarter;
  --  Completed a $228.2 million Initial Public Offering on March 15, 2010;
  --  Executed a credit agreement and other definitive documentation for a $100 million senior secured revolving credit facility, providing flexibility to fund future acquisitions;
  --  Took delivery of the Company's initial vessel, the Baltic Leopard, a 2009-built Supramax vessel;
  --  Took delivery of the Company's second vessel, the Baltic Panther, a 2009-built Supramax vessel;
  --  Reached agreements to enter into spot market-related time charters for the Baltic Leopard and the Baltic Panther, both 2009-built Supramax vessels, with Oldendorff GMBH and Co. KG. Lubeck for approximately 11 to 13.5 months;
  --  Reached agreements to enter into spot market-related time charters for the two Capesize newbuildings, the Baltic Bear and the Baltic Wolf, with Cargill International S.A. for approximately 11 to 13.5 months;
  --  Reached an agreement to enter into a spot market-related time charter for the Baltic Jaguar, a 2009-built Supramax vessel, with Clipper Bulk Shipping N.V. for approximately 11 to 13.5 months.

Financial Review: 2010 First Quarter
The company recorded a net loss for the first quarter of 2010 of $0.5 million, or $0.09 basic and diluted loss per share. The net loss was a result of the company generating no revenues, as expected, due to the timing of vessel deliveries, and incurring general and administrative expenses including non-cash compensation expenses. The initial vessel of the company's fleet was delivered on April 8, 2010 and a second vessel was delivered on April 29, 2010. We expect three additional vessels to be delivered before May 15th and the sixth vessel to be delivered in October 2010.

EBITDA was $(0.5) million for the three months ended March 31, 2010.

John C. Wobensmith, President and Chief Financial Officer, commented, "During the first quarter, we completed our $228.2 million IPO, creating the only publicly traded drybulk company solely focused on the spot market. We believe our fleet deployment strategy combined with our approach of maintaining little or no leverage and distributing a substantial portion of cash flows through dividends positions the Company to create long-term value for shareholders."

Mr. Wobensmith continued, "Since our IPO in March, we have made important progress implementing our strategy. We have taken delivery of the first two of six drybulk vessels which are currently trading on spot market-related charters. In addition, we also signed spot market-related charters for three vessels prior to their delivery, ensuring that five of our six vessels are already committed to spot market-related charters. In order to enhance our ability to take advantage of future growth opportunities decisively, we entered into a $100 million credit facility that we primarily intend to use as bridge financing for future vessel acquisitions. In seeking opportunities to expand our modern high-quality fleet, we will continue to adhere to a strict set of return criteria."

Liquidity and Capital Resources
Cash Flow
Net cash used in operating activities for the three months ended March 31, 2010 was $1.0 million. Net cash used in operating activities for the three months ended March 31, 2010 was primarily a result of a recorded net loss of $0.5 million, and certain prepaid expenses and advances made to Genco Shipping & Trading Limited, our parent company, offset by amortization of restricted stock compensation in the amount of $0.2 million and accounts payable of $0.2 million.

Net cash used in investing activities was $35.6 million for the three months ended March 31, 2010 and related to deposits on our initial vessels to be acquired.

Net cash provided by financing activities for the three months ended March 31, 2010 was $285.8 million and consisted of $214.5 million of proceeds from our initial public offering as well as Genco Shipping & Trading Limited's capital contribution in the amount of $75 million. Net cash provided by financing activities was offset by $3.4 million of payments for expenses related to the initial public offering as well as $0.3 million of payments for deferred financing costs.

Capital Expenditures
We make capital expenditures from time to time in connection with vessel acquisitions. Our current fleet consists of two Supramax vessels, which we took delivery of in April 2010. After the expected delivery of four vessels the Company has agreed to acquire, Baltic Trading Limited will own a fleet of six drybulk vessels, consisting of two Capesize and four Supramax vessels, with an aggregate carrying capacity of approximately 566,000 dwt.

In addition to acquisitions that we may undertake in future periods, we will incur additional capital expenditures due to special surveys and drydockings for our fleet. We do not currently expect any of our vessels to be drydocked in 2010.

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