Eneti Inc. Announces Financial Results for the First Quarter of 2021 and Declares a Quarterly Cash - GlobeNewswire

MONACO, May 18, 2021 (GLOBE NEWSWIRE) -- Eneti Inc. (NYSE: NETI) (“Eneti” or the “Company”), today reported its results for the three months ended March 31, 2021.


The Company also announced that on May 14, 2021 its Board of Directors declared a quarterly cash dividend of $0.05 per share on the Company’s common shares.


Results for the Three Months Ended March 31, 2021 and 2020



  • For the first quarter of 2021, the Company’s GAAP net income was $41.9 million, or $3.84 per diluted share, including:

    • a gain subsequent to an increase in fair value less costs to sell of approximately $15.5 million, or $1.43 per diluted share, taken related to the Company’s previously announced plan to exit the dry bulk industry. The gain is primarily the result of an increase in the fair value of common shares of Star Bulk Carriers Corp. (“Star Bulk”) (NASDAQ: SBLK) and Eagle Bulk Shipping Inc. (“Eagle”) (NASDAQ: EGLE) received or to be received as a portion of the compensation for the purchase of certain of our vessels;

    • the write-off of $3.7 million, or $0.34 per diluted share, of deferred financing costs on repaid credit facilities related to vessels that have been sold; and

    • a non-cash gain of approximately $15.8 million and cash dividend income of $0.2 million, or $1.47 per diluted share, from the Company’s equity investments (primarily Scorpio Tankers Inc.).





  • For the first quarter of 2020, the Company’s GAAP net loss was $124.7 million, or $18.12 per diluted share. These results include a non-cash loss of approximately $89.1 million and cash dividend income of $0.4 million, or $12.88 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc., and a write-down of approximately $17.0 million, or $2.47 per diluted share, related to the classification of two Ultramax vessels and one Kamsarmax vessel as held for sale.

  • Total vessel revenues for the first quarter of 2021 were $59.8 million, compared to $40.8 million for the same period in 2020.

  • Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the first quarter of 2021 was $52.0 million and EBITDA for the first quarter of 2020 was a loss of $100.1 million (see Non-GAAP Financial Measures below).

  • For the first quarter of 2021, the Company’s adjusted net income was $30.0 million, or $2.75 adjusted per diluted share, which excludes the impact of the gain of approximately $15.5 million related to the Company’s previously announced plan to exit the dry bulk industry due to an increase in the fair value of the assets to be received in exchange for certain vessels as described above and the write-off of $3.7 million of deferred financing costs on repaid credit facilities related to vessels that have been sold.

  • For the first quarter of 2020, the Company’s adjusted net loss was $107.7 million, or $15.65 adjusted per diluted share, which excludes the write-down of approximately $17.0 million related to the classification of two Ultramax vessels and one Kamsarmax vessel as held for sale.

  • Adjusted EBITDA for the first quarter of 2021 was $36.5 million compared to an $83.1 million loss in the prior year period (see Non-GAAP Financial Measures below). 

  • As of May 14, 2021, the Company’s remaining fleet consists of 10 Ultramax vessels and 2 Kamsarmax vessels, as well as five time chartered-in vessels which are expected to be redelivered to their respective owners during the remainder of the second quarter of 2021 and the third quarter of 2021.


Cash and Cash Equivalents


As of May 14, 2021, the Company had approximately $152.8 million in cash and cash equivalents.


Dry Bulk Exit


Eneti Inc. announced on August 3, 2020 its intention to transition away from the business of dry bulk commodity transportation and towards marine-based renewable energy including investing in the next generation of wind turbine installation vessels.


The following table summarizes when the Company delivered or expects to deliver the vessels to be sold to their respective buyers.













































































































































    Ultramax Vessels   Kamsarmax Vessels   Total Vessels  
Quarter   # of Vessels   Sales Price
($000’s)
  # of Vessels   Sales Price
($000’s)
  # of Vessels   Sales Price
($000’s)
 
Unsold Vessels at September 30, 2020   33       16       49      
Q4 2020   5   $88,460   3   $54,865   8   $143,325  
Q1 2021   11   $187,333   7   $123,127   18   $310,460 (1)(2)
Q2 2021: April 1 - May 14   7   $124,350   4   $81,500   11   $205,850 (3)(4)
Q2 2021: May 15 - June 30   7   $117,672   0   $0   7   $117,672 (5)
Total Vessels Sold   30   $517,815   14   $259,492   44   $777,307  
Unsold Vessels at May 14, 2021   3       2       5      

(1) Includes approximately $89.3 million of debt assumed or reimbursed to the Company by buyer
(2) Excludes approximately 2.6 million shares of Star Bulk common stock
(3) Includes approximately $12.7 million of debt assumed by buyer
(4) Excludes approximately 0.4 million shares of Star Bulk common stock
(5) Excludes a warrant for 212,315 shares of Eagle common stock


Contract to Build a Wind Turbine Installation Vessel


On May 11, 2021, the Company has entered into a binding agreement with Daewoo Shipbuilding and Marine Engineering for the construction of one wind turbine installation vessel (“WTIV”). The contract price is $330.0 million and the vessel is expected to be delivered early in the third quarter of 2024. In addition, the Company holds an option to construct an additional WTIV at the same price, net of currency adjustments.


The vessel is an NG-16000X design by GustoMSC (a subsidiary of NOV Inc.), and includes a 2,600 Ton Leg Encircling Crane from Huisman Equipment B.V. of the Netherlands. The vessel is capable of installing up to 20 Megawatt turbines at depths of up to 65 meters of water, and it can be adapted to operate on the alternate fuels of LNG or ammonia.


Jones Act Initiative


The Company is in advanced discussions with several American shipbuilders for the construction of a WTIV. This vessel would be constructed, financed, and operated by American citizens in compliance with the Jones Act, in order to address the heightened demand for transportation and installation capacity on the Continental Shelf of the United States.


Investment in Star Bulk


During March and April 2021, the Company sold approximately 2.6 million common shares of Star Bulk for aggregate net proceeds of approximately $45.5 million. The Company received these common shares as compensation for SBI Subaru and SBI Ursa, Ultramax bulk carriers built in 2015, SBI Capoeira and SBI Carioca, Kamsarmax bulk carriers built in 2015, and SBI Lambada and SBI Macarena, Kamsarmax bulk carriers built in 2016. As part of the transaction, the related existing lease finance arrangements were also assumed by Star Bulk. One vessel, SBI Pegasus, remains to be delivered to Star Bulk, for which Star Bulk will assume debt of $12.7 million and the Company will also receive approximately 0.4 million common shares of Star Bulk and be reimbursed for the February 2021 debt payment that was made in advance.


Debt Overview


The Company’s outstanding debt balances, gross of unamortized deferred financing costs as of March 31, 2021 and May 14, 2021, are as follows (dollars in thousands):



































































































































































    As of
March 31, 2021
  As of May 14,
2021
         
Credit Facility   Amount Outstanding
$85.5 Million Credit Facility   $ 10,725     $  
$184.0 Million Credit Facility   21,862      
$34.0 Million Credit Facility   29,679      
$90.0 Million Credit Facility   11,257      
$19.6 Million Lease Financing - SBI Rumba   15,285     15,175  
$19.0 Million Lease Financing - SBI Tango   15,798     15,690  
$19.0 Million Lease Financing - SBI Echo   15,963     15,863  
$20.5 Million Lease Financing - SBI Hermes   17,427     17,314  
$21.4 Million Lease Financing - SBI Samba   18,588     18,462  
CMBFL Lease Financing   12,672     12,672  
$45.0 Million Lease Financing - SBI Virgo & SBI Libra   19,194      
AVIC Lease Financing   33,576      
$67.3 Million Lease Financing   37,158      
Total   $ 259,184     $ 95,176  
                 

Quarterly Cash Dividend


In the first quarter of 2021, the Company’s Board of Directors declared and the Company paid a quarterly cash dividend of $0.05 per share totaling approximately $0.6 million.


On May 14, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.05 per share, payable on or about June 15, 2021, to all shareholders of record as of June 1, 2021. As of May 17, 2021, 11,233,604 shares were outstanding.


Share Repurchase Program


During the first quarter of 2021, the Company repurchased approximately 61,000 shares of the Company’s common stock, at an average cost of $18.01 per share. The Company subsequently repurchased approximately 15,000 shares of the Company’s common stock at an average cost of $19.98 per share from April 1, 2021 through May 17, 2021. These repurchases, totaling approximately $1.4 million, were made under the Board of Directors authorized share repurchase program and funded from available cash resources. As of May 17, 2021, the Company had $31.9 million remaining under the authorized share repurchase program.


COVID-19


Since the beginning of the calendar year 2020, the ongoing outbreak of the novel coronavirus (COVID-19) that originated in China in December 2019 and that has spread to most developed nations of the world has resulted in numerous actions taken by governments and governmental agencies in an attempt to mitigate the spread of the virus. These measures have resulted in a significant reduction in global economic activity and extreme volatility in the global financial and commodities markets. During the first quarter of 2021, the dry bulk charter market saw a significant recovery, however future charter rates remain highly dependent on the duration and continuing impact of the COVID-19 pandemic, as evidenced by the recent resurgence of cases in India and other parts of the world. When these measures and the resulting economic impact will end and what the long-term impact of such measures on the global economy will be are not known at this time. As a result, the extent to which COVID-19 will impact the Company’s results of operations and financial condition, including its planned transition towards marine-based renewable energy, will depend on future developments, which are highly uncertain and cannot be predicted.





































































































































































































































































 
Eneti Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Amounts in thousands, except per share data)
     
    Unaudited
    Three Months Ended March 31,
    2021   2020
Revenue:        
Vessel revenue   $ 59,829     $ 40,824  
Operating expenses:        
Voyage expenses   6,080     1,360  
Vessel operating costs   15,611     24,684  
Charterhire expense   11,980     4,698  
Vessel depreciation       12,343  
General and administrative expenses   7,585     6,528  
(Gain) loss / write-down on assets sold or held for sale   (15,532 )   17,009  
Total operating expenses   25,724     66,622  
Operating income (loss)   34,105     (25,798 )
Other income (expense):        
Interest income   8     123  
Income (loss) from equity investments   15,972     (88,631 )
Foreign exchange income (loss)   71     (54 )
Financial expense, net   (8,293 )   (10,343 )
Total other income (expense)   7,758     (98,905 )
Net income (loss)   $ 41,863     $ (124,703 )
         
Earnings (loss) per share:        
Basic   $ 3.94     $ (18.12 )
Diluted   $ 3.84     $ (18.12 )
         
Basic weighted average number of common shares outstanding   10,631     6,883  
Diluted weighted average number of common shares outstanding   10,892     6,883  
             




















































































 
Eneti Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in thousands)
     
    Unaudited
    March 31, 2021   December 31, 2020
Assets        
Current assets        
Cash and cash equivalents   $ 81,509     $ 84,002  
Accounts receivable   23,735     21,086  
Prepaid expenses and other current assets   14,817     16,515  
Total current assets   120,061     121,603  
Non-current assets        
Assets held for sa