Yesterday after market close, Excel Maritime Carriers Ltd. (EXM), a global dry bulk carrier, declared financial results for the second quarter of 2011, which barely meets the Zacks Consensus Estimate.
GAAP net loss in the second quarter of 2011 was $15.7 million or 19 cents per share compared with a net income of $79.2 million or 95 cents per share in the year-ago quarter. However, quarterly adjusted (excluding special-items) EPS of a loss of 7 cents was exactly in line with the Zacks Consensus Estimate.
Quarterly total revenue was a little over $92.8 million compared with $198 million in the prior-year quarter. This huge reduction was primarily attributable to extremely volatile freight environment of the global drybulk shipping industry.
Nevertheless, quarterly Voyage revenue of approximately $92 million was well above the Zacks Consensus Estimate of $83 million. In the reported quarter, Time Charter Equivalent (TCE) per day was $18,932 compared with $24,062 in the prior-year quarter.
Quarterly total operating expenses were nearly $95.2 million, up 0.2% year over year. However, operating loss in the reported quarter was $2.4 million compared with an operating income of $103.1 million in the year-ago quarter. Quarterly adjusted EBITDA was $44 million, down 26.8% year over year.
An average of 48 Excel Maritime vessels were operated during the second quarter of 2011 compared with 47.7 in the year-ago quarter. Management announced that the company secured under time charter employment of 84% for the fiscal year ending December 31, 2011 and 54% for the next one year till June 2012.
During the first half of 2011, Excel Maritime generated $71.4 million of cash from operations compared with $88.2 million in the prior-year period. Free cash flow (cash flow from operations less capital expenditure) in the first half of 2011 was $52.9 million compared with $28.2 million in the year-ago quarter.
At the end of the second quarter of 2011, Excel Maritime had $59.7 million of cash & cash equivalents compared with $65.9 million at the end of fiscal 2010. Total debt at the end of the reported quarter was $1,100 million compared with $1,154 million at the end of fiscal 2010. At the end of the second quarter of 2011, debt-to-capitalization ratio was 0.36 compared with 0.37 at the end of fiscal 2010.
Recommendation
Excel Maritime operates under highly competitive drybulk shipping industry. Its main competitors are Diana Shipping Inc. (DSX), Genco Shipping & Trading Ltd. (GNK), and DryShips Inc. (DRYS).
We maintain our long-term Underperform recommendation on Excel Maritime. This was primarily attributable to the stiff reduction of drybulk spot freight rate in the recent past. However, currently the company holds a short-term Zacks #3 Rank (Hold) on the stock.
