Baltic Trading Limited (BALT)

Q4 2012 Earnings Call

February 21, 2013 10:00 am ET

Executives

John C. Wobensmith - Principal Executive Officer, President, Chief Financial Officer, Principal Accounting Officer, Secretary and Treasurer

Apostolos Zafolias

Presentation

Operator

Good day, everyone, and welcome to the Baltic Trading Limited Fourth Quarter 2012 Earnings Conference Call and Presentation.

Before we begin, please note that there will be a slide presentation accompanying today’s conference call. That presentation can be obtained from Baltic Trading’s website at www.baltictrading.com.

Today's conference is being recorded and is now being webcast at the company's website, www.baltictrading.com. [Operator Instructions] A replay of the conference will be accessible at any time during the next 2 weeks by dialing (888) 203-1112 or at (719) 457-0820, and the access code for the replay is 4821121.

At this time, I will turn the conference over to the company. Please go ahead.

Unknown Executive

Good morning. Before we begin our presentation, I note that, in this conference call, we will be making certain forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements use words such as anticipate, budget, estimate, expect, project, intend, plan, believe and other words and terms of similar meaning in connection with the discussion of potential future events, circumstances or future operating or financial performance. These forward-looking statements are based on management’s current expectations and observations.

For a discussion of factors that could cause results to differ, please see the company’s press release that was issued yesterday, the materials relating to this call posted on the company’s website and the company’s filings with the Securities and Exchange Commission, including, without limitation, the company’s Annual Report on Form 10-K for the year ended December 31, 2011, and the company’s subsequent reports filed with the SEC.

At this time, I would like to introduce John Wobensmith, the President and Chief Financial Officer of Baltic Trading Limited.

John C. Wobensmith

Good morning. Welcome to Baltic Trading's Fourth Quarter 2012 Conference Call. With me today is Apostolos Zafolias. I will begin today's call by reviewing our fourth quarter highlights, as outlined on Slide 2 of the presentation, followed by a review of our financial results for the quarter. We will then discuss the industry's current fundamentals and open up the call for questions.

Beginning on Slide 4, I will be reviewing Baltic Trading's highlights for the fourth quarter. During the fourth quarter, we maintained our financial flexibility and operational integrity in a challenging drybulk market. We remain committed to preserving a balance sheet with low debt, maintaining an efficient cost structure and pulling a fleet of modern vessels on spot market-related time charters that provide the ability to drive future performance and freight rates improvement.

For the fourth quarter, we declared a dividend of $0.01 per share, representing our 11th consecutive dividend since going public. As we remain focused on distributing a substantial portion of our cash flows to shareholders, our financial results for the quarter were affected by a volatile freight rate environment. For the 3-month period ended December 31, 2012, Baltic Trading recorded a net loss of $4.3 million or $0.19 basic and diluted loss per share. I will discuss our financial performance in more detail in a few minutes.

Turning to Slide 5. We provide an overview of our current fleet. We are pleased to own a modern fleet that meets stringent operational and safety standards, with an average age of 3.1 years, far below the world average of approximately 10 years. Our current 9-vessel fleet consists of 4 2009-built Supramax vessels, 2 2010-built Capesize vessels, 2 2010-built Handysize vessels and 1 2009-built Handysize vessel, with an aggregate carrying capacity of 672,000 deadweight ton.

The fleet also contains 3 groups of sister ships, which we believe creates economies of scale in the maintenance and crewing of our vessels. Consistent with our fleet deployment strategy, all 9 of our vessels are employed on spot market-related time charters at creditworthy counterparties, including Cargill International, a global producer and marketer of food and agricultural products, which is our largest customer, enabling Baltic Trading to maximize utilization while earning rates closely linked to the various Baltic Dry indices and capitalize on the positive long-term demand for essential commodities in developing countries, such as China and India.

Turning to Slide 7. We present our financial results. For the fourth quarter and year ended December 31, 2012, the company generated revenues of $7.1 million and $27.3 million, respectively. This compares to the revenues for the fourth quarter of 2011 year -- and year ended December 31, 2011, of $13.1 million and $43.5 million, respectively. The decrease in revenues for the fourth quarter of 2012 compared to the prior year period is due to the lower spot market rates achieved by our vessels.

The company recorded a net loss for the fourth quarter of 2012 of $4.3 million or $0.19 basic and diluted loss per share. The net loss for the year ended December 31, 2012, was $17.3 million or $0.78 basic and diluted loss per share. This compares to net income of $1.8 million or $0.08 basic and diluted earnings per share for the fourth quarter of 2011 and a net loss of $400,000 or $0.02 basic and diluted loss per share for the year ended December 31, 2011.

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