Eagle Bulk Shipping Inc. (NASDAQ:EGLE) Q3 2023 Earnings Call Transcript

Costa Tsoutsoplides: Yeah, I mean, there’s a sort of a window that we are able to effect a dry dock. And that’s dependent on these special survey date. It fluctuates between probably three to five months, roughly. So there’s some wiggle room there that we can kind of try to optimize based on the market and based on the position of the ships.

Gregory Lewis: Because really what I’m wondering is, Q1 is seasonally weak if we think about throughout the year, would we expect a few more maybe in Q1 than the rest of the year?

Costa Tsoutsoplides: Right now for Q1 we have three scheduled. For a full year calendar 2024 we actually have six. But last night — I know we had mentioned before.

Gregory Lewis: Perfect. Thank you, everybody.

Gary Vogel: Thank you.

Operator: Thank you. [Operator Instructions]. Our next question comes from the line of Omar Nokta with Jefferies. Your line is now open. Omar Nokta with Jeffries, your line is open. Please check your mute button.

Omar Nokta: Thank you. Hi, guys. Gary, Costa, good morning. Thanks for the update. Just wanted to ask a couple questions. First, maybe on the market, big picture. Gary you outlined that ship values have been on the rise kind of since August, and generally had been pretty firm even with a downshift we’ve seen in rates in recent quarters. Just wanted to ask kind of what do you think is behind the uptick, you mentioned, there’s been a focus on modern tonnage, how much of this sort of rise and firmness in the second hand market has to do with people looking or scrambling, perhaps, to modernize ahead of regulations versus say, a bullish on the outlook, is there any way to maybe sort of qualify that, to give us a sense of what’s driving the strength in the S&P market?

Gary Vogel: Yeah, I mean, my view is it’s really driven by future rate expectation in the sense that, you don’t need to modernize today, let’s say, in particular versus if you think the market is going to be flat for a while. I mean, people are seeing, that the slide we put up, which speaks to the average age against the order book, I think is extremely compelling. Notwithstanding the fact that we’re approaching record age, the order book and our slide speaks just to the mid-size is at 9%. And people see that and that combined with the fact that, companies have made significant amounts of money over the last couple of years, are positioning themselves, I think for what we believe is going to happen, and that is that these older ships inevitably we’ll have to scrap and the headwinds that we’ve seen on some of the demand side and will abate and that will be extremely positive.

And there’s simply not the capacity to put new supply into the market in a meaningful way, in a short time span. At the moment, you’re ordering ships, typically. You’re talking about 2026, even 2027. And so as these older ships start to scrap and you got any kind of reasonable demand pop, I think people are planning for that. So, I don’t — I also think that part of the reason, aside from the age profile is, and we’ve spoken about this before, right, the uncertainty around things like carbon pricing, future propulsion regulations, CII, and what that’s going to mean, EU ETS is coming into effect in January. So when you put all those things together, older ships are going to become less efficient, even non-competitive. And people see that. So to me, it’s really about an expectation of a more robust rate environment going forward.

And, the numbers and the graphs that illustrate that, I think, as I said before, I think are quite compelling.