excel040809.pdf (application/pdf Object).
Excel Maritime Carrier Ltd. EXM has released their 4th quarter and year end results which are linked above. As is now the current standard for the bulk shipping companies, they have taken a big write down of non-cash assets and reported a big negative earnings number: A loss of $7.49 per share for the quarter.
The bulk of the loss is the write of of the goodwill that was on the books from the purchase of Quintana Maritime. The write off is for $335 million or $7.63 per share. I took a little trip down memory lane and looked up the details of the Quintana purchase. In April 2008 Excel Maritime paid about $2.5 billion for Quintana. Today, almost one year later, Excel has a market cap of just $300 million and still has something like $1.5 billion in long term debt. Ouch!
Aside from write-downs, write-offs and non-cash charges, EXM earned $1.71 per share. In the 3rd quarter of 2008 they earned $2.70 per share, so conditions for the company deteriorated rapidly in the final 3 months of 2008.
Excel Maritime has only about 60% of their available charter days committed for so far in 2009. I think this does not bode well for the company’s revenues for the year. Bulk charter rates are again softening and EXM has a pretty large fleet they need to keep busy to pay off their pretty large debt load. I think the new paradigm for bulk shipping companies is can they generate enough revenues to continue to service their debt until bulk charter rates cycle back up again. Those companies that can actually reduce their debt during 2009 will be way ahead in generating profits when the global economy starts to pick up again. In my opinion, EXM does not seem well positioned in this environment.
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2 Comments
I’m really surprised that some of these companies can stay afloat (excuse me) given their debt, low shipping rates and lack of business. I think in the coming months, we’ll see an acceleration of M&A activity. The companies with the strongest balance sheets should do well. I own ISH and PRGN presently as I think they are going to come out on top. Any other names that would fit into the “strong” category?
I think the companies with good time charter contracts and low debt loads will do OK over the next year.