The BDI is down 9 this morning, basically unchanged thanks to strength in Supramax rates. By the way, Handysize rates haven’t budged during this small BDI pullback. The BDI is being dragged lower by Capesize rates, which are up 300% over the past two months. Any reasonable human being would surmise this pullback to be a healthy aspect of a bull market in its nascency.
Back to BALT.
Have a look at their profit and loss statement, over the past year.
Cost of revenue is pretty much mailed in every qt at $4.5 mill. SG&A is also extremely predictable at $1.8 mill and “others” has been no more than $3.72mill over the past 4 qts, bringing total expenditures to around $9.9 million per qt.
Now the problem with BALT, as well as many other Dry Bulkers, has been the top line. Their revenues have sucked, thanks to depressed rates. However, in recent weeks, rates have changed, rather dramatically.
Let’s have a sterile, scientific, look at BALT’s current revenue rates.
Total fleet: 11 (2 additional Handysize ships added since last qt)
Capesize: 2 @ $36,069 per day- $72,138
Supramax: 4 @ $11,369 per day- $45,476
Handysize: 5 @ $5,940 per day- $29,700
Total: $147,314
According to today’s rates, BALT is generating $147,314 per day. If you extrapolate that over 90 days, they should make $13,258,260–providing capacity remains at 99.9%.
In summary, total expenses amount to $110,000 per day. With revenues at $147,314 per day, BALT stands to make $37,314, every single day or $3.35 million dollars over the next quarter. Considering BALT’s position of returning earnings to shareholders, expect a special dividend to be announced over the next quarter or two.
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everyone was pushing to get special dividends out last november/december due to the “tax scare”. Since tax rates are not on the chopping block, you think they wait until January to pay it out?
I’m not sure. But BALT paid .01 last qt, even though they lost money. Since its IPO, they’ve paid out more than $1.00 per share in divvies. One could only assume that any profits enjoyed will be shared.
The big question is how much of their capacity is on long term contracts made when the rates was much lower than today?
BALT was built by a shipping iBanker, with the explicit intent of mirroring the ongoings of the BDI. Their contracts are likely very short term and based on day rates.
There isn’t any long term rates in Dry Bulk shipping, as far as I know.
I don’t know if it’s an exception, but I have some stocks in the Danish dry bulk shipping company D/S Norden and a big percantage of their capacity is secured on long term contracts
indeed, there shall be booty to go around.
Fly,
Why didn’t you include interest expense in there? It’s been a little over 1M a quarter. Not enough to put them in the red according to your numbers, but still considerable, no?
I believe that’s included in “others.”
No, I was wrong. You are right, it should’ve been added.
Phew. Thanks.
Very insightful analysis. Thank you very much.
plugging that 13M rev number should still get them in the black to the tune of 2M.
Fly,
How are you feeling about FLTX with this lengthy draw down? Buying opportunity or abandon ship?
Still long.
Fly,
Forgive my ignorance, but where do you find the daily price of shipping rates? I like learning to trade like you instead of just following you blindly.
Thanks,
A
Any insight into what happened in 2011?
Revenues up 30%, Operating Income down 60%.
Understand your timeframe much shorter than that, and in a shorter timeframe costs will be more fixed, but just wondering what happened.
Dr. fly,
What’s going on with fltx?