Release Date: November 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Golden Ocean Group Ltd (GOGL, Financial) reported an increase in adjusted EBITDA to $124.4 million in Q3 2024, up from $120.3 million in Q2.
- The company declared a dividend of $0.30 per share for the third quarter of 2024, maintaining a consistent payout.
- GOGL successfully executed its fleet renewal strategy by selling older vessels at attractive prices.
- The company secured attractive financing, supporting its industry-low cash breakeven rates.
- GOGL has a strong cash position with $117.6 million in cash and cash equivalents and $150 million in undrawn credit facilities.
Negative Points
- Net income decreased to $56.3 million in Q3 2024 from $62.5 million in Q2.
- The company experienced a loss of $12 million on derivatives and other financial income, compared to a gain of $1.9 million in Q2.
- GOGL recorded a $700,000 loss in investments in associates, up from a $400,000 loss in Q2.
- The company is entering a period with frequent drydockings, which could impact operational efficiency.
- Operating expenses increased to $69.4 million in Q3, up from $66.3 million in Q2, partly due to more ships being drydocked.
Q & A Highlights
Q: Hi, Simon. Thanks for the update. Can you provide insight into Golden Ocean's current stance on capital deployment, especially after selling an older Newcastlemax and a Panamax? Are you more of a seller or a buyer in the current market?
A: We have completed significant fleet growth earlier, increasing by 30% over the last three years. Currently, we don't see value in acquiring modern tonnage at prevailing prices. We are focusing on selling older tonnage to balance and average out our fleet age. Regarding capital deployment, we favor dividends over buybacks, although we might consider buybacks given the current share price situation.
Q: Regarding the dividend, you've declared $0.30 for the past four quarters. If earnings per share fall to $0.20 or $0.25, would you maintain the $0.30 dividend, or would you revert to a percentage payout of earnings?
A: We generally follow a percentage payout of earnings but aim to balance peaks and troughs. Our low-cost base allows us to pay dividends even if the market weakens temporarily. We remain positive about market fundamentals and intend to continue paying dividends through weaker periods, though the nominal amount may vary.
Q: Can you elaborate on the fleet renewal strategy and its impact on Golden Ocean's operations?
A: We are focused on renewing our fleet by selling older vessels, which aligns with our strategy to maintain a modern and efficient fleet. This approach helps us manage fleet age and supports our operational efficiency, ensuring we remain competitive in the market.
Q: How do you view the current market conditions for Capesize and Newcastlemax segments?
A: We believe supply and demand dynamics favor the Capesize segment in the foreseeable future. We are the largest listed owner in this segment, and our position offers significant market cap and trading liquidity. We see healthy cargo volumes and positive production guidance from major miners, supporting our outlook.
Q: What are your thoughts on the current geopolitical and economic environment's impact on Golden Ocean's operations?
A: Despite geopolitical turmoil and challenging trading sentiment, we have seen healthy cargo volumes. We remain fundamentally positive on the market outlook, supported by strong production targets from major miners and positive economic growth projections, particularly from China.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
