Eagle Bulk Shipping Inc (EGLE) 2009 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to fourth quarter Eagle Bulk Shipping earnings conference call. My name is Ann, and I will be your coordinator for today's call.

(Operator Instructions)

This conference is being recorded for replay purposes. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session following the presentation.

I would now like to the turn the presentation over to Mr. Sophocles Zoullas, Chairman and CEO. Please proceed, sir.

Thank you. Good morning.

I would like to welcome everyone to Eagle Bulk Shipping's fourth quarter and fiscal year 2009 earnings call. To supplement our remarks today, I encourage participants to access a slide presentation that is available on our website at www.eagleships.com.

Please note that part of our discussion today will include forward-looking statements. These statements are not guarantees of future performance, and are inherently subject to risks and uncertainties. You should not place undue reliance on these forward-looking statements. We refer all of you to our filings with the Securities and Exchange Commission for a more detailed discussion of the results, risks and uncertainties that may have a direct bearing on our operating results, our performance and our financial condition.

Please note on slide three, the agenda for the call will be as follows. I will review our fourth quarter and fiscal year 2009 highlights, provide a Company update, as well as Eagle Bulk's updated views on the industry, before Alan will provide a financial overview. I will then end the call with concluding remarks, before we open the call to questions.

Please turn to slide five for a review of our fourth quarter and fiscal year 2009 results. During the quarter, we realized net income of $2.19 million or $0.04 per share. Gross time charter revenues were $43.6 million, and EBITDA was $25.2 million. Fleet utilization for the quarter was 99.6%. Full year 2009 net income was $33.3 million or $0.60 per share. Gross time charter revenues were $199.9 million. EBITDA during the period was $121.2 million. Superior fleet utilization was also maintained at 99.6%. It is important to also note that Eagle Bulk maintained profitability throughout the challenging dry bulk cycle of the last six quarters.

Please turn to slide six for a review of our 2009 highlights. During the year, Eagle Bulk has stayed on course with its promise to deliver sustainable growth, as we took delivery of four Supramax newbuildings, which increased the fleet 17.4% to 27 vessels. This growth has continued into 2010, as we have taken delivery of six more Supramaxes in the last ten weeks. As the dry bulk market started to recover in the middle of last year, we also entered into several well-timed charters linked to the Baltic Supramax index, or BSI, which allows us to realize cash flows of the improving spot market while maintaining uninterrupted revenues without ballast costs. I will discuss our BSI-linked charters in greater detail later on in this presentation.

During the first half of last year, while the dry bulk market was still under stress, we were also able to increase Eagle Bulk's financial flexibility by successfully completing $100 million equity offering during the second quarter. At the same time we amended our credit facility, so that it is no longer subject to market value fluctuations. Lastly, we leveraged our in-house technical management team, and established a technical management subsidiary to manage a portion of our fleet and third-party vessels in-house, which allows us to maintain better visibility and control over operating costs.

Please turn to slide eight for a Company update. The key message on slide eight is that we have taken delivery of ten vessels in the last 14 months, of which eight have only recently delivered into the fleet since Q4. A review of the chartering profile of these ten vessels provides insight into the evolved and opportunistic chartering strategy Eagle Bulk has deployed to maximize cash flow. First, consistent with our conservative strategy since inception, stable cash flows come from six vessels that are on fixed charters which deliver minimum contracted revenues of over $300 million, excluding any profit-sharing. These expiry of these charters ranges between 2013 and 2019. Second, upside EBITDA will be realized from the Crested Eagle, Golden Eagle and Imperial Eagle charters, which are all linked to the spot-oriented Baltic Supramax index. Additionally, the Stellar Eagle will be coming off a $12,000 charter during the second quarter, and will be available to re-charter in a much improved market. The full earning power of these ten vessels will only be realized for the first time during 2010.

Slide nine gives an overview of the expanding fleet and its contribution to cash flow. In addition to the ten vessels that we have taken delivery of during the last 14 months, we have seven additional vessels scheduled for delivery during the balance of this year, which we expect will generate minimum contracted revenues of $200 million, excluding profit sharing. For next year, we have a final seven vessels scheduled for delivery that have contracts with expected minimum contracted revenues of another additional $200 million, excluding profit sharing again.

The graph on the right of slide nine shows Eagle Bulk's estimated compounded rate of growth in owned days, which is the most accurate way to measure a Company's revenue-generating capabilities. For the eight-year period from 2005 through 2012, Eagle Bulk's estimated compounded rate of growth exceeds 25%. The green bars represent the growth from 2005 through 2009. Our future growth is represented by the blue bars, which indicate growth from under 10,000 owned days to over 17,000 owned days. As we have detailed in the past, we expect this growth to be funded by existing cash, our evolving facility, and cash flow from operations.

Please turn to slide ten for a comprehensive charter update. As the dry bulk market started to improve in the summer of 2009, we opportunistically entered into a series of Baltic Supramax index-linked charters that have generated significantly higher levels of cash flow than if we had entered fixed one-year charters at that time. In addition, we have also chartered three vessels on short-term charters between $18,000 to $26,000 a day, to take advantage of current demand for Supramax vessels. This evolution in our chartering strategy focuses on maximizing cash flow, and is made possible as our growing new-build fleet delivers long-term stable charters that allow us to trade the other vessels more opportunistically. We expect to maintain a balanced mix of long-term indexed and shorter-term charters as we continue to grow our fleet. Our current charter mix is 56% on fixed-rate charters, some with profit sharing components, 16% on these new BSI charters, and 28% open capacity.

Please turn to slide 12 for an update of the dry bulk market. Much as we had anticipated during our last call, the dry bulk market demand continues to be strong. Total iron ore world trade in 2010 is expected to increase by 11% to over 1 billion tons. During 2009, Chinese iron ore imports grew 38.9% year-on-year to over 600 million tons, representing roughly two-thirds of global demand. The top five suppliers to China last year were Australia, with 41.7%, Brazil with 22.7%, India with 17.1%, and South Africa with 5.5%.

India's own requirements for iron ore have driven its government to raise tariffs, which in turn has dropped India's market share by 31.8% to 17.1% since 2005. As China's demand for iron ore has grown, this new demand is met by other markets, which increases ton-mile demand as well. Specifically, the markets of Australia, Brazil, South Africa, the Ukraine, Russia, Canada, and Mauritania have filled this demand void, which had has had a positive effect on dry bulk rates. Many of these markets are uniquely suited to the capabilities and versatility of the Supramax asset class.

The graph on slide 12 shows the growth in copper production, which has traditionally been used by ship owners as a lead indicator for dry bulk demand. The graph clearly shows that copper production and production growth have steady increased since the collapse of the global markets in December of 2008.

Slide 13 reviews the coal market, which is a key demand driver for Supramaxes, especially in India. Global demand by 2014 is expected to increase by 37.7%, and is expected to reach over 1 billion tons during this period. The pie chart shows estimated demand growth by region. As we have said in our many presentations before, India is a major dry bulk market that is often eclipsed in the financial press by China. However, power generation demand in India for the foreseeable future is expected to make India represent almost 40% of demand growth for the next five years.

To put this in perspective, global seaborne trade for coal for 2009 was 795 million tons, unchanged from the prior year. However, as 72 gigawatts of new power capacity is expected to come online, with over 80% coming from India, China, and other Asian regions, growth in global coal seaborne trade is expected to reach an additional 300 million tons by 2014. India continues to be a main driver in the coal trade, as it has maintained a 20% compounded annual growth rate since 2002. These statistics are very relevant for the Supramax market, as Supramaxes are the workhorse for seaborne trade to India. Much of this demand will be met from coal supplied from Australia, Indonesia, Russia, South America, the US, Canada, and Vietnam, much of which will be transported on Supramaxes.

Slide 14 discusses the recovering demand in the minor bulk market, which is also often overlooked, even though this market represents 965 million tons or 32.4% of total dry bulk trade. This important sub-Panamax market typically provides cargoes for Supramaxes in a down market when larger ships are idle, and further stimulates demand in a rising market. In 2010, minor bulk trades are expected to recover by 7.8% to 1,040,000,000 tons, representing an increase of approximately 75 million tons in the sub-Panamax market trade. These trades are typically Bauxite/alumina, phosphates, pet coke, forest products and steels, which all are each expected to increase by 10% year-on-year. These commodities are typically in trade routes that can't accommodate Panamax's or Capesize vessels. The graph on the right shows that after a sharp drop off in demand in 2009, minor bulk is expected to increase in 2010. Once again, the Supramax vessel type is the dominant workhorse for the minor bulk market.

Slide 15 illustrates the competitive versatility of the Supramax class compared to Capesize and Panamax vessels. During 2009, our fleet carried 61% major bulk cargoes, and 39% of our cargoes were in the minor bulk market. As can be expected, Eagle Bulk's 2009 mix of dry bulk commodities mirrors the global movement of dry bulk.

Please turn to slide 16 for a review of the dry bulk order book. After much speculation regarding dry bulk vessel supply and how many vessels will actually deliver, we now have historical data since 2009 that shows a clear pattern is developing. The data for 2009, and the initial data for 2010, clearly indicates that the Supramax market is experiencing the largest slippage of supply relative to Capesize and Panamax vessels. During 2009, the Supramax market realized slippage of 47.6%, compared with 41.1% for Panamaxes and 33.7% for Capes. As we look into 2010, the slippage as increased for January, with Supramaxes realizing 82.7% slippage, compared with 50% slippage for Panamaxes and 63.2% slippage for Capes. The increase in slippage corresponds to our view that later deliveries will experience more cancellations, delays, and other problems, as ship owners have fewer deposits and later new-build deliveries, and have not secured financing. We expect this trend to continue.

Slide 17 gives an update on the scrapping market, which during 2009 removed 246 dry bulk vessels, equating to 10 million dead weight tons. The message on this graph is very straightforward, that the sub-Panamax market has the highest level of scrapping and the oldest fleet. Last year, only nine Capesize vessels and 32 Panamax vessels were scrapped, compared with over 200 vessels in the sub-Panamax market. Regarding fleet age by vessel type, the sub-Panamax market has the oldest fleet, and 35% of the fleet is over 20 years old, compared with 21% for Panamaxes and only 15% for Capes. Even though scrapping has slowed down as charter rates have improved, as we look forward, 2,500 vessels or 24% of global dry bulk fleet is over 20 years old, and will eventually be a large escape valve for supply coming into the market, and should help keep supply in balance with demand.

I will now turn over the call to Alan, who will review our financial performance.

Thank you, Soph.

Slide 19. I would like to offer a brief recap on our fourth quarter and full-year results of operations. I also want to emphasize up front that Eagle Bulk posted positive results during all four quarters of 2009, while navigating the most precipitous drop in charter rates in the history of the dry bulk market.

Net revenues for the quarter were $42 million, compared to the 4Q 2008 figure of $60 million. All vessels were on time charter during the quarter. Operating income for the quarter was $10.4 million, compared to the fourth quarter 2008 figure of $16.4 million. EBITDA, as adjusted for exceptional items under the terms of our credit agreement, was $25.2 million for the fourth quarter, compared to the fourth quarter 2008 figure of $33.5 million. Net income was $2.1 million or $0.04 for the quarter. Net revenues for the year ended December 31st were $192.6 million, compared to the prior year figure of $185.4 million. Operating income for the year was $65.4 million, compared with the prior year figure of $76.8 million. EBITDA for the year was $121.2 million, compared with the prior year figure of $127.7 million. Net income, adjusted for one-time write-offs of deferred financing costs related to amendments to our revolving credit facility, for 2009 was $36.7 million, compared with the 2008 figure of $63.7 million. And finally, our utilization rate for the fourth quarter and the year was a superb 99.6%.

Turning to slide 20, just a few comments on our balance sheet. We ended the year with $84 million dollars in the bank, including $13 million of restricted cash. During the year we borrowed a net $111 million, in order to fund our new building program. With we took delivery of four ships last year, six so far this year, and are scheduled to take delivery of seven more before the end of the year. Our debt stands at $900 million at year-end, and we are complaint with all of our current bank covenants.

Slide 21. Next I would like to spend a few moments going over our expected cash costs for the first half of 2010, which we estimate at a total $11,397 per vessel per day, which is one of the lowest in the industry. Our estimated daily vessel operating cost is $5,116. Our technical management fees paid to our vessel managers are estimated at $307 per vessel per day. The increase in vessel expenses is the result of increases in crew wages, insurance costs, costs related to anti-piracy measures, and general increases in the cost of stores and spares. Our general -- excuse me, our estimated cash general and administrative expenses for 2010 is $1,521 per vessel per day. We are forecasting no increase in the total cash G&A for 2010. As a result, we are seeing a per-day decline of 26% from 20 -- from actual 2009 expenses. Based on our current interest rate swaps, we estimate our interest expense net of interest income for the first half of 2010 is $3,850 per vessel per day. Finally, we have increased our estimate that our average dry dock costs at $603 per vessel per day, on the basis of the average dry docking increasing in costs from $500,000 to $550,000 once every two and-a-half years.

With that I will turn it back to Soph, who will complete the presentation.

Thank you, Alan.

In conclusion, slide 23 reviews the key factors that position Eagle Bulk well for 2010 and beyond. First, we are one of the world's largest owners of Supramax vessels, a market which we believe is experiencing healthy demand and has the greatest supply slippage. Second, we enjoy cash flow stability with fixed rate charters on the existing fleet, and the new builds coming online. This provides strong cash flow predictability and visibility, and gives us a revenue base to opportunistically charter the rest of the fleet for maximum cash flow generation into the future. Third, the revenue and cash flow upside potential is already in place, as eight vessels are currently trading on Baltic Supramax index-linked charters, and a further three vessels are on short-term charters. Fourth, we have been able to demonstrate continued superior operating performance, in excess of 99.5%, which, combined with our new opportunistic charters, will help us maximize our revenues. Lastly, we have leveraged our New York-based management team to fully run financial, commercial and technical operations from our headquarters in New York, which allows us to better control our costs going forward.

I would now like to turn over the call to the Operator for questions. Thank you.

Okay. Thank you.

(Operator Instructions)

And our first question comes from the line of Natasha Boyden with Cantor Fitzgerald. Please proceed.

Thank you, Operator. Good morning, gentlemen.

Good morning, Natasha.

We are looking at [Supramax] rates have been relatively stable over the last six months or so, especially relative to larger vessels. Having said that, you pointed out that you do have a larger number of unfixed days in the latter half of 2010, and I am just really wondering what your thinking is versus the level of [products] you are comfortable with versus you potentially fixing more vessels in the market?

That's a very important question, and thank you for asking it. I think the very clear message I want to get out today is that the Company has evolved on the basis of having a much larger fleet. I mean we have -- when we had a fleet of say 10 or 15 vessels, we, we basically put all of the ships on minimum one-year fixed rate charters. As you can tell from today, and it has been happening -- you probably got a sense of it from our last call in November, it is an evolved strategy that is based on the abilities and the deliveries that we've had from the new build program. We are going to be taking in -- roughly, we are realizing fixed rate charters of about $700 million of minimum contracted revenues from the new builds that are delivering at quite a fast pace now into the fleet, which allows us to have the cash flow base to opportunistically generate a higher level of cash flow from the other ships in the fleet.

So right now, we have about a -- say a 55% to 60% fixed rate charter on the fleet. Most of those charters -- many of those charters, by the way, have profit sharing components either now or into the future, which allows us, Natasha, to -- with the balance of the fleet, call it 40% balance, to bifurcate that into two sub-categories, short-term charters and this new -- and I must say, this is really new to the dry bulk market. It is a -- the dry bulk market itself is evolving, BSI-linked charters is a somewhat new phenomenon that we've -- I'm not going to say quite pioneered, but have definitely been at the forefront of this.

So from this point forward, you can expect from us to report our open capacity, or spot exposed capacity, both in terms of open days and in terms of index-linked charters, which is currently about 40%, which we feel is the right mix for today's demand for Supramaxes and dry bulk vessels in the market today.

Okay. Great. Thank you very much. Then just sort of a macro question. You had the slide in your presentation about slippage, it was certainly pretty spectacular for January 2010. Looking out for the whole year in general, what is your -- your outlook in particular for fleet supply growth, and do you think that the January numbers are a good indicator going forward in terms of a run rate of what kind of slippage we might see?

January surprised us, too, and I will tell you why. Typically, ship owners like to delay December deliveries into January, because they get a with one-year newer vessel because it is on the calendar year that bases the age of a delivery of a ship. So we were expecting, as most ship owners do, that you would get a huge delivery -- wave of deliveries into January, partly because of the delayed December deliveries into the new calendar year. When we saw the Supramax number of 82% missed deliveries, we were actually very positivity surprised. I think one month is too difficult to perfectly see what the trend line is, so we would like to see a couple more months to determine the trend line for -- for deliveries in the Supramax market.

But I do believe that there are a couple of factors that could indicate greater slippage this year than the prior year, i.e the financing component, and secondly, the fact that vessels delivering in 2009, by the time the financial crisis hit at the end of 2008, most ship owners had paid 40%, 50%, 60% of the delivered cost to the shipyard. So there was very little flexibility that ship owners had to delay. As ships in 2010, 2011 and 2012 in some cases only have 20% or even 10% down, we feel there's more flexibility to increase from 2009 levels. So I wouldn't be surprised if 2010 slippage exceeds 2009, but I think January for 2010 was an exceptional month, and we are waiting to see what the February figures show.

So does this -- and you will probably know certainly whether or not -- does this still indicate that the banks really still holding off on any kind of financing? What are you hearing on that?

I think that the era of pre-delivery financing effectively is halted right now. I think new vessel acquisitions that are particularly [on-the-water] vessels are -- for specific deals and specific owners that market has loosened up a bit, but I think pre-delivering financing, especially of ships that were ordered two years ago at prices that are well above today's prices, banks are very reluctant to finance those vessels.

Okay. Great. Just one more quick question, Alan, this one is for you. I don't want to leave you out. Can you -- just give us some more color regarding that decrease in G&A expense in the fourth quarter. It looked like it was down pretty nicely there?

It is down because it is down. We have held our costs, and we believe we can stick with that for 2010.

Okay. Great. Thank you very much, gentlemen. Much appreciated.

Our next question comes from the line of Urs Dur with Lazard Capital Markets. Please proceed.

Good morning, guys.

Hi, Urs.

Hi. Nice [410].

Thank you.

No, seriously. I didn't mean it facetious way, I'm sorry. Can you walk through, Soph, where you are a little bit, not only with your banks, but seeing opportunities that are out there to be involved in a little bit more consolidation of the industry, and picking up distressed assets; can Eagle do that going forward? Because now it looks like you are on the -- an upward path on EPS again, and the world looks a lot better from a credit perspective, so what opportunities are you seeing out there?

That's a great question. I think one of the things that we identified very early in the Company's sort of -- if you look back at 2005, and we mapped out in our five-year plan where we wanted to be by 2010, our -- our motto, even if you look at our annual report, I think two or three years ago, the cover was delivering sustainable growth. So to do that, you need to buy ships at the right price, and a lot of the new builds that we are taking delivery of were in contracts that were put in before the run-up in asset values. So the one thing Eagle has been able to do is effectively grow to about a 20% to 25%-plus growth rate year-on-year; not delivering jerky growth, i.e. not going through two years of flat growth or negative growth like some companies do, and then going through explosive growth and then stopping the growth. We have been able to maintain, very much by design, this stable growth trajectory.

I think we are one of the few companies out there, Urs, when a lot of other companies are saying we will grow, we will do this, we will will do that, we can actually tell to the market and to our shareholders here is our 5,000 days of additional operating capacity that will leverage our Company to generate greater EBITDA in an improving world, that we can show through the trajectory of the new builds. And even though we have taken delivery of ten vessels in 14 months -- and I think this is a very central point to answering your question. We have taken delivery of ten ships in 14 months; the next nine months, we are going to take delivery of another seven, and then the program in next year ends with another seven. So we are talking about 14 vessels on the back of ten vessels of growth in the last 14 months, which I think is almost unprecedented.

So, the organic growth concept of Eagle, I think, is very central. Now, above and beyond that, which I guess if you are saying do we want to grow more than our 70% growth rate --

No, no I wasn't necessarily criticizing that. I am saying, let's say you were confronted with a really great opportunity, you like the price, you can get charters with it, what kind of firepower does Eagle have to get involved with that? Or are we sticking with our current, again as you point out, impressive growth rate?

No, no, I think that -- that the motto at Eagle is a rolling stone gathers no moss, i.e. you never stay static, we never stay static. And in terms of growth opportunities, I highlighted this back in 2006; I believe that the future of dry bulk is going be corporate M&A, and I think the companies that are at the forefront of having a name brand, being a dominant player in its asset category, and having a very well-respected and liquid share price, are going be able to do corporate M&A. And I think, Urs, you are talking more about ship-by-ship acquisitions; I think what we are excited about in Eagle looking forward is more corporate opportunities.

Okay. So then you are saying that there may very well be some public-on-public or public-on-private M&A; what would you think is more likely, public-on-public or public-on-private?

I would say all of the above, but when you look forward into certain owners that -- this is all going to unfold, I think, in the next two years, that are capital constrained or new builds that haven't been financed and don't have the capital available to them, they will be choking, and those are the opportunities that we are looking to exploit.

Okay. And then, the other thing is more of an operational perspective. Vessel OpEx is lower than I expected, which is great. Can you detail how cost controls were put in place there, if any? I think you may have mentioned it on the call, but if there is any further color on vessel OpEx control going forward, just like you mentioned G&A control going forward? What are we looking at for vessel OpEx for next year?

I think what you guys are really getting a taste of is the new Eagle. I mean what we are, when we look at where the Company is going at the beginning of 2010, you know, a lot of the cost control frankly is coming from having this incredible management infrastructure here that we are leveraging, and taking ships in-house to benchmark -- to benchmark against the third-party managers, to drive down our costs, to get closer to our component suppliers. And frankly, when you get up to 47 ships, you can leverage being such a dominant player in the market to really start to draw your cost average down on some of your consumables and other things.

So you are seeing is really Eagle coming into its own right, and we're very excited about the balance of the year and beyond.

All right. Well, thank you very much for that. That's all I have got. Thanks.

Thanks.

Our next question comes from the line of Chris Wetherbee with FBR Capital Markets. Please proceed.

Great. Thanks. Good morning, guys.

Good morning, Chris.

I guess just conceptually or bigger picture on the industry, you mentioned the gap in financing for new-build vessels, particularly as you look into sort of the 2010 order book, and how a lot of those vessels were ordered a couple years ago at prices that are well above what maybe they're worth right now. You have, obviously, good relationships with the yards, given the new building pipeline that you have; can you give us a sense of what the yards are saying about this, and maybe what their posture is going into this process? Because obviously something needs to give in this negotiation between what the price on the contract was relative to what -- you know, maybe financing is out there, but -- so if you could just kind of summarize their views and how they are thinking about the world, that would be helpful.

Sure. It is a good question. A lot of these transactions which are starting to surface now, many of which are not surfacing at all, are kind of happening under the carpet, not -- or below the radar. What you are seeing, Chris, is deliveries being delayed indefinitely, you are seeing ships being canceled but are not being reported as canceled to the market, they're being reported as, you know, converted or into different asset classes. So it is an evolving picture that I think -- as I said, 2009, you really didn't get a sense of it, because the 2009 new builds that delivered were, to the large part, financed. I mean, those ships had financing that had been put in place because the deliveries were imminent, and the delivery -- so the financing was in place before Lehman Brothers occurred in the end of 2008.

But for deliveries that are occurring in 2010, 2011 and 2012, which is what we are all concerned about, many owners had not anticipated to put the delivery financing in place until, say, a year before the delivery of those ships; i.e., most of the owners -- many of the owners had not arranged for delivery financing when Lehman Brothers occurred. So going into 2009, people were running around unable to secure financing at a time when -- you know, we have to also look at the financing market for ships.

Banks look very differently at financing an on-the-water ship, which is imminently deliverable to the owner, versus pre-delivery financing for a new build that may be one or two years away, especially since a lot of the less-established yards are having their own problems with working capital, and securing lines of credit themselves. So that's why we believe that for 2010, we will see slippage at or above the slippage that we saw in 2009, and we expect that trend to continue, but I think Natasha asked do we believe January will be representative of 2010; that was just a tremendously big number of slippage of vessels for our asset class. I think we have to wait another month or two, but that was probably an outlier.

Yes, certainly, that seems to be an awfully high number. Is your sense at all that the yards are willing to negotiate at all on price of these, are they doing their best? I know it is something that is not going to be at all publicized given what's at stake, but is your sense that there is any wiggle room in some of these contract prices?

These negotiations are so private, it is very hard to get visibility, and the market will only find out much after the event. My view is that it is a very specific, it is specific to the owner, specific to the yards. But frankly, it depends -- it depends on the yard's position; if it is a yard that, for example, was very deep into the container market, and has container exposure, and they're worried about their new building program, they will take a different stance from someone who is building Capesizes or VLCCs. So it is really yard-by-yard specific.

Certainly. That's very helpful. I appreciate the color. Just one other question, Eagle-specific. On the CapEx, it was very helpful you gave the 2010 number; can you give us a sense of what the 2011 number looks like, even if it is just kind of directional relative to 2010?

It will be in the K, but it is $159 million CapEx for 2011.

Okay. Great. Thanks very much for the time. I appreciate it.

You're welcome.

Our next question comes from Michael Weber with Deutsche Bank. Please proceed.

Hi, good morning, guys. How are you?

Hi, Mike.

Just wanted to kind of zero-in on your current operating fleet. You guys have been pretty transparent about looking to get a little bit more market leverage with your operating fleet, as you deliver more charter coverage with your new builds, and you signed a bunch of these BSI-linked charters; how do you think about those? I guess if I were to isolate your operating fleet, and you are looking for about 40% exposure, do you think about those in a way that if you could sign all of your operating fleet to BSI-linked charters, you would do it because you would avoid ballast costs, or how do you strike the right balance there between the BSI-linked versus the shorter-term charters?

I think right now, I mean if we look at the whole fleet, both fixed and open and indexed, right now, given the strength of the market, I would say being 30% to 40% exposed to the market is great. We have been able to effectively arbitrage the huge charter premium between 1-year rates and, call it, shorter-term rates. But to put that -- to show you the tremendous value we have been able to generate in doing this, if we fixed at the time one-year fixed rate charters on these index charters, we would be probably looking at about, say, $18,000, $19,000, maybe the top charter would have been close to $20,000 a day.

Uh-huh.

BSI today is at $24.500 a day.

Yes, yes. I mean I guess what I am getting at is that when you guys go into charter negotiations for your operating fleet, is that BSI-linked charter kind of always on the table, or is that something -- is there ever a situation that you guys would look to maybe do something on the four-month to six-month basis, and it's more preferable than a BSI-linked charter?

The one with piece of guidance is BSI-linked charters tend to be with the larger, more sophisticated end-users.

Okay. That's helpful.

And it also -- it is sort of a very symbiotic relationship, because the bigger charters are the ones that do the index charters, and they look for the bigger owners to be their counterpart. So it's sort of a nice place for Eagle to operate in.

Right. So as we see more BSI-linked charters, we can make a conclusion that the charter-party quality is going up as well?

We never had a problem there.

No -- yes, yes.

I think we are one of the few companies that in the abyss of the market had no charter-party problems or defaults. So that was never an issue for us.

Yes, yes. Looking at, I guess, your fleet growth, and I guess you talked about it a little bit, have you guys given an update on the options you guys currently have, and if those are still on the table and when they expire?

They're actually options that have no expiry. So there are eight of them out there, and we are holding them; we are waiting to see where the market goes.

Right. So I mean if I think --

They're still pretty far out there, so we want to see what the market does before we make a decision on those.

Right. But if I were to think about, I guess, growth on top of what you guys already have substantial -- I mean, that would seem like probably the easiest and most cost-effective way to continue growing beyond your current order book?

You are 100% correct.

Okay. All right. Then I guess just a couple of housekeeping questions, and this is the second or third quarter in a row you guys come in below expectations on G&A, and you mentioned it would be flat year-over-year on a cash basis; on a noncash basis, I mean on an all-in basis, should we expect something to be -- you know, 2010 to be around the same level as 2009, and how should we see that trend I guess throughout the year? Will it be a little lumpy?

No, we are giving -- and actually, it will be fairly straight. We are going to give out noncash compensation guidance for 2010 of $14.5 million.

I think -- I think what you should focus on is, on the back of a larger fleet, we are keeping G&A flat. So on a per-vessel analysis, we are actually going down quite a bit, you know, over a 20% reduction.

Yes, that's great. And I guess, finally, I don't know if you have given this already, but your current operating debt total?

$900 million at 12/31.

Great, guys. That's all I have. Thanks for the time.

Ladies and gentlemen, this concludes today's question-and-answer session. I would now like to turn the call back over to Mr. Sophocles Zoullas for closing remarks.

I would like to thank everyone again for joining us for our fourth quarter and full year 2009 earnings call, and we look forward to keeping you updated of new developments in future. Thank you, again.

Ladies and gentlemen, we thank you for your participation in today's conference. This concludes the presentation, and you may now disconnect. Have a good day.