SOURCE: Excel Maritime via Capital Link, Inc.

September 29, 2005 09:00 ET

Excel Maritime Poised for Stability and Growth

Excel Maritime Moves to NYSE

NEW YORK, NY -- (MARKET WIRE) -- September 29, 2005 -- As of September 15, 2005, Excel Maritime trades on the Big Board under the same symbol it traded on the AMEX, (NYSE: EXM). "The move to NYSE is an important landmark in the company's history," says CEO, Christopher Georgakis. "NYSE is the dominant U.S. market of choice for companies from all over the world. We are confident that joining our peer group of leading global shipping companies on the Big Board will enhance our company's positioning, visibility and recognition within the investment community. NYSE's global platform is also expected to enhance the liquidity and quality of trading of our shares with tangible benefits for our shareholders."

First Pure Dry Bulk Company to List in the U.S.

Excel Maritime is the first pure dry bulk company to have listed on a U.S. Exchange and its common stock has traded on the American Stock Exchange since April 1998. Since that time, the company has delivered six consecutive years of profitability.

EXM is the owner and operator of dry bulk carriers and a provider of worldwide seaborne transportation services for dry bulk cargoes. The company's vessels carry major bulk commodities, such as coal, iron ore and grain, as well as minor bulk commodities such as fertilizers, bauxite, alumina and cement.

A new management team, CEO -- Christopher Georgakis -- and CFO -- Lefteris Papatrifon, were appointed in November 2004. Since then, taking advantage of the favourable environment in global shipping, the company embarked on a strategy of fleet expansion and renewal, through timely acquisitions of second hand vessels and the disposal of older units.

In November 2004, Excel Maritime had a fleet of five vessels with an average age of 25 years and a total deadweight tonnage (dwt) of 358,000. Within a period of three quarters the company sold three older vessels and acquired 16 new ones, increasing the total number of the fleet to 18 vessels (one Capesize, ten Panamax and seven Handymax vessels) with a total dwt capacity of 1.1 million.

It also reduced the average age of its fleet to 13.2 years, well below the industry average of 16 years. This transformation of the company was made possible through two secondary offerings in December 2004 and March 2005 which grossed about $179 million.

Delivering on Promises

"We are a completely different company today compared to last year," explains Georgakis. "In terms of fleet composition, organizational structure and corporate governance. We set out with five major goals and we have made significant and tangible progress on all of them. Our goals have been to expand the fleet and bring its age below industry average, to deploy the majority of our new acquisitions in the period market, to generate EBITDA from fixed charters, for each vessel, equivalent to 30% of the acquisition value, to maintain a low net debt to total capitalization ratio and to improve the trading liquidity of our stock."

Operational Strategy Focusing on Cost Containment

Excel Maritime is the first listed dry-bulk company to have fully integrated in-house technical management. As of March 2005, the technical and commercial management of the fleet is conducted by Maryville Maritime Inc., a wholly owned subsidiary, which also provides management services to third parties.

"This structure enables us to increase operational efficiency and control and reduce costs," explains CFO, Lefteris Papatrifon. Together with a proactive preventative maintenance program, both ashore and at sea, and by employing professional well-trained masters, officers and crews, Excel has been able to minimize off-hire periods, effectively manage insurance costs and control overall operating expenses. Maryville Maritime carries the distinction of being the first Greek ship management company to have been awarded simultaneous ISM and ISO Safety and Quality Systems Certification in February 1996.Today the company is ISO 9001:2000 and 14001:1996 certified by Bureau Veritas.

Balanced Fleet Deployment Strategy

In terms of fleet deployment strategy for the new purchases, the company seeks to employ these vessels in the medium and long-term time charter market, while the initial fleet is deployed in the spot market.

Christopher Georgakis comments: "We believe that this strategy enables us to take full advantage of market opportunities as they arise, while at the same time we enjoy cash flow stability and greater visibility of earnings."

As of September 22nd, 2005, half of the fleet is under time charters with duration between 12 and 26 months, while the other half trades in the spot market. In the first half of 2005, Excel achieved an average TCE rate (time charter equivalent rate) for vessels under charter of $22,571 per day, while for vessels in the spot market $23,562 per day. The blended average daily TCE for the fleet was $23,125 per vessel.

Looking at the second half of 2005, 50% of the total fleet days are currently fixed under charters with the remaining 50% available for spot charters. For 2006, the mix between charter and spot fleet days stands currently at 28% and 72%. "In principal we are period minded, however, our present mix of period and spot charters enables us to take better advantage of prevailing market conditions," comments Christopher Georgakis.

Corporate Governance

"We are committed to maintaining the highest standards of corporate governance," assures Lefteris Papatrifon, the company's CFO. "In this context, we have implemented significant initiatives, such as the formation of a majority independent Board of Directors and the establishment of an Internal Audit Department."

First Half 2005 Financial Results

Revenues for the first half of '05 were $49.2 million, up 86% from $26.5 million from the first half of '04. EBITDA was $36.4 million, double the $18.2 million of the first half 2004. Net Income for the first half of '05 was 23.4 million, up 36% from the $17.2 million of the first half of '04. Earnings per share were $1.36 down 9% from $1.49 from the first half of '04. These earnings per share included the effect of a non-cash charge reflecting the management agreement termination expense with the company's previous technical manager, Excel Management Ltd. Excluding the management termination expense, EPS for the first half of '05 would have been $1.66 per share or 11% up from the first half of '04.

On the balance sheet, cash as of June 2005, was $59.3 million, fixed assets were $456.7 million, long-term debt was $269.2 million -- including the current portion of $45.3 million, stockholders equity was 245.4 million, and net debt to total capitalization was 41 %.

There are 19,631,000 shares outstanding and the market capitalization is about $308 million. Daily volume is about 250,000 shares.

Sound Prospects for the Dry Bulk Sector

"We believe that the fundamentals in the dry bulk sector remain strong," explains Christopher Georgakis. "The rapid industrialization that is taking place in China, results in increased steel production and imports of raw materials which act as the principal drivers for strong freight rates. The first half of '05 GDP growth in China was 9.5% and industrial production growth was 16.5%. China's rapid growth rate, together with growth in the emerging economies of South East Asia, is behind the increase of seaborne trade of approximately 4% on an annual basis for the next three years. This increase in seaborne trade is expected to result in firm freight levels."

"What is very important to understand," continues Georgakis, "is that this demand is not consumer driven. It is demand related to core commodities necessary for infrastructure development and industrial activity. These imports go into electricity generation and steel making. Even if there is softening in Chinese GDP growth this does not necessarily translate into less electricity or less steel making, especially given China's preparation for the Olympics of 2008 and the 2010 World Expo in Shanghai. There are also other projects which will require large quantities of steel for the next several years such as a national electricity grid, a national highway system, and the Yangtse-Huangpu canal.

"Notwithstanding the above, in the summer of 2005 we did experience the effects of seasonality and the effects of inventory correction in China, but these do not alter the long-term fundamentals of the sector, which we believe to be sound."

Increased Fuel Costs Passed On

"Under time charter employment, fuel is not part of our cost structure," comments CFO Lefteris Papatrifon. "This cost is passed onto the charterers. Consequently, the increase of fuel costs has a minimal direct impact on our profitability." However he continues, "If fuel prices were to increase further and remain at high levels for a long period of time, this could have an adverse impact on the global economy and thereby affect global trade and demand for shipping."

Future Growth Aiming at Maximizing Shareholder Value

"We believe there are opportunities for consolidation within the dry bulk sector," explains Georgakis. "And Excel Maritime will seek to identify and evaluate these opportunities in the future.

"At present, our focus is on integrating the new acquisitions into our initial fleet, however, due to a correction in asset values in the recent months there may be opportunities to acquire vessels in the near future.

"In any case, any acquisition must be accretive to earnings. We remain committed to our acquisition criteria of seeking to generate EBITDA from fixed charters equivalent to 30% of the acquisition value within a period of 24 months. Moreover, we wish to maintain a net debt to capitalization ratio of approximately 40%."

Based on figures released for the first half 2005 earnings, Excel Maritime achieved a daily TCE for the fleet of $23,125 per vessel, while the estimated annualized pro forma breakeven level for the fleet in 2005 is $14,080 on a free cash flow basis and $12,170 on a net income basis.

Estimated Expense           Free Cash Flow ($)      Net  Income ($)
Vessel Operating                 4,900                 4,900
General & Administration           660                   850
Depreciation & Amortization          0                 4,620
Interest                         1,800                 1,800
Maintenance CapEx                  720                     0
Principal Debt Repayment        14,080                12,170
According to analyst reports, cash on the company's balance sheet is estimated between $79 and $94 million at the end of 2005 and $129 to $136 million at the end of 2006 indicating that Excel Maritime's ability for organic growth or for further debt reduction.

Sector Positioning Among Dry Bulk Companies

"Today, there are a number of publicly listed dry bulk companies," states Georgakis, "so investors can differentiate amongst them based on several criteria, such as fleet type, technical management structure, deployment strategy, and so on.

"Excel Maritime is a company committed to period employment for its new acquisitions with a view to awarding shareholders with forward earnings visibility and effective management of freight volatility, while the company's initial fleet will continue trading in the spot market. With a balanced fleet deployment strategy, stringent acquisition criteria and a strong balance sheet, the company is well positioned for future growth."

Distinct Competitive Advantages

"We have several major competitive advantages," continues Georgakis. "First, a strong management team with considerable experience in the operations of dry bulk vessels, a team which has delivered six consecutive years of profitability to its shareholders. Additionally, we have strong customer relationships as a result of the quality of our fleet and Excel's reputation for dependability. Also, cost effective operations with low operating costs and low break even levels. And last but not least, a long experience in the public markets, as we have been listed since 1998."

Analyst Consensus

Excel Maritime has been actively followed by analysts at three houses, Cantor Fitzgerald, Dahlman Rose and Hibernia Southcoast Capital who have buy recommendations on the stock with target prices between $18 and $20.

Analyst Consensus EPS are $ 0.63 for the third quarter 2005 and $ 0.88 for the fourth quarter 2005. The same estimates for the year 2005 are $ 2.86 and for the year 2006 $ 3.17 per share. Excel's shares closed at $15.71 on Wednesday, September 28th.

For more info visit: http://www.excelmaritime.com

To get the PDF version of this write up, please click on the link below: http://www.capitallink.com/press/EXCEL092705.pdf

Capital Link, Inc. is an Investor Relations and Financial Communications company servicing several listed companies including Excel Maritime.

Contact Information

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