BALT Q1 2012 Earnings Presentation

7/31/2019 BALT Q1 2012 Earnings Presentation

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Baltic Trading Limited

Q1 2012 Earnings Presentation

May 1st, 2012


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2 BALTIC TRADING LIMITED

Agenda

First Quarter and Year to Date 2012 Highlights

Financial Overview

Industry Overview


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First Quarter and Year to Date Highlights


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First Quarter 2012 Highlights

Net loss of $4.5 million for the first quarter of 2012

Basic and diluted loss per share of $0.20

Paid a $0.13 dividend per share for the fourth quarter of 2011

Declared a $0.05 dividend per share for the first quarter of 2012

Extended the Baltic Bear with Swissmarine Services S.A. for 10.5 to 13.5

months at 101.5% of the Baltic Capesize Index

Cash position of $5.2 million as of March 31, 2012


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Financial Overview


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Dividend Declaration & Policy Declared dividend of $0.05 per share payable on or about May 17th, 2012 to all shareholders of

record on May 10th, 2012

Dividend policy established as follows:

Net income less cash expenditures for capital items related to fleet, such as drydocking andspecial surveys, other than vessel acquisitions and related expenses

Plus non-cash compensation

Subject to reserves established by our board

Credit facility places no restrictions on amounts of dividends

Dividend History

Q2 2010 $0.16

Q3 2010 $0.16

Q4 2010 $0.17

Q1 2011 $0.06

Q2 2011 $0.10Q3 2011 $0.12

Q4 2011 $0.13

Q1 2012 $0.05

Total $0.95


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Q2 2012 Estimated Break-Even Levels (1)

Daily Expenses by Category Free Cash Flow(2) Net Income

Direct Vessel Operating(3) 5,300 5,300

G&A, Management Fees(4)

1,714 2,208

Interest Expense (5) 1,237 1,378

Depreciation(6) - 4,497

Daily Break-Even(7) 8,251 13,383

(1) Breakeven levels are based on an average number of 9.00 vessels for Q2 2012.

(2) Free Cash Flow is defined as net income plus depreciation less capital expenditures, primarily vessel dry dockings, and other non-cash items, namelyrestricted stock compensation and deferred financing charges.

(3) Direct Vessel Operating Expenses is based on managements estimates and budgets submitted by our technical managers. We believe DVOE are bestmeasured for comparative purposes over a 12-month period.

(4) General & Administrative amounts are based on a budget which includes incentive compensation and may vary, including as a result of actual incentivecompensation. Management Fees are based on the contracted monthly rate per vessel for the technical management of our fleet, including amount paid toGenco.

(5) Interest Expense is based on our outstanding debt of $101.3 million, unused commitment fees of 1.25% under our amended $150 million credit facility, anassumed LIBOR rate of 0.50% plus 300 bps and amortization of deferred financing costs. As part of the commitment fee portion of interest expense, thereare semi-annual commitment fee reductions of $5.0 million. The first two reductions occurred on May 31, 2011 and November 30, 2011, respectively andthe next reduction will occur on May 31, 2012.

(6) Depreciation is based on the acquisition value of the current fleet, including the vessels to be acquired and amortization of dry docking costs. Depreciationexpense utilizes a residual scrap rate of $245 per LWT.

(7) The amounts shown will vary based on actual results.


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Industry Overview


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Recent Drybulk Market Developments Iron ore inventories have declined from a record of 101.5 Mt set in the beginning of February of this year

Currently at 97.1 Mt after decreasing for five of the last seven weeks(1)

Expect to see further declines as strength in steel prices continues

Chinese steel stockpiles have decreased for eight consecutive weeks, coupled with a rebound in steel production(1)

March iron ore imports into China totaled 62.9 Mt as weekly iron ore fixtures continue to recover from January 2012 lows (1)

Chinese property sales recovering over the past six weeks(2)

In line with Chinese easing monetary policies

Strong coal demand from China due to unusually warm weather and the ongoing expansion of the Chinese economy(1)

Hydropower generation remains low due to the ongoing drought in southwest China leading to a higher dependencyon thermal coal-derived electricity production

Coal stockpiles at Chinas largest coal port Qinhuangdao currently stand at 5.2 Mt below their target of 7.0 Mt(1)

Daqin Railway scheduled maintenance in April led to less coal railed to ports resulting in depleted inventory levels

Only one of Japans 54 nuclear reactors remains online while the countrys power generation demand continues to rise(3)

South American grain season and strong coal demand have supported Panamax rates as additional cargoes have emergedin the Atlantic(4)

Scrapping increased 38% YOY during Q1 2012 on a tonnage basis(5)

Average age of scrapped vessels decreasing to approximately 29 years in 2012 from 32 years in 2010

Chinas CPI increased 3.6% YOY in March 2012, higher than forecasts, but still down from a 2011 peak increase of 6.5%seen last July(6)

Vales transshipment hub in the Philippines has become operational as China upholds its ban on vessels larger than300,000 dwt from entering its ports(1)

1) Source: Commodore Research

2) Source: Deutsche Bank3) Source: Reuters

4) Source: RS Platou

5) Source: Clarkson Research Services Limited 20126) Source: National Bureau of Statistics


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Short and Long-Term Industry Catalysts

3) Source: Clarkson Research Services Limited 20124) Source: Maersk Broker Dry Bulk Market Quarterly

Chinese Coal Imports(2)

(million tons)

0246

810121416182022

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The Chinese government lowered bank reserverequirements by 50 bps in November 2011 and February2012 to fuel lending and stimulate growth(1)

Chinese bank loans for March increased 49% YOY(2)

Chinas twelfth five-year plan continues to emphasizeinfrastructure

NDRC committed $7.9 billion to fund suspendedrailway projects(2)

Port and volume expansion as iron ore and coal minersincrease production over the next few years

Increased demand of imported ore against Chinesedomestic ore possible due to price arbitrage

Slippage of newbuilding vessel deliveries as financingconcerns continue

Additional scrapping potential due to a combination oflow charter rates and high scrap steel prices

Peak summer demand season is approaching leading to

increased electricity demand Chinas coal imports have exceeded 20 Mt four

of the last five months including the secondlargest monthly import total in March(2)

Indias 2012 thermal coal imports are forecastedto increase 20% to 93 Mt(4)

Q1 YOY Scheduled vs. Actual Deliveries(3)

Q1 2012 (mdwt) Q1 2011 (mdwt)

Actual Deliveries 29.6 24.3

Scrapping 7.8 5.7

Net Additions 21.8 18.6

Scheduled Deliveries as of 1/1 45.6 35.8

Q1 Slippage % 35% 32%

1) Source: Bloomberg2) Source: Commodore Research


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Demand Side Fundamentals Chinese steel production increased 2.5% YOY for the first quarter of 2012(1)

Crude steel output in China is expected to rise 4% in 2012(2)

Chinas fixed-asset investment rose 20.9% through the first three months of 2012(3)

Global steel production set a record in 2011 by growing 6.8% to 1,527 Mt(1)

Monthly global crude steel production reached a new high of 132.2 Mt in March 2012, 11% greater than the prior month (4)

Coal consumption by Chinese power plants is expected to grow by 150 Mt in 2012 to satisfy increased power demand(2)

China produced 411 billion kilowatt hours of electricity in March, 84% of which was generated from using thermal coal (4)

Indian apparent steel usage is forecasted to grow 6.9% in 2012(1)

Indias steel industry plans to produce upwards of 110 Mt by 2020 an increase of 40 Mt from existing capacity (2)

Source: Clarkson Research Services Limited 2012, World Steel Association

1) Source: World Steel Associat ion2) Source: Reuters

Source: Clarkson Research Services Limited 2012

3) Source: National Bureau of Statist ics4) Source: Commodore Research

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80China EU27 (External Trade)

Japan South Korea

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Iron Ore Imports by Country

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Chinese Iron Ore Imports vs. Steel Production

(million tons)


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Increasing Iron Ore and Coal Production are Major Factors

1) Source: Public statements by subject companies

2) Source: Clarkson Research Services Limited 2012

3) Source: Reuters

4) Source: Australias Bureau of Resources and Energy Economics

5) Source: Commodore Reasearch

6) Source: Bloomberg

Key iron ore expansion plans equal increased capacity of487 Mt by 2016(1)

487 Mt represents 46.3% of total 2011 seaborne ironore trade

Brazilian iron ore exports increased 11% in March 2012compared to the prior year period(2)

Brazilian iron ore exports recovered from January lowsas weather related issues eased toward the end of thefirst quarter of 2012

Rio Tinto projects iron ore demand will nearly double in thenext eight years(3)

Addition of at least 100 Mt per year to meet growthprojections

Australian iron ore exports in 2012 are forecasted to increaseby 12% to 493 Mt(4)

Australian thermal coal, metallurgical coal and ironore export volumes are anticipated to grow 59%, 50%and 54%, respectively, by 2015

China to add 390 Mt of additional iron ore port capacity by2015(5)

BHP and Rio Tinto investing to increase port capacity at PortHedland and Cape Lambert(6)

Port Hedland is expected to increase capacity from220 Mt to 500 Mt by 2015

Indias coal demand is projected to climb 41% to 980 Mt overthe next five years with a potential of 265 Mt sourced fromimports as compared to 118 Mt imported during 2011(6)

Key Expansion Plans(1)

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2012 2013 2014 2015 2016

BHP Fortescue Rio Tinto Vale MMX

(million tons)


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Supply Side Fundamentals First quarter 2012 newbuild orders decreased 70% YOY(1)

Declining newbuilding activity and prices coupled with strong steel prices have put pressure on shipyard margins(2)

Scarce capital continues

European lenders are still limiting funding availability

21% of the fleet is greater than 20 years old and 16% of the fleet is greater than 25 years old(1)

22.5 mdwt scrapped in 2011 and 10.8 mdwt scrapped in 2012 YTD(1)

Slippage of newbuilding vessel deliveries as financing concerns continue

Bangladesh ship breaking has resumed but a new 5% tax has been added for purchasing vessels for scrap Twelve vessels were scrapped in Bangladesh during April representing the countrys highest monthly total since June 2011(1)

Chinas Dalian shipyard is reported to begin operation in the second half of 2012 with potential to scrap up to 75 vessels a year(3)

1) Source: Clarkson Research Services Limited 20122) Source: Commodore Research

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2004 2005 2006 2007 2008 2009 2010 2011 2012YTD

Handysize & Handymax Panamax Capesize

Drybulk Vessel Scrapping by Type(1)

(No. of Vessels)

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Capesize Panamax Handymax Handysize

Drybulk Vessel Deliveries by Type(1)

(million dwt)

Remains to beseen what willbe delivered

3) Source: SteelGuru


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Q&A

Documents

BALT Q1 2012 Earnings Presentation