SINGAPORE, May 24, 2022 (GLOBE NEWSWIRE) -- Grindrod Shipping Holdings Ltd. (NASDAQ: GRIN) (JSE: GSH) (“Grindrod Shipping” or the “Company” or the “Group” or “we” or “us” or “our”), a global provider of maritime transportation services predominantly in the drybulk sector, today announced its unaudited earnings results for the three months ended March 31, 2022.

Financial Highlights for the Three Months Ended March 31, 2022

Continuing Operations:

• Revenues of $110.3 million
  
  

• Gross profit of $40.7 million
  
  

• Profit for the period and attributable to owners of the Company of $29.0 million or $1.55 per ordinary share
  
  

• Adjusted net income of $29.8 million, or $1.60 per ordinary share⁽¹⁾
  
  

• Adjusted EBITDA for the period of $50.2 million⁽¹⁾
  
  

• Handysize and supramax/ultramax TCE per day of $22,201 and $24,385, respectively⁽¹⁾
  
  

• Period end cash and bank balances of $106.5 million and restricted cash of $6.6 million

⁽¹⁾ Adjusted EBITDA, Adjusted net income and TCE per day are non-GAAP financial measures. For the definitions of these non-GAAP financial measures and the reconciliation of these measures to the most directly comparable financial measure calculated and presented in accordance with GAAP, please refer to the definitions and reconciliations in “Non-GAAP Financial Measures” at the end of this press release.

Recent Developments

• On April 14, 2022 we entered into a contract to sell the 2016-built medium range product tanker, Matuku for $30.0 million (before costs). In anticipation of the sale, we have exercised the purchase option for Matuku under her existing finance arrangement at a cost of $25.4 million following the expiration of the current bareboat charter under which the vessel operated. Delivery of the vessel to us is expected on or about May 30, 2022 before onward delivery to her new owners planned on or about June 1, 2022.
  
  

• On May 10, 2022, we exercised the purchase option on the chartered-in 2015-built supramax bulk carrier, IVS Pinehurst, for an amount of $18.0 million with delivery planned on or about June 18, 2022. The vessel will remain chartered-in at her original contract rate until delivery to us.
  
  

• On May 10, 2022, we agreed to extend the long-term charter on the 2014-built supramax bulk carrier, IVS Crimson Creek, for a period of 11 to 13 months at a charter-in rate of $26,276 per day commencing May 1, 2022.
  
  

• On May 24, 2022, the Company’s Board of Directors declared an interim quarterly cash dividend of $0.47 per ordinary share, payable on or about June 20, 2022, to all shareholders of record as of June 10, 2022 (the “Record Date”). As of May 24, 2022, there were 18,958,025 common shares of the Company outstanding (excluding treasury shares).
  
  In view of the Record Date of June 10, 2022, shareholders may not reposition shares between the JSE and the U.S. Register during the period from June 8, 2022, at 9.00 a.m. (South African time) until June 10, 2022 at 9.00 a.m. (South African time).

• As of May 19, 2022, we have contracted the following TCE per day for the second quarter of 2022 ⁽¹⁾:
  

  • Handysize: approximately 1,310 operating days⁽²⁾ at an average TCE per day of approximately $26,875

  • Supramax/ultramax: approximately 1,568 operating days⁽²⁾ at an average TCE per day of approximately $29,498

⁽¹⁾ TCE per day is a non-GAAP financial measure. For the definition of this non-GAAP financial measure and the reconciliation of this measure to the most directly comparable financial measure calculated and presented in accordance with GAAP, please refer to the definitions and reconciliations in “Non-GAAP Financial Measures” at the end of this press release.

⁽²⁾ Operating days: the number of available days in the relevant period a vessel is controlled by us after subtracting the aggregate number of days that the vessel is off-hire due to a reason other than scheduled drydocking and special surveys, including unforeseen circumstances. We use operating days to measure the aggregate number of days in a relevant period during which vessels are actually available to generate revenue.

CEO Commentary

Stephen Griffiths, the Interim Chief Executive Officer and Chief Financial Officer of Grindrod Shipping, commented:

“After a transformational year in 2021 for Grindrod Shipping in which we enjoyed record financial results for the full year overall, the Company has enjoyed a historically strong start to 2022. For the first quarter of 2022, we achieved $50.2 million of Adjusted EBITDA and $29.8 million of Adjusted net income, or $1.60 per ordinary share from continuing operations. The quarter was the strongest first quarter for charter rates for our ship types in over a decade and lays a solid foundation for the rest of the year. Continuing with our flexible capital return policy rewarding our shareholders, we have declared a cash dividend of $0.47 per ordinary share with respect to the first quarter.

Despite the uncertainty in the global economy created by the Russian/Ukraine conflict, COVID lockdowns in China and the disruptions to traditional trade routes, the outlook for the dry bulk sector appears to remain positive. Healthy demand for minor bulk commodities and continued cargo spillover from tight container shipping markets, coupled with the smallest newbuilding orderbook in decades and congestion continue to lead to a tight supply/demand balance and strong freight rates. Against this backdrop, we were pleased to once again demonstrate the benefits of the Grindrod Shipping business model through the acquisition of the chartered-in IVS Pinehurst through exercising a highly advantageous purchase option on the vessel.

Finally, I would like to thank our recently retired Chief Executive Officer, Martyn Wade, for his 14 years of service to the Company and 12 years of working together. Martyn left Grindrod Shipping in a strong financial position and well placed to benefit from the current dry cargo market. We wish him all the best and appreciate his contribution to our current success.”

Unaudited Results for the Three Months Ended March 31, 2022 and 2021

Continuing Operations

Revenue was $110.3 million for the three months ended March 31, 2022 and $68.4 million for the three months ended March 31, 2021. Vessel revenue was $110.2 million for the three months ended March 31, 2022 and $68.2 million for the three months ended March 31, 2021. Revenue increased due to improved market conditions in the drybulk business.

Our handysize total revenue and supramax/ultramax total revenue was $36.2 million and $72.7 million, respectively, for the three months ended March 31, 2022, and $23.7 million and $43.4 million, respectively, for the three months ended March 31, 2021. Handysize vessel revenue and supramax/ultramax vessel revenue was $36.2 million and $72.7 million, respectively, for the three months ended March 31, 2022, and $23.5 million and $43.4 million, respectively, for the three months ended March 31, 2021. The results for the first quarter of 2022 were positively impacted by higher TCE per day rates achieved in our handysize and supramax/ultramax drybulk carrier segments, reflecting the stronger spot markets in these segments.

Handysize TCE per day was $22,201 per day for the three months ended March 31, 2022 and $12,053 per day for the three months ended March 31, 2021. Supramax/ultramax TCE per day was to $24,385 per day for the three months ended March 31, 2022 and $13,259 per day for the three months ended March 31, 2021.

Cost of sales was $69.6 million for the three months ended March 31, 2022 and $55.8 million for the three months ended March 31, 2021. Cost of sales increased due to higher charter hire costs incurred for our short-term chartered-in vessels as drybulk spot charter rates increased significantly during 2022 and fuel costs increased significantly in the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

Our handysize segment and supramax/ultramax segment cost of sales was $20.4 million and $49.5 million, respectively, for the three months ended March 31, 2022 and $18.5 million and $37.7 million, respectively, for the three months ended March 31, 2021.

Handysize voyage expenses and supramax/ultramax voyage expenses were $5.3 million and $18.4 million, respectively, for the three months ended March 31, 2022 and $6.4 million and $11.3 million, respectively, for the three months ended March 31, 2021. Handysize vessel operating costs and supramax/ultramax vessel operating costs were $7.7 million and $4.5 million, respectively, for the three months ended March 31, 2022, and $6.8 million and $3.8 million, respectively, for the three months ended March 31, 2021. Handysize vessel operating costs per day were $5,677 per day for the three months ended March 31, 2022 and $5,069 per day for the three months ended March 31, 2021. Vessel operating costs per day were higher in the handysize drybulk carrier segment for the first quarter of 2022 in comparison to the first quarter of 2021 due to increased crew repatriation costs, increased repair costs on certain of our older vessels and inflationary increases. Supramax/ultramax vessel operating costs per day were $5,540 per day for the three months ended March 31, 2022 and $5,309 per day for the three months ended March 31, 2021.  Vessel operating costs per day were higher in the supramax/ultramax carrier segment for the first quarter of 2022 in comparison to the first quarter of 2021 due to increased crew repatriation costs and inflationary increases.

The long-term charter-in costs per day for our supramax/ultramax fleet was $13,158 per day during the three months ended March 31, 2022 and $12,370 per day for the three months ended March 31, 2021. The increase is due to the index linked rate on one charter in agreement being higher due to the increased drybulk spot market in the three months ended March 31, 2022 and the exercising of a charter extension option on another agreement at a higher rate. During the three months ended March 31, 2022, out of 2,229 operating days in the supramax/ultramax segment, 64.0% were fulfilled with owned/long-term chartered-in vessels and the remaining 36.0% with short-term chartered-in vessels compared to 2,422 operating days in the supramax/ultramax segment, 57.5% were fulfilled with owned/long-term chartered-in vessels and the remaining 42.5% with short-term chartered-in vessels the three months ended March 31, 2021.
  
Gross profit was $40.7 million for the three months ended March 31, 2022 and $12.6 million for the three months ended March 31, 2021.

Other operating (expense) income was operating expense of $0.3 million for the three months ended March 31, 2022 and operating income of $0.1 million for the three months ended March 31, 2021.

Administrative expense was $8.3 million for the three months ended March 31, 2022 and $6.3 million for the three months ended March 31, 2021. Administrative expense increased in the first quarter of 2022 as compared to the first quarter of 2021 due to higher staff incentive costs relating to our increase in profit.

Interest income was $0.1 million for the three months ended March 31, 2022 and $0.0 million for the three months ended March 31, 2021.

Interest expense was $3.1 million for the three months ended March 31, 2022 and $3.2 million for the three months ended March 31, 2021.

Income tax expense (benefit) was an expense of $0.1 million for the three months ended March 31, 2022 and was $0.0 million for the three months ended March 31, 2021.

Profit for the three months ended March 31, 2022 was $29.0 million compared to $3.2 million for the three months ended March 31, 2021.

Profit attributable to owners of the Company for the three months ended March 31, 2022 was $29.0 million compared to $2.2 million for the three months ended March 31, 2021.

Continuing and Discontinued Operations

Profit for the three months ended March 31, 2022 was $29.0 million compared to a profit of $3.3 million for the three months ended March 31, 2021.

Profit attributable to owners of the Company for the three months ended March 31, 2022 was $29.0 million compared to a profit of $2.4 million for the three months ended March 31, 2021.

Net cash flows generated from operating activities was $28.5 million for the three months ended March 31, 2022 and $15.0 million for the three months ended March 31, 2021. Net cash generated from investing activities was $0.0 million for the three months ended March 31, 2022 and $0.1 million for the three months ended March 31, 2021. Net cash flows used in financing activities was $29.7 million for the three months ended March 31, 2022 and $15.6 million for the 12 months ended March 31, 2021.

As of March 31, 2022, we had cash and cash equivalents of $103.6 million and restricted cash of $9.5 million.

Conference Call Details

Tomorrow, Wednesday, May 25, 2022, at 8:00 a.m. Eastern Time/ 2:00 p.m. South African Time/ 8:00 p.m. Singapore Time, the Company's management will host a conference call and webcast to discuss the earnings results.

Conference Call details: Participants should dial into the call 10 minutes before the scheduled time using the following numbers: +1 877 553 9962 (US Toll Free Dial In), +0808 238 0669 (UK Toll Free Dial In), +65 3158 5482 (Singapore Dial In), or +27 10 5003039 (South Africa Dial In), +44 (0) 2071 928592 (International Standard Dial In). Please quote “Grindrod” to the operator.

Slides and Audio Webcast / Slides Presentation Details

There will be a live, and then archived webcast of the conference call and accompanying slides, accessible through the Grindrod Shipping website www.grinshipping.com (click on Notices & Events). The slide presentation of the first quarter 2022 financial results will be accessible in PDF format 10 minutes prior to the conference call and webcast. Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

About Grindrod Shipping

Grindrod Shipping owns and operates a diversified fleet of owned, long-term and short-term chartered-in drybulk vessels predominantly in the handysize and supramax/ultramax segments. The drybulk business, which operates under the brand “Island View Shipping” (“IVS”) includes a Fleet of 31 vessels consisting of 15 handysize drybulk carriers and 16 supramax/ultramax drybulk carriers. The Company also owns one medium range tanker on bareboat charter. The Company is based in Singapore, with offices in London, Durban, Tokyo and Rotterdam. Grindrod Shipping is listed on NASDAQ under the ticker “GRIN” and on the JSE under the ticker “GSH”.

Fleet Table

The following table sets forth certain summary information regarding our fleet as of the date of this press release.

Drybulk Carriers — Owned Fleet (24 Vessels)

 Drybulk Carriers — Long-Term Charter-In Fleet (7 Vessels)

Tankers – Owned Fleet (1 Vessel)

Unaudited and Selected Segment Information

Selected Historical and Statistical Data of Our Operating Fleet

Set forth below are selected historical and statistical data of our operating fleet for the three months ended March 31, 2022 and March 31, 2021 that we believe may be useful in better understanding our operating fleet’s financial position and results of operations⁽¹⁾. This table contains certain information regarding TCE per day, vessel operating costs per day and long-term charter-in costs per day which are non-GAAP measures. For a discussion of certain of these measures, see “Non-GAAP Financial Measures” at the end of this press release.

Unaudited Condensed Consolidated Statement of Financial Position 

Unaudited Condensed Consolidated Statement of Profit or Loss

Unaudited Condensed Consolidated Statement of Cash Flows

The following table presents cash flow information for each of the three months ended March 31, 2022 and 2021.

During the three months ended March 31,2022 and 2021, cash flows relating to the discontinued operation of the tanker business were cash used in operating activities of $Nil (2021:$254,000), cash used in investing activities of $Nil (2021:$2,000) and cash used in financing activities of $Nil (2021:$855,000).

Non-GAAP Financial Measures

The financial information included in this press release includes certain “non-GAAP financial measures” as such term is defined in SEC regulations governing the use of non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flows that excludes or includes amounts that are included in, or excluded from, the most directly comparable measure calculated and presented in accordance with IFRS. For example, non-GAAP financial measures may exclude the impact of certain unique and/or non-operating items such as acquisitions, divestitures, restructuring charges, large write-offs or items outside of management’s control. Management believes that the non-GAAP financial measures described below provide investors and analysts useful insight into our financial position and operating performance.

TCE Revenue and TCE per day

TCE revenue is defined as vessel revenue less voyage expenses. Such TCE revenue, divided by the number of our operating days during the period, is TCE per day. Vessel revenue and voyage expenses as reported for our operating segments include a proportionate share of vessel revenue and voyage expenses attributable to our joint ventures based on our proportionate ownership of the joint ventures for the period the joint venture existed during the relevant period. The number of operating days used to calculate TCE per day also includes the proportionate share of our joint ventures’ operating days for the period the joint venture existed during the relevant period and also includes charter-in days.

TCE per day is a common shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters have to cover voyage expenses and are generally not expressed in per-day amounts while charter hire rates for vessels on time charters do not cover voyage expenses and generally are expressed in per day amounts.

Below is a reconciliation from TCE revenue to revenue for the three month periods ended March 31, 2022 and 2021.

Vessel operating costs per day

Vessel operating costs per day represents vessel operating costs divided by the number of calendar days for owned vessels during the period. The vessel operating costs and the number of calendar days used to calculate vessel operating costs per day includes the proportionate share of our joint ventures’ vessel operating costs and calendar days for the period the joint venture existed during the relevant period and excludes charter-in costs and charter-in days.

Vessel operating costs per day is a non-GAAP performance measure commonly used in the shipping industry to provide an understanding of the daily technical management costs relating to the running of owned vessels.

Long-term charter-in costs and Long-term charter-in costs per day

Long-term charter-in costs is defined as the charter costs relating to chartered-in vessels included in our fleet from time to time, which are vessels for which the period of the charter that we initially commit to is 12 months or more, even if at a given time the remaining period of their charter may be less than 12 months (“long-term charter-in vessels”). Such long-term charter-in costs, divided by the number of operating days for the relevant vessels during the period, is long-term charter-in costs per day.

Long-term charter-in costs and long-term charter-in costs per day are non-GAAP performance measures used primarily to provide an understanding of the total costs and total costs per day relating to the charter-in of the Company’s long-term chartered-in vessels.

Below is a reconciliation from long-term charter-in costs to adjusted charter hire costs for the three month periods ended March 31, 2022 and 2021.

EBITDA and Adjusted EBITDA
EBITDA is defined as earnings before income tax (expense) benefit, interest income, interest expense, share of (profits) losses of joint ventures and depreciation and amortization. Adjusted EBITDA is EBITDA adjusted to exclude the items set forth in the table below, which represent certain non-recurring, non-operating or other items that we believe are not indicative of the ongoing performance of our core operations.

EBITDA and Adjusted EBITDA are used by analysts in the shipping industry as common performance measures to compare results across peers. EBITDA and Adjusted EBITDA are not items recognized by IFRS, and should not be considered in isolation or used as alternatives to profit (loss) for the period or any other indicator of our operating performance.

Our presentation of EBITDA and Adjusted EBITDA is intended to supplement investors’ understanding of our operating performance by providing information regarding our ongoing performance that exclude items we believe do not directly affect our core operations and enhancing the comparability of our ongoing performance across periods. Our management considers EBITDA and Adjusted EBITDA to be useful to investors because such performance measures provide information regarding the profitability of our core operations and facilitate comparison of our operating performance to the operating performance of our peers. Additionally, our management uses EBITDA and Adjusted EBITDA as measures when reviewing our operating performance. While we believe these measures are useful to investors, the definitions of EBITDA and Adjusted EBITDA used by us may not be comparable to similar measures used by other companies.

The table below presents the reconciliation between EBITDA and Adjusted EBITDA to profit (loss) for the period for the three months ended March 31, 2022 and 2021.

Adjusted net income and Adjusted Earnings per share

Adjusted net income is defined as Profit for the period attributable to the owners of the Company adjusted for (reversal of) impairment loss recognized on ships, impairment loss recognized on goodwill and intangibles, reversal of impairment loss recognized on right-of-use assets, impairment loss on net disposal group, loss on disposal of business, share based compensation and non-recurring expenditure. Adjusted Earnings per share represents this figure divided by the weighted average number of ordinary shares outstanding for the period.

Adjusted net income is used by management for forecasting, making operational and strategic decisions, and evaluating current company performance. It is also one of the inputs used to calculate the variable amount that will be returned to shareholders in the form of quarterly dividends and/or share repurchases. Adjusted net income is not recognized by IFRS, and should not be considered in isolation or used as alternatives to profit for the period or any other indicator of our operating performance.

Our presentation of Adjusted net income is intended to supplement investors’ understanding of our operating performance by providing information regarding our ongoing performance that exclude items we believe do not directly affect our core operations and enhancing the comparability of our ongoing performance across periods. We consider Adjusted net income to be useful to management and investors because it eliminates items that are unrelated to the overall operating performance and that may vary significantly from period to period. Identifying these elements will facilitate comparison of our operating performance to the operating performance of our peers. The definitions of Adjusted net income used by us may not be comparable to similar measures used by other companies.

The table below presents the reconciliation between Adjusted net income to Profit for the period attributable to the owners of the Company for the three months ended March 31, 2022 and 2021.

Headline earnings and Headline earnings per share

The Johannesburg Stock Exchange, or JSE, requires that we calculate and publicly disclose Headline earnings per share and diluted Headline earnings per share. Headline earnings per share is calculated using net income which has been determined based on IFRS. Accordingly, this may differ to the Headline earnings per share calculation of other companies listed on the JSE because such companies may report their financial results under a different financial reporting framework such as U.S. GAAP.

Headline earnings for the period represents profit for the period attributable to owners of the Company adjusted for the re-measurements that are more closely aligned to the operating or trading results as set forth below, and Headline earnings per share represents this figure divided by the weighted average number of ordinary shares outstanding for the period.

The table below presents a reconciliation between Headline earnings to Profit for the period attributable to owners of the Company for the three months ended March 31, 2022 and 2021.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act 1995 with respect to Grindrod Shipping’s financial condition, results of operations, cash flows, business strategies, operating efficiencies, competitive position, growth opportunities, plans and objectives of management, and other matters. These forward looking statements, including, among others, those relating to our future business prospects, revenues and income, are necessarily estimates and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Accordingly, these forward-looking statements should be considered in light of various important factors, including those set forth below. Words such as “may,” “expects,” “intends,” “plans,” “believes,” “anticipates,” “hopes,” “estimates,” and variations of such words and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on the information available to, and the expectations and assumptions deemed reasonable by Grindrod Shipping at the time these statements were made. Although Grindrod Shipping believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of Grindrod Shipping. Actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, without limitation, Grindrod Shipping’s future operating or financial results; the strength of world economies, including, in particular, in China and the rest of the Asia-Pacific region; the effects of the COVID-19 pandemic on our operations and the demand and trading patterns for the drybulk market, and the duration of these effects; cyclicality of the drybulk market, including general drybulk shipping market conditions and trends, including fluctuations in charter hire rates and vessel values; changes in supply and demand in the drybulk shipping industry, including the market for Grindrod Shipping’s vessels; changes in the value of Grindrod Shipping’s vessels; changes in Grindrod Shipping’s business strategy and expected capital spending or operating expenses, including drydocking, surveys, upgrades and insurance costs; competition within the drybulk industry; seasonal fluctuations within the drybulk industry; Grindrod Shipping’s ability to employ its vessels in the spot market and its ability to enter into time charters after its current charters expire; general economic conditions and conditions in the oil and coal industries; Grindrod Shipping’s ability to satisfy the technical, health, safety and compliance standards of its customers; the failure of counterparties to our contracts to fully perform their obligations with Grindrod Shipping; Grindrod Shipping’s ability to execute its growth strategy; international political and economic conditions including additional tariffs imposed by China and the United States; potential disruption of shipping routes due to weather, accidents, political events, natural disasters or other catastrophic events; vessel breakdowns; corruption, piracy, military conflicts, political instability and terrorism in locations where we may operate, including the recent conflicts between Russia and Ukraine; fluctuations in interest rates and foreign exchange rates and the changes in the method pursuant to which the London Interbank Offered Rate and other benchmark rates are determined; changes in the costs associated with owning and operating Grindrod Shipping’s vessels; changes in, and Grindrod Shipping’s compliance with, governmental, tax, environmental, health and safety regulations including the International Maritime Organization, or IMO 2020, regulations limiting sulfur content in fuels; potential liability from pending or future litigation; Grindrod Shipping’s ability to procure or have access to financing, its liquidity and the adequacy of cash flows for its operation; the continued borrowing availability under Grindrod Shipping’s debt agreements and compliance with the covenants contained therein; Grindrod Shipping’s ability to fund future capital expenditures and investments in the construction, acquisition and refurbishment of its vessels; Grindrod Shipping’s dependence on key personnel; Grindrod Shipping’s expectations regarding the availability of vessel acquisitions and its ability to buy and sell vessels and to charter-in vessels as planned or at prices we deem satisfactory; adequacy of Grindrod Shipping’s insurance coverage; effects of new technological innovation and advances in vessel design; and the other factors set out in “Item 3. Key Information-Risk Factors” in our Annual Report on Form 20-F for the year ended December 31, 2021 filed with the Securities and Exchange Commission on March 25, 2022. Grindrod Shipping undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events except as required by law.