Excel Maritime Carriers Ltd. (EXM: chart)
Second Quarter 2008 Financial Results
August 11, 2008 10:00 a.m. ET

Executives

Stamatis Molaris - President and Chief Executive Officer
Lefteris A. Papatrifon - Chief Financial Officer

Analysts

Doug Mavrinac - Jefferies & Co.
Natasha Boyden - Cantor Fitzgerald
Charles Rupinski – Maxim Group LLC

Presentation

Operator

Thank you for standing by ladies and gentlemen and welcome to the Excel Maritime conference call on the second quarter 2008 financial results. We have with us Mr. Stamatis Molaris, President and Chief Executive Officer and Mr. Lefteris Papatrifon, Chief Financial Officer of the Company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session at which time if you wish to ask a question, please press “*1” on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded today, Monday, August 11, 2008. We now pass the floor to Mr. Molaris. Please go ahead sir.

Stamatis Molaris

Thank you. Good morning everyone. Thank you for joining me in this conference call to discuss the second quarter six-month results of Excel. Please be reminded that we will be discussing forward-looking statements in today’s call and presentation. Regarding the Safe Harbor language I’d like to refer you to slide #2 of this webcast presentation for further information. Please take a moment to read through the text in the slide. I am conducting this call today with Lefteris Papatrifon, Excel’s Chief Financial Officer.

If I can ask you to turn to slide #4, on April 15th Excel completed its acquisition of Quintana, one of the largest transactions ever done in the shipping markets. Excel now controls an operating fleet of 47 vessels with a carrying capacity of approximately 3.7 million dead weight tonnes at an average age of 8.7 years. Excel continues to make great progress in integrating the operations of the two companies and the benefits of the merger are really becoming apparent. The integration of the IT systems and the key management processes are now almost complete. The acquisition of Quintana was accounted for using the purchase method of accounting whereby all Quintana assets were fair valued, resulting in goodwill of approximately $321 million. In particular, all Quintana''s time charters were fair valued, giving rise to significant deferred assets and liabilities that will be amortized to income over their remaining lives. Please refer to the fleet lease in the Appendix of our second quarter result’s press release to see the fair values assigned to Quintana vessels.

It should be noted that the second quarter results reflect consolidated Excel-Quintana results from April 16th, the day following the closing of the Quintana acquisition transaction. In this respect, revenues and expenses from ex-Quintana vessels start contributing to Excel’s results from April 16th onwards. This means that effectively $14.9 million of revenues earned by Quintana between April 1 and April 15, 2008 have not been included in the second quarter results.

The first quarterly results that will reflect the full quarter’s operations for the combined entity will be the third quarter of 2008. In terms of the second quarter results Excel had a great quarter. Net income increased by over 530% to $126.8 million over the comparable period in 2007 and earnings per diluted share consequently increased to $3.14 per share.

Net income for the quarter includes approximately $76 million of non-cash time charter amortization amounts and a non-cash fair value gain on Excel’s interest rate swaps of $72.9 million. Lefteris, our CFO will discuss these accounting adjustments in greater detail later in the presentation. Time charter equivalent rates for the quarter were $33,329 per day compared to $25,124 per day in the same quarter last year. The improved rate environment combined with the significant increase in the size of the fleet with an average of 42.2 vessels operating during the quarter kept adjusted EBITDA to a record $88.6 million, an increase of 274% or almost $65 million. During that quarter, the Board of Directors increased its quarterly minimum dividend guidance by 100% to $0.40 per share. In this respect, today the Board declared a dividend of $0.40 per share for the quarter payable on September 15th, to shareholders on record on September 1st.

To give you an update on the Angela Star which ran aground in Taiwan on July 22nd whilst at the towage and pilots is now in dry docking for repairs and is expected to return to service no later than September 6, 2008. We expect that the total cost of the Company, including lost hire is approximately is $1.2 million or $0.03 per diluted share. During the quarter, two vessels, Fortezza and Coal Glory completed dry dockings. These vessels spent 44 days in dry dock at a total cost of $2.3 million. In addition, Lady initiated its dry docking on May 12 with expected redelivery on August 13.

On slide #5 given the size of our fleet I only want to state that other vessels that are coming off their time charters through the end of 2009 are available should we decide if it is appropriate to do so to be fixed on or short durational charters. The slide shows that on a cumulative basis in the third quarter of 2008 alone we have 11 vessels coming off their time charters. Further four vessels become available in the fourth quarter of 2008. Given the prevailing forces in charter rate environment and expectations for a very strong fourth quarter this translates into significant revenue generated for vessels on top of the revenue generated from our fixed fleet.

On slide #6 our expected fixed revenues for the fourth quarter of 2008 almost fully cover our expected total fixed charges for the same period. Our fixed charges relate to the expected fixed payment of debt on our debt facilities, interest payments for the period and scheduled dry docking cost. Even though our 2009 expected combined time charter accounted for up to 60% of expected or waiting days, our $280 million of expected net fixed revenues are almost sufficient to cover our fixed charges. In 2010, our contracted revenues are more than enough to cover our fixed charges. Also, our scheduled debit payments are reduced and this is solely with half of the fixed fleet. This demonstrates in a very compelling way how our chartering strategy is protecting us from market down side whilst providing ample free cash flow, potential for growth, and payment of dividends.

On slide #7 we provide you the sensitivity concerning the revenue generating capability of our unfixed fleet for 2009. Our unfixed fleet in the fourth quarter of 2008 can generate approximately $60 million expected net revenues at the charter rate of $50,000 per ship. The current average charter rate for Panamaxes are around $53,000 a day while Supramaxes operate at approximately $47,000 per day. Even if this environment stays throughout the remainder of 2008 and a quarter of 2009 our expected unfixed earnings could potentially exceed $60 million and $350 million respectively for each period. As you can see the magnitude of upside is quite. considerable. This additional revenue gives us significant flexibility in terms of future dividend payment decisions and future vessel acquisitions.

I will now turn the presentation over to Lefteris to discuss the financial and operational performance of the Company. Please Lefteris.

Lefteris A. Papatrifon