Adjusted 2Q2020 EBITDA of $3.3 million was below our estimate of $6.3 million, mainly due to lower than expected TCE rates of $6.7k/day, or ~$900 below our estimate. In contrast to 1Q2020, operating results were not insulated from weak market conditions with forward cover of 62% of 2Q2020 days booked at TCE rates of only $6.8k/day, and market rates were weaker-than-expected over the remainder of the quarter. Lower TCE rates more than offset lower opex and G&A expenses.Lowering 2020 EBITDA estimate to $73.7 million from $83.4 million based on softer 2Q2020 results, lower TCE rate assumptions and a smaller fleet. Forward cover is more attractive this quarter with 62% of 3Q2020 days booked at $11.6k/day, and both 3Q2020 and 4Q2020 EBITDA is likely to be well above 2Q2020 EBITDA. Firmer market fundamentals kicked in late 2Q2020, but we are lowering our 2020 EBITDA estimate based on TCE rates of $10.2k/day and slightly higher opex in 2H2020.Asset sales pushed into 3Q2020 due to COVID-19 issues, but fleet renewal program on track. The three sales that were set to close last quarter were pushed out into 3Q2020. Two sales have already closed (Baltic Win on July 6th and Baltic Breeze on July 31st) and the third (Genco Bay) should close shortly. The barbell strategy will be boosted by the sale of the remaining seven Handys. The sales proceeds are likely to be offset by paying debt of $14.2 million on the three vessels.Focus stays on maintaining balance sheet strength and expanding liquidity. Cash was down $6.6 million to $142.9 million, but total debt and leases dropped $28.7 million to $471.3 million so net debt declined ~$22.0 million to $328.4 million in 2Q2020.Maintain OUTPERFORM rating and price target of $14. While the dry bulk was softer than expected in 2Q2002, we believe that the fleet renewal program and upside optionality are positives. Moreover, financial leverage is moderate and no debt amortization relief or significant refinancing is expected, in contrast to some other competitors. While the stock is up more than 50% since the end of May, including a 5% gain in August, it is still down 33% for this year. As a result, we believe that the risk/reward profile is very compelling based on an extension of the emerging 2H2020 recovery.Read More >>