TBS International PLCTBSI

Morningstar Rating

Stock Research and Analysis

by Adam Fleck

TBS International is a niche player in the growing dry-bulk goods shipping industry. Although TBS and similar companies have capitalized on the developing world's surging demand for dry-bulk and general-cargo imports over the past several years, global Read more

Bulls Say

Like many other shipping companies, TBS avoids paying taxes by incorporating offshore.

TBS is operating at 100% capacity on its ships, and we believe there are more opportunities for customer growth in its niche market, somewhat mitigating falling shipping rates.

Vessel scrapping has been historically low during the last few years. Fleet reduction during the next several years should prevent shipping rates from returning to historical lows. Read more

Bears Say

TBS is currently working with its lenders to renegotiate its debt agreements. We think the firm is likely to cut its dividend and pay higher interest costs in exchange for covenant waivers. If TBS can't reach an agreement, it may need to sell assets at fire-sale prices, issue dilutive equity, or file for bankruptcy protection.

Dry-bulk shipping operates in boom and bust cycles. Because most of TBS' vessels are not tied to a long-term contract, volatile freight rate changes can be detrimental to the company.

The industry's order book for multipurpose vessels, which include TBS' "tweendecker" ships, has recently increased to almost 30% of the world's fleet.

TBS has antitakeover bylaws in place that entrench management. Read more

Strategy

TBS offers a flexible shipping method. The company's tweendecker ships are not traditional container or bulk carriers and instead can adapt to various cargo types and sizes. These unique ships enable Read more

Management

TBS has many governance and stewardship issues that concern us. The company has overpaid for acquisitions in the past, including two affiliate companies in 2004 for which it paid an egregious $8.1 million for negative book value (more liabilities than Read more

Profile

Based in Bermuda, TBS International is a worldwide marine transporter, but it concentrates on Asian and Latin American trade routes. The company targets niche markets, offering Read more

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