(b)Use of Estimates: The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include fair values of long-lived assets (primarily vessels and operating lease right-of-use assets), recoverability of long-lived assets (primarily vessels and operating lease right-of-use assets), stock-based compensation and fair values of financial instruments (primarily derivative instruments and Convertible Bond Debt (as defined herein)), residual values of vessels, useful lives of vessels and estimated losses on accounts receivable. Actual results could differ from those estimates.

(d)Accounts Receivable and Credit Losses: Accounts receivable primarily includes receivables from charterers for time and voyage charter contracts. The Company maintains an allowance for expected credit losses on accounts receivable. The allowance for expected credit losses is reported in Receivables, net in the Consolidated Balance Sheets and provisions for expected credit losses are reported in Operating income in the Consolidated Statements of Operations.

The Company assesses collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis for accounts receivable from specific customers with known disputes or collectability issues. In estimating the amount of the allowance for credit losses, the Company considers historical collectability based on past due status, the creditworthiness of customers based on current credit evaluations, customer-specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. For the years ended December 31, 2023, 2022 and 2021, our assessment considered business and market disruptions caused by the conflicts between Russia and Ukraine and Israel and Hamas, the COVID-19 pandemic and estimates of expected emerging credit and collectability trends. The continued volatility in market conditions and evolving shifts in credit trends are inherently difficult to predict causing variability and volatility that may have a material impact on our allowance for expected credit losses in future periods.

(e)Insurance Claims: Insurance claims are recorded net of any deductible amounts for insured damages, which are recognized when recovery is virtually certain under the related insurance policies and where the Company can make an estimate of the amount to be reimbursed following the insurance claim. Insurance claims are reported in Accounts receivable in the Consolidated Balance Sheets.

(g)Vessels and Vessel Improvements, at Cost: Vessels are reported at cost, which consists of the contract price, and other direct costs relating to acquiring and placing a vessel in service, less accumulated depreciation. Depreciation is calculated on a straight-line basis over the estimated remaining useful life of a vessel based on the cost of the vessel reduced by its estimated scrap value. The Company estimates the useful life of a vessel to be 25 years from the date of its initial delivery from the shipyard to its original owner.

Effective January 1, 2023, we increased the estimated scrap value of our vessels from $300 per light weight ton (“lwt”) to $400 per lwt. This change was driven by increases in 15-year average scrap price trends sourced from a third-party data provider as well as similar increases by certain of our industry peer companies. The change in the estimated scrap value will result in a decrease in depreciation expense over the estimated remaining useful lives of our vessels. The impact of this change on Net income and Basic and Diluted net income per share for the year ended December 31, 2023 is as follows:

(h)Recoverability of Long-Lived Assets: The Company reviews long-lived assets for potential impairment at each balance sheet date or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When the Company determines that an asset’s carrying amount may not be recoverable, the asset is tested for recoverability by comparing an estimate of the asset’s undiscounted cash flows, excluding interest charges, expected to be generated by its use to its carrying amount. When an asset’s estimated undiscounted cash flows is less than its carrying amount, the Company will record an impairment loss. Measurement of an impairment loss is based on the amount by which an asset’s carrying amount exceeds its estimated fair value.

When estimating the future cash flows of vessels and vessel improvements, a significant assumption made by the Company is future charter rates. The Company estimates future charter rates based on the 15-year average of the Baltic Supramax Index (“BSI”), as published by a reputable independent third-party shipping broker, and as adjusted for the actual deadweight tonnage of a given vessel.

When measuring an impairment loss, the Company uses information obtained from independent third-parties in estimating the fair value (basic charter-free market value) of a vessel.

The Company reviews, on an annual basis, the assumptions used in the estimation of undiscounted cash flows. We did not recognize any impairment charges on our vessels and vessel improvements for the years ended December 31, 2023, 2022 and 2021.

(i)Accounting for Drydocking Costs: The Company follows the deferral method of accounting for drydocking costs whereby actual costs incurred are deferred and amortized on a straight-line basis over the period through the date the next drydocking is required to become due, generally 30 months for vessels that are 15 years old or more and 60 months for vessels that are less than 15 years old. Costs deferred as part of the drydocking include direct costs that are incurred as part of the drydocking to meet regulatory requirements. Certain costs are capitalized during drydocking if they are expenditures that add economic life to the vessel, increase the vessel’s earnings capacity or improve the vessel’s efficiency. Direct costs that are deferred include the shipyard costs, parts, inspection fees, steel, blasting and painting. Expenditures for normal maintenance and repairs, whether incurred as part of the drydocking or not, are expensed as incurred. Unamortized drydocking costs of a vessel that is sold are written off and included in the calculation of the resulting gain or loss in the period of the vessel’s sale. Unamortized drydocking costs are written off as drydocking expense if a vessel is drydocked before the expiration of the applicable amortization period.

(j)Deferred Financing Costs: Fees incurred for obtaining new loans or refinancing existing ones are deferred and amortized to interest expense over the life of the related debt using the effective interest method. Unamortized deferred financing costs are written off when the related debt is extinguished. Deferred financing costs (or debt issuance costs) are reported as a reduction to the carrying value of long-term debt in the Consolidated Balance Sheets.

(k)Other Fixed Assets: Other fixed assets are stated at cost less accumulated depreciation. Depreciation is based on a straight-line basis over the estimated useful life of the asset. Other fixed assets consist principally of leasehold improvements, computers and software and are depreciated over three years. Depreciation expense for other fixed assets for the years ended December 31, 2023, 2022 and 2021 was $0.2 million, $0.2 million and $0.3 million, respectively.

(l)Leases: Operating lease liabilities are recognized at the lease commencement date based on the net present value of fixed lease payments and variable lease payments that depend on an index or rate using the discount rate implicit in the lease, or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. The Company’s incremental borrowing rate is the rate that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to a lease’s lease payments in a similar economic environment. Operating lease right-of-use assets are generally recognized based on the related lease liabilities. Operating lease liabilities and right-of-use assets are recognized for leases with a lease term (which includes periods covered by options to extend if the Company is reasonably certain to exercise that option) that is greater than twelve months. The Company has elected to account for short-term operating leases from time charter-in contracts and from office leases in earnings on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred and does not recognize operating lease right-of-use assets or operating lease liabilities for such short-term leases.

Operating lease right-of-use assets are reviewed for potential impairment at each balance sheet date or whenever events or changes in circumstances indicate that an asset group’s carrying value may not be recoverable. When the Company determines that an operating lease right-of-use asset’s carrying amount may not be recoverable, the asset is tested for recoverability by comparing an estimate of the asset’s undiscounted cash flows expected to be generated by its use to its carrying amount. The Company estimates the future cash flows of an operating lease right-of-use asset using BSI forward curve data and time charter market rates that best align to an operating lease’s remaining lease term, as published by independent third-party sources. For the years ended December 31, 2023 and 2022, the Company recorded impairment losses on operating lease right-of-use assets of $0.7 million and $2.2 million, respectively. These losses were driven by declines in the freight rate environment as compared to certain operating leases with relatively higher fixed hire rates. No impairment loss on operating lease right-of-use assets was recorded for the year ended December 31, 2021.

Time charter-out contracts are accounted for as operating leases as (i) the vessel is an identifiable asset, (ii) the Company does not have substantive substitution rights and (iii) the charterer has the right to control the use of the vessel during the contractual term of the related time charter agreement and derives an economic benefit from its use. Under time charter-out contracts, the Company does not separate lease and non-lease components as the timing and pattern of transfer of lease and non-lease components are the same and the lease components, if accounted for separately, would be classified as an operating lease.

Voyage charter contracts generally consist of a single performance obligation of transportation of cargo within a specified period of time. This performance obligation is satisfied over time as the related voyage progresses and the related revenue is recognized on a straight-line basis over the estimated relative transit time (in voyage days) from the commencement of the loading of cargo to the completion of discharge, provided an agreed non-cancellable charter between the Company and the charterer is in existence, the charter rate is fixed and determinable and collectability is reasonably assured.

(n)Voyage Expenses and Vessel Operating Expenses: Voyage expenses primarily consists of bunker costs, port charges, canal tolls and the cost of cargo handling operations incurred under voyage charter contracts. Similar costs under time charter contracts are the responsibility of the Company’s customers (the charterer) and are not recorded by the Company. Brokerage commissions incurred under time charter and voyage charter contracts are also included in voyage expenses. Brokerage commissions are deferred and recognized over the related contractual charter term. Vessel operating expenses primarily consists of crewing, vessel repairs and maintenance and vessel insurance costs. Except for brokerage commissions, voyage expenses and vessel operating expenses are expensed as incurred on an accrual basis.

At the inception of a time charter, the Company records the difference between the cost of bunkers from the previous charterer and the cost of bunkers sold to the current charterer as a gain or loss within voyage expenses. Additionally, the Company records lower of cost and net realizable value adjustments to re-value the bunker fuel on a quarterly basis for certain time charter agreements where the inventory is subject to gains and losses. These differences in bunkers, including any lower of cost and net realizable value adjustments, resulted in a net gain of $5.9 million, $8.1 million and $6.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. Additionally, voyage expenses include the cost of bunkers consumed during the ballast period for time charter voyages. The ballast period starts from the completion of the previous voyage and ends on the delivery of the vessel to the current charterer.

(r)Interest Rate Risk Management: The Company is exposed to the impact of changes in benchmark interest rates on its outstanding debt under the Term Facility and Revolving Facility as part of the Global Ultraco Debt Facility (as each of these terms is defined below.) The Company manages its exposure to the impact of changes in benchmark interest rates on its earnings and cash flows through the use of interest rate swaps. See Note 7. Debt and Note 8. Derivative Instruments for additional information.

Under the United States Internal Revenue Code of 1986, as amended (the “Code”), a foreign corporation engaged in the international operation of ships will be exempt from U.S. federal income tax on its shipping income if it meets certain requirements under §883 of the Code and certain regulations thereunder. For the years ended December 31, 2023, 2022 and 2021, the Company believes that its operations qualify for exemption under §883 of the Code by virtue of satisfying the Country of Organization Requirement and Ownership Requirement. The U.S. Treasury Department recognizes the Republic of the Marshall Islands as a “qualified foreign country” for purposes of satisfying the Country of Organization Requirement and the Company satisfied the Ownership Requirement by virtue of its Common Stock being primarily and regularly traded on an established securities market in the United States. Therefore, we believe that we are not subject to United States federal taxes on United States source shipping income.

(t)Stock-Based Compensation: The Company generally measures stock-based compensation based on the fair value of the award at the date of grant and recognizes the related expense over the vesting period on a straight-line basis using the graded vesting method. The grant date fair value of stock options is generally estimated using the Black-Scholes option pricing model. The grant date fair value of stock-based compensation awards that are contingent upon a total shareholder return-based market condition is generally estimated using a Monte Carlo simulation model. Expense for stock-based compensation awards that include performance conditions are initially calculated and subsequently remeasured based on the outcome deemed probable of occurring, and recognized over the vesting period, with the ultimate amount of expense recognized based on the actual performance outcome. Expense for stock-based compensation awards that include market conditions are calculated based on grant date fair value and recognized over the vesting period, whether or not, and regardless to what extent, the market condition is satisfied. Forfeitures of stock-based compensation are accounted for as they occur. See Note 15. Stock Incentive Plans for additional information.

(u)Collateral on Derivatives: The Company separately presents the right to reclaim cash collateral or the obligation to return cash collateral from the fair value of derivative instruments. The amount of collateral required to be posted is defined in the terms of respective master agreements executed with counterparties or exchanges and is required when agreed-upon threshold limits are exceeded. As of December 31, 2023 and 2022, the Company posted cash collateral related to derivative instruments under its collateral security arrangements of $2.2 million and $0.9 million, respectively, which is recorded within Collateral on derivatives in the Consolidated Balance Sheets.

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. ASU 2020-06 removes from U.S. GAAP the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, after adopting the ASU’s guidance, entities will not separately present in equity an embedded conversion feature in such debt. Instead, the entity will account for a convertible debt instrument wholly as debt, and for convertible preferred stock wholly as preferred stock (i.e., as a single unit of account), unless (1) a convertible instrument contains features that require bifurcation as a derivative under Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. The Company adopted ASU 2020-06 as of January 1, 2022, under the modified retrospective approach. Accordingly, the Convertible Bond Debt no longer required bifurcation and separate accounting of its equity component and the related debt discount will no longer be amortized to interest expense over the life of the bond. An adjustment to opening retained earnings as of January 1, 2022 of $8.7 million was recorded within Accumulated deficit reflecting the cumulative impact of adoption. Additionally, a $20.7 million reduction to Additional paid-in capital was recorded to reverse the equity component and an offsetting $12.0 million was recorded within Convertible Bond Debt, net of debt discount and debt issuance costs as a reversal of the debt discount.

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 establishes (1) a general contract modification principle that entities can apply in other areas that may be affected by reference rate reform and (2) certain elective hedge accounting expedients. In June 2023, the Company modified certain interest rate swap agreements to coincide with the Global Ultraco Refinancing (as defined below). The Company utilized certain expedients under ASU 2020-04 to conclude that the modifications should be accounted for as continuations of the existing swap agreements, which had no impact on our consolidated financial statements. See Note 7. Debt and Note 8. Derivative Instruments for additional information.

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, and an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. ASU 2023-07 also requires that all segment-related disclosures required by FASB Topic 280 (Segment Reporting) be made by entities that have a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024 and early adoption is permitted. The Company is currently evaluating the potential impact of ASU 2023-07 on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 expands income tax disclosure requirements, primarily through enhanced disclosures about rate reconciliations, income taxes paid and certain other income tax-related disclosures, while also removing certain income tax-related disclosures deemed to no longer be cost beneficial or relevant. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 and early adoption is permitted. The Company is currently evaluating the potential impact of ASU 2023-09 on its consolidated financial statements.