Genco Shipping & Trading Limited · NYSE:GNK
Genco Shipping & Trading — Q4 2022 Earnings Presentation
36 slides from Genco Shipping & Trading's earnings presentation, Feb 23, 2023
Slide 1: Q4 2022 Earnings Presentation
GENCO SHIPPING & TRADING LIMITED Q4 2022 Earnings Presentation February 23rd, 2023
Slide 2: Forward Looking Statements
Forward Looking Statements "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995 This presentation contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements use
Slide 3: Agenda
Agenda • Q4 2022 + YTD Highlights • Financial Overview • Industry Overview 3
Slide 4: Fourth Quarter 2022 and Year-to-Date Highlights
Fourth Quarter 2022 and Year-to-Date Highlights 4
Slide 5: Continued strong financial performance
Continued strong financial performance Q4 2022 key financial metrics Value strategy updates Net income attributable to Genco Dividends • Q4 2022: $28.7 million, basic and diluted earnings • Q4 2022: declared a $0.50 per share dividend per share: $0.67 • Annualized dividend yield of 11% based Adjuste
Slide 6: Genco's comprehensive value strategy
Genco’s comprehensive value strategy Focused on 3 key elements… Significant dividends Deleveraging Growth Debt outstanding at Dec 31, 2022 $171 Use shares as a currency million (~40% of fleet’s current scrap value) Debt repayments to grow Cash flow generation Debt prepayments Utilize reserve + revol
Slide 7: Dividends declared under our value strategy
Dividends declared under our value strategy… 5 value strategy dividends declared… $3.24 per share Dividends under value strategy in last 5Qs 14% 11% Last 4 dividends declared as a % of annualized Feb 21, 2023 GNK share price dividend yield* $0.79 $0.78 14 quarters $0.67 Consecutive quarterly dividen
Slide 8: Quarterly dividend calculation / framework
Quarterly dividend calculation / framework Straight-forward and transparent dividend formula – Genco plans to provide TCE, expense and reserve estimates in advance Dividend calculation (numbers in m Q4 2022 actual Q1 2023 estimates except per share amounts) $14,217 Estimate of Q1 2023 to date based
Slide 9: Genco's "barbell" approach to fleet composition
Genco’s “barbell” approach to fleet composition …combines upside potential of Capesize vessels with the more stable earnings stream of minor bulk vessels Major bulk Minor bulk These two sectors provide Capesize complementary characteristics for Ultra/Supra Genco’s value strategy… 17 27 vessels vesse
Slide 10: Portfolio approach to scrubber installation
Portfolio approach to scrubber installation Genco continues to capture wide fuel spreads thru scrubbers installed on 17 Capesize vessels ◼ Genco implemented a portfolio approach for IMO 2020 compliance ◼ Installed scrubbers on Capesize vessels + consuming VLSFO on our minor bulk vessels ◼ All-in cos
Slide 11: Financial Overview
Financial Overview 11
Slide 12: Fourth quarter earnings
Fourth quarter earnings Three Months Ended Three Months Ended Twelve Months Ended Twelve Months Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 (Dollars in thousands, except share and per share data) (Dollars in thousands, except share and per share data) (unaudited) (u
Slide 13: December 31, 2022 balance sheet
December 31, 2022 balance sheet December 31, 2022 December 31, 2021 (Dollars in thousands) (unaudited) BALANCE SHEET DATA: Cash (including restricted cash) $ 64,100 $ 120,531 Current assets 125,430 174,830 Total assets 1,173,866 1,203,002 Current liabilities (excluding current portion of long-term d
Slide 14: Fourth quarter highlights
Fourth quarter highlights Three Months Ended Twelve Months Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 (unaudited) (unaudited) FLEET DATA: Total number of vessels at end of period 44 42 44 42 Average number of vessels (1) 44.0 42.4 44.0 41.6 Total ownership days for
Slide 15: Continued strong TCE performance
Continued strong TCE performance… …with fleetwide rates well in excess of our cash flow breakeven rate Fleet-wide TCE rate Q1 2023 cash flow breakeven rate $40 $35.2 $35 FY 2022 TCE benchmark $30 $29.3 $28.8 ~$3k outperformance $25 $24.1 $23.6 TCE ($ in 000s) $21.1 Q1 2023 TCE estimate to date based
Slide 16: Genco's industry low cash flow breakeven rate
Genco’s industry low cash flow breakeven rate Genco’s financial de-leveraging thru large scale debt paydowns has helped to create the strongest balance sheet among its peer group Meaningful reduction in debt outstanding thru large- …significantly reduced our cash flow breakeven scale debt paydowns s
Slide 17: Industry Overview
Industry Overview 17
Slide 18: Current drybulk market trends
Current drybulk market trends Orderbook Environmental Geopolitical / macro China 7.1% 2023 Ukraine Reopening Historically low Environmental Russia’s war in Ukraine China’s pivot from zero- newbuilding vessel regulations have led to has resulted in a re- Covid policies + stimulus orderbook as a lower
Slide 19: Drybulk freight rate seasonality
Drybulk freight rate seasonality Brazilian iron ore exports historically decline in Q1 due to poor …while newbuilding deliveries rises in the beginning of the year 1 2 weather + scheduled maintenance… due to the frontloaded nature of the orderbook… 120 25 100 20 80 15 60 10 40 20 5 0 0 …temporarily
Slide 20: China stimulus + reversal of Covid policies
China stimulus + reversal of Covid policies… …to align with increased drybulk cargo flows, particularly in 2H 2023 China GDP growth per quarter in 2022 vs 2023 forecast Key targets / dates 10% Significant step up in China’s 2022 GDP growth target was 5.5% originally set to be ‘around 5.5%’ 9% China
Slide 21: Grain trade impacted by macro environment
Grain trade impacted by macro environment USDA grain export forecasts – Feb 2023 1 2021/22 2022/23 71 51 59 54 +12MT 4 22 21 3 -13MT Coarse grain (incl corn) Wheat Soybean 1 -24MT 2 2021/22 2022/23 79 92 48 50 2 +15MT Coarse grain (incl corn) Wheat Soybean 3 2021/22 2022/23 33 ◼ Q3: in between North
Slide 22: Historically low newbuilding orderbook
Historically low newbuilding orderbook 1.5% Drybulk newbuilding orderbook as a % of the total drybulk fleet (does not take into account slippage / scrapping) 3.2% 2.7% 1.3% 1.2% 7.1% Orderbook as a % of the total drybulk fleet 1.0% 0.9% 0.9% 0.9% 0.8% 0.7% % of fleet 0.8% 0.6% 8.0% % of the total dr
Slide 23: Fleet-wide impact of environmental regulations
Fleet-wide impact of environmental regulations 350 ~30% of the drybulk fleet is “eco” 300 ◼ Slower maximum speeds due to Engine Power Limitation system installations + 250 Carbon Intensity Indicator compliance Fleet size (mdwt) 200 ◼ Older ships becoming less competitive, possibly increased scrappin
Slide 24: Freight rate catalysts and drybulk outlook
Freight rate catalysts and drybulk outlook Marsoft 2023 to 2024 S&D growth estimates Drybulk market catalysts Vessel* 2023 2024 Record low orderbook as a percentage of the fleet Iron Ore 1 to limit net fleet growth Capesize +3.5% +1.8% Coal Capesize 2 China’s reopening + stimulus +4.8% +0.1% Panamax
Slide 25: Q&A
Q&A 25
Slide 26: Appendix
Appendix 26
Slide 27: Genco's fleet list
Genco’s fleet list Major Bulk Minor Bulk 17 Vessel Name Year Built Dwt Vessel Name Year Built Dwt Vessel Name Year Built Dwt Capesize Capesize Ultramax Supramax Genco Resolute 2015 181,060 Genco Freedom 2015 63,671 Genco Hunter 2007 58,729 Genco Endeavour 2015 181,060 Baltic Hornet 2014 63,574 Genco
Slide 28: Longer term time charter activity
Longer term time charter activity Vessel Type Rate Duration Min Expiration Baltic Wolf Capesize $ 30,250 22-28 months Jun-23 ◼ We continue to utilize a fleet-wide portfolio approach to fixture Genco Maximus Capesize $ 27,500 24-30 months Sep-23 activity Genco Freedom Ultramax $ 23,375 20-23 months M
Slide 29: Breakeven rate prior to debt service
Breakeven rate prior to debt service… …is covered in nearly every rate environment over the last 2 decades $50,000 Illustrative fleet-wide time charter rate $45,000 Illustrative breakeven rate prior to debt service $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $- Q1-2000 Q3-2001 Q1-
Slide 30: Significant fleet-wide operating leverage
Significant fleet-wide operating leverage Highlights the improved risk / reward profile of our new value strategy $350 Every $1,000 increase in TCE is ~$16m of $16m incremental annualized EBITDA on our 44- $300 vessel fleet $250 For our 17 Capesizes specifically, every $5,000 Illustrative net revenu
Slide 31: EBITDA reconciliation
EBITDA reconciliation(1) Adjusted EBITDA Q1 2021-Q4 2022 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Net income $ 1,985 $ 32,037 $ 57,132 $ 90,852 $ 41,689 $ 47,382 $ 40,828 $ 28,679 Net interest expense 4,470 4,422 3,918 2,392 2,225 2,337 1,984 1,505 Income tax expense - - - - -
Slide 32: Time charter equivalent reconciliation
Time charter equivalent reconciliation(1) Three Months Ended Twelve Months Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 (unaudited) (unaudited) Total Fleet Voyage revenues (in thousands) $ 126,973 $ 183,277 $ 536,934 $ 547,129 Voyage expenses (in thousands) 43,470 36
Slide 33: Net Income reconciliation
Net Income reconciliation Three Months Ended December 31, 2022 Net Income Reconciliation (unaudited) Net income attributable to Genco Shipping & Trading Limited $ 28,679 + Unrealized loss on fuel hedges (115) Net income $ 28,564 Adjusted earnings per share - basic $ 0.67 Adjusted earnings per share
Slide 34: Q1 2023 estimated fleet-wide expenses
Q1 2023 estimated fleet-wide expenses(1) Est Ownership / Owned Available Days - Q1 2023 Daily Expenses by Category Free Cash Flow(2) Net Income Owned Avail Vessel Type Own. Days DD Days Days Direct Vessel Operating(3) $6,250 $6,250 Capesize 1,530 65 1,465 G&A Expenses(4) 1,496 1,738 Ultramax 1,350 -
Slide 35: Footnotes to Q1 2023 estimated fleet-wide expenses & operating expense reconciliation
Footnotes to Q1 2023 estimated fleet-wide expenses & operating expense reconciliation (1) Estimated expenses are presented for illustrative purposes. The amounts shown will vary based on actual results. (2) Free Cash Flow is defined as net income plus depreciation less capital expenditures, primaril
Slide 36: Thank You
Thank You
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