Genco Shipping & Trading Limited · NYSE:GNK
Genco Shipping & Trading — Q2 2021 Earnings Presentation
35 slides from Genco Shipping & Trading's earnings presentation, Aug 5, 2021
Slide 1: Genco Shipping & Trading Limited Q2 2021 Earnings Presentation
Genco Shipping & Trading Limited Q2 2021 Earnings Presentation August 5th, 2021
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 ◼ Second Quarter 2021 and Year-to-Date Highlights ◼ Financial Overview ◼ Industry Overview 3
Slide 4: Second Quarter 2021 and Year-to-Date Highlights
Second Quarter 2021 and Year-to-Date Highlights
Slide 5: Q2 2021 – a transformative quarter for Genco
Q2 2021 – a transformative quarter for Genco Comprehensive value strategy milestones ◼ New $450 Million Credit Facility ― Agreed to terms with lenders to provide additional capital allocation flexibility, improve terms and lower our cash flow breakeven rate ◼ Debt pay down ― $82.2m of debt paid down
Slide 6: Q2 2021 – our strongest quarter in over a decade
Q2 2021 – our strongest quarter in over a decade… Key financial metrics ◼ Net income: $32.0 million ― Basic and diluted earnings per share: $0.76 / $0.75 ― Highest quarterly earnings per share since 2010 ◼ EBITDA: $50.2 million during Q2 2021 ― 1H 2021 adj. EBITDA of $70.9m vs $71.8m in all of 2020
Slide 7: Our comprehensive value strategy
Our comprehensive value strategy… …is a holistic three-pronged approach including returning cash to shareholders, further deleveraging of the balance sheet and growth of the fleet Dividends Deleveraging Growth Use shares as a currency to grow Debt repayments Cash flow generation Utilize reserve + De
Slide 8: Our roadmap to year-end and implementation
Our roadmap to year-end and implementation… Debt paid down $161m Cash balance ◼ $82.2m of debt repaid in 1H 2021, including our revolver and scrubber facilities June 30, 2021 Growth ◼ Have agreed to acquire 6 Ultramaxes between April $367m Debt outstanding and July 2021 (9 in total since December 20
Slide 9: Q2 2021 TCE to date is our highest since 2010
Q2 2021 TCE to date is our highest since 2010… …with a further improvement expected in Q3 2021 based on quarter to date fixtures TCE increase quarter-over-quarter: +73% +31% $35 $31.3 $30 $27.6 $25.3 $25 Major Bulk Minor Bulk Fleet-Wide $23.8 TCE ($ in 000s) $21.1 $19.2 $20 $17.5 $16.7 $16.3 $15 $13
Slide 10: GS Shipmanagement joint venture
GS Shipmanagement joint venture We expect this technical management joint venture with The Synergy Group to accomplish the following: 1 Increase visibility and control over vessel operations Increase fleet-wide fuel efficiency to lower our carbon footprint 2 through an advanced data platform 3 Unloc
Slide 11: Financial Overview
Financial Overview
Slide 12: Second Quarter Earnings
Second Quarter Earnings Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 (Dollars in thousands, except share and per share data) (Dollars in thousands, except share and per share data) (unaudited) (unaudited) INCOME STATE
Slide 13: June 30, 2021 Balance Sheet
June 30, 2021 Balance Sheet June 30, 2021 December 31, 2020 (Dollars in thousands) (unaudited) BALANCE SHEET DATA: Cash (including restricted cash) $ 161,201 $ 179,679 Current assets 220,094 247,202 Total assets 1,182,465 1,232,809 Current liabilities (excluding current portion of long-term debt) 38
Slide 14: Second Quarter Highlights
Second Quarter Highlights Three Months Ended Six Months Ended June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 (unaudited) (unaudited) FLEET DATA: Total number of vessels at end of period 40 53 40 53 Average number of vessels (1) 40.1 53.0 41.7 53.7 Total ownership days for fleet (2) 3,647 4,
Slide 15: Global debt refinancing provides further optionality
Global debt refinancing provides further optionality… …and flexibility within our capital structure as we continue to implement our comprehensive value strategy, key terms include: Credit facility capacity: $450 million, consisting of a $150m term loan and revolver up to $300m Target debt outstandin
Slide 16: Significant financial deleveraging in 2H 2021
Significant financial deleveraging in 2H 2021… $ in m Dec-20 Debt paydown Jun-21 Post refinancing $495m facility $450m facility Capacity Dec 2021 target Scrubber $ 23.0 $ (23.0) $ - Term loan $ 150.0 $ 150.0 Term loan $ 311.3 $ (34.9) $ 276.4 Revolver $ 300.0 $ 100.0 Total $ 334.3 $ (57.9) $ 276.4 T
Slide 17: Q3 2021 estimated fleet-wide expenses
Q3 2021 estimated fleet-wide expenses(1) Daily Expenses by Category Free Cash Flow(2) Net Income ◼ Our year-end debt target is ~$250m following targeted voluntary debt paydowns Direct Vessel Operating(3) $5,100 $5,100 totaling approximately $117 million in the second half of General and Administrati
Slide 18: Industry Overview
Industry Overview
Slide 19: Freight rates at decade highs in the YTD
Freight rates at decade highs in the YTD… $60,000 Index rates as of August 4, 2021 Baltic Capesize Index $50,000 Baltic Supramax Index BCI: $35,675 Current BSI $40,000 BSI: $32,817 $30,000 $20,000 $10,000 $- Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 J
Slide 20: Asset values have significantly increased in the YTD
Asset values have significantly increased in the YTD… …but remain low relative to the current earnings environment $50 10yr old asset value increases in the YTD 10yr old Capesize $45 $40 10yr old Supramax Capes: +56% Supras: +77% $35 $30 $25 $20 $15 $10 $5 $- Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-1
Slide 21: Brazilian iron ore exports are improving
Brazilian iron ore exports are improving… ◼ Brazilian iron ore exports have increased by 11% YOY through July 2021 ◼ Vale 2021 production guidance of 315-335MT ◼ Vale forecasts to reach a runrate of 400mtpa by the end of 2022 ◼ Key iron ore route provides high volumes together with long ton mile tra
Slide 22: Inventory levels for key major bulk trades
Inventory levels for key major bulk trades China’s steel inventories China’s iron ore port inventories 30 170 25 160 150 20 140 15 130 10 120 5 110 - 100 India’s coal powerplant stockpiles ◼ China’s steel inventories experienced seasonal 60 restocking in Q1, but have now seen multiple weeks of drawn
Slide 23: Strong grain trade + improvement in other minor bulk trades
Strong grain trade + improvement in other minor bulk trades China’s soybean imports 110 100 90 80 Black Sea – US – Q4 peak season Aug peak season China Firm exports carried Ramping up into 2021 soybean imports following recovery in demand from the swine flu Brazil – Q2 to Q3 peak season, record soyb
Slide 24: Drybulk newbuilding orderbook prior to slippage / scrapping
Drybulk newbuilding orderbook prior to slippage / scrapping Current drybulk newbuilding orderbook as a % of the fleet per Clarksons (does not take into account slippage or scrapping) 2.0% 1.5% 1.7% 2.7% 1.4% % of fleet 1.0% 0.9% 0.9% 0.9% 0.6% 0.6% 0.6% 0.5% 0.5% 0.3% 0.3% 0.3% 0.3% 0.0% Q3-21 Q4-21
Slide 25: Freight rate catalysts
Freight rate catalysts 1 Record low orderbook as a percentage of the fleet to limit net fleet growth 2 Unprecedented levels of global stimulus 3 Global GDP forecast to rise by 6% and 5% in 2021 and 2022, respectively* 4 China’s economy to continue to lead while rest of world continues economic impro
Slide 26: Q&A
Q&A
Slide 27: Appendix
Appendix
Slide 28: Genco pro forma fleet list
Genco pro forma fleet list Major Bulk Minor Bulk Vessel Name Year Built Dwt Vessel Name Year Built Dwt Vessel Name Year Built Dwt Capesize Ultramax Supramax Genco Resolute 2015 181,060 Genco Enterprise 2016 63,997 Genco Hunter 2007 58,729 Genco Endeavour 2015 181,060 Baltic Hornet 2014 63,574 Genco
Slide 29: Significant fleet-wide operating leverage
Significant fleet-wide operating leverage $350 $300 Every $1,000 increase in TCE is ~$15m of $16m incremental annualized EBITDA on our $250 44-vessel pro forma fleet Illustrative net revenue ($ in m) $200 $150 $100 For our 17 Capesizes specifically, every $31m $5,000 increase in TCE is ~$31m of incr
Slide 30: Breakeven rate prior to debt service is covered
Breakeven rate prior to debt service is covered… …in nearly every rate environment over the last two decades, highlighting the importance of the quarter dividend reserve to be targeted off debt and interest payments – a prudent approach to protect the balance sheet during volatile market periods $50
Slide 31: Genco's quarterly dividend framework / calculation
Genco’s quarterly dividend framework / calculation Targeting a quarterly dividend based on cash flow after debt service less a reserve Genco's quarterly dividend to be paid based on the following formula: Operating cash flow Quarterly reserve is targeted to be based on quarterly debt Less: Debt repa
Slide 32: Time Charter Equivalent Reconciliation
Time Charter Equivalent Reconciliation(1) Three Months Ended Six Months Ended June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 (unaudited) (unaudited) Total Fleet Voyage revenues (in thousands) $ 121,008 $ 74,206 $ 208,599 $ 172,542 Voyage expenses (in thousands) 36,702 41,695 71,775 90,063 C
Slide 33: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation Three Months Ended June 30, 2021 Adjusted Net Income Reconciliation (unaudited) Net income $ 32,037 + Loss on sale of vessels 15 Adjusted net income $ 32,052 Adjusted net earnings per share - basic $ 0.76 Adjusted net earnings per share - diluted $ 0.75 Weighted av
Slide 34: Footnotes to Q3 2021 estimated fleet-wide expenses
Footnotes to Q3 2021 estimated fleet-wide expenses (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, primarily vessel drydockings, plus other no
Slide 35: Thank you
Thank you
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