Genco Shipping & Trading Limited · NYSE:GNK
Genco Shipping & Trading — Q4 2021 Earnings Presentation
42 slides from Genco Shipping & Trading's earnings presentation, Feb 24, 2022
Slide 1: Q4 2021 Earnings Presentation
GENCO SHIPPING & TRADING LIMITED Q4 2021 Earnings Presentation February 24th, 2022
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 2021 + YTD Highlights • Financial Overview • Industry Overview 3
Slide 4: Fourth Quarter 2021 and Year-to-Date Highlights
Fourth Quarter 2021 and Year-to-Date Highlights 4
Slide 5: Value strategy implemented
Value strategy implemented Reducing our cash flow breakeven rate, paving the way for compelling dividends… Dividends • Declared a $0.67 per share dividend for Q4 2021 – the first dividend under our comprehensive value strategy, and a nearly 350% increase from the Q3 2021 dividend • We have now paid
Slide 6: Continued strong financial performance
Continued strong financial performance Recording our best results in over a decade Q4 / FY 2021 key financial metrics • Net income attributable to Genco • Q4 2021: $90.9 million, basic and diluted earnings per share: $2.16 / $2.13 • Basic and diluted EPS adjusted for gain on sale of vessels: $2.02 /
Slide 7: Genco's comprehensive value strategy
Genco’s comprehensive value strategy Focused on 3 key elements… Significant dividends Deleveraging Growth Reached target debt outstanding Use shares as a currency $246m (~60% of fleet’s current scrap value) Debt repayments to grow Cash flow generation Debt prepayments Utilize reserve + revolver 45%
Slide 8: Genco's differentiated platform
Genco’s differentiated platform… …offers a compelling risk / reward profile High operating Minor bulk vessels – 44 Major bulk vessels – leverage thru 17 27 Ultra/Supra Capesize Drybulk vessels scale 2022 Genco setup 2x Low financial Net LTV Current fleet scrap $246m Debt outstanding 16% leverage (cu
Slide 9: Timeline of value strategy execution
Timeline of value strategy execution 3 pillars of our value strategy were accomplished on parallel paths over the course of 2021… Evaluation / Agreed to Agreed to Agreed to Implemented BOD approval / purchase 1 Ultra purchased 2 Ultras purchase 3 Ultras Dec 2021 Public announcement Apr 2021 May 2021
Slide 10: Genco's dividend ramp up ahead of take off
Genco’s dividend ramp up ahead of “take off”… 10 Declared 10 consecutive quarterly dividends $1.725 Declared $1.725 per share of dividends in quarters since Q3 2019 Per share aggregate since Q3 2019 Quarterly dividend progression ahead of value strategy execution $0.67 $0.15 $0.10 $0.02 $0.05 Q4 202
Slide 11: Quarterly dividend calculation / framework
Quarterly dividend calculation / framework Straight-forward and transparent dividend formula $24,215 Estimate of Q1 2022 for 87% of days fixed to date (Q1 2022 owned available days: 3,849 for the full quarter) Dividend calculation (numbers in m Q4 2021 actual Q1 2022 estimates Commentary except per
Slide 12: Q4 2021 TCE is our highest since 2008
Q4 2021 TCE is our highest since 2008 Q1 2022 estimates to date point to another strong quarter $50 $45 Major Bulk Minor Bulk Fleet-Wide Q1 2022 TCE estimate to date is fixed for $40.6 $24.2k ~87% of the quarter’s available days $40 $35.2 $35 $31.5 $30.8 $29.3 +20% Q4 2021 is 20% higher vs Q3 2021 $
Slide 13: 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 14: Freight rate development and earnings
Freight rate development and earnings …highlight the importance of owning large Capesize vessels together with minor bulk ships $90,000 Baltic Capesize Index $80,000 Capesize: Baltic Supramax Index Higher industry beta $70,000 providing upside potential $60,000 $50,000 Ultramax / Supramax: More stab
Slide 15: Portfolio approach to scrubber installation
Portfolio approach to scrubber installation Genco is capturing the widening fuel spreads thru scrubbers installed on 17 Capesize vessels ◼ Genco implemented a portfolio approach towards IMO 2020 compliance ◼ Installed scrubbers on Capesize vessels + consuming VLSFO on our minor bulk vessels ◼ Equipm
Slide 16: Financial Overview
Financial Overview 16
Slide 17: Fourth quarter earnings
Fourth quarter earnings Three Months Ended Three Months Ended Twelve Months Ended Twelve Months Ended December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020 (Dollars in thousands, except share and per share data) (Dollars in thousands, except share and per share data) (unaudited) (u
Slide 18: December 31, 2021 balance sheet
December 31, 2021 balance sheet December 31, 2021 December 31, 2020 (Dollars in thousands) (unaudited) BALANCE SHEET DATA: Cash (including restricted cash) $ 120,531 $ 179,679 Current assets 174,830 247,202 Total assets 1,203,002 1,232,809 Current liabilities (excluding current portion of long-term
Slide 19: Fourth quarter highlights
Fourth quarter highlights Three Months Ended Twelve Months Ended December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020 (unaudited) (unaudited) FLEET DATA: Total number of vessels at end of period 42 47 42 47 Average number of vessels (1) 42.4 48.5 41.6 51.8 Total ownership days for
Slide 20: Adjusted EBITDA development since 2017
Adjusted EBITDA development since 2017 Q1 2022 estimates to date point to another strong quarter $275 $253 $250 $225 ◼ Significant operating leverage $200 highlighted by significant growth in Adjusted EBITDA $175 $ in millions $150 $123 ◼ Q4 2021 Adjusted EBITDA is $125 greater than FY 2019 / 2020 $
Slide 21: 2021 cash flow walk
2021 cash flow walk Primary uses of cash in 2021 included debt paydowns + fleet growth $500 $49 2021 debt repayments: $109 $203m $400 $13 $34 $ in m $300 $236 $169 $200 $19 $100 $180 $121 $80 $0 Cash - Dec 31, Operating CF Vessel sales Vessel purchases Dividends Scheduled debt Voluntary debt DD + BW
Slide 22: Q1 2022 estimated fleet-wide expenses
Q1 2022 estimated fleet-wide expenses(1) Daily Expenses by Category Free Cash Flow(2) Net Income ◼ Our year-end debt is $246m following voluntary debt paydowns totaling $59 million in Q4 2021 Direct Vessel Operating(3) $5,825 $5,825 ◼ No mandatory debt amortizations payments until 2026 G&A Expenses(
Slide 23: Illustrative cash flow distributable per share
2022 illustrative dividend sensitivity… …points to significant operating leverage $8.00 Illustrative dividend per share Annualized yield on current share price 40% 37% $7.00 35% Similar level as FY 32% 2021 and Q1 2022 Illustrative cash flow distributable per share $6.00 30% to date TCE 27% Annualiz
Slide 24: Industry Overview
Industry Overview 24
Slide 25: Freight rate development
Freight rate development Strong 2021 followed by Q1 seasonal decline, although rates have increased off recent lows $90,000 $80,000 Baltic Capesize Index Q1 seasonal factors $70,000 Baltic Supramax Index ◼ Weather related cargo disruptions impact $60,000 cargo availability $50,000 ◼ Timing of newbui
Slide 26: China steel output + iron ore imports
China steel output + iron ore imports China’s steel output has declined from record levels Correlation of China’s steel output and iron ore imports has broken down in recent years 110 120 Record 110 100 output 100 90 90 80 80 70 70 Steel prod IO imports 60 2015 2016 2017 2018 60 2019 2020 2021 50 Ap
Slide 27: China's policies becoming more accommodative
China’s policies becoming more accommodative China GDP growth per quarter in 2021 vs target 20% 18% ◼ China to set 2022 GDP growth target in March 2022 China GDP growth rates 16% 2021 gov't target 14% ◼ Credit growth in China has been increasing in recent months 2021 actual GDP growth 12% 10% ◼ 21 p
Slide 28: Historically low newbuilding orderbook
Historically low newbuilding orderbook 1.5% Drybulk newbuilding orderbook as a % of the fleet (does not take into account slippage / scrapping) 1.3% 2.5% 2.8% 1.3% 1.0% 7% Orderbook as a % of the total drybulk fleet 0.9% 0.7% % of fleet 0.8% 0.7% 0.7% 0.7% 0.6% 0.6% 7% % of the on the water fleet >=
Slide 29: Global ordering trends focus on containers
Global ordering trends focus on containers 70% Drybulk Drybulk Tanker Container Current 7% 8% 24% Oct-20 7% 8% 8% ◼ Global newbuild ordering has been 60% Tanker % Variance -9% -8% 189% focused on the containership sector Average 22% 15% 19% Min 7% 8% 8% 50% Container ◼ Container orderbook has increa
Slide 30: Fleet-wide impact of environmental regulations
Fleet-wide impact of environmental regulations 400 350 ~30% of ◼ Slower maximum speeds due to EPL the drybulk installations + CII compliance 300 fleet is “eco” 250 Fleet size (mdwt) ◼ Older ships becoming less competitive, possibly increased scrapping 200 14.7% 150 ◼ Longer times in drydocking for i
Slide 31: Freight rate catalysts and drybulk outlook
Freight rate catalysts and drybulk outlook Marsoft 2022 to 2023 S&D growth estimates Drybulk market catalysts Vessel* 2022 2023 Record low orderbook as a percentage of the fleet to Iron Ore 1 limit net fleet growth Capesize +3.9% +3.2% Coal 2 Strong 2022 global GDP growth forecast Capesize +3.2% +0.
Slide 32: Q&A
Q&A 32
Slide 33: Appendix
Appendix 33
Slide 34: 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 35: Illustrative net revenue
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 pro forma fleet $250 For our 17 Capesizes specifically, every $5,000 Illustrative
Slide 36: 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 37: EBITDA reconciliation
EBITDA reconciliation(1) Adjusted EBITDA 2017 to 2021 2017 2018 2019 2020 Q4 2021 FY 2021 Net (loss) income $ (58,725) $ (32,940) $ (55,985) $ (225,573) $ 90,852 $ 182,006 Net interest expense 28,946 29,290 27,860 21,385 2,392 15,203 Income tax (benefit) expense - - - - - - Depreciation/amortization
Slide 38: Time charter equivalent reconciliation
Time charter equivalent reconciliation(1) Three Months Ended Twelve Months Ended Dec 31, 2020 Mar 31, 2021 Jun 30, 2021 Sep 30, 2021 Dec 31, 2021 Dec 31, 2020 Dec 31, 2021 (unaudited) (unaudited) Total Fleet Voyage revenues (in thousands) $ 95,495 $ 87,591 $ 121,008 $ 155,252 $ 183,277 $ 355,560 $ 5
Slide 39: Adjusted Net Income reconciliation
Adjusted Net Income reconciliation Three Months Ended December 31, 2021 Adjusted Net Income Reconciliation (unaudited) Net income attributable to Genco Shipping & Trading Limited $ 90,852 + Gain on sale of vessels (5,818) Adjusted net income $ 85,034 Adjusted net earnings per share - basic $ 2.02 Ad
Slide 40: Footnotes to Q1 2022 estimated fleet-wide expenses
Footnotes to Q1 2022 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 41: Assumptions to illustrative dividend sensitivity
Assumptions to illustrative dividend sensitivity ◼ Fleet size: Based on a fleet of 44 vessels. ◼ Illustrative rates used to calculate net revenue: Net revenue is defined as voyage revenues less voyage expenses less charter hire expenses. Illustrative time charter equivalent rates are presented on a
Slide 42: Thank You
Thank You
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