Genco Shipping & Trading Limited · NYSE:GNK
Genco Shipping & Trading — Q2 2023 Earnings Presentation
36 slides from Genco Shipping & Trading's earnings presentation, Aug 4, 2023
Slide 1: Q2 2023 Earnings Presentation
GENCO SHIPPING & TRADING LIMITED Q2 2023 Earnings Presentation August 4th, 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 • Q2 2023 + YTD Highlights • Financial Overview • Industry Overview 3
Slide 4: Second Quarter 2023 and Year-to-Date Highlights
Second Quarter 2023 and Year-to-Date Highlights 4
Slide 5: Q2 2023: continued strong financial performance
Q2 2023: continued strong financial performance Financial performance Value strategy Net income attributable to Genco, Q2 2023 $11.6m $11.6 million, basic and diluted earnings per share of $0.15 Q2 2023 dividend per share $0.27, adjusted EBITDA of $30.0m* Declared 16 consecutive quarterly dividends
Slide 6: Genco's comprehensive value strategy
Genco’s comprehensive value strategy Focused on 3 key elements… Significant dividends Deleveraging Growth Debt outstanding at Jun 30, 2023 $154 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: Dividend history over the last 4 years
Dividend history over the last 4 years Sizeable dividend payouts since the implementation of our value strategy Dividend history Significant increase in dividends since Sustained dividends across (Q3 2019 to date) value strategy inception diverse market environments Quarter Dividend/sh 7 16 Q3 2019
Slide 8: Quarterly dividend calculation / framework
Quarterly dividend calculation / framework Straight-forward and transparent dividend formula Dividend calculation (numbers in m Q2 2023 actual Q3 2023 estimates except per share amounts) Fixtures to date + Q3 2023 to date estimate based on 61% of Net revenue $ 60.66 $12,262 owned available days fixe
Slide 9: Financial Overview
Financial Overview 9
Slide 10: Second quarter earnings
Second quarter earnings Three Months Ended Three Months Ended Six Months Ended June Six Months Ended June June 30, 2023 June 30, 2022 30, 2023 30, 2022 (Dollars in thousands, except share and per share data) (Dollars in thousands, except share and per share data) (unaudited) (unaudited) INCOME STATE
Slide 11: June 30, 2023 balance sheet
June 30, 2023 balance sheet June 30, 2023 December 31, 2022 (Dollars in thousands) (unaudited) BALANCE SHEET DATA: Cash (including restricted cash) $ 53,892 $ 64,100 Current assets 110,682 125,430 Total assets 1,135,393 1,173,866 Current liabilities (excluding current portion of long-term debt) 29,2
Slide 12: Second quarter highlights
Second quarter highlights Three Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 (unaudited) (unaudited) FLEET DATA: Total number of vessels at end of period 44 44 44 44 Average number of vessels (1) 44.0 44.0 44.0 43.9 Total ownership days for fleet (2) 4,004 4,
Slide 13: Continued strong TCE performance
Continued strong TCE performance… …with fleetwide rates well in excess of our cash flow breakeven rate Fleet-wide TCE rate $35 Q3 2023 TCE estimate to date Q3 2023 cash flow $12.3k based on fixtures for ~61% of the $9.7k $30 $28.8 breakeven rate quarter’s available days $25 $24.1 $23.6 +12% $19.3 ab
Slide 14: Genco's industry low cash flow breakeven rate
Genco’s industry low cash flow breakeven rate Meaningful reduction in debt outstanding thru large- …significantly reduced our cash flow breakeven scale debt paydowns since 2021… rate to the lowest in the peer group $500 $16,000 Cash breakeven ex DD DD Capex $449 -66% $14,000 $401 Reduction in debt $
Slide 15: 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 16: Industry Overview
Industry Overview 16
Slide 17: Freight rate development
Freight rate development Current $25,000 spot rates Baltic Capesize Index Baltic Supramax Index BCI is based on a non-scrubber BCI: $14,956 fitted Capesize $20,000 BSI: $7,646 Recent market dynamics $15,000 1) Solid iron ore and coal volumes into China $10,000 2) Unwinding of port congestion increas
Slide 18: China macro data points to further stimulus
China macro data points to further stimulus Politburo meeting in July signaled a pro-growth shift in policy tone related to the property sector and local gov’t debt Credit impulse fell in Q2 after a strong Q1 China loans (trillion yuan) PMI PMI - 50 Q2 China GDP growth, below 6 54 6.3% Q1: better th
Slide 19: China's iron ore and steel complex
China’s iron ore and steel complex 2H: iron ore port inventory restocking + increase in seaborne iron ore availability China’s IO inventories are at their lowest since July 2021 170 90% China steel mill utilization >90% 160 China steel production in 1H 2023, which +1% has continued to firm in July 1
Slide 20: Global steel production growth led by China + India
Global steel production growth led by China + India Global steel production (MT) Jun 2023 Jun 2022 % Variance 1H 2023 1H 2022 % Variance ◼ China has produced 57% of global China 91.1 90.8 0.4% 535.6 528.8 1.3% steel output in 1H 2023 European Union 10.6 11.9 -11.1% 66.3 74.4 -10.9% Japan 7.3 7.4 -1.
Slide 21: Grain trade impacted by macro environment
Grain trade impacted by macro environment Wheat 2023/24p 2022/23e Variance % Variance World 211.62 217.17 (5.55) -3% US 19.73 20.65 (0.92) -4% +1MT Russia 47.50 45.50 2.00 4% Ukraine 10.50 16.80 (6.30) -38% -16MT Aust 21.50 32.50 (11.00) -34% Canada 26.50 25.50 1.00 4% +11MT EU 38.50 34.00 4.50 13%
Slide 22: Supply side remains favorable, despite easing congestion
Supply side remains favorable, despite easing congestion Historically low orderbook as a % of fleet… …together with an aging global fleet 25% 23.7% 110 22.9% 100 20.3% 90 20% % of fleet >= 20 17.6% 8.2% Mdwt built per year 80 years old 70 15% % of fleet 12.2% 60 11.2% 11.0% 10.5% 50 10% 8.4% 7.3% 7.
Slide 23: Freight rate catalysts and drybulk outlook
Freight rate catalysts and drybulk outlook Marsoft 2024 to 2025 S&D growth estimates Drybulk market catalysts Vessel* 2024 2025 Record low orderbook as a percentage of the fleet Iron Ore 1 to limit net fleet growth Capesize +3.7% +0.9% Coal Capesize 2 China stimulus + iron ore restocking -0.3% 0.0%
Slide 24: Q&A
Q&A 24
Slide 25: Appendix
Appendix 25
Slide 26: 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 27: Longer term time charter activity
Longer term time charter activity Vessel Type Rate Duration Min Expiration ◼ We continue to utilize a fleet-wide portfolio approach to fixture Genco Maximus Capesize $ 27,500 24-30 months Sep-23 activity Genco Endeavour Capesize 127% of BCI + scrubber premium 11-14 months Jan-24 ◼ We continue to eva
Slide 28: Q3 2023 cash flow breakeven rate
Q3 2023 cash flow breakeven rate… …is covered in nearly every rate environment over the last 2 decades $50,000 Illustrative fleet-wide time charter rate $45,000 Q3 2023 CF breakeven rate $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $- Q1-2000 Q3-2001 Q1-2003 Q3-2004 Q1-2006 Q3-2007
Slide 29: 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 30: EBITDA reconciliation
EBITDA reconciliation(1) Adjusted EBITDA Q1 2021-Q2 2023 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Net income $ 1,985 $ 32,037 $ 57,132 $ 90,852 $ 41,689 $ 47,382 $ 40,828 $ 28,679 $ 2,634 $ 11,562 Net interest expense 4,470 4,422 3,918 2,392 2,225 2,337 1,984 1
Slide 31: Time charter equivalent reconciliation
Time charter equivalent reconciliation(1) Three Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 (unaudited) (unaudited) Total Fleet Voyage revenues (in thousands) $ 90,556 $ 137,764 $ 184,947 $ 273,991 Voyage expenses (in thousands) 28,830 32,460 66,265 70,924 C
Slide 32: Net Income reconciliation
Net Income reconciliation Three Months Ended June 30, 2023 Net Income Reconciliation (unaudited) Net income attributable to Genco Shipping & Trading Limited $ 11,562 + Unrealized loss on fuel hedges 38 Net income $ 11,600 Adjusted earnings per share - basic $ 0.27 Adjusted earnings per share - dilut
Slide 33: Portfolio approach to scrubber installation
Portfolio approach to scrubber installation Genco continues to capture wide fuel spreads through 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
Slide 34: Q3 2023 estimated fleet-wide expenses
Q3 2023 estimated fleet-wide expenses(1) Daily Expenses by Category Free Cash Flow(2) Net Income Est Ownership / Owned Available Days - Q3 2023 Owned Avail Vessel Type Own. Days DD Days Vessel Operating Expenses(3) $6,250 $6,250 Days Capesize 1,564 - 1,564 G&A Expenses(4) 1,457 1,757 Ultramax 1,380
Slide 35: Footnotes to Q3 2023 estimated fleet-wide expenses & operating expense reconciliation
Footnotes to Q3 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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