Genco Shipping & Trading Limited · NYSE:GNK
Genco Shipping & Trading — Q2 2022 Earnings Presentation
37 slides from Genco Shipping & Trading's earnings presentation, Aug 4, 2022
Slide 1: Q2 2022 Earnings Presentation
GENCO SHIPPING & TRADING LIMITED Q2 2022 Earnings Presentation August 4th, 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 • Q2 2022 + YTD Highlights • Financial Overview • Industry Overview 3
Slide 4: Second Quarter 2022 and Year-to-Date Highlights
Second Quarter 2022 and Year-to-Date Highlights 4
Slide 5: Continued strong financial performance
Continued strong financial performance Q2 2022 key financial metrics Value strategy updates • Net income attributable to Genco Dividends • Q2 2022: $47.4 million, basic and diluted • Q2 2022: declared a $0.50 per share dividend earnings per share: $1.12 / $1.10, an increase of nearly 50% YOY • Annua
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, 2022 $188.5 Use shares as a currency million (~45% of fleet’s current scrap value) Debt repayments to grow Cash flow generation Debt prepayments Utilize reserve + rev
Slide 7: Dividends declared under our value strategy
Dividends declared under our value strategy… $1.96 per share 10% 12 quarters $3.015/share Declared under value strategy in Last 3 dividends declared as a % of Declared 12 consecutive quarterly Declared dividends in aggregate last 3Qs Aug 2, 2022 GNK share price dividends since Q3 2019 since Q3 2019
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 except per share amounts) Q2 2022 actual Q3 2022 estimates $25,059 Estimate of Q3 2022 days fixed to
Slide 9: Illustrative quarterly dividend sensitivity
Illustrative quarterly dividend sensitivity… …points to significant operating leverage $1.75 Illustrative quarterly dividend sensitivity based on a range of TCE rates 30% 25% Illustrative cash flow distributable per share - quarterly $1.50 25% Illustrative quarterly dividend per share $1.25 21% Annu
Slide 10: 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 11: 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 for IMO 2020 compliance ◼ Installed scrubbers on Capesize vessels + consuming VLSFO on our minor bulk vessels ◼ Equipment
Slide 12: Financial Overview
Financial Overview 12
Slide 13: Second quarter earnings
Second quarter earnings Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 (Dollars in thousands, except share and per share data) (Dollars in thousands, except share and per share data) (unaudited) (unaudited) INCOME STATE
Slide 14: June 30, 2022 balance sheet
June 30, 2022 balance sheet June 30, 2022 December 31, 2021 (Dollars in thousands) (unaudited) BALANCE SHEET DATA: Cash (including restricted cash) $ 50,627 $ 120,531 Current assets 120,146 174,830 Total assets 1,186,143 1,203,002 Current liabilities (excluding current portion of long-term debt) 48,
Slide 15: Second quarter highlights
Second quarter highlights Three Months Ended Six Months Ended June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 (unaudited) (unaudited) FLEET DATA: Total number of vessels at end of period 44 40 44 40 Average number of vessels (1) 44.0 40.1 43.9 41.7 Total ownership days for fleet (2) 4,004 3,
Slide 16: Q2 2022 TCE is our strongest Q2 since 2010
Q2 2022 TCE is our strongest Q2 since 2010 Firm earnings in midst of the geopolitical headwinds, with a strong TCE estimate for Q3 to date Major Bulk Minor Bulk Fleet-Wide $35 $29.6 $30 $28.8 $27.0 +36% $26.8 $25.1 $25 Q3 2022 TCE estimate to date is fixed for $23.8 $25.1k ~79% of the quarter’s avai
Slide 17: Genco's industry low cash flow breakeven rate
Genco’s industry low cash flow breakeven rate Genco accentuated its financial de-leveraging thru large scale debt paydowns (in addition to asset value appreciation) creating the strongest balance sheet among its peer group Meaningful reduction in debt outstanding thru large- …significantly reduced o
Slide 18: Industry Overview
Industry Overview 18
Slide 19: Freight rate development
Freight rate development Capes rangebound after May rally + Supras remain firm despite decline $40,000 Baltic Capesize Index $35,000 Baltic Supramax Index $30,000 $25,000 $20,000 $15,000 Current BDI Q3 CF breakeven $10,000 BCI is based on a non- scrubber fitted Capesize BCI: $14,842 $8,744 $5,000 BS
Slide 20: Brazilian IO exports near 2013/2020 1H lows
Brazilian IO exports near 2013/2020 1H lows Brazilian IO exports are 7% below 1H 2021 levels 240 220 1H 2H 200 +19% Avg increase of Br IO exports in 2H vs 1H since 2010 180 160 6 of the last 12 years to 2021 have seen Br IO exports 140 <160 below 160MT in 1H, with 5 of those years occurring 120 from
Slide 21: China's series of accommodative policies since Q4
China’s series of accommodative policies since Q4 Date China's stimulus measures since shift to accommodation in Q4 2021 ◼ July 2022 Politburo meeting: Dec-21 PBoC cuts RRR by 50bps Dec-21 PBoC cuts the 1-year Loan Prime Rate by 5bps ― Growth target now focused on “striving to achieve Jan-22 PBoC cu
Slide 22: Russia's war in Ukraine continues to impact coal and grain trades
Russia’s war in Ukraine continues to impact the global coal and grain trades – recent developments include… Grain Coal ◼ Russia and Ukraine sign a deal to reopen Ukrainian ◼ Continued re-routing of cargo flows ports for grain exports ◼ Tightness in energy markets ― Wheat and corn prices have softene
Slide 23: 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) 1.3% 1.5% 3.4% 2.2% 7.0% Orderbook as a % of the total drybulk fleet 1.0% 0.9% 0.9% 0.8% 0.8% 0.8% % of fleet 0.8% 0.6% 7.9% % of the total dr
Slide 24: Fleet-wide impact of environmental regulations
Fleet-wide impact of environmental regulations ~30% of the drybulk 350 fleet is “eco” 300 ◼ Slower maximum speeds due to engine power limitation installations + Carbon 250 Intensity Indicator compliance Fleet size (mdwt) 200 ◼ Older ships becoming less competitive, 15.7% possibly increased scrapping
Slide 25: Freight rate catalysts and drybulk outlook
Freight rate catalysts and drybulk outlook Marsoft 2H 2022 to 2024 S&D growth estimates Drybulk market catalysts 2H 2022 vs Vessel* 2023 2024 1H 2022 Record low orderbook as a percentage of the fleet Iron Ore 1 to limit net fleet growth Capesize +8.2% +3.8% +1.6% Coal Capesize 2 Fleet-wide inefficie
Slide 26: Q&A
Q&A 26
Slide 27: Appendix
Appendix 27
Slide 28: 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 Genco Vigilant 2015 63,671 Genc
Slide 29: Securing cash flows in this strong earning environment
Securing cash flows in this strong earning environment Vessel Type Rate Duration Min Expiration Baltic Wolf Capesize $ 30,250 22-28 months Jun-23 ◼ We continue to utilize a fleet-wide Genco Maximus Capesize $ 27,500 24-30 months Sep-23 portfolio approach to fixture activity to capture this strong Ge
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 pro forma fleet $250 For our 17 Capesizes specifically, every $5,000 Illustrative
Slide 31: 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 32: EBITDA reconciliation
EBITDA reconciliation(1) Adjusted EBITDA Q1 2021-Q2 2022 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Net income $ 1,985 $ 32,037 $ 57,132 $ 90,852 $ 41,689 $ 47,382 Net interest expense 4,470 4,422 3,918 2,392 2,225 2,337 Income tax expense - - - - - - Depreciation/amortization 13,441 13,769 14,
Slide 33: Time charter equivalent reconciliation
Time charter equivalent reconciliation(1) Three Months Ended Six Months Ended June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 (unaudited) (unaudited) Total Fleet Voyage revenues (in thousands) $ 137,764 $ 121,008 $ 273,991 $ 208,599 Voyage expenses (in thousands) 32,460 36,702 70,924 71,775
Slide 34: Net Income reconciliation
Net Income reconciliation Three Months Ended June 30, 2022 Net Income Reconciliation (unaudited) Net income attributable to Genco Shipping & Trading Limited $ 47,382 Adjusted earnings per share - basic $ 1.12 Adjusted earnings per share - diluted $ 1.10 Weighted average common shares outstanding - b
Slide 35: Q3 2022 estimated fleet-wide expenses
Q3 2022 estimated fleet-wide expenses(1) Est Ownership / Owned Available Days - Q3 2022 Owned Avail Daily Expenses by Category Free Cash Flow(2) Net Income Vessel Type Own. Days DD Days Days Direct Vessel Operating(3) $4,950 $4,950 Capesize 1,564 127 1,437 Ultramax 1,380 32 1,348 G&A Expenses(4) 1,2
Slide 36: Footnotes to Q3 2022 estimated fleet-wide expenses
Footnotes to Q3 2022 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 37: Thank You
Thank You
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