Genco Shipping & Trading Limited · NYSE:GNK
Genco Shipping & Trading — Q1 2021 Earnings Presentation
37 slides from Genco Shipping & Trading's earnings presentation, May 6, 2021
Slide 1: Q1 2021 Earnings Presentation
Genco Shipping & Trading Limited Q1 2021 Earnings Presentation May 6th, 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 ◼ First Quarter 2021 and Year-to-Date Highlights ◼ New Comprehensive Value Strategy ◼ Financial Overview ◼ Industry Overview 3
Slide 4: First Quarter 2021 and Year-to-Date Highlights
First Quarter 2021 and Year-to-Date Highlights
Slide 5: First quarter 2021 and YTD update
First quarter 2021 and YTD update ◼ Increased the quarterly dividend for Q1 2021 to $0.05 per share ― 7th consecutive quarterly dividend declared totaling $0.805 per share ◼ Cash position: $164.0 million, including $40.5 million of restricted cash related to vessel sales Q1 2021 ◼ Adjusted net incom
Slide 6: Q2 2021 TCE to date is our highest since 2010
Q2 2021 TCE to date is our highest since 2010 $24.9 $25 Major Bulk Minor Bulk Fleet-Wide +69% $20.7 $20 $17.5 $17.8 $16.7 $16.3 TCE ($ in 000s) $15 $13.6 $13.2 $12.2 $11.5 $11.3 $10.8 $9.8 $9.5 $10 $9.0 $6.5 $6.7 $5.3 $5 $- Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2022 to date, 74% fixed ◼ Our siz
Slide 7: Fleet-wide operating leverage
Fleet-wide operating leverage $300 Every $1,000 increase in TCE is ~$14m of $250 $14m incremental annualized EBITDA on our 40-vessel fleet $200 Illustrative net revenue ($ in m) $150 $100 For our 17 Capesizes specifically, every $31m $5,000 increase in TCE is ~$31m of incremental annualized EBITDA $
Slide 8: GNK stock performance
GNK stock performance GNK’s large shareholders’ % ownership* $18 Prior to $16 58% recent sales* GNK large ~800k $14 shareholders began selling $12 Current* on Dec 11, 2020 20% $10 $8 $6 30-day avg share $4 ~200k volume traded (current vs before large $2 shareholder sales) $- Since Dec 11, 2020: GNK
Slide 9: New comprehensive value strategy
New comprehensive value strategy
Slide 10: Our new corporate strategy
Our new corporate strategy… …is a holistic three-pronged approach including returning cash to shareholders, further de-levering of the balance sheet and growth of the fleet Dividends De-levering Growth Use shares as a Scheduled debt currency to grow Cash flow repayments generation Utilize reserve +
Slide 11: 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 12: Steps taken towards implementation to date
Steps taken towards implementation to date Debt paid down ◼ $48.2m of debt repaid in Q1 2021, including $20.2m scheduled and $28.0m prepaid ◼ Agreed to purchase a 2016-built Ultramax vessel, our 4th Ultramax acquisition since Growth December 2020 Dividend ◼ Increased our quarterly dividend to $0.05/
Slide 13: Our roadmap to year-end and implementation
Our roadmap to year-end and implementation… Where we currently stand – April 30, 2021 balances $181m Cash balance (including restricted cash) $220m Net debt $401m Debt outstanding 27% Net LTV Year-end targets 20% Target a net loan-to-value of ~20% by year-end Differentiator for Genco: we believe ach
Slide 14: Illustrative cash flow sensitivity
Illustrative cash flow sensitivity ($ in m, except TCE and per share data) Target year-end 2021 net Est. net LTV ratio at year-end 2021 20% loan-to-value ratio ~11% basis current fixtures + FFA curve 2022 illustrative analysis based on cash flow sensitivity Fleet-wide net TCE - 2022 $ 15,000 $ 17,50
Slide 15: Financial Overview
Financial Overview
Slide 16: First Quarter Earnings
First Quarter Earnings Three Months Ended Three Months Ended March 31, 2021 March 31, 2020 (Dollars in thousands, except share and per share data) (unaudited) INCOME STATEMENT DATA: Revenues: Voyage revenues $ 87,591 $ 98,336 Total revenues 87,591 98,336 Operating expenses: Voyage expenses 35,074 48
Slide 17: March 31, 2021 Balance Sheet
March 31, 2021 Balance Sheet March 31, 2021 December 31, 2020 (Dollars in thousands) (unaudited) BALANCE SHEET DATA: Cash (including restricted cash) $ 164,025 $ 179,679 Current assets 227,880 247,202 Total assets 1,180,343 1,232,809 Current liabilities (excluding current portion of long-term debt)
Slide 18: First Quarter Highlights
First Quarter Highlights Three Months Ended March 31, 2021 March 31, 2020 (unaudited) FLEET DATA: Total number of vessels at end of period 41 53 Average number of vessels (1) 43.3 54.3 Total ownership days for fleet (2) 3,897 4,942 Total chartered-in days (3) 341 422 Total available days (4) 4,201 5
Slide 19: Cash and debt development – Q1 2021
Cash and debt development – Q1 2021 ($ in m) Cash flows – Q1 2021 $21 $18 $48 $2 $1 $4 $180 $164 Dec. 31, 2020 Operating cash flow Drydock, BWTS Vessel sale proceeds Debt repayments Dividend paid Working capital Mar. 31, 2021 fluctuation Debt – Q1 2021 $20 ◼ Debt balance decreased by 11% during Q1 $
Slide 20: Estimated Q2 2021 Net Income Breakeven Rate
Estimated Q2 2021 Net Income Breakeven Rate(1) Fleet breakeven rate – estimated Q2 2021 $16,000 (Detailed Q2 2021 estimated b/e rates in appendix) $14,000 $ per vessel per day $12,000 $10,000 $3,893 $8,000 $357 $1,177 $6,000 $11,900 $1,473 $4,000 $2,000 $5,000 $0 DVOE G&A Mgmt Fees Interest Expense
Slide 21: Industry Overview
Industry Overview
Slide 22: Freight rates have started 2021 off strong
Freight rates have started 2021 off strong… …with the BCI and BSI reaching levels not seen since 2010 $60,000 Baltic Capesize Index Index rates as of May 5, 2021 Baltic Supramax Index Current BCI BCI: $44,817 BSI: $23,483 $50,000 Current BSI $40,000 $30,000 $20,000 $10,000 $- Jan-10 Jul-10 Jan-11 Ju
Slide 23: 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: +46% Supras: +40% $35 $30 $25 $20 $15 $10 $5 $- Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-1
Slide 24: China's record IO imports led by all-time high steel output
China’s record IO imports led by all-time high steel output China’s IO imports rose by 8% YOY in Q1 2021… 120 2017 2018 2019 2020 2021 110 100 90 80 70 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec …as China’s steel output continues to set records and gain global market share 100 90 80 70 60 2017
Slide 25: Brazilian iron ore exports have recovered
Brazilian iron ore exports have recovered… …following poor weather conditions and operational challenges that disrupted production and shipments during most of 1H 2020 ◼ Brazilian iron ore exports have increased by 17% YOY through March ◼ Vale 2021 production guidance of 315-335MT ◼ Vale forecasts t
Slide 26: 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 27: 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 ◼ Minor bulk
Slide 28: Drybulk newbuilding orderbook
Drybulk newbuilding orderbook Current drybulk newbuilding orderbook as a % of the fleet per Clarksons (does not take into account slippage or scrapping) 2.0% 1.5% 2.6% 2.5% 1.1% % of fleet 1.0% 0.8% 0.9% 0.7% 0.6% 0.6% 0.5% 0.5% 0.5% 0.0% Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 2023+ ◼ Orderbook a
Slide 29: Freight rate catalysts for 2021
Freight rate catalysts for 2021 1 Record low orderbook as a percentage of the fleet to limit net fleet growth 2 Unprecedented levels of global stimulus – global GDP forecast to rise by 6% in 2021* 3 China’s economy to continue to lead while rest of world continues economic improvement 4 Recovery and
Slide 30: Q&A
Q&A
Slide 31: Appendix
Appendix
Slide 32: Assumptions to illustrative cash flow sensitivity
Assumptions to illustrative cash flow sensitivity ◼ Fleet size: Based on a fleet of 40 vessels pro forma for the agreed upon sale of the Genco Lorraine and the agreed upon acquisition of the Genco Enterprise. ◼ Illustrative rates used to calculate net revenue: Net revenue is defined as voyage revenu
Slide 33: 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 Genco Pyrenees 2010 58,018 Genco Resolute 2015 181,060 Genco Enterprise 2016 64,000 Genco Rhone 2011 58,018 Genco Endeavour 2015 181,060 Baltic Hornet 2
Slide 34: Time Charter Equivalent Reconciliation
Time Charter Equivalent Reconciliation(1) Three Months Ended March 31, 2021 March 31, 2020 (unaudited) Total Fleet Voyage revenues (in thousands) $ 87,591 $ 98,336 Voyage expenses (in thousands) 35,074 48,368 Charter hire expenses (in thousands) 5,435 3,075 47,082 46,893 Total available days for own
Slide 35: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation Three Months Ended March 31, 2021 Adjusted Net Income Reconciliation (unaudited) Net income $ 1,985 + Loss on sale of vessels 720 Adjusted net income $ 2,705 Adjusted net earnings per share - basic $ 0.06 Adjusted net earnings per share - diluted $ 0.06 Weighted av
Slide 36: Q2 2021 Genco Estimated Breakeven Rates
Q2 2021 Genco Estimated Breakeven Rates(1) Daily Expenses by Category Free Cash Flow(2) Net Income Direct Vessel Operating(3) $5,000 $5,000 General and Administrative 1,374 1,473 Expenses(4) Technical Management Fees(5) 357 357 Drydocking(6) 576 - Interest Expense(7) 907 1,177 Fixed Debt Repayments(
Slide 37: Thank you
Thank you
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