Genco Shipping & Trading Limited · NYSE:GNK
Genco Shipping & Trading — Sidoti Virtual Small-Cap Conference March 2024
45 slides from Genco Shipping & Trading's conference presentation, Mar 13, 2024
Slide 1: Genco Shipping & Trading Limited – Sidoti Virtual Small-Cap Conference
GENCO SHIPPING & TRADING LIMITED Sidoti Virtual Small-Cap Conference March 13th, 2024 NYSE: GNK
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: Presenters
Presenters John C. Wobensmith Peter Allen Chief Executive Officer Chief Financial Officer ▪ Over 25 years of ▪ 16 years of experience experience in the in the shipping industry shipping industry ▪ Significant experience in ▪ Strong background in capital allocation, M&A, managing all aspects of a as
Slide 4: Executive summary
Executive summary 4
Slide 5: Genco Shipping & Trading overview
Genco Shipping & Trading overview ◼ The largest U.S. based drybulk shipowner, with 43 modern, high-quality vessels ◼ Headquartered in New York with global offices in Singapore and Copenhagen ◼ Transport both major (iron ore & coal) and minor (grains, cement, fertilizers, etc.) bulk across all key wo
Slide 6: Q4 2023 highlights + financial performance
Q4 2023 highlights + financial performance Value Strategy Financial Performance Q4 2023 dividend: $0.41/sh, Q4 2023 net income or $0.11/sh (diluted) Dividends 18th consecutive quarterly dividend totaling 24% of $4.9m Adjusted net income of $18.6m or $0.43/sh ex-non-cash vessel impairment charge the
Slide 7: Genco’s comprehensive value strategy
Genco’s comprehensive value strategy Enhanced ability to succeed through all industry cycles Remain committed to strong corporate governance and are focused on enhancing the Company’s potential to Executed across our deliver returns to three strategy pillars shareholders, reducing the Company’s fina
Slide 8: Continued progress in 2023 regarding our value strategy
Continued progress in 2023 regarding our value strategy What we said What we did Well-balanced capital allocation across 3 pillars April 2021… ~3 years later… of dividends, deleveraging and growth Transform Paid down Genco into a low leverage, Fleet Debt $249m of debt high dividend yield company gro
Slide 9: Global drybulk trade and key routes
Global drybulk trade and key routes ~90% of global trade is carried by the international shipping industry – Genco’s global footprint maximizes revenue generation by capturing market trends in real-time Copenhagen Commercial Operations Minor Bulk focus U.S. Headquarters Corporate strategy Finance/ac
Slide 10: Genco transported 27mdwt of drybulk commodities in 2023
Genco transported 27mdwt of drybulk commodities in 2023 We employ a diversified asset base consisting of large Capesize vessel and medium size Ultramax/Supramax vessels, enabling us to carry a wide range of cargoes worldwide Drybulk trade is ~half of seaborne trade volume Genco’s commodities carried
Slide 11: 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 These two sectors provide Major bulk complementary characteristics Minor bulk Capesize Ultra/Supra for Genco’s value strategy… 16 Direct exposure
Slide 12: Financial flexibility in various freight market conditions
Financial flexibility in various freight market conditions Asset values rising due $70 to firm freight rates and Significant supported by strong N/B prices operating leverage Cape 5-year $60 Ultra 5-year $50 Well-positioned in $40 up or down markets $30 $20 Countercyclical opportunities $10 to buy v
Slide 13: Allocating capital to enable Genco to create value through cycles
Allocating capital to enable Genco to create value through cycles 1 Low financial leverage Results in low cash flow breakeven rate – medium term goal of zero net debt 2 Compelling quarterly dividends Returned 24% of the current share price in dividends over 18 consecutive quarters of dividend distri
Slide 14: Comprehensive value strategy
Comprehensive value strategy 14
Slide 15: Low financial leverage through voluntary debt repayments
Low financial leverage through voluntary debt repayments $500 New $500m RCF increases flexibility to: Debt outstanding Recent draw downs Continue to voluntarily repay debt $400 Opportunistically drawing down capital w/o losing borrowing capacity Debt outstanding per quarter ($ in m) $300 Draw for 2
Slide 16: Compelling quarterly dividends over the last 4.5 years
Compelling quarterly dividends over the last 4.5 years Significant increase in dividends since value strategy inception Sustained dividends across diverse market environments 9 18 18 Consecutive quarterly dividends since Q3 2019 quarters # of quarters $4.100 $5.155/ Dividends in aggregate since $5.1
Slide 17: Transparent dividend policy
Transparent dividend policy Dividend calculation (numbers in m except Q4 2023 actual per share amounts) Net revenue $ 70.62 Operating cash flow Operating expenses $ (33.33) Quarterly dividend policy target: Less: drydocking/BWTS/ESD upgrades $ - 100% of excess quarterly cash flow ex- Operating cash
Slide 18: Executed the next leg of our fleet renewal strategy
Executed the next leg of our fleet renewal strategy High-grading the fleet with modern Cape purchases # of vessels 30 Base Fleet Buy Sell 25 Cape sale & purchase activity: Modernizing the fleet + increasing earnings capacity Bought: 2016-built high 20 specification vessels ~$10m, or Drydocking capex
Slide 19: Genco is in an advantageous position…
Genco is in an advantageous position… …together with $295m of Industry low financial leverage… + Industry low cash flow breakeven rate + undrawn revolver availability Genco’s low CF b/e rate provides the ability to pay dividends across Genco has the cyclicality of the GNK’s greater an industry drybu
Slide 20: Current drybulk market dynamics
Current drybulk market dynamics 20
Slide 21: Freight rate development
$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 1/3/2023 1/10/2023 1/17/2023 1/24/2023 1/31/2023 2/7/2023 Source: Clarksons Research Services Limited 2024 2/14/2023 2/21/2023 2/28/2023 3/7/2023 3/14/2023 3/21/2023 3/28/2023 4/4/2023 4/11/2023 4/18/2023 4/25/2023 5/2/2023 5/9/2023 Baltic Capesize
Slide 22: Panama Canal re-routing due to low water levels
Panama Canal re-routing due to low water levels ~53 days ~10 days ~40 days ~40 days ~57 days 22
Slide 23: Suez Canal re-routing due to geopolitical tensions
Suez Canal re-routing due to geopolitical tensions Previous trade route Re-routing due to Suez Canal ~36 days geopolitical tensions +33% Increase in voyage duration by ~12 days or 33% from Rotterdam to Shanghai traveling around Cape of Good Hope vs through the Suez Canal ~48 days 23
Slide 24: China’s iron ore and steel complex
China’s iron ore and steel complex Potential iron ore port inventory restocking + increase in seaborne iron ore availability China’s iron ore inventories are at multi-year lows 83% China steel mill utilization 170 China steel production was flat YoY 160 +0% in 2023 150 Iron ore imports increased by
Slide 25: Global steel production rebounding
Global steel production rebounding Global steel production (MT) Jan 2024 Jan 2023 % Variance FY 2023 FY 2022 % Variance China 77.2 83.0 -6.9% 1,019.1 1,019.1 0.0% ◼ China produced 55% of global steel output European Union 10.2 10.4 -1.8% 126.3 136.4 -7.4% in 2023 Japan 7.3 7.2 0.6% 87.0 89.2 -2.5% I
Slide 26: Grain trade impacted by macro environment
Grain trade impacted by macro environment Entering South American grain season Wheat 2023/24p 2022/23e Variance % Variance World 212.13 220.17 (8.04) -4% US 19.32 20.65 (1.33) -6% Russia 51.00 47.50 3.50 7% +4MT Ukraine 16.00 17.12 (1.12) -7% -4MT Aust 20.00 31.82 (11.82) -37% Canada 24.00 25.59 (1.
Slide 27: Intense period of global fleet replacement is scheduled to occur…
Intense period of global fleet replacement is scheduled to occur… Age profile of the global drybulk fleet vs newbuilding orderbook 400 ~33% In 2030, ~33% of the current 350 drybulk fleet will be 20 years or older or ~4,400 ships 300 250 8% Fleet size (mdwt) >8% of the fleet is currently 200 20 years
Slide 28: Supply side remains favorable, despite easing congestion
Supply side remains favorable, despite easing congestion Global port congestion has increased from Q3 2023 lows… ◼ Meaningful reduction in global port Capesize Panamax 125 -17% congestion in Q2-Q3 2023, rebound since 115 105 Upside risk to congestion given the recent Mdwt 95 ◼ 85 unwinding which has
Slide 29: 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 Iron Ore Capesize +4.1% +1.8% Record low orderbook as a percentage of the fleet 11 expected to limit net fleet growth Coal Capesize Panamax +1.8% +0.0% 2 China stimulus Gra
Slide 30: Conclusion
Conclusion 30
Slide 31: Making demonstrable progress executing comprehensive value strategy
Industry low Balanced risk- cash flow reward strategy breakeven rate Making demonstratable progress executing Revenue Strong balance generation comprehensive sheet + liquidity value strategy Strong corporate Fleet renewal governance / growth 31
Slide 32: Appendix
Appendix 32
Slide 33: Fourth quarter earnings
Fourth quarter earnings Three Months Ended Three Months Ended Twelve Months Ended Twelve Months Ended December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 (Dollars in thousands, except share and per share data) (Dollars in thousands, except share and per share data) (unaudited) (u
Slide 34: December 31, 2023 balance sheet
December 31, 2023 balance sheet December 31, 2023 December 31, 2022 (Dollars in thousands) (unaudited) BALANCE SHEET DATA: Cash (including restricted cash) $ 46,857 $ 64,100 Current assets 157,272 125,430 Total assets 1,141,902 1,173,866 Current liabilities (excluding current portion of long-term de
Slide 35: Fourth quarter highlights
Fourth quarter highlights Three Months Ended Twelve Months Ended December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 (unaudited) (unaudited) FLEET DATA: Total number of vessels at end of period 46 44 46 44 Average number of vessels (1) 44.8 44.0 44.2 44.0 Total ownership days for
Slide 36: Genco’s pro-forma fleet list
Genco’s 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 16 Genco Reliance 2016 181,146 Genco Freedom 2015 63,671 Genco Hunter 2007 58,729 Genco Resolute 2015 181,060 Baltic Hornet 2014 63,574 Genco
Slide 37: Longer term time charter activity
Longer term time charter activity Vessel Type Rate Duration Min Expiry Genco Resolute Capesize BCI + 27% + scrubber 11-14 months Apr-24 Genco Defender Capesize BCI + 25% + scrubber 11-14 months Apr-24 Genco Reliance Capesize BCI + 28% + scrubber 10-12 months Jan-25 Genco Ranger Capesize BCI + 28% +
Slide 38: Volatility and cyclicality of drybulk shipping highlights importance of low leverage
Volatility and cyclicality of drybulk shipping highlights the importance of low financial leverage + low breakeven rate …cash flow breakeven rate is covered in nearly every rate environment over the last 2 decades Significant operating leverage inherent in $100,000 the business Illustrative fleet-wi
Slide 39: Significant fleet-wide operating leverage
Significant fleet-wide operating leverage Highlights the improved risk / reward profile of our new value strategy $350 $15m Every $1,000 increase in TCE is ~$15m of incremental annualized EBITDA on our current 43-vessel fleet $300 $29m For our 16 Capesizes specifically, every $5,000 $250 increase in
Slide 40: EBITDA reconciliation
EBITDA reconciliation(1) Adjusted EBITDA Q1 2021-Q4 2023 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Net income $ 1,985 $ 32,037 $ 57,132 $ 90,852 $ 41,689 $ 47,382 $ 40,828 $ 28,679 $ 2,634 $ 11,562 $ (32,004) $ 4,937 Net interest expense 4,470 4,
Slide 41: Time charter equivalent reconciliation
Time charter equivalent reconciliation(1) Three Months Ended Twelve Months Ended December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 (unaudited) (unaudited) Total Fleet Voyage revenues (in thousands) $ 115,516 $ 126,973 $ 383,825 $ 536,934 Voyage expenses (in thousands) 42,450 43
Slide 42: Net income reconciliation
Net income reconciliation Three Months Ended December 31, 2023 Net Income Reconciliation (unaudited) Net income attributable to Genco Shipping & Trading Limited $ 4,937 + Impairment of vessel assets 13,617 + Unrealized loss on fuel hedges 1 Net income $ 18,555 Adjusted earnings per share - basic $ 0
Slide 43: #1 rated ESG shipping company for 3rd straight year
#1 rated ESG shipping company for 3rd straight year Environmental Social + Governance Short to medium term focus Longer term plan Technological advancement Transition to alt fuels Fleet renewal – buying more ― Ammonia ESG committee of our board of directors established fuel efficient ships ― Methano
Slide 44: Portfolio approach to scrubber installation
Portfolio approach to scrubber installation Genco continues to capture wide fuel spreads through scrubbers installed on 16 Capesize vessels ◼ Portfolio approach: installed scrubbers on Capesize Singapore Fuel Spread Developments vessels + consuming VLSFO on our minor bulk vessels $1,200 IFO 0.5% S S
Slide 45: Thank You
Thank You
Genco Shipping & Trading — Sidoti Virtual Small-Cap Conference March 2024 on 6ix