Genco Shipping & Trading Limited · NYSE:GNK
Genco Shipping & Trading — Q3 2022 Earnings Presentation
36 slides from Genco Shipping & Trading's earnings presentation, Nov 10, 2022
Slide 1: Q3 2022 Earnings Presentation
GENCO SHIPPING & TRADING LIMITED Q3 2022 Earnings Presentation November 10th, 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 • Q3 2022 + YTD Highlights • Financial Overview • Industry Overview 3
Slide 4: Third Quarter 2022 and Year-to-Date Highlights
Third Quarter 2022 and Year-to-Date Highlights 4
Slide 5: Continued strong financial performance
Continued strong financial performance Q3 2022 key financial metrics Value strategy updates • Net income attributable to Genco Dividends • Q3 2022: $40.8 million, basic and diluted • Q3 2022: declared a $0.78 per share dividend, earnings per share: $0.96 / $0.95 an increase of 56% vs Q2 2022 • Adjus
Slide 6: Genco's comprehensive value strategy
Genco’s comprehensive value strategy Focused on 3 key elements… Significant dividends Deleveraging Growth Debt outstanding at Sep 30, 2022 $179.8 Use shares as a currency million (~42% 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… 4 value strategy dividends declared… $2.74 per share Dividends under value strategy in last 4Qs 21% annualized dividend yield* +56% 19% QoQ Last 4 dividends declared as a % of Nov 8, 2022 GNK share price $0.79 $0.78 13 quarters $0.67 13 consecutive quarte
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 Q3 2022 actual Q4 2022 estimates except per share amounts) Fixtures to date + Net revenue $ 89.85 Ope
Slide 9: 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 10: 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 ◼ All-in cos
Slide 11: Financial Overview
Financial Overview 11
Slide 12: Third quarter earnings
Third quarter earnings Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 (Dollars in thousands, except share and per share data) (Dollars in thousands, except share and per share data) (unaudited) (un
Slide 13: September 30, 2022 balance sheet
September 30, 2022 balance sheet September 30, 2022 December 31, 2021 (Dollars in thousands) (unaudited) BALANCE SHEET DATA: Cash (including restricted cash) $ 71,490 $ 120,531 Current assets 145,763 174,830 Total assets 1,205,733 1,203,002 Current liabilities (excluding current portion of long-term
Slide 14: Third quarter highlights
Third quarter highlights Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 (unaudited) (unaudited) FLEET DATA: Total number of vessels at end of period 44 43 44 43 Average number of vessels (1) 44.0 40.6 44.0 41.3 Total ownership days fo
Slide 15: Continued strong TCE performance
Continued strong TCE performance… …as we have recorded TCE of over $20,000 per day for six consecutive quarters dating back to Q2 2021 Fleet-wide TCE rate Q4 2022 cash flow breakeven rate $40 $35.2 $35 TCE - Q3 2022 Type Period Spot Fleet-wide $29.3 $30 $28.8 Cape $ 27,035 $ 18,006 $ 19,233 $25 $24.
Slide 16: 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 17: Industry Overview
Industry Overview 17
Slide 18: Drybulk market trends led by the supply side
Drybulk market trends led by the supply side Orderbook Environmental Fleet inefficiencies Steel 6.9% 2023 Ukraine +1% Historically low Environmental Russia’s war in Ukraine Steel demand is forecast to newbuilding vessel regulations have led to resulting in longer coal return to growth in 2023 orderb
Slide 19: Freight rate development
Freight rate development $40,000 Baltic Capesize Index $35,000 Baltic Supramax Index BCI: $13,578 $30,000 $25,000 BSI: $13,551 $20,000 $15,000 $10,000 $5,000 $- Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 19 Source: Clarksons Research Services Limited 2022
Slide 20: Macro factors to continue to play a role in drybulk trade
Macro factors to continue to play a role in drybulk trade… 1 Global GDP and drybulk trade growth have a 0.72 correlation… 2 …while China GDP growth is highly correlated with the BDI 14.0 Global GDP growth Global drybulk trade growth 16.0 China GDP growth BDI 8,000 12.0 14.0 7,000 10.0 12.0 6,000 8.0
Slide 21: Grain trade impacted by macro environment, in US peak season
Grain trade impacted by macro environment, in US peak season USDA grain export forecasts – Oct 2022 1 2021/22 2022/23 70 60 59 56 +12MT 4 22 21 3 -23MT Coarse grain (incl corn) Wheat Soybean 1 -15MT 2 2021/22 2022/23 80 90 45 47 2 +12MT Coarse grain (incl corn) Wheat Soybean 3 2021/22 2022/23 33 ◼ Q
Slide 22: 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) 3.7% 2.3% 1.3% 1.2% 6.9% Orderbook as a % of the total drybulk fleet 1.0% 0.8% 0.8% 0.8% % of fleet 0.8% 0.7% 0.6% 0.6% 8.0% % of the total dr
Slide 23: Fleet-wide impact of environmental regulations
Fleet-wide impact of environmental regulations 350 ~30% of the drybulk fleet is “eco” 300 ◼ Slower maximum speeds due to Engine Power Limitation system installations + 250 Carbon Intensity Indicator compliance Fleet size (mdwt) 200 ◼ Older ships becoming less competitive, possibly increased scrappin
Slide 24: Freight rate catalysts and drybulk outlook
Freight rate catalysts and drybulk outlook Marsoft 2023 to 2024 S&D growth estimates Drybulk market catalysts Vessel* 2023 2024 Record low orderbook as a percentage of the fleet Iron Ore 1 to limit net fleet growth Capesize +4.3% +1.6% Potential for increased fleet-wide inefficiencies and Coal 2 Cap
Slide 25: Q&A
Q&A 25
Slide 26: Appendix
Appendix 26
Slide 27: 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 28: 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 portfolio approach to fixture Genco Maximus Capesize $ 27,500 24-30 months Sep-23 activity to capture this strong ea
Slide 29: 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 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: EBITDA reconciliation
EBITDA reconciliation(1) Adjusted EBITDA Q1 2021-Q3 2022 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Net income $ 1,985 $ 32,037 $ 57,132 $ 90,852 $ 41,689 $ 47,382 $ 40,828 Net interest expense 4,470 4,422 3,918 2,392 2,225 2,337 1,984 Income tax expense - - - - - - - Depreciation/amort
Slide 32: Time charter equivalent reconciliation
Time charter equivalent reconciliation(1) Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 (unaudited) (unaudited) Total Fleet Voyage revenues (in thousands) $ 135,970 $ 155,252 $ 409,961 $ 363,851 Voyage expenses (in thousands) 39,496
Slide 33: Net Income reconciliation
Net Income reconciliation Three Months Ended September 30, 2022 Net Income Reconciliation (unaudited) Net income attributable to Genco Shipping & Trading Limited $ 40,828 + Unrealized loss on fuel hedges 1,871 Net income $ 42,699 Adjusted earnings per share - basic $ 1.00 Adjusted earnings per share
Slide 34: Q4 2022 estimated fleet-wide expenses
Q4 2022 estimated fleet-wide expenses(1) Daily Expenses by Category Free Cash Flow(2) Net Income Est Ownership / Owned Available Days - Q4 2022 Owned Avail Vessel Type Own. Days DD Days Direct Vessel Operating(3) $5,150 $5,150 Days Capesize 1,564 79 1,485 G&A Expenses(4) 1,264 1,444 Ultramax 1,380 2
Slide 35: Footnotes to Q4 2022 estimated fleet-wide expenses & operating expense reconciliation
Footnotes to Q4 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 36: Thank You
Thank You
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