Genco Shipping & Trading Limited · NYSE:GNK
Genco Shipping & Trading — Q1 2022 Earnings Presentation
41 slides from Genco Shipping & Trading's earnings presentation, May 5, 2022
Slide 1: Q1 2022 Earnings Presentation
GENCO SHIPPING & TRADING LIMITED Q1 2022 Earnings Presentation May 5th, 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 • Q1 2022 + YTD Highlights • Financial Overview • Industry Overview 3
Slide 4: First Quarter 2022 and Year-to-Date Highlights
First Quarter 2022 and Year-to-Date Highlights 4
Slide 5: Continued strong financial performance
Continued strong financial performance Recording our best first quarter results in over a decade Q1 2022 key financial metrics • Net income attributable to Genco • Q1 2022: $41.7 million, basic and diluted earnings per share: $0.99 / $0.97 • EBITDA* • Q1 2022: $58.0m – 181% higher than Q1 2021 • Str
Slide 6: Value strategy recent developments
Value strategy recent developments Dividends • Declared a $0.79 per share dividend for Q1 2022, an increase of 18% vs Q4 2021 • First full dividend payout under our value strategy • We have now paid 11 consecutive quarterly dividends totaling $2.515 per share Debt repayments • Repaid $48.75 million
Slide 7: Genco's comprehensive value strategy
Genco’s comprehensive value strategy Focused on 3 key elements… Significant dividends Deleveraging Growth Debt outstanding at Mar 31, 2022 Use shares as a currency $197m (~40% of fleet’s current scrap value) Debt repayments to grow Cash flow generation Debt prepayments Utilize reserve + revolver 56%
Slide 8: Genco's dividend ramp up ahead of "take off"
Genco’s dividend ramp up ahead of “take off”… 11 Declared 11 consecutive quarterly dividends $2.515 Declared $2.515 per share of dividends in quarters since Q3 2019 Per share aggregate since Q3 2019 Quarterly dividend progression ahead of value strategy execution n Q1 2022 dividend is the first full
Slide 9: Quarterly dividend calculation / framework
Quarterly dividend calculation / framework Straight-forward and transparent dividend formula – Genco plans to provide TCE, expense and reserve guidance in advance $27,596 Estimate of Q2 2022 for 68% of days fixed to date (Q2 2022 owned available days: 3,717 for the full quarter) Dividend calculation
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: Freight rate development and earnings
$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Source: Clarksons Research Services Limited 2022 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Baltic Capesize Index Baltic Supramax Index Apr-18 May-18 Jun-18 Jul-18
Slide 12: Portfolio approach to scrubber installation
Portfolio approach to scrubber installation Genco is capturing the widening fuel spreads thru scrubbers installed on 17 Capesize vessels n Genco implemented a portfolio approach towards IMO 2020 compliance n Installed scrubbers on Capesize vessels + consuming VLSFO on our minor bulk vessels n Equipm
Slide 13: Financial Overview
Financial Overview 13
Slide 14: First quarter earnings
First quarter earnings Three Months Ended Three Months Ended March 31, 2022 March 31, 2021 (Dollars in thousands, except share and per share data) (unaudited) INCOME STATEMENT DATA: Revenues: Voyage revenues $ 136,227 $ 87,591 Total revenues 136,227 87,591 Operating expenses: Voyage expenses 38,464
Slide 15: March 31, 2022 balance sheet
March 31, 2022 balance sheet March 31, 2022 December 31, 2021 (Dollars in thousands) (unaudited) BALANCE SHEET DATA: Cash (including restricted cash) $ 49,071 $ 120,531 Current assets 105,140 174,830 Total assets 1,167,502 1,203,002 Current liabilities (excluding current portion of long-term debt) 3
Slide 16: First quarter highlights
First quarter highlights Three Months Ended March 31, 2022 March 31, 2021 (unaudited) FLEET DATA: Total number of vessels at end of period 44 41 Average number of vessels (1) 43.9 43.3 Total ownership days for fleet (2) 3,950 3,897 Total chartered-in days (3) 311 341 Total available days (4) 4,078 4
Slide 17: Q1 2022 cash flow walk
Q1 2022 cash flow walk Primary uses of cash in Q1 2022 included debt prepayments + fleet growth $200 $- $150 $41 $54 Q1 2022 debt prepayments: $49m $ in m $28 $100 $9 March 31, 2022 balances $40 n Cash: $49.1m $121 $50 n Debt: $197.3m $8 n Revolver availability: $221.8m $49 $0 Cash - Dec 31, Operati
Slide 18: Q1 2022 TCE is our strongest Q1 since 2010
Q1 2022 TCE is our strongest Q1 since 2010 Firm earnings during the seasonally weakest part of the year, with a higher TCE estimate for Q2 to date Major Bulk Minor Bulk Fleet-Wide $35 +98% +15% Q2 2022 TCE estimate to date is fixed for $30 $29.1 $27.6k $27.6 ~68% of the quarter’s available days $24.
Slide 19: 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 20: Industry Overview
Industry Overview 20
Slide 21: Current drybulk market snapshot
Current drybulk market snapshot Drybulk market catalysts Current drybulk market dynamics Historically low orderbook as a percentage of Russia’s war in Ukraine resulting in longer coal ton 6.6% the fleet to limit net fleet growth Ukraine miles while grain exports have been reduced – longer term dynam
Slide 22: Freight rate development
Freight rate development Strong 2021 followed by Q1 seasonal decline, although rates have increased off recent lows $90,000 $80,000 Baltic Capesize Index Baltic Supramax Index $70,000 $60,000 $50,000 $40,000 BSI: $30,054 $30,000 $20,000 $10,000 BCI: $19,235 $- Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-
Slide 23: Cape rates impacted by lower Q1 iron ore volumes
Cape rates impacted by lower Q1 iron ore volumes Capesize rates vs Brazil IO exports Baltic Capesize Index Brazilian iron ore exports $70,000 40 35 $60,000 30 n Brazilian iron ore $50,000 exports are down 11% YOY thru Q1 25 2022 and down 21% Brazil IO exports (MT) $40,000 vs Q4 2021 BCI 20 $30,000 n
Slide 24: China's policies becoming more accommodative
China’s policies becoming more accommodative China GDP growth per quarter in 2021 vs target n China set 2022 GDP growth target of ‘around 5.5%’ 20% 18% n Credit growth in China has been increasing in recent months with March China GDP growth rates 2022 growth reaccelerating reaching the highest poin
Slide 25: Grain trade re-routing of cargo flows
Grain trade re-routing of cargo flows Black Sea grain supplies have been reduced causing buyers to focus on US + South America Black Sea n Limited grain Q3 peak exports from season Black Sea region US expected Q4 peak season n Next crop China season is highly Largest importer uncertain n Potential d
Slide 26: Coal trade re-routing of cargo flows
Coal trade re-routing of cargo flows European coal imports sourced from longer ton mile origins Russia n Tightness in energy markets US and rising prices has increased coal China demand Largest importer India n Re-routing of cargo flows from Colombia longer ton mile origins (ie Aust to Indonesia Eur
Slide 27: 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% 2.1% 3.0% 1.4% 6.6% Orderbook as a % of the total drybulk fleet 1.0% 0.9% 0.8% 0.8% 0.8% 0.7% % of fleet 0.8% 0.6% 0.6% 7.8% % of the tot
Slide 28: Fleet-wide impact of environmental regulations
Fleet-wide impact of environmental regulations 400 350 ~30% of n Slower maximum speeds due to EPL the drybulk installations + CII compliance 300 fleet is “eco” 250 Fleet size (mdwt) n Older ships becoming less competitive, possibly increased scrapping 200 15.2% 150 n Longer times in drydocking for 1
Slide 29: Freight rate catalysts and drybulk outlook
Freight rate catalysts and drybulk outlook Marsoft 2H 2022 to 2023 S&D growth estimates Drybulk market catalysts 2H 2022 vs Vessel* 2023 1H 2022 Record low orderbook as a percentage of the fleet Iron Ore 1 to limit net fleet growth Capesize +5.6% +2.6% Coal 2 Strong 2022 global GDP growth forecast C
Slide 30: Q&A
Q&A 30
Slide 31: Appendix
Appendix 31
Slide 32: 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 33: 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 n 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 34: Illustrative net revenue
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 35: 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 36: EBITDA reconciliation
EBITDA reconciliation(1) Adjusted EBITDA Q1 2021-Q1 2022 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Net income $ 1,985 $ 32,037 $ 57,132 $ 90,852 $ 41,689 Net interest expense 4,470 4,422 3,918 2,392 2,225 Income tax expense - - - - - Depreciation/amortization 13,441 13,769 14,200 14,822 14,059 EBITDA
Slide 37: Time charter equivalent reconciliation
Time charter equivalent reconciliation(1) Three Months Ended March 31, 2022 March 31, 2021 (unaudited) Total Fleet Voyage revenues (in thousands) $ 136,227 $ 87,591 Voyage expenses (in thousands) 38,464 35,074 Charter hire expenses (in thousands) 7,638 5,435 Realized gain on fuel hedges (in thousand
Slide 38: Net Income reconciliation
Net Income reconciliation Three Months Ended March 31, 2022 Net Income Reconciliation (unaudited) Net income attributable to Genco Shipping & Trading Limited $ 41,689 Adjusted net earnings per share - basic $ 0.99 Adjusted net earnings per share - diluted $ 0.97 Weighted average common shares outsta
Slide 39: Q2 2022 estimated fleet-wide expenses
Q2 2022 estimated fleet-wide expenses(1) Est Ownership / Owned Available Days - Q2 2022 Owned Avail Daily Expenses by Category Free Cash Flow(2) Net Income Vessel Type Own. Days DD Days Days Direct Vessel Operating(3) $6,000 $6,000 Capesize 1,547 247 1,300 Ultramax 1,365 40 1,325 G&A Expenses(4) 1,2
Slide 40: Footnotes to Q2 2022 estimated fleet-wide expenses
Footnotes to Q2 2022 estimated fleet-wide expenses / Q2-Q4 2022 operating expense reconciliation Q2 2022 operating expense reconciliation Q2 2022 free Adj to GAAP Q2 2022 Net Operating expenses ($ in m) cash flow est measure income est (1) Estimated expenses are presented for illustrative purposes.
Slide 41: Thank You
Thank You
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