Genco Shipping & Trading Limited · NYSE:GNK
Genco Shipping & Trading — Q3 2023 Earnings Presentation
38 slides from Genco Shipping & Trading's earnings presentation, Nov 9, 2023
Slide 1: Q3 2023 Earnings Presentation
GENCO SHIPPING & TRADING LIMITED Q3 2023 Earnings Presentation November 9th, 2023
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 2023 + YTD Highlights • Financial Overview • Industry Overview 3
Slide 4: Third Quarter 2023 and Year-to-Date Highlights
Third Quarter 2023 and Year-to-Date Highlights 4
Slide 5: Q3 2023 and YTD highlights + financial performance
Q3 2023 and YTD highlights + financial performance Value strategy Financial performance Estimated Q4 2023 TCE for 69% $0.15 Q3 2023 dividend per share $16,665 of Q4 owned available days* Q3 2023 net loss or -$0.75/sh 10% Net loan-to-value* -$32.0m Ex-non-cash vessel impairment charge adjusted net lo
Slide 6: Genco's comprehensive value strategy
Genco’s comprehensive value strategy Focused on 3 key elements… Dividends Deleveraging Growth Reduced cash flow $145 Debt – Sep 30, 2023 # of modern, eco vessels <$9k (~40% of fleet’s current scrap value) 15 purchased since 2018** breakeven rate million Consecutive quarterly Paid down $305m of debt
Slide 7: Dividend history over the last 4 years
Dividend history over the last 4 years Sizeable dividend payouts since the implementation of our value strategy Dividend history Significant increase in dividends since Sustained dividends across (Q3 2019 to date) value strategy inception diverse market environments Dividend history (Q3 2019 to date
Slide 8: Quarterly dividend calculation / framework
Quarterly dividend calculation / framework Straight-forward and transparent dividend formula Dividend calculation (numbers in m Q3 2023 actual Q4 2023 estimates except per share amounts) Fixtures to date + Net revenue $ 47.24 market Operating $16,665 Q4 2023 to date estimate based on 69% of owned av
Slide 9: $500 Million Revolving Credit Facility
$500 Million Revolving Credit Facility… …anticipated to meaningfully increase financial flexibility and borrowing capacity while reducing margin and extending maturity – expected to close in Q4 2023 Key debt structure improvements… Addt’l $500m revolving credit facility (RCF) terms Key terms Current
Slide 10: Financial Overview
Financial Overview 10
Slide 11: Third quarter earnings
Third quarter earnings Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 (Dollars in thousands, except share and per share data) (Dollars in thousands, except share and per share data) (unaudited) (un
Slide 12: September 30, 2023 balance sheet
September 30, 2023 balance sheet September 30, 2023 December 31, 2022 (Dollars in thousands) (unaudited) BALANCE SHEET DATA: Cash (including restricted cash) $ 52,217 $ 64,100 Current assets 111,522 125,430 Total assets 1,094,997 1,173,866 Current liabilities (excluding current portion of long-term
Slide 13: Third quarter highlights
Third quarter highlights Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 (unaudited) (unaudited) FLEET DATA: Total number of vessels at end of period 44 44 44 44 Average number of vessels (1) 44.0 44.0 44.0 44.0 Total ownership days fo
Slide 14: Continued strong TCE performance
Continued strong TCE performance… …with fleetwide rates well in excess of our cash flow breakeven rate Fleet-wide TCE rate $20 +38% above Q3 $16.7 $15.6 $15 Q4 2023 TCE estimate to date based on fixtures $13.9 $16.7k for ~69% of the quarter’s available days $12.1 TCE ($ in 000s) $10 69% ~69% of the
Slide 15: Genco's industry low cash flow breakeven rate
Genco’s industry low cash flow breakeven rate Meaningful reduction in debt outstanding thru large- …significantly reduced our cash flow breakeven scale debt paydowns from Q1 2021 to Q3 2023… rate to the lowest in the peer group $500 $16,000 Cash breakeven ex DD DD Capex $449 -68% Reduction in debt f
Slide 16: 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… 18 27 vessels vesse
Slide 17: Industry Overview
Industry Overview 17
Slide 18: Freight rate development
Freight rate development $30,000 Baltic Capesize Index Baltic Supramax Index Current spot rates BCI is based on a $25,000 non-scrubber BCI: $19,222 fitted Capesize $20,000 BSI: $12,139 $15,000 $10,000 $5,000 $- 18 Source: Clarksons Research Services Limited 2023
Slide 19: China macro data points to further stimulus
China macro data points to further stimulus Chinese government has moved to address weakness in consumer demand and the property market Credit impulse fell after a strong Q1 China loans (trillion yuan) PMI PMI - 50 ◼ PMI in contractionary territory all of Q2 after a 6 54 strong Q1 Q1: better than 53
Slide 20: 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 IO inventories are at multi-year lows 170 90% China steel mill utilization >90% 160 China steel production through ~50MT +2% September YoY 150 draw down from 2022 high
Slide 21: Global steel production growth led by China + India
Global steel production growth led by China + India Global steel production (MT) Sep 2023 Sep 2022 % Variance YTD 2023 YTD 2022 % Variance ◼ China has produced 57% of global China 82.1 87.0 -5.6% 795.1 781.8 1.7% steel output though Sep this year European Union 10.6 10.7 -1.1% 96.2 105.7 -9.1% Japan
Slide 22: Grain trade impacted by macro environment
Grain trade impacted by macro environment Wheat 2023/24p 2022/23e Variance % Variance World 206.26 221.60 (15.34) -7% US 19.05 20.65 (1.60) -8% +2MT Russia 50.00 47.50 2.50 5% Ukraine 11.00 17.12 (6.12) -36% -15MT Aust 17.50 32.50 (15.00) -46% Canada 23.00 25.75 (2.75) -11% +5MT EU 37.50 35.08 2.42
Slide 23: Intense period of fleet replacement is scheduled to occur
Intense period of fleet replacement is scheduled to occur… Age profile of the global drybulk fleet vs newbuilding orderbook 400 350 In 2030, ~35% of the current drybulk fleet 300 ~35% will be 20 years or older or ~5,000 ships 250 Fleet size (mdwt) 200 17.5% 8% >8% of the fleet is currently 20 years
Slide 24: Supply side remains favorable, despite easing congestion
Supply side remains favorable, despite easing congestion Global port congestion has eased in 2023 to date… Capesize Panamax 125 ◼ Meaningful reduction in global port 115 -21% congestion in 2023 105 Mdwt 95 85 ◼ Upside risk to congestion given the recent unwinding which has brought 75 levels to below
Slide 25: 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 Record low orderbook as a percentage of the fleet Iron Ore 1 to limit net fleet growth Capesize +4.7% +1.5% Coal Capesize 2 China stimulus + iron ore restocking -0.6% 0.0%
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 Vessel Name Year Built Dwt Vessel Name Year Built Dwt Vessel Name Year Built Dwt 18 Capesize Ultramax Supramax Capesize Genco Resolute 2015 181,060 Genco Freedom 2015 63,671 Genco Hunter 2007 58,729 Genco Endeavour 2015 181,060 Baltic Hornet 2014 63,574 Genco
Slide 29: Longer term time charter activity
Longer term time charter activity Vessel Type Rate Duration Min Expiration Genco Endeavour Capesize 127% of BCI + scrubber premium 11-14 months Jan-24 ◼ We continue to utilize a fleet-wide portfolio approach to fixture Genco Resolute Capesize 127% of BCI + scrubber premium 11-14 months Feb-24 activi
Slide 30: Q4 2023 cash flow breakeven rate
Q4 2023 cash flow breakeven rate… …is covered in nearly every rate environment over the last 2 decades $50,000 Illustrative fleet-wide time charter rate $45,000 Q4 2023 CF breakeven rate $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $- Q1-2000 Q3-2001 Q1-2003 Q3-2004 Q1-2006 Q3-2007
Slide 31: 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 current $300 44-vessel fleet $250 For our 17 Capesizes specifically, every $5,000 Illustrative net
Slide 32: EBITDA reconciliation
EBITDA reconciliation(1) Adjusted EBITDA Q1 2021-Q3 2023 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 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) Net interest expense 4,470 4,422 3,918 2,392
Slide 33: Time charter equivalent reconciliation
Time charter equivalent reconciliation(1) Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 (unaudited) (unaudited) Total Fleet Voyage revenues (in thousands) $ 83,361 $ 135,970 $ 268,309 $ 409,961 Voyage expenses (in thousands) 34,256 3
Slide 34: Net loss reconciliation
Net loss reconciliation Three Months Ended September 30, 2023 Net Loss Reconciliation (unaudited) Net loss attributable to Genco Shipping & Trading Limited $ (32,004) + Impairment of vessel assets 28,102 + Unrealized loss on fuel hedges 15 Net loss $ (3,887) Adjusted loss per share - basic $ (0.09)
Slide 35: Portfolio approach to scrubber installation
Portfolio approach to scrubber installation Genco continues to capture wide fuel spreads through 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
Slide 36: Q4 2023 estimated fleet-wide expenses
Q4 2023 estimated fleet-wide expenses(1) Est Ownership / Owned Available Days - Q4 2023 Daily Expenses by Category Free Cash Flow(2) Net Income Owned Avail Vessel Type Own. Days DD Days Vessel Operating Expenses(3) $6,000 $6,000 Days Capesize 1,613 - 1,613 G&A Expenses(4) 1,440 1,730 Ultramax 1,380
Slide 37: Footnotes to Q4 2023 estimated fleet-wide expenses & operating expense reconciliation
Footnotes to Q4 2023 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 38: Thank You
Thank You
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