Genco Shipping & Trading Limited · NYSE:GNK
Genco Shipping & Trading — Q1 2024 Earnings Presentation
41 slides from Genco Shipping & Trading's earnings presentation, May 9, 2024
Slide 1: Q1 2024 Earnings Presentation
GENCO SHIPPING & TRADING LIMITED Q1 2024 Earnings Presentation May 9th, 2024
Slide 2: Forward Looking Statements
Forward Looking Statements "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995 This presentation contains contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking state
Slide 3: Agenda
Agenda Q1 2024 + YTD Highlights Financial Overview Industry Overview 3
Slide 4: First Quarter 2024 and Year-to-Date Highlights
First Quarter 2024 and Year-to-Date Highlights 4
Slide 5: Q1 2024 highlights + financial performance
Q1 2024 highlights + financial performance Value Strategy Financial Performance Q1 2024 dividend: $0.42/sh, $18.8m 19th consecutive quarterly Q1 2024 net income or $0.43/sh (diluted) Dividends dividend totaling 25% of Adjusted net income of $21.4m or $0.49/sh the current share price Deleveraging 7%
Slide 6: Continued progress on our value strategy
Continued progress on 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 $279m of debt high dividend yield company growth paydowns $2
Slide 7: Compelling quarterly dividends over the last 4+ years
Compelling quarterly dividends over the last 4+ years Significant increase in dividends since value strategy inception Sustained dividends across diverse market environments 10 19 19 Consecutive quarterly quarters dividends since Q3 2019 # of quarters $4.520 $5.575 $5.575/ Dividends in aggregate sin
Slide 8: Executed the next leg of our fleet renewal strategy
Executed the next leg of our fleet renewal strategy Upgrading 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 sa
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 These two sectors provide Major bulk complementary characteristics Minor bulk Capesize Ultra/Supra for Genco’s value strategy… 16 Direct exposure
Slide 10: 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 Q2 2024 TCE estimate to date +38% YoY $20.1k based on fixtures for ~65% of the quarter’s available days $15 65% ~65% of the Q2’s TCE ($ in 000s) available days fixed $10 $20
Slide 11: Genco is in an advantageous position…
Genco is in an advantageous position… …together with $299m 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 12: Financial Overview
Financial Overview 12
Slide 13: First quarter earnings
First quarter earnings Three Months Ended Three Months Ended March 31, 2024 March 31, 2023 (Dollars in thousands, except share and per share data) (unaudited) INCOME STATEMENT DATA: Revenues: Voyage revenues $ 117,435 $ 94,391 Total revenues 117,435 94,391 Operating expenses: Voyage expenses 37,200
Slide 14: March 31, 2024 balance sheet
March 31, 2024 balance sheet March 31, 2024 December 31, 2023 (Dollars in thousands) (unaudited) BALANCE SHEET DATA: Cash (including restricted cash) $ 48,679 $ 46,857 Current assets 146,184 157,272 Total assets 1,117,806 1,141,902 Current liabilities (excluding current portion of long-term debt) 39
Slide 15: First quarter highlights
First quarter highlights Three Months Ended March 31, 2024 March 31, 2023 (unaudited) FLEET DATA: Total number of vessels at end of period 45 44 Average number of vessels (1) 45.4 44.0 Total ownership days for fleet (2) 4,132 3,960 Total chartered-in days (3) 196 236 Total available days (4) 4,189 4
Slide 16: Debt outstanding per quarter
Debt repayments through Q2 2024 to date Debt outstanding $500 Revolving credit facility increases flexibility to: 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 Paid down Draw f
Slide 17: Transparent dividend policy
Transparent dividend policy Dividend calculation (numbers in m except Q1 2024 actual Q2 2024 estimates per share amounts) Net revenue $ 76.74 Fixtures to date + market Q2 2024 to date estimate based on 65% Operating cash flow $20,126 of owned available days fixed Operating expenses $ (35.96) $ (34.5
Slide 18: Industry Overview
Industry Overview 18
Slide 19: 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 Baltic Capesize Index 4/25/2023 5/2/2023 5/9
Slide 20: Panama Canal re-routing due to low water levels
Panama Canal re-routing due to low water levels Panama Canal Authority has ~53 days ◼ increased daily transits from 27 per day This is still well below typical ~10 days ◼ levels of ~40 per day ◼ Restrictions may gradually ease to full capacity by 2025 ~40 days ~40 days ~57 days 20
Slide 21: Suez Canal re-routing due to geopolitical tensions
Suez Canal re-routing due to 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 Top 7 origins of 2023 drybulk trade via Suez 1) Russia: ~90MT (mostly coal, IO, grain) 2) US: ~50MT (mostly c
Slide 22: 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 86% China steel mill utilization 170 Steel production has fallen by 2% 160 -2% YoY through March 150 Seasonal restocking –
Slide 23: Global steel production rebounding
Global steel production rebounding Global steel production (MT) Mar 2024 Mar 2023 % Variance YTD 2024 YTD 2023 % Variance China 88.3 95.7 -7.8% 256.6 261.5 -1.9% ◼ World Steel forecasts global steel European Union demand to grow by 1.7% and 1.2% in 11.6 12.1 -4.3% 33.0 33.4 -1.4% 2024 and 2025, resp
Slide 24: Grain trade impacted by macro environment
Grain trade impacted by macro environment Currently South American grain season Wheat 2023/24p 2022/23e Variance % Variance World 213.47 220.17 (6.70) -3% US 19.32 20.65 (1.33) -6% Russia 52.00 47.50 4.50 9% Ukraine 17.50 17.12 0.38 2% +6MT Aust 20.50 31.82 (11.32) -36% Canada 24.00 25.59 (1.59) -6%
Slide 25: 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 ~5,000 ships 300 250 9% Fleet size (mdwt) 9% of the fleet is currently 200 20 years
Slide 26: Supply side remains favorable, with increasing inefficiencies
Supply side remains favorable, with increasing inefficiencies Global port congestion has picked up since December… ◼ Global port congestion has increased since Capesize Panamax 125 +7% the end of last year 115 105 Mdwt 95 ◼ Increased port inefficiencies has brought 85 congestion levels back in line
Slide 27: 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 28: 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 28
Slide 29: Q&A
Q&A 29
Slide 30: Thank You
Thank You
Slide 31: Appendix
Appendix 31
Slide 32: 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 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 Auvergne
Slide 33: 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 Jul-24 ◼ We continue to utilize a fleet-wide portfolio Genco Defender Capesize BCI + 25% + scrubber 11-14 months Jul-24 approach to fixture activity ◼ We continue to evalu
Slide 34: Illustrative net revenue and fleet-wide operating leverage
Significant fleet-wide operating leverage Highlights the improved risk / reward profile of our new value strategy $350 $300 $15m Every $1,000 increase in TCE is ~$15m of incremental annualized EBITDA on our current 43-vessel fleet $29m For our 16 Capesizes specifically, every $5,000 $250 increase in
Slide 35: EBITDA reconciliation
EBITDA reconciliation(1) Adjusted EBITDA Q1 2021-Q1 2024 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 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 $ 18,798 Net interest
Slide 36: Time charter equivalent reconciliation
Time charter equivalent reconciliation(1) Three Months Ended March 31, 2024 March 31, 2023 (unaudited) Total Fleet Voyage revenues (in thousands) $ 117,435 $ 94,391 Voyage expenses (in thousands) 37,200 37,435 Charter hire expenses (in thousands) 3,510 3,664 Realized gain on fuel hedges (in thousand
Slide 37: Net income reconciliation
Net income reconciliation Three Months Ended March 31, 2024 Net Income Reconciliation (unaudited) Net income attributable to Genco Shipping & Trading Limited $ 18,798 + Loss on sale of vessels 978 + Other operating expense 1,804 + Unrealized gain on fuel hedges (160) Adjusted net income $ 21,420 Adj
Slide 38: 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 39: Q2 2024 estimated fleet-wide expenses
Q2 2024 estimated fleet-wide expenses(1) Daily Expenses by Category Net Income Free Cash Flow(2) Vessel Operating Expenses(3) $6,350 $6,350 Est Ownership / Owned Available Days – Q2 2024 G&A Expenses(4) 1,743 1,448 Vessel Type Own. Days DD Days Owned Avail Days Technical Management 234 234 Expenses(
Slide 40: Footnotes to Q2 2024 estimated fleet-wide expenses & operating expense reconciliation
Footnotes to Q2 2024 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 41: 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 Significant operating leverage inherent in $100,000 the business Illustrative fleet-wide time charter rate $15m Every $1,000 increase in TCE is ~$15m of incremental annualized EBIT
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