Genco Shipping & Trading Limited · NYSE:GNK
Genco Shipping & Trading — Q3 2021 Earnings Presentation
35 slides from Genco Shipping & Trading's earnings presentation, Nov 4, 2021
Slide 1: Genco Shipping & Trading Limited Q3 2021 Earnings Presentation
Genco Shipping & Trading Limited Q3 2021 Earnings Presentation November 4th, 2021
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 ◼ Third Quarter 2021 and Year-to-Date Highlights ◼ Financial Overview ◼ Industry Overview 3
Slide 4: Third Quarter 2021 and Year-to-Date Highlights
Third Quarter 2021 and Year-to-Date Highlights
Slide 5: Q3 2021 – approaching full execution of value strategy
Q3 2021 – approaching full execution of value strategy Comprehensive value strategy milestones ◼ Vessel acquisitions ― Agreed to acquire 6 Ultramaxes since April 2021 • Took delivery of 4 of these vessels in Q3 ◼ Financial deleveraging ― $144.2m of debt paid down through Sep 2021 ― Plan to pay down
Slide 6: Q3 2021 – our strongest quarter in over a decade
Q3 2021 – our strongest quarter in over a decade… Key financial metrics ◼ Net income: $57.1 million ― Basic and diluted earnings per share: $1.36 / $1.34 ― Adjusted net income of $61.7 million • Basic and diluted earnings per share: $1.47 / $1.44 ― Highest quarterly earnings per share since 2008 ◼ A
Slide 7: Our comprehensive value strategy
Our comprehensive value strategy… …is a holistic three-pronged approach including returning cash to shareholders, further deleveraging of the balance sheet and growth of the fleet Dividends Deleveraging Growth Use shares as a currency to grow Debt repayments Cash flow generation Utilize reserve + De
Slide 8: Genco's quarterly dividend calculation / framework
Genco’s quarterly dividend calculation / framework First dividend under new policy to be Q4 2021 TCE estimate based on 71% Q4 based on Q4 2021 results and paid in Q1 $36,879 fixed to date (Q4 2021 owned available 2021 2022 days: 3,836 for the full quarter) Q4 2021 estimates Dividend calculation Comm
Slide 9: Q3 2021 TCE to date is our highest since 2010
Q3 2021 TCE to date is our highest since 2010… …with a further improvement expected in Q4 2021 based on quarter to date fixtures TCE increase quarter-over-quarter: +39% +26% $50 $45 $43.7 Major Bulk Minor Bulk Fleet-Wide $40 $36.9 $35 $32.1 TCE ($ in 000s) $30.8 $29.3 $30 $28.1 $23.8 $25 $21.1 $19.2
Slide 10: Genco's adjusted EBITDA development – last 5 years
Genco’s adjusted EBITDA development – last 5 years 9 mos 2021 adjusted EBITDA is greater than adjusted EBITDA for FY 2019 and FY 2020 combined and already greater than FY 2018 $175 $151 $150 $123 $125 Q3 2021 adj EBITDA is > FY 2019/2020 levels $ in millions $100 $80 $72 $72 $75 $56 $50 $25 $0 2017
Slide 11: Financial Overview
Financial Overview
Slide 12: Third Quarter Earnings
Third Quarter Earnings Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020 (Dollars in thousands, except share and per share data) (Dollars in thousands, except share and per share data) (unaudited) (un
Slide 13: September 30, 2021 Balance Sheet
September 30, 2021 Balance Sheet September 30, 2021 December 31, 2020 (Dollars in thousands) (unaudited) BALANCE SHEET DATA: Cash (including restricted cash) $ 80,487 $ 179,679 Current assets 142,471 247,202 Total assets 1,176,765 1,232,809 Current liabilities (excluding current portion of long-term
Slide 14: Third Quarter Highlights
Third Quarter Highlights Three Months Ended Nine Months Ended September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020 (unaudited) (unaudited) FLEET DATA: Total number of vessels at end of period 43 51 43 51 Average number of vessels (1) 40.6 51.4 41.3 52.9 Total ownership days fo
Slide 15: Q4 2021 estimated fleet-wide expenses
Q4 2021 estimated fleet-wide expenses(1) Daily Expenses by Category Free Cash Flow(2) Net Income ◼ Our year-end debt target is $246m following targeted Direct Vessel Operating(3) $5,100 $5,100 voluntary debt paydowns totaling approximately $59 G&A Expenses(4) 1,338 1,467 million in Q4 2021 Technical
Slide 16: Industry Overview
Industry Overview
Slide 17: Freight rates at decade highs in the YTD
Freight rates at decade highs in the YTD… $90,000 Index rates as of $80,000 November 3, 2021 Baltic Capesize Index $70,000 Baltic Supramax Index BCI: $27,162 $60,000 BSI: $30,005 $50,000 $40,000 $30,000 $20,000 $10,000 $- Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Source:
Slide 18: Asset values have significantly increased in the YTD
Asset values have significantly increased in the YTD $50 10yr old asset value increases in the YTD 10yr old Capesize $45 10yr old Supramax Capes: +85% Supras: +114% $40 $35 $30 $25 $20 $15 $10 $5 $- Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan
Slide 19: China steel production / iron ore imports
China steel production / iron ore imports China’s steel output has declined from record levels Correlation of China’s steel output and iron ore (China production usually peaks in Q2, and declines at YE) imports has broken down in recent years 110 120 Record 110 100 output 100 90 90 80 80 70 70 60 St
Slide 20: Coal market dynamics
Coal market dynamics China coal imports in recent years have declined ~65MT of Australian coal redirected from China to other into year-end, but in 2021 are trending higher due countries in the YTD to tightness in energy supplies 40 35 30 25 20 +16 +12 15 +3 10 +22 5 In addition to the primary desti
Slide 21: China could reverse policy into 2022
China could reverse policy into 2022… China GDP growth per quarter in 2021 vs target Key targets / dates 20% China GDP growth rates 18% >6% China’s 2021 GDP growth target 16% 2021 gov't target 14% 2021 consensus estimates China’s 2021 GDP growth consensus 12% 8% forecast 10% 8% Politburo meeting in
Slide 22: Brazilian iron ore exports are improving
Brazilian iron ore exports are improving… ◼ Brazilian iron ore exports have increased by 8% YOY through September 2021 ◼ Vale 2021 production guidance of 315-335MT ◼ Vale forecasts to reach a runrate of 370mtpa by the end of 2022 ◼ Key iron ore route provides high volumes together with long ton mile
Slide 23: Historically low orderbook + decline in fleet-wide productivity
Historically low orderbook + decline in fleet-wide productivity Current drybulk newbuilding orderbook as a % of the fleet per Clarksons (does not take into account slippage or scrapping) 2.0% 1.5% 3.0% 2.3% 0.8% 1.0% % of fleet 1.0% 0.7% 0.8% 0.7% 0.7% 0.6% 0.5% 0.5% 0.5% 0.5% 0.3% 0.2% 0.2% 0.1% 0.
Slide 24: Global fleet-wide impact of environmental regulations
Global fleet-wide impact of environmental regulations ◼ Slower maximum speeds due to EPL installations + CII compliance ◼ Older ships becoming less competitive, possibly increased scrapping ◼ Longer times in drydocking for installation of energy saving devices (think scrubbers, but to a lesser exten
Slide 25: Freight rate catalysts
Freight rate catalysts 1 Drybulk demand growth is expected to outpace vessel supply growth in 2022 2 Record low orderbook as a percentage of the fleet to limit net fleet growth 3 Global GDP forecast to rise 5% in 2022* 4 China’s demand to remain firm while rest of world continues economic improvemen
Slide 26: Q&A
Q&A
Slide 27: Appendix
Appendix
Slide 28: Genco pro forma fleet list
Genco 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 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 Genco Au
Slide 29: Significant fleet-wide operating leverage
Significant fleet-wide operating leverage $350 $300 Every $1,000 increase in TCE is ~$16m of $16m incremental annualized EBITDA on our $250 44-vessel pro forma fleet Illustrative net revenue ($ in m) $200 $150 $100 For our 17 Capesizes specifically, every $31m $5,000 increase in TCE is ~$31m of incr
Slide 30: Breakeven rate prior to debt service is covered
Breakeven rate prior to debt service is covered… …in nearly every rate environment over the last two decades, highlighting the importance of the quarter dividend reserve to be targeted off debt and interest payments – a prudent approach to protect the balance sheet during volatile market periods $50
Slide 31: EBITDA Reconciliation
EBITDA Reconciliation(1) Adjusted EBITDA 2017 to 9 mos 2021 2017 2018 2019 2020 Q3 2021 9 mos 2021 Net (loss) income $ (58,725) $ (32,940) $ (55,985) $ (225,573) $ 57,132 $ 91,154 Net interest expense 28,946 29,290 27,860 21,385 3,918 12,811 Income tax (benefit) expense - - - - - - Depreciation/amor
Slide 32: Time Charter Equivalent Reconciliation
Time Charter Equivalent Reconciliation(1) Three Months Ended Nine Months Ended September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020 (unaudited) (unaudited) Total Fleet Voyage revenues (in thousands) $ 155,252 $ 87,524 $ 363,851 $ 260,066 Voyage expenses (in thousands) 37,797 3
Slide 33: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation Three Months Ended September 30, 2021 Adjusted Net Income Reconciliation (unaudited) Net income $ 57,132 + Loss on sale of vessels 159 + Loss on debt extinguishment 4,408 Adjusted net income $ 61,699 Adjusted net earnings per share - basic $ 1.47 Adjusted net earni
Slide 34: Footnotes to Q4 2021 estimated fleet-wide expenses
Footnotes to Q4 2021 estimated fleet-wide expenses (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, primarily vessel drydockings, plus other no
Slide 35: Thank you
Thank you <&
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