Genco Shipping & Trading Limited · NYSE:GNK
Genco Shipping & Trading — Q4 2023 Earnings Presentation
47 slides from Genco Shipping & Trading's earnings presentation, Feb 22, 2024
Slide 1: Q4 2023 Earnings Presentation
GENCO SHIPPING & TRADING LIMITED Q4 2023 Earnings Presentation February 22nd, 2024
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 Q4 2023 + YTD Highlights Financial Overview Industry Overview 3
Slide 4: Fourth Quarter 2023 and Year-to-Date Highlights
Fourth Quarter 2023 and Year-to-Date Highlights 4
Slide 5: Fourth quarter 2023 and year-to-date overview
Fourth quarter 2023 and year-to-date overview Enhanced ability to succeed through all industry cycles Remain committed to strong corporate governance and are focused on enhancing the Company’s potential to Executed across our deliver returns to three strategy pillars shareholders, reducing the Compa
Slide 6: Q4 2023 highlights + financial performance
Q4 2023 highlights + financial performance Value Strategy Financial Performance Q4 2023 dividend: $0.41/sh, Q4 2023 net income or $0.11/sh (diluted) Dividends 18th consecutive quarterly dividend totaling 29% of $4.9m Adjusted net income of $18.6m or $0.43/sh ex-non-cash vessel impairment charge the
Slide 7: Continued progress in 2023 regarding our value strategy
Continued progress in 2023 regarding 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 $249m of debt high dividend yield company gro
Slide 8: Compelling quarterly dividends over the last 4.5 years
Compelling quarterly dividends over the last 4.5 years Significant increase in dividends since value strategy inception Sustained dividends across diverse market environments 9 18 18 Consecutive quarterly quarters dividends since Q3 2019 # of quarters $4.100 $5.155/ Dividends in aggregate since $5.1
Slide 9: Executed the next leg of our fleet renewal strategy
Executed the next leg of our fleet renewal strategy High-grading 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
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 These two sectors provide Major bulk complementary characteristics Minor bulk Capesize Ultra/Supra for Genco’s value strategy… 16 Direct exposure
Slide 11: Genco is in an advantageous position…
Genco is in an advantageous position… …due to its fully considered strategic capital allocation priorities …together with $295m 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 ac
Slide 12: Financial flexibility in various freight market conditions
Financial flexibility in various freight market conditions Asset values rising due $70 to firm freight rates and Significant supported by strong operating leverage Cape 5-year N/B prices $60 Ultra 5-year $50 Well-positioned in $40 up or down markets $30 $20 Countercyclical opportunities $10 to buy v
Slide 13: Allocating capital to enable Genco to create value through cycles
Allocating capital to enable Genco to create value through cycles 1 Low financial leverage Results in low cash flow breakeven rate – medium term goal of zero net debt 2 Compelling quarterly dividends Returned 29% of the current share price in dividends over 18 consecutive quarters of dividend distri
Slide 14: Financial Overview
Financial Overview 14
Slide 15: Fourth quarter earnings
Fourth quarter earnings Three Months Ended Three Months Ended Twelve Months Ended Twelve Months Ended December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 (Dollars in thousands, except share and per share data) (Dollars in thousands, except share and per share data) (unaudited) (u
Slide 16: December 31, 2023 balance sheet
December 31, 2023 balance sheet December 31, 2023 December 31, 2022 (Dollars in thousands) (unaudited) BALANCE SHEET DATA: Cash (including restricted cash) $ 46,857 $ 64,100 Current assets 157,272 125,430 Total assets 1,141,902 1,173,866 Current liabilities (excluding current portion of long-term de
Slide 17: Fourth quarter highlights
Fourth quarter highlights Three Months Ended Twelve Months Ended December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 (unaudited) (unaudited) FLEET DATA: Total number of vessels at end of period 46 44 46 44 Average number of vessels (1) 44.8 44.0 44.2 44.0 Total ownership days for
Slide 18: Debt outstanding per quarter
Low financial leverage through voluntary debt repayments $500 New $500m RCF increases flexibility to: Debt outstanding 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 Draw for 2
Slide 19: Transparent dividend policy
Transparent dividend policy Target: 100% of excess quarterly cash flow ex-maintenance and withholding for future investment Dividend calculation (numbers in m Q4 2023 actual Q1 2024 estimates except per share amounts) Fixtures to date + Q1 2024 to date estimate based on 81% Net revenue $ 70.62 marke
Slide 20: 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 +34% Q1 2024 TCE estimate to date YoY $18.7k based on fixtures for ~81% of the quarter’s available days $15 81% ~81% of the Q1’s TCE ($ in 000s) available days fixed $10 $18
Slide 21: Industry Overview
Industry Overview 21
Slide 22: 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 BCI: $2.3k 4/4/2023 4/11/2023 4/18/2023 4/25/2023 5/2/2023 Baltic Capesiz
Slide 23: Drybulk freight rate seasonality
Drybulk freight rate seasonality 1 Brazilian iron ore exports historically decline in Q1 due to poor weather + scheduled maintenance… 2 …while newbuilding deliveries rises in the beginning of the year due to the frontloaded nature of the orderbook… 120 25 100 20 80 15 60 10 40 20 5 0 0 Q1-2017 Q1-20
Slide 24: BSI seasonality around the CNY (2016 to date)
BSI seasonality around the CNY (2016 to date) Chinese New Year & BSI Low BSI Rates $40,000 Year CNY BSI Low Avg Low High 2016 Feb 8 Feb 12 $ 6,164 $ 2,330 $ 9,525 $37,500 2017 Jan 28 Feb 6 9,345 6,432 12,564 $35,000 2018 Feb 16 Feb 13 11,487 9,333 13,431 2019 Feb 5 Feb 6 9,948 4,837 15,233 $32,500 2
Slide 25: Panama Canal re-routing due to low water levels
Panama Canal re-routing due to low water levels ~53 days ~10 days ~40 days ~40 days ~57 days 25
Slide 26: Suez Canal re-routing due to geopolitical tensions
Suez Canal re-routing due to geopolitical tensions Previous trade route Re-routing due to Suez Canal ~36 days 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 ~48 days 26
Slide 27: 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 84% China steel mill utilization 170 China steel production was flat YoY 160 +0% in 2023 150 Iron ore imports increased by
Slide 28: Global steel production rebounding
Global steel production rebounding Global steel production (MT) Dec 2023 Dec 2022 % Variance FY 2023 FY 2022 % Variance China 67.4 79.2 -14.9% 1,019.1 1,019.1 0.0% ◼ China produced 55% of global steel output European Union 9.1 8.8 2.7% 126.3 136.4 -7.4% in 2023 Japan 7.0 6.9 1.1% 87.0 89.2 -2.5% Ind
Slide 29: Grain trade impacted by macro environment
Grain trade impacted by macro environment Entering South American grain season Wheat 2023/24p 2022/23e Variance % Variance World 210.69 220.17 (9.48) -4% US 19.73 20.65 (0.92) -4% +4MT Russia 51.00 47.50 3.50 7% Ukraine 15.00 17.12 (2.12) -12% -7MT Aust 19.50 31.82 (12.32) -39% Canada 24.00 25.59 (1
Slide 30: 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 ~35% In 2030, ~35% of the current 350 drybulk fleet will be 20 years or older or ~5,000 ships 300 250 8% Fleet size (mdwt) >8% of the fleet is currently 200 20 years
Slide 31: Supply side remains favorable, despite easing congestion
Supply side remains favorable, despite easing congestion Global port congestion has eased since April of 2023… ◼ Meaningful reduction in global port Capesize Panamax 125 -12% congestion in 2023 115 105 Upside risk to congestion given the recent Mdwt 95 ◼ 85 unwinding which has brought levels to 75 b
Slide 32: 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 +4.0% +1.7% Record low orderbook as a percentage of the fleet 11 expected to limit net fleet growth Coal Capesize Panamax +0.1% +0.1% 2 China stimulus Gra
Slide 33: 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 33
Slide 34: Q&A
Q&A 34
Slide 35: Thank You
Thank You
Slide 36: Appendix
Appendix 36
Slide 37: #1 rated ESG shipping company for 3rd straight year
#1 rated ESG shipping company for 3rd straight year Environmental Social + Governance Short to medium term focus Longer term plan Technological advancement Transition to alt fuels Fleet renewal – buying more ― Ammonia ESG committee of our board of directors established fuel efficient ships ― Methano
Slide 38: Genco's pro-forma fleet list
Genco’s 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 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
Slide 39: Longer term time charter activity
Longer term time charter activity Vessel Type Rate Duration Min Expiry Genco Endeavour Capesize BCI + 27% + scrubber 11-14 months Apr-24 Genco Resolute Capesize BCI + 27% + scrubber 11-14 months Apr-24 ◼ We continue to utilize a fleet-wide portfolio Genco Defender Capesize BCI + 25% + scrubber 11-14
Slide 40: Significant 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 41: EBITDA reconciliation
EBITDA reconciliation(1) Adjusted EBITDA Q1 2021-Q4 2023 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 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) $ 4,937 Net interest expense 4,470 4,
Slide 42: Time charter equivalent reconciliation
Time charter equivalent reconciliation(1) Three Months Ended Twelve Months Ended December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 (unaudited) (unaudited) Total Fleet Voyage revenues (in thousands) $ 115,516 $ 126,973 $ 383,825 $ 536,934 Voyage expenses (in thousands) 42,450 43
Slide 43: Net income reconciliation
Net income reconciliation Three Months Ended December 31, 2023 Net Income Reconciliation (unaudited) Net income attributable to Genco Shipping & Trading Limited $ 4,937 + Impairment of vessel assets 13,617 + Unrealized loss on fuel hedges 1 Net income $ 18,555 Adjusted earnings per share - basic $ 0
Slide 44: 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 45: Q1 2024 estimated fleet-wide expenses
Q1 2024 estimated fleet-wide expenses(1) Daily Expenses by Category Net Income Free Cash Flow(2) Vessel Operating Expenses(3) $6,150 $6,150 Est Ownership / Owned Available Days – Q1 2024 G&A Expenses(4) 1,589 1,370 Vessel Type Own. Days DD Days Owned Avail Days Technical Management Fees(5) 234 234 C
Slide 46: Footnotes to Q1 2024 estimated fleet-wide expenses & operating expense reconciliation
Footnotes to Q1 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 47: 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 …cash flow breakeven rate is covered in nearly every rate environment over the last 2 decades Significant operating leverage inherent in $100,000 the business Illustrative fleet-wi
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