Genco Shipping & Trading Limited · NYSE:GNK
Genco Shipping & Trading — Sidoti Virtual Small Cap Investor Conference (January 2022)
36 slides from Genco Shipping & Trading's conference presentation, Jan 19, 2022
Slide 1: Genco Shipping & Trading Limited
Genco Shipping & Trading Limited Sidoti Virtual Small Cap Conference NYSE:GNK January 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: Presenters
Presenters Peter Allen John C. Wobensmith Apostolos Zafolias Senior Vice President, Chief Executive Officer Chief Financial Officer Strategy & Finance ◼ Over 25 years of ◼ 15 years of experience in ◼ 13 years of experience in experience in the shipping the shipping industry the shipping industry ind
Slide 4: Executive Summary
Executive Summary
Slide 5: Genco Shipping & Trading: Who We Are…
Genco Shipping & Trading: Who We Are… ◼ Genco is the largest U.S. based drybulk shipowner ◼ Focused on the global transportation of commodities providing a full-service logistics solution to our customers ◼ We transport raw materials such as iron ore, grain, bauxite, cement, nickel ore across world-
Slide 6: Global drybulk trade and key routes
Global drybulk trade and key routes ~90% of global trade is carried by the international shipping industry Iron Ore 30% Coal 17% Grain 14% Minor Bulks 39% Primary uses: Steel production Steel production Human consumption Various uses – Power generation Feed livestock linked to global GDP growth Cook
Slide 7: Genco transported 25 mdwt of drybulk commodities in 2021
Genco transported 25 mdwt of drybulk commodities in 2021 We employ a diversified asset base consisting of the larger Capesize vessels and medium sized Ultramax / Supramax vessels enabling us to carry a wide range of cargoes worldwide providing a full-service logistics solution to customers through o
Slide 8: 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 ― $203m of debt paid down through Dec 31, 2021 ― Reached target
Slide 9: Comprehensive value strategy
Comprehensive value strategy
Slide 10: Genco’s differentiated comprehensive value strategy
Genco’s differentiated comprehensive value strategy Focused on 3 key elements… Dividends Deleveraging Growth Use shares as a Debt repayments currency to grow Cash flow generation Debt prepayments Utilize reserve + Reduced cash flow utilizing cash on the revolver breakeven rate balance sheet + operat
Slide 11: Genco’s quarterly dividend framework / calculation
Genco’s quarterly dividend framework / calculation Straight-forward and transparent dividend formula Genco's quarterly dividend to be paid based on the Payment of first dividend under following formula: new policy in Q1 2022 based on Q4 2021 results Operating cash flow Less: Debt repayments Quarterl
Slide 12: 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 13: 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 For our 17 Capesizes specifically, every $31m $5,000 increase in TCE is ~$31m of $100 incr
Slide 14: 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 15: Securing cash flows in this strong earnings environment
Securing cash flows in this strong earnings environment Vessel Type Rate Duration Min Expiration Genco Liberty Capesize $ 31,000 10-13 months Feb-22 Baltic Bear Capesize $ 32,000 10-14 months Mar-22 Baltic Wolf Capesize $ 30,250 22-28 months Jun-23 Genco Maximus Capesize $ 27,500 24-30 months Sep-23
Slide 16: The drybulk supply and demand equation
The drybulk supply and demand equation Drybulk demand rebound post GFC, 18% record supply growth subsequently 80% “Supply shock” of 9,000 orderbook over ordering pressured the market 16% during boom years 8,000 Market began to 14% find balance in 7,000 Fleet Growth 2017 following the 12% 2016 lows 6
Slide 17: Market update and industry overview
Market update and industry overview
Slide 18: Freight rates remain firm, despite seasonal decline
Freight rates remain firm, despite seasonal decline $90,000 Index rates as of $80,000 January 18, 2022 Q1 seasonal factors 1) Weather related cargo disruptions impacting $70,000 Baltic Capesize Index BCI: $10,913 cargo availability 2) Timing of N/B deliveries 3) Timing of Lunar New $60,000 Baltic Su
Slide 19: Asset values have increased significantly over the last year…
Asset values have increased significantly over the last year… $50 10yr old asset value increases since end of 2020 10yr old Capesize $45 $40 10yr old Supramax Capes: +69% Supras: +95% $35 $30 $25 $20 $15 $10 $5 $- ◼ Genco’s fleet average age is ~10 years and has directly experienced the rise in asse
Slide 20: 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) imports has broken down in recent years 110 120 Record 110 100 output 100 90 90 80 80 70 70 60 Steel prod IO imports
Slide 21: Coal market dynamics
Coal market dynamics China coal imports in recent years have declined Australian coal redirected from China to other countries into year-end, but in 2021 trended higher due to tightness in energy supplies 40 35 30 25 20 +15 +15 15 +3 10 +19 5 - Mar-18 Mar-19 Mar-20 Mar-21 Jan-18 Jul-18 Jan-19 Jul-19
Slide 22: China’s policies becoming more accommodative in 2022…
China’s policies becoming more accommodative in 2022… China GDP growth per quarter in 2021 vs target Key targets / dates 20% 18% China GDP growth rates 16% >6% China’s 2021 GDP growth target 2021 gov't target 14% 2021 actual GDP growth 12% 8% China’s 2021 actual GDP growth 10% 8% Feb 6% Beijing Olym
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% 2.7% 1.2% 1.0% % of fleet 1.0% 0.9% 0.7% 0.7% 0.6% 0.6% 0.6% 0.6% 0.5% 0.4% 0.3% 0.3% 0.2% 0.0% Q1
Slide 24: Global ordering trends focusing on containerships
Global ordering trends focusing on containerships Drybulk Tanker Container Drybulk Current 7% 8% 23% 70% Oct-20 7% 8% 8% 60% Tanker % Variance -6% -2% 173% Average 22% 15% 19% 50% Container Min 7% 8% 8% Max 66% 33% 38% 40% 30% 20% 10% 0% ◼ Global newbuild ordering has been focused on the containersh
Slide 25: Freight rate catalysts and drybulk outlook
Freight rate catalysts and drybulk outlook Marsoft 2022 to 2023 S&D growth estimates Drybulk market catalysts Vessel* 2022 2023 Record low orderbook as a percentage of Iron Ore 1 the fleet to limit net fleet growth Capesize +3.9% +3.2% Coal 2 Strong 2022 global GDP growth forecast Capesize +3.2% +0.
Slide 26: Conclusion
Conclusion
Slide 27: Genco is attractively positioned to capture market upside
Genco is attractively positioned to capture market upside ◼ Experienced US-based management team Leadership ◼ US-filer with high corporate governance standards ◼ Demand and supply dynamics forecast to continue to improve in 2022 Drybulk Market Best-in-Class ◼ Active management through global commerc
Slide 28: Appendix
Appendix
Slide 29: 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 30: 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 31: 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 32: 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 33: 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 34: Global debt refinancing provides further optionality…
Global debt refinancing provides further optionality… …and flexibility within our capital structure as we continue to implement our comprehensive value strategy, key terms include: Credit facility capacity: $450 million, consisting of a $150m term loan and revolver up to $300m Target debt outstandin
Slide 35: Genco fleet list
Genco 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 Auvergne 200
Slide 36: Thank you
Thank you <&
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