Genco Shipping & Trading Limited (GNK) 4 May 232023 Q1 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Genco Shipping & Trading Limited First Quarter 2023 Earnings Conference Call and Presentation.

Before we begin, please note that there will be a slide presentation accompanying today's conference call. That presentation can be obtained from Genco's website at www.gencoshipping.com.

To inform everyone, today's conference is being recorded and is now being webcast at the company's website at www.gencoshipping.com.

We will conduct a question-and-answer session after the opening remarks. that at follow will time. Instructions the A any and be XXXXXX. at will during replay entering the passcode X-XXX-XXX-XXXX of time dialing next accessible by conference X the weeks

the turn conference will I time, go ahead. this over At to company. Please the

morning. Good

believe note the presentation, we'll certain Reform Such of Private pursuant Securities potential plan, other budget, connection operating estimate, circumstances Before statements expect, terms use this similar safe words or performance. words the forward-looking such of making in XXXX. intend, I in Litigation begin conference as anticipate, that statements we with harbor project, the forward-looking future future and to meaning in our financial discussion or call, be of provisions of Act events,

on observations. based expectations forward-looking statements management's are and current These

results Exchange the of and the please year Securities filings and the for the company's and issued yesterday, with For filed XX, XXXX, factors X-K differ, company's and release report this December cause to company's reports supplement XX-K Commission, the annual on relating could Form limitation, that call that the to press with discussion posted website Form Form ended XX-Q the on was the see company's a including, SEC. without the on company's materials

introduce At of to time, Trading this I Executive would John Officer Limited. Chief Wobensmith, like Genco Shipping &

XXXX Call. First Conference Good Quarter morning, Genco's Welcome everyone. to

providing an current call quarter our the today's by the fundamentals, questions. XXXX on call year-to-date reviewing update begin for opening will highlights, value QX up before I industry's results strategy, our comprehensive the and for financial and

on also presentation please refer earnings information, posted For our website. our additional to

to we our to for execute benefit value returned generated significant shareholders. we Following a continue which year sizable of shareholders, the strategy capital earnings during and

has quarter first continued achieve in of drybulk seasonal results period for financial what been the a low XXXX, freight to historically rates. During solid Genco

benchmarks, for a equivalent upon straight profitability. the as XXth charter above the our time a $XX,XXX This commercial million, adjusted quarter $X,XXX of platform. to nearly rate for scrubber day day, $X.X our led which best-in-class income of the was of achieved we quarter quarter We net per company's drew

have X approximately in that highlighting consecutive a achieved income drybulk to adjusted for While what X period duration, been X nearly longer net I now has has of years, market cycles favorable years sustained Genco and fundamentals. due profitability been note to historically

come we currently near have Given continue cycle historical in the time will this expect visibility book, be the to the can lows order online, with which new and we capacity extended.

XX% guidance as per rate ahead, breakeven $XX,XXX vessel quarter our Looking per of strong estimated our equivalent day per approximately of level the for charter QX well represents the earnings power QX flow our time cash remains and a increase above day. $X,XXX versus

company year, the Importantly, to a of for fleet-wide schedule we light during market we have as this view the enabling what balance a firming increase utilization drydocking period.

quarter declared we XXXX, share. of For a dividend the first of per $X.XX

reserve Board recommendation While quarterly produce to with management's a our declare quarterly of portion dividend not did $XX.XX million Directors for of XX% stated on dividend. utilize reserve the the quarter, to formula share our the per a of a

value sizable reserve the to central quarterly when seeks as market a appropriate the Genco strategy A of Genco's the use in optionality component as is pay for of reserve environments. diverse as well maintaining dividends

markets shipping During in seasonal drybulk quarter, experienced the the first volatility freight rates.

voluntarily to debt. continued pay However, Genco down

breakeven cash for since financial the positive Genco's growth, March, supply and those payment represents date X $X.XX under meaningful declared share sixth strategy a per balance dividend a leverage, to The gave quarterly quarter of rate confidence minimal our company for outlook underpinned low to the year, quarterly reduce flow our together dividends industry with first drybulk the This low and the significant value market rebound realized with over of reserve declare our cumulative by quarters. to dividend.

$XX.XX a to in our $X.XX This previously strategy the since reduced with flexibility April we've to of dividend our under quarter inception from of our back downward of to volatility. reserve lever policy, we periods value Consistent XXXX. maintain highlighted utilize million announced is smooth for of to million out our intention the first XXXX reserve

QX Importantly, Genco's we for industry pay low relied assets market into did not cash quarters, differentiators, the key reserve on like dividend. strong which amounts position. breakeven order sheet financial leverage reserved or the We and previous low quarter. in debt Periods in balance solely to quarterly reducing dip sell XXXX, this, highlight raise flow rate, are first the

in softer our a to of capital two voluntarily declare QX, able a debt strategy. and repay half the we dividend, of first pillars allocation key Despite rate environment temporarily were still sizable

XXXX, company's a the in speaks of now We the QX and and record our allocation. share strength total of share we have years approach $X.XXX prudent to of Since approximately cycles, or XX% almost through balance over our declared believe varying X of to dividends, track meaningful dividends per price. sheet capital our sustainable current

In a having addition Continuing we paying a dividends, in compelling continue debt to to time debt. on to proactively focus which to reduce created our pay net no position mandatory our to have meaningful risk-reward goal consistent seeking repayments to down we is medium-term debt model. down pay X, with debt during

Capesizes economy, world's impact year reopening market, balance developing the second also towards given this geared continues the on We rates which on currently the February lows. freight highs the at have Baltic rebounded for in $XX,XXX has over largest non-scrubber-fitted market, only to We drybulk be the drybulk Index. current for the Capesize since and year-to-date but per China, remain the the positive of at Regarding stand Asia. not meaningfully day the

over historical which the net for The will lows, remains order coming new improving limit building growth foundation fleet book providing years, solid a market. near an

has to freight to constraints order fundamentals growth tighten threshold low supply a Given fleet rates growth market exceed and to in demand outpace capacity, further in move up.

the last the and mid-June Apostolos nearly Shipping. is serve for will family job his behalf X On and wish the earnings of that year-end. call once over the the will and as for I We CFO, him to Genco this be thank I'd of in the point then like consultant our Zafolias, did through outstanding as Apostolos Before close, company leaving management a of best out I, team at decades all course going again, he Board the forward. he Directors,

Officer. I the At our over Financial call now this point, will Chief turn to Apostolos,

Thank you, John.

achieve debt paid financial During start a and further record the paid we first maintain down to down since On earnings to the quarter, reducing a leverage. of we cumulative solid we basis, net XXXX, loan-to-value debt, have current XX% continued low voluntarily commitment value as of levels of debt nearly debt million Genco Notably, of the since our XX%. our or balance. of $XXX to fleet scrap outstanding is 'XX, our enabling a X.Xx

recorded company $X.X and earnings of $X.XX per For net income $XX.X diluted QX million. million while our share, was basic EBITDA XXXX, or adjusted first the quarter

XX, with was when million, which combined $XX.X liquidity $XXX revolver total As million. provides cash of position of million, availability March our $XXX our of approximately

position, value three with of our together that unencumbered, This vessels pillars XXXX that and is fact Ultramax we under remain continue for dividends, through substantial comprehensive deleveraging the of five focused strategy, on provides delivering which the acquired the us flexibility liquidity growth. to significant

make reducing X. debt good to our meantime, on to objective progress net the we In our continue medium-term of

deleveraging, million of $XXX debt the net outstanding $XXX substantial Following our or was of debt. end million March, as our of

million. declared formula, $X.X share. down energy our dividend For a $XX.X $X.XX of device $X.XX dividend cost of the quarter, million. had flow debt operating saving Board Directors per Walking of million, treatment the repayments of Drydocking and ballast we less water of first cash system

the elected with to a drybulk decision To reiterate As based of our on the million formula significant in a in quarterly year. a $XX.XX balance since the utilize of the portion was the resulted wouldn't what rebound mentioned, declare reserve quarter's to dividend, for outlook quarterly have our Board March John positive this and the market reserve a Board's dividend. of

changes of anticipate Looking expense rate purchases per our stores. ahead quarter, we be crew of per and vessel and per that to to $X,XXX flow the due Within the breakeven vessel figure, to our expect around $X,XXX timing operating spares day, cash per be we day. vessel to primarily second

We continue year of the second first be anticipate to the while operating the maintenance expenses vessel We continue cost safety our and seeking meet vessel those optimization, half. to half of to in stringent focus below on standards. to do

over, once again, covered whole. would you, team, I the like the XX community support for bank take years. like I our us, the equity investor to call that Before Thank this John a have the all analysts Genco and hand great I also group the to and the time the thank all. as last to thank and would over experiences

our will discuss now SVP over the turn Strategy Peter to the of to Finance, and fundamentals. Allen, I industry call

Apostolos. you, Thank

of mid-February and approximately quarter lows Capesize first and per Baltic the hit of day, During indexes in Supramax the $X,XXX XXXX, respectively. $X,XXX

per to leverage levels significantly $XX,XXX rate been have of operating these day, significant highlighting rebounded However, and classes. these the asset $XX,XXX

indicators last positive much seen for drybulk the We've X of months.

In to China steel rates, XX% year-over-year. from into freight ore over as in currently. imports values output up we've witnessed being X% This has rise into well. utilization were increased asset coal while Iron translated QX, to and similar addition meaningfully higher XX% China's

floor approximately of While than GDP iron the growth China's China's COVID October recently, pulled they remain ore greater of prior levels, XX% . end X.X% target, to which the back have was consensus XXXX X% prices QX just we as potentially X%, figure estimates of as exceed and a puts view in this at stage. ahead of them more also line growth to GDP a

supportive As second drybulk ore will which continued be particularly of we expect with to rates look half in for we the for seasonally the coincide shipment stronger and year. ahead, Capesize coal, volumes, China's reopening iron believe we

of net annualized X.X%, Regarding side, to growth in the years. book percentage primarily the delivery the front-loaded near- long-term and a XXXX of fleet the the as low schedule. order fleet in as growth environmental as coming well low supply Historically of nature the due expected keep to was net X%, are regulations, QX just fleet

highlighted, the constructive outlook with together various given catalysts strong Overall, we have fundamentals. drybulk the supply-side historically demand market for a

your happy our concludes presentation, questions. and take now This will be we to

[Operator Instructions].

from comes first Jefferies. Omar from Your question Nokta

definitely, miss of you And best Wishing luck. with you. we'll working

beginning. there since been very You've the

Thank you very much, Omar.

Yes. Yes. Yes.

ask just talked basically I for we we're drybulk that year. Broadly, you. lows of earlier you in the for how And -- Cape. the highest the at the sitting to off non-eco at about we $XX,XXX guys year market the and bounced wanted So saw

market. being funfair doesn't the of the like reopening what almost talk to anticipated, per Just in a as maybe Cape Because se. perhaps long time. of industrially than quietest seeing lot about much side as it's wanted service you're to ask that be of things. China the a bit intensive is this slower There's a rates -- in run-up maybe being seem in kind not There

do weaker iron we And cap XX. much least weaker support seeing you level better at backdrop? of the think I this at at is at of seeing this is point going prices, rates are moment? What at ore rates telling market given thought, we're yet, backdrop What the that But in it have this than us, on late. guess, steel the -- given would

positive. we last X are rates, over I pretty both at months. of you Capes Omar, Any back today, that on seen healthy, look see for where and XX, particularly scrubber Ultramax's values the it adjusted is we've pretty firming the Cape which time feels over

would thesis you recovery -- would And a the was see this at I last guess talking that believe, our in really we recovery, go XXXX. second back until started half I year, reopening China wouldn't time to of meaningful October about -- of I a the probably I year.

to pleasantly is that now back seeing been stick after on surprised. right really still COVID China -- we've demand of in what lockdowns. recovering I So we're prediction think will I the

grabbing to place tend and the believe into put efforts I yet, still several have that lag. the are last months over those been don't stimulus

into of So vessel to We're of the that XXXX half second and this and XXXX. deliveries going see more in the a large I slowdown we certainly see get as into hitting also year very half this second year. in

$XX,XXX complacent we about a So it's day internally, like good breakeven. ho-hum. right Cape It's above funny more rates that. It's flow our we maybe $XX,XXX day cash cash it. how flow. the are enough And you're become than very But of a sort

XX but as answer that, into again, I good. it's months the think, longer after half second question, pretty they're and the now get Ultra year still it and next is And the see still going look your it's of then forward interesting but things the to So both how we and in also curve the interesting may flat healthy FFA flat, to pretty Capesize again, right -- levels. there's be Supramax. And -- at for

to So Capes. hovering on around XX XX the

-- well got That's the mean Yes. maybe you is rates we interesting. helpful. it's that breakeven. very it perhaps supply here, give just tighter than firm And just much credit Yes, for. just picture interesting I above see it's you've your a to

Yes.

follow-up. just One

topic, on reserve. is in the a mentioned reserve, strong condition. but financial separate the guys a Genco And You clearly, just very

overall. of a got amount good You've cash, low leverage

You over of couple paid down much debt past years. the so

dividend, the got got approach the you've You formulaic drydock where to the reserve.

You Or this past this your and have then with being overly are at reserve, $XX.XX Genco you strong -- quarter. given that's actually that that's think how on Kind what you you additional additional does -- of do are have you do you reserve, debt million, that? repayment that toggled think moment, which still needed? reserve the is of -- conservative thoughts

depreciating our plus have basically of important a repayment quarterly debt going for These assets. I renewal are The to is reserve fleet $XX.XX million it's off think interest. do forward.

into as dictates. back to need move newer do you so tonnage can that market we the So hold

clearly, the a $XX and million in in place. kept But year -- repayments we've principal

getting still So the of zero is over there. term to down the debt net medium goal

it's I no get to really So once that amortization. think to down mandatory will continue it I zero interesting think be have and debt -- to we net

sure put the reserve shareholders. obviously fleet setting future be make But point just for to important. We've I the flow we're believe company returned additional continuing the There's on a set is that up it, a got cash -- do fine can to renewal standpoint. from to to that

[Operator Instructions].

from B. next Your Liam comes question from Burke Riley.

do spot see charters, opportunities time you these rate opportunity? capture Or are time how you the charters? rising of in at to your looking that? of out you market to some Do a more John, other want environment,

Yes.

term -- that, to volatility. away we're heavily when coverage the mood, speak, would charter focus anything in basis. we we doing we're so on Having rate put fixed the not where tend long a So where because to more to time the for is of said on Capes

in market coming. rates Just is because firmer we do the believe

low, and put above when XXX% from charters vessels, index the quarter did Baltic rates premium What quite on Capesize were the to on we have is scrubber done, premiums very we a good plus bit Capesize vessels anywhere that. some BCI, XXX% away, in Index, beyond particular, really did a top first of this we at over in and of

rates, portfolio holding a in paid $XX,XXX that's off well, we're approaching the from I think day for time being. terms So back a But of again, actually really on as fixed standpoint, BCI. we're the

rumblings nicely Great. steel Peter, China are steel There quarter. ore environmental you in looking iron production demand? has of bounced about the initiatives. How production, first back been have pretty at obviously, the derivative

obviously year-to-date, Thanks, year. been almost week Steel rising has Liam. Steel in has China X% the question. Good every in really strong up production been QX. in this utilization

a there's positive lot indicators So there. been of

China happen in to Peak steel production QX. tends in

the peaks is But So drives peak of rates and iron ore half from what and year. rates drybulk really actually. right exports which particular, Australia, keep in that now, Brazil the around second in

peak to XX year. levels. million those tons to we significantly from need been And restock They've down ore get probably that China last highs There's back to inventories. do they to think iron restock drawn needs another

So of peaks what on on production the focused that's in now. during right about more construction ore China actually season flows commodity side iron because the spring we're typically steel

So yes, months. up on exports Australia, Brazil focused and really very in we're coming the iron ramping ore

that ask are lines. conference participating, there concludes today. your thank at time, for We no you and you for this your As disconnect call further questions this please

Liam. Thanks,