Genco Shipping & Trading Limited (GNK) 9 Nov 232023 Q3 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Genco Shipping & Trading Limited Third 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 and instructions will follow at that time.

A replay of the conference will be accessible at any time during the next 2 weeks by dialing in 1(877)674-7070 and entering the passcode 329256.

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

morning. Good

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

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

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

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

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

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

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

value with quarter, strategy, During sizable shareholders fleet. to to while our providing take the third steps continuing our renew we advance continued dividend a to

differentiated to lower even and policy. sizable share built-in we levels industry of per we as environment. utilize This capital flexibility freight shareholders a dividends low and our optionality providing dividend break-even within quarter, a the structure for dividend during rate declared highlights Genco's For the $X.XX

share XX% time, price. quarterly of current or consecutive commitment per $X.XXX Notably, shareholders. this share success Over capital highlighting XXth our third quarter represents of have and we declared returning our significant dividend, the to the dividends

our the date, declare the flow per produce elected improved the to confidence position, in for the dividend quarter, dividend. recommendation formula While gave $X.XX low rate break-even to Genco's to leverage cash stated financial the share share dividend. Directors the rates of freight management's Board with together QX company per did declare and not on industry-low $X.XX

Regarding quarterly of $XX.XX million the the $X.XX have and dividend calculation, consolidated for line voluntary $XX.X previous dividend. one reserve of reserve we QX to totaled reduced million which debt was quarterly $X.X the This quarterly the in voluntary repayment million, item. of voluntary million purpose

debt it one repayments Given reserve. are in to fully quarterly consolidate we Genco's the that reserve and felt into discretion, both was appropriate voluntary them

while new expense facility, loan with term advantageous interest revolving more debt structures flexibility structure outstanding capacity providing vessel with to partially our to Furthermore, meaningful this credit fund future reduce than to our previous manage us actively acquisitions. allows XXX%

QX, maturities. with line continue facility Genco capacity In debt down the without facility, revolving with in X interest aligns of voluntarily million down as $XXX we losing structure revolving draw debt facility credit expense to fund value a medium-term strategy This our extending our credit reducing well received pay borrowing our the debt, enables significantly and for to capacity, a commitment goal expanding growth. to net to

taking vessel. of delivery the Ranger to acquire advantage strong took in a to renamed modern Genco we be vessel anticipate agreement we year. this of opportunistically a position XXX,XXX scrubber-fitted ton point, Capesize this The enter an vessel, XXXX-built To of is mid-November SWS Capesize into the company's which to deadweight liquidity high-specification

Modern a of Eco rarely in Capesizes handful with trade transactions only year. a given

our purchase to this modernize fleet. with pleased are we such, As further

purchase and our market line renewal strategy. fleet assess additional in in to the sale continue We transactions with

firm by uplift QX significant in drybulk solid is market, rates current and today. our iron TCE shipments, ore, bauxite September, in estimated coal we have a the seen drybulk beginning reflected led Regarding which freight in

demand a and supportive view the we book, to we persist, low from growth to have Moving China in historically resulted market. volatility developing for forward, order capacity drybulk Asia, expect be while commodity constraints coupled that with

rate improvement, we also recent strengthen. value asset the Given have seen

In shipyard continue secondhand newbuilding firm of asset be to addition, supportive prices values. lower and capacity

October, pleased Global reductions footprint, statement in Lastly, we to by the initiative our to on become efficiency Maritime carbon signatory a operational focused an emissions reducing led are ambition the Forum. and

Allen, our I now over call the will Officer. Chief return Peter to Financial

John. you, Thank

XXXX, and noncash $XX.X recorded a vessel $X.XX of a million basic company million. net or the charge loss of impairment share, loss QX included For diluted which $XX per

net Excluding future loss charge, we renewal. estimated undiscounted recorded per X vessel for ton or share. impairment flows were Capesize XXX,XXX noncash that This diluted $X.X as $X.XX fleet was million is as our the cash loss adjusted vessels our noncash this of divesting basic part deadweight of and evaluating charge

their third survey the during special fair third we, values The adjusted not their value scheduled net did quarter. and market in therefore, exceed book to values XXXX

Adjusted the EBITDA for X-month total to million. $XX.X $XX.X QX bringing XXXX totaled million,

$XXX.X net outstanding XX, XX%. net of our our million, loan-to-value million was $XX to September As debt $XX.X cash to our was bringing and position debt million and

million $XXX.X our availability, $XXX was of revolver end at million. quarter total of undrawn liquidity With third position the the

XXX% X.XX% providing to X.XX% to to previously, SOFR facility plus pricing of X.XX% to SOFR $XXX include support Key of end flexibility. a QX, [ the maturity as borrowing credit ] general capacity to (sic) extended terms and in received by increase on lower $XXX XX% in be (sic) growth X.XX% an XXX% Subsequently revolving further [ we well XXX% can margin fleet commitments nearly ] or million, structure credit plus million compared utilized which as over a purposes. core for revolving XXXX facility,

participated shipping lenders both the the of high-quality group to facility, leading in new our are continued support appreciate lending that Genco. We that international existing and revolving including banks

to amended subject is and in definitive customary The conditions of and close expected fulfillment documentation XXXX. closing facility is to QX

million. debt undrawn outstanding be to This QX partially a $XXX.X in the pro amended million the from includes Ranger. Genco drawdown and anticipate $XX million $XXX.X forma closing availability the facility we acquisition of Upon of and an acquisition, revolver

be rate QX of per TCE fixed. to for to cash ahead day, we Looking $XX,XXX XX% date our per break-even $X,XXX XXXX, QX to estimates below flow vessel our well anticipate

slow from the Index a to start The Multi $X,XXX third push Capesize to reaching end $XX,XXX. continued began approximately higher rose specifically. rise freight quarter quarter, of $XX,XXX. September to rates to in a in October, After Rates year-to-date high the at

at in $XX,XXX near volatility expect current and spot Supramax $XX,XXX we firm. persist and remain rates While the to term,

second ore coal and miners The Australia abundant supporting seen Brazil into by major increased XXXX, of ore China In availability year-to-date solid from in iron figures. these iron have X% and respectively. XX%, have the half we import trades and cargo

tight we the October, Given the offset to supply-and-demand higher. meaningful congestion general off port congestion while In the helped continue push freight QX, of be reduce balance, of some rates, to sensitive effective firm of which on volumes in unwinding, QX levels. saw lows trade and rates increased freight pressure to rates and the fluctuation capacity

indicators increase an Despite of $XXX Asia. mill multiyear China's after signaling the routes production countries signals. XX%. support sector, developed convey continued ex the risen an in for and several straight above period demand above to complex for inventories, steel steel has ore ore steel outside now ton key the contraction, elongated of in months within China secondary China X Furthermore, potentially prices within challenges trade iron port per include low and property positive utilization iron These

the expected side, of year-to-date fleet as primarily nature book net supply the the the low levels. as fleet X.X%, and order delivery growth longer-term is keep growth due regulations in to low Regarding coming fleet net front-loaded are percentage a and the years. low well near-term annualized in historically scrapping of environmental to schedule the The as

of volatility of a provides year, the early market forward. a low of balance the our drybulk basis view year While we and of supply growth expect foundation going into solid for for the the constructive next part picture

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

first from [Operator the line Omar comes of Jefferies. Nokta from question Instructions] Your

First you that revolving, off, a Obviously, revolver. the that's facility that. congrats see congrats million size guess, on every of I that so on fully day not $XXX

a of XXXX-built sort ship. just to Cape, the you ask about acquired Wanted

also going you way be sale a that. more and read and signaled in kind front I the Just release is purchase of the on active in and to general, purchase of it both sort it's like the sale bit being sounds

maybe moving forward Genco us give in more bit a you maybe about how term the in near bit or a on expand the that color Could here thinking comment you're market? S&P and

Thanks, Yes. Omar.

at you So the we look our some if XXXs. Capes, some older of fleet, had

Eco those So is vessels. ultimately to our high-spec newer with intention replace

on we're looking working right at now. that a few and So things

Genco on are then coming the Supramaxes, next older And year. we the which for drydocking up the Auvergne, the have and are and also the Aquitaine, Bourgogne Ardennes,

Ultramax replacing on those So better higher-spec type also focused vessels fuel Eco, efficiency vessels. with were the

drydocking are mentioned just I that vessels year. those all have We next

by So and the newer try CapEx to capital deploying intention disposing on those be would the of vessels. save for to numbers

And obviously year. I trying our EU starting into the to play carbon footprint, next think coming the you but we also ETS have We're side. have CapEx reduce

Ultras those to and position So up. keep costs a trade can the in down we want Supras, year as particularly be we to with to efficient as better and be the

past maybe to in acquisitions, And time back And over been the on a terms several helpful. Cape. Genco been some That's of since was just the acquired has Ultras. you've years focused come Ultra/Supras. it's more Clearly, going the to

that investment? sort a a What's approach? barbell wanting in future the... to this shift of lean perhaps Or it Is in thinking, kind is in bit still higher of

Yes. trade we've now. Eco the few a over approach. years, very year tonnage barbell your I a to would this the hands it's in It's difficult get We like few And really Ranger. XXXX, on exposure. including Capesize say still seen Genco this only last right

on So be up, about what you and did it, when precise they we to here. is which move come quickly want very do them

focus are some the have and going the certainly on to maybe But vessels than reducing going and and forward again, regulations Eco value ships. I more more with flexibility trading think more older environmental of emissions,

new Clearly, one Yes, maybe just maturity by and And lot it one you out plus. pushed turn maybe -- over. the a and I'll me the the more for final couple gives revolver flexibility, you years a one, of definitely.

the dividend about or reserve new ongoing conservative, sort see the and obviously you it, that toggle once giving policy changes When in we the the is but is with happening go facility you of any sort of reserve, is that completed? plenty think very kind of to which with shifts numbers there of into flexibility general, the

see any I point, though. this change don't at

So of for as we have and meeting, how there And XXXX, we fourth quarter did we've we with set get into fourth be about discussion out announced will we Board that ahead normal obviously we that the time. and when to and quarter XXXX. announcing XXXX guidance for our put want

and out. session for strategy tuned, our go stay say plays see would I we'll XXXX and the conversations So how

Very on the And again good. All congrats right. Well, thanks, John. facility.

Thanks, Omar. Appreciate Great. it.

Liam Burke B. of line Your the question from Riley. next comes from

side, congestion Yes. John, either or supply steaming additional with slow the through tightening seeing on the any are fleet? you global

has Look, side actually already. lot the as is congestion global driving iron particularly coal of fairly to there's move China, is fleet and that. up is it, of going again. a of ore in I started Obviously, flow think slow that it The

we not. still into certainly, -- can we next congestion averages, during rates back should market and risk year, get there get to I Probably we of historical get positive, Are which back COVID? But the out again. supply push going help to think as we into winding upside up the year. of take more is get on to up there's next levels as

mentioned for mention about the You prepared hawked outlook commodities the your that the how your are you and comments in did Capesize [ market -- ]. --

see down fitting the seems As road, book of look to where a in vis-a-vis there? still a there do order Newcastlemax percent them larger you we the be

was In that Capesize -- terms yes. the the Yes. fitting Newcastlemaxes, in of with

the like its still flexibility times There we so the you're capacity. not of filling a Capesize than full Newcastlemax personally, So where Newcastlemaxes. up the more are to

the capital, like efficient. more on modern in we -- but fuel sector. And ones Capesize -- like return of that are obviously So terms the we still

And significantly, for a I bauxite look in which at case of extremely quite But iron going Capes X Liam, trades, active while. growing is the or think coal be the quite that those if trade, to it's the all are or you markets. whether it's

comes Your BTIG. from question next the line of from Elmaghrabi Sherif

what we've So charter-in below days the far for roughly from first, QX, years. last couple they're of doubled but seen still pretty

So rates QX. a to pretty have from improvement QX seen significant

tick general the would how charter-in any guess, So chartering should end helpful. the higher expect to year? you're of for about I color thinking in on days be we

Yes.

obviously that been over on create midsized in chartering alpha use to term. we've trades the which mind, in short is keep in very forward So our doing arbitrage very particularly on indices, the used cargo we is create to the have existing we're successful that booked It sector. and fleet at,

charter-in fourth The into moved as really we're we expect -- get higher the we the but in get I I quarter, days guess market as quarter fourth or to has end. some would to the see up.

have been for which we fixing first We is also quarter, what some typically forward do.

you'll think more see as charter-in quarter tonnage I well. in So the first

that somebody in in short-term mind take term. ship and else's long It's But then chartered-in use tonnage, is cargo. other keep an our again, go where we've cargo usually not to liftings opportunity and perform arbitrage identified ship for

very record levels And grain have inland low bit of South the and helpful. a in But exports. on in North a grain That's Brazil. story, maybe macro, more then American we season water we've constraining the got then kind U.S.,

QX. Mississippi on you winter into persist exports how grain especially seaborne of see the So levels the out, shaking kind I'm given water low could wondering

[indiscernible]

been the market America. we've It's seen, some of been volumes offset to the terrific extended. particular. been of Ukraine, supportive Yes. No, for definitely Thanks it's Yes, season grain Atlantic in good overall look, It's of and out out absolutely. to obviously a reduced question. the South it's that

to the grain season again, In wheat towards future, quarter, of the back QX. fourth up in American lower. we'll be exports South not-too-distant picking the have in But U.S. out likely yes, end of --

So relatively should be it short-lived.

help We Panama instead ton the Canal, which is Canal miles through some Suez. going and through extending ships on taking getting of they're are situation, going the Panama

extending it's ton So there. miles

the some are are fleet current that there supportive So inefficiencies market. to

do the during expect Q&A, in good in that. well job of we're as remarks the mentioned as but QX, we John a like volatility fixing over doing yes, But prepared

X have -- period $XX,XXX over at -- deals the short Ultra/Supras We period are that March. $XX,XXX on fixed to through

side. So pretty that good on job

ended. Q&A conference participating. you today's gentlemen, and ladies This our has And all Thank session concludes call. for

may You disconnect. now