Genco Shipping & Trading Limited · NYSE:GNK
Genco Shipping & Trading — Sidoti June Small-Cap Virtual Conference 2023
42 slides from Genco Shipping & Trading's conference presentation, June 2023
Slide 1: Genco Shipping & Trading Limited – Sidoti June Small-Cap Virtual Conference
GENCO SHIPPING & TRADING LIMITED Sidoti June Small-Cap Virtual Conference June 2023 NYSE: GNK
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 John C. Wobensmith Apostolos Zafolias Peter Allen Chief Executive Officer Chief Financial Officer SVP, Strategy & Finance ▪ Over 25 years of ▪ 18 years of experience ▪ 15 years of experience experience in the in the shipping industry in the shipping industry shipping industry ▪ Significan
Slide 4: Executive summary
Executive summary 4
Slide 5: Genco Shipping & Trading overview
Genco Shipping & Trading overview ◼ The largest U.S. based drybulk shipowner, with 44 modern, high quality vessels transporting both major (iron ore & coal) and minor (grains, cement, fertilizers, etc.) bulk across all key world-wide shipping routes ◼ Optimized risk return profile: low leverage (11%
Slide 6: Q1 2023: continued strong financial performance
Q1 2023: continued strong financial performance Financial performance Value strategy Net income attributable to Genco, Q1 2023 $2.6m $2.6 million, basic and diluted earnings per share of $0.15 Q1 2023 dividend per share $0.06 Declared 15 consecutive quarterly dividends $19.9m Q1 2023 adjusted EBITDA
Slide 7: Global drybulk trade and key routes
Global drybulk trade and key routes ~90% of global trade is carried by the international shipping industry – Genco’s global footprint maximizes revenue generation by capturing market trends in real-time Copenhagen Commercial Operations Minor Bulk focus U.S. Headquarters Corporate strategy Finance/ac
Slide 8: Genco transported 25mdwt of drybulk commodities in 2022
Genco transported 25mdwt of drybulk commodities in 2022 We employ a diversified asset base consisting of large Capesize vessel and medium size Ultra/Supramax vessels, enabling us to carry a wide range of cargoes worldwide Drybulk trade is ~half of seaborne trade volume Genco’s commodities carried Co
Slide 9: Global grain trade: key component of our business
Global grain trade: key component of our business helping to feed the world and alleviate hunger #3 Grain is the 3rd largest commodity carried by the vessels in our fleet… …representing over 20% of our commodities >20% loaded by our minor bulk fleet in 2022 Corn, wheat, soybeans and other agricultur
Slide 10: Current drybulk market trends
Current drybulk market trends Orderbook Environmental China Geopolitical / macro 7.1% 2023 Reopening Ukraine Historically low Environmental China’s pivot from zero- Russia’s war in Ukraine newbuilding vessel regulations have led to Covid policies + stimulus has resulted in a re- orderbook as a lower
Slide 11: The drybulk supply and demand equation
The drybulk supply and demand equation 80% 18% orderbook 9,000 16% 8,000 14% 7,000 Fleet Growth 12% 6,000 Drybulk Trade Growth 10% 5,000 BDI 7% % growth 8% 4,000 orderbook BDI 6% 3,000 4% 2,000 2% 1,000 0% 0 -2% -1,000 COVID-19 -4% -2,000 Financial War in crisis Ukraine Source: Clarksons Research Se
Slide 12: 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 Major bulk Minor bulk These two sectors provide Capesize complementary characteristics for Ultra/Supra Genco’s value strategy… 17 27 vessels vesse
Slide 13: Portfolio approach to scrubber installation
Portfolio approach to scrubber installation Genco continues to capture wide fuel spreads thru scrubbers installed on 17 Capesize vessels ◼ Genco implemented a portfolio approach for IMO 2020 compliance ◼ Installed scrubbers on Capesize vessels + consuming VLSFO on our minor bulk vessels ◼ All-in cos
Slide 14: Genco's ESG overview / recent initiatives
Genco’s ESG overview / recent initiatives #1 rated public shipping company on ESG matters (1) ◼ Replaced older, less fuel-efficient vessels with modern Ultramax ships that will lower overall fuel consumption in order to reduce our fleet’s greenhouse gas emissions ◼ Implemented an IMO 2023 compliance
Slide 15: Comprehensive value strategy
Comprehensive value strategy 15
Slide 16: Genco's comprehensive value strategy
Genco’s comprehensive value strategy Focused on 3 key elements… Significant dividends Deleveraging Growth Debt outstanding at Mar 31, 2023 $162 Use shares as a currency million (~40% of fleet’s current scrap value) Debt repayments to grow Cash flow generation Debt prepayments Utilize reserve + revol
Slide 17: Dividend history over the last ~4 years
Dividend history over the last ~4 years Sizeable dividend payouts since the implementation of the value strategy Dividend history Significant increase in dividends since Sustained dividends across (Q3 2019 to date) value strategy inception diverse market environments Quarter Dividend/sh 6 15 Q3 2019
Slide 18: Quarterly dividend calculation / framework
Quarterly dividend calculation / framework Straight-forward and transparent dividend formula Dividend calculation (numbers in m Q1 2023 actual Q2 2023 estimates except per share amounts) Fixtures to date + Net revenue $ 53.40 market Operating cash flow Operating expenses $ (32.19) $ (33.57) Less: de
Slide 19: Genco's industry low cash flow breakeven rate
Genco’s industry low cash flow breakeven rate Genco’s financial de-leveraging thru large scale debt paydowns has helped to create the strongest balance sheet among its peer group Meaningful reduction in debt outstanding thru large- …significantly reduced our cash flow breakeven scale debt paydowns s
Slide 20: Significant fleet-wide operating leverage
Significant fleet-wide operating leverage Highlights the improved risk / reward profile of our new value strategy $350 Every $1,000 increase in TCE is ~$16m of $16m incremental annualized EBITDA on our 44- $300 vessel fleet $250 For our 17 Capesizes specifically, every $5,000 Illustrative net revenu
Slide 21: Current drybulk market dynamics
Current drybulk market dynamics 21
Slide 22: Freight rate development
Freight rate development Baltic Capesize Index Baltic Supramax Index $20,000 $15,000 $10,000 Current BDI BCI is based on a non- scrubber fitted Capesize BCI: $12,702 $5,000 BSI: $7,984 $- 22 Source: Clarksons Research Services Limited 2023
Slide 23: Drybulk trade tilted towards developing Asia
Drybulk trade tilted towards developing Asia… +0.8% / +1.4% 9% +5.2% / +4.5% 0.17 +1.6% / +1.1% 46% (75% of IO, 19% of coal, 26% of grain) 0.4% 0.65 0.07 Easing monetary policy + Tightening monetary stimulus , CPI at 1% policy, CPI at 6% +5.9% / +6.3% 6% (17% of coal trade) 0.29 2023 / 24 GDP growth
Slide 24: Historical seaborne iron ore imports and China steel production
Historical seaborne iron ore imports and China steel production Brazil IO exports peak in 2H… …together with Aust IO exports China’s IO inventories are at lowest levels since Jul 2022 100 +19% or +31MT 200 +7% or +26MT 170 34MT draw down from in 2H vs 1H in 2H vs 1H 2022 high 160 75 175 IO stock bui
Slide 25: Grain trade impacted by macro environment
Grain trade impacted by macro environment USDA grain export forecasts – June 2023 1 2022/23 2023/24 +2MT 59 4 46 54 54 21 20 3 -14MT Coarse grain (incl corn) Wheat Soybean 1 +11MT 2 2022/23 2023/24 93 97 2 +5MT 53 55 Coarse grain (incl corn) Wheat Soybean 3 2022/23 2023/24 30 22 16 11 ◼ South Americ
Slide 26: Historically low newbuilding orderbook
Historically low newbuilding orderbook 25% 24% 23% Development of the drybulk newbuilding 20% orderbook as a % of the total drybulk fleet Orderbook as a % of the total 20% 18% 7.1% drybulk fleet 15% 12% 11% 11% % of fleet 10% 10% 8% 7% 7% 5% 3% 2% 2% 0% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2
Slide 27: Freight rate catalysts and drybulk outlook
Freight rate catalysts and drybulk outlook Marsoft 2023 to 2024 S&D growth estimates Drybulk market catalysts Vessel* 2023 2024 Record low orderbook as a percentage of the fleet Iron Ore 1 to limit net fleet growth Capesize +5.0% +3.7% Coal Capesize 2 China’s reopening + stimulus +2.0% -0.3% Panamax
Slide 28: Conclusion
Conclusion 28
Slide 29: Genco provides an attractive risk-reward balance
Genco provides an attractive risk-reward balance… …while being well-positioned to capture market upside Leadership ◼ Experienced US-based management team + US-filer with high corporate governance standards Value strategy ◼ Meaningful dividends to shareholders + low leverage + strong cash position Be
Slide 30: Appendix
Appendix 30
Slide 31: First quarter earnings
First quarter earnings Three Months Ended Three Months Ended March 31, 2023 March 31, 2022 (Dollars in thousands, except share and per share data) (unaudited) INCOME STATEMENT DATA: Revenues: Voyage revenues $ 94,391 $ 136,227 Total revenues 94,391 136,227 Operating expenses: Voyage expenses 37,435
Slide 32: March 31, 2023 balance sheet
March 31, 2023 balance sheet March 31, 2023 December 31, 2022 (Dollars in thousands) (unaudited) BALANCE SHEET DATA: Cash (including restricted cash) $ 50,397 $ 64,100 Current assets 107,244 125,430 Total assets 1,143,900 1,173,866 Current liabilities (excluding current portion of long-term debt) 34
Slide 33: First quarter highlights
First quarter highlights Three Months Ended March 31, 2023 March 31, 2022 (unaudited) FLEET DATA: Total number of vessels at end of period 44 44 Average number of vessels (1) 44.0 43.9 Total ownership days for fleet (2) 3,960 3,950 Total chartered-in days (3) 236 311 Total available days (4) 4,064 4
Slide 34: Genco's fleet list
Genco’s fleet list Major Bulk Minor Bulk 17 Vessel Name Year Built Dwt Vessel Name Year Built Dwt Vessel Name Year Built Dwt Capesize Capesize Ultramax Supramax Genco Resolute 2015 181,060 Genco Freedom 2015 63,671 Genco Hunter 2007 58,729 Genco Endeavour 2015 181,060 Baltic Hornet 2014 63,574 Genco
Slide 35: Longer term time charter activity
Longer term time charter activity Vessel Type Rate Duration Min Expiration ◼ We continue to utilize a fleet-wide Baltic Wolf Capesize $ 30,250 22-28 months Jun-23 portfolio approach to fixture activity Genco Maximus Capesize $ 27,500 24-30 months Sep-23 ◼ We continue to evaluate a variety Genco Ende
Slide 36: Breakeven rate prior to debt service
Breakeven rate prior to debt service… …is covered in nearly every rate environment over the last 2 decades $50,000 Illustrative fleet-wide time charter rate $45,000 Illustrative breakeven rate prior to debt service $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $- Q1-2000 Q3-2001 Q1-
Slide 37: EBITDA reconciliation
EBITDA reconciliation(1) Adjusted EBITDA Q1 2021-Q1 2023 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Net income $ 1,985 $ 32,037 $ 57,132 $ 90,852 $ 41,689 $ 47,382 $ 40,828 $ 28,679 $ 2,634 Net interest expense 4,470 4,422 3,918 2,392 2,225 2,337 1,984 1,505 1,259 Income
Slide 38: Time charter equivalent reconciliation
Time charter equivalent reconciliation(1) Three Months Ended March 31, 2023 March 31, 2022 (unaudited) Total Fleet Voyage revenues (in thousands) $ 94,391 $ 136,227 Voyage expenses (in thousands) 37,435 38,464 Charter hire expenses (in thousands) 3,664 7,638 Realized gain on fuel hedges (in thousand
Slide 39: Net Income reconciliation
Net Income reconciliation Three Months Ended March 31, 2023 Net Income Reconciliation (unaudited) Net income attributable to Genco Shipping & Trading Limited $ 2,634 + Unrealized loss on fuel hedges 42 Net income $ 2,676 Adjusted earnings per share - basic $ 0.06 Adjusted earnings per share - dilute
Slide 40: Q2 2023 estimated fleet-wide expenses
Q2 2023 estimated fleet-wide expenses(1) Est Ownership / Owned Available Days - Q2 2023 Daily Expenses by Category Free Cash Flow(2) Net Income Owned Avail Vessel Type Own. Days DD Days Direct Vessel Operating(3) $6,250 $6,250 Days Capesize 1,547 - 1,547 G&A Expenses(4) 1,473 1,659 Ultramax 1,365 -
Slide 41: Footnotes to Q2 2023 estimated fleet-wide expenses & operating expense reconciliation
Footnotes to Q2 2023 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 42: Thank You
Thank You
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