UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 20192020
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-33393
GENCO SHIPPING & TRADING LIMITED
(Exact name of registrant as specified in its charter)
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Republic of the Marshall Islands |
| 98-043-9758 |
(State or other jurisdiction of |
| (I.R.S. Employer |
299 Park Avenue, 12th Floor, New York, New York 10171
(Address of principal executive offices) (Zip Code)
(646) 443-8550
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐ |
| Accelerated filer ☒ |
| Non-accelerated filer ☐ |
| Smaller reporting company ☒ | ||
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| Emerging growth company ☐ |
If emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of exchange on which registered |
Common stock, par value $0.01 per share | GNK | New York Stock Exchange (NYSE) |
The number of shares outstanding of each of the issuer’s classes of common stock, as of May 9, 2019:6, 2020: Common stock, par value $0.01 per share — 41,656,94741,801,753 shares.
Genco Shipping & Trading Limited
2
Website Information
We intend to use our website, www.GencoShipping.com, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in our website’s Investor section. Accordingly, investors should monitor the Investor portion of our website, in addition to following our press releases, SEC filings, public conference calls, and webcasts. To subscribe to our e-mail alert service, please submit your e-mail address at the Investor Relations Home page of the Investor section of our website. The information contained in, or that may be accessed through, our website is not incorporated by reference into or a part of this document or any other report or document we file with or furnish to the SEC, and any references to our website are intended to be inactive textual references only.
3
Genco Shipping & Trading Limited
Condensed Consolidated Balance Sheets as of March 31, 20192020 and December 31, 20182019
(U.S. Dollars in thousands, except for share and per share data)
(Unaudited)
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| March 31, |
| December 31, |
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| March 31, |
| December 31, |
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| 2019 |
| 2018 |
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| 2020 |
| 2019 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | 187,713 |
| $ | 197,499 |
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| $ | 134,338 |
| $ | 155,889 |
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Restricted cash |
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| 4,947 |
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| 4,947 |
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| 14,855 |
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| 6,045 |
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Due from charterers, net of a reserve of $1,171 and $669, respectively |
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| 17,265 |
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| 22,306 |
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Due from charterers, net of a reserve of $665 and $1,064, respectively |
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| 15,004 |
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| 13,701 |
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Prepaid expenses and other current assets |
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| 9,213 |
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| 10,449 |
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| 10,865 |
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| 10,049 |
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Inventories |
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| 30,625 |
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| 29,548 |
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| 29,342 |
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| 27,208 |
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Vessels held for sale |
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| — |
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| 5,702 |
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| 23,129 |
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| 10,303 |
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Total current assets |
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| 249,763 |
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| 270,451 |
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| 227,533 |
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| 223,195 |
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Noncurrent assets: |
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Vessels, net of accumulated depreciation of $261,017 and $244,529, respectively |
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| 1,335,048 |
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| 1,344,870 |
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Deferred drydock, net of accumulated amortization of $14,988 and $13,553 respectively |
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| 8,520 |
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| 9,544 |
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Fixed assets, net of accumulated depreciation and amortization of $1,435 and $1,281, respectively |
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| 3,099 |
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| 2,290 |
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Vessels, net of accumulated depreciation of $228,208 and $288,373, respectively |
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| 1,121,561 |
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| 1,273,861 |
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Deferred drydock, net of accumulated amortization of $6,993 and $11,862 respectively |
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| 17,704 |
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| 17,304 |
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Fixed assets, net of accumulated depreciation and amortization of $1,704 and $2,154, respectively |
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| 5,949 |
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| 5,976 |
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Operating lease right-of-use assets |
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| 9,425 |
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| — |
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| 7,904 |
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| 8,241 |
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Restricted cash |
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| 315 |
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| 315 |
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| 315 |
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| 315 |
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Total noncurrent assets |
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| 1,356,407 |
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| 1,357,019 |
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| 1,153,433 |
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| 1,305,697 |
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Total assets |
| $ | 1,606,170 |
| $ | 1,627,470 |
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| $ | 1,380,966 |
| $ | 1,528,892 |
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Liabilities and Equity |
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Current liabilities: |
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Accounts payable and accrued expenses |
| $ | 24,137 |
| $ | 29,143 |
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| $ | 34,170 |
| $ | 49,604 |
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Current portion of long-term debt |
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| 70,351 |
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| 66,320 |
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| 72,962 |
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| 69,747 |
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Deferred revenue |
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| 4,497 |
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| 6,404 |
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| 7,818 |
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| 6,627 |
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Current operating lease liabilities |
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| 1,613 |
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| — |
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| 1,698 |
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| 1,677 |
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Total current liabilities: |
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| 100,598 |
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| 101,867 |
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| 116,648 |
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| 127,655 |
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Noncurrent liabilities: |
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Long-term operating lease liabilities |
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| 11,092 |
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| — |
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| 9,393 |
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| 9,826 |
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Deferred rent |
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| — |
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| 3,468 |
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Long-term debt, net of deferred financing costs of $15,967 and $16,272, respectively |
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| 448,522 |
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| 468,828 |
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Long-term debt, net of deferred financing costs of $12,143 and $13,094, respectively |
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| 403,729 |
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| 412,983 |
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Total noncurrent liabilities |
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| 459,614 |
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| 472,296 |
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| 413,122 |
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| 422,809 |
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Total liabilities |
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| 560,212 |
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| 574,163 |
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| 529,770 |
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| 550,464 |
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Commitments and contingencies (Note 14) |
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Equity: |
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Common stock, par value $0.01; 500,000,000 shares authorized; 41,656,947 and 41,644,470 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively |
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| 416 |
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| 416 |
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Common stock, par value $0.01; 500,000,000 shares authorized; 41,801,753 and 41,754,413 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively |
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| 418 |
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| 417 |
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Additional paid-in capital |
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| 1,740,615 |
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| 1,740,163 |
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| 1,714,385 |
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| 1,721,268 |
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Retained deficit |
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| (695,073) |
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| (687,272) |
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Accumulated deficit |
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| (863,607) |
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| (743,257) |
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Total equity |
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| 1,045,958 |
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| 1,053,307 |
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| 851,196 |
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| 978,428 |
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Total liabilities and equity |
| $ | 1,606,170 |
| $ | 1,627,470 |
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| $ | 1,380,966 |
| $ | 1,528,892 |
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See accompanying notes to condensed consolidated financial statements.
4
Genco Shipping & Trading Limited
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 20192020 and 20182019
(U.S. Dollars in Thousands, Except for Earnings Per Share and Share Data)
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| For the Three Months Ended |
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| For the Three Months Ended |
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| March 31, |
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| March 31, |
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| 2019 |
| 2018 |
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| 2020 |
| 2019 |
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Revenues: |
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Voyage revenues |
| $ | 93,464 |
| $ | 76,916 |
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| $ | 98,336 |
| $ | 93,464 |
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Total revenues |
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| 93,464 |
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| 76,916 |
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| 98,336 |
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| 93,464 |
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Operating expenses: |
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Voyage expenses |
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| 43,022 |
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| 21,093 |
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| 48,368 |
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| 43,022 |
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Vessel operating expenses |
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| 23,190 |
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| 23,767 |
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| 21,813 |
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| 23,190 |
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Charter hire expenses |
|
| 2,419 |
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| — |
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| 3,075 |
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| 2,419 |
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General and administrative expenses (inclusive of nonvested stock amortization expense of $452 and $493, respectively) |
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| 6,310 |
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| 5,218 |
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General and administrative expenses (inclusive of nonvested stock amortization expense of $481 and $452, respectively) |
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| 5,767 |
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| 6,310 |
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Technical management fees |
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| 1,940 |
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| 1,948 |
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| 1,854 |
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| 1,940 |
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Depreciation and amortization |
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| 18,076 |
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| 16,886 |
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| 17,574 |
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| 18,076 |
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Impairment of vessel assets |
|
| — |
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| 56,402 |
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| 112,814 |
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| — |
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Gain on sale of vessels |
|
| (611) |
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| — |
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Loss (gain) on sale of vessels |
|
| 486 |
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| (611) |
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Total operating expenses |
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| 94,346 |
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| 125,314 |
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| 211,751 |
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| 94,346 |
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Operating loss |
|
| (882) |
|
| (48,398) |
|
|
| (113,415) |
|
| (882) |
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Other (expense) income: |
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Other income (expense) |
|
| 329 |
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| (85) |
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Other (expense) income |
|
| (584) |
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| 329 |
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Interest income |
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| 1,327 |
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| 794 |
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| 594 |
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| 1,327 |
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Interest expense |
|
| (8,575) |
|
| (8,124) |
|
|
| (6,945) |
|
| (8,575) |
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Other expense |
|
| (6,919) |
|
| (7,415) |
|
|
| (6,935) |
|
| (6,919) |
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Loss before income taxes |
|
| (7,801) |
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| (55,813) |
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Income tax expense |
|
| — |
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| — |
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Net loss |
| $ | (7,801) |
| $ | (55,813) |
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| $ | (120,350) |
| $ | (7,801) |
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Net loss per share-basic |
| $ | (0.19) |
| $ | (1.61) |
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| $ | (2.87) |
| $ | (0.19) |
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Net loss per share-diluted |
| $ | (0.19) |
| $ | (1.61) |
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| $ | (2.87) |
| $ | (0.19) |
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Weighted average common shares outstanding-basic |
|
| 41,726,106 |
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| 34,577,990 |
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| 41,866,357 |
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| 41,726,106 |
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Weighted average common shares outstanding-diluted |
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| 41,726,106 |
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| 34,577,990 |
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| 41,866,357 |
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| 41,726,106 |
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See accompanying notes to condensed consolidated financial statements.
5
Genco Shipping & Trading Limited
Condensed Consolidated Statements of Comprehensive Loss
For the Three Months Ended March 31, 20192020 and 20182019
(U.S. Dollars in Thousands)
(Unaudited)
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| For the Three Months Ended |
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| For the Three Months Ended |
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| March 31, |
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| March 31, |
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|
| 2019 |
| 2018 |
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| 2020 |
| 2019 |
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Net loss |
| $ | (7,801) |
| $ | (55,813) |
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| $ | (120,350) |
| $ | (7,801) |
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Other comprehensive income |
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| — |
|
| — |
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| — |
|
| — |
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Comprehensive loss |
| $ | (7,801) |
| $ | (55,813) |
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| $ | (120,350) |
| $ | (7,801) |
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See accompanying notes to condensed consolidated financial statements.
6
Genco Shipping & Trading Limited
Condensed Consolidated Statements of Equity
For the Three Months Ended March 31, 20192020 and 20182019
(U.S. Dollars in Thousands)
(Unaudited)
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| Additional |
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| Common |
| Paid-in |
| Retained |
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| Stock |
| Capital |
| Deficit |
| Total Equity |
| ||||
Balance — January 1, 2019 |
| $ | 416 |
| $ | 1,740,163 |
| $ | (687,272) |
| $ | 1,053,307 |
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Net loss |
|
|
|
|
|
|
|
| (7,801) |
|
| (7,801) |
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Issuance of 12,477 shares of vested RSUs |
|
| — |
|
| — |
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|
| — |
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Nonvested stock amortization |
|
|
|
|
| 452 |
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|
|
| 452 |
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|
|
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|
Balance — March 31, 2019 |
| $ | 416 |
| $ | 1,740,615 |
| $ | (695,073) |
| $ | 1,045,958 |
|
|
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|
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|
|
| Additional |
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|
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| ||
|
| Common |
| Paid-in |
| Accumulated |
|
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| ||||
|
| Stock |
| Capital |
| Deficit |
| Total Equity |
| ||||
Balance — January 1, 2020 |
| $ | 417 |
| $ | 1,721,268 |
| $ | (743,257) |
| $ | 978,428 |
|
|
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|
|
|
|
|
|
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|
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Net loss |
|
|
|
|
|
|
|
| (120,350) |
|
| (120,350) |
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|
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|
Issuance of 47,341 shares of vested RSUs, net of forfeitures of 1,490 shares |
|
| 1 |
|
| (1) |
|
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|
|
| — |
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Cash dividends declared ($0.175 per share) |
|
|
|
|
| (7,363) |
|
|
|
|
| (7,363) |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Nonvested stock amortization |
|
|
|
|
| 481 |
|
|
|
|
| 481 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance — March 31, 2020 |
| $ | 418 |
| $ | 1,714,385 |
| $ | (863,607) |
| $ | 851,196 |
|
|
|
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| Additional |
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| ||
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| Common |
| Paid-in |
| Accumulated |
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| |||
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|
| Stock |
| Capital |
| Deficit |
| Total Equity |
| ||||
|
|
|
|
| Additional |
|
|
|
|
|
| |||||||||||||||
|
| Common |
| Paid-in |
| Retained |
|
|
|
| ||||||||||||||||
|
| Stock |
| Capital |
| Deficit |
| Total Equity |
| |||||||||||||||||
Balance — January 1, 2018 |
| $ | 345 |
| $ | 1,628,355 |
| $ | (654,332) |
| $ | 974,368 |
| |||||||||||||
Balance — January 1, 2019 |
| $ | 416 |
| $ | 1,740,163 |
| $ | (687,272) |
| $ | 1,053,307 |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
| (55,813) |
|
| (55,813) |
|
|
|
|
|
|
|
|
| (7,801) |
|
| (7,801) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of 12,477 shares of vested RSUs |
|
| — |
|
| — |
|
|
|
|
| — |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Nonvested stock amortization |
|
|
|
|
| 493 |
|
|
|
|
| 493 |
|
|
|
|
|
| 452 |
|
|
|
|
| 452 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance — March 31, 2018 |
| $ | 345 |
| $ | 1,628,848 |
| $ | (710,145) |
| $ | 919,048 |
| |||||||||||||
Balance — March 31, 2019 |
| $ | 416 |
| $ | 1,740,615 |
| $ | (695,073) |
| $ | 1,045,958 |
|
See accompanying notes to condensed consolidated financial statements.
7
Genco Shipping & Trading Limited
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 20192020 and 20182019
(U.S. Dollars in Thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
|
| For the Three Months Ended |
| ||||||||
|
| March 31, |
|
| March 31, |
| ||||||||
|
| 2019 |
| 2018 |
|
| 2020 |
| 2019 |
| ||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| $ | (7,801) |
| $ | (55,813) |
|
| $ | (120,350) |
| $ | (7,801) |
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
| |||||||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
| |||||||
Depreciation and amortization |
|
| 18,076 |
|
| 16,886 |
|
|
| 17,574 |
|
| 18,076 |
|
Amortization of deferred financing costs |
|
| 915 |
|
| 573 |
|
|
| 951 |
|
| 915 |
|
Noncash operating lease expense |
|
| 285 |
|
| — |
|
|
| 337 |
|
| 285 |
|
Amortization of nonvested stock compensation expense |
|
| 452 |
|
| 493 |
|
|
| 481 |
|
| 452 |
|
Impairment of vessel assets |
|
| — |
|
| 56,402 |
|
|
| 112,814 |
|
| — |
|
Gain on sale of vessels |
|
| (611) |
|
| — |
| |||||||
Loss (gain) on sale of vessels |
|
| 486 |
|
| (611) |
| |||||||
Insurance proceeds for protection and indemnity claims |
|
| 226 |
|
| 68 |
|
|
| 101 |
|
| 226 |
|
Change in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease (increase) in due from charterers |
|
| 5,041 |
|
| (1,079) |
| |||||||
Decrease (increase) in prepaid expenses and other current assets |
|
| 927 |
|
| (3,740) |
| |||||||
(Increase) decrease in due from charterers |
|
| (1,303) |
|
| 5,041 |
| |||||||
(Increase) decrease in prepaid expenses and other current assets |
|
| (1,074) |
|
| 927 |
| |||||||
Increase in inventories |
|
| (1,077) |
|
| (4,561) |
|
|
| (2,134) |
|
| (1,077) |
|
Decrease in other noncurrent assets |
|
| — |
|
| 514 |
| |||||||
(Decrease) increase in accounts payable and accrued expenses |
|
| (2,114) |
|
| 1,094 |
| |||||||
Decrease in deferred revenue |
|
| (1,907) |
|
| (110) |
| |||||||
Decrease in accounts payable and accrued expenses |
|
| (9,916) |
|
| (2,114) |
| |||||||
Increase (decrease) in deferred revenue |
|
| 1,191 |
|
| (1,907) |
| |||||||
Decrease in operating lease liabilities |
|
| (390) |
|
| — |
|
|
| (412) |
|
| (390) |
|
Increase in deferred rent |
|
| — |
|
| 180 |
| |||||||
Deferred drydock costs incurred |
|
| (410) |
|
| (1,446) |
|
|
| (2,784) |
|
| (410) |
|
Net cash provided by operating activities |
|
| 11,612 |
|
| 9,461 |
| |||||||
Net cash (used in) provided by operating activities |
|
| (4,038) |
|
| 11,612 |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of vessels, including deposits |
|
| (9,274) |
|
| — |
| |||||||
Purchase of vessels and ballast water treatment systems, including deposits |
|
| (273) |
|
| (3,406) |
| |||||||
Purchase of scrubbers (capitalized in Vessels) |
|
| (7,778) |
|
| (5,868) |
| |||||||
Purchase of other fixed assets |
|
| (1,199) |
|
| (158) |
|
|
| (1,039) |
|
| (1,199) |
|
Net proceeds from sale of vessels |
|
| 6,351 |
|
| — |
|
|
| 14,510 |
|
| 6,351 |
|
Insurance proceeds for hull and machinery claims |
|
| — |
|
| 1,607 |
|
|
| 157 |
|
| — |
|
Net cash (used in) provided by investing activities |
|
| (4,122) |
|
| 1,449 |
| |||||||
Net cash provided by (used in) investing activities |
|
| 5,577 |
|
| (4,122) |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayments on the $108 Million Credit Facility |
|
| (1,580) |
|
| — |
|
|
| (1,580) |
|
| (1,580) |
|
Proceeds from $495 Million Credit Facility |
|
| 11,250 |
|
| — |
| |||||||
Repayments on the $495 Million Credit Facility |
|
| (15,000) |
|
| — |
|
|
| (16,660) |
|
| (15,000) |
|
Repayments on the $400 Million Credit Facility |
|
| — |
|
| (11,434) |
| |||||||
Repayments on the $98 Million Credit Facility |
|
| — |
|
| (2,542) |
| |||||||
Repayments on the 2014 Term Loan Facilities |
|
| — |
|
| (681) |
| |||||||
Payment of common stock issuance costs |
|
| (105) |
|
| — |
|
|
| — |
|
| (105) |
|
Cash dividends paid |
|
| (7,290) |
|
| — |
| |||||||
Payment of deferred financing costs |
|
| (591) |
|
| — |
|
|
| — |
|
| (591) |
|
Net cash used in financing activities |
|
| (17,276) |
|
| (14,657) |
|
|
| (14,280) |
|
| (17,276) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash, cash equivalents and restricted cash |
|
| (9,786) |
|
| (3,747) |
|
|
| (12,741) |
|
| (9,786) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash at beginning of period |
|
| 202,761 |
|
| 204,946 |
|
|
| 162,249 |
|
| 202,761 |
|
Cash, cash equivalents and restricted cash at end of period |
| $ | 192,975 |
| $ | 201,199 |
|
| $ | 149,508 |
| $ | 192,975 |
|
See accompanying notes to condensed consolidated financial statements.
8
Genco Shipping & Trading Limited
(U.S. Dollars in Thousands, Except Per Share and Share Data)
Notes to Condensed Consolidated Financial Statements (unaudited)
1 - GENERAL INFORMATION
The accompanying condensed consolidated financial statements include the accounts of Genco Shipping & Trading Limited (“GS&T”) and its direct and indirect wholly-owned subsidiaries (collectively, the “Company”). The Company is engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels. GS&T is incorporated under the laws of the Marshall Islands, and as of March 31, 2019,2020, is the direct or indirect owner of all of the outstanding shares or limited liability company interests of the following subsidiaries: Genco Ship Management LLC; Genco Investments LLC; Genco RE Investments LLC; Genco Shipping Pte. Ltd.; Genco Shipping A/S; Baltic Trading Limited (“Baltic Trading”); and the ship-owning subsidiaries as set forth below under “Other General Information.”
On June 19, 2018,In March 2020, the Company closedWorld Health Organization declared the outbreak of a novel coronavirus strain, or COVID-19, to be a pandemic. The COVID-19 pandemic is having widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices. Governments have implemented measures in an equity offeringeffort to contain the virus, including social distancing, travel restrictions, border closures, limitations on public gatherings, working from home, supply chain logistical changes, and closure of 7,015,000 sharesnon-essential businesses. This has led to a significant slowdown in overall economic activity levels globally and a decline in demand for certain of common stock atthe raw materials that our vessels transport.
At present, it is not possible to ascertain the overall impact of COVID-19 on the Company’s operational and financial performance, which may take some time to materialize and may not be fully reflected in the results for 2020. However, an offering priceincrease in the severity or duration or a resurgence of $16.50 per share. The Company received net proceedsthe COVID-19 pandemic could have a material adverse effect on the Company’s business, results of $109,648 after deducting underwriters’ discountsoperations, cash flows, financial condition, the carrying value of the Company’s assets, the fair values of the Company’s vessels, and commissions and other expenses.the Company’s ability to pay dividends.
Other General Information
Below is the list of the Company’s wholly owned ship-owning subsidiaries as of March 31, 2019:2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly Owned Subsidiaries |
| Vessel Acquired |
| Dwt |
| Delivery Date |
| Year Built |
|
| Vessel Acquired |
| Dwt |
| Delivery Date |
| Year Built |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Genco Augustus Limited |
| Genco Augustus |
| 180,151 |
| 8/17/07 |
| 2007 |
|
| Genco Augustus |
| 180,151 |
| 8/17/07 |
| 2007 |
|
Genco Tiberius Limited |
| Genco Tiberius |
| 175,874 |
| 8/28/07 |
| 2007 |
|
| Genco Tiberius |
| 175,874 |
| 8/28/07 |
| 2007 |
|
Genco London Limited |
| Genco London |
| 177,833 |
| 9/28/07 |
| 2007 |
|
| Genco London |
| 177,833 |
| 9/28/07 |
| 2007 |
|
Genco Titus Limited |
| Genco Titus |
| 177,729 |
| 11/15/07 |
| 2007 |
|
| Genco Titus |
| 177,729 |
| 11/15/07 |
| 2007 |
|
Genco Challenger Limited |
| Genco Challenger |
| 28,428 |
| 12/14/07 |
| 2003 |
| |||||||||
Genco Charger Limited |
| Genco Charger |
| 28,398 |
| 12/14/07 |
| 2005 |
| |||||||||
Genco Warrior Limited |
| Genco Warrior |
| 55,435 |
| 12/17/07 |
| 2005 |
|
| Genco Warrior |
| 55,435 |
| 12/17/07 |
| 2005 |
|
Genco Predator Limited |
| Genco Predator |
| 55,407 |
| 12/20/07 |
| 2005 |
|
| Genco Predator |
| 55,407 |
| 12/20/07 |
| 2005 |
|
Genco Hunter Limited |
| Genco Hunter |
| 58,729 |
| 12/20/07 |
| 2007 |
|
| Genco Hunter |
| 58,729 |
| 12/20/07 |
| 2007 |
|
Genco Champion Limited |
| Genco Champion |
| 28,445 |
| 1/2/08 |
| 2006 |
| |||||||||
Genco Constantine Limited |
| Genco Constantine |
| 180,183 |
| 2/21/08 |
| 2008 |
|
| Genco Constantine |
| 180,183 |
| 2/21/08 |
| 2008 |
|
Genco Raptor LLC |
| Genco Raptor |
| 76,499 |
| 6/23/08 |
| 2007 |
| |||||||||
Genco Thunder LLC |
| Genco Thunder |
| 76,588 |
| 9/25/08 |
| 2007 |
| |||||||||
Genco Hadrian Limited |
| Genco Hadrian |
| 169,025 |
| 12/29/08 |
| 2008 |
|
| Genco Hadrian |
| 169,025 |
| 12/29/08 |
| 2008 |
|
Genco Commodus Limited |
| Genco Commodus |
| 169,098 |
| 7/22/09 |
| 2009 |
|
| Genco Commodus |
| 169,098 |
| 7/22/09 |
| 2009 |
|
Genco Maximus Limited |
| Genco Maximus |
| 169,025 |
| 9/18/09 |
| 2009 |
|
| Genco Maximus |
| 169,025 |
| 9/18/09 |
| 2009 |
|
Genco Claudius Limited |
| Genco Claudius |
| 169,001 |
| 12/30/09 |
| 2010 |
|
| Genco Claudius |
| 169,001 |
| 12/30/09 |
| 2010 |
|
Genco Bay Limited |
| Genco Bay |
| 34,296 |
| 8/24/10 |
| 2010 |
|
| Genco Bay |
| 34,296 |
| 8/24/10 |
| 2010 |
|
Genco Ocean Limited |
| Genco Ocean |
| 34,409 |
| 7/26/10 |
| 2010 |
|
| Genco Ocean |
| 34,409 |
| 7/26/10 |
| 2010 |
|
Genco Avra Limited |
| Genco Avra |
| 34,391 |
| 5/12/11 |
| 2011 |
|
| Genco Avra |
| 34,391 |
| 5/12/11 |
| 2011 |
|
Genco Mare Limited |
| Genco Mare |
| 34,428 |
| 7/20/11 |
| 2011 |
|
| Genco Mare |
| 34,428 |
| 7/20/11 |
| 2011 |
|
Genco Spirit Limited |
| Genco Spirit |
| 34,432 |
| 11/10/11 |
| 2011 |
|
| Genco Spirit |
| 34,432 |
| 11/10/11 |
| 2011 |
|
Genco Aquitaine Limited |
| Genco Aquitaine |
| 57,981 |
| 8/18/10 |
| 2009 |
|
| Genco Aquitaine |
| 57,981 |
| 8/18/10 |
| 2009 |
|
Genco Ardennes Limited |
| Genco Ardennes |
| 58,018 |
| 8/31/10 |
| 2009 |
|
| Genco Ardennes |
| 58,018 |
| 8/31/10 |
| 2009 |
|
Genco Auvergne Limited |
| Genco Auvergne |
| 58,020 |
| 8/16/10 |
| 2009 |
|
| Genco Auvergne |
| 58,020 |
| 8/16/10 |
| 2009 |
|
Genco Bourgogne Limited |
| Genco Bourgogne |
| 58,018 |
| 8/24/10 |
| 2010 |
|
| Genco Bourgogne |
| 58,018 |
| 8/24/10 |
| 2010 |
|
Genco Brittany Limited |
| Genco Brittany |
| 58,018 |
| 9/23/10 |
| 2010 |
|
| Genco Brittany |
| 58,018 |
| 9/23/10 |
| 2010 |
|
Genco Languedoc Limited |
| Genco Languedoc |
| 58,018 |
| 9/29/10 |
| 2010 |
|
| Genco Languedoc |
| 58,018 |
| 9/29/10 |
| 2010 |
|
Genco Loire Limited |
| Genco Loire |
| 53,430 |
| 8/4/10 |
| 2009 |
|
| Genco Loire |
| 53,430 |
| 8/4/10 |
| 2009 |
|
Genco Lorraine Limited |
| Genco Lorraine |
| 53,417 |
| 7/29/10 |
| 2009 |
|
| Genco Lorraine |
| 53,417 |
| 7/29/10 |
| 2009 |
|
Genco Normandy Limited |
| Genco Normandy |
| 53,596 |
| 8/10/10 |
| 2007 |
|
| Genco Normandy |
| 53,596 |
| 8/10/10 |
| 2007 |
|
Genco Picardy Limited |
| Genco Picardy |
| 55,257 |
| 8/16/10 |
| 2005 |
|
| Genco Picardy |
| 55,257 |
| 8/16/10 |
| 2005 |
|
Genco Provence Limited |
| Genco Provence |
| 55,317 |
| 8/23/10 |
| 2004 |
| |||||||||
Genco Pyrenees Limited |
| Genco Pyrenees |
| 58,018 |
| 8/10/10 |
| 2010 |
| |||||||||
Genco Rhone Limited |
| Genco Rhone |
| 58,018 |
| 3/29/11 |
| 2011 |
| |||||||||
Genco Weatherly Limited |
| Genco Weatherly |
| 61,556 |
| 7/26/18 |
| 2014 |
| |||||||||
Genco Columbia Limited |
| Genco Columbia |
| 60,294 |
| 9/10/18 |
| 2016 |
| |||||||||
Genco Endeavour Limited |
| Genco Endeavour |
| 181,060 |
| 8/15/18 |
| 2015 |
| |||||||||
Genco Resolute Limited |
| Genco Resolute |
| 181,060 |
| 8/14/18 |
| 2015 |
| |||||||||
Genco Defender Limited |
| Genco Defender |
| 180,021 |
| 9/6/18 |
| 2016 |
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly Owned Subsidiaries |
| Vessel Acquired |
| Dwt |
| Delivery Date |
| Year Built |
|
| Vessel Acquired |
| Dwt |
| Delivery Date |
| Year Built |
|
|
|
|
|
|
|
|
|
|
| |||||||||
Genco Provence Limited |
| Genco Provence |
| 55,317 |
| 8/23/10 |
| 2004 |
| |||||||||
Genco Pyrenees Limited |
| Genco Pyrenees |
| 58,018 |
| 8/10/10 |
| 2010 |
| |||||||||
Genco Rhone Limited |
| Genco Rhone |
| 58,018 |
| 3/29/11 |
| 2011 |
| |||||||||
Genco Weatherly Limited |
| Genco Weatherly |
| 61,556 |
| 7/26/18 |
| 2014 |
| |||||||||
Genco Columbia Limited |
| Genco Columbia |
| 60,294 |
| 9/10/18 |
| 2016 |
| |||||||||
Genco Endeavour Limited |
| Genco Endeavour |
| 181,060 |
| 8/15/18 |
| 2015 |
| |||||||||
Genco Resolute Limited |
| Genco Resolute |
| 181,060 |
| 8/14/18 |
| 2015 |
| |||||||||
Genco Defender Limited |
| Genco Defender |
| 180,021 |
| 9/6/18 |
| 2016 |
| |||||||||
Genco Liberty Limited |
| Genco Liberty |
| 180,032 |
| 9/11/18 |
| 2016 |
|
| Genco Liberty |
| 180,032 |
| 9/11/18 |
| 2016 |
|
Baltic Lion Limited |
| Baltic Lion |
| 179,185 |
| 4/8/15 | (1) | 2012 |
|
| Baltic Lion |
| 179,185 |
| 4/8/15 | (1) | 2012 |
|
Baltic Tiger Limited |
| Genco Tiger |
| 179,185 |
| 4/8/15 | (1) | 2011 |
|
| Genco Tiger |
| 179,185 |
| 4/8/15 | (1) | 2011 |
|
Baltic Leopard Limited |
| Baltic Leopard |
| 53,446 |
| 4/8/10 | (2) | 2009 |
|
| Baltic Leopard |
| 53,446 |
| 4/8/10 |
| 2009 |
|
Baltic Panther Limited |
| Baltic Panther |
| 53,350 |
| 4/29/10 | (2) | 2009 |
|
| Baltic Panther |
| 53,350 |
| 4/29/10 |
| 2009 |
|
Baltic Cougar Limited |
| Baltic Cougar |
| 53,432 |
| 5/28/10 | (2) | 2009 |
|
| Baltic Cougar |
| 53,432 |
| 5/28/10 |
| 2009 |
|
Baltic Jaguar Limited |
| Baltic Jaguar |
| 53,473 |
| 5/14/10 | (2) | 2009 |
|
| Baltic Jaguar |
| 53,473 |
| 5/14/10 |
| 2009 |
|
Baltic Bear Limited |
| Baltic Bear |
| 177,717 |
| 5/14/10 | (2) | 2010 |
|
| Baltic Bear |
| 177,717 |
| 5/14/10 |
| 2010 |
|
Baltic Wolf Limited |
| Baltic Wolf |
| 177,752 |
| 10/14/10 | (2) | 2010 |
|
| Baltic Wolf |
| 177,752 |
| 10/14/10 |
| 2010 |
|
Baltic Wind Limited |
| Baltic Wind |
| 34,408 |
| 8/4/10 | (2) | 2009 |
|
| Baltic Wind |
| 34,408 |
| 8/4/10 |
| 2009 |
|
Baltic Cove Limited |
| Baltic Cove |
| 34,403 |
| 8/23/10 | (2) | 2010 |
|
| Baltic Cove |
| 34,403 |
| 8/23/10 |
| 2010 |
|
Baltic Breeze Limited |
| Baltic Breeze |
| 34,386 |
| 10/12/10 | (2) | 2010 |
|
| Baltic Breeze |
| 34,386 |
| 10/12/10 |
| 2010 |
|
Baltic Fox Limited |
| Baltic Fox |
| 31,883 |
| 9/6/13 | (2) | 2010 |
|
| Baltic Fox |
| 31,883 |
| 9/6/13 |
| 2010 |
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Baltic Hare Limited |
| Baltic Hare |
| 31,887 |
| 9/5/13 | (2) | 2009 |
|
| Baltic Hare |
| 31,887 |
| 9/5/13 |
| 2009 |
|
Baltic Hornet Limited |
| Baltic Hornet |
| 63,574 |
| 10/29/14 | (2) | 2014 |
|
| Baltic Hornet |
| 63,574 |
| 10/29/14 |
| 2014 |
|
Baltic Wasp Limited |
| Baltic Wasp |
| 63,389 |
| 1/2/15 | (2) | 2015 |
|
| Baltic Wasp |
| 63,389 |
| 1/2/15 |
| 2015 |
|
Baltic Scorpion Limited |
| Baltic Scorpion |
| 63,462 |
| 8/6/15 |
| 2015 |
|
| Baltic Scorpion |
| 63,462 |
| 8/6/15 |
| 2015 |
|
Baltic Mantis Limited |
| Baltic Mantis |
| 63,470 |
| 10/9/15 |
| 2015 |
|
| Baltic Mantis |
| 63,470 |
| 10/9/15 |
| 2015 |
|
(1) | The delivery date for these vessels represents the date that the vessel was purchased from |
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2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) which includes the accounts of GS&T and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Basis of presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and operating results have been included in the statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 20182019 (the “2018“2019 10-K”). The results of operations for the three months ended March 31, 20192020 are not necessarily indicative of the operating results to be expected for the year ending December 31, 2019.2020.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include vessel valuations, the valuation of amounts due from charterers, performance claims, residual value of vessels, useful life of vessels and the fair value of derivative instruments, if any. Actual results could differ from those estimates.
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Segment reporting
The Company reports financial information and evaluates its operations by voyage revenues and not by the length of ship employment for its customers, i.e., spot or time charters. Each of the Company’s vessels serve the same type of customer, have similar operations and maintenance requirements, operate in the same regulatory environment, and are subject to similar economic characteristics. Based on this, the Company has determined that it operates in one reportable segment, the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels.
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Restricted cash
Current and non-current restricted cash includes cash that is restricted pursuant to our credit facilities. Refer to Note 7 — Debt. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same amounts shown in the Condensed Consolidated Statements of Cash Flows:
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| March 31, |
| December 31, |
| March 31, |
| December 31, |
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| March 31, |
| December 31, |
| ||||||
|
| 2019 |
| 2018 |
| 2018 |
| 2017 |
|
| 2020 |
| 2019 |
| ||||||
Cash and cash equivalents |
| $ | 187,713 |
| $ | 197,499 |
| $ | 172,775 |
| $ | 174,479 |
|
| $ | 134,338 |
| $ | 155,889 |
|
Restricted cash - current |
|
| 4,947 |
|
| 4,947 |
|
| 5,447 |
|
| 7,234 |
|
|
| 14,855 |
|
| 6,045 |
|
Restricted cash - noncurrent |
|
| 315 |
|
| 315 |
|
| 22,977 |
|
| 23,233 |
|
|
| 315 |
|
| 315 |
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Cash, cash equivalents and restricted cash |
| $ | 192,975 |
| $ | 202,761 |
| $ | 201,199 |
| $ | 204,946 |
|
| $ | 149,508 |
| $ | 162,249 |
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Vessels held for sale
The Company’s Board of Directors has approved a strategy of divesting specifically identified older, less fuel-efficient vessels as part of a fleet renewal program to streamline and modernize the Company’s fleet.
On November 23, 2018,March 2, 2020, the Company reachedentered into an agreement to sell the Baltic Wind and on March 20, 2020, the Company entered into agreements to sell the Baltic Breeze and Genco Bay. The relevant vessel assets have been classified as held for sale in the Condensed Consolidated Balance Sheets as of March 31, 2020. The Baltic Wind, Baltic Breeze and Genco Bay are expected to be sold during the second and third quarters of 2020. Refer to Note 4 — Vessel Acquisitions and Dispositions for details of the agreements.
On September 25, 2019, the Company entered into an agreement to sell the Genco Vigour,Thunder, and the relevant vessel assets have been classified as held for sale in the Condensed Consolidated Balance SheetSheets as of December 31, 2018.2019. This vessel was sold on January 28, 2019. March 5, 2020. Refer to Note 4 — Vessel Acquisitions and Dispositions for further information.details of the agreement.
Vessels, net
Vessels, net is stated at cost less accumulated depreciation. Included in vessel costs are acquisition costs directly attributable to the acquisition of a vessel and expenditures made to prepare the vessel for its initial voyage.voyage, including the purchase of exhaust gas cleaning systems (“scrubbers”) and ballast water treatment systems. The Company also capitalizes interest costs for a vessel under construction as a cost that is directly attributable to the acquisition of a vessel. Vessels are depreciated on a straight-line basis over their estimated useful lives, determined to be 25 years from the date of initial delivery from the shipyard. Depreciation expense for vessels for the three months ended March 31, 2020 and 2019 was $15,833 and 2018 was $16,488, and $15,673, respectively.
Depreciation expense is calculated based on cost less the estimated residual scrap value. The costs of significant replacements, renewals and betterments are capitalized and depreciated over the shorter of the vessel’s remaining
11
estimated useful life or the estimated life of the renewal or betterment. Undepreciated cost of any asset component being replaced that was acquired after the initial vessel purchase is written off as a component of vessel operating expense. Expenditures for routine maintenance and repairs are expensed as incurred. Scrap value is estimated by the Company by taking the estimated scrap value of $310 per lightweight ton (“lwt”) times the weight of the ship noted in lwt.
Deferred revenue
Deferred revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized as income when earned. Additionally, deferred revenue includes estimated customer claims, mainly due to time charter performance issues. As of March 31, 20192020 and December 31, 2018,2019, the Company had an accrual of $640$303 and $345,$577, respectively, related to these estimated customer claims.
Revenue recognition
Since the Company’s inception, revenues have been generated from time charter agreements, spot market voyage charters, pool agreements and spot market-related time charters. Voyage revenues also include the sale of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement.
Time charters
A time charter involves placing a vessel at the charterer’s disposal for a set period of time during which the charterer may use the vessel in return for the payment by the charterer of a specified daily hire rate, including any ballast bonus payments received pursuant to the time charter agreement. Spot market-related time charters are the same as other time charter agreements, except the time charter rates
11
are variable and are based on a percentage of the average daily rates as published by the Baltic Dry Index (“BDI”). Voyage revenues also include the sale of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement.
The Company records time charter revenues, including spot market-related time charters, over the term of the charter as service is provided. Revenues are recognized on a straight-line basis as the average revenue over the term of the respective time charter agreement.agreement for which the performance obligations are satisfied beginning when the vessel is delivered to the charterer until it is redelivered back to the Company. The Company records spot market-related time charter revenues over the term of the charter as service is provided based on the rate determined based on the BDI for each respective billing period. As such, the revenue earned by the Company’s vessels that are on spot market-related time charters is subject to fluctuations of the spot market. Time charter contracts, including spot market-related time charters, are considered operating leases and therefore do not fall under the scope of Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers (“ASC 606”) because (i) the vessel is an identifiable asset; (ii) the Company does not have substantive substitution rights; and (iii) the charterer has the right to control the use of the vessel during the term of the contract and derives economic benefit from such use.
The Company has identified that time charter agreements, including fixed rate time charters and spot market-related time charters, contain a lease in accordance with Accounting Standards Codification (“ASC”)ASC 842 — Leases, refer to Note 12 — Voyage RevenueRevenues for further discussion.
Spot market voyage charters
In a spot market voyage charter contract, the charterer hires the vessel to transport a specific agreed-upon cargo for a single voyage, which may contain multiple load ports and discharge ports. The consideration in such a contract is determined on the basis of a freight rate per metric ton of cargo carried or occasionally on a lump sum basis. The charter party generally has a minimum amount of cargo. The charterer is liable for any short loading of cargo or "dead" freight. The contract generally has a "demurrage" or "despatch" clause. As per this clause, the charterer reimburses the Company recognizesfor any potential delays exceeding the allowed laytime as per the charter party clause at the ports visited which is recorded as demurrage revenue. Conversely, the charterer is given credit if the loading/discharging activities happen within the allowed laytime known as despatch resulting in a reduction in revenue. The voyage contracts generally have variable consideration in the form of demurrage or despatch. The amount of revenue earned as demurrage or despatch
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paid by the Company is not a material component of the Company’s revenue for the three months ended March 31, 2020 and 2019.
Pursuant to the revenue recognition guidance as disclosed in Note 12 — Voyage Revenues, revenue for spot market voyage charters is recognized ratably over the total transit time of each voyage, which commences at the time the vessel arrives at the loading port and ends at the time the discharge of cargo is completed at the discharge port, in accordance with ASC 606 — Revenue from Contracts with Customers (“ASC 606”). Refer to Note 12 — Voyage Revenue for further discussion.port.
Vessel Pools
At March 31, 20192020 and December 31, 2018,2019, the Company did not have any of its vessels in vessel pools. Under pool arrangements, the vessels operate under a time charter agreement whereby the cost of bunkers and port expenses are borne by the pool and operating costs including crews, maintenance and insurance are typically paid by the owner of the vessel. Since the members of the pool share in the revenue less voyage expenses generated by the entire group of vessels in the pool, and the pool operates in the spot market, the revenue earned by these vessels is subject to the fluctuations of the spot market. The Company recognizes revenue from these pool arrangements based on its portion of the net distributions reported by the relevant pool, which represents the net voyage revenue of the pool after voyage expenses and pool manager fees.
Voyage expense recognition
In time charters, spot market-related time charters and pool agreements, operating costs including crews, maintenance and insurance are typically paid by the owner of the vessel and specified voyage costs such as fuel and port charges are paid by the charterer. These expenses are borne by the Company during spot market voyage charters. As such, there are significantly higher voyage expenses for spot market voyage charters as compared to time charters, spot market-related time charters and pool agreements. Refer to Note 12 — Voyage RevenueRevenues for further discussion of the accounting for fuel expenses for spot market voyage charters. There are certain other non-specified voyage expenses, such as commissions, which are typically borne by the Company. At the inception of a time charter, the Company records the difference between the cost of bunker fuel delivered by the terminating charterer and the bunker fuel sold to the new charterer as a gain or loss within voyage expenses. Additionally, the Company records lower of cost and net realizable value adjustments to re-value the bunker fuel on a quarterly basis for certain time charter agreements where the inventory is subject to gains and losses. These differences in bunkers, including any lower of cost and net realizable value adjustments, resulted in a net (loss) gainloss of ($350)$841 and $855$350 during the three months ended March 31, 20192020 and 2018,2019, respectively. Additionally, voyage expenses include the cost of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement.
Charter hire expenses
During the second quarter of 2018, the Company began chartering-in third-party vessels. The costs to charter-in these vessels, which primarily include the daily charter hire rate net of commissions or net freight revenue, are recorded as Charter hire expenses. The companyCompany recorded $3,075 and $2,419 of charter hire expenses during the three months ended March 31, 2019.2020 and 2019, respectively.
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Impairment of vessel assets
During the three months ended March 31, 20192020 and 2018,2019, the Company recorded $0$112,814 and $56,402,$0, respectively, related to the impairment of vessel assets in accordance with ASC 360 — “Property, Plant and Equipment” (“ASC 360”).
At March 31, 2020, the Company determined that the expected estimated future undiscounted cash flows for four of our Supramax vessels, the Genco Picardy, the Genco Predator, the Genco Provence and the Genco Warrior, did not exceed the net book value of these vessels as of March 31, 2020. The Company adjusted the carrying value of these vessels to their respective fair market values as of March 31, 2020. This resulted in an impairment loss of $27,046 during the three months ended March 31, 2020.
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On February 27, 2018,24, 2020, the Board of Directors determined to dispose of the Company’s following nineten Handysize vessels:the Baltic Hare, the Baltic Fox, the Baltic Wind, the Baltic Cove, the Baltic Breeze, the Genco Cavalier,Ocean, the Genco Loire,Bay, the Genco Lorraine,Avra, the Genco Muse,Mare and the Genco Normandy, the Baltic Cougar, the Baltic Jaguar, the Baltic Leopard and the Baltic Panther,Spirit, at times and on terms to be determined in the future. Given this decision, and that the revised estimated future undiscounted cash flows for each of these older vessels did not exceed the net book value for each vessel wegiven the estimated probabilities of whether the vessels will be sold, the Company adjusted the values of these older vessels to their respective fair market values during the three months ended March 31, 2018.2020. Subsequent to February 24, 2020, the Company has entered into agreements to sell three of these vessels during the three months ended March 31, 2020, namely the Baltic Wind, the Baltic Breeze and the Genco Bay, which were adjusted to their net sales price. This resulted in an impairment loss of $56,402$85,768 during the three months ended March 31, 2018.2020. Refer to Note 4 — Vessel Acquisitions and Dispositions for further detail regarding the vessel sales.
GainLoss (gain) on sale of vessels
During the three months ended March 31, 2020, the Company recorded a net loss of $486 related to the sale of vessels. The net loss of $486 recorded during the three months ended March 31, 2020 related primarily to the sale of the Genco Charger and Genco Thunder. During the three months ended March 31, 2019, the Company recorded a net gain of $611 related to the sale of vessels. The net gain of $611 recorded during the three months ended March 31, 2019 related primarily to the sale of the Genco Vigour. There were no vessels sold during the three months ended March 31, 2018.
Recent accounting pronouncements
In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13, “Disclosure Framework: Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-03”),” which change the disclosure requirements for fair value measurements by removing, adding, and modifying certain disclosures. This ASU is effective for fiscal years beginning after December 15, 2019, and for interim periods within that year. Early adoption is permitted for any eliminated or modified disclosures upon issuance of this ASU. The Company has evaluated the impact of the adoption of ASU 2018-03 and has determined that there is no effect on its condensed consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses" ("ASU 2016-13"). ASU 2016-13 amends the current financial instrument impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. ASU 2016-13 was effective on January 1, 2020, with early adoption permitted. The Company adopted ASU 2016-13 during the first quarter of 2020 and it did not have a material impact on the Company’s condensed consolidated financial statements.
In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).” ASU 2020-04 provides temporary optional expedients and exceptions to the guidance in U.S. GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. This ASU is effective for adoption at any time between March 12, 2020 and December 31, 2022. The Company is currently evaluating the impact of this adoption on its condensed consolidated financial statements and related disclosures.
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASC 842”), which replaces the existing guidance in ASC 840 – Leases (“ASC 840”). This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability for leases with lease terms of more than twelve months. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset and for operating leases, the lessee would recognize a straight-line total lease expense. Accounting by lessors will remain largely unchanged from current U.S. GAAP. The requirements of this standard include an increase in required disclosures. This ASU was effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years. Lessees and lessors were required to apply the new standard at the beginning of the earliest period presented in the financial statements in which they first apply the new guidance, using a modified retrospective transition method. The requirements of this standard include a significant increase in required disclosures. In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements” which provides clarifications and improvements to ASC 842, including allowing entities to elect an additional transition method with which to adopt ASC 842. The approved transition method enables entities to apply the transition requirements at the effective date of ASC 842 (rather than at the beginning of the earliest comparative period presented as currently required) with the effect of the initial application of ASC 842 recognized as a cumulative-effect adjustment to retained earnings in the period of adoption. As a result, an entity’s reporting for the comparative periods presented in the year of adoption would continue to be in accordance with ASC 840, Lease (Topic 840) (“ASC 840”), including the disclosure requirements of ASC 840. The Company adopted ASC 842 on January 1, 2019 using this transition method.
The new guidance provides a number of optional practical expedients in the transition. The Company has elected the package of practical expedients, which among other things, allows the carryforward of the historical lease classification. Further, upon implementation of the new guidance, the Company has elected the practical expedients to combine lease and non-lease components, and to not recognize right-of-use assets and lease liabilities for short-term
13
leases. Upon adoption of ASC 842 on January 1, 2019, the Company recorded a right-of-use asset of $9,710 and an operating lease liability of $13,095 in the Condensed Consolidated Balance Sheets. Refer to Note 13 — Leases for further information regarding our operating lease agreement and the effect of the adoption of ASC 842 from a lessee perspective.
Pursuant to ASC 842, the Company has identified revenue from its time charter agreements as lease revenue. Refer to Note 12— Voyage revenue for additional information regarding the adoption of ASC 842 from a lessor perspective.
3 - CASH FLOW INFORMATION
For the three months ended March 31, 2020, the Company had non-cash investing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $2,950 for the Purchase of scrubbers, $1,314 for the Purchase of vessels and ballast water treatment systems, including deposits, $548 for the Purchase of other fixed assets and $196 for the Net proceeds from sale of vessels. For the three months ended March 31, 2020, the Company had non-cash financing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expense consisting of $97 for Cash dividends paid.
14
For the three months ended March 31, 2019, the Company had non-cash investing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $306$297 for the Purchase of vessels and ballast water treatment systems, including deposits, $9 for the Purchase of scrubbers, $41 for the Net proceeds from sale of vessels and $124 for the Purchase of other fixed assets. For the three months ended March 31, 2019, the Company had non-cash financing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $20 for the Payment of deferred financing fees.
For the three months ended March 31, 2018 the Company had non-cash investing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $64 for the Purchase of other fixed assets.
During the three months ended March 31, 20192020 and 2018,2019, cash paid for interest was $7,760$6,051 and $7,530,$7,760, respectively.
During the three months ended March 31, 20192020 and 2018,2019, there was no cash paid for estimated income taxes.
During the three months ended March 31, 2020, the Company made a reclassification of $23,129 from Vessels, net of accumulated depreciation to Vessels held for sale as the Company entered into agreements to sell the Baltic Wind, Baltic Breeze and Genco Bay prior to March 31, 2020. Refer to Note 4 — Vessel Acquisitions and Dispositions.
On February 25, 2020, the Company issued 173,749 restricted stock units and options to purchase 344,568 shares of the Company’s stock at an exercise price of $7.06 to certain individuals. The fair value of these restricted stock units and stock options were $1,227 and $693, respectively.
On March 4, 2019, the Company issued 106,079 restricted stock units and options to purchase 240,540 shares of the Company’s stock at an exercise price of $8.39 to certain individuals. The fair value of these restricted stock units and stock options were $890 and $904, respectively.
On February 27, 2018, the Company issued 37,346 restricted stock units and options to purchase 122,608 shares of the Company’s stock at an exercise price of $13.69 to certain individuals. The fair value of these restricted stock units and stock options were $512 and $926, respectively.
Refer to Note 15 — Stock-Based Compensation for further information regarding the aforementioned grants.
4 - VESSEL ACQUISITIONS AND DISPOSITIONS
Vessel AcquisitionsDispositions
On June 6, 2018,March 20, 2020, the Company entered into agreements to sell the Baltic Breeze and Genco Bay, both 2010-built Handysize vessels, for $7,900 each less a 2.0% broker commission payable to a third party. The sales are expected to be completed during the second and third quarter of 2020. The vessel assets have been classified as held for sale in the Condensed Consolidated Balance Sheets as of March 31, 2020. Refer to “Impairment of vessel assets” section in Note 2 — Summary of Significant Accounting Policies for impairment expense recorded during the three months ended March 31, 2020.
On March 2, 2020, the Company entered into an agreement to sell the Baltic Wind, a 2009-built Handysize vessel, for $7,750 less a 2.0% broker commission payable to a third party. The sale is expected to be completed during the en bloc purchasesecond quarter of four drybulk vessels, including two Capesize drybulk vessels and two Ultramax drybulk vessels2020. The vessel assets have been classified as held for approximately $141,000. Eachsale in the Condensed Consolidated Balance Sheets as of March 31, 2020. Refer to “Impairment of vessel was built with a fuel-saving “eco” engine. The Genco Resolute, a 2015-built Capesize vessel, was delivered on August 14, 2018 andassets” section in Note 2 — Summary of Significant Accounting Policies for impairment expense recorded during the Genco Endeavour, a 2015-built Capesize vessel, was delivered on August 15, 2018. The Genco Weatherly, a 2014-built Ultramax vessel, was delivered on July 26, 2018 and the Genco Columbia, a 2016-built Ultramax vessel, was delivered on September 10, 2018. The Company utilized a combination of cash on hand and proceeds from the $108 Million Credit Facility to finance the purchase.three months ended March 31, 2020.
On July 12, 2018, the Company entered into agreements to purchase two 2016-built Capesize drybulk vessels for an aggregate purchase price of $98,000. The Genco Defender was delivered on September 6, 2018 and the Genco Liberty was delivered on September 11, 2018. The Company utilized a combination of cash on hand and proceeds from the $108 Million Credit Facility to finance the purchase.
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Vessel Dispositions
On November 23, 2018,25, 2019, the Company entered into an agreement to sell the Genco Vigour,Thunder, a 1999-built2007-built Panamax vessel, to a third party for $6,550$10,400 less a 2.0% broker commission payable to a third party. The sale was completed on January 28, 2019.March 5, 2020. The vessel assets werehave been classified as held for sale in the Condensed Consolidated Balance SheetSheets as of December 31, 2018. 2019.
On November 21, 2018,February 3, 2020, the Company entered into an agreement to sell the Genco Knight,Charger, a 1999-built Panamax2005-built Handysize vessel, to a third party for $6,200$5,150 less a 3.0% broker1.0% commission payable to a third party. The sale of the Genco Charger was completed on December 26, 2018.February 24, 2020.
15
On November 15, 2018,4, 2019, the Company entered into an agreement to sell the Genco Beauty,Raptor, a 1999-built2007-built Panamax vessel, to a third party for $6,560 less a 3.0% broker commission payable to a third party. The sale was completed on December 17, 2018.
On October 31, 2018, the Company entered into an agreement to sell the Genco Muse, a 2001-built Handymax vessel, to a third party for $6,660$10,200 less a 2.0% broker commission payable to a third party. The sale was completed on December 5, 2018.11, 2019.
On August 30, 2018, the Company entered into an agreement to sell the Genco Cavalier, a 2007-built Supramax vessel, to a third party for $10,000 less a 2.5% broker commission payable to a third party. The sale was completed on October 16, 2018. The Genco CavalierThunder, Genco Charger and Genco Raptor served as collateral under the $495 Million Credit Facility;facility; therefore $4,947$5,339, $3,471 and $6,045, respectively, of the net proceeds received from the sale will remain classified as restricted cash for 180 days following the respective sale datedates, which has been reflected as current restricted cash in the Condensed Consolidated Balance Sheets as of March 31, 2019 and2020. As of December 31, 2018. That2019, a total amount of $6,045 was reflected as restricted cash in the Condensed Consolidated Balance Sheets for the Genco Raptor. These amounts can be used towards the financing of a replacement vessel or vessels meeting certain requirements and added as collateral under the facility. If such a replacement vessel is not added as collateral within such 180 day period, the Company will be required to use the proceeds as a loan prepayment. On April 15, 2019, the Company utilized these proceeds as a loan prepayment under the $495 Million Credit Facility, refer to Note 17 — Subsequent Events.
On July 24, 2018,September 20, 2019, the Company entered into an agreement to sell the Genco Surprise,Champion, a 1998-built Panamax2006-built Handysize vessel, to a third party for $5,300 less a 3.0% broker commission payable to a third party. On August 7, 2018, the Company completed the sale of the Genco Surprise.
On June 27, 2018, the Company reached agreements to sell the Genco Explorer and the Genco Progress, both 1999-built Handysize vessels, to a third party for $5,600 each$6,600 less a 3.0% broker commission payable to a third party. The sale of the Genco Progress was completed on September 13, 2018October 21, 2019. On August 2, 2019, the Company entered into an agreement to sell the Genco Challenger, a 2003-built Handysize vessel, for $5,250 less a 2.0% broker commission payable to a third party. The sale was completed on October 10, 2019. The Genco Champion and Genco Challenger served as collateral under the $495 Million Credit Facility; therefore, $6,880 of the net proceeds from the sale of these two vessels was required to be used as a loan prepayment since a replacement vessels was not going to be added as collateral within 180 days following the respective sales dates. Refer to Note 7 — Debt for further information.
On November 23, 2018, the Company entered into an agreement to sell the Genco ExplorerVigour, a 1999-built Panamax vessel, to a third party for $6,550 less a 2.0% broker commission payable to a third party. The sale was completed on November 13, 2018.
With the exception of the Genco Cavalier, the aforementioned six vessels that were sold during the year ended December 31, 2018 and theJanuary 28, 2019. The Genco Vigour which was sold during the three months ended March 31, 2019 dodid not serve as collateral under any of the Company’s credit facilities; therefore the Company was not required to pay down any indebtedness with the proceeds from the sales. facilities.
Refer to Note 1 — General Information for a listing of the delivery dates for the vessels in the Company’s fleet.
5 - NET LOSS PER SHARE
The computation of basic net loss per share is based on the weighted-average number of common shares outstanding during the reporting period. The computation of diluted net loss per share assumes the vesting of nonvested stock awards and the exercise of stock options (refer to Note 15 — Stock-Based Compensation), for which the assumed proceeds upon vesting are deemed to be the amount of compensation cost attributable to future services and are not yet recognized using the treasury stock method, to the extent dilutive. There were 242,772288,185 restricted stock units and 496,148837,338 stock options excluded from the computation of diluted net loss per share during the three months ended March 31, 2020 because they were anti-dilutive. There were 242,722 restricted stock units and 496,418 stock options excluded from the computation of diluted net loss per share during the three months ended March 31, 2019
15
because they were anti-dilutive. There were 264,367 shares of restricted stock and restricted stock units and 255,608 stock options excluded from the computation of diluted net loss per share during the three months ended March 31, 2018 because they were anti-dilutive.anti-dilutive (refer to Note 15 — Stock-Based Compensation).
The Company’s diluted net loss per share will also reflect the assumed conversion of the equity warrants issued when the Company emerged from bankruptcy on July 9, 2014 (the “Effective Date”) and MIP Warrants issued by the Company (refer to Note 15 — Stock-Based Compensation) if the impact is dilutive under the treasury stock method. The equity warrants have a 7-year term that commenced on the day following the Effective Date and are exercisable for one tenth of a share of the Company’s common stock. There were no unvested MIP Warrants and 3,936,761 equity warrants excluded from the computation of diluted net loss per share during the three months ended March 31, 20192020 and 20182019 because they were anti-dilutive.
16
The components of the denominator for the calculation of basic and diluted net loss per share are as follows:
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|
| For the Three Months Ended |
|
| For the Three Months Ended |
| ||||
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| March 31, |
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| March 31, |
| ||||
|
| 2019 |
| 2018 |
|
| 2020 |
| 2019 |
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|
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|
Common shares outstanding, basic: |
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|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, basic |
| 41,726,106 |
| 34,577,990 |
|
| 41,866,357 |
| 41,726,106 |
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|
Common shares outstanding, diluted: |
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|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, basic |
| 41,726,106 |
| 34,577,990 |
|
| 41,866,357 |
| 41,726,106 |
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|
|
|
|
|
|
|
|
|
|
Dilutive effect of warrants |
| — |
| — |
|
| — |
| — |
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Dilutive effect of stock options |
| — |
| — |
|
| — |
| — |
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|
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|
|
|
|
Dilutive effect of restricted stock awards |
| — |
| — |
|
| — |
| — |
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|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, diluted |
| 41,726,106 |
| 34,577,990 |
|
| 41,866,357 |
| 41,726,106 |
|
6 - RELATED PARTY TRANSACTIONS
During the three months ended March 31, 20192020 and 2018,2019, the Company did not identify any related party transactions.
7 – DEBT
Long-term debt, net consists of the following:
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| March 31, |
| December 31, |
|
| March 31, |
| December 31, |
| ||||
|
| 2019 |
| 2018 |
|
| 2020 |
| 2019 |
| ||||
Principal amount |
| $ | 534,840 |
| $ | 551,420 |
|
| $ | 488,834 |
| $ | 495,824 |
|
Less: Unamortized debt financing costs |
|
| (15,967) |
|
| (16,272) |
|
|
| (12,143) |
|
| (13,094) |
|
Less: Current portion |
|
| (70,351) |
|
| (66,320) |
|
|
| (72,962) |
|
| (69,747) |
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|
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|
|
|
|
|
|
Long-term debt, net |
| $ | 448,522 |
| $ | 468,828 |
|
| $ | 403,729 |
| $ | 412,983 |
|
16
|
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|
| March 31, 2019 |
| December 31, 2018 |
|
| March 31, 2020 |
| December 31, 2019 |
| ||||||||||||||||
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|
|
| Unamortized |
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|
| Unamortized |
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|
|
| Unamortized |
|
|
|
| Unamortized |
| ||||
|
|
|
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| Debt Issuance |
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| Debt Issuance |
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| Debt Issuance |
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| Debt Issuance |
| ||||
|
| Principal |
| Cost |
| Principal |
| Cost |
|
| Principal |
| Cost |
| Principal |
| Cost |
| ||||||||
$495 Million Credit Facility |
| $ | 430,000 |
| $ | 14,213 |
| $ | 445,000 |
| $ | 14,423 |
|
| $ | 390,314 |
| $ | 10,791 |
| $ | 395,724 |
| $ | 11,642 |
|
$108 Million Credit Facility |
|
| 104,840 |
|
| 1,754 |
|
| 106,420 |
|
| 1,849 |
|
|
| 98,520 |
|
| 1,352 |
|
| 100,100 |
|
| 1,452 |
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
Total debt |
| $ | 534,840 |
| $ | 15,967 |
| $ | 551,420 |
| $ | 16,272 |
|
| $ | 488,834 |
| $ | 12,143 |
| $ | 495,824 |
| $ | 13,094 |
|
As of March 31, 20192020 and December 31, 2018, $15,9672019, $12,143 and $16,272$13,094 of deferred financing costs, respectively, were presented as a direct deduction within the outstanding debt balance in the Company’s Condensed Consolidated Balance Sheet.Sheets. Amortization expense for deferred financing costs was $915$951 and $573$915 for the three months ended March 31, 20192020 and 2018,2019, respectively. This amortization expense is recorded as a component of Interest expense in the Condensed Consolidated Statements of Operations.
Effective June 5, 2018, the portion
17
$495 Million Credit Facility
On May 31, 2018, the Company entered into a five-year senior secured credit facility for an aggregate amount of up to $460,000 with Nordea Bank AB (publ), New York Branch (“Nordea”), as Administrative Agent and Security Agenty, the various lenders party thereto, and Nordea, Skandinaviska Enskilda Banken AB (publ), ABN AMRO Capital USA LLC, DVB Bank SE, Crédit Agricole Corporate & Investment Bank, and Danish Ship Finance A/S as Bookrunners and Mandated Lead Arrangers. Deutsche Bank AG Filiale DeutschlandgeschäDeutschlandgeschäft, and CTBC Bank Co. Ltd. are Co-Arrangers under this credit facility. On June 5, 2018, proceeds of $460,000 under this facility were used, together with cash on hand, to refinance all of the Company’s existing credit facilities (the $400 Million Credit Facility, $98 Million Credit Facility and 2014 Term Loan Facilities, as defined below) into one facility, and pay down the debt on seven of the Company’s oldest vessels, which have been identified for sale.
On February 28, 2019, the Company entered into an Amendment and Restatement Agreement (the “Amendment”) for this credit facility (the “$495 Million Credit Facility”) with Nordea Bank AB (publ), New York Branch (“Nordea”), as Administrative Agent and Security Agent, the various lenders party thereto, and Nordea, Skandinaviska Enskilda Banken AB (publ), ABN AMRO Capital USA LLC, DVB Bank SE, Crédit Agricole Corporate & Investment Bank, and Danish Ship Finance A/S as Bookrunners and Mandated Lead Arrangers. The Amendment provides for an additional tranche up to $35,000 to finance a portion of the acquisitions, installations, and related costs for exhaust gas cleaning systems (or “scrubbers”)scrubbers for 17 of the Company’s Capesize vessels. On August 28, 2019, September 23, 2019 and March 12, 2020, the Company made total drawdowns of $9,300, $12,200 and $11,250, respectively, under the $35 Million tranche of the $495 Million Credit Facility.
On November 15, 2019, the Company utilized $6,880 of the proceeds from the sale of the Genco Challenger and Genco Champion, which were sold during the fourth quarter of 2019, as a loan prepayment under the $495 Million Credit Facility. Additionally, on April 15, 2019, the Company utilized $4,947 of the proceeds from the sale of the Genco Cavalier as a loan prepayment under the $495 Million Credit Facility. Under the terms of the $495 Million Credit Facility, the amount received from the proceeds of the sale of a collateralized vessel can be used towards the financing of a replacement vessel or vessels meeting certain requirements and added as collateral under the facility. However, since a replacement vessel was not added as collateral within the 180 day period stipulated in the $495 Million Credit Facility, the Company was required to utilize the proceeds as a loan prepayment.
As of March 31, 2019,2020, there was $35,000 ofno availability under the $495 Million Credit Facility. Total debt repayments of $16,660 and $15,000 were made during the three months ended March 31, 2020 and 2019 under the $495 Million Credit Facility. There were no debt repayments made under the $495 Million Credit Facility, during the three months ended March 31, 2018. As of March 31, 2019 and December 31, 2018, the total outstanding net debt balance was $415,787 and $430,577, respectively.
The $495 Million Credit Facility provides for the following key terms in relation to the $460,000 tranche:
· | The final maturity date is May 31, 2023. |
· | Borrowings bear interest at |
17
· | Scheduled amortization payments may be recalculated upon the Company’s request based on changes in collateral vessels, prepayments of the loan made as a result of a collateral vessel disposition as part of the Company’s fleet renewal program, or voluntary prepayments, subject in each case to a minimum repayment profile under which the loan will be repaid to nil when the average age of the vessels serving as collateral from time to time reaches 17 years. Mandatory prepayments are applied to remaining amortization payments pro rata, while voluntary prepayments are applied to remaining amortization payments in order of maturity. |
18
· | Acquisitions and additional indebtedness are allowed subject to compliance with financial covenants, a collateral maintenance test, and other customary conditions. |
The $495 Million Credit Facility provides for the following key terms in relation to the $35,000 tranche:
· | The final maturity date is May 31, 2023. |
· | Borrowings under the tranche may be incurred pursuant to multiple drawings on or prior to March 30, 2020 in minimum amounts of $5,000 and may be used to finance up to 90% of the scrubber costs noted above. |
· | Borrowings under the tranche will bear interest at LIBOR plus 2.50% through September 30, 2019 and LIBOR plus a range of 2.25% to 2.75% thereafter, dependent upon the Company’s ratio of total net indebtedness to the last twelve months’ EBITDA. |
· | The tranche is subject to equal consecutive quarterly repayments commencing on the last day of the fiscal quarter ending March 31, 2020 in an amount reflecting a repayment profile whereby the loans shall have been repaid after four years calculated from March 31, 2020. Assuming that the full $35,000 is borrowed, each quarterly repayment amount |
The $495 Million Credit Facility provides for the following key terms:
· |
|
· | Collateral vessels can be sold or disposed of without prepayment of the loan if a replacement vessel or vessels meeting certain requirements are included as collateral within 180 days of such sale or disposition. In addition: |
· | we must be in compliance with the collateral maintenance test; |
· | the replacement vessels must become collateral for the loan; and either |
· | the replacement vessels must have an equal or greater appraised value that the collateral vessels for which they are substituted, or |
· | ratio of the aggregate appraised value of the collateral vessels (including replacement vessels) to the outstanding loan amount after the collateral disposition (accounting for any prepayments of the loan by the time the replacement vessels become collateral vessels) must equal or exceed the aggregate appraised value of the collateral vessels to the outstanding loan before the collateral disposition. |
· | Key financial covenants include: |
18
· | minimum liquidity, with unrestricted cash and cash equivalents to equal or exceed the greater of $30,000 and 7.5% of total indebtedness (no restricted cash is required); |
19
· | minimum working capital, with consolidated current assets (excluding restricted cash) minus consolidated current liabilities (excluding the current portion of long-term indebtedness) to be not less than zero; |
· | debt to capitalization, with the ratio of total indebtedness to total capitalization to be not more than 70%; and |
· | collateral maintenance, with the aggregate appraised value of collateral vessels to be at least 135% of the principal amount of the loan outstanding under the $495 Million Credit Facility. |
· | Collateral includes the current vessels in the Company’s fleet other than the seven oldest vessels in the fleet which |
As of March 31, 2019,2020, the Company was in compliance with all of the financial covenants under the $495 Million Credit Facility.
$108 Million Credit Facility
On August 14, 2018, the Company entered into a five-year senior secured credit facility (the “$108“108 Million Credit Facility”) with Crédit Agricole Corporate & Investment Bank (“CACIB”), as Structurer and Bookrunner, CACIB and Skandinaviska Enskilda Banken AB (Publ) as Mandate Lead Arrangers, CACIB as Administrative Agent and as Security Agent, and the other lenders party thereto from time to time. The Company has used proceeds from the $108 Million Credit Facility to finance a portion of the purchase price for the six vessels, including four Capesize Vessels and two Ultramax vessels, which were delivered to the Company during the three months ended September 30, 2018 (refer to Note 4 — Vessel Acquisitions and Dispositions).2018. These six vessels also serve as collateral under the $108 Million Credit Facility. The Company drew down a total of $108,000 during the three months ended September 30, 2018, which represents 45% of the appraised value of the six vessels.
As of March 31, 2019,2020, there was no availability under the $108 Million Credit Facility. Total debt repayments of $1,580 were made during the three months ended March 31, 2020 and 2019 under the $108 Million Credit Facility. There were no debt repayments made during the three months ended March 31, 2018 under the $108 Million Credit Facility. As of March 31, 2019 and December 31, 2018, the total outstanding net debt balance was $103,086 and $104,571, respectively.
The $108 Million Credit Facility provides for the following key terms:
· | The final maturity date of the $108 Million Credit Facility is August 14, 2023. |
· | Borrowings under the $108 Million Credit Facility bear interest at LIBOR plus 2.50% through September 30, 2019 and LIBOR plus a range of 2.25% to 2.75% thereafter, dependent upon the Company’s ratio of total net indebtedness to the last twelve months EBITDA. |
· | Scheduled amortization payments under the $108 Million Credit Facility reflect a repayment profile whereby the facility shall have been repaid to nil when the average vessel aged of the collateral vessels reaches 20 years. Based on this, the required repayments are $1,580 per quarter commencing on December 31, 2018, with a final balloon payment on the maturity date. |
· | Mandatory prepayments are to be applied to remaining amortization payments pro rata, while voluntary prepayments are to be applied to remaining amortization payments in order of maturity. |
19
· |
|
20
· | Acquisitions and additional indebtedness are allowed subject to compliance with financial covenants (including a collateral maintenance test) and other customary conditions. |
· | Key financial covenants are substantially similar to those under the Company’s $495 Million Credit Facility and include: |
· | minimum liquidity, with unrestricted cash and cash equivalents to equal or exceed the greater of $30,000 and 7.5% of total indebtedness; |
· | minimum working capital, with consolidated current assets (excluding restricted cash) minus consolidated current liabilities (excluding the current portion of long-term indebtedness) to be not less than zero; |
· | debt to capitalization, with the ratio of total indebtedness to total capitalization to be not more than 70%; and |
· | collateral maintenance, with the aggregate appraised value of collateral vessels to be at least 135% of the principal amount of the loan outstanding under the $108 Million Credit Facility. |
As of March 31, 2019,2020, the Company was in compliance with all of the financial covenants under the $108 Million Credit Facility.
$400 Million Credit Facility
On November 10, 2016, the Company entered into a senior secured term loan facility, the $400 Million Credit Facility, in an aggregate principal amount of up to $400,000 with Nordea Bank Finland plc, New York Branch, Skandinaviska Enskilda Banken AB (publ), DVB Bank SE, ABN AMRO Capital USA LLC, Crédit Agricole Corporate and Investment Bank, Deutsche Bank AG Filiale Deutschlandgeschäft, Crédit Industriel et Commercial and BNP Paribas. On November 15, 2016, the proceeds under the $400 Million Credit Facility were used to refinance six of the Company’s prior credit facilities. The $400 Million Credit Facility was collateralized by 45 of the Company’s vessels and at December 31, 2016, required the Company to sell five remaining unencumbered vessels, which were sold during the year ended December 31, 2017. On November 14, 2016, the Company borrowed the maximum available amount of $400,000.
The $400 Million Credit Facility had a maturity date of November 15, 2021, and the principal borrowed under the facility bore interest at the LIBOR for an interest period of three months plus a margin of 3.75%. The Company had the option to pay 1.50% of such rate in-kind (“PIK interest”) through December 31, 2018, of which was payable on the maturity date of the facility. The Company opted to make the PIK interest election through September 29, 2017. As of March 31, 2019 and December 31, 2018, the Company did not have any PIK interest recorded. The $400 Million Credit Facility originally had scheduled amortization payments of (i) $100 per quarter through December 31, 2018, (ii) $7,610 per quarter from March 31, 2019 through December 31, 2020, (iii) $18,571 per quarter from March 31, 2021 through September 30, 2021 and (iv) $282,605 upon final maturity on November 15, 2021, which did not include PIK interest. Pursuant to the credit facility agreement, upon the payment of any excess cash flow to the lenders (see below), the scheduled repayments were adjusted to reflect the reduction of future amortization amounts.
There was no collateral maintenance testing for the $400 Million Credit Facility prior to June 30, 2018. Thereafter, there was to be required collateral maintenance testing with a gradually increasing threshold calculated as the value of the collateral under the facility as a percentage of the loan outstanding as follows: 105% from June 30, 2018 to December 30, 2018, 115% from December 31, 2018 to December 30, 2020 and 135% thereafter.
20
The $400 Million Credit Facility required the Company to comply with a number of covenants substantially similar to those in the Company’s other credit facilities, including financial covenants related to debt to total book capitalization, minimum working capital, minimum liquidity, and dividends; collateral maintenance requirements (as described above); and other customary covenants. The Company was required to maintain a ratio of total indebtedness to total capitalization of not greater than 0.70 to 1.00 at all times. Minimum working capital as defined in the $400 Million Credit Facility was not to be less than $0 at all times. The $400 Million Credit Facility had minimum liquidity requirements at all times for all vessels in its fleet of (i) $250 per vessel to and including December 31, 2018, (ii) $400 per vessel from January 1, 2019 to and including December 31, 2019 and (iii) $700 per vessel from January 1, 2020 and thereafter. The Company was prohibited from paying dividends without lender consent through December 31, 2020. The Company was able establish non-recourse subsidiaries to incur indebtedness or make investments, but it was restricted from incurring indebtedness or making investments (other than through non-recourse subsidiaries). Excess cash from the collateralized vessels under the $400 Million Credit Facility was subject to a cash sweep. The cash flow sweep was 100% of excess cash flow through December 31, 2018, 75% through December 31, 2020 and the lesser of 50% of excess cash flow or an amount that would reflect a 15-year average vessel age repayment profile thereafter; provided no prepayment under the cash sweep was required from the first $10,000 in aggregate of the prepayments otherwise required under the cash sweep. During the three months ended March 31, 2019 and 2018, the Company repaid $0 and $11,334, respectively, for the excess cash flow sweep.
There were no debt repayments made during the three months ended March 31, 2019 and total debt repayments of $11,434 were made during the three months ended March 31, 2018 under the $400 Million Credit Facility.
On June 5, 2018, the $400 Million Credit Facility was refinanced with the $495 Million Credit Facility; refer to the “$495 Million Credit Facility” section above.
$98 Million Credit Facility
On November 4, 2015, thirteen of the Company’s wholly-owned subsidiaries entered into a Facility Agreement, by and among such subsidiaries as borrowers (collectively, the “Borrowers”); Genco Holdings Limited, a direct subsidiary of Genco of which the Borrowers are direct subsidiaries (“Holdco”); certain funds managed or advised by Hayfin Capital Management, Breakwater Capital Ltd, or their nominee, as lenders; and Hayfin Services LLP, as agent and security agent (the “$98 Million Credit Facility”). The Borrowers borrowed the maximum available amount of $98,271 under the facility on November 10, 2015.
Borrowings under the facility were available for working capital purposes. The facility had a final maturity date of September 30, 2020, and the principal borrowed under the facility bore interest at LIBOR for an interest period of three months plus a margin of 6.125% per annum. The facility had no fixed amortization payments for the first two years and fixed amortization payments of $2,500 per quarter thereafter. To the extent the value of the collateral under the facility was 182% or less of the loan amount outstanding, the Borrowers were to prepay the loan from earnings received from operation of the thirteen collateral vessels after deduction of the following amounts: costs, fees, expenses, interest, and fixed principal repayments under the facility; operating expenses relating to the thirteen vessels; and the Borrowers’ pro rata share of general and administrative expenses based on the number of vessels they owned.
The Facility Agreement required the Borrowers and, in certain cases, the Company and Holdco to comply with a number of covenants substantially similar to those in the other credit facilities of Genco and its subsidiaries, including financial covenants related to maximum leverage, minimum consolidated net worth, minimum liquidity, and dividends; collateral maintenance requirements; and other customary covenants. The Company was prohibited from paying dividends under this facility until December 31, 2018. Following December 31, 2018, the amount of dividends the Company could pay was limited based on the amount of the repayment of at least $25,000 of the loan under such facility, as well as the ratio of the value of vessels and certain other collateral pledged under such facility. The Facility Agreement included usual and customary events of default and remedies for facilities of this nature.
Borrowings under the facility were secured by first priority mortgage on the vessels owned by the Borrowers, namely the Genco Constantine, the Genco Augustus, the Genco London, the Genco Titus, the Genco Tiberius, the Genco Hadrian, the Genco Knight, the Genco Beauty, the Genco Vigour, the Genco Predator, the Genco Cavalier, the Genco
21
Champion, and the Genco Charger, and related collateral. Pursuant to the Facility Agreement and a separate Guarantee executed by the Company, the Company and Holdco were acting as guarantors of the obligations of the Borrowers and each other under the Facility Agreement and its related documentation.
On November 15, 2016, the Company entered into an Amending and Restating Agreement, which amended and restated the credit agreements and the guarantee for the $98 Million Credit Facility (the “Restated $98 Million Credit Facility”). The Restated $98 Million Credit Facility provided for the following: reductions in the minimum liquidity requirements consistent with the $400 Million Credit Facility, except the minimum liquidity amount for the collateral vessels under this facility was $750 per vessel, which was reflected as restricted cash; netting of certain amounts against the measurements of the collateral maintenance covenant, which remained in place with a 140% value to loan threshold; a portion of amounts required to be maintained under the minimum liquidity covenant for this facility may, under certain circumstances, have been used to prepay the facility to maintain compliance with the collateral maintenance covenant; elimination of the original maximum leverage ratio and minimum net worth covenants; and restrictions on incurring indebtedness, making investments (other than through non-recourse subsidiaries) or paying dividends, similar to those provided for in the $400 Million Credit Facility. The minimum working capital and the total indebtedness to total capitalization were the same as the $400 Million Credit Facility.
There were no debt repayments made during the three months ended March 31, 2019 and total debt repayments of $2,542 made during the three months ended March 31, 2018 under the $98 Million Credit Facility.
On June 5, 2018, the $98 Million Credit Facility was refinanced with the $495 Million Credit Facility; refer to the “$495 Million Credit Facility” section above.
2014 Term Loan Facilities
On October 8, 2014, Baltic Trading and its wholly-owned subsidiaries, Baltic Hornet Limited and Baltic Wasp Limited, each entered into a loan agreement and related documentation for a credit facility in a principal amount of up to $16,800 with ABN AMRO Capital USA LLC and its affiliates (the “2014 Term Loan Facilities”) to partially finance the newbuilding Ultramax vessel that each subsidiary acquired, namely the Baltic Hornet and Baltic Wasp, respectively. Amounts borrowed under the 2014 Term Loan Facilities were not allowed to be reborrowed. The 2014 Term Loan Facilities had a ten-year term, and the facility amount was to be the lowest of 60% of the delivered cost per vessel, $16,800 per vessel, and 60% of the fair market value of each vessel at delivery. The 2014 Term Loan Facilities were insured by the China Export & Credit Insurance Corporation (Sinosure) in order to cover political and commercial risks for 95% of the outstanding principal plus interest, which was recorded in deferred financing fees. Borrowings under the 2014 Term Loan Facilities bore interest at the three or six-month LIBOR rate plus an applicable margin of 2.50% per annum. Borrowings were to be repaid in 20 equal consecutive semi-annual installments of 1/24 of the facility amount plus a balloon payment of 1/6 of the facility amount at final maturity. Principal repayments commenced six months after the actual delivery date for each respective vessel.
Borrowings under the 2014 Term Loan Facilities were secured by liens on the vessels acquired with borrowings under these facilities, namely the Baltic Hornet and Baltic Wasp, and other related assets. The Company guaranteed the obligations of the Baltic Hornet and Baltic Wasp under the 2014 Term Loan Facilities.
On November 15, 2016, the Company entered into Supplemental Agreements with lenders under our 2014 Term Loan Facilities which, among other things, amended the Company’s collateral maintenance covenants under the 2014 Term Loan Facilities to provide that such covenants would not be tested through December 30, 2017 and the minimum collateral value to loan ratio was 100% from December 31, 2017, 105% from June 30, 2018, 115% from December 31, 2018 and 135% from December 31, 2019. These Supplemental Agreements also provided for certain other amendments to the 2014 Term Loan Facilities, which included reductions in the minimum liquidity requirements consistent with the $400 Million Credit Facility and restrictions on incurring indebtedness, making investments (other than through non-recourse subsidiaries) or paying dividends, similar to the $400 Million Credit Facility. Additionally, the minimum working capital required was the same as under the $400 Million Credit Facility. Lastly, the maximum leverage requirement was equivalent to the debt to total capitalization requirement in the $400 Million Credit Facility.
22
There were no debt repayments made during the three months ended March 31, 2019 and total debt repayments of $681 were made during the three months ended March 31, 2018 under the 2014 Term Loan Facilities.
On June 5, 2018, the 2014 Term Loan Facilities were refinanced with the $495 Million Credit Facility; refer to the “$495 Million Credit Facility” section above.
Interest rates
The following table sets forth the effective interest rate associated with the interest expense for the Company’s debt facilities noted above, including the cost associated with unused commitment fees, if applicable. The following table also includes the range of interest rates on the debt, excluding the impact of unused commitment fees, if applicable:
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| |||||
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| For the Three Months Ended |
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| ||
|
| March 31, |
| For the Three Months Ended March 31, | ||||||
|
| 2019 |
| 2018 |
|
| 2020 |
| 2019 |
|
Effective Interest Rate |
| 5.56 | % | 5.83 | % |
| 4.76 | % | 5.56 | % |
Range of Interest Rates (excluding unused commitment fees) |
| 4.99 % to 5.76 | % | 3.83 % to 8.43 | % |
| 3.45 % to 5.05 | % | 4.99 % to 5.76 | % |
8 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values and carrying values of the Company’s financial instruments at March 31, 20192020 and December 31, 20182019 which are required to be disclosed at fair value, but not recorded at fair value, are noted below.
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| March 31, 2019 |
| December 31, 2018 |
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| March 31, 2020 |
| December 31, 2019 |
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| Carrying |
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| Carrying |
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| Carrying |
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| Carrying |
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|
|
| ||||
|
| Value |
| Fair Value |
| Value |
| Fair Value |
|
| Value |
| Fair Value |
| Value |
| Fair Value |
| ||||||||
Cash and cash equivalents |
| $ | 187,713 |
| $ | 187,713 |
| $ | 197,499 |
| $ | 197,499 |
|
| $ | 134,338 |
| $ | 134,338 |
| $ | 155,889 |
| $ | 155,889 |
|
Restricted cash |
|
| 5,262 |
|
| 5,262 |
|
| 5,262 |
|
| 5,262 |
|
|
| 15,170 |
|
| 15,170 |
|
| 6,360 |
|
| 6,360 |
|
Floating rate debt |
|
| 534,840 |
|
| 534,840 |
|
| 551,420 |
|
| 551,420 |
|
|
| 488,834 |
|
| 488,834 |
|
| 495,824 |
|
| 495,824 |
|
The carrying value of the borrowings under the $495 Million Credit Facility and the $108 Million Credit Facility as of March 31, 20192020 and December 31, 20182019 approximate their fair value due to the variable interest nature thereof as each of these credit facilities represent floating rate loans. Refer to Note 7 — Debt for further information regarding the Company’s credit facilities. The $495 Million Credit Facility was utilized to refinance the $400 Million Credit Facility, $98 Million Credit Facility and 2014 Term Loan Facilities on June 5, 2018 and was subsequently amended on February 28, 2019. The carrying amounts of the Company’s other financial instruments at March 31, 20192020 and December 31, 20182019 (principally Due from charterers and Accounts payable and accrued expenses) approximate fair values because of the relatively short maturity of these instruments.
ASC Subtopic 820-10, “Fair Value Measurements & Disclosures” (“ASC 820-10”), applies to all assets and liabilities that are being measured and reported on a fair value basis. This guidance enables the reader of the financial
21
statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumption (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 requires significant management judgment. The three levels are defined as follows:
· | Level 1—Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree of judgment. |
· | Level 2—Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. |
· | Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
23
Cash and cash equivalents and restricted cash are considered Level 1 items, as they represent liquid assets with short-term maturities. Floating rate debt is considered to be a Level 2 item, as the Company considers the estimate of rates it could obtain for similar debt or based upon transactions amongst third parties. Nonrecurring fair value measurements include vessel impairment assessments completed during the interim period and at year-end as determined based on third-party quotes, which are based on various data points, including comparable sales of similar vessels, which are Level 2 inputs. During the three months ended March 31, 2018,2020, the vesselsvessel assets for ninefourteen of the Company’s vessels were written down as part of the impairment recorded during the three months ended March 31, 2018.2020. There was no vessel impairment recorded during the three months ended March 31, 2019. The vessels held for sale as of March 31, 2020 were written down as part of the impairment recorded during the three months ended March 31, 2020. The vessel held for sale as of December 31, 2019 was written down as part of the impairment recorded during the three months ended September 30, 2019. Refer to “Impairment of vessel assets” section in Note 2 — Summary of Significant Accounting Policies.
Nonrecurring fair value measurements also include impairment tests conducted by the Company during the three months ended March 31, 2020 and 2019 of its operating lease right-of use assets. The fair value determination for the operating lease right-of-use assets was based on third party quotes, which is considered a Level 2 input. During the three months ended March 31, 2020 and 2019, there was no impairment of the operating lease right-of-use assets. Refer to Note 13 — Leases. The Company did not have any Level 3 financial assets or liabilities as of March 31, 20192020 and December 31, 2018.2019.
9 - PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| March 31, |
| December 31, |
|
| March 31, |
| December 31, |
| ||||
|
| 2019 |
| 2018 |
|
| 2020 |
| 2019 |
| ||||
Vessel stores |
| $ | 629 |
| $ | 597 |
|
| $ | 566 |
| $ | 638 |
|
Capitalized contract costs |
|
| 748 |
|
| 2,289 |
|
|
| 2,516 |
|
| 1,952 |
|
Prepaid items |
|
| 4,590 |
|
| 3,426 |
|
|
| 2,871 |
|
| 2,870 |
|
Insurance receivable |
|
| 1,239 |
|
| 851 |
|
|
| 2,217 |
|
| 2,039 |
|
Advance to agents |
|
| 1,063 |
|
| 1,109 |
|
|
| 1,218 |
|
| 1,162 |
|
Other |
|
| 944 |
|
| 2,177 |
|
|
| 1,477 |
|
| 1,388 |
|
Total prepaid expenses and other current assets |
| $ | 9,213 |
| $ | 10,449 |
|
| $ | 10,865 |
| $ | 10,049 |
|
22
10 - FIXED ASSETS
Fixed assets, net consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| March 31, |
| December 31, |
|
| March 31, |
| December 31, |
| ||||
|
| 2019 |
| 2018 |
|
| 2020 |
| 2019 |
| ||||
Fixed assets, at cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel equipment |
| $ | 3,786 |
| $ | 2,873 |
|
| $ | 6,543 |
| $ | 7,288 |
|
Furniture and fixtures |
|
| 462 |
|
| 462 |
|
|
| 270 |
|
| 467 |
|
Leasehold improvements |
|
| 29 |
|
| — |
|
|
| 539 |
|
| 100 |
|
Computer equipment |
|
| 257 |
|
| 236 |
|
|
| 301 |
|
| 275 |
|
Total costs |
|
| 4,534 |
|
| 3,571 |
|
|
| 7,653 |
|
| 8,130 |
|
Less: accumulated depreciation and amortization |
|
| (1,435) |
|
| (1,281) |
|
|
| (1,704) |
|
| (2,154) |
|
Total fixed assets, net |
| $ | 3,099 |
| $ | 2,290 |
|
| $ | 5,949 |
| $ | 5,976 |
|
Depreciation and amortization expense for fixed assets for the three months ended March 31, 2020 and 2019 was $345 and 2018 was $154, and $71, respectively.
24
11 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| March 31, |
| December 31, |
|
| March 31, |
| December 31, |
| ||||
|
| 2019 |
| 2018 |
|
| 2020 |
| 2019 |
| ||||
Accounts payable |
| $ | 12,802 |
| $ | 15,110 |
|
| $ | 21,850 |
| $ | 26,040 |
|
Accrued general and administrative expenses |
|
| 1,434 |
|
| 4,298 |
|
|
| 1,593 |
|
| 4,105 |
|
Accrued vessel operating expenses |
|
| 9,901 |
|
| 9,735 |
|
|
| 10,727 |
|
| 19,459 |
|
Total accounts payable and accrued expenses |
| $ | 24,137 |
| $ | 29,143 |
|
| $ | 34,170 |
| $ | 49,604 |
|
Total voyage revenue includesrevenues include revenue earned on fixed rate time charters, spot market voyage charters and spot market-related time charters, as well as the sale of bunkers consumed during short-term time charters. For the three months ended March 31, 20192020 and 2018,2019, the Company earned $93,464$98,336 and $76,916$93,464 of voyage revenue, respectively.
Revenue for spot market voyage charters is recognized ratably over the total transit time of the voyage which begins when the vessel arrives at the loading port and ends at the time the discharge of cargo is completed at the discharge port in accordance with ASC 606. Spot market voyage charter agreements do not provide the charterers with substantive decision-making rights to direct how and for what purpose the vessel is used, therefore revenue from spot market voyage charters is not within the scope of ASC 842. Additionally, the Company has identified that the contract fulfillment costs of spot market voyage charters consist primarily of the fuel consumption that is incurred by the Company from the latter of the end of the previous vessel employment and the contract date until the arrival at the loading port in addition to any port expenses incurred prior to arrival at the load port, as well as any charter hire expenses for third-party vessels that are chartered in. The fuel consumption during this period isand any port expenses incurred prior to arrival at the load port are capitalized and recorded in Prepaid expenses and other current assets in the Condensed Consolidated Balance SheetSheets and isare amortized ratably over the total transit time of the voyage from arrival at the loading port until the vessel departs from the discharge port and expensed as part of Voyage Expenses.Similarly, for any third party vessels that are chartered in, the charter hire expenses during this period are capitalized and recorded in Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets and are amortized and expensed as part of Charter hire expenses. Refer also to Note 9 — Prepaid Expenses and Other Current Assets.
During time charter agreements, including fixed rate time charters and spot market-related time charters, the charterers have substantive decision-making rights to direct how and for what purpose the vessel is used. As such, the
23
Company has identified that time charter agreements contain a lease in accordance with ASC 842. During time charter agreements, the Company is responsible for operating and maintaining the vessels. These costs are recorded as vessel operating expenses in the Condensed Consolidated Statements of Operation. The Company has elected the practical expedient that allows the Company to combine lease and non-lease components under ASC 842 as the Company believes (1) the timing and pattern of recognizing revenues for operating the vessel is the same as the timing and pattern of recognizing vessel leasing revenue; and (2) the lease component, if accounted for separately, would be classified as an operating lease.
Total voyage revenue recognized in the Condensed Consolidated Statements of Operations includes the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
|
| For the Three Months Ended |
| ||||||||
|
| March 31, |
|
| March 31, |
| ||||||||
|
| 2019 |
| 2018 |
|
| 2020 |
| 2019 |
| ||||
Lease revenue |
| $ | 23,390 |
| $ | 42,854 |
|
| $ | 19,151 |
| $ | 23,390 |
|
Spot market voyage revenue |
|
| 70,074 |
|
| 34,062 |
|
|
| 79,185 |
|
| 70,074 |
|
Total voyage revenues |
| $ | 93,464 |
| $ | 76,916 |
|
| $ | 98,336 |
| $ | 93,464 |
|
25
13 - LEASES
Effective April 4, 2011, the Company entered into a seven-year sub-sublease agreement for its main office in New York, New York. The term of the sub-sublease commenced June 1, 2011, with a free base rental period until October 31, 2011. Following the expiration of the free base rental period, the monthly base rental payments were $82 per month until May 31, 2015 and thereafter were $90 per month until the end of the seven-year term. Pursuant to the sub-sublease agreement, the sublessor was obligated to contribute $472 toward the cost of the Company’s alterations to the sub-subleased office space. The Company has also entered into a direct lease with the over-landlord of such office space that commenced immediately upon the expiration of such sub-sublease agreement, for a term covering the period from May 1, 2018 to September 30, 2025; the direct lease provided for a free base rental period from May 1, 2018 to September 30, 2018. Following the expiration of the free base rental period, the monthly base rental payments are $186 per month from October 1, 2018 to April 30, 2023 and $204 per month from May 1, 2023 to September 30, 2025. For accounting purposes, the sub-sublease agreement and direct lease agreement with the landlord constitute one lease agreement.
In addition, during October 2017 the Company entered into a lease for office space in Singapore that expired in January 2019. A lease was signed for a new office space in Singapore effective January 17, 2019 for a three-year term.
Lastly, during July 2018, the Company entered into a lease for office space in Copenhagen, which commenced on July 1, 2018 and ended on April 30, 2019. A lease was signed for a new office space in Copenhagen effective May 1, 2019 for a minimum period ending May 1, 2023.
The Company adopted ASC 842 using the transition method on January 1, 2019 (refer to Note 2 — Summary of Significant Accounting Policies) and has identified this leasethese leases as an operating lease. Total operating lease cost recorded during the three months ended March 31, 2019 was $452, which was recorded in General and administrative expenses in the Condensed Consolidated Statements of Operation.leases. Variable rent expense, such as utilities and escalation expenses, are excluded from the determination of the operating lease liability, as the Company has deemed these insignificant.The Company used its incremental borrowing rate as the discount rate under ASC 842 since the rate implicit in the lease cannot be readily determined.
On June 14, 2019, the Company entered into a sublease agreement for a portion of the leased space for its main office in New York, New York that commenced on July 26, 2019 and will end on September 29, 2025. There is a free base rental period for the first four and a half months commencing on July 26, 2019. Following the expiration of the free base rental period, the monthly base sublease income will be $102 per month until September 29, 2025. The sublease income for the portion of the leased space is less than the lease payments due for the space, which has been identified as an indicator of impairment under ASC 360. As such, the right-of-use asset for the subleased portion of the space was written down to its fair value during the second quarter of 2019 which resulted in $223 of impairment charges which was recorded in Impairment of right-of-asset in the Condensed Consolidated Statements of Operation during the three months
24
ended June 30, 2019. Sublease income is recorded net with the total operating lease costs in General and administrative expenses in the Condensed Consolidated Statements of Operation. There was $306 of sublease income recorded during the three months ended March 31, 2020. There was no sublease income recorded during the three months ended March 31, 2019.
Total operating lease costs recorded during the three months ended March 31, 2020 and 2019 were $483 and $452, respectively, which was recorded in General and administrative expenses in the Condensed Consolidated Statements of Operations.
Supplemental Condensed Consolidated Balance Sheet information related to the Company’s operating leases as of March 31, 20192020 are as follows:
|
|
|
|
|
|
|
|
|
|
| March 31, |
|
| March 31, |
| ||
|
| 2019 |
|
| 2020 |
| ||
Operating Lease: |
|
|
|
|
|
|
|
|
Operating lease right-of-use asset |
| $ | 9,425 |
|
| $ | 7,904 |
|
|
|
|
|
|
|
|
|
|
Current operating lease liabilities |
| $ | 1,613 |
|
| $ | 1,698 |
|
Long-term operating lease liabilities |
|
| 11,092 |
|
|
| 9,393 |
|
Total operating lease liabilities |
| $ | 12,705 |
|
| $ | 11,091 |
|
|
|
|
|
|
|
|
|
|
Weighted average remaining lease term (years) |
|
| 6.51 |
|
|
| 5.50 |
|
Weighted average discount rate |
|
| 5.15 | % |
|
| 5.15 | % |
Maturities of operating lease liabilities as of March 31, 20192020 are as follows:
|
|
|
|
|
|
| March 31, |
| |
|
| 2019 |
| |
Remainder of 2019 |
| $ | 1,672 |
|
2020 |
|
| 2,230 |
|
2021 |
|
| 2,230 |
|
2022 |
|
| 2,230 |
|
2023 |
|
| 2,378 |
|
Thereafter |
|
| 4,292 |
|
Total lease payments |
|
| 15,032 |
|
Less imputed interest |
|
| (2,327) |
|
Present value of lease liabilities |
| $ | 12,705 |
|
26
Maturities of operating lease liabilities as of December 31, 2018 are as follows:
|
|
|
|
|
|
|
|
|
|
| December 31, |
|
| March 31, |
| ||
|
| 2018 |
|
| 2020 |
| ||
2019 |
| $ | 2,230 |
| ||||
2020 |
|
| 2,230 |
| ||||
Remainder of 2020 |
| $ | 1,672 |
| ||||
2021 |
|
| 2,230 |
|
|
| 2,230 |
|
2022 |
|
| 2,230 |
|
|
| 2,230 |
|
2023 |
|
| 2,378 |
|
|
| 2,378 |
|
2024 |
|
| 2,453 |
| ||||
Thereafter |
|
| 4,292 |
|
|
| 1,839 |
|
Total lease payments |
|
| 15,590 |
|
|
| 12,802 |
|
Less imputed interest |
|
| (1,711) |
| ||||
Present value of lease liabilities |
| $ | 11,091 |
|
Supplemental Condensed Consolidated Cash Flow information related to leases are as follows:
|
|
|
|
| |||||||
|
| For the Three |
|
|
|
|
|
|
|
| |
|
| Months Ended |
|
| For the Three Months Ended |
| |||||
|
| March 31, |
|
| March 31, |
| |||||
|
| 2019 |
|
| 2020 |
| 2019 |
| |||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows from operating lease |
| $ | 557 |
|
| $ | 557 |
| $ | 557 |
|
Under the previous leasing guidance under ASC 840, the Company had deferred rent at December 31, 2018 of $3,468. Rent expense pertaining to this lease for the three months ended March 31, 2018 under ASC 840 was $452.
During the second quarter of 2018, the Company began chartering-in third-party vessels. Under ASC 842, the Company is the lessee in these agreements. The Company has elected the practical expedient under ASC 842 to not recognize right-of-use assets and lease liabilities for short-term leases. During the three months ended March 31, 2020 and 2019, all charter-in agreements for third-party vessels were less than twelve months and considered short-term
25
leases. Refer to Note 2 — Summary of Significant Accounting Policies for the charter hire expenses recorded during the three months ended March 31, 2020 and 2019 for these charter-in agreements.
14 – COMMITMENTS AND CONTINGENCIES
During the second half of 2018, the Company entered into agreements for the purchase of ballast water treatments systems (“BWTS”) for 4742 of its vessels. The cost of these systems will vary based on the size and specifications of each vessel and whether the systems will be installed in China during the vessels’ scheduled drydockings. Based on the contractual purchase price of the BWTS and the estimated installation fees, the Company estimates the cost of the systems to be approximately $0.8$0.9 million for Capesize vessels, $0.5 million for Panamax vessels, $0.5$0.6 million for Supramax vessels and $0.5 million for Handysize vessels. These costs will be capitalized and depreciated over the remainder of the life of the vessel. The Company recorded $2,426cumulatively $14,225 and $1,804$12,783 in Vessel assets in the Condensed Consolidated Balance Sheets as of March 31, 20192020 and December 31, 2018, respectively.2019, respectively, related to BWTS additions.
On December 21, 2018, the Company entered into agreements to install scrubbers on its 17 Capesize vessels. The Company anticipatescompleted scrubber installation on the 1716 of its Capesize vessels to be completed during 2019 and estimate that the remaining Capesize vessel on January 17, 2020. The cost of each scrubber including installation, will be approximately $2.25 million per vessel, which may varyvaried according to the specifications of ourthe Company’s vessels and technical aspects of the installation, among other variables. These costs will be capitalized and depreciated over the remainder of the life of the vessel. The Company recorded $6,293cumulatively $42,477 and $428$41,270 in Vessel assets in the Condensed Consolidated Balance SheetSheets as of March 31, 20192020 and December 31, 2018,
27
respectively.2019, respectively, related to scrubber additions. The Company has entered into an amendment to the $495 Million Credit Facility to provide financing to cover a portion of these expenses,expenses; refer to Note 7 — Debt for further information.
15 - STOCK-BASED COMPENSATION
2014 Management Incentive Plan
On the Effective Date, pursuant to the Chapter 11 Plan, the Company adopted the Genco Shipping & Trading Limited 2014 Management Incentive Plan (the “MIP”). An aggregate of 966,806 shares of Common Stock were available for award under the MIP. Awards under the MIP took the form of restricted stock grants and three tiers of MIP Warrants with staggered strike prices based on increasing equity values. The number of shares of common stock available under the Plan represented approximately 1.8% of the shares of post-emergence Common Stock outstanding as of the Effective Date on a fully-diluted basis. Awards under the MIP were available to eligible employees, non-employee directors and/or officers of the Company and its subsidiaries (collectively, “Eligible Individuals”). Under the MIP, a committee appointed by the Board from time to time (or, in the absence of such a committee, the Board) (in either case, the “Plan Committee”) could grant a variety of stock-based incentive awards, as the Plan Committee deems appropriate, to Eligible Individuals. The MIP Warrants are exercisable on a cashless basis and contain customary anti-dilution protection in the event of any stock split, reverse stock split, stock dividend, reclassification, dividend or other distributions (including, but not limited to, cash dividends), or business combination transaction.
On August 7, 2014, pursuant to the MIP, certain individuals were granted MIP Warrants whereby each warrant can be converted on a cashless basis for the amount in excess of the respective strike price. The MIP Warrants were issued in three tranches for 238,066, 246,701 and 370,979 shares and have exercise prices, as adjusted for dividends declared during the fourth quarter of $259.102019 and the first quarter of 2020, of $240.89221 (the “$259.10240.89 Warrants”), $287.30$267.11051 (the “$287.30267.11 Warrants”) and $341.90$317.87359 (the “$341.90317.87 Warrants”) per whole share, respectively. The fair value of each warrant upon emergence from bankruptcy was $7.22 for the $259.10$240.89 Warrants, $6.63 for the $287.30$267.11 Warrants and $5.63 for the $341.90$317.87 Warrants. The warrant values were based upon a calculation using the Black-Scholes-Merton option pricing formula. This model uses inputs such as the underlying price of the shares issued when the warrant is exercised, volatility, cost of capital interest rate and expected life of the instrument. The Company has determined that the warrants should be classified within Level 3 of the fair value hierarchy by evaluating each input for the Black-Scholes-Merton option pricing formula against the fair value hierarchy criteria and using the lowest level of input as the basis for the fair value classification. The Black-Scholes-Merton option pricing formula used a volatility of 43.91% (representing the six-year volatility of a peer group), a risk-free interest rate of 1.85% and a dividend rate of 0%.
26
The aggregate fair value of these awards upon emergence from bankruptcy was $54,436. The warrants vested 33.33% on each of the first three anniversaries of the grant date, with accelerated vesting upon a change in control of the Company.
For the three months ended March 31, 20192020 and 2018,2019, there was no amortization expense of the fair value of these warrants recorded.warrants. As of March 31, 2019,2020, there was no unamortized stock-based compensation for the warrants and all warrants were vested.
The following table summarizes certain information about the warrants outstanding as of March 31, 2019:2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants Outstanding and Unvested, |
| Warrants Outstanding and Exercisable, |
| ||||||||||
March 31, 2019 |
| March 31, 2019 |
| ||||||||||
|
|
|
| Weighted |
|
|
|
|
|
| Weighted |
| |
|
| Weighted |
| Average |
|
|
| Weighted |
| Average |
| ||
|
| Average |
| Remaining |
|
|
| Average |
| Remaining |
| ||
Number of |
| Exercise |
| Contractual |
| Number of |
| Exercise |
| Contractual |
| ||
Warrants |
| Price |
| Life |
| Warrants |
| Price |
| Life |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
| $ | — |
| — |
| 8,557,461 |
| $ | 303.12 |
| 1.36 |
|
|
|
|
|
|
|
|
Warrants Outstanding and Exercisable, |
| |||||
March 31, 2020 |
| |||||
|
|
|
|
| Weighted |
|
|
| Weighted |
| Average |
| |
|
| Average |
| Remaining |
| |
Number of |
| Exercise |
| Contractual |
| |
Warrants |
| Price |
| Life |
| |
|
|
|
|
|
|
|
8,557,461 |
| $ | 281.82 |
| 0.35 |
|
As of March 31, 20192020 and December 31, 2018,2019, a total of 8,557,461 of warrants were outstanding.
28
2015 Equity Incentive Plan
On June 26, 2015, the Company’s Board of Directors approved the 2015 Equity Incentive Plan for awards with respect to an aggregate of 400,000 shares of common stock (the “2015 Plan”). Under the 2015 Plan, the Company’s Board of Directors, the compensation committee, or another designated committee of the Board of Directors may grant a variety of stock-based incentive awards to the Company’s officers, directors, employees, and consultants. Awards may consist of stock options, stock appreciation rights, dividend equivalent rights, restricted (nonvested) stock, restricted stock units, and unrestricted stock. As of March 31, 2019,2020, the Company has awarded restricted stock units, restricted stock and stock options under the 2015 Plan.
On March 23, 2017, the Board of Directors approved an amendment and restatement of the 2015 Plan. This amendment and restatement increased the number of shares available for awards under the plan from 400,000 to 2,750,000, subject to shareholder approval; set the annual limit for awards to non-employee directors and other individuals as 500,000 and 1,000,000 shares, respectively; and modified the change in control definition. The Company’s shareholder’sshareholders approved the increase in the number of shares at the Company’s 2017 Annual Meeting of Shareholders on May 17, 2017.
Stock Options
On March 23, 2017, the Company issued options to purchase 133,000 of the Company’s shares of common stock to John C. Wobensmith, Chief Executive Officer and President, with an exercise price of $11.13$10.805 per share.share, as adjusted for the special dividend declared on November 5, 2019. One third of the options become exercisable on each of the first three anniversaries of October 15, 2016, with accelerated vesting upon a change in control of the Company, and all unexercised options expire on the sixth anniversary of the grant date. The fair value of each option was estimated on the date of the grant using the Black-Scholes-Merton pricing formula, resulting in a value of $6.41 per share, or $853 in the aggregate. The assumptions used in the Black-Scholes-Merton option pricing formula are as follows: volatility of 79.80% (representing a blend of the Company’s historical volatility and a peer-based volatility estimate due to limited trading history since emergence from bankruptcy), a risk-free interest rate of 1.68%, a dividend yield of 0%, and expected life of 3.78 years (determined using the simplified method as outlined in Staff Accounting Bulletin 14 – Share-Based Payment (“SAB Topic 14”) due to lack of historical exercise data).
On February 27, 2018, the Company issued options to purchase 122,608 of the Company’s shares of common stock to certain individuals with an exercise price of $13.69$13.365 per share.share, as adjusted for the special dividend declared on
27
November 5, 2019. One third of the options become exercisable on each of the first three anniversaries of February 27, 2018, with accelerated vesting that may occur following a change in control of the Company, and all unexercised options expire on the sixth anniversary of the grant date. The fair value of each option was estimated on the date of the grant using the Black-Scholes-Merton pricing formula, resulting in a value of $7.55 per share, or $926 in the aggregate. The assumptions used in the Black-Scholes-Merton option pricing formula are as follows: volatility of 71.94% (representing a blend of the Company’s historical volatility and a peer-based volatility estimate due to limited trading history post recapitalization of the Company in November 2016), a risk-free interest rate of 2.53%, a dividend yield of 0%, and expected life of 4.00 years (determined using the simplified method as outlined in SAB Topic 14 due to lack of historical exercise data).
On March 4, 2019, the Company issued options to purchase 240,540 of the Company’s shares of common stock to certain individuals with an exercise price of $8.39$8.065 per share.share, as adjusted for the special dividend declared on November 5, 2019. One third of the options become exercisable on each of the first three anniversaries of March 4, 2019, with accelerated vesting that may occur following a change in control of the Company, and all unexercised options expire on the sixth anniversary of the grant date. The fair value of each option was estimated on the date of the grant using the Black-Scholes-Merton pricing formula, resulting in a value of $3.76 per share, or $904 in the aggregate. The assumptions used in the Black-Scholes-Merton option pricing formula are as follows: volatility of 55.23% (representing the Company’s historical volatility), a risk-free interest rate of 2.49%, a
29
dividend yield of 0%, and expected life of 4.00 years (determined using the simplified method as outlined in SAB Topic 14 due to lack of historical exercise data).
On February 25, 2020, the Company issued options to purchase 344,568 of the Company’s shares of common stock to certain individuals with an exercise price of $7.06 per share. One third of the options become exercisable on each of the first three anniversaries of February 25, 2020, with accelerated vesting that may occur following a change in control of the Company, and all unexercised options expire on the sixth anniversary of the grant date. The fair value of each option was estimated on the date of the grant using the Cox-Ross-Rubinstein pricing formula, resulting in a value of $2.01 per share, or $693 in the aggregate. The assumptions used in the Cox-Ross-Rubinstein option pricing formula are as follows: volatility of 53.91% (representing the Company’s historical volatility), a risk-free interest rate of 1.41%, a dividend yield of 7.13%, and expected life of 4 years (determined using the simplified method as outlined in SAB Topic 14 due to lack of historical exercise data).
For the three months ended March 31, 20192020 and 2018,2019, the Company recognized amortization expense of the fair value of these options, which is included in General and administrative expenses, as follows:
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
| ||||
|
| March 31, |
| ||||
|
| 2019 |
| 2018 |
| ||
General and administrative expenses |
| $ | 181 |
| $ | 123 |
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
| ||||
|
| March 31, |
| ||||
|
| 2020 |
| 2019 |
| ||
General and administrative expenses |
| $ | 205 |
| $ | 181 |
|
Amortization of the unamortized stock-based compensation balance of $1,259$1,072 as of March 31, 20192020 is expected to be expensed $669, $431, $142$582, $367, $111 and $17$12 during the remainder of 20192020 and during the years ended December 31, 2020, 2021, 2022 and 2022,2023, respectively. The following table summarizes the unvested option activity for the three months ended March 31, 2019:2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| Number of |
| Average Exercise |
| Average Fair |
|
|
|
|
|
| Weighted |
| Weighted |
|
| ||||
|
| Options |
| Price |
| Value |
|
|
|
| Number |
| Average |
| Average |
|
| ||||
Outstanding at January 1, 2019 - Unvested |
| 166,942 |
| $ | 13.01 |
| $ | 7.25 |
|
|
| ||||||||||
|
| of |
| Exercise |
| Fair |
|
| |||||||||||||
|
| Options |
| Price |
| Value |
|
| |||||||||||||
Outstanding at January 1, 2020 - Unvested |
| 322,279 |
| $ | 9.41 |
| 4.72 |
|
| ||||||||||||
Granted |
| 240,540 |
|
| 8.39 |
|
| 3.76 |
|
|
|
| 344,568 |
| 7.06 |
| 2.01 |
|
| ||
Exercisable |
| (40,869) |
|
| 13.69 |
|
| 7.55 |
|
|
|
| (119,923) |
| 9.87 |
| 5.05 |
|
| ||
Exercised |
| — |
|
| — |
|
| — |
|
|
|
| — |
| — |
| — |
|
| ||
Forfeited |
| — |
|
| — |
|
| — |
|
|
|
| (3,378) |
| 8.07 |
| 3.76 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Outstanding at March 31, 2019 - Unvested |
| 366,613 |
| $ | 9.90 |
| $ | 4.93 |
|
|
| ||||||||||
Outstanding at March 31, 2020 - Unvested |
| 543,546 |
| $ | 7.83 |
| $ | 2.94 |
|
|
28
The following table summarizes certain information about the options outstanding as of March 31, 20192020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Options Outstanding and Unvested, |
| Options Outstanding and Exercisable, |
|
|
| Options Outstanding and Unvested, |
| Options Outstanding and Exercisable, |
| ||||||||||||||||||||
|
|
| March 31, 2019 |
| March 31, 2019 |
|
|
| March 31, 2020 |
| March 31, 2020 |
| ||||||||||||||||||||
Weighted | Weighted |
|
|
|
|
|
| Weighted |
|
|
|
|
|
| Weighted |
| Weighted |
|
|
|
|
|
| Weighted |
|
|
|
|
|
| Weighted |
|
Average | Average |
|
|
| Weighted |
| Average |
|
|
| Weighted |
| Average |
| Average |
|
|
| Weighted |
| Average |
|
|
| Weighted |
| Average |
| ||||
Exercise Price of | Exercise Price of |
|
|
| Average |
| Remaining |
|
|
| Average |
| Remaining |
| Exercise Price of |
|
|
| Average |
| Remaining |
|
|
| Average |
| Remaining |
| ||||
Outstanding | Outstanding |
| Number of |
| Exercise |
| Contractual |
| Number of |
| Exercise |
| Contractual |
| Outstanding |
| Number of |
| Exercise |
| Contractual |
| Number of |
| Exercise |
| Contractual |
| ||||
Options | Options |
| Options |
| Price |
| Life |
| Options |
| Price |
| Life |
| Options |
| Options |
| Price |
| Life |
| Options |
| Price |
| Life |
| ||||
$ | 10.43 |
| 366,613 |
| $ | 9.90 |
| 5.47 |
| 129,535 |
| $ | 11.94 |
| 3.27 |
| 8.86 |
| 543,546 |
| $ | 7.83 |
| 5.47 |
| 293,792 |
| $ | 10.78 |
| 3.76 |
|
As of March 31, 20192020 and December 31, 2018,2019, a total of 496,148837,338 and 255,608496,148 stock options were outstanding, respectively.
Restricted Stock Units
The Company has issued restricted stock units (“RSUs”) under the 2015 Plan to certain members of the Board of Directors and certain executives and employees of the Company, which represent the right to receive a share of common stock, or in the sole discretion of the Company’s Compensation Committee, the value of a share of common stock on the date that the RSU vests. As of March 31, 20192020 and December 31, 2018, 228,7812019, 373,588 and 216,304326,247 shares of the Company’s common stock were outstanding in respect of the RSUs, respectively. Such shares of common stock will only be issued in respect of vested RSUs issued to directors when the director’s service with the Company as a director terminates. Such shares of common stock will only be issued to executives and employees when their RSUs vest under the terms of their grant agreements and the amended 2015 Plan described above.
30
The RSUs that have been issued to certain members of the Board of Directors generally vest on the date of the annual shareholders meeting of the Company following the date of the grant. In lieu of cash dividends issued for vested and nonvested shares held by certain members of the Board of Directors, the Company will grant additional vested and nonvested RSUs, respectively, which are calculated by dividing the amount of the dividend by the closing price per share of the Company’s common stock on the dividend payment date and will have the same terms as other RSUs issued to members of the Board of Directors. The RSUs that have been issued to other individuals vest ratably on each of the three anniversaries of the determined vesting date. The table below summarizes the Company’s unvested RSUs for the three months ended March 31, 2019:2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted |
|
|
| Weighted |
| ||
|
| Number of |
| Average Grant |
| Number of |
| Average Grant |
| ||
|
| RSUs |
| Date Price |
| RSUs |
| Date Price |
| ||
Outstanding at January 1, 2019 |
| 149,170 |
| $ | 12.42 |
| |||||
Outstanding at January 1, 2020 | 162,096 |
| $ | 9.26 |
| ||||||
Granted |
| 106,079 |
|
| 8.39 |
| 177,911 |
|
| 7.00 |
|
Vested |
| (12,477) |
|
| 13.69 |
| (50,332) |
|
| 9.48 |
|
Forfeited |
| — |
|
| — |
| (1,490) |
|
| 8.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2019 |
| 242,772 |
| $ | 10.59 |
| |||||
Outstanding at March 31, 2020 | 288,185 |
| $ | 7.83 |
|
The total fair value of the RSUs that vested during the three months ended March 31, 2020 and 2019 was $351 and 2018 was $107, and $0, respectively. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.
29
The following table summarizes certain information of the RSUs unvested and vested as of March 31, 2019:2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested RSUs | Unvested RSUs |
| Vested RSUs |
| Unvested RSUs |
| Vested RSUs |
| ||||||||||||||
March 31, 2019 |
| March 31, 2019 |
| |||||||||||||||||||
March 31, 2020 | March 31, 2020 |
| March 31, 2020 |
| ||||||||||||||||||
|
|
|
| Weighted |
|
|
|
|
|
|
|
| Weighted |
|
|
|
|
| ||||
|
| Weighted |
| Average |
|
|
| Weighted |
|
| Weighted |
| Average |
|
|
| Weighted |
| ||||
|
| Average |
| Remaining |
|
|
| Average |
|
| Average |
| Remaining |
|
|
| Average |
| ||||
Number of |
| Grant Date |
| Contractual |
| Number of |
| Grant Date |
|
| Grant Date |
| Contractual |
| Number of |
| Grant Date |
| ||||
RSUs |
| Price |
| Life |
| RSUs |
| Price |
|
| Price |
| Life |
| RSUs |
| Price |
| ||||
242,772 |
| $ | 10.59 |
| 1.70 |
| 306,712 |
| $ | 11.30 |
| |||||||||||
288,185 |
| $ | 7.83 |
| 2.27 |
| 472,555 |
| $ | 11.26 |
|
The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures. As of March 31, 2019,2020, unrecognized compensation cost of $1,294$1,557 related to RSUs will be recognized over a weighted-average period of 1.702.27 years.
For the three months ended March 31, 20192020 and 2018,2019, the Company recognized nonvested stock amortization expense for the RSUs, which is included in General and administrative expenses as follows:
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
| ||||
|
| March 31, |
| ||||
|
| 2019 |
| 2018 |
| ||
General and administrative expenses |
| $ | 271 |
| $ | 366 |
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
| ||||
|
| March 31, |
| ||||
|
| 2020 |
| 2019 |
| ||
General and administrative expenses |
| $ | 276 |
| $ | 271 |
|
Restricted Stock
Under the 2015 Plan, grants of restricted common stock issued to executives ordinarily vest ratably on each of the three anniversaries of the determined vesting date. As of March 31, 2019, all restricted stock awards under the 2015 Plan were vested.
There were no shares that vested under the 2015 Plan during the three months ended March 31, 2019 and 2018. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.
31
For the three months ended March 31, 2019 and 2018, the Company recognized nonvested stock amortization expense for the 2015 Plan restricted shares, which is included in General and administrative expenses, as follows:
|
|
|
|
|
|
|
| For the Three Months Ended |
| ||||
| March 31, |
| ||||
| 2019 |
| 2018 |
| ||
General and administrative expenses | $ | — |
| $ | 3 |
|
The Company amortized these grants over the applicable vesting periods, net of anticipated forfeitures. As of March 31, 2019, there was no unrecognized compensation cost.
16 - LEGAL PROCEEDINGS
In April 2015, six class action complaints were filed in the Supreme Court of the State of New York, County of New York. On May 26, 2015, the six actions were consolidated under the caption In Re Baltic Trading Ltd. Stockholder Litigation, Index No. 651241/2015, and a consolidated class action complaint was filed on June 10, 2015 (the “Consolidated Complaint”). The Consolidated Complaint was purported to be brought by and on behalf of Baltic Trading’s shareholders and alleges that the then-proposed July 2015 merger did not fairly compensate Baltic Trading’s shareholders and undervalued Baltic Trading. The Consolidated Complaint named as defendants the Company, Baltic Trading, the individual members of Baltic Trading’s board, and the Company’s merger subsidiary. The claims generally alleged (i) breaches of fiduciary duties of good faith, due care, disclosure to shareholders, and loyalty, including for failing to maximize shareholder value, and (ii) aiding and abetting those breaches. Among other relief, the complaints sought an injunction against the merger, declaratory judgments that the individual defendants breached fiduciary duties, rescission of the merger agreement, and unspecified damages.
On July 9, 2015, plaintiffs in that action moved to enjoin the merger vote, scheduled to take place on July 17, 2015. The motion to enjoin the vote was denied on July 15, 2015. Plaintiffs sought an emergency injunction and temporary restraining order from the New York State Appellate Division, First Department the following day, on July 16, 2015. The Appellate Division denied the request, and the vote, and subsequent merger, proceeded as scheduled on July 17, 2015. Plaintiffs thereafter withdrew that appeal.
On June 30, 2015, defendants had moved to dismiss the Consolidated Complaint in its entirety. Plaintiffs subsequently served an Amended Consolidated Complaint, and defendants directed their motion to dismiss to that amended complaint. The motion to dismiss was granted and the Amended Consolidated Complaint was dismissed with prejudice on August 29, 2016. By a Decision and Order dated April 26, 2018, the New York State Appellate Division, First Department affirmed the dismissal of the amended complaint. The time for plaintiffs to file a motion for leave to appeal to the New York State Court of Appeals has expired.
From time to time, the Company may be subject to legal proceedings and claims in the ordinary course of its business, principally personal injury and property casualty claims. Such claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. The Company is not aware of any legal proceedings or claims that it believes will have, individually or in the aggregate, a material effect on the Company, its financial condition, results of operations or cash flows besides those noted above.
32
flows.
17 – SUBSEQUENT EVENTS
On April 15, 2019,May 6, 2020, the Company utilized $4,947announced a regular quarterly dividend of $0.02 per share to be paid on or about May 28, 2020 to shareholders of record as of May 18, 2020. The aggregate amount of the proceeds from the sale of the Genco Cavalier that was classified as restricted cash as of March 31, 2019 and December 31, 2018 as a loan prepayment under the $495 Million Credit Facility. Under the terms of the $495 Million Credit Facility, the amount received from the proceeds of the sale of a collateralized vessel candividend is expected to be used towards the financing of a replacement vessel or vessels meeting certain requirements and added as collateral under the facility. However, since a replacement vessel was not added as collateral within the 180 day period stipulated in the $495 Million Credit Facility,approximately $0.8 million, which the Company was required to utilize the proceeds as a loan prepayment. As a result of the prepayment, the scheduled amortization payments were recalculated in accordance with terms of the facility. As such, for the $460,000 tranche, scheduled amortization paymentsanticipates will be $14,864 per quarter commencing June 30, 2019, with a finalfunded from cash on hand at the time the payment of $187,601 due on the maturity date. As a result of the loan prepayment, the availability under the $35,000 tranche was reducedis to $34,628. Assuming that the full $34,628 is borrowed, scheduled quarterly repayments would be approximately $2,473 commencing March 31, 2020. The Current portion of long-term debt in the Condensed Consolidated Balance Sheets as of March 31, 2019 reflects this revised repayment schedule, as well as the early prepayment.
made.
3330
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995
This report 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 words such as “anticipate,” “budget”, “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with a discussion of potential future events, circumstances or future operating or financial performance. These forward-looking statements are based on our management’s current expectations and observations. Included among the factors that, in our view, could cause actual results to differ materially from the forward looking statements contained in this report are the following: (i) declines or sustained weakness in demand in the drybulk shipping industry; (ii) continuation of weakness or declines in drybulk shipping rates; (iii) changes in the supply of or demand for drybulk products, generally or in particular regions; (iv) changes in the supply of drybulk carriers including newbuilding of vessels or lower than anticipated scrapping of older vessels; (v) changes in rules and regulations applicable to the cargo industry, including, without limitation, legislation adopted by international organizations or by individual countries and actions taken by regulatory authorities; (vi) increases in costs and expenses including but not limited to: crew wages, insurance, provisions, lube oil, bunkers, repairs, maintenance, general and administrative expenses, and management fee expenses; (vii) whether our insurance arrangements are adequate; (viii) changes in general domestic and international political conditions; (ix) acts of war, terrorism, or piracy; (x) changes in the condition of the Company’s vessels or applicable maintenance or regulatory standards (which may affect, among other things, our anticipated drydocking or maintenance and repair costs) and unanticipated drydock expenditures; (xi) the Company’s acquisition or disposition of vessels; (xii) the amount of offhire time needed to complete maintenance, repairs, and installation of equipment to comply with applicable regulations on vessels and the timing and amount of any reimbursement by our insurance carriers for insurance claims, including offhire days; (xiii) the completion of definitive documentation with respect to charters; (xiv) charterers’ compliance with the terms of their charters in the current market environment; (xv) the extent to which our operating results continue to be affected by weakness in market conditions and freight and charter rates; (xvi) our ability to maintain contracts that are critical to our operation, to obtain and maintain acceptable terms with our vendors, customers and service providers and to retain key executives, managers and employees; (xvii) completion of documentation for vessel transactions and the performance of the terms thereof by buyers or sellers of vessels and us; (xviii) the terms of definitive documentation for the purchase and installation of exhaust gas cleaning systems, or scrubbers, for our vessels and our ability to have scrubbers installed within the price range and time frame anticipated; (xix) our ability to obtain any additional financing for scrubbers on acceptable terms; (xx) the relative cost and availability of low sulfur and high sulfur fuel or any additional scrubbers we may seek to install; (xxi)(xix) our ability to realize the economic benefits or recover the cost of the scrubbers we plan to install; (xxii)have installed; (xx) worldwide compliance with sulfur emissions regulations due to takethat took effect on January 1, 2020; (xxi) our financial results for the year ending December 31, 2020 and other factors relating to determination of the tax treatment of dividends we have declared; (xxii) the duration and impact of the COVID-19 novel coronavirus epidemic, which may negatively affect general global and regional economic conditions, our ability to charter our vessels at all and the rates at which are able to do so; our ability to call on or depart from ports on a timely basis or at all; our ability to crew, maintain, and repair our vessels; our ability to staff and maintain our headquarters and administrative operations; sources of cash and liquidity; our ability to sell vessels in the secondary market, including without limitation the compliance of purchasers and us with the terms of vessel sale contracts, and the prices at which vessels are sold; and other factors relevant to our business described from time to time in our filings with the Securities and Exchange Commission; (xxiii) successful completion of the negotiation of, and agreement regarding the terms of definitive documentation for, the revolving credit facility for up to $25 million referred to in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” in this Form 10-Q; and (xxiv) other factors listed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 20182019 and subsequent reports on Form 8-K and Form 10-Q. Our ability to pay dividends in any period will depend upon various factors, including the limitations under any credit agreements to which we may be a party, applicable provisions of Marshall Islands law and the final determination by the Board of Directors each quarter after its review of our financial performance. The timing and amount of dividends, if any, could also be affected by factors affecting cash flows, results of operations, required capital expenditures, or reserves. As a result, the amount of dividends actually paid may vary. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
31
The following management’s discussion and analysis should be read in conjunction with our historical consolidated financial statements and the related notes included in this Form 10-Q.
General
We are a Marshall Islands company that transports iron ore, coal, grain, steel products and other drybulk cargoes along worldwide shipping routes through the ownership and operation of drybulk carrier vessels. Our fleet currently consists of 5853 drybulk vessels, including 17 Capesize drybulk carriers, two Panamax drybulk carriers, six Ultramax drybulk carriers, 20 Supramax drybulk carriers and 1310 Handysize drybulk carriers, with an aggregate carrying capacity of approximately 5,075,0004,837,000 dwt and an average age of approximately 9.39.9 years. We seek to deploy our vessels on time charters, spot market voyage charters, spot market-related time charters or in vessel pools trading in the spot market, to reputable charterers. The majority of the vessels in our current fleet are presently engaged under time charter, spot market voyage charters and spot market-related time charter contracts that expire (assuming the option periods in the time charters are not exercised) between May 2019 and August 2019.
See pages 4038 - 4139 for a table of all vessels in our current fleet.
34
In 2017, we began implementing initiativesGenco’s approach towards fleet composition is to expand our commercial platformown a high-quality fleet of vessels that focuses primarily on Capesize, Ultramax and more actively manage the employmentSupramax vessels. This approach of our vessels. We hired commercial directors for ourowning ships that transport both major bulk and minor bulk fleets and began employment of our vessels directlycommodities provide us with cargo owners under cargo contracts. To better capitalize on opportunities to employ our vessels, we expanded our global commercial presence with the establishment of new offices in Singapore and Copenhagen. Additionally, we have withdrawn all of our vessels from their respective pools and have reallocated our freight exposure to a wide range of drybulk trade flows. We employ an active commercial strategy which consists of a global team located in the Atlantic basin to seek to capture the earnings premium historically offered.U.S., Copenhagen and Singapore. Overall, our fleet deployment strategy remains weighted towards short-term fixtures, which provideprovides us with optionality in a potentially rising freight rate environment.on our sizeable fleet. In addition to both short and long-term time charters, we fix our vessels on spot market voyage charters as well as spot market-related time charters depending on market conditions and management’s outlook.
COVID-19
In March 2020, the World Health Organization (the “WHO”) declared the outbreak of a novel coronavirus strain, or COVID-19, to be a pandemic. The COVID-19 pandemic is having widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices. Governments have implemented measures in an effort to contain the virus, including social distancing, travel restrictions, border closures, limitations on public gatherings, working from home, supply chain logistical changes, and closure of non-essential businesses. This has led to a significant slowdown in overall economic activity levels globally and a decline in demand for certain of the raw materials that our vessels transport.
Drybulk shipping rates, and therefore our voyage revenues, depend to a significant degree on economic activity in China, which drives demand for iron ore, coal and other cargoes we carry. In particular, the COVID-19 pandemic has resulted in reduced industrial activity in China on which our business is substantially dependent, with temporary closures of factories and other facilities. The pandemic resulted in a 6.8% contraction in China’s GDP during the first quarter of 2020, with the most significant impact occurring in January and February. Since March, the world’s second largest economy and largest importer of drybulk commodities has shown signs of improvement as various economic indicators such as fixed asset investment and industrial production rose as compared to the previous months of the year. Economic activity levels in regions outside of China have declined significantly due to various forms of nationwide shutdowns being imposed to prevent the spread of COVID-19. India, Japan, Europe and the U.S., which are important drivers of demand for drybulk trade, are expected to see meaningful contractions in economic output, which is likely to persist at least through the second quarter of 2020. The impact of the economic contraction remains highly dependent on the trajectory of COVID-19, which is uncertain.
While the drybulk earnings environment in Q1 2020 was already trending lower in part due to Brazilian iron ore supply constraints, the onset and continued spread of COVID-19 further accentuated this decline. The Capesize market is heavily reliant on iron ore shipments, particularly from Brazil, which decreased by 16% from the previous year in the first quarter of 2020, marking the lowest quarter since the first quarter of 2013 as heavy rainfall impacted export activity.
The outlook for China and the rest of the world remains uncertain and is highly dependent on the path of COVID-19 and measures taken by the governments around the world in response to it. In the near term, given overall decreased economic activity globally, we believe that drybulk commodities that are closely tied to global GDP growth,
32
such as coal and various minor bulk cargoes, are likely to continue to see reduced trade flows due to lower end user demand. As countries worldwide begin to gradually recover and reopen their respective economies, we anticipate augmented trade flows and demand for raw materials, which could support increased drybulk earnings. However, the timing of any such recovery cannot be predicted and could be affected by a resurgence of the virus.
As our vessels continue to trade commodities globally, we have taken measures to safeguard our crew and work toward preventing the spread of COVID-19. Crew members have received gloves, face masks, hand sanitizer, goggles and handheld thermometers. We continue to monitor the Centers for Disease Control and Prevention (the “CDC”) and the WHO guidelines and are also limiting access of shore personnel boarding our vessels. Specifically, no shore personnel with fever or respiratory symptoms are allowed on board, and those that are allowed on board are restricted to designated areas that are thoroughly cleaned after their use. Face masks are also provided to shore personnel prior to boarding a vessel. Precautionary materials are posted in common areas to supplement safety training while personal hygiene best practices are strongly encouraged on board.
We have implemented protocols with regard to crew rotations to keep our crew members safe and healthy which includes polymerase chain reaction (PCR) antibody testing as well as a 14-day quarantine period prior to boarding a vessel. Genco is enacting crew changes where permissible by regulations of the ports and origin of the mariners, in addition to strict protocols that safeguard our crews against COVID-19 exposure.
Onshore, our three global offices located in New York, Copenhagen, and Singapore are temporarily closed with our personnel working remotely. We have also placed a ban on all non-essential travel.
The COVID-19 pandemic and measures to contain its spread thus have negatively impacted and could continue to impact regional and global economies and trade patterns in markets in which we operate, the way we operate our business, and the businesses of our charterers and suppliers. These impacts may continue or become more severe. The extent to which the COVID-19 pandemic impacts our business going forward will depend on numerous evolving factors we cannot reliably predict, including the duration and scope of the pandemic; governmental, business, and individuals’ actions in response to the pandemic; and the impact on economic activity, including the possibility of recession or financial market instability. Please refer to Risk Factors (Part II, Item 1A of this Form 10-Q) for a discussion of these factors and other risks.
U.S.-China Trade War
Over the course of 2018 and 2019, the United States imposed a series of tariffs on several goods imported from various countries. Certain of these countries, including China, undertook retaliatory actions by implementing tariffs on select U.S. products. Most notably in terms of drybulk trade volumes is China’s tariff placed upon U.S. soybean exports, which could adversely affect drybulk rates. To date, our observationWith the signing of the “phase one” trade flows has been that China has increased its market share of Brazilian soybeans, while a portion of U.S. shipments have been re-directed to other destinations such as Latin America and Europe. During the first quarter of 2019, trade tensionsagreement between China and the U.S. appeared to be moderately easing as several reports indicated thatin January 2020, China has agreed in principle to purchase largemeaningful quantities of U.S. soybeans. This variedsoybeans from actions taken at the end of 2018, in which minimal U.S. soybeans were purchased by China during what is traditionally peak North American grain season.However, as of the date of this filing, there is no trade agreement currently in place between China and the U.S., and the risk However, a re-escalation of rising trade tensionsprotectionist measures taken between the two nations and further escalationthese countries or other could lead to reduced volumes of tariffs if no agreement is reached remains.drybulk trade.
IMO 2020 Compliance
On October 27, 2016, the Marine Environment Protection Committee (“MEPC”) of the International Maritime Organization (“IMO”) announced the ratification of regulations mandating reduction in sulfur emissions from 3.5% currently to 0.5% as of the beginning of 2020 rather than pushing the deadline back to 2025. By 2020,Accordingly, ships will now have to reduce sulfur emissions, for which the principal solutions are the use of exhaust gas cleaning systems (“scrubbers”) or buying fuel with low sulfur content. If a vessel is not retrofitted with a scrubber, it will need to use low sulfur fuel, which is currently more expensive than standard marine fuel containing 3.5% sulfur content. This increased demand for low sulfur fuel may resulthas resulted in an increase in prices for such fuel.fuel and may result in additional increases.
We have entered into agreements to installinstalled scrubbers on our 17 Capesize vessels. We expect the balancevessels, 16 of which were completed during 2019 and one of which was completed in January 2020. The remainder of our fleet will consumehas begun consuming compliant, low sulfur fuel beginning in 2020, butalthough we intend to continue to evaluate other options. During the course of 2018,2019, we sold sevenfour of
33
our vessels. Additionally, we have sold two of our older, less fuel efficient vessels during the first quarter of 2020 and purchased six modern high specificationhave entered into agreements to sell three additional vessels with a goalfor which the sales are expected to be completed during the second and third quarters of improving fuel consumption and further reduce emissions.2020. We also sold an additional vessel during January 2019 and will continue to seek opportunities to renew our fleet going forward.
On January 1, 2019, we adopted Accounting Standards Codification (“ASC”) 842 — Leases which resulted in a right-of-use and operating lease liability for our office lease in New York. Refer to Note 2 — Summary of Significant Accounting Policies and Note 13 — Leases of our Condensed Consolidated Financial Statements for further information.Our Operations
We report financial information and evaluate our operations by charter revenues and not by the length of ship employment for our customers, i.e., spot or time charters. Each of our vessels serves the same type of customer, has similar operations and maintenance requirements, operates in the same regulatory environment, and is subject to similar economic characteristics. Based on this, we have determined that we operate in one reportable segment in which we are engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels.
Our management team and our other employees are responsible for the commercial and strategic management of our fleet. Commercial management includes the negotiation of charters for vessels, managing the mix of various types of charters, such as time charters, spot market voyage charters and spot market-related time charters, and monitoring the performance of our vessels under their charters. Strategic management includes locating, purchasing, financing and selling vessels. We currently contract with two independent technical managers to provide technical management of our fleet at a lower cost than we believe would be possible in-house. Technical management involves the day-to-day
35
management of vessels, including performing routine maintenance, attending to vessel operations and arranging for crews and supplies. Members of our New York City-based management team oversee the activities of our independent technical managers.
Factors Affecting Our Results of Operations
We believe that the following table reflects important measures for analyzing trends in our results of operations. The table reflects our ownership days, chartered-in days, available days, operating days, fleet utilization, TCE rates and daily vessel operating expenses for the three months ended March 31, 20192020 and 20182019 on a consolidated basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
|
|
|
|
|
| ||||
|
| March 31, |
| Increase |
|
|
| |||||
|
| 2020 |
| 2019 |
| (Decrease) |
| % Change |
| |||
Fleet Data: |
|
|
|
|
|
|
|
|
|
|
|
|
Ownership days (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Capesize |
|
| 1,547.0 |
|
| 1,530.0 |
|
| 17.0 |
| 1.1 | % |
Panamax |
|
| 64.8 |
|
| 207.2 |
|
| (142.4) |
| (68.7) | % |
Ultramax |
|
| 546.0 |
|
| 540.0 |
|
| 6.0 |
| 1.1 | % |
Supramax |
|
| 1,820.0 |
|
| 1,800.0 |
|
| 20.0 |
| 1.1 | % |
Handymax |
|
| — |
|
| — |
|
| — |
| — | % |
Handysize |
|
| 964.7 |
|
| 1,170.0 |
|
| (205.3) |
| (17.5) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
| 4,942.5 |
|
| 5,247.2 |
|
| (304.7) |
| (5.8) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Chartered-in days (2) |
|
|
|
|
|
|
|
|
|
|
|
|
Capesize |
|
| — |
|
| — |
|
| — |
| — | % |
Panamax |
|
| — |
|
| — |
|
| — |
| — | % |
Ultramax |
|
| 178.3 |
|
| 30.4 |
|
| 147.9 |
| 486.5 | % |
Supramax |
|
| 204.1 |
|
| 186.4 |
|
| 17.7 |
| 9.5 | % |
Handymax |
|
| 14.5 |
|
| 17.4 |
|
| (2.9) |
| (16.7) | % |
Handysize |
|
| 25.1 |
|
| 58.9 |
|
| (33.8) |
| (57.4) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
| 422.0 |
|
| 293.1 |
|
| 128.9 |
| 44.0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Available days (owned & chartered-in fleet) (3) |
|
|
|
|
|
|
|
|
|
|
|
|
Capesize |
|
| 1,528.4 |
|
| 1,528.8 |
|
| (0.4) |
| (0.0) | % |
Panamax |
|
| 64.4 |
|
| 207.2 |
|
| (142.8) |
| (68.9) | % |
Ultramax |
|
| 668.4 |
|
| 570.2 |
|
| 98.2 |
| 17.2 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
|
|
|
|
|
| ||||
|
| March 31, |
| Increase |
|
|
| |||||
|
| 2019 |
| 2018 |
| (Decrease) |
| % Change |
| |||
Fleet Data: |
|
|
|
|
|
|
|
|
|
|
|
|
Ownership days (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Capesize |
|
| 1,530.0 |
|
| 1,170.0 |
|
| 360.0 |
| 30.8 | % |
Panamax |
|
| 207.2 |
|
| 540.0 |
|
| (332.8) |
| (61.6) | % |
Ultramax |
|
| 540.0 |
|
| 360.0 |
|
| 180.0 |
| 50.0 | % |
Supramax |
|
| 1,800.0 |
|
| 1,890.0 |
|
| (90.0) |
| (4.8) | % |
Handymax |
|
| — |
|
| 90.0 |
|
| (90.0) |
| (100.0) | % |
Handysize |
|
| 1,170.0 |
|
| 1,350.0 |
|
| (180.0) |
| (13.3) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
| 5,247.2 |
|
| 5,400.0 |
|
| (152.8) |
| (2.8) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Chartered-in days (2) |
|
|
|
|
|
|
|
|
|
|
|
|
Capesize |
|
| — |
|
| — |
|
| — |
| — | % |
Panamax |
|
| — |
|
| — |
|
| — |
| — | % |
Ultramax |
|
| 30.4 |
|
| — |
|
| 30.4 |
| 100.0 | % |
Supramax |
|
| 186.4 |
|
| — |
|
| 186.4 |
| 100.0 | % |
Handymax |
|
| 17.4 |
|
| — |
|
| 17.4 |
| 100.0 | % |
Handysize |
|
| 58.9 |
|
| — |
|
| 58.9 |
| 100.0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
| 293.1 |
|
| — |
|
| 293.1 |
| 100.0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Available days (owned & chartered-in fleet) (3) |
|
|
|
|
|
|
|
|
|
|
|
|
Capesize |
|
| 1,528.8 |
|
| 1,137.8 |
|
| 391.0 |
| 34.4 | % |
Panamax |
|
| 207.2 |
|
| 540.0 |
|
| (332.8) |
| (61.6) | % |
Ultramax |
|
| 570.2 |
|
| 359.7 |
|
| 210.5 |
| 58.5 | % |
Supramax |
|
| 1,945.6 |
|
| 1,889.6 |
|
| 56.0 |
| 3.0 | % |
Handymax |
|
| 17.4 |
|
| 81.8 |
|
| (64.4) |
| (78.7) | % |
Handysize |
|
| 1,226.9 |
|
| 1,326.6 |
|
| (99.7) |
| (7.5) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
| 5,496.1 |
|
| 5,335.5 |
|
| 160.6 |
| 3.0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Available days (owned fleet) (4) |
|
|
|
|
|
|
|
|
|
|
|
|
Capesize |
|
| 1,528.8 |
|
| 1,137.8 |
|
| 391.0 |
| 34.4 | % |
Panamax |
|
| 207.2 |
|
| 540.0 |
|
| (332.8) |
| (61.6) | % |
Ultramax |
|
| 539.8 |
|
| 359.7 |
|
| 180.1 |
| 50.1 | % |
Supramax |
|
| 1,759.2 |
|
| 1,889.6 |
|
| (130.4) |
| (6.9) | % |
Handymax |
|
| — |
|
| 81.8 |
|
| (81.8) |
| (100.0) | % |
Handysize |
|
| 1,168.0 |
|
| 1,326.6 |
|
| (158.6) |
| (12.0) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
| 5,203.0 |
|
| 5,335.5 |
|
| (132.5) |
| (2.5) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating days (5) |
|
|
|
|
|
|
|
|
|
|
|
|
Capesize |
|
| 1,515.3 |
|
| 1,137.8 |
|
| 377.5 |
| 33.2 | % |
Panamax |
|
| 199.7 |
|
| 536.7 |
|
| (337.0) |
| (62.8) | % |
Ultramax |
|
| 531.5 |
|
| 353.5 |
|
| 178.0 |
| 50.4 | % |
Supramax |
|
| 1,915.9 |
|
| 1,869.1 |
|
| 46.8 |
| 2.5 | % |
3634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
|
|
|
|
|
|
| For the Three Months Ended |
|
|
|
|
|
| ||||||||
|
| March 31, |
| Increase |
|
|
|
| March 31, |
| Increase |
|
|
| ||||||||||
|
| 2019 |
| 2018 |
| (Decrease) |
| % Change |
|
| 2020 |
| 2019 |
| (Decrease) |
| % Change |
| ||||||
Supramax |
|
| 1,971.0 |
|
| 1,945.6 |
|
| 25.4 |
| 1.3 | % | ||||||||||||
Handymax |
|
| 14.5 |
|
| 17.4 |
|
| (2.9) |
| (16.7) | % | ||||||||||||
Handysize |
|
| 982.2 |
|
| 1,226.9 |
|
| (244.7) |
| (19.9) | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Total |
|
| 5,228.9 |
|
| 5,496.1 |
|
| (267.2) |
| (4.9) | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Available days (owned fleet) (4) |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Capesize |
|
| 1,528.4 |
|
| 1,528.8 |
|
| (0.4) |
| (0.0) | % | ||||||||||||
Panamax |
|
| 64.4 |
|
| 207.2 |
|
| (142.8) |
| (68.9) | % | ||||||||||||
Ultramax |
|
| 490.1 |
|
| 539.8 |
|
| (49.7) |
| (9.2) | % | ||||||||||||
Supramax |
|
| 1,766.9 |
|
| 1,759.2 |
|
| 7.7 |
| 0.4 | % | ||||||||||||
Handymax |
|
| — |
|
| — |
|
| — |
| — | % | ||||||||||||
Handysize |
|
| 957.1 |
|
| 1,168.0 |
|
| (210.9) |
| (18.1) | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Total |
|
| 4,806.9 |
|
| 5,203.0 |
|
| (396.1) |
| (7.6) | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Operating days (5) |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Capesize |
|
| 1,528.4 |
|
| 1,515.3 |
|
| 13.1 |
| 0.9 | % | ||||||||||||
Panamax |
|
| 60.1 |
|
| 199.7 |
|
| (139.6) |
| (69.9) | % | ||||||||||||
Ultramax |
|
| 667.8 |
|
| 531.5 |
|
| 136.3 |
| 25.6 | % | ||||||||||||
Supramax |
|
| 1,944.9 |
|
| 1,915.9 |
|
| 29.0 |
| 1.5 | % | ||||||||||||
Handymax |
|
| 17.4 |
|
| 81.8 |
|
| (64.4) |
| (78.7) | % |
|
| 14.5 |
|
| 17.4 |
|
| (2.9) |
| (16.7) | % |
Handysize |
|
| 1,202.7 |
|
| 1,312.8 |
|
| (110.1) |
| (8.4) | % |
|
| 910.4 |
|
| 1,202.7 |
|
| (292.3) |
| (24.3) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
| 5,382.5 |
|
| 5,291.7 |
|
| 90.8 |
| 1.7 | % |
|
| 5,126.1 |
|
| 5,382.5 |
|
| (256.4) |
| (4.8) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fleet utilization (6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capesize |
|
| 99.0 | % |
| 99.3 | % |
| (0.3) | % | (0.3) | % |
|
| 99.9 | % |
| 99.0 | % |
| 0.9 | % | 0.9 | % |
Panamax |
|
| 96.4 | % |
| 99.4 | % |
| (3.0) | % | (3.0) | %�� |
|
| 92.7 | % |
| 96.4 | % |
| (3.7) | % | (3.8) | % |
Ultramax |
|
| 93.2 | % |
| 98.2 | % |
| (5.0) | % | (5.1) | % |
|
| 99.9 | % |
| 93.2 | % |
| 6.7 | % | 7.2 | % |
Supramax |
|
| 97.1 | % |
| 98.9 | % |
| (1.8) | % | (1.8) | % |
|
| 98.6 | % |
| 97.1 | % |
| 1.5 | % | 1.5 | % |
Handymax |
|
| 100.0 | % |
| 90.9 | % |
| 9.1 | % | 10.0 | % |
|
| 100.0 | % |
| 100.0 | % |
| — | % | — | % |
Handysize |
|
| 97.9 | % |
| 98.9 | % |
| (1.0) | % | (1.0) | % |
|
| 92.0 | % |
| 97.9 | % |
| (5.9) | % | (6.0) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fleet average |
|
| 97.4 | % |
| 98.9 | % |
| (1.5) | % | (1.5) | % |
|
| 97.8 | % |
| 97.4 | % |
| 0.4 | % | 0.4 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
|
|
|
|
|
| ||||
|
| March 31, |
| Increase |
|
|
| |||||
|
| 2020 |
| 2019 |
| (Decrease) |
| % Change |
| |||
Average Daily Results: |
|
|
|
|
|
|
|
|
|
|
|
|
Time Charter Equivalent (7) |
|
|
|
|
|
|
|
|
|
|
|
|
Capesize |
| $ | 16,660 |
| $ | 12,054 |
| $ | 4,606 |
| 38.2 | % |
Panamax |
|
| 5,439 |
|
| 7,889 |
|
| (2,450) |
| (31.1) | % |
Ultramax |
|
| 8,107 |
|
| 8,421 |
|
| (314) |
| (3.7) | % |
Supramax |
|
| 6,492 |
|
| 8,769 |
|
| (2,277) |
| (26.0) | % |
Handymax |
|
| — |
|
| — |
|
| — |
| — | % |
Handysize |
|
| 5,734 |
|
| 6,938 |
|
| (1,204) |
| (17.4) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fleet average |
|
| 9,755 |
|
| 9,230 |
|
| 525 |
| 5.7 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Daily vessel operating expenses (8) |
|
|
|
|
|
|
|
|
|
|
|
|
Capesize |
| $ | 4,886 |
| $ | 4,963 |
| $ | (77) |
| (1.6) | % |
Panamax |
|
| 4,175 |
|
| 4,327 |
|
| (152) |
| (3.5) | % |
Ultramax |
|
| 4,637 |
|
| 4,300 |
|
| 337 |
| 7.8 | % |
Supramax |
|
| 4,209 |
|
| 4,268 |
|
| (59) |
| (1.4) | % |
Handymax |
|
| — |
|
| — |
|
| — |
| — | % |
Handysize |
|
| 3,884 |
|
| 4,015 |
|
| (131) |
| (3.3) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
|
|
|
|
|
| ||||
|
| March 31, |
| Increase |
|
|
| |||||
|
| 2019 |
| 2018 |
| (Decrease) |
| % Change |
| |||
Average Daily Results: |
|
|
|
|
|
|
|
|
|
|
|
|
Time Charter Equivalent (7) |
|
|
|
|
|
|
|
|
|
|
|
|
Capesize |
| $ | 12,054 |
| $ | 13,739 |
| $ | (1,685) |
| (12.3) | % |
Panamax |
|
| 7,889 |
|
| 8,987 |
|
| (1,098) |
| (12.2) | % |
Ultramax |
|
| 8,421 |
|
| 10,895 |
|
| (2,474) |
| (22.7) | % |
Supramax |
|
| 8,769 |
|
| 9,965 |
|
| (1,196) |
| (12.0) | % |
Handymax |
|
| — |
|
| 10,519 |
|
| (10,519) |
| (100.0) | % |
Handysize |
|
| 6,938 |
|
| 8,842 |
|
| (1,904) |
| (21.5) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fleet average |
|
| 9,230 |
|
| 10,463 |
|
| (1,233) |
| (11.8) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Daily vessel operating expenses (8) |
|
|
|
|
|
|
|
|
|
|
|
|
Capesize |
| $ | 4,963 |
| $ | 4,702 |
| $ | 261 |
| 5.6 | % |
Panamax |
|
| 4,327 |
|
| 4,392 |
|
| (65) |
| (1.5) | % |
Ultramax |
|
| 4,300 |
|
| 4,334 |
|
| (34) |
| (0.8) | % |
Supramax |
|
| 4,268 |
|
| 4,419 |
|
| (151) |
| (3.4) | % |
Handymax |
|
| — |
|
| 5,971 |
|
| (5,971) |
| (100.0) | % |
Handysize |
|
| 4,015 |
|
| 4,033 |
|
| (18) |
| (0.4) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fleet average |
|
| 4,420 |
|
| 4,401 |
|
| 19 |
| 0.4 | % |
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
|
|
|
|
|
| ||||
|
| March 31, |
| Increase |
|
|
| |||||
|
| 2020 |
| 2019 |
| (Decrease) |
| % Change |
| |||
Fleet average |
|
| 4,413 |
|
| 4,420 |
|
| (7) |
| (0.2) | % |
Definitions
In order to understand our discussion of our results of operations, it is important to understand the meaning of the following terms used in our analysis and the factors that influence our results of operations.
(1) Ownership days. We define ownership days as the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.
(2) Chartered-in days. We define chartered-in days as the aggregate number of days in a period during which we chartered-in third-party vessels.
(3) Available days (owned and chartered-in fleet). We define available days, which we have recently updated and incorporated in the table above to better demonstrate the manner in which we evaluate our business, as the number of our ownership days and chartered-in days less the aggregate number of days that our vessels are off-hire due to
37
familiarization upon acquisition, repairs or repairs under guarantee, vessel upgrades or special surveys. Companies in the shipping industry generally use available days to measure the number of days in a period during which vessels should be capable of generating revenues.
(4) Available days (owned fleet). We define available days for the owned fleet as available days less chartered-in days.
(5) Operating days. We define operating days as the number of our total available days in a period less the aggregate number of days that our vessels are off-hire due to unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.
(6) Fleet utilization. We calculate fleet utilization, which we have recently updated and incorporated in the table above to better demonstrate the manner in which we evaluate our business, as the number of our operating days during a period divided by the number of ownership days plus chartered-in days less drydocking days.
(7) TCE rates. We define TCE rates as our voyage revenues less voyage expenses and charter-hire expenses, divided by the number of the available days of our owned fleet during the period, which is consistent with industry standards.period. TCE rate is a common shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charterhire rates for vessels on voyage charters are generally not expressed in per-day amounts while charterhire rates for vessels on time charters generally are expressed in such amounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
|
| For the Three Months Ended |
| ||||||||
|
| March 31, |
|
| March 31, |
| ||||||||
|
| 2019 |
| 2018 |
|
| 2020 |
| 2019 |
| ||||
Voyage revenues (in thousands) |
| $ | 93,464 |
| $ | 76,916 |
|
| $ | 98,336 |
| $ | 93,464 |
|
Voyage expenses (in thousands) |
|
| 43,022 |
|
| 21,093 |
|
|
| 48,368 |
|
| 43,022 |
|
Charter hire expenses (in thousands) |
|
| 2,419 |
|
| — |
|
|
| 3,075 |
|
| 2,419 |
|
|
|
| 48,023 |
|
| 55,823 |
|
|
| 46,893 |
|
| 48,023 |
|
Total available days for owned fleet |
|
| 5,203.0 |
|
| 5,335.5 |
|
|
| 4,807 |
|
| 5,203 |
|
Total TCE rate |
| $ | 9,230 |
| $ | 10,463 |
|
| $ | 9,755 |
| $ | 9,230 |
|
(8) Daily vessel operating expenses. We define daily vessel operating expenses to include crew wages and related costs, the cost of insurance expenses relating to repairs and maintenance (excluding drydocking), the costs of spares and
36
consumable stores, tonnage taxes and other miscellaneous expenses. Daily vessel operating expenses are calculated by dividing vessel operating expenses by ownership days for the relevant period.
38
Operating Data
The following table represents the operating data for the three months ended March 31, 20192020 and 20182019 on a consolidated basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
|
|
|
|
|
|
| For the Three Months Ended |
|
|
|
|
|
| ||||||||
|
| March 31, |
|
|
|
|
|
|
| March 31, |
|
|
|
|
|
| ||||||||
|
| 2019 |
| 2018 |
| Change |
| % Change |
|
| 2020 |
| 2019 |
| Change |
| % Change |
| ||||||
|
| (U.S. dollars in thousands, except for per share amounts) |
|
| (U.S. dollars in thousands, except for per share amounts) |
| ||||||||||||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voyage revenues |
| $ | 93,464 |
| $ | 76,916 |
| $ | 16,548 |
| 21.5 | % |
| $ | 98,336 |
| $ | 93,464 |
| $ | 4,872 |
| 5.2 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
| 93,464 |
|
| 76,916 |
|
| 16,548 |
| 21.5 | % |
|
| 98,336 |
|
| 93,464 |
|
| 4,872 |
| 5.2 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voyage expenses |
|
| 43,022 |
|
| 21,093 |
|
| 21,929 |
| 104.0 | % |
|
| 48,368 |
|
| 43,022 |
|
| 5,346 |
| 12.4 | % |
Vessel operating expenses |
|
| 23,190 |
|
| 23,767 |
|
| (577) |
| (2.4) | % |
|
| 21,813 |
|
| 23,190 |
|
| (1,377) |
| (5.9) | % |
Charter hire expenses |
|
| 2,419 |
|
| — |
|
| 2,419 |
| 100.0 | % |
|
| 3,075 |
|
| 2,419 |
|
| 656 |
| 27.1 | % |
General and administrative expenses (inclusive of nonvested stock amortization expense of $452 and $493, respectively) |
|
| 6,310 |
|
| 5,218 |
|
| 1,092 |
| 20.9 | % | ||||||||||||
General and administrative expenses (inclusive of nonvested stock amortization expense of $481 and $452, respectively) |
|
| 5,767 |
|
| 6,310 |
|
| (543) |
| (8.6) | % | ||||||||||||
Technical management fees |
|
| 1,940 |
|
| 1,948 |
|
| (8) |
| (0.4) | % |
|
| 1,854 |
|
| 1,940 |
|
| (86) |
| (4.4) | % |
Depreciation and amortization |
|
| 18,076 |
|
| 16,886 |
|
| 1,190 |
| 7.0 | % |
|
| 17,574 |
|
| 18,076 |
|
| (502) |
| (2.8) | % |
Impairment of vessel assets |
|
| — |
|
| 56,402 |
|
| (56,402) |
| (100.0) | % |
|
| 112,814 |
|
| — |
|
| 112,814 |
| 100.0 | % |
Gain on sale of vessels |
|
| (611) |
|
| — |
|
| (611) |
| 100.0 | % | ||||||||||||
Loss (gain) on sale of vessels |
|
| 486 |
|
| (611) |
|
| 1,097 |
| (179.5) | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
| 94,346 |
|
| 125,314 |
|
| (30,968) |
| (24.7) | % |
|
| 211,751 |
|
| 94,346 |
|
| 117,405 |
| 124.4 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
| (882) |
|
| (48,398) |
|
| 47,516 |
| (98.2) | % |
|
| (113,415) |
|
| (882) |
|
| (112,533) |
| 12,758.8 | % |
Other expense |
|
| (6,919) |
|
| (7,415) |
|
| 496 |
| (6.7) | % |
|
| (6,935) |
|
| (6,919) |
|
| (16) |
| 0.2 | % |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Loss before income taxes |
|
| (7,801) |
|
| (55,813) |
|
| 48,012 |
| (86.0) | % | ||||||||||||
Income tax expense |
|
| — |
|
| — |
|
| — |
| — |
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| $ | (7,801) |
| $ | (55,813) |
| $ | 48,012 |
| (86.0) | % |
| $ | (120,350) |
| $ | (7,801) |
| $ | (112,549) |
| 1,442.8 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share - basic |
| $ | (0.19) |
| $ | (1.61) |
| $ | 1.42 |
| (88.2) | % |
| $ | (2.87) |
| $ | (0.19) |
| $ | (2.68) |
| 1,410.5 | % |
Net loss per share - diluted |
| $ | (0.19) |
| $ | (1.61) |
| $ | 1.42 |
| (88.2) | % |
| $ | (2.87) |
| $ | (0.19) |
| $ | (2.68) |
| 1,410.5 | % |
Weighted average common shares outstanding - basic |
|
| 41,726,106 |
|
| 34,577,990 |
|
| 7,148,116 |
| 20.7 | % |
|
| 41,866,357 |
|
| 41,726,106 |
|
| 140,251 |
| 0.3 | % |
Weighted average common shares outstanding - diluted |
|
| 41,726,106 |
|
| 34,577,990 |
|
| 7,148,116 |
| 20.7 | % |
|
| 41,866,357 |
|
| 41,726,106 |
|
| 140,251 |
| 0.3 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (1) |
| $ | 17,523 |
| $ | (31,597) |
| $ | 49,120 |
| (155.5) | % |
| $ | (96,425) |
| $ | 17,523 |
| $ | (113,948) |
| (650.3) | % |
3937
(1) | EBITDA represents net (loss) income plus net interest expense, taxes and depreciation and amortization. EBITDA is included because it is used by management and certain investors as a measure of operating performance. EBITDA is used by analysts in the shipping industry as a common performance measure to compare results across peers. Our management uses EBITDA as a performance measure in our consolidated internal financial statements, and it is presented for review at our board meetings. We believe that EBITDA is useful to investors as the shipping industry is capital intensive which often results in significant depreciation and cost of financing. EBITDA presents investors with a measure in addition to net income to evaluate our performance prior to these costs. EBITDA is not an item recognized by U.S. GAAP (i.e., non-GAAP measure) and should not be considered as an alternative to net income, operating income or any other indicator of a company’s operating performance required by U.S. GAAP. EBITDA is not a measure of liquidity or cash flows as shown in our Condensed Consolidated Statements of Cash Flows. The definition of EBITDA used here may not be comparable to that used by other companies. The following table demonstrates our calculation of EBITDA and provides a reconciliation of EBITDA to net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
|
| For the Three Months Ended |
| ||||||||
|
| March 31, |
|
| March 31, |
| ||||||||
|
| 2019 |
| 2018 |
|
| 2020 |
| 2019 |
| ||||
Net loss |
| $ | (7,801) |
| $ | (55,813) |
|
| $ | (120,350) |
| $ | (7,801) |
|
Net interest expense |
|
| 7,248 |
|
| 7,330 |
|
|
| 6,351 |
|
| 7,248 |
|
Income tax expense |
|
| — |
|
| — |
|
|
| — |
|
| — |
|
Depreciation and amortization |
|
| 18,076 |
|
| 16,886 |
|
|
| 17,574 |
|
| 18,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (1) |
| $ | 17,523 |
| $ | (31,597) |
|
| $ | (96,425) |
| $ | 17,523 |
|
Results of Operations
The following tables set forth information about the current employment of the vessels in our fleet as of May 8, 2019:5, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Year |
| Charter |
|
|
|
| Year |
| Charter |
|
|
|
Vessel |
| Built |
| Expiration(1) |
| Cash Daily Rate(2) |
|
| Built |
| Expiration(1) |
| Cash Daily Rate(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capesize Vessels |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Genco Augustus |
| 2007 |
| May 2019 |
| $5,000 |
|
| 2007 |
| May 2020 |
| Voyage |
|
Genco Tiberius |
| 2007 |
| May 2019 |
| Voyage |
|
| 2007 |
| July 2020 |
| Voyage |
|
Genco London |
| 2007 |
| June 2019 |
| Voyage |
|
| 2007 |
| May 2020 |
| Voyage |
|
Genco Titus |
| 2007 |
| June 2019 |
| $20,250 |
|
| 2007 |
| May 2020 |
| Voyage |
|
Genco Constantine |
| 2008 |
| June 2019 |
| $6,500 |
|
| 2008 |
| May 2020 |
| Voyage |
|
Genco Hadrian |
| 2008 |
| May 2019 |
| $6,000 |
|
| 2008 |
| June 2020 |
| Voyage |
|
Genco Commodus |
| 2009 |
| May 2019 |
| $3,250 |
|
| 2009 |
| May 2020 |
| $6,000 |
|
Genco Maximus |
| 2009 |
| June 2019 |
| Voyage |
|
| 2009 |
| June 2020 |
| $6,000 |
|
Genco Claudius |
| 2010 |
| May 2019 |
| $4,150 |
|
| 2010 |
| May 2020 |
| Voyage |
|
Genco Tiger |
| 2011 |
| June 2019 |
| 100% of BCI |
|
| 2011 |
| July 2020 |
| Voyage |
|
Baltic Lion |
| 2012 |
| May 2019 |
| Voyage |
|
| 2012 |
| June 2020 |
| $7,600 |
|
Baltic Bear |
| 2010 |
| June 2019 |
| Voyage |
|
| 2010 |
| June 2020 |
| Voyage |
|
Baltic Wolf |
| 2010 |
| June 2019 |
| Voyage |
|
| 2010 |
| May 2020 |
| Voyage |
|
Genco Resolute |
| 2015 |
| May 2019 |
| Voyage |
|
| 2015 |
| July 2020 |
| Voyage |
|
Genco Endeavour |
| 2015 |
| May 2019 |
| Voyage |
|
| 2015 |
| May 2020 |
| Voyage |
|
Genco Defender |
| 2016 |
| June 2019 |
| Voyage |
|
| 2016 |
| June 2020 |
| Voyage |
|
Genco Liberty |
| 2016 |
| May 2019 |
| $8,500 |
|
| 2016 |
| June 2020 |
| Voyage |
|
|
|
|
|
|
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Panamax Vessels |
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| |||||||
Genco Raptor |
| 2007 |
| June 2019 |
| 96% of BPI |
| |||||||
Genco Thunder |
| 2007 |
| July 2019 |
| 98% of BPI |
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Ultramax Vessels |
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|
|
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| |||||||
Baltic Hornet |
| 2014 |
| May 2020 |
| $8,800 |
| |||||||
Baltic Wasp |
| 2015 |
| May 2020 |
| Voyage |
| |||||||
Baltic Scorpion |
| 2015 |
| June 2020 |
| $6,250 |
|
4038
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| Year |
| Charter |
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| Year |
| Charter |
|
|
|
Vessel |
| Built |
| Expiration(1) |
| Cash Daily Rate(2) |
|
| Built |
| Expiration(1) |
| Cash Daily Rate(2) |
|
Ultramax Vessels |
|
|
|
|
|
|
| |||||||
Baltic Hornet |
| 2014 |
| June 2019 |
| Voyage |
| |||||||
Baltic Wasp |
| 2015 |
| July 2019 |
| $6,000 |
| |||||||
Baltic Scorpion |
| 2015 |
| June 2019 |
| Voyage |
| |||||||
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| |||||||
Baltic Mantis |
| 2015 |
| June 2019 |
| Voyage |
|
| 2015 |
| May 2020 |
| Voyage |
|
Genco Weatherly |
| 2014 |
| May 2019 |
| $17,000 |
|
| 2014 |
| May 2020 |
| $8,000 |
|
Genco Columbia |
| 2016 |
| June 2019 |
| Voyage |
|
| 2016 |
| May 2020 |
| Voyage |
|
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Supramax Vessels |
|
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|
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Genco Predator |
| 2005 |
| June 2019 |
| Voyage |
|
| 2005 |
| April 2020 |
| $17,500 |
|
Genco Warrior |
| 2005 |
| May 2019 |
| $9,250 |
|
| 2005 |
| June 2020 |
| $9,000 |
|
Genco Hunter |
| 2007 |
| June 2019 |
| Voyage |
|
| 2007 |
| May 2020 |
| Voyage |
|
Genco Lorraine |
| 2009 |
| May 2019 |
| $6,000 |
|
| 2009 |
| May 2020 |
| Voyage |
|
Genco Loire |
| 2009 |
| April 2019 |
| $6,000 |
|
| 2009 |
| May 2020 |
| Voyage |
|
Genco Aquitaine |
| 2009 |
| June 2019 |
| $9,250 |
|
| 2009 |
| May 2020 |
| Voyage |
|
Genco Ardennes |
| 2009 |
| May 2019 |
| $11,500 |
|
| 2009 |
| June 2020 |
| Voyage |
|
Genco Auvergne |
| 2009 |
| May/July 2019 |
| $5,000 / Voyage |
|
| 2009 |
| June 2020 |
| $2,750 |
|
Genco Bourgogne |
| 2010 |
| May 2019 |
| $9,850 |
|
| 2010 |
| April 2020 |
| $8,050 |
|
Genco Brittany |
| 2010 |
| May/July 2019 |
| $8,500 / $9,750 |
|
| 2010 |
| June 2020 |
| Voyage |
|
Genco Languedoc |
| 2010 |
| May/August 2019 |
| $11,750 / Voyage |
|
| 2010 |
| June 2020 |
| Voyage |
|
Genco Normandy |
| 2007 |
| June 2019 |
| Voyage |
|
| 2007 |
| May 2020 |
| Voyage |
|
Genco Picardy |
| 2005 |
| July 2019 |
| $5,000 |
|
| 2005 |
| April 2020 |
| Voyage |
|
Genco Provence |
| 2004 |
| June 2019 |
| $11,500 |
|
| 2004 |
| May 2020 |
| Voyage |
|
Genco Pyrenees |
| 2010 |
| May 2019 |
| Voyage |
|
| 2010 |
| June 2020 |
| Voyage |
|
Genco Rhone |
| 2011 |
| May 2019 |
| Voyage |
|
| 2011 |
| May 2020 |
| Voyage |
|
Baltic Leopard |
| 2009 |
| July 2019 |
| Voyage |
|
| 2009 |
| June 2020 |
| $7,500 |
|
Baltic Panther |
| 2009 |
| May 2019 |
| Voyage |
|
| 2009 |
| June 2020 |
| Voyage |
|
Baltic Jaguar |
| 2009 |
| May 2019 |
| Voyage |
|
| 2009 |
| June 2020 |
| Voyage |
|
Baltic Cougar |
| 2009 |
| May 2019 |
| $6,000 |
|
| 2009 |
| June 2020 |
| Voyage |
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
Handysize Vessels |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Baltic Hare |
| 2009 |
| July 2019 |
| Voyage |
|
| 2009 |
| May 2020 |
| $5,750 |
|
Baltic Fox |
| 2010 |
| June 2019 |
| $8,750 |
|
| 2010 |
| May 2020 |
| $2,350 |
|
Genco Charger |
| 2005 |
| May 2019 |
| Voyage |
| |||||||
Genco Challenger |
| 2003 |
| May 2019 |
| $9,750 |
| |||||||
Genco Champion |
| 2006 |
| May 2019 |
| Voyage |
| |||||||
Baltic Wind |
| 2009 |
| May 2019 |
| $7,000 |
|
| 2009 |
| April 2020 |
| $3,750 |
|
Baltic Cove |
| 2010 |
| May 2019 |
| $10,100 |
|
| 2010 |
| May 2020 |
| $2,200 |
|
Baltic Breeze |
| 2010 |
| June 2019 |
| $9,000 |
|
| 2010 |
| May 2020 |
| $4,000 |
|
Genco Ocean |
| 2010 |
| June 2019 |
| $9,500 |
|
| 2010 |
| May 2020 |
| Voyage |
|
Genco Bay |
| 2010 |
| June 2019 |
| $8,400 |
|
| 2010 |
| May 2020 |
| Voyage |
|
Genco Avra |
| 2011 |
| May/June 2019 |
| $5,000 / Voyage |
|
| 2011 |
| July 2020 |
| Voyage |
|
Genco Mare |
| 2011 |
| May 2019 |
| $11,350 |
|
| 2011 |
| June 2020 |
| Voyage |
|
Genco Spirit |
| 2011 |
| May 2019 |
| Voyage |
|
| 2011 |
| May 2020 |
| $3,250 |
|
(1) | The charter expiration dates presented represent the earliest dates that our charters may be terminated in the ordinary course. Under the terms of certain contracts, the charterer is entitled to extend the time charter from two to four months in order to complete the vessel's final voyage plus any time the vessel has been off-hire. |
(2) | Time charter rates presented are the gross daily charterhire rates before third-party brokerage commission generally ranging from 1.25% to 6.25%. In a time charter, the charterer is responsible for voyage expenses such as bunkers, port expenses, agents’ fees and canal dues. |
4139
Three months ended March 31, 20192020 compared to the three months ended March 31, 20182019
VOYAGE REVENUES-
For the three months ended March 31, 2019,2020, voyage revenues increased by $16.5$4.9 million, or 21.5%5.2%, to $93.5$98.3 million as compared to $76.9$93.5 million for the three months ended March 31, 2018.2019. The increase in voyage revenues was primarily due to theincreased employment of vessels on spot market voyage charters.charters, specifically for Capesize vessels, partially offset by reduced fixed time charter rates for certain vessels in our fleet. Since most of our revenues for the first quarter derived from forward cargoes and short-period time charters entered into before the COVID-19 pandemic began to have a significant economic effect, our results for the first quarter were partially insulated from the impact of COVID-19. However, we believe the pandemic has resulted in lower drybulk rates since March of this year than we would have achieved in the absence of the virus, given lower demand for some of the cargoes we carry, including iron ore, coal and various minor bulk commodities. In some countries, notably India, the curtailing of terminal operations due to COVID-19 since March has resulted in reduced activity at ports and further curtailed the ability of drybulk vessels to earn revenues.
The average Time Charter Equivalent (“TCE”) rate of our fleet decreased 11.8%increased 5.7% to $9,755 a day for the three months ended March 31, 2020 from $9,230 a day for the three months ended March 31, 2019 from $10,463 a day for the three months ended March 31, 2018.2019. The decreaseincrease in TCE rates was primarily due to the increase in voyage expenses due to the employmenta result of vessels on spot market voyages as our business model has shifted to an active commercial platform. In addition, the decrease in TCE rates resulted from lower charterhigher rates achieved by our Capesize vessels which we believe were negatively affectedpartially offset by the Vale dam breach and tropical cyclone Veronica as described below.lower rates for our smaller class vessels.
InBeginning in the first quarter of 2019, seasonal factors such2020 through the present, as frontloaded newbuilding deliveries,a number of the Lunar New Year celebration and weather-related disruptions hampered cargo availability. In addition,charters we booked prior to the tragic Vale dam breach and tropical cyclone Veronica reducedglobal spread of COVID-19 have expired, subsequent fixtures for certain of our vessels have been at lower rates than what was fixed for the supplyprevious quarter. For Capesize vessels, rates as reported by the Baltic Exchange are significantly lower than those that our vessels earned in the second half of seaborne2019. However, the Baltic Capesize Index has improved from first quarter lows. We believe this trend is largely attributable to early signs of industrial recovery in China that began in March 2020 as well as indications of a potential gradual recovery in iron ore cargoes,shipments from Brazil, which directly and negatively impacted the Capesize market in particular. Furthermore, coal restrictionswe believe is based on such recovery in China as well as the overhangcessation of the U.S.-China trade dispute also negatively impacted the market. Subsequently,weather-related disruptions. Market conditions and rates for minor bulk vessels have been declining during the second quarter to date from rates during the freight rate environment has begun to improve as somefirst quarter of these factors have subsided while increased vessel scrapping has resulted in2020 and are also significantly lower net fleet growth.
While the drybulk market has improved so farthan those in the second quarterhalf of 2019 relative2019. As cargoes on these vessels largely consist of commodities tied to global economic activity as a whole, we believe the enddecline in rates is largely attributable to decreased global economic activity in countries other than China as a result of COVID-19, which have not yet shown signs of recovery.
The overall uncertainty surrounding the first quarter,impact of COVID-19 on our second quarter fixturesbusiness, together with reduced economic activity and in turn trade flows, could continue to date represent a lower TCE when comparednegatively impact the revenue generated by our vessels. While we believe that the recovery of economies affected by COVID-19 will lead to what was bookedincreased trade flows and improvement in the first three months of the year. This is primarily due todrybulk shipping rates, the timing of fixtures as well asany such recovery cannot be predicted and could be affected by a resurgence of the strategic repositioning on select minor bulk vessels.virus.
For the three months ended March 31, 20192020 and 2018,2019, we had 5,247.24,942.5 and 5,400.05,247.2 ownership days, respectively. The decrease in ownership days is primarily due to the sale of eightfour vessels during the second half of 20182019 and two vessels during the first quarter of 2019 partially offset by the delivery of six vessels2020. Fleet utilization increased to 97.8% during the third quarter of 2018. Fleet utilization decreased tothree months ended March 31, 2020 from 97.4% during the three months ended March 31, 2019, from 98.9% during the three months ended March 31, 2018, primarily due to increased waiting time. decrease in offhire during the first quarter of 2020.
VOYAGE EXPENSES-
In time charters, spot market-related time charters and pool agreements, operating costs including crews, maintenance and insurance are typically paid by the owner of the vessel and specified voyage costs such as fuel and port charges are paid by the charterer. These expenses are borne by the Company during spot market voyage charters. There are certain other non-specified voyage expenses such as commissions, which are typically borne by us. Voyage expenses include port and canal charges, fuel (bunker) expenses and brokerage commissions payable to unaffiliated third parties. Port and canal charges and bunker expenses primarily increase in periods during which vessels are employed on spot market voyage charters because these expenses are for the account of the vessel owner. At the inception of a time
40
charter, we record the difference between the cost of bunker fuel delivered by the terminating charterer and the bunker fuel sold to the new charterer as a gain or loss within voyage expenses. Voyage expenses also include the cost of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement. Additionally, we may record lower of cost and net realizable value adjustments to re-value the bunker fuel on a quarterly basis for certain time charter agreements where the inventory is subject to gains and losses. Refer to Note 2 — Summary of Significant Accounting Policies in our Condensed Consolidated Financial Statements.
Voyage expenses increased by $21.9$5.3 million from $21.1 million during the three months ended March 31, 2018 as compared to $43.0 million during the three months ended March 31, 2019.2019 as compared to $48.4 million during the three months ended March 31, 2020. This increase was primarily due to the employmentonset of vesselsIMO 2020 in which our non-scrubber fitted minor bulk fleet consumed more expensive low sulfur fuel as opposed to high sulfur fuel in order to comply with sulfur emissions regulations that took effect on additional spot market voyage charters during the first quarter of 2019 which incur significantly higher voyage expenses as compared to time charters, spot market-related time charters and pool
42
arrangements.January 1, 2020. This increase was partially offset by a decreasesavings in fuel costs on our Capesize vessels, which are all fitted with scrubbers and continue to consume the costs ofless expensive high sulfur fuel. Additionally, there was an increase in bunkers consumed during short-term time charters during the first quarter of 20192020 as compared to the first quarter of 2018.2019.
VESSEL OPERATING EXPENSES-
Vessel operating expenses decreased by $0.6$1.4 million from $23.8 million during the three months ended March 31, 2018 to $23.2 million during the three months ended March 31, 2019.2019 to $21.8 million during the three months ended March 31, 2020. The decrease was primarily due to lower maintenance related expenses, as well as fewer owned vessels during Q1the first quarter of 2020 as compared to the first quarter of 2019.
Daily vessel operating expenses increaseddecreased marginally to $4,420$4,413 per vessel per day for the three months ended March 31, 20192020 from $4,401$4,420 per day for the three months ended March 31, 2018. The increase in daily vessel operating expense was predominantly due2019. Refer to higher crew related expenses partially offset by a decrease in maintenance related expenses.“Capital Expenditures” below for further detail. We believe daily vessel operating expenses are best measured for comparative purposes over a 12-month period in order to take into account all of the expenses that each vessel in our fleet will incur over a full year of operation. Our actual daily vessel operating expenses per vessel for the three months ended March 31, 20192020 were $105$177 below the weighted-average budgeted rate of $4,525$4,590 per vessel per day for the entire year.
Restrictions on crew rotations have led to a temporary decline in crewing related expenses in the near-term although we anticipate costs to normalize over time. The timing of crew rotations remains dependent on the duration and severity of COVID-19 in countries from which our crews are sourced as well as any restrictions in place at ports in which our vessels call. In cases when crew rotations are delayed, we may have some additional costs related to crew bonuses aimed at keeping existing on board for prolonged periods of time.
Our vessel operating expenses, which generally represent fixed costs for each vessel, increase to the extent our fleet expands. Other factors beyond our control, some of which may affect the shipping industry in general, including, for instance, developments relating to market prices for crewing, lubes, and insurance, may also cause these expenses to increase. The impact of COVID-19 could result in potential shortages or a lack of access to required spare parts for the operation of our vessels, or potential delays in any unscheduled repairs, which could lead to business disruptions and delays.
As a result of the pending sale of the Genco Bay and the Baltic Breeze, we anticipate that we will forego budgeted drydocking costs of $1.4 million in the aggregate. Refer to Note 4 — Vessel Acquisitions and Dispositions in our Condensed Consolidated Financial Statements for further details.
CHARTER HIRE EXPENSES-
Charter hire expenses increased by $0.7 million from $2.4 million during the three months ended March 31, 2019 to $3.1 million during the three months ended March 31, 2020. During the first quarter of 2019,2020, we chartered in ninethirteen third-party vessels which resulted in total expenses of $2.4 million. We did not charter-in anyas compared to nine vessels prior toduring the secondfirst quarter of 2018.2019.
41
GENERAL AND ADMINISTRATIVE EXPENSES-
We incur general and administrative expenses that relate to our onshore non-vessel-related activities. Our general and administrative expenses include our payroll expenses, including those relating to our executive officers, operating lease expense, legal, auditing and other professional expenses. General and administrative expenses include nonvested stock amortization expense which represent the amortization of stock-based compensation that has been issued to our Directors and employees pursuant to Management Incentive Program (the “MIP”) and the 2015 Equity Incentive Plan. Refer to Note 15 — Stock-Based Compensation in our Condensed Consolidated Financial Statements. General and administrative expenses also include legal and professional fees associated with our credit facilities, which are not capitalizable to deferred financing costs. We expect to incurincurred additional general and administrative expenses during 2019 as a result of our global expansion to Singapore and Copenhagen.Copenhagen and may incur additional such expenses related to these overseas offices during 2020.
For the three months ended March 31, 20192020 and 2018,2019, general and administrative expenses were $6.3$5.8 million and $5.2$6.3 million, respectively. The $1.1$0.5 million differencedecrease was primarily due to a combination of an increasedecrease in compensation related expense andoffice maintenance fees as well as legal and professional fees associated with the amendment to the $495 Million Credit Facility entered into during the first quarter of 2019 (refer to Note 7 — Debt in our Condensed Consolidated Financial Statements).fees.
TECHNICAL MANAGEMENT FEES-
We incur management fees to third-party technical management companies for the day-to-day management of our vessels, including performing routine maintenance, attending to vessel operations and arranging for crews and supplies. Technical management fees were $1.9 million and $1.9 million during the three months ended March 31, 2020 and 2019, and 2018.respectively.
43
DEPRECIATION AND AMORTIZATION-
We depreciate the cost of our vessels on a straight-line basis over the expected useful life of each vessel. Depreciation is based on the cost of the vessel less its estimated residual value. We estimate the useful life of our vessels to be 25 years and we estimate the residual value by taking the estimated scrap value of $310 per lightweight ton times the weight of the ship in lightweight tons.
Depreciation and amortization expense increaseddecreased by $1.2$0.5 million to $17.6 million during the three months ended March 31, 2020 as compared to $18.1 million during the three months ended March 31, 2019 as compared to $16.9 million during the three months ended March 31, 2018. 2019. This increasedecrease was primarily due to depreciation expense recorded during the first quarter of 2019 for the six vessels delivered during the third quarter of 2018, partially offset by a decrease in depreciation expense for the eightfive vessels that were sold during the second halffourth quarter of 20182019 and the first quarter of 2019.2020, as well as a decrease for the ten Handysize vessels that were impaired during the first quarter of 2020. Refer to Note 4 — Vessel Acquisitions and Dispositions in our Condensed Consolidated Financial Statements.
IMPAIRMENT OF VESSEL ASSETS-
During the three months ended March 31, 2018,2020, we recorded $56.4$112.8 million of impairment of vessel assets. There was no impairment of vessel assets during the three months ended March 31, 2019.
On February 27, 2018, our 24, 2020, the Board of Directors determined to dispose of the Company’s following nine vessels:ten of our Handysize vessels; the Baltic Hare, the Baltic Fox, the Baltic Wind, the Baltic Cove, the Baltic Breeze, the Genco Cavalier,Ocean, the Genco Loire,Bay, the Genco Lorraine,Avra, the Genco Muse,Mare and the Genco Normandy, the Baltic Cougar, the Baltic Jaguar, the Baltic Leopard and the Baltic Panther,Spirit, at times and on terms to be determined in the future. Given this decision, and that the revised estimated future undiscounted cash flows for each of these older vessels did not exceed the net book value for each vessel given the estimated probabilities of whether the vessels will be sold, we have adjusted the values of these older vessels to their respective fair market values during the first quarter of 2020. Subsequent to February 24, 2020, we have entered into agreements to sell three months endedof these vessels during the first quarter of 2020, namely the Baltic Wind, the Baltic Breeze and the Genco Bay, which were adjusted to their net sales prices. Total impairment recorded during the first quarter of 2020 related to these ten Handysize vessels was $85.8 million.
42
At March 31, 2018.2020, we determined that the expected estimated future undiscounted cash flows for four of our Supramax vessels; the Genco Picardy, the Genco Predator, the Genco Provence and the Genco Warrior; did not exceed the net book value of these vessels as of March 31, 2020. As such, we adjusted the carrying value of these vessels to their respective fair market values as of March 31, 2020. This resulted in an impairment loss of $56.4$27.0 million during the three months ended March 31, 2018.first quarter of 2020.
Refer to Note 2 — Summary of Significant Accounting Policies in our Condensed Consolidated Financial Statement for further information.
GAINLOSS (GAIN) ON SALE OF VESSELS-
During the first quarter of 2020, we recorded a net loss on sale of vessels of $0.5 million related primarily to the sale of the Genco Charger on February 24, 2020 and Genco Thunder on March 5, 2020. During the first quarter of 2019, we recorded a net gain on sale of vessels of $0.6 million related primarily to the sale of the Genco Vigour on January 28, 2019. There were no vessels sold during the first quarter of 2018.
OTHER (EXPENSE) INCOME-
NET INTEREST EXPENSE –
Net interest expense decreased marginally by $0.1$0.9 million from $7.3 million during the three months ended March 31, 2018 to $7.2 million during the three months ended March 31, 2019.2019 to $6.4 million during the three months ended March 31, 2020. Net interest expense during the three months ended March 31, 20192020 and 20182019 consisted of interest expense under our credit facilities and amortization of deferred financing costs for those facilities. ThereThis decrease was primarily due to a $0.5$1.6 million increasedecrease in interest expense as a result of lower interest rates, as well as lower outstanding debt. This was offset by a $0.7 million decrease in interest income during the first quarter of 2019 as compared to the same period during 2018 due to an increasea decrease in interest earned on our time deposits and cash accounts and time deposits. This increase was partially offset by a $0.4 million increase in interest expense which was primarily due to the interest expense associated with the $108 Million Credit Facility, which was entered into on August 14, 2018, partially offset by a decrease in interest expense due to the refinancing of our previous credit facilities on June 5, 2018.accounts. Refer to Note 7 — Debt in our Condensed Consolidated Financial Statements for information regarding our credit facilities.
LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity are cash flow from operations, cash on hand, equity offerings and credit facility borrowings. We currently use our funds primarily for the acquisition of vessels generally and under our ongoing fleet renewal program, drydocking for our vessels, and satisfying working capital requirements as may be needed to support our business and make required payments under our indebtedness. Our ability to continue to meet our liquidity
44
needs is subject to and will be affected by cash utilized in operations, the economic or business environment in which we operate, shipping industry conditions, the financial condition of our customers, vendors and service providers, our ability to comply with the financial and other covenants of our indebtedness, and other factors.
We expectbelieve, given our current cash holdings, if drybulk shipping rates do not decline significantly from current levels, our capital resources, including cash anticipated to be generated within the year, are sufficient to fund our operations for at least the next twelve months. Such resources include unrestricted cash and cash equivalents of $134.3 million as of March 31, 2020, which compares to a minimum liquidity requirement under our credit facilities of approximately $37 million as of the date of this report. Given quarterly amortization payments of $18.2 million under our credit facilities, anticipated capital expenditures related to drydockings and the installation of ballast water treatment systems (“BWTS”), as well as any quarterly dividend payments, we anticipate to continue to have significant cash expenditures. However, if market conditions were to worsen significantly due to the current COVID-19 pandemic, then our cash resources may decline to a level that may put at risk our fuel costsability to service timely our debt and capital expenditure commitments.
Our credit facilities contain collateral maintenance covenants that require the aggregate appraised value of collateral vessels to be at least 135% of the principal amount of the loan outstanding under each such facility. If the values of our fuel inventories will increase in 2019vessels were to decline further significantly as a result of sulfur emission regulations dueCOVID-19 or otherwise, we may not satisfy this collateral maintenance requirement. Any borrowings under the $25 million revolving credit facility we are negotiating that is further described below may make it more difficult to take effect on January 1, 2020.satisfy the collateral maintenance requirement under our
43
$108 Million Credit Facility. If we do not satisfy the collateral maintenance requirement, we will need to post additional collateral or prepay outstanding loans to bring us back into compliance, or we will need to seek waivers, which may not be available or may be subject to conditions.
On June 19, 2018,In the future, we closed anmay require capital to fund acquisitions or to improve or support our ongoing operations and debt structure, particularly in light of economic conditions resulting from the ongoing COVID-19 pandemic. We may from time to time seek to raise additional capital through equity offeringor debt offerings, selling vessels or other assets, pursuing strategic opportunities, or otherwise. We may also from time to time seek to incur additional debt financing from private or public sector sources, refinance our indebtedness or obtain waivers or modifications to our credit agreements to obtain more favorable terms, enhance flexibility in conducting our business, or otherwise. We may also seek to manage our interest rate exposure through hedging transactions. We may seek to accomplish any of 7,015,000 sharesthese independently or in conjunction with one or more of common stock at an offering price of $16.50 per share. We received net proceeds of approximately $109.6 million after deducting underwriters’ discounts and commissions and other expenses. We used the net proceedsthese actions. However, if market conditions are unfavorable, we may be unable to finance a portionaccomplish any of the purchase priceforegoing on acceptable terms or at all. Please refer to Risk Factors (Part II, Item 1A of this Form 10-Q) for the two Capesizea further discussion of risks related to our liquidity and two Ultramax vessels that we acquired during the third quarter of 2018. Refer to Note 4 — Vessel Acquisitions and Dispositions.capital resources.
We entered into the $495 Million Credit Facility on May 31, 2018, which was initially used to refinance our prior credit facilities: the $400 Million Credit Facility, the $98 Million Credit Facility and the 2014 Term Loan Facilities on June 5, 2018 and originally allowed borrowings of up to $460 million. On February 28, 2019, we entered into an amendment to the $495 Million Credit Facility whichthat provides for an additional tranche of up to $35 million to finance a portion of the acquisitions, installations, and related costs for exhaust cleaning systems (or “scrubbers)“scrubbers”) for 17 of the Company’s Capesize vessels. Additionally, we entered into the $108 Million Credit Facility on August 14, 2018 to finance a portion of the purchase price for the six vessels that were purchased during the third quarter of 2018. Refer to Note 7 — Debt in our Condensed Consolidated Financial Statements. We are in the process of negotiating a revolving credit facility with lenders of our current bank group for up to $25 million, which we expect will be collateralized by the vessels in our $108 Million Credit Facility. There can be no assurance that we will be able to enter into this facility or obtain funding under it on favorable terms or at all.
At March 31, 2019,2020, we were in compliance with all financial covenants under the $495 Million Credit facility and the $108 Million Credit Facility.
We believe our capital resources are sufficient to fund our operations for at least the next twelve months. Given the commencement of quarterly amortization payments of $16.6 million under our credit facilities on December 31, 2018 and anticipated capital expenditures relating to installation of ballast water treatment systems (“BWTS”) and scrubbers on our vessels for environmental regulatory compliance during 2019, we anticipate that our cash expenditures will increase.
We intend to finance a significant portion of the cost associated with scrubbers on our vessels with borrowings as described above and further under “Capital Expenditures” below. Moreover, in the future, we may require capital to fund acquisitions or to improve or support our ongoing operations and debt structure. We may from time to time seek to raise additional capital through equity or debt offerings, selling vessels or other assets, pursuing strategic opportunities, or otherwise. We may also from time to time seek to refinance our indebtedness or obtain waivers or modifications to our credit agreements to obtain more favorable terms, enhance flexibility in conducting our business, or otherwise. We may seek to accomplish any of these independently or in conjunction with one or more of these actions. However, if market conditions are unfavorable, we may be unable to accomplish any of the foregoing on acceptable terms or at all.
UnderOur Board of Directors has adopted a quarterly dividend policy to pay a dividend of $0.175 per share. However, in light of ongoing market weakness and heightened economic uncertainty as a result of the termsCOVID-19 pandemic, our Board of Directors determined it would be prudent to reduce our regular quarterly dividend following its quarterly review in order to support our balance sheet and liquidity position and better position us for an eventual economic recovery. Accordingly, on May 6, 2020, we announced a quarterly dividend of $0.02 per share. Our Board expects to reassess the payment of dividends as appropriate from time to time. Our declaration and payment of dividends is subject to a number of conditions and restrictions as described below.
On November 5, 2019, we entered into amendments with our lenders to the dividend covenants of the credit agreements for our $495 Million Credit Facility and our $108 Million Credit Facility, weFacility. Under the terms of these two facilities as so amended, dividends or repurchases of our stock are subject to customary conditions. We may pay dividends or repurchase stock under these facilities to the extent our total unrestricted cash and cash equivalents are greater than $100 million and 18.75% of our total indebtedness, whichever is higher; if we cannot satisfy this condition, we are subject to customary conditions and a limitation of 50% of consolidated net income for the quarter preceding such dividend payment or stock repurchase if the collateral maintenance test ratio is 200% or less for such quarter. quarter, for which purpose the full commitment of up to $35 million of our new scrubber tranche is assumed to be drawn. At March 31, 2020, we had unrestricted cash and cash equivalents of $134.3 million. We have commitments for amortization payments expected to be $18.2 million per quarter for 2020, or $20.2 million from September 30, 2020 onward, if we draw in full the $25 million credit facility we are negotiating. Therefore, if we do not generate cash flow from operations, we would be unlikely to be able to declare or pay dividends after the end of 2020, assuming we draw such facility in full (or earlier if we do not), except to the extent of permissible dividends from net income.
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The declaration and payment of any dividend or any stock repurchase is subject to the discretion of our Board of Directors. Our Board of Directors which expectsand management continue to considerclosely monitor market developments together with the appropriatenessevaluation of our quarterly dividend payments from time to time as well as relevant legal and contractual requirements.policy in the current market environment. The principal business factors that our Board of Directors expects to consider when determining the timing and amount of dividend payments or stock repurchases include our earnings, financial condition, and cash requirements at the time. Marshall Islands law generally prohibits the declaration and payment of dividends or stock repurchases other than from surplus. Marshall Islands law also prohibits the declaration and payment of dividends or stock repurchases while a company is insolvent or would be rendered insolvent by the payment of such a dividend.dividend or such a stock repurchase. Ongoing market weakness and heightened economic uncertainty as a result of the COVID-19 pandemic and related economic conditions may result in our suspension, reduction, or termination of future quarterly dividends.
U.S. Federal Income Tax Treatment of Dividends
U.S. Holders
For purposes of this discussion, the term "U.S. Holder" means a beneficial owner of our common stock that is, for U.S. federal income tax purposes, (i) an individual U.S. citizen or resident, (ii) a corporation that is created or organized in or under the laws of the United States, any state thereof or the District of Columbia, or any other U.S. entity taxable as a corporation, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust if either (x) a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (y) the trust has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. If a partnership, or an entity treated for U.S. federal income tax purposes as a partnership, such as a limited liability company, holds common stock, the tax treatment of a partner will generally depend on the status of the partner and upon the activities of the partnership. If you are a partner in such a partnership holding our common stock, you are encouraged to consult your tax advisor. A beneficial owner of our common stock (other than a partnership) that is not a U.S. Holder is referred to below as a "Non-U.S. Holder."
Subject to the discussion of passive foreign investment company (PFIC) status on pages 41 – 42 in the 2019 10-K, any distributions made by us to a U.S. Holder with respect to our common shares generally will constitute dividends to the extent of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of those earnings and profits will be treated first as a nontaxable return of capital to the extent of the U.S. Holder's tax basis in our common shares (determined on a share-by-share basis), and thereafter as capital gain. U.S. Holders that own at least 10% of our shares may be able to claim a dividends-received-deduction and should consult their tax advisors.
Dividends paid on our common shares to a U.S. Holder who is an individual, trust or estate, or a "non-corporate U.S. Holder," will generally be treated as "qualified dividend income" that is taxable to such non-corporate U.S. Holder at preferential tax rates, provided that (1) our common shares are readily tradable on an established securities market in the United States (such as the NYSE, on which our common shares are traded); (2) we are not a PFIC for the taxable year during which the dividend is paid or the immediately preceding taxable year (which we do not believe we have been, are, or will be); (3) the non-corporate U.S. Holder's holding period of our common shares includes more than 60 days in the 121-day period beginning 60 days before the date on which our common shares becomes ex-dividend; and (4) the non-corporate U.S. Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property. A non-corporate U.S. Holder will be able to take qualified dividend income into account in determining its deductible investment interest (which is generally limited to its net investment income) only if it elects to do so; in such case, the dividend will be taxed at ordinary income rates. Non-corporate U.S. Holders also may be required to pay a 3.8% surtax on all or part of such holder's "net investment income," which includes, among other items, dividends on our shares, subject to certain limitations and exceptions. Investors are encouraged to consult their own tax advisors regarding the effect, if any, of this surtax on their ownership of our shares.
Amounts taxable as dividends generally will be treated as passive income from sources outside the U.S. However, if (a) we are 50% or more owned, by vote or value, by U.S. Holders and (b) at least 10% of our earnings and profits are attributable to sources within the U.S., then for foreign tax credit purposes, a portion of our dividends would
45
be treated as derived from sources within the U.S. With respect to any dividend paid for any taxable year, the U.S. source ratio of our dividends for foreign tax credit purposes would be equal to the portion of our earnings and profits from sources within the U.S. for such taxable year divided by the total amount of our earnings and profits for such taxable year. The rules related to U.S. foreign tax credits are complex and U.S. Holders should consult their tax advisors to determine whether and to what extent a credit would be available.
Special rules may apply to any "extraordinary dividend" — generally, a dividend in an amount which is equal to or in excess of 10% of a shareholder's adjusted basis (or fair market value in certain circumstances) in a share of our common shares — paid by us. If we pay an "extraordinary dividend" on our common shares that is treated as "qualified dividend income", then any loss derived by a non-corporate U.S. Holder from the sale or exchange of such common shares will be treated as long-term capital loss to the extent of such dividend.
Tax Consequences if We Are a Passive Foreign Investment Company
As discussed in “U.S. tax authorities could treat us as a ‘passive foreign investment company,’ which could have adverse U.S. federal income tax consequences to U.S. shareholders” in Item 1.A Risk Factors in our 2019 10-K, a foreign corporation generally will be treated as a PFIC for U.S. federal income tax purposes if, after applying certain look through rules, either (1) at least 75% of its gross income for any taxable year consists of “passive income” or (2) at least 50% of the average value or adjusted bases of its assets (determined on a quarterly basis) produce or are held for the production of passive income, i.e., “passive assets.” As discussed above, we do not believe that our past or existing operations would cause, or would have caused, us to be deemed a PFIC with respect to any taxable year. No assurance can be given that the IRS or a court of law will accept our position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, there can be no assurance that we will not become a PFIC in any future taxable year because the PFIC test is an annual test, there are uncertainties in the application of the PFIC rules, and although we intend to manage our business so as to avoid PFIC status to the extent consistent with our other business goals, there could be changes in the nature and extent of our operations in future taxable years.
If we were to be treated as a PFIC for any taxable year in which a U.S. Holder owns shares of our common stock (and regardless of whether we remain a PFIC for subsequent taxable years), the tax consequences to such a U.S. holder upon the receipt of distributions in respect of such shares that are treated as “excess distributions” would differ from those described above. In general, an excess distribution is the amount of distributions received during a taxable year that exceed 125% of the average amount of distributions received by a U.S. Holder in respect of the common shares during the preceding three taxable years, or if shorter, during the U.S. Holder’s holding period prior to the taxable year of the distribution. The distributions that are excess distributions would be allocated ratably over the U.S. Holder’s holding period for the common shares. The amount allocated to the current taxable year and any taxable year prior to the first taxable year in which we were a PFIC would be taxed as ordinary income. The amount allocated to each of the other taxable years would be subject to tax at the highest marginal rate in effect for the U.S. Holder for that taxable year, and an interest charge for the deemed deferral benefit would be imposed on the resulting tax allocated to such other taxable years. The tax liability with respect to the amount allocated to taxable years prior to the year of the distribution cannot be offset by net operating losses. As an alternative to such tax treatment, a U.S. Holder may make a “qualified electing fund” election or “mark to market” election, to the extent available, in which event different rules would apply. The U.S. federal income tax consequences to a U.S. Holder if we were to be classified as a PFIC are complex. A U.S. Holder should consult with his or her own advisor with regard to those consequences, as well as with regard to whether he or she is eligible to and should make either of the elections described above.
Non-U.S. Holders
Non-U.S. Holders generally will not be subject to U.S. federal income tax on dividends received from us on our common shares unless the income is effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States (“effectively connected income”) (and, if an applicable income tax treaty so provides, the dividends are attributable to a permanent establishment maintained by the Non-U.S. Holder in the U.S.). Effectively connected income (or, if an income tax treaty applies, income attributable to a permanent establishment maintained in the U.S.) generally will be subject to regular U.S. federal income tax in the same manner discussed above relating to taxation of U.S. Holders. In addition, earnings and profits of a corporate Non-U.S. Holder that are attributable to such
46
income, as determined after allowance for certain adjustments, may be subject to an additional branch profits tax at a rate of 30%, or at a lower rate as may be specified by an applicable income tax treaty. Non-U.S. Holders may be subject to tax in jurisdictions other than the United States on dividends received from us on our common shares.
Dividends paid on our common shares to a non-corporate U.S. Holder may be subject to U.S. federal backup withholding tax if the non-corporate U.S. Holder:
· | fails to provide us with an accurate taxpayer identification number; |
· | is notified by the IRS that they have become subject to backup withholding because they previously failed to report all interest and dividends required to be shown on their federal income tax returns; or |
· | fails to comply with applicable certification requirements |
A holder that is not a U.S. Holder or a partnership may be subject to U.S. federal backup withholding with respect to such dividends unless the holder certifies that it is a non-U.S. person, under penalties of perjury, or otherwise establishes an exemption therefrom. Backup withholding tax is not an additional tax. Holders generally may obtain a refund of any amounts withheld under backup withholding rules that exceed their income tax liability by timely filing a refund claim with the IRS.
You are encouraged to consult your own tax advisor concerning the overall tax consequences arising in your own particular situation under U.S. federal, state, local, or foreign law from the payment of dividends on our common stock.
Cash Flow
Net cash provided byused in operating activities for the three months ended March 31, 20192020 was $11.6$4.0 million as compared to $9.5net cash provided by operating activities of $11.6 million for the three months ended March 31, 2018. Included2019. This decrease in cash provided by operating activities was primarily due to an increase in amounts due from charterers as of March 31, 2020 based on the net losstiming of freight payments and the percentage completion of spot voyages for our vessels, an increase in drydocking related expenditures and other changes in working capital.
Net cash provided by investing activities was $5.6 million during the three months ended March 31, 2019 was a gain of $0.6 million arising from the sale of the Genco Vigour. Included in the net loss during the three months ended March 31, 2018 was $56.4 million of non-cash impairment charges. Depreciation and amortization expense for the three months ended March 31, 2019 increased by $1.2 million primarily due to depreciation expense for the six vessels delivered during the third quarter of 2018, partially offset by a decrease in depreciation expense for the eight vessels that were sold during the second half of 2018 and the first quarter of 2019. Additionally, there was a $6.1 million increase in the fluctuation in due from charterers due to the timing of payments received from charterers and a $4.7 million increase in the fluctuation in prepaid expenses and other current assets due to a fluctuation in capitalized contract costs associated with spot market voyages. Lastly, there was a $3.5 million increase in the fluctuation in inventories associated with vessels on spot market voyage charters and a $1.0 million decrease in deferred drydocking costs as there were less vessels that completed drydocking during the first quarter of 20192020 as compared to the first quarter of 2018. These fluctuations were partially offset by a $3.2 million decrease in the fluctuation accounts payable and accrued expenses due to the timing of payments made and a $1.8 million decrease in the fluctuation of deferred revenue due to the timing of payments received from charterers.
Netnet cash used in investing activities wasof $4.1 million during the three months ended March 31, 2019 as compared to net cash provided by investing activities of $1.4 million during the three months ended March 31, 2018. Net cash used in investing activities during the three months ended March 31, 2019 consisted2019. This increase was primarily of $9.3 million purchase of vessels related primarily to deposit payments made on scrubbers and ballast water treatment systems and $1.2 million for the purchase of other fixed assets due to the purchase of vessel equipment. These cash outflows during the three months ended March 31, 2019 were partially offset by $6.4 million ofan increase in net proceeds from the sale of one vessel during the first quarter of 2019. Netvessels, as well as a decrease in ballast water treatment system related expenditures. These amounts were partially offset by an increase in cash provided by investing activities during the three months ended March 31, 2018 consisted primarily of the proceeds receivedused to purchase scrubbers for hull and machinery claims related primarily to the receipt of the remaining insurance settlement for the main engine repair claim for the Genco Tiger. our vessels.
Net cash used in financing activities during the three months ended March 31, 2020 and 2019 was $14.3 million and 2018 was $17.3 million, respectively. The decrease was primarily due to the $11.3 million drawdown on the $495 Million Credit Facility during the first quarter of 2020, partially offset by a $7.3 million payment of dividends during the first quarter of 2020 and $14.7a $1.7 million respectively. Net cash usedincrease in financing activities of $17.3 million for the three months ended March 31, 2019 consisted primarily of the following: $15.0 million repayment of debtrepayments under the $495 Million Credit Facility; $1.6 million repayment of debt under the $108 Million Credit Facility; $0.6 million payment of deferred financing costs; and $0.1 million payment of common stock issuance costs. Net cash used in financing activities of $14.7 million for the three months ended March 31, 2018 consisted primarily of the following: $11.4 million repayment of debt under the $400 Million Credit Facility, $2.5 million repayment of debt under the $98 Million Credit Facility and $0.7 million repayment of debt under the 2014 Term Loan Facilities. On August 14, 2018, we entered into the $108 Million Credit Facility to finance a portion of the purchase price for the six vessels acquired during the third quarter of 2018. On June 5, 2018, the $495 Million Credit Facility refinanced the following three existing credit facilities; the $400 Million Credit Facility, the $98 Million Credit Facility and the 2014 Term Loan Facilities. Additionally, on February 28, 2019, the $495 Million Credit Facility was amended to add a tranche of $35 million for the purchase of scrubbers in addition to the original $460 million tranche used for the refinancing on June 5, 2018.Facility.
Credit Facilities
Refer to Note 7 — Debt in our Condensed Consolidated Financial Statements for information regarding our current credit facilities, including the underlying financial and non-financial covenants. We entered into the $108 Million Credit Facility on August 14, 2018 to finance a portion of the purchase price for the six vessels that were purchased during the third quarter of 2018. Additionally, we entered into the $495 Million Credit Facility on May 31, 2018, which was initially used to refinance our prior credit facilities: the $400 Million Credit Facility, the $98 Million Credit Facility and the 2014 Term Loan Facilities on June 5, 2018. On February 28, 2019, we entered into an amendment to the $495 Million Credit Facility, which provides for an additional tranche of up to $35 million to finance a portion of the acquisitions, installations, and related costs for exhaust cleaning systems (or “scrubbers”) for 17 of our Capesize vessels.
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Interest Rate Swap Agreements, Forward Freight Agreements and Currency Swap Agreements
At March 31, 20192020 and December 31, 2018,2019, we did not have any interest rate swap agreements. As part of our business strategy, we may enter into interest rate swap agreements to manage interest costs and the risk associated with changing interest rates. In determining the fair value of interest rate derivatives, we would consider the creditworthiness of both the counterparty and ourselves immaterial. Valuations prior to any adjustments for credit risk would be validated by comparison with counterparty valuations. Amounts would not and should not be identical due to the different modeling assumptions. Any material differences would be investigated.
AsAs part of our business strategy, we may enter into arrangements commonly known as forward freight agreements, or FFAs, to hedge and manage our exposure to the charter market risks relating to the deployment of our vessels. Generally, these arrangements would bind us and each counterparty in the arrangement to buy or sell a specified tonnage freighting commitment “forward” at an agreed time and price and for a particular route. Upon settlement, if the contracted charter rate is less than the average of the rates (as reported by an identified index) for the specified route and period, the seller of the FFA is required to pay the buyer an amount equal to the difference between the contracted rate and the settlement rate multiplied by the number of days in the specific period. Conversely, if the contracted rate is greater than the settlement rate, the buyer is required to pay the seller the settlement sum. Although FFAs can be entered into for a variety of purposes, including for hedging, as an option, for trading or for arbitrage, if we decided to enter into FFAs, our objective would be to hedge and manage market risks as part of our commercial management. It is not currently our intention to enter into FFAs to generate a stream of income independent of the revenues we derive from the operation of our fleet of vessels. If we determine to enter into FFAs, we may reduce our exposure to any declines in our results from operations due to weak market conditions or downturns, but may also limit our ability to benefit economically during periods of strong demand in the market. We have not entered into any FFAs as of March 31, 20192020 and December 31, 2018.2019.
Contractual Obligations
The following table sets forth our contractual obligations and their scheduled maturity dates as of March 31, 2019.2020. The table incorporates the employment agreement entered into in September 2007 with our Chief Executive Officer and President, John C. Wobensmith, which was amended on March 23, 2017.as amended. The interest and borrowing fees and scheduled credit agreement payments below reflect the $495 Million Credit Facility and the $108 Million Credit Facility, as well as other fees associated with the facilities. The following table also incorporates the future lease payments associated with the lease for our current office space in New York.leases. Refer to Note 13 — Leases in our Condensed Consolidated Financial Statements for further information regarding the terms of our current lease agreement. Lastly, the table incorporates the remaining contractual purchase obligations for the purchase of ballast water treatment systems for 47 of our vessels and the contractual purchase obligations for the purchase of scrubber equipment for 1742 of our vessels, refer to “Capital Expenditures” section below for further information. All of our time charter-in agreements with third parties are less than twelve months and have not been included below.
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| One to |
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| Year (1) |
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| Five Years |
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| (U.S. dollars in thousands) |
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Credit Agreements |
| $ | 534,840 |
| $ | 53,907 |
| $ | 131,552 |
| $ | 349,381 |
| $ | — |
|
| $ | 488,834 |
| $ | 54,721 |
| $ | 145,924 |
| $ | 288,189 |
| $ | — |
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Interest and borrowing fees |
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| 95,559 |
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| 21,954 |
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| 48,043 |
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| 25,562 |
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| — |
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| 43,558 |
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| 12,600 |
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| 26,364 |
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| 4,594 |
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| — |
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Vessel purchase obligations |
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| 29,879 |
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| 21,135 |
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| 6,588 |
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| 2,156 |
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| — |
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| 8,516 |
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| 3,001 |
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| 5,515 |
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| — |
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| — |
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Executive employment agreement |
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| 306 |
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| 306 |
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| — |
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| — |
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| — |
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| 305 |
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| 305 |
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| — |
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| — |
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| — |
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Office leases |
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| 15,032 |
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| 1,672 |
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| 4,460 |
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| 4,608 |
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| 4,292 |
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| 12,802 |
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| 1,672 |
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| 4,460 |
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| 4,831 |
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| 1,839 |
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Totals |
| $ | 675,616 |
| $ | 98,974 |
| $ | 190,643 |
| $ | 381,707 |
| $ | 4,292 |
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| $ | 554,015 |
| $ | 72,299 |
| $ | 182,263 |
| $ | 297,614 |
| $ | 1,839 |
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(1) | Represents the nine-month period ending December 31, |
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Interest expense has been estimated using 2.48%0.44% based on one-month LIBOR plus the average applicable margin of 3.25% for the $460 million tranche of the $495 Million Credit Facility, 2.50% for the $35 million tranche of the $495 Million Credit facility and 2.50% for the $108 Million Credit Facility.
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Capital Expenditures
We make capital expenditures from time to time in connection with our vessel acquisitions. Our fleet currently consists of 5853 drybulk vessels, including 17 Capesize drybulk carriers, two Panamax drybulk carriers, six Ultramax drybulk carriers, 20 Supramax drybulk carriers and 1310 Handysize drybulk carriers.
As previously announced, we have implemented a fuel efficiency upgrade program for certain of our vessels in an effort to generate fuel savings and increase the future earnings potential for these vessels. The upgrades have been successfully installed on 17 of our vessels in the aggregate during plannedprevious drydockings from 2014 to 2017.
Under U.S. Federal law and 33 CFR, Part 151, Subpart D, U.S. approved BWTS will be required to be installed in all vessels at the first out of water drydocking after January 1, 2016 if these vessels are to discharge ballast water inside 12 nautical miles of the coast of the U.S. U.S. authorities did not approve ballast water treatment systems until December 2016. Therefore, the U.S. Coast Guard (“USCG”) has granted us extensions for our vessels with 2016 drydocking deadlines until January 1, 2018; however, an alternative management system (“AMS”) may be installed in lieu. For example, in February 2015, the USCG added Bawat to the list of ballast water treatment systems that received AMS acceptance. An AMS is valid for five years from the date of required compliance with ballast water discharge standards, by which time it must be replaced by an approved system unless the AMS itself achieves approval. Furthermore, we received extensions for vessels drydocking in 2016 that allowed for further extensions to the vessels’ next scheduled drydockings in year 2021. Additionally, for our vessels that were scheduled to drydock in 2017 and 2018, the USCG has granted an extension that enables us to defer installation to the next scheduled out of water drydocking. Any newbuilding vessels that we acquire will have a USCG approved system or at least an AMS installed when the vessel is being built.
In addition, on September 8, 2016, the Ballast Water Management (“BWM”) Convention was ratified and had an original effective date of September 8, 2017. However, on July 7, 2017, the effective date of the BWM Convention was extended two years to September 8, 2019 for existing ships. This will require vessels to have a BWTS installed to coincide with the vessels’ next International Oil Pollution Prevention Certificate (“IOPP”) renewal survey after September 8, 2019. In order for a vessel to trade in U.S. waters, it must be compliant with the installation date as required by the USCG as outlined above.
During the second half of 2018, we entered into agreements for the purchase of BWTS for 4742 of our vessels. The cost of these systems will vary based on the size and specifications of each vessel and whether the systems will be installed in China. Based on the contractual purchase price of the BWTS and the estimated installation fees, the Company estimates the cost of the systems to be approximately $0.8$0.9 million for Capesize, $0.5 million for Panamax, $0.5$0.6 million for Supramax and $0.5 million for Handysize vessels. These costs will be capitalized and depreciated over the remainder of the life of the vessel. During 2019 and the first quarter of 2020, we completed the installation of BWTS on 17 and two of our vessels, respectively. We intend to fund the remaining BWTS purchase price and installation fees using cash on hand.
Under maritime regulations due to takethat went into effect on January 1, 2020, our vessels such as ours will havewere required to reduce sulfur emissions, for which the principal solutions are the use of scrubbers or buying fuel with low sulfur content. We have entered into agreements to installcompleted the installation of scrubbers on our 17 Capesize vessels.vessels, 16 of which were completed as of December 31, 2019 and the last one of which was completed on January 17, 2020. The balanceremainder of our vessels are expected to consume compliant, low sulfur fuel, but we will continue to evaluate other options. We anticipateconsuming VLSFO. The costs for the scrubber installation on the 17 Capesize vessels to be completed in 2019equipment and estimate that the cost of each scrubber, including installation will be approximately $2.25 million per vessel, which may vary according to the specifications of our vessels and technical aspects of the installation, among other variables. These costs will be capitalized and depreciated over the remainder of the life of the vessel. This does not include any lost revenue associated with offhire days due to the installation of the scrubbers. During February 2019, we entered into an amendment to our $495 Million Credit Facility for an additional tranche of up to $35 million to cover a portion of the expenses to the acquisition and installation of scrubbers on our 17 Capesize vessels. We intend to fund the remainder of the costs with cash on hand. The estimated costs and off-hire days associated with the installation of the scrubbers are included in the expenditure table below. For vessels foron which we dodid not currently anticipate installinginstall scrubbers, on, we expect to incurincurred additional costs during 2019 in order to transition these vessels from high sulfur fuel to compliant low sulfur fuel.
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In addition to acquisitions that we may undertake in future periods, we will incur additional expenditures due to special surveys and drydockings for our fleet. Through March 31, 2020, we have paid $39.5 million in cash installments towards our scrubber program and have drawn down $32.8 million under the scrubber tranche under our $495 Million Credit Facility. While we completed 16 scrubber retrofits during 2019 and one in January 2020, due to the timing of cash flows, we have approximately $3.0 million relating to our scrubber program currently recorded in accounts payable as of March 31, 2020, which we plan to pay during the second quarter of 2020.
We estimate our drydocking costs, including capitalized costs incurred during drydocking related to vessel assets and vessel equipment, BWTS costs, scrubber costs and scheduled off-hire days for our fleet through 20202021 to be:
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| $ | 19.4 |
| $ | 8.9 |
| $ | 32.0 |
| 875 |
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| $ | 10.7 |
| $ | 4.9 |
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| 300 |
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|
|
|
|
|
|
|
|
|
|
Remainder of 2020 |
| $ | 7.6 |
| $ | 3.0 |
| 210 |
|
2021 |
| $ | 9.3 |
| $ | 5.5 |
| 230 |
|
(1) | Estimated drydocking costs during |
(2) |
|
(3) | Estimated offhire days during |
The costs reflected are estimates based on drydocking our vessels in China. Actual costs will vary based on various factors, including where the drydockings are actually performed. We expect to fund these costs with cash on hand (with the exception of certain scrubber costs as noted above). These costs do not include drydock expense items that are reflected in vessel operating expenses.
Actual length of drydocking will vary based on the condition of the vessel, yard schedules and other factors. Higher repairs and maintenance expense during drydocking for vessels which are over 15 years old typically result in a higher number of off-hire days depending on the condition of the vessel.
During the three months ended March 31, 20192020 and 2018,2019, we incurred a total of $0.4$2.8 million and $1.4$0.4 million of drydocking costs, respectively, excluding costs incurred during drydocking that were capitalized to vessel assets or vessel equipment.
One of ourFive vessels completed their respective drydockings during the three months ended March 31, 2020, which included one vessel that began its drydocking during the firstfourth quarter of 2019 and completed it during April 2019. We estimate that 34ten of our vessels will be drydocked during the remainder of 20192020 and 1411 of our vessels will be drydocked during 2020.2021.
As of January 17, 2020, we have completed the installation of scrubbers on our 17 Capesize vessels.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
50
Inflation
Inflation has only a moderate effect on our expenses given current economic conditions. In the event that significant global inflationary pressures appear, these pressures would increase our operating, voyage, general and administrative, and financing costs.
CRITICAL ACCOUNTING POLICIES
There have been no changes or updates to our critical accounting policies as disclosed in the 2018 10-K, with the exception of new accounting pronouncements adopted as of January 1, 2019. Refer to “Recent accounting
49
pronouncements” in Note 2 — Summary of Significant Accounting Policies of our Condensed Consolidated Financial Statements, which is incorporated herein by reference, for further information.2019 10-K.
Vessels and Depreciation
We record the value of our vessels at their cost (which includes acquisition costs directly attributable to the vessel and expenditures made to prepare the vessel for its initial voyage) less accumulated depreciation. We depreciate our drybulk vessels on a straight-line basis over their estimated useful lives, estimated to be 25 years from the date of initial delivery from the shipyard. Depreciation is based on cost less the estimated residual scrap value of $310/lwt based on the 15-year average scrap value of steel. An increase in the residual value of the vessels will decrease the annual depreciation charge over the remaining useful life of the vessels. Similarly, an increase in the useful life of a drybulk vessel would also decrease the annual depreciation charge. Comparatively, a decrease in the useful life of a drybulk vessel or in its residual value would have the effect of increasing the annual depreciation charge. However, when regulations place limitations over the ability of a vessel to trade on a worldwide basis, we will adjust the vessel’s useful life to end at the date such regulations preclude such vessel’s further commercial use.
The carrying value of each of our vessels does not represent the fair market value of such vessel or the amount we could obtain if we were to sell any of our vessels, which could be more or less. Under U.S. GAAP, we would not record a loss if the fair market value of a vessel (excluding its charter) is below our carrying value unless and until we determine to sell that vessel or the vessel is impaired as discussed in the 20182019 10-K. As of March 31, 2019, excluding the three Bourbon vessels we resold immediately upon delivery to MEP at our cost, we have sold 21 of our vessels since our inception and realized a profit in each instance, with the exception of the Genco Marine which was scrapped on May 17, 2016, the Genco Surprise which was sold during the third quarter of 2018, and the Genco Muse which was sold during the fourth quarter of 2018.
During the three months ended March 31, 2018,2020, we recorded losses of $56.4$112.8 million related to the impairment of vessel assetsassets. There was $85.8 million of impairment expense recorded during the three months ended March 31, 2020 for ninethe remaining ten of our Handysize vessels; the Baltic Hare, the Baltic Fox, the Baltic Wind, the Baltic Cove, the Baltic Breeze, the Genco Cavalier,Ocean, the Genco Loire,Bay, the Genco Lorraine,Avra, the Genco Muse,Mare and the Genco Normandy, the Baltic Cougar, the Baltic Jaguar, the Baltic Leopard and the Baltic PantherSpirit. On February 27, 2018,24, 2020, our Board of Directors determined to dispose of these vessels at times and on terms to be determined in the future. As such,Given this decision, and that the revised estimated future undiscounted cash flows for each of these older vessels did not exceed the net book value for each vessel given the estimated probabilities of whether the vessels will be sold, we adjusted the values of these older vessels and the vessel values were adjusted to their respective fair market values during the first quarter of 2020. Subsequent to February 24, 2020, we have entered into agreements to sell three of these vessels during the first quarter of 2020, namely the Baltic Wind, the Baltic Breeze and the Genco Bay, which resulted in an impairment loss.were adjusted to their net sales price. Refer to Note 2 — Summary of Significant Accounting Policies in our Condensed Consolidated Financial Statements for further information.
DuringAdditionally, at March 31, 2020, we determined that the expected estimated future undiscounted cash flows for four of our Supramax vessels; the Genco Picardy, the Genco Predator, the Genco Provence and the Genco Warrior; did not exceed the net book value of these vessels as of March 31, 2020. As such, we adjusted the carrying value of these vessels to their respective fair market values as of March 31, 2020. This resulted in an impairment loss of $27.0 million during the three months ended March 31, 2019, we did not record any losses related to the2020.
There was no impairment of vessel assets.assets recorded during the three months ended March 31, 2019.
51
Pursuant to our credit facilities, we regularly submit to the lenderslenders’ valuations of our vessels on an individual charter free basis in order to evidence our compliance with the collateral maintenance covenants under our credit facilities. Such a valuation is not necessarily the same as the amount any vessel may bring upon sale, which may be more or less, and should not be relied upon as such. We were in compliance with the collateral maintenance covenant under our $495 Million Credit Facility and $108 Million Credit Facility as of March 31, 2019.2020. Refer to Note 7 — Debt in our Condensed Consolidated Financial Statements for further details. We obtained valuations for all of the vessels in our fleet pursuant to the terms of the $495 Million Credit Facility and the $108 Million Credit Facility. In the chart below, we list each of our vessels, the year it was built, the year we acquired it, and its carrying value at March 31, 20192020 and December 31, 2018.2019. Vessels have been grouped according to their collateralized status as of March 31, 2019.2020. The carrying value of the ten Handysize vessels and four Supramax vessels as noted above reflect the impairment loss recorded during the three months ended March 31, 2020. The carrying value of the Genco Loire,Thunder and Genco Lorraine, Genco Normandy, Baltic Cougar, Baltic Jaguar, Baltic Leopard and Baltic PantherCharger at March 31, 2019 and December 31, 20182019 reflect the impairment loss recorded during 20182019 for these vessels. The carrying value of the Genco Vigour at December 31, 2018 reflects the impairment loss recorded during 2017 for this vessel.
At March 31, 2019,2020, the vessel valuations of all of our vessels for covenant compliance purposes under our credit facilities as of the most recent compliance testing date were lower than their carrying values at March 31, 2019.2020, with the exception of the Baltic Hare, the Baltic Wind, the Baltic Cove, the Baltic Breeze, the Genco Ocean, the Genco Bay, the Genco Avra, the Genco Mare, the Genco Spirit, the Genco Picardy, the Genco Predator, the Genco Provence and the Genco Warrior, which were impaired during the three months ended March 31, 2020 as noted above. At December 31, 2018,2019, the vessel valuations of all of our vessels for covenant compliance purposes under our credit
50
facility as of the most recent compliance testing date were lower than their carrying values at December 31, 2018,2019, with the exception of the Baltic Lion, Genco Tiger, Genco Weatherly, and Genco Vigour.Charger, which was impaired during the year ended December 31, 2019.
The amount by which the carrying value at March 31, 20192020 of all of the vessels in our fleet, with the exception of the 13 aforementioned vessels, exceeded the valuation of such vessels for covenant compliance purposes ranged, on an individual vessel basis, from $0.1 million to $16.2$18.5 million per vessel, and $366.0$340.0 million on an aggregate fleet basis. The amount by which the carrying value at December 31, 20182019 of all of the vessels in our fleet, with the exception of the fourone aforementioned vessels,vessel, exceeded the valuation of such vessels for covenant compliance purposes ranged, on an individual vessel basis, from $1.1$1.3 million to $14.9$18.1 million per vessel, and $336.3$419.4 million on an aggregate fleet basis. The average amount by which the carrying value of our vessels exceeded the valuation of such vessels for covenant compliance purposes was $6.3$8.5 million at March 31, 20192020 and $6.1$7.8 million as of December 31, 2018.2019. However, neither such valuation nor the carrying value in the table below reflects the value of long-term time charters, if any, related to some of our vessels.
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Carrying Value (U.S. |
| ||||
|
|
|
|
|
| dollars in |
| ||||
|
|
|
|
|
| thousands) as of |
| ||||
|
|
|
| Year |
| March 31, |
| December 31, |
| ||
Vessels |
| Year Built |
| Acquired |
| 2020 |
| 2019 |
| ||
$495 Million Credit Facility |
|
|
|
|
|
|
|
|
|
|
|
Genco Commodus |
| 2009 |
| 2009 |
| $ | 38,990 |
| $ | 39,472 |
|
Genco Maximus |
| 2009 |
| 2009 |
|
| 38,968 |
|
| 39,498 |
|
Genco Claudius |
| 2010 |
| 2009 |
|
| 40,772 |
|
| 41,314 |
|
Baltic Bear |
| 2010 |
| 2010 |
|
| 40,439 |
|
| 40,967 |
|
Baltic Wolf |
| 2010 |
| 2010 |
|
| 40,643 |
|
| 41,163 |
|
Baltic Lion |
| 2009 |
| 2013 |
|
| 31,852 |
|
| 32,199 |
|
Genco Tiger |
| 2010 |
| 2013 |
|
| 29,860 |
|
| 30,115 |
|
Genco Thunder |
| 2007 |
| 2008 |
|
| — |
|
| 10,303 |
|
Baltic Scorpion |
| 2015 |
| 2015 |
|
| 25,318 |
|
| 25,583 |
|
Baltic Mantis |
| 2015 |
| 2015 |
|
| 25,569 |
|
| 25,835 |
|
Genco Hunter |
| 2007 |
| 2007 |
|
| 16,843 |
|
| 17,121 |
|
Genco Warrior |
| 2005 |
| 2007 |
|
| 7,803 |
|
| 15,053 |
|
Genco Aquitaine |
| 2009 |
| 2010 |
|
| 16,817 |
|
| 17,046 |
|
Genco Ardennes |
| 2009 |
| 2010 |
|
| 16,848 |
|
| 17,080 |
|
Genco Auvergne |
| 2009 |
| 2010 |
|
| 17,034 |
|
| 17,094 |
|
Genco Bourgogne |
| 2010 |
| 2010 |
|
| 17,569 |
|
| 17,802 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Carrying Value (U.S. |
| ||||
|
|
|
|
|
| dollars in |
| ||||
|
|
|
|
|
| thousands) as of |
| ||||
|
|
|
| Year |
| March 31, |
| December 31, |
| ||
Vessels |
| Year Built |
| Acquired |
| 2019 |
| 2018 |
| ||
$495 Million Credit Facility |
|
|
|
|
|
|
|
|
|
|
|
Genco Commodus |
| 2009 |
| 2009 |
| $ | 38,253 |
| $ | 38,389 |
|
Genco Maximus |
| 2009 |
| 2009 |
|
| 38,291 |
|
| 38,423 |
|
Genco Claudius |
| 2010 |
| 2009 |
|
| 40,224 |
|
| 40,376 |
|
Baltic Bear |
| 2010 |
| 2010 |
|
| 39,730 |
|
| 39,866 |
|
Baltic Wolf |
| 2010 |
| 2010 |
|
| 39,869 |
|
| 39,989 |
|
Baltic Lion |
| 2009 |
| 2013 |
|
| 30,906 |
|
| 30,870 |
|
Genco Tiger |
| 2010 |
| 2013 |
|
| 28,789 |
|
| 28,716 |
|
Genco Raptor |
| 2007 |
| 2008 |
|
| 15,866 |
|
| 16,096 |
|
Genco Thunder |
| 2007 |
| 2008 |
|
| 15,949 |
|
| 16,173 |
|
Baltic Scorpion |
| 2015 |
| 2015 |
|
| 26,386 |
|
| 26,648 |
|
Baltic Mantis |
| 2015 |
| 2015 |
|
| 26,639 |
|
| 26,897 |
|
Genco Hunter |
| 2007 |
| 2007 |
|
| 17,954 |
|
| 18,223 |
|
Genco Warrior |
| 2005 |
| 2007 |
|
| 15,456 |
|
| 15,674 |
|
Genco Aquitaine |
| 2009 |
| 2010 |
|
| 17,222 |
|
| 17,436 |
|
Genco Ardennes |
| 2009 |
| 2010 |
|
| 17,246 |
|
| 17,466 |
|
Genco Auvergne |
| 2009 |
| 2010 |
|
| 17,429 |
|
| 17,582 |
|
Genco Bourgogne |
| 2010 |
| 2010 |
|
| 18,257 |
|
| 18,420 |
|
Genco Brittany |
| 2010 |
| 2010 |
|
| 18,215 |
|
| 18,444 |
|
Genco Languedoc |
| 2010 |
| 2010 |
|
| 18,220 |
|
| 18,448 |
|
Genco Loire |
| 2009 |
| 2010 |
|
| 10,880 |
|
| 10,773 |
|
Genco Lorraine |
| 2009 |
| 2010 |
|
| 10,924 |
|
| 10,769 |
|
Genco Normandy |
| 2007 |
| 2010 |
|
| 9,032 |
|
| 9,134 |
|
Baltic Leopard |
| 2009 |
| 2009 |
|
| 10,667 |
|
| 10,779 |
|
Baltic Jaguar |
| 2009 |
| 2010 |
|
| 10,672 |
|
| 10,785 |
|
Baltic Panther |
| 2009 |
| 2010 |
|
| 10,667 |
|
| 10,782 |
|
Baltic Cougar |
| 2009 |
| 2010 |
|
| 10,670 |
|
| 10,784 |
|
Genco Picardy |
| 2005 |
| 2010 |
|
| 15,461 |
|
| 15,736 |
|
Genco Provence |
| 2004 |
| 2010 |
|
| 14,533 |
|
| 14,809 |
|
Genco Pyrenees |
| 2010 |
| 2010 |
|
| 18,161 |
|
| 18,395 |
|
Genco Rhone |
| 2011 |
| 2011 |
|
| 19,302 |
|
| 19,532 |
|
Genco Bay |
| 2010 |
| 2010 |
|
| 17,068 |
|
| 17,284 |
|
Genco Ocean |
| 2010 |
| 2010 |
|
| 17,140 |
|
| 17,356 |
|
Genco Avra |
| 2011 |
| 2011 |
|
| 18,164 |
|
| 18,378 |
|
Genco Mare |
| 2011 |
| 2011 |
|
| 18,202 |
|
| 18,420 |
|
Genco Spirit |
| 2011 |
| 2011 |
|
| 18,260 |
|
| 18,470 |
|
Genco Challenger |
| 2003 |
| 2007 |
|
| 9,339 |
|
| 9,543 |
|
Baltic Wind |
| 2009 |
| 2010 |
|
| 16,213 |
|
| 16,427 |
|
Baltic Cove |
| 2010 |
| 2010 |
|
| 17,078 |
|
| 17,296 |
|
Baltic Breeze |
| 2010 |
| 2010 |
|
| 17,175 |
|
| 17,382 |
|
Baltic Fox |
| 2010 |
| 2013 |
|
| 16,656 |
|
| 16,876 |
|
Baltic Hare |
| 2009 |
| 2013 |
|
| 15,696 |
|
| 15,910 |
|
Genco Constantine |
| 2008 |
| 2008 |
|
| 35,924 |
|
| 36,086 |
|
Genco Augustus |
| 2007 |
| 2007 |
|
| 33,594 |
|
| 33,747 |
|
Genco London |
| 2007 |
| 2007 |
|
| 33,042 |
|
| 33,152 |
|
Genco Titus |
| 2007 |
| 2007 |
|
| 33,126 |
|
| 33,235 |
|
Genco Tiberius |
| 2007 |
| 2007 |
|
| 33,528 |
|
| 33,756 |
|
Genco Hadrian |
| 2008 |
| 2008 |
|
| 35,957 |
|
| 36,139 |
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Carrying Value (U.S. |
|
|
|
|
|
| Carrying Value (U.S. |
| ||||||||
|
|
|
|
|
| dollars in |
|
|
|
|
|
| dollars in |
| ||||||||
|
|
|
|
|
| thousands) as of |
|
|
|
|
|
| thousands) as of |
| ||||||||
|
|
|
| Year |
| March 31, |
| December 31, |
|
|
|
| Year |
| March 31, |
| December 31, |
| ||||
Vessels |
| Year Built |
| Acquired |
| 2019 |
| 2018 |
|
| Year Built |
| Acquired |
| 2020 |
| 2019 |
| ||||
Genco Brittany |
| 2010 |
| 2010 |
|
| 17,837 |
|
| 17,829 |
| |||||||||||
Genco Languedoc |
| 2010 |
| 2010 |
|
| 17,379 |
|
| 17,609 |
| |||||||||||
Genco Loire |
| 2009 |
| 2010 |
|
| 10,649 |
|
| 10,777 |
| |||||||||||
Genco Lorraine |
| 2009 |
| 2010 |
|
| 10,614 |
|
| 10,748 |
| |||||||||||
Genco Normandy |
| 2007 |
| 2010 |
|
| 8,607 |
|
| 8,717 |
| |||||||||||
Baltic Leopard |
| 2009 |
| 2009 |
|
| 10,648 |
|
| 10,773 |
| |||||||||||
Baltic Jaguar |
| 2009 |
| 2010 |
|
| 10,663 |
|
| 10,782 |
| |||||||||||
Baltic Panther |
| 2009 |
| 2010 |
|
| 10,659 |
|
| 10,784 |
| |||||||||||
Baltic Cougar |
| 2009 |
| 2010 |
|
| 10,667 |
|
| 10,791 |
| |||||||||||
Genco Picardy |
| 2005 |
| 2010 |
|
| 8,000 |
|
| 14,669 |
| |||||||||||
Genco Provence |
| 2004 |
| 2010 |
|
| 7,287 |
|
| 14,164 |
| |||||||||||
Genco Pyrenees |
| 2010 |
| 2010 |
|
| 17,292 |
|
| 17,528 |
| |||||||||||
Genco Rhone |
| 2011 |
| 2011 |
|
| 18,377 |
|
| 18,610 |
| |||||||||||
Genco Bay |
| 2010 |
| 2010 |
|
| 7,750 |
|
| 16,411 |
| |||||||||||
Genco Ocean |
| 2010 |
| 2010 |
|
| 7,718 |
|
| 16,562 |
| |||||||||||
Genco Avra |
| 2011 |
| 2011 |
|
| 8,465 |
|
| 17,505 |
| |||||||||||
Genco Mare |
| 2011 |
| 2011 |
|
| 8,465 |
|
| 17,546 |
| |||||||||||
Genco Spirit |
| 2011 |
| 2011 |
|
| 8,466 |
|
| 17,614 |
| |||||||||||
Baltic Wind |
| 2009 |
| 2010 |
|
| 7,630 |
|
| 15,996 |
| |||||||||||
Baltic Cove |
| 2010 |
| 2010 |
|
| 7,717 |
|
| 16,490 |
| |||||||||||
Baltic Breeze |
| 2010 |
| 2010 |
|
| 7,750 |
|
| 16,603 |
| |||||||||||
Baltic Fox |
| 2010 |
| 2013 |
|
| 8,955 |
|
| 15,995 |
| |||||||||||
Baltic Hare |
| 2009 |
| 2013 |
|
| 8,278 |
|
| 15,395 |
| |||||||||||
Genco Constantine |
| 2008 |
| 2008 |
|
| 35,850 |
|
| 36,450 |
| |||||||||||
Genco Augustus |
| 2007 |
| 2007 |
|
| 33,712 |
|
| 34,330 |
| |||||||||||
Genco London |
| 2007 |
| 2007 |
|
| 33,109 |
|
| 33,600 |
| |||||||||||
Genco Titus |
| 2007 |
| 2007 |
|
| 33,820 |
|
| 33,590 |
| |||||||||||
Genco Tiberius |
| 2007 |
| 2007 |
|
| 33,712 |
|
| 34,276 |
| |||||||||||
Genco Hadrian |
| 2008 |
| 2008 |
|
| 36,179 |
|
| 36,638 |
| |||||||||||
Genco Predator |
| 2005 |
| 2007 |
|
| 15,487 |
|
| 15,701 |
|
| 2005 |
| 2007 |
|
| 8,000 |
|
| 14,846 |
|
Genco Champion |
| 2006 |
| 2008 |
|
| 12,107 |
|
| 12,314 |
| |||||||||||
Genco Charger |
| 2005 |
| 2007 |
|
| 11,254 |
|
| 11,453 |
|
| 2005 |
| 2007 |
|
| — |
|
| 5,099 |
|
Baltic Hornet |
| 2014 |
| 2014 |
|
| 24,859 |
|
| 25,114 |
|
| 2014 |
| 2014 |
|
| 23,829 |
|
| 24,086 |
|
Baltic Wasp |
| 2015 |
| 2015 |
|
| 25,115 |
|
| 25,370 |
|
| 2015 |
| 2015 |
|
| 24,083 |
|
| 24,340 |
|
TOTAL |
|
|
|
|
| $ | 1,096,854 |
| $ | 1,105,823 |
|
|
|
|
|
| $ | 907,492 |
| $ | 1,044,798 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$108 Million Credit Facility |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Genco Endeavour |
| 2015 |
| 2018 |
|
| 45,279 |
|
| 45,368 |
|
| 2015 |
| 2018 |
|
| 45,480 |
|
| 45,947 |
|
Genco Resolute |
| 2015 |
| 2018 |
|
| 45,423 |
|
| 45,497 |
|
| 2015 |
| 2018 |
|
| 45,696 |
|
| 46,093 |
|
Genco Columbia |
| 2016 |
| 2018 |
|
| 27,458 |
|
| 27,702 |
|
| 2016 |
| 2018 |
|
| 26,360 |
|
| 26,627 |
|
Genco Weatherly |
| 2014 |
| 2018 |
|
| 22,335 |
|
| 22,564 |
|
| 2014 |
| 2018 |
|
| 21,443 |
|
| 21,676 |
|
Genco Liberty |
| 2016 |
| 2018 |
|
| 48,825 |
|
| 48,930 |
|
| 2016 |
| 2018 |
|
| 49,133 |
|
| 49,506 |
|
Genco Defender |
| 2016 |
| 2018 |
|
| 48,874 |
|
| 48,986 |
|
| 2016 |
| 2018 |
|
| 49,086 |
|
| 49,517 |
|
|
|
|
|
|
| $ | 238,194 |
| $ | 239,047 |
|
|
|
|
|
| $ | 237,198 |
| $ | 239,366 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unencumbered |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Genco Vigour |
| 1999 |
| 2004 |
|
| — |
|
| 5,699 |
| |||||||||||
TOTAL |
|
|
|
|
| $ | — |
| $ | 5,699 |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Consolidated Total |
|
|
|
|
| $ | 1,335,048 |
| $ | 1,350,569 |
|
|
|
|
|
| $ | 1,144,690 |
| $ | 1,284,164 |
|
If we were to sell a vessel or hold a vessel for sale, and the carrying value of the vessel were to exceed its fair market value, we would record a loss in the amount of the difference. Refer to Note 2 — Summary of Significant Accounting Policies and Note 4 — Vessel Acquisitions and Dispositions in our Condensed Consolidated Financial
53
Statements for information regarding the sale of vessel assets and the classification of the vessel assets held for sale as of March 31, 20192020 and December 31, 2018.2019.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest rate risk
We are exposed to the impact of interest rate changes. Our objective is to manage the impact of interest rate changes on our earnings and cash flow in relation to our borrowings. At March 31, 20192020 and December 31, 2018,2019, we did not have any interest rate swap agreements to manage interest costs and the risk associated with changing interest rates.
We are subject to market risks relating to changes in LIBOR rates because we have significant amounts of floating rate debt outstanding. During the three months ended March 31, 20192020 and 2018,2019, we were subject to the following interest rates on the outstanding debt under our credit facilities:facilities (Refer to Note 7 — Debt of our condensed consolidated financial statements for further information):
· | $108 Million Credit Facility — one-month LIBOR plus 2.50% effective |
· | $495 Million Credit Facility — |
· | $460 Million Tranche – one-month LIBOR plus 3.25% effective June 5, 2018, when the initial $460 million draw down on this tranche of this facility was made. The applicable margin was reduced to 3.00% |
53
|
|
· | $ |
|
|
A 1% increase in LIBOR would result in an increase of $1.4$1.3 million in interest expense for the three months ended March 31, 2019.2020.
Derivative financial instruments
As part of our business strategy, we may enter into interest rate swap agreements to manage interest costs and the risk associated with changing interest rates. As of March 31, 20192020 and December 31, 2018,2019, we did not have any derivative financial instruments.
Refer to “Interest rate risk” section above for further information regarding interest rate swap agreements.
Currency and exchange rates risk
The majority of transactions in the international shipping industry are denominated in U.S. Dollars. Virtually all of our revenues and most of our operating costs are in U.S. Dollars. We incur certain operating expenses in currencies other than the U.S. dollar, and the foreign exchange risk associated with these operating expenses is immaterial.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including our Chief Executive Officer and President and our Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act as of the end of the
54
period covered by this report. Based upon that evaluation, our Chief Executive Officer and President and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
55
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in the 2019 10-K, which could materially affect our business, financial condition or future results. Below is an update to the risk factor entitled, “The Covid-19 novel coronavirus, or other epidemics, could have a material adverse impact on our business, results of operations, or financial condition”:
The COVID-19 pandemic and measures to contain its spread have impacted the markets in which we operate and could have a material adverse impact on our business and its operations.
The COVID-19 pandemic and measures to contain its spread have negatively impacted regional and global economies and trade patterns in markets in which we operate, the way we operate our business, and the businesses of our charterers and suppliers. These negative impacts could continue or worsen. The COVID-19 pandemic may have far-reaching repercussions on our business and industry that are currently unknown. Governments in affected countries are imposing travel bans, quarantines, and other emergency public health measures, and a number of countries have implemented lockdown measures. Companies, including us, are also taking precautions, such as requiring employees to work remotely and imposing travel restrictions, while some other businesses have been required to close entirely. These restrictions have had an adverse impact on global economic conditions, resulted in turmoil in the shipping, credit, and other markets that affect us, and introduced new risks to our operations. These negative effects may continue or occur after the pandemic itself diminishes or ends. The COVID-19 pandemic has resulted in reduced industrial activity in China on which our business is substantially dependent, with temporary closures of factories and other facilities, and we believe it has resulted in lower drybulk rates in 2020 thus far, given lower demand for some of the cargoes we carry, including iron ore and coal. As the COVID-19 pandemic has spread, economic activity has also declined in other major industrial and financial centers of the world, including the United States, the European Union, Japan, India, and South Korea. Deterioration of worldwide, regional, or national economic conditions and activity could result in further reduced demand for the cargoes we carry and drybulk shipping services and may also negatively affect our charters, suppliers, and other parties with which we do business.
Moreover, we face significant risks to our personnel and operations due to the COVID-19 pandemic. Our crews face risk of exposure to COVID-19 as a result of travel to ports in China and other countries in which cases of COVID-19 have been reported. Our shore-based personnel likewise face risk of such exposure, as we are headquartered in New York, which currently has the highest number of COVID-19 cases reported in the U.S. The spread of COVID-19 has led to disruption of normal business activities and the imposition of measures to prevent or limit the spread of COVID-19, all of which may result in severe operational disruptions and delays. Our operations may be negatively affected by the unavailability of normal port infrastructure and services, including limited access to equipment, critical goods, and personnel, which may lead to delays in the loading and discharging of cargo on or from our vessels; closure of ports and customs offices; restrictions on the ability of our vessels to call on or depart from ports or requiring mandatory minimum periods between port calls (such as regulations requiring a minimum of 14 days between departure from a port in China and arrival at a port in certain other countries), which may result in vessel offhire; delays and expenses in finding substitute crew members if any of our vessels’ crew members become infected; our inability to renew or maintain the required classifications of our vessels; difficulty in executing vessel purchases or sales; disruptions to crew changes; quarantine of our ships, our crews, or both; delays in or inability to perform scheduled drydockings, intermediate or special surveys of vessels and scheduled and unscheduled ship repairs and upgrades, including the installation of ballast water treatment equipment, which may result from a shortage of necessary personnel, an inability to access or unavailability of necessary facilities or otherwise; and shortages of or a lack of access to spare parts required for our vessels. As our shore-based personnel are currently working remotely, any disruption in remote communications could also negatively impact our operations. The occurrence of one or more of the foregoing events or circumstances could have a material adverse effect on our business, results of operations, cash flows, financial condition, values of our vessels, and ability to pay dividends.
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The COVID-19 pandemic and measures to contain its spread could have a material adverse impact on our financial condition, compliance with our credit facility covenants, and ability to pay dividends.
As a result of the impact of COVID-19 and measures to contain its spread on general market conditions and our operations as described in the preceding risk factor, we may experience significant risks to our financial condition and liquidity. These risks include inability to charter our vessels at profitable rates or at all, with resulting losses from operations; noncompliance of charterers with the terms of our charters, including payment; a decline in counterparty credit strength; limitations on sources of cash and liquidity, including reduced access to capital markets and tightening credit from potential lenders in the private or public sector; delays or defaults in payments if the payment systems through which we receive revenues from vessel chartering or process payment of our expenses do not function; noncompliance with covenants in our credit facilities; and potential decreases in the market values of vessels and related impairment charges.
Our credit facilities contain collateral maintenance covenants that require the aggregate appraised value of collateral vessels to be at least 135% of the principal amount of the loan outstanding under each such facility. If the values of our vessels were to decline further significantly as a result of COVID-19 or otherwise, we may not satisfy this collateral maintenance requirement. Any borrowings under the $25 million revolving credit facility we are negotiating may make it more difficult to satisfy the collateral maintenance requirement under our $108 Million Credit Facility. If we do not satisfy the collateral maintenance requirement, we will need to post additional collateral or prepay outstanding loans to bring us back into compliance, or we will need to seek waivers, which may not be available or may be subject to conditions.
We also reduced our quarterly dividend to $0.02 per share in order to maintain our cash reserves in the face of uncertainties presented by COVID-19. Our credit facilities permit the payment of dividends to the extent our unrestricted cash and cash equivalents are greater than $100 million and 18.75% of our total indebtedness, whichever is higher (or a specified percentage of consolidated net income for the preceding quarter). At March 31, 2020, we had cash for this purpose of $134.3 million. We have commitments for amortization payments expected to be $18.2 million per quarter for 2020, or $20.2 million from September 30, 2020 onward, if we draw in full the $25 million credit facility we are negotiating. Therefore, if we do not generate cash flow from operations, we would be unlikely to be able to declare or pay dividends after the end of 2020, assuming we draw such facility in full (or earlier if we do not), except to the extent of permissible dividends from net income.
At present, it is not possible to ascertain the overall impact of COVID-19 on our business, which may take some time to materialize and may not be fully reflected in the results for 2020. However, the occurrence of any of the foregoing events or other epidemics, an increase in the severity or duration or a resurgence of the COVID-19 or other epidemic, or prevention and mitigation measures related to any such epidemic could have a material adverse effect on our business, results of operations, cash flows, financial condition, values of our vessels, and ability to pay dividends.
The Exhibit Index attached to this report is incorporated into this Item 16 by reference.
5457
EXHIBIT INDEX
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Exhibit |
| Document | |
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| |
3.1 |
| Second Amended and Restated Articles of Incorporation of Genco Shipping & Trading Limited.(1) | |
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| |
3.2 |
| ||
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3.3 |
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3.4 |
| ||
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3.5 | |||
3.6 |
| ||
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| |
|
| Amended and Restated By-Laws of Genco Shipping & Trading Limited, dated July 9, 2014.(1) | |
|
|
| |
|
| Amendment to Amended and Restated By-Laws, dated June 4, 2018. | |
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|
| |
4.1 |
| Form of Specimen Stock Certificate of Genco Shipping & Trading Limited.(1) | |
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| |
4.2 |
| Form of Specimen Warrant Certificate of Genco Shipping & Trading Limited.(1) | |
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| |
10.1 |
| ||
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10.2 |
| ||
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| |
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10.4 |
| ||
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10.5 |
| ||
10.6 | |||
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10.10 |
| ||
5558
31.1 |
| ||
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31.2 |
| ||
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| |
32.1 |
| Certification of Chief Executive Officer and President pursuant to 18 U.S.C. Section 1350.(*) | |
|
|
| |
32.2 |
| Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.(*) | |
|
|
| |
101 |
| The following materials from Genco Shipping & Trading Limited’s Quarterly Report on Form 10-Q for the quarter ended March 31, | |
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|
|
(*) | Filed with this report. | |
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|
(1) | Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on July 15, 2014. | |
|
|
|
(2) | Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on July 17, 2015. | |
|
|
|
(3) | Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on April 15, 2016. | |
(4) | Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on July 7, 2016. | |
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|
|
| Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on January 4, 2017. | |
|
| |
| Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on November 15, 2016. | |
|
| |
| Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on June 5, 2018. | |
|
| |
| Incorporated by reference to Genco Shipping & Trading Limited’s |
5659
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
| GENCO SHIPPING & TRADING LIMITED | ||
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| ||
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| ||
| DATE: May | By: | /s/ John C. Wobensmith | |
|
| John C. Wobensmith | ||
|
| Chief Executive Officer and President | ||
|
| (Principal Executive Officer) | ||
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|
| ||
|
|
| ||
| DATE: May | By: | /s/ Apostolos Zafolias | |
|
| Apostolos Zafolias | ||
|
| Chief Financial Officer | ||
|
| (Principal Financial Officer) |
5760