Exhibit 99.1
CONTACT:
John C. Wobensmith
Chief Financial Officer
Genco Shipping & Trading Limited
(646) 443-8555
GENCO SHIPPING & TRADING LIMITED ANNOUNCES
SECOND QUARTER 2008 FINANCIAL RESULTS
Declares Dividend of $1.00 per Share for Q2 2008
New York, New York, July 30, 2008 - Genco Shipping & Trading Limited (NYSE:GNK) today reported its financial results for the three and six months ended June 30, 2008.
The following financial review discusses the results for the three and six months ended June 30, 2008 and June 30, 2007.
Second Quarter 2008 and Year-to-Date Highlights
| · | Declared a dividend $1.00 per share, based on Q2 2008 results, payable on or about August 29, 2008 to all shareholders of record as of August 15, 2008; |
| · | Excluding the $2.6 million in dividends received from our investment in Jinhui Shipping and Transportation shares, recorded net income of $58.3 million, or $1.96 basic and $1.95 diluted earnings per share; |
| · | Recorded net income of $60.9 million, or $2.05 basic and $2.03 diluted earnings per share; |
| · | Completed the closing of a $204 million follow-on offering accompanied by a secondary offering; |
| · | Agreed to the acquisition of two Panamax and one Supramax vessel from Bocimar International N.V. and Delphis N.V. for an aggregate purchase price of $257 million; |
| · | Agreed to the acquisition of three Capesize and three Handysize vessels for an aggregate purchase price of $530 million; |
| · | Took delivery of the Genco Raptor and Genco Cavalier, two of the three vessels from the Bocimar acquisition; |
| · | Reached time charter agreements for six vessels, including one from the Bocimar acquisition and one from the Metrostar acquisition; and |
| · | Paid a $1.00 per share dividend on May 30, 2008 based on Q1 2008 results. |
Financial Review: 2008 Second Quarter
Excluding the $2.6 million dividends received from the investment in Jinhui Shipping and Transportation shares, the Company recorded net income of $58.3 million, or $1.96 basic and $1.95 diluted earnings per share. Including these dividends, the Company recorded net income for the second quarter of 2008 of $60.9 million, or $2.05 basic and $2.03 diluted earnings per share. Net income was $134.9 million or $4.61 basic and $4.58 diluted earnings per share for the six months ended June 30, 2008. Comparatively, for the six months ended June 30, 2007 net income was $33.6 million or $1.33 basic and $1.32 diluted earnings per share.
EBITDA was $85.7 million for the three months ended June 30, 2008 versus $25.4 million for the three months ended June 30, 2007.
Robert Gerald Buchanan, President, commented, “During the second quarter, we benefited from favorable contracts, and, in particular, profit sharing agreements that enabled the Company to take advantage of robust market conditions and post strong results. Consistent with our strategy, we maintained an intense focus on securing our vessels on time charters, during a time in which we further consolidated the drybulk industry by agreeing to add nine vessels to our fleet. Specifically, we renewed vessels at attractive rates and signed newly acquired vessels on charters prior to their delivery. We currently have approximately 94% of our fleet's available days secured on contracts for the remainder of 2008 and 60% in 2009. With a modern versatile fleet, we remain in a strong position to provide charterers with the highest quality service while capitalizing on the strong demand for essential commodities such as iron ore and coal. ”
Genco Shipping & Trading Limited revenues increased 184% to $104.6 million for the three months ended June 30, 2008 versus $36.8 million for the three months ended June 30, 2007, due to the operation of a larger fleet as well as the renewal of time charters at higher charter rates than those contracted previously.
The average daily time charter equivalent, or TCE, rates obtained by the Company’s fleet increased 95% to $40,945 per day for the three months ended June 30, 2008 compared to $21,046 for the three months ended June 30, 2007. The increase in TCE rates was due to higher charter rates achieved in the second quarter of 2008 versus the second quarter of 2007 for two of the Panamax vessels, six of the Handymax vessels, and five of the Handysize vessels in our current fleet. Furthermore, higher TCE rates were achieved in the second quarter of 2008 versus the same period last year due to the operation of five Capesize vessels acquired as part of the Metrostar acquisition.
Total operating expenses increased to $33.8 million for the three months ended June 30, 2008 from $18.3 million for the three-month period ended June 30, 2007, due to higher vessel operating expenses, general and administrative expenses and depreciation and amortization related to the operation of a larger fleet. Vessel operating expenses were $11.2 million for the second quarter of 2008 compared to $6.4 million for the same period last year. The increase in vessel operating expenses was due to the operation of a
larger fleet, higher crewing and lube expenses, as well as the operation of larger class vessels, namely Capesize vessels for the second quarter of 2008 versus the same period last year. We expect our vessel operating expenses, which generally represent variable costs, to further increase as a result of the expansion of our fleet. Depreciation and amortization expenses increased to $16.7 million for the second quarter of 2008 from $7.4 million for the second quarter of 2007 related to the growth of our fleet. General and administrative expenses increased to $4.4 million from $3.1 million during the comparative periods due to costs associated with higher employee non-cash compensation and other employee related costs. Management fees were $0.7 million for the three months ended June 30, 2008 and $0.4 million for the three months ended June 30, 2007, respectively, and relate to fees paid to our independent technical managers.
Daily vessel operating expenses grew to $4,378 per vessel per day during the second quarter of 2008 from $3,727 for the same quarter last year as a result of higher crew and lube expenses as well as the operation of five Capesize vessels. 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. Based on estimates provided by our technical managers and management’s expectations, our 2008 DVOE budget is $4,700 per vessel per day.
Financial Review: First Half 2008
Net income was $134.9 million or $4.61 basic and $4.58 diluted earnings per share, for the six months ended June 30, 2008 compared to $33.6 million, or $1.33 basic and $1.32 diluted earnings per share for the six months ended June 30, 2007. Included in net income for the six months ended June 30, 2008 is a $26.2 million gain from the sale of the Genco Trader, $2.6 million of income received from our investment in stock of Jinhui Shipping and Transportation Limited, and a loss from derivative instruments of $1.4 million. Revenues increased 165% to $196.2 million for the six months ended June 30, 2008 compared to $74.1 million for the six months ended June 30, 2007. EBITDA was $181.5 million for the six months ended June 30, 2008 versus $55.9 for the six months ended June 30, 2007. TCE rates obtained by the Company increased to $38,419 per day for the six months ended June 30, 2008 from $20,863 for the same period in 2007. Total operating expenses were $40.1 million for the six months ended June 30, 2008 compared to $33.3 for the six months ended June 30, 2007, and daily vessel operating expenses per vessel were $4,328 versus $3,677 for the comparative periods.
Liquidity and Capital Resources
Cash Flow
Net cash provided by operating activities for the three months ended June 30, 2008 and 2007, was $131.6 million and $47.5 million, respectively. The increase was primarily due to the operation of a larger fleet, which contributed to increases in net income, depreciation, and deferred revenues. Adjustments to operating cash flows include $9.6 million of realized losses on forward currency contracts offset by $9.9 million of unrealized gains on hedged short-term investments and $2.6 million of realized income from dividends. Increases to cash flow were offset by $26.2 million in gains from the sale of the Genco Trader and $11.6 million of amortization of value of the time charters acquired as part of the Metrostar and Evalend acquisitions. Net cash provided by operating activities for the three months ended June 30, 2007 was primarily a result of recorded net income of $33.6 million, less the gain from the sale of the Genco Glory of $3.6 million, plus depreciation and amortization charges of $14.6 million.
Net cash used in investing activities was $302.0 million for the six months ended June 30, 2008 as compared to $90.4 for the six months ended June 30, 2007. For the six months ended June 30, 2008, cash used in investing activities primarily related to the purchase of vessels in the amount of $247.1 million, deposits on vessels to be acquired of $80.6 million, the purchase of $10.3 million of Jinhui stock, and payments on forward currency contracts of $9.6 million. The above were offset by proceeds from the sale of the Genco Trader in the amount of $43.1 million. For the three months ended June 30, 2007 the cash used in investing activities primarily related to the purchase of short-term investments of $103.1 million, offset by the sale of the Genco Glory in the amount of $13.0 million.
Net cash provided by financing activities for the six months ended June 30, 2008 was $194.8 million as compared to $37.1 million for the six months ended June 30, 2007. For the six months ended June 30, 2008, net cash provided by financing activities consisted of the drawdown of $321.3 million related to the purchase of vessels and $195.7 million in net proceeds from our May 2008 follow-on offering. These inflows were offset by the repayment of $268.0 million under the 2007 credit facility and the payment of cash dividends of $53.8 million. For the same period last year, net cash provided by financing activities consisted of $77.0 million of proceeds from a short-term line used to finance the purchase of Jinhui shares, and was offset by the payment of cash dividends of $33.7 million and the repayment of $5.7 million under our 2005 credit facility.
Capital Expenditures
We make capital expenditures from time to time in connection with vessel acquisitions. Our current fleet consists of five Capesize, seven Panamax, four Supramax, six Handymax and eight Handysize vessels, with an aggregate carrying capacity of approximately 2,150,000 dwt. After the expected delivery of 11 vessels the Company has agreed to acquire, Genco Shipping & Trading Limited will own a fleet of 41 drybulk
vessels, consisting of 12 Capesize, eight Panamax, four Supramax, six Handymax and 11 Handysize vessels, with an aggregate carrying capacity of approximately 3,516,000 dwt.
In addition to acquisitions that we may undertake in future periods, we will incur additional capital expenditures due to special surveys and drydockings for our fleet. We estimate that five of our vessels will be drydocked in the remainder of 2008, of which three will be drydocked during the third quarter of 2008 and two vessels in the fourth quarter of 2008. An additional five of our vessels will be drydocked in 2009.
We estimate our drydocking costs for our fleet through 2009 to be:
| | Q3 2008 | Q4 2008 | 2009 |
| | | | |
Estimated Costs (1) | $2.6 million | $1.9 million | $4.1 million |
Estimated Offhire Days (2) | 60 | 40 | 100 |
(1) Estimates are based on our budgeted cost of 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 from operations.
(2) Assumes 20 days per drydocking per vessel. Actual length will vary based on the condition of the vessel, yard schedules and other factors.
The Genco Sugar completed its drydocking during the second quarter of 2008 at a cost of approximately $0.7 million. The vessel was on planned offhire for 17.9 days in connection with this scheduled drydocking.
Update on Share Repurchase Program
The Company previously announced that its Board of Directors has approved a share repurchase program for up to a total of $50 million of the Company's common stock. As of June 30, 2008, the Company has not bought back any shares.
As of July 30, 2008, the Company had 31,795,978 shares of common stock outstanding.
Summary Consolidated Financial and Other Data
The following table summarizes Genco Shipping & Trading Limited’s selected consolidated financial and other data for the periods indicated below.
| | | | | Three Months Ended | Six Months Ended |
| | | | | June 30, 2008 | June 30, 2007 | June 30, 2008 | June 30, 2007 |
| | (Dollars in thousands, except share and per share data) | (Dollars in thousands, except share and per share data) |
| | (unaudited) | (unaudited) |
| INCOME STATEMENT DATA: | | | | |
| Revenues | $ 104,572 | $ 36,847 | $ 196,242 | $ 74,067 |
| | | | | | | | |
| Operating expenses: | | | | |
| | Voyage expenses | 724 | 1,017 | 1,468 | 2,430 |
| | Vessel operating expenses | 11,187 | 6,445 | 22,106 | 12,834 |
| | General and administrative expenses | 4,431 | 3,052 | 8,842 | 6,247 |
| | Management fees | �� 665 | 393 | 1,338 | 744 |
| | Depreciation and amortization | 16,748 | 7,433 | 32,612 | 14,619 |
| | Gain on sale of vessel | - | - | (26,227) | (3,575) |
| | | Total operating expenses | 33,755 | 18,340 | 40,139 | 33,299 |
| | | | | | | | |
| Operating income | 70,817 | 18,507 | 156,103 | 40,768 |
| | | | | | | | |
| Other (expense) income: | | | | |
| | Income from short-term investment | 2,590 | - | 2,590 | - |
| | (Loss) Income from derivative instruments | (1,315) | (1,594) | (1,380) | (1,594) |
| | Interest income | 422 | 888 | 975 | 1,954 |
| | Interest expense | (11,615) | (4,080) | (23,402) | (7,570) |
| | | Other (expense) income: | (9,918) | (4,786) | (21,217) | (7,210) |
| | | | | | | | |
| | | | | | | | |
| Net income | $ 60,899 | $ 13,721 | $ 134,886 | $ 33,558 |
| | | | | | | | |
| Earnings per share - basic | $ 2.05 | $ 0.54 | $ 4.61 | $ 1.33 |
| | | | | | | | |
| Earnings per share - diluted | $ 2.03 | $ 0.54 | $ 4.58 | $ 1.32 |
| | | | | | | | |
| Weighted average shares outstanding - basic | 29,750,309 | 25,312,593 | 29,242,118 | 25,310,783 |
| | | | | | | | |
| Weighted average shares outstanding - diluted | 29,957,698 | 25,456,413 | 29,436,024 | 25,439,043 |
| | | | | | | | |
| | | | | | | | |
| | | | | | June 30, 2008 | December 31, 2007 | |
| BALANCE SHEET DATA: | | (unaudited) | | |
| Cash | | | $ 95,964 | $ 71,496 | |
| Current assets, including cash | | 270,895 | 267,594 | |
| Total assets | | 1,951,696 | 1,653,272 | |
| Current liabilities, including current portion of long-term debt | | 29,742 | 70,364 | |
| Total long-term debt, including current portion | | 989,250 | 936,000 | |
| Shareholders' equity | | 877,282 | 622,185 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | Six Months Ended | |
| | | | | | June 30, 2008 | June 30, 2007 | |
| | | | | | (unaudited) | |
| | | | | | | | |
| Net cash provided by operating activities | | 131,627 | 47,540 | |
| Net cash used in investing activities | | (302,000) | (90,401) | |
| Net cash provided by financing activities | | 194,841 | 37,105 | |
| | | | | | | | |
| | | | | | | | |
| | | | | Three Months Ended | Six Months Ended |
| | | | | June 30, 2008 | June 30, 2007 | June 30, 2008 | June 30, 2007 |
| FLEET DATA: | (unaudited) | (unaudited) |
| Total number of vessels at end of period | 29 | 19 | 29 | 19 |
Average number of vessels (1) | 28.1 | 19.0 | 28.1 | 19.3 |
Total ownership days for fleet (2) | 2,555 | 1,729 | 5,107 | 3,491 |
Total available days for fleet (3) | 2,536 | 1,703 | 5,070 | 3,434 |
Total operating days for fleet (4) | 2,518 | 1,668 | 5,033 | 3,371 |
Fleet utilization (5) | 99.3% | 98.0% | 99.3% | 98.2% |
| | | | | | | | |
| | | | | | | | |
| AVERAGE DAILY RESULTS: | | | | |
Time charter equivalent (6) | 40,945 | $ 21,046 | $ 38,419 | $ 20,863 |
Daily vessel operating expenses per vessel (7) | 4,378 | 3,727 | 4,328 | 3,677 |
| | | | | | | | |
| | | | | Three Months Ended | Six Months Ended |
| | | | | June 30, 2008 | June 30, 2007 | June 30, 2008 | June 30, 2007 |
| | | | | (Dollars in thousands) | (Dollars in thousands) |
| EBITDA Reconciliation: | (unaudited) | (unaudited) |
| | Net Income | $ 60,899 | $ 13,721 | $ 134,886 | $ 33,558 |
| | + | | Net interest expense | 11,193 | 3,192 | 22,427 | 5,616 |
| | + | | Depreciation and amortization | 16,748 | 7,433 | 32,612 | 14,619 |
| | + | | Amortization of nonvested stock compensation | 1,607 | 585 | 3,195 | 1,171 |
| | + | | Amortization of value of time charters acquired | (4,761) | 461 | (11,610) | 917 |
| | | | EBITDA(8) | 85,686 | 25,392 | 181,510 | 55,881 |
| | | | | | | | |
(1) Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was part of our fleet during the period divided by the number of calendar days in that period.
(2) 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.
(3) We define available days as the number of our ownership days less the aggregate number of days that our vessels are off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels. 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) We define operating days as the number of our 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.
(5) We calculate fleet utilization by dividing the number of our operating days during a period by the number of our available days during the period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the number of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning.
(6) We define TCE rates as our net voyage revenue (voyage revenues less voyage expenses) divided by the number of our available days during the period, which is consistent with industry standards. 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. Since some vessels were acquired with an existing time charter at a below-market rate, we allocated the purchase price between the vessel and an intangible liability for the value assigned to the below-market charterhire. This intangible liability is amortized as an increase to voyage revenues over the minimum remaining term of the charter.
(7) 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 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.
(8) EBITDA represents net income plus net interest expense, income tax expense, depreciation and amortization, amortization of nonvested stock compensation, and amortization of the value of time charter acquired. 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 consolidating internal financial statements and it is presented for review at our board meetings. EBITDA is also used by our lenders in certain loan covenants. For these reasons, we believe that EBITDA is a useful measure to present to our investors. EBITDA is not an item recognized by U.S. GAAP 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 source of liquidity or cash flows as shown in our consolidated statement of cash flows. The definition of EBITDA used here may not be comparable to that used by other companies.
Genco Shipping & Trading Limited’s Fleet
Our current fleet consists of five Capesize, seven Panamax, four Supramax, six Handymax and eight Handysize drybulk carriers with an aggregate carrying capacity of approximately 2,150,000 dwt. Our current fleet contains seven groups of sister ships, which are vessels of virtually identical sizes and specifications. We believe that maintaining a fleet that includes sister ships reduces costs by creating economies of scale in the maintenance, supply and crewing of our vessels. As of June 30, 2008, the average age of our current fleet was 6.5 years, as compared to the average age for the world fleet of approximately 16 years for the drybulk shipping segments in which we compete. All of the vessels in our current fleet are currently on long-term time charters with an average remaining life of approximately 22 months as of June 30, 2008.
The following table reflects the current employment of Genco's current fleet as well as the employment or other status of vessels expected to join Genco's fleet:
| Vessel | Year Built | Charterer | Charter Expiration (1) | Cash Daily Rate (2) | Net Revenue Daily Rate (3) | Expected Delivery (4) |
| | | | | | | |
| Capesize Vessels | | | | | | |
| Genco Augustus | 2007 | Cargill International S.A. | December 2009 | 45,263 | 62,750 | - |
| Genco Tiberius | 2007 | Cargill International S.A. | January 2010 | 45,263 | 62,750 | - |
| Genco London | 2007 | SK Shipping Co., Ltd | August 2010 | 57,500 | 64,250 | - |
| Genco Titus | 2007 | Cargill International S.A. | September 2011 | 45,000(5) | 46,250 | - |
| Genco Constantine | 2008 | Cargill International S.A. | August 2012 | 52,750(5) | | - |
| Genco Hadrian | 2008(6) | Cargill International S.A. | 46 to 62 months from delivery | 65,000(5) | | Q4 2008 |
| Genco Commodus | 2009(6) | To be determined (“TBD”) | TBD | TBD | | Q2 2009 |
| Genco Maximus | 2009(6) | TBD | TBD | TBD | | Q2 2009 |
| Genco Aurelius | 2009(6) | TBD | TBD | TBD | | Q2 2009 |
| Genco Claudius | 2009(6) | TBD | TBD | TBD | | Q3 2009 |
| Genco Julian | 2009(6) | TBD | TBD | TBD | | Q3 2009 |
| Genco Valerian | 2009(6) | TBD | TBD | TBD | | Q4 2009 |
| | | | | | | |
Panamax Vessels | | | | | | |
| Genco Beauty | 1999 | Cargill International S.A. | May 2009 | 31,500 | | - |
| Genco Knight | 1999 | SK Shipping Ltd. | May 2009 | 37,700 | | - |
| Genco Leader | 1999 | A/S Klaveness Chartering | December 2008 | 25,650(7) | | - |
| Genco Vigour | 1999 | STX Panocean (UK) Co. Ltd. | March 2009 | 29,000(8) | | - |
| Genco Acheron | 1999 | ArcelorMittal | July 2011 | 55,250(9) | | - |
| Genco Surprise | 1998 | Hanjin Shipping Co., Ltd. | December 2010 | 42,100 | | - |
| Genco Raptor | 2007 | COSCO Bulk Carriers Co., Ltd. | April 2012 | 52,800 | | - |
| Genco Thunder | 2007 | TBD | TBD | TBD | | Q4 2008 |
| | | | | | | |
| Supramax Vessels | | | | | | |
| Genco Predator | 2005 | A/S Klaveness Chartering | October 2008 | 58,000(10) | | - |
| Genco Warrior | 2005 | Hyundai Merchant Marine Co. Ltd. | November 2010 | 38,750 | | - |
| Genco Hunter | 2007 | Pacific Basin Chartering Ltd. | June 2009 | 62,000(11) | | - |
| Genco Cavalier | 2007 | Samsun Logix Corporation | July 2010 | 48,500(12) | 47,700 | - |
Handymax Vessels | | | | | | |
| Genco Success | 1997 | Korea Line Corporation | February 2011 | 33,000(13) | | - |
| Genco Carrier | 1998 | Louis Dreyfus Corporation | March 2011 | 37,000 | | - |
| Genco Prosperity | 1997 | Pacific Basin Chartering Ltd | June 2011 | 37,000(14) | | - |
| Genco Wisdom | 1997 | Hyundai Merchant Marine Co. Ltd. | February 2011 | 34,500 | | - |
| Genco Marine | 1996 | NYK Bulkship Europe S.A. | March 2009 | 47,000 | | - |
| Genco Muse | 2001 | Norden A/S | August 2008 | 47,650 | | - |
| | | | | | | |
| Handysize Vessels | | | | | | |
| Genco Explorer | 1999 | Lauritzen Bulkers A/S | August 2009 | 19,500 | | - |
| Genco Pioneer | 1999 | Lauritzen Bulkers A/S | August 2009 | 19,500 | | - |
| Genco Progress | 1999 | Lauritzen Bulkers A/S | August 2009 | 19,500 | | - |
| Genco Reliance | 1999 | Lauritzen Bulkers A/S | August 2009 | 19,500 | | - |
| Genco Sugar | 1998 | Lauritzen Bulkers A/S | August 2009 | 19,500 | | - |
| Genco Charger | 2005 | Pacific Basin Chartering Ltd. | November 2010 | 24,000 | | - |
| Genco Challenger | 2003 | Pacific Basin Chartering Ltd. | November 2010 | 24,000 | | - |
| Genco Champion | 2006 | Pacific Basin Chartering Ltd. | December 2010 | 24,000 | | - |
| Genco Eagle | 2008 | TBD | TBD | TBD | | Q4 2008 |
| Genco Falcon | 2008 | TBD | TBD | TBD | | Q1 2009 |
| Genco Hawk | 2008 | TBD | TBD | TBD | | Q1 2009 |
(1) The charter expiration dates presented represent the earliest dates that our charters may be terminated in the ordinary course. Except for the Genco Titus, under the terms of each contract, the charterer is entitled to extend time charters from two to four months in order to complete the vessel's final voyage plus any time the vessel has been off-hire. The charterer of the Genco Titus has the option to extend the charter for a period of one year.
(2) Time charter rates presented are the gross daily charterhire rates before third party commissions ranging from 1.25% to 6.25%, except as indicated for the Genco Leader in note 7 below. In a time charter, the charterer is responsible for voyage expenses such as bunkers, port expenses, agents’ fees and canal dues.
(3) For the vessels acquired with a below-market time charter rate, the approximate amount of revenue on a daily basis to be recognized as revenues is displayed in the column named “Net Revenue Daily Rate” and is net of any third-party commissions. Since these vessels were acquired with existing time charters with below-market rates, we allocated the purchase price between the respective vessel and an intangible liability for the value assigned to the below-market charterhire. This intangible liability is amortized as an increase to voyage revenues over the minimum remaining term of the charter. For cash flow purposes, we will continue to receive the rate presented in the “Cash Daily Rate” column until the charter expires.
(4) Dates for vessels being delivered in the future are estimates based on guidance received from the sellers and/or the respective shipyards.
(5) These charters include a 50% index-based profit sharing component above the respective base rates listed in the table. The profit sharing between the charterer and us for each 15-day period is calculated by taking the average over that period of the published Baltic Cape Index of the four time charter routes, as reflected in daily reports. If such average is more than the base rate payable under the charter, the excess amount is allocable 50% to each of the charterer and us. A third-party brokerage commission of 3.75% based on the profit sharing amount due to us is payable out of our share.
(6) Year built for vessels being delivered in the future are estimates based on guidance received from the sellers and/or the respective shipyards.
(7) The time charter rate presented is the net daily charterhire rate. There are no payments of commissions associated with this time charter.
(8) We have entered into a time charter for 23 to 25 months at a rate of $33,000 per day for the first 11 months, $25,000 per day for the following 11 months and $29,000 per day thereafter, less a 5% third-party commission. For purposes of revenue recognition, the time charter contract is reflected on a straight-line basis at approximately $29,000 per day for 23 to 25 months
in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.
(9) We have entered into a time charter agreement with ArcelorMittal for 35 to 37 months at a rate of $55,250 per day less a 5% third-party commission. The vessel is currently in drydocking and is expected to deliver to its new charterer on or about August 1, 2008.
(10) We have entered into a short-term time charter with A/S Klaveness Chartering for 3 to 5 months at a rate of $58,000 per day less a 5% third-party commission. The new charter commenced following the completion of the prior time charter on July 18, 2008.
(11) We have reached an agreement to extend the time charter with Pacific Basin Chartering Ltd. for 11 to 13.5 months at a rate of $62,000 per day, less a 5% third party brokerage commission. The time charter commenced following the expiration of the vessel's prior time charter on July 21, 2008.
(12) The time charter for this vessel commenced on July 19, 2008. In completing the negotiation of certain changes we required for novation of the existing charter, we agreed to reduce the daily gross rate and received a rebate from the brokers involved in the vessel sale. Since the vessel was acquired with a below-market rate, we allocated the purchase price between the vessel and an intangible liability for the value assigned to the below-market charterhire.
(13) We extended the time charter for an additional 35 to 37.5 months at a rate of $40,000 per day for the first 12 months, $33,000 per day for the following 12 months, $26,000 per day for the next 12 months and $33,000 per day thereafter less a 5% third-party commission. In all cases, the rate for the duration of the time charter will average $33,000 per day. For purposes of revenue recognition, the time charter contract is reflected on a straight-line basis at approximately $33,000 per day for 35 to 37.5 months in accordance with U.S. GAAP.
(14) We recently extended the time charter for an additional 35 to 37.5 months at a rate of $37,000 per day less a 5% third-party commission. The new charter commenced on July 10, 2008, following the expiration of the previous charter.
Q2 2008 Dividend Announcement
The Company’s Board of Directors declared a second quarter 2008 dividend of $1.00 per share payable on or about August 29, 2008 to all shareholders of record as of August 15, 2008. As previously announced, the Company plans to declare quarterly dividends to shareholders by each February, May, August and November, in amounts substantially equal to its available cash from operations during the previous quarter, less cash expenses for that quarter (principally vessel operating expenses and debt service) and any reserves the Board of Directors determines the Company should maintain. These reserves may cover, among other things: drydocking, repairs, claims, liabilities and other obligations,
interest expense and debt amortization, acquisitions of additional assets and working capital. The Q2 2008 dividend of $1.00 equates to an annualized yield of 6.3% based on the closing price of Genco Shipping & Trading’s common stock as of July 29, 2008 at $63.27.
John C. Wobensmith, Chief Financial Officer, commented, “Genco’s strong quarterly results are testament to the sizeable earnings power of the fleet. During the quarter, we remained true to our objective of becoming the industry bellwether and acquired nine high-quality vessels. With the addition of these vessels, Genco has expanded its fleet approximately 345% on a net tonnage basis since going public in July 2005. During the quarter, we also completed a $204 million equity offering, underscoring the ongoing support we have received from the capital and banking markets as we execute our growth strategy. Going forward, we intend to continue to seek opportunities to consolidate the industry in a manner that meets our strict earnings and cash flow criteria as well as return on capital hurdles. Complementing this focus, we intend to continue to draw upon our significant time charter coverage to distribute sizeable dividends to shareholders.”
About Genco Shipping & Trading Limited
Genco Shipping & Trading Limited transports iron ore, coal, grain, steel products and other drybulk cargoes along worldwide shipping routes. Genco Shipping & Trading Limited currently owns a fleet of 30 drybulk vessels consisting of five Capesize, seven Panamax, four Supramax, six Handymax and eight Handysize vessels, with an aggregate carrying capacity of approximately 2,150,000 dwt. After the expected delivery of 11 vessels the Company has agreed to acquire, Genco Shipping & Trading Limited will own a fleet of 41 drybulk vessels, consisting of 12 Capesize, eight Panamax, four Supramax, six Handymax and 11 Handysize vessels, with an aggregate carrying capacity of approximately 3,516,000 dwt.
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Conference Call Announcement
Genco Shipping & Trading Limited announced that it will hold a conference call on Thursday, July 31, 2008 at 8:30 a.m. Eastern Time, to discuss its 2008 second quarter financial results. The conference call and a presentation will be simultaneously webcast and will be available on the Company’s website, www.GencoShipping.com. To access the conference call, dial (888) 204-4610 or (913) 312-1300 and enter passcode 1470749. A replay of the conference call can also be accessed through August 14, 2008 by dialing (888) 203-1112 or (719) 457-0820 and entering the passcode 1470749. The Company intends to place additional materials related to the earnings announcement, including a slide presentation, on its website prior to the conference call.
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward looking statements are based on 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) changes in demand or rates in the drybulk shipping industry; (ii) changes in the supply
of or demand for drybulk products, generally or in particular regions; (iii) changes in the supply of drybulk carriers including newbuilding of vessels or lower than anticipated scrapping of older vessels; (iv) 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; (v) increases in costs and expenses including but not limited to: crew wages, insurance, provisions, repairs, maintenance and general and administrative expenses; (vi) the adequacy of our insurance arrangements; (vii) changes in general domestic and international political conditions; (viii) 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; (ix) the number of offhire days needed to complete repairs on vessels and the timing and amount of any reimbursement by our insurance carriers for insurance claims including offhire days; (x) the Company’s acquisition or disposition of vessels; (xi) the fulfillment of the closing conditions under, or the execution of customary additional documentation for, the Company’s agreements to acquire a total of 11 drybulk vessels; and other factors listed from time to time in our public filings with the Securities and Exchange Commission, including, without limitation, the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 and its reports on Form 10-Q and Form 8-K. The timing and amount of purchases under the Company’s share repurchase program will be determined by management based upon market conditions and other factors. Purchases may be made pursuant to a program adopted under Rule 10b5-1 under the Securities and Exchange Act. The program does not require the Company to purchase any specific number or amount of shares and may be suspended or reinstated at any time in the Company’s discretion and without notice. Repurchases will be subject to restrictions under the Company’s existing credit facility. Our ability to pay dividends in any period will depend upon factors, including the limitations under our loan agreements, 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.
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