Exhibit 99.1
CONTACT:
John C. Wobensmith
Chief Financial Officer
Genco Shipping and Trading Limited
(646) 443-8555
GENCO SHIPPING AND TRADING LIMITED ANNOUNCES
SECOND QUARTER FINANCIAL RESULTS
Time-Charters at Favorable Rates Contribute to Strong Results
Closes $450 million Credit Facility; Positions Company for Future Growth
New York, New York, August 17, 2005 - Genco Shipping and Trading Limited
(NASDAQ:GSTL) today reported its financial results for the three months and six
months ended June 30, 2005.
The following financial review presents the results for the three months and six
months ended June 30, 2005 and for the three months ended March 31, 2005. Since
the Company began operations on December 6, 2004, comparable historical data for
the three months and six months ended June 30, 2005 is unavailable.
Year to Date Highlights
-----------------------
o Net income was $15.6 million for the three months ended June 30, 2005 and
$27.0 million for the six months ended June 30, 2005.
o We took delivery of the Genco Prosperity and the Genco Trader, increasing
fleet to 16 vessels with carrying capacity of approximately 790,000 dwt.
o We completed a $247 million Initial Public Offering on July 22, 2005.
o We entered into a new $450 million credit facility, providing an undrawn
capacity of $344 million to fund future acquisitions in July 2005.
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Financial Review: 2005 Second Quarter
-------------------------------------
The Company had net income of $15.6 million, or $1.16 earnings per share and
$0.62 pro forma earnings per share for the three months ended June 30, 2005. Pro
forma earnings per share gives effect to the additional shares issued and sold
in connection to the Company's initial public offering as described in note (1)
of the "Summary Consolidated Financial and Other Data". Comparatively, for the
three months ended March 31, 2005 net income was $11.4 million, or $0.84
earnings per share and $0.45 pro forma earnings per share. The increase in net
income was primarily attributable to the delivery of the final two vessels under
our original fleet purchase agreement and a full quarter of operations for the
eight vessels delivered during the quarter ended March 31, 2005.
Robert Gerald Buchanan, President, commented, "During the first half of 2005,
Genco achieved significant milestones that position the Company well for the
future. Among our accomplishments, we completed the acquisition and integration
of 16 modern drybulk vessels. We also signed the majority of our vessels on time
charters, with rates above the current environment. Finally, we completed a
successful $247 million initial public offering in July of 2005. Genco intends
to draw upon its modern fleet and strong industry relationships to take
advantage of the favorable long-term supply and demand imbalance for drybulk
ships. At the same time, we will focus on making accretive acquisitions aimed at
consolidating a fragmented industry and solidifying Genco's leadership
position."
Operating income increased to $19.4 million for the three months ended June 30,
2005 compared to $13.9 million for the three months ended March 31, 2005. EBITDA
for the three months ended June 30, 2005 was $25.1 million compared to $17.9
million for the period ended March 31, 2005 (please see "Summary Consolidated
Financial and Other Data" for a reconciliation of net income to EBITDA).
The average daily time charter equivalent, or TCE, rates obtained by the
Company's fleet increased by 3.6% to $21,648 per day for the three months ended
June 30, 2005 compared to $20,904 for the three months ended March 31, 2005.
Total operating expenses increased to $11.5 million for the three months ended
June 30, 2005 from $7.5 million for the three month period ended March 31, 2005,
as a result of operating a larger fleet. Vessel operating expenses were $3.4
million for the three months ended June 30, 2005 compared to $2.0 million for
the three month period ended March 31, 2005. General and administrative costs
increased to $0.9 million from $0.3 million during the comparative periods due
to the expansion of our fleet. Management fees for the three months ended June
30, 2005 increased to $0.5 million compared to $0.3 million for the three months
ended March 31, 2005, primarily due to a full quarter of operations for the
eight vessels delivered during the quarter ended March 31, 2005.
Daily vessel operating expenses rose to $2,465 per vessel day during the second
quarter of 2005 from $2,042 for the previous quarter this year. This increase is
primarily due to two factors. First, the Genco Trader, a Panamax vessel that we
received delivery of during the second quarter, has higher operating costs than
Handymax and Handysize
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vessels, due to the larger size of the vessel. Second, the longer operating
period for the fourteen vessels delivered through March 31, 2005.
Financial Review: Six Months Ended June 30, 2005
------------------------------------------------
Net income was $27.0 million or $2.00 earnings per share and $1.07 pro forma
earnings per share (see note (1) of the "Summary Consolidated Financial and
Other Data") for the six months ended June 30, 2005. Voyage revenues were $52.3
million and EBITDA was $43.0 million for the six months ended June 30, 2005. TCE
rates obtained by the Company's fleet for the six months ended June 30, 2005
were $21,339 per day.
Daily direct vessel operating expenses for the six months ended June 30, 2005
were $2,289.
Liquidity and Capital Resources
-------------------------------
Cash Flow
---------
Net cash provided by operating activities for the six-month period ended June
30, 2005 was $38.5 million. Net cash from operating activities was primarily a
result of recorded net income of $27.0 million and depreciation charges of $9.7
million. Net cash used in investing activities was $232.5 million and related
solely to the acquisition of ten additional vessels during 2005. Net cash
provided by financing activities was $212.8 million and consisted primarily of
$231.2 million in proceeds from our original credit facility and a further
equity contribution of $2.7 million used to finance the acquisition of ten
additional vessels. These events were off-set by a scheduled $20.6 million debt
payment under our original credit facility on June 1, 2005.
Capital Expenditures
--------------------
We make capital expenditures from time to time in connection with vessel
acquisitions. Our recent vessel acquisitions consist of our fleet of five
Panamax drybulk carriers, six Handymax drybulk carriers and five Handysize
drybulk carriers.
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. Upon the delivery of the Genco Trader, in June 2005, the Company
incurred a deferred drydocking cost associated with the preparation of the
vessel for its initial charter. We estimate our drydocking costs for our fleet
through 2007 to be:
2005 2006 2007
Q3 Q4
-------------------------------------------------------
Estimated Costs $ 280,000 $ - $ 1,710,000 $ 2,130,000
Estimated Offhire Days (1) 20 0 140 160
(1) Estimated at 20 days per drydocking per vessel
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Summary Consolidated Financial and Other Data
---------------------------------------------
The following table summarizes Genco Shipping and Trading Limited's selected
consolidated financial and other data for the periods indicated below.
Three Months Ended Six Months Ended
June 30, 2005 June 30, 2005
-----------------------------------------
(Dollars in thousands, except share data)
(unaudited)
-----------------------------------------
INCOME STATEMENT DATA:
Revenues $ 30,950 $ 52,349
Operating expenses:
Voyage expenses 1,020 1,910
Vessel operating expenses 3,417 5,432
General and administrative expenses 933 1,193
Management fees 478 809
Depreciation 5,670 9,651
--------- ---------
Total operating expenses 11,518 18,995
--------- ---------
Operating income 19,432 33,354
--------- ---------
Interest income (expense):
Interest income 183 266
Interest expense (3,998) (6,618)
--------- ---------
Net interest expense $ (3,815) $ (6,352)
--------- ---------
Net income 15,617 27,002
========= =========
Earnings per share $ 1.16 $ 2.00
========= =========
Weighted average shares outstanding, thousands 13,500 13,500
========= =========
Proforma earnings per share (1) $ 0.62 $ 1.07
========= =========
Proforma weighted average shares outstanding, thousands (1) 25,260 25,260
========= =========
--------------------------------
June 30, 2005 June 30, 2005
(unaudited)
--------------------------------
BALANCE SHEET DATA:
Cash $ 26,222 $ 7,431
Current assets, including cash 28,951 8,529
Total assets 445,166 201,628
Current liabilities, including current portion of long-term debt 84,346 24,048
Current portion of long-term debt 82,500 23,203
Total long-term debt, including current portion 336,375 125,766
Shareholder's equity 103,081 73,374
Six Months Ended June 30, 2005
(unaudited)
------------------------------
Net cash provided by operating activities $ 38,470
Net cash (used) by investing activities (232,479)
Net cash provided by financing activities 212,800
EBITDA (2) (43,005)
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-----------------------------------------
Three Months Ended Six Months Ended
June 30, 2005 June 30, 2005
-----------------------------------------
FLEET DATA:
Total number of vessels at end of period 16 16
Average number of vessels (3) 15.4 13.1
Total ownership days for fleet (4) 1,386 2,373
Total available days for fleet (5) 1,383 2,364
Total operating days for fleet (6) 1,372 2,346
Fleet utilization (7) 99.2% 99.2%
AVERAGE DAILY RESULTS:
Time charter equivalent (8) $ 21,648 $ 21,339
Daily vessel operating expenses per vessel (9) 2,465 2,289
-----------------------------------------
Three Months Ended Six Months Ended
June 30, 2005 June 30, 2005
(Dollars in thousands)
-----------------------------------------
EBITDA Reconciliation:
Net Income $ 15,617 $ 27,002
+ Net interest expen 3,815 6,352
+ Depreciation 5,670 9,651
--------- ---------
EBITDA 25,102 43,005
========= =========
(1) For purposes of this pro forma calculation 25,260,000 shares of common
stock have been considered issued and outstanding.
(2) EBITDA represents net income plus net interest expense, income tax expense,
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 consolidating monthly 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.
(3) Average number of vessels is the number of vessels that constituted our
fleet for the relevant period, as a measured by the sum of the number of
days each vessels was part of our fleet during the period divided by the
number of calendar days in that period.
(4) 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.
(5) 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.
(6) 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.
(7) 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.
(8) We define TCE rates as our revenues (net of 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.
(9) 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.
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Genco Shipping and Trading Limited's Fleet
------------------------------------------
As of June 30 2005, Genco Shipping and Trading Limited's fleet consisted of five
Panamax, six Handymax and five Handysize drybulk carriers, with a total carrying
capacity of approximately 790,000 deadweight tons, or dwt. The average age of
the Company's fleet as of June 30, 2005 was 8.3 years.
Fourteen of the sixteen vessels in our fleet are on long-term time charters with
an average remaining life of 1.4 years as of June 30 2005.
2005
- -------------------------------------------------------------------------------------------------------------
Vessel Vessel Type Expiration Date(1) Current Time Charter Rates (2)
------ ----------- ------------------ ------------------------------
1 Genco Beauty Panamax February 2007 $29,000
2 Genco Knight Panamax January 2007 $29,000
3 Genco Leader Panamax -- Spot
4 Genco Trader Panamax -- Spot
5 Genco Vigour Panamax December 2006 $29,000
6 Genco Explorer Handysize August 2006 $17,250
7 Genco Glory Handysize December 2006 $18,250
8 Genco Pioneer Handysize September 2006 $17,250
9 Genco Progress Handysize September 2006 $17,250
10 Genco Reliance Handysize August 2006 $17,250
11 Genco Sugar Handysize August 2006 $17,250
12 Genco Carrier Handymax December 2006 $24,000
13 Genco Marine Handymax March 2007 $26,000 (3)
14 Genco Prosperity Handymax March 2007 $23,000
15 Genco Success Handymax January 2007 $23,850
16 Genco Wisdom Handymax January 2007 $24,000
- -------------------------------------------------------------------------------------------------------------
(1) The dates presented on this table represent the earliest dates that our
charters may be terminated. Except with respect to the Genco Trader and
Genco Leader charters, under the terms of the contracts, charterers are
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.
(2) Time charter rates presented are the gross daily charterhire rates before
the payments of brokerage commissions ranging from 1.25% to 5% to
unaffiliated third parties. In a time charter, the charterer is responsible
for voyage expenses such as bunkers, port expenses, agents' fees and canal
dues.
(3) The time charter rate is $26,000 until March 2006 and $18,000 thereafter.
New Credit Facility
-------------------
On July 29, 2005, subsequent to the initial public offering, the Company entered
into a new credit facility dated July 15, 2005. The new credit facility is with
a syndicate of commercial lenders consisting of Nordea Bank Finland Plc, New
York Branch, DnB NOR Bank ASA, New York Branch and Citigroup Global Markets
Limited. The credit facility has been used to refinance our indebtedness, and
will be used in the future to acquire additional vessels and for working capital
requirements. Under the terms of our new credit facility, borrowings in the
amount of $106.2 million were used to repay indebtedness under our original
credit facility. After our initial borrowings under the new credit facility,
$343.8 million remains available to fund future vessel acquisitions, and we may
borrow up to $20.0 million of the $343.8 million for working capital purposes.
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Interest on the amounts drawn is payable at the rate of 0.95% per annum over
LIBOR until the fifth anniversary of the closing of the new credit facility
and 1.00% per annum over LIBOR thereafter. We are also obligated to pay a
commitment fee equal to 0.375% per annum on any undrawn amounts available
under the facility.
The new credit facility has a term of ten years. The facility permits borrowings
up to 65% of the value of the vessels that secure our obligations under the new
credit facility up to the facility limit, provided that conditions to drawdown
are satisfied. The facility limit is $450 million for a period of six years.
Thereafter, the facility limit is reduced by an amount equal to 8.125% of the
total commitment, semi-annually over a period of four years and is reduced to $0
on the tenth anniversary.
John C. Wobensmith, Chief Financial Officer, commented, "We are pleased to have
entered into this $450 million facility and appreciate the support we received
from leading financial institutions. The favorable terms of the facility provide
an advantage for Genco as the Company seeks to further expand its fleet size and
earnings. Drawing upon our significant financial flexibility, we will actively
pursue accretive opportunities that meet strict financial criteria and create
long-term shareholder value. We are also positioned to create value through our
dividend policy. Based on our operations for the third quarter, we expect to
declare a $0.54 dividend by November 2005."
Dividend Policy
---------------
Our dividend policy is to declare quarterly distributions to shareholders by
each February, May, August and November commencing in November, 2005,
substantially equal to our available cash from operations during the previous
quarter, less cash expenses for that quarter (principally vessel operating
expenses and debt service) and any reserves our board of directors determines we
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. While we
cannot assure you that we will do so, and subject to the limitations set forth
below, we expect to declare a dividend per share of $0.54 by November 2005
(based on our actual results of operations for the third quarter of 2005).
The declaration and payment of any dividend will be subject to the discretion of
our board of directors. The timing and amount of dividend payments will depend
on our earnings, financial condition, cash requirements and availability, fleet
renewal and expansion, restrictions in our loan agreements, the provisions of
Marshall Islands law affecting the payment of distributions to shareholders and
other factors. Our board of directors may review and amend our dividend policy
from time to time in light of our plans for future growth and other factors.
Election of New Board Member
----------------------------
The Company also announced today that Harry A. Perrin has been elected to the
Company's Board of Directors. Mr. Perrin will serve as Chairman of the Audit
Committee.
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Peter C. Georgiopoulos, Chairman of the Board, stated, "We are delighted to
welcome Harry to the Board. Harry brings a broad range of experience in
accounting, finance and strategic planning."
Mr. Perrin is currently the co-head of the Restructuring Business of Petrie
Parkman & Co., Inc. Prior to joining Petrie Parkman in 2001, Mr. Perrin was a
partner for ten years in the business finance and restructuring group of the
Houston office of the law firm of Weil Gotshal & Manges. Mr. Perrin is a
Certified Public Accountant. He holds a Bachelor of Business Administration in
Accounting from the University of Texas and a J.D. from the University of
Houston. Prior to attending law school, Mr. Perrin worked in the audit
department of the Dallas office of Touche Ross & Co.
About Genco Shipping and Trading Limited
----------------------------------------
Genco Shipping and Trading Limited transports iron ore, coal, grain, steel
products and other drybulk cargoes along worldwide shipping routes. Genco
Shipping and Trading Limited currently owns a fleet of 16 drybulk carriers,
consisting of five Panamax, six Handymax and five Handysize vessels, with a
carrying capacity of approximately 790,000 dwt.
Conference Call Announcement
----------------------------
Genco Shipping and Trading Limited announced that it will hold a conference call
on August 18, 2005 at 8:30 a.m. Eastern Time to discuss its 2005 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 (866) 770-7146 and enter passcode 96910853.
A replay of the conference call can also be accessed until August 31, 2005, by
dialing (888) 286-8010 and entering the passcode 71424578. 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,
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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; and other factors listed from
time to time in our public filings with the Securities and Exchange Commission
including, without limitation, the Registration Statement on Form S-1, as
amended, for our initial public offering (See Registration Statement No.
333-124718). 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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