GNK - Earnings call transcript Q4 2019 | Genco Shipping & Trading Limited

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Operator

Good morning, ladies and gentlemen, and welcome to the Genco Shipping & Trading Limited Fourth Quarter 2019 Earnings Conference Call and Presentation.

Before we begin, please note that there will be a slide presentation accompanying today's conference call. That presentation can be obtained from Genco's Web site at www.gencoshipping.com. To inform everyone that today's conference is being recorded and is now being webcast on the company's Web site, www.gencoshipping.com.

We will conduct a question-and-answer session after the opening remarks, and instructions will be given at that time. XXXXXXXX. conference two accessible or weeks entering pass the during any XXX-XXX-XXXX of the next the by code replay will at be time and A dialing XXX-XXX-XXXX turn At the this would time, like conference to the I over company. to ahead. go Please

Unidentified Company Representative

Good morning.

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

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

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

John Wobensmith

full fourth and quarter call. will I quarter call highlights. conference reviewing Genco's XXXX morning, everyone. Welcome our fourth to Good begin today's by year

quarter then the the questions. open We for will our for current industry's call then discuss and fundamentals results and financial up the

site this presentation earnings to Web information, morning. our please additional For refer on our also posted

stronger of executed with overall execution to company initiatives enhanced the earnings Genco $X quarter half platforms several a initiatives key fourth drybulk Genco's The further XXXX marks to market net in another in second important for adjusted the enabled of these with the to income power. in XXXX our return together and profitability strengthen of which million. year we

to important During capital also of an for remain ours to a our which demonstrated we value. year, commitment advance focus disciplined shareholder the continues allocation strategy, creating

shareholders, attractive we sheet our well vessels XXXX, our Complementing of as Capesize drew solid in of acquisition efficient XXXX strong to Last scrubbers milestone in upon as on vessels regular balance our an return important position part modern liquidity dividend capital and of November, to our our allocation installation the capital policy fuel marking implemented company. broader for as quarterly a strategy. we

over regular our dividend. the now special cash We for are consecutive dividend dividend two includes which quarters, of second we declared have to fourth quarter. pleased the have Notably quarterly onetime share per declared a past $X.XXX per of share, $X.XXX cumulative

in completed Regarding our our strategy, success comprehensive compliance objective scrubber implementing installation approach. to realizing for our pleased a our vessels, key XXXX we XXXX are IMO Genco’s IMO have Capesize program

dedication and ability sure Capesize up timely of entire China. our fully shipyard were trade execute of limited our fully are systems operating able ahead the gain a despite XXXX, half experience which to in our to in While and success, our Based XXXX, we vessels valuable capacity able January this to installation efficiently our work program making was equipment also testament scrubber tightness on we second a in of hard to while in unprecedented operational team, standards. is the were the the manner to

year represented for vessels expenditure our addition during system ballast With and the fitting entering fleet. for of this of surveys portion XXXX scheduled XXXX scrubber to a shipyard water installations, XX core capital substantial fleet our of entire Capesize treatment in special

have since these maximize vessels Capesize year. will scheduled XXXX in utilization our in will we this investment enable for Our in no to XXXX Capesize drydockings fleet us

market we upside well are As we capture to positioned going believe such, potential forward.

fuel charter the trade spreads forward Capesize capture this time been sulfur we've are our guidance for more year, patterns, with and between normalized in so to low equivalent per which reflected high first quarter. Furthermore, far of together fuels able $XX,XXX the day approximately

minor exceeding continued per market, our progression to bulk by commercial the This platform. over our the $XXX we benchmark vessels, our internal XXXX. highlights of active outperform day For continued during

continued U. Our stream. customers year the key and global our earnings of further team XXX in course the new Copenhagen, S., booked last to approximately Singapore fixtures diversify over add and to

the While performance a is daily over fleet-wide performance strong to best view it fleet indices, our believe TCE is to-date we metrics full to QX relative these period. year

on due reporting to results rates. benchmarks a such our inherent TCE the yearly our be avoid against forward, As choppiness to in volatility we basis internal the quarter-to-quarter going will bring can freight

seasonal During conditions. quarter, of work a quarter this experienced freight market we we first Genco the pullback of anticipation with portion have to of degree rate insulation current cover and providing a from a the

demand of seasonal part early In rates to industrial and additional commodity the corona the weakness, virus of this impacted in the activity, novel has freight further outbreak year.

remains certainly of the end, as East. focus of protocols crew possible. this undertaken during vessels safety corona wellbeing effort dedicated measures Our have as soon members, virus Far board To protect health, in we instituted and seafarers in an hope for our the to particularly on this time, precautionary for on our team of the and containment our and those several

a balance to are During minor currently which freight deploying both drybulk of we term the experiencing, importance of direct and long with of commodities, together exposure even as approach strong our the prospects. periods highlighted is strong sheet fleet so, with present volatility major our rate of more demand

maintaining leverage throughout liquidity differentiator market to than more while cycle, positions of the Specifically, aim lowest create as value continue to key one the we a shareholder net as peer our view drybulk in Genco group. of we our in million $XXX

to turn now will Apostolos Chief Officer. Zafolias, I the Financial call over our

Apostolos Zafolias

John. you, Thank

$X.X income million $X and adjusted million. for quarter loss charges quarter excluding XXXX, diluted $X.XX $X.X of in million vessels, non-cash vessel income fourth the per $X.X sale earnings company the and net of the For was in basic or reported of impairment share, net million

During the solidify of quarter, sheet. generated adjusted we already EBITDA enabling our balance us $XX.X strong to million, fourth further

XX, of despite a deferred debt our the QX dividend paid is December year. gross outstanding share Specifically, in our drydocking costs million the of of is million of including cumulative and being of $XXX.X per in XXXX cash history Comparatively, XXXX. of year end company financing $X.XX as restricted as it cash, $XXX.X busiest the

second these in our have base. exit our less from been early XXXX sole steps and further remaining sector balance composition, older our completing to-date. and opportunistic XXXX new execute of our feet during the a and of to efforts. as sale as half buyers five fleet we represents enhance Additional vessels efficient to delivered have been sheet fuel the Four their vessels continue currently of approach The the continue barbell more the to asset vessels fleet we focused creating to sale Panamax our modernization

remaining view Consistent sale we're which of our within XX non-core with handy-sized we vessels, evaluating the our assets as mix. fleet approach, this

of we For scrubber our to $XX XXXX, values. executed credit our earlier, which quarter remaining first associated the program. our mentioned available In pay, these facility, is the under impairment adjustment of million have we $XX scrubber while million drawdown. related approximately scrubber with of Separately, to in of XXXX, million we fully tranche $XX have respective of million for expenses remaining retrofit approximately non-cash anticipate us to charge as vessels the range $XX market fair John have the we with

hire weighted of the market day over elect Also, rate XX breakeven our to per those per first ballast our $X,XXX flow drydocking the estimated conditions, vessel rates cash Basin XXXX across in of of we in current Furthermore, Depending this anticipate may maximize be Our per term. XXX vessel estimated figure to we’ll including quarter to an days time certain per vessel as during approximately fleet. with of is our we of the budget QX for expiring relating vessels effort year XXXX. approximately day, long contracts Capesized $XX,XXX on weeks. breakeven coming off DVOE the Capesize earnings the to have Atlantic vessels our

Drybulk call Allen, turn our now to industry will I analyst Peter to over discuss fundamentals. the our market

Peter Allen

you, Thank Apostolos.

play, of half book, far come rates disruptions to related freight pressure the Seasonal beginning so XXXX, order due frontloaded at have the weather of increased deliveries of Following strong currently under including nature a XXXX. factors of the are onset in second of at the impacting the the New in Impact corona lunar China. by the Year novel of China. on factors dry accentuated and cargo these occurrence industrial availability the its and activity been has on virus market bulk effect newbuilding

is and to activity impact point of to virus such as Specifically, traffic consumption, China, in uncertain levels impacted of that predict. which decline as current point the for duration remains some out corona various has that meaningful road high-frequency We at daily carry. the we the year-over-year indicators, as commodities time demand coal of the well in challenging

soybean that the Focusing season begin on in ramp we South American demand specifically see March. drybulk of drivers, term note Brazilian up start exports grain meaningfully near should the to

major the shipments. company's iron the particularly concentration historical high half bulks, first iron revised full production guidance, although, year, for in iron which coincides in the Vale the down implying Brazilian expectation a ore, output remained its second year of quarter unchanged peak ore On the with ore of

industry regulatory fuel landscape, made On types. global environment challenging. larger in given Capesize anticipate believe a particularly fuel vessels that higher the trading we fitted reaction vessel as regulations, uncompetitive compliance increased vessels comply supply fuel, shifted non-scrubber the particularly current market through maritime these older side IMO costs, have vessels has vessel are and XXXX the these for consuming to costly side demolitions, conditions becoming this for supply We with

annualized well the While to heightened we the the we course as to of over saw reacting environment. as market to year net expect approximately firm which growth newbuilding during of January, the led conditions, normalize regulatory fleet in deliveries X% supply month,

We questions. a note greater X%, fleet take years. concludes supply is side the compares or that fundamentals to not low This positive these be foundation that approximately which believe dynamics market equal X% of our of drybulk for the the provide a and as remains happy at to percentage than solid forward. would XX we fleet order to the book presentation going We

Operator

will Instructions] Giveans [Operator Our from Randy come with Jefferies. question first

Randy Giveans

for XQ ‘XX XX% Two so I rates guess especially a quick XX,XXX quarter quite at your date for questions Capesizes. me, day your impressive,

current Capesize you class, is due outperformance of bookings looking maybe of to Now kind of rates ton. spread earning a of of XXX asset kind are that scrubber a currently one this day also at much on And a your maybe and Capesizes? of premiums? versus X,XXX your scrubber looking using What how fitted specifically early at

John Wobensmith

would predicting quarter. let’s seasonally a predicting QX corona of we first the virus, strong. not by were clearly time slow of was I forward as fixtures So say being of them were say One we three in terms impacted booking but was ahead

we as So some both physically took well advantage for that, the we did well of forward fleet, forward bookings Capesize cover. and took Capesize cargos with as as

And also fuel low was towards thing scrubber as on of quite is second question of bit that next then again, the is a third is The And was that. bought related December. $X,XXX the spread? probably somewhere because oil. to price your which we high was around sulfur part $X,XXX fairly on a And $XXX of fuel a then it day the the beneficial, end spread,

Randy Giveans

of Cape? kind environment rate Yes, current on scrubber fitted a

John Wobensmith

today $XXX. is spread I the so Yes, $XXX, about think

low more also that corona get certainly our starts shipping demand that, from rearview that period expect But of to fuel to, when very the our said mirror, I We that So again as virus did has a the think for in seasonal but I oil. weakened. all slow having starts sulfur bookings. for slowdown

would spreads oil, expect because will price I'm as well. I So the those I oil, And if the the say of back spread certainly of but if I oil that up also expect up not as push price towards $XXX. moves price up that to analyst, of move only should

burning So on around say earning day scrubbers sulfur versus low oil basis currently, we're premium having and sulfur fuel fuel oil. a $X,XXX high I that our would probably board

Randy Giveans

at market especially pertains been the How And by then side? it if values that impacted to liquid there's sale. the asset second the the have use with a accretive weaknesses now further looking of cash, XX%, to what which question, debt pertains as then current them do still XX the at the -- incremental top buying And Or discount a it are in ongoing to selling of is of are is are NAV NAV to to a shares priority NAV. buying with the XX% transactions or repay going vessels for you kind you at for as S&P asset the vessels sales, Handysize cash? and

John Wobensmith

Well, let's S&P talk first. the about market

the as amplified virus slow. as but So clearly, situation. is the again typical by S&P sentiment from well seasonal standpoint of a market is the this And corona negative that realities, the to time year due

to identified ships. back did we I a fleet step XX think XXXX. strategic in our non-core They We with back these when early this plan were as part you need to just program. management renewal not at our make fleet board last of board and our the our had What do fleet part of renewal meeting. last, when our has was these program decided we take

necessarily And value. is make making ships. the right good now ideal not indices, for looking next say clear selling our be ships. time going approach to opportunistic sell the I We're sure to that best be our an that. probably This we're not beating on so we're these it’s We're these benchmarks money vessels. So would to on to just these getting week, to very be

year, this look firmer clear, matter it's to expect right of but I very will we be be to a prices. finding the for So then opportunity. it

Randy Giveans

of then that cash? And use

John Wobensmith

that at back that it that sense of the have assets to what it at make have strategy, at time. of Does make and those at use again, ships. look sense this I the does to at it a majority sold cash, probably we time the time we capital dividend to allocation or it So look sense that's think a there, to make and buy stock, it does do we'll buy we've

Operator

Nokta Our next Clarksons Securities. Omar with from question comes Platou

Omar Nokta

them not, question and dribble maybe one expect a of be appetite year. if Just this you're on follow-up just out this to or block regarding ships Randy's can't outlined it be or on think? week, you of deal, sort Handys, and to I you've not there's wanted them the selling recall would the sister to that it do are sell think you vessels more you but do

John Wobensmith

sister of then There eight sets two [Hakadadee] are the two XXs ships. and the are there types. are So XX there

[cagey] sell an I'm the sale an need it, is an Omar, because immediate somewhere being about But think situation again to do little down opportunity on to I there's there's not block a there where road. a vessels.

do So maximizes in to want we that really way and value proceeds. a it shareholder

as or is look So but proceeds company. at well as for two maybe I done. will it's idea the it But block getting here time to the both, on at maximize a one

Omar Nokta

to with $XXX million right sense. get time cash clearly That makes there And of you’ve and wait deal… got the

John Wobensmith

That's correct. exactly

Omar Nokta

then sales. not much think you're outstanding the as able but it's unlocked Have you if free that against those given, filed stay, I'm for And how new currently that potential ships? just cash if we XX about sure can get is or to

Apostolos Zafolias

but pro We've not filed be that would number specifically, basis. rata it paid a down on

John Wobensmith

one can Omar, We on we'll get number, give you it. hold that second

do retrieving follow-up, is Apostolos While have any that, other you Omar?

Omar Nokta

buying Just maybe them scrubber, us for a together? market in about about a how and a how does just it think you proceeds about do does it or think makes how you thought or when ships. work few come down you if some quarters Ultramax let's we we're and And gauge to putting buy line environment, with If buy of was thinking one whether as Cape we're and different balanced process sort could How a on the a hopefully more in that the to buy give it. an color sense Cape, Supramax? you you're you a where

John Wobensmith

forward. tonnage again, strategy we're well the that on we barbell approach Ultramax do the So is going any of company as of focused terms growth the the Capesize, in as where

at in of the has terms so return do it's potentials, and for earnings. that, And pricing the way the time of demand, vessels obviously assess feel which on we future with to commodity always again, at will we the capital time what

classes that So focus those on. asset are we'll the two

I cash and scrubbers, flows on investment. returns to opportunity scrubber Capes, I earn still a a think excess there's would In good good good say terms of

a I with something or but it had investment. I a it's my think the take we're if I a So when capital redeploying on scrubber druthers, installed would Cape this if next worthwhile year, even again, depends it's year but

Omar Nokta

here out, couple Ultramaxes Do that outperforming in the have going your of operating Supras, you And deploying for least then clearly versus that the that, likely up that after at the you Supras? it's just go in maybe past to at from least about think on quarters on Ultras segment the most capital following results. been

John Wobensmith

capital and there's ship. of a actually cost Yes, the mean, for I Supras, every

So capital our would been Ultramaxes Supras we've the obviously design on than the but the more on obviously the But we good Supras on are focus Ultramaxes so Supras Ultras those and you outperforming than on yes, if the fleet and any more are return for benchmarks so earning newer ships. specifically me renewal. ask a

Apostolos Zafolias

vessels those $XXX the of getting works, at facility. So that collateralize you, that of Omar, just to million pool that part back are a way credit

rata pro times. current the million at But it’d value, ships. based paid it's those relation paid the debt to of on XX So $XX value market market about on in based on be

Operator

you. Thank

B. comes Liam question next FBR. Our Burke Riley from with

Liam Burke

pre coming you John, any next anticipate about fuel problems we supply go in the into you year? year or spoke as buying possibly the high through sulfur XXXX. Do

John Wobensmith

high For oil? sulfur the fuel

Liam Burke

Yes.

John Wobensmith

but up our the terms really disruptions Singapore doing in Capes. don't with almost are in majority sulfur the oil. So said, -- most you ports certainly And fueling in we Singapore exclusively having there that Like do that see inventory high our of Capes. fuel I the with we're any of or bunkering affect it, of doesn't issues think supply Singapore in can and in we're issues see some us. I smaller of on our

Operator

[Operator Thank Instructions]. you

Our next Deutsche Amit comes Bank. from question Mehrotra with

Unidentified Analyst

on And markets corona spot in with you really think bit virus? is if span? you into New Year, so, over remarks, seeing stabilized situation just for call increased late, the couple so to China the the hopped prepared post lunar this Amit. touched you do Chris last the the but of starting stabilize a apologies reopening has I is is if market over or the the This in on Are activity it weeks.

John Wobensmith

to would are stabilize. things say I starting

tell think move start when to still on really it's as Capes in to the early I a to significant way. little a

is do a even packages, do -- and the belief we expect the government when package. things geared three stable, Chinese could will that do towards of will and be steel which level is corona industry. large are contained Our when one these It be things virus the stimulus infrastructure

benefit I think certainly infrastructure what will Capes the the side. happens on So from

South ramp this off move to the bulk, seeing minor a some the year and record definitely soybean crop had On actually strength. soybean we've Coast Brazil Ultra seen just of up has from that to East Xs has moving seen We're low shipments up America. and started going that and really we've the that's we low in sort think to continue. the Xs rates to

seen, that's also strength we've to black sea. still the from out crop in leftover in move we've some the high then And seen of corn black sea Atlantic, the a continuing

these seen up into and India soybean including on commodities going to of China. start and corn of also And to coal as going then China All Indonesia the are side we've Asia, out pick out well.

is stabilized get Capes, see once and to minor think right we're more starting expect the we a things the term. on back little I some the to bulks, I say So situation. would strength normal

Unidentified Analyst

as on drybulk internationally. Yes, by is And you math and seeing the does few entire the to maybe the trying the do important Iran. it I'd you Southern than Like How off drybulk stabilizing in think virus far over things biggest market you quite for terms and most about is next equity of more imports. at it account reports last my relates drybulk month? do Europe and about that trade least important as trade that like in just How like, Iran China to a demand said, that as imagine interesting, is it think sold demand? you clearly significantly is because the countries. of bit But days, over spreading two and XX% feel Italy China of kind are off off keep

John Wobensmith

a doing lot We're business. not of drybulk

a clear think and In to with Iran, don't anything we’re I Italy. with not lot doing doing fact, just be we're

and and the cases So I drivers in in but about we'll those that spreads S., then think market. virus if overall in Europe very the as are drybulk wouldn't obviously But the people how look Europe two see obviously general low. big goes. U. at concerned the Obviously, I are

the is did GDP whether standpoint. bulks. major deliver you that I reiterate both out, interesting watch. is think it's and China to I social think the the pointed industry, the really to he China this major from to And driver target target drybulk one needs It or President minor an year, as economic is

again, So to once to expect that best government I economy. And Chinese feel back significant the steel industry and spending, to the goes the help and normal, things which I is for they're very way their focused ore. quickest the some on iron do stimulus directly And and get from do it. infrastructure clearly

Unidentified Analyst

be one to Cape Yes, so potential And Certainly, any the some more, the VLOCs scrapping fundamentals. certainly in insights be older heard of rumblings that'd the feels we’ve just that about market. helpful the it’d of case. have there? then you Do

John Wobensmith

we're at scrapped, scrapped. that seeing we're I than it's XX to from is does there it's Yes, And are it thought. think earlier this that look even And like seeing scrap marked eight interesting, we VLOCs year. for have what what another Capes because VLOC least definitely seen, we

So had with an a offset be ago, going higher there be what we to of more offset scrapping there maybe this manner but definitely and VLOCs to thought there than of levels. year positive few months is is deliveries seems in a

doubt the nobody like drybulk in that see is while other on to the add thing they And the were that scrapping it likes no today, this, I'll side, reacting shipping are past. freight there's where is rates has

old years we've older. think already think got got XX -- that we've and well, Capesize scrapped vessels XXX you've you've I are And today. Capes got, about right now, had I XX

So down there's to to slim due fleet Capesize for opportunity scrapping. real a the I still think

Unidentified Analyst

if And more one then I could.

to are have scrubber the Just the coming know vessels you we're of decent like So side at guys charters and X,XXX-ish seen on we've any market? premiums seeing tanker I are similar in range for the want that in level, time equipped amount on question market. the what the the drybulk Capes? is, spot you side, a spot fixtures see seen to if in scrubber particularly But

John Wobensmith

done right There's today. really time fixed The only are where rates now, not a our when on percentage you decent to rate we've I premium index rates seen scrubber But is been couple market thing which -- a been think much have going means paper deals. looking premium. they you charter are normal with There's a pennies. are on response percentage when in those the for that that actually where have today,

something interested So in. clearly, that's not we're

Operator

Thank you.

We have no further questions at this time. your This concludes today's participation. call. Thank you for

You disconnect. may now

Genco Shipping & Trading Limited (GNK) 26 Feb 202019 Q4 Earnings call transcript