GNK - Earnings call transcript Q2 2022 | Genco Shipping & Trading Limited

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Operator

Good morning, ladies and gentlemen and welcome to the Genco Shipping & Trading Limited Second Quarter 2022 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 website at www.gencoshipping.com. To inform everyone, today's conference is being recorded and is now being webcast at the company's website, website www.gencoshipping.com.

We will conduct a question-and-answer session after the opening remarks. that at follow will time. Instructions the A during and be XXXXXXX. anytime will next replay entering two passcode XXX-XXX-XXXX of the or weeks accessible XXX-XXX-XXXX conference by the dialing the turn conference will I time, this over At to company. the Please go ahead.

Peter Allen

morning. Good

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

on this Form like introduce XXXX. X-K on Genco of John Limited. filed ended Chief Trading Form December discussion Please differ. Exchange SEC. company's issued call without XX-Q for For the and company's results that that the see limitation, would company's Commission, annual materials report reports the And website the Form factors the with Officer Executive subsequently time, posted and relating a XX-K cause was I Securities press company's At and to with year this the release the yesterday, could to XX, including of on filings Wobensmith, company's to Shipping the &

John Wobensmith

before strategy, questions. call our for the will for providing XXXX quarter highlights morning, financial today's Good and Genco's to revealing value current up the quarter industry's the update call. everyone. Welcome QX, results comprehensive fundamentals and an begin conference opening second call by XXXX I year-to-date

earnings fleet to refer from website. the leverage operating information, to commercial on continue remains sizable power significant operating and presentation additional our For of benefit strong and best-in-class we platform. also posted please earnings our Genco's our

from sequentially results basis. strong quarter a improving our rising nearly XX% while XXXX, on with Genco earnings the second of first achieved the year-over-year financial quarter, During

value During dividend strategy, per throughout the quarter, for on a representing our an paying on current focused shareholders. the execute annualized our declared on and $X.XX benefit compelling the dividends based and second growth the is meaningful price. share which we notably, deleveraging of Most capitalizing cycles share quarter of we continue to opportunities of for of successfully yield sustainable XX% XXXX

have financial debt rates. debt that compelling goal breakeven position debt most flow are is paydown flow industry in the breakeven during quarter substantially. paid versus quarter to measures breakeven the for with leverage, of of dividends $X.XX $X.XXX majority in CapEx reward leverage We now any The per Having to prioritized medium-term traded CapEx We peers. sheet our share of we volatile led those do XX debt lower a have share. as remain of a us variance cash is drybulk paying low reduce executed consecutive strength second These quarterly low front our in operating to represents quarter-to-quarter Along high Continuing rise across we in a believe public balance net rate environment. loaded model the dividends, zero. and differentiators have time dividend Genco drydocking risk to to QX and repayments not essential we cash our third drydocking which together consistent per combination dividends gain XXXX. totaling versus anticipate our markets XXXX the low rates, levels to paydowns our Genco's substantial continue in overall we mandatory also with publicly our QX. with create core alone

sustainable dividends which stronger that overtime improve During through our rewarding distributing Genco deleveraging continuing delever believe long-term. dividends standing view further compelling even advantage a the to in shareholders on rate $XX,XXX growth XX% earnings focus so over equivalent an while take enables intense per financial the during XXXX. We time to we the the in day, period charter strong is quarter, increase as an turn, quarter position maintain we of markets this to - an prudent of perspective, attractive generated in we develop. opportunities From of same as an from

$XX,XXX quarter Looking can XX% ahead as we our days approximately firm booked to XXXX, have the we TCE of at expect a per available third of day.

measures freight current levels. believe the rise for bulk the for balance market ore for year, and major the in trends a vessels to stimulus of of terms rates, we supportive particularly In be current volumes China iron export from

constructive overall of percentage low though drybulk a order book outlook around for market, the as historically centers the Our fleet. the

our As point, order to a Chief in supply market the Apostolos call demand threshold low has a exceed this Zafolias, over result will turn At this Officer. I of to outpace book, growth further low to Financial to direct fundamentals. growth, now order tighten

Apostolos Zafolias

John. you, Thank

cumulative of have the significant current ability took to is we a the commitment to strong advantage enabling down fleet shareholders. to of of XX%. earnings as our fleet of debt our demonstrated a, achieve of we breakevens continue During and net leverage times a to stock two capital outstanding. debt value to XXXX, leverage the On over loan value quarter, basis environments paydown return Notably, our reducing maintain operating to have as $XXX XX%, of we second Genco million our and debt to part since paid a or

For share an a the XXXX, yield of annualized representing declared we dividend of XX%. second $X.XX quarter per

third the dividend we John the quarter. to mentioned, As believe positioned we're well increase in

company For recorded share. QX, basic per the earnings $X.XX diluted net and or $X.XX million $XX.X income of XXXX,

EBITDA for as million the period quarter year. was to million, last $XX.X same $XX.X second compared Our

June XXXX, of XX, $XX.X million. as position cash Our was

of debt XX million, therefore XXXX, QX rate position In of continue our Our paid quarterly $X.XX revolver under of provides was delivering voluntary comprehensive pillars value the voluntarily for representing flexibility run debt of $XXX we in down us significant availability June as total repayments. a liquidity million, resulting million, our three strategy. which $XXX to totaling

Although, a to reducing with medium-term to we debt plan when zero. mandatory net of until debt matures have XXXX, to we voluntarily the objective amortization delever payments no facility continue our

of $XXX million to net are Following exposure as $XXX deleveraging of second which interest through rising since resulted rates. in in durations million. limit end of rate - the place debt the beginning Also important of the debt have XXXX, our which note, to cuts with outstanding substantial various XXXX, interest March quarter, interest was our to we

of operating dollars million. strategy of of our consisted million framework. dividend for saving share $X.XX down water $XX.X $X.XX ballast the I repayments treatment Walking declared in $XX announced quarter of the our As system mentioned, Board and with million value our of less Directors this of and a line formula, per second drydocking reserves flow energy $XX.XX million debt previously of cash device costs dividend

of ballast included payback savings Importantly, - water continue well as enhance treatment million have years and which expenses to period to for the devices, energy for three over of shareholder in one-time systems, as we our was $X.X the a two believed quarter expenses savings long-term. to estimated returns

we result our On illustration in our portion we provided on for the plan expense lower level joint a quarter available and in new operating the expenses higher Furthermore, second we completing estimates the fixed expense frontloaded QX the quarter as technical of of In will days, relation of we for expect the to result to venture. drydocking our of to which QX. have fleets' the Going an our anticipated drydocking Slide third continue side for reserve. TCE CapEx of vessel recorded estimates for communicating expenses, XXXX. transition estimates we the management X, drydock forward,

vessels of million increase voluntary operating cash stores integration the our is a estimated - first debt the in million. expect we Included as higher $X.XX technical China, repayments vessels, expense. During our Allen stores will strict well our expect certain we vessels interest repair to fundamentals. be million, expenses well we as and the on quarter, year, of crews figure associated experienced COVID on our the the to during third $XX.XX expected turn regulations based and of of venture. and zero an the Chinese Filipino be total, the estimated during is and to of our normalize the to and Strategy completed are of SVP expense to now former year. maintenance equation and discuss as purchase made spares, reserve as Having to industry QX with the reserve extensive higher I Peter which half in that in $XX.X the of over call crew as spares crews the the In changeover half expenses to repatriating side in into second joint the for complete we from costs managers crews replenished Indian and the of

Peter Allen

Thank you, Apostolos.

from from During the their of of freight towards $XX,XXX quarter. Baltic rates XXXX, Index day the operating while This $XX,XXX continued per improvement seasonally first the rates end to and $XX,XXX trade softer in mostly the nearly rose of upside month potential and $XX,XXX vessels, per solid approximately The Capesize day day later. a April quarter second sequential Capesize per owning leverage quarter. to inherent Supramax highlights the one during range

quarter cargo third through we As uplift seaborne ore in second anticipate the and progress and we of half the year, availability. iron

half half to production miner, of an from the year uplift in in large the Vale, XX% first volumes ore suggests of the guidance year. XX% from Brazilian iron second ranging versus the Specifically higher

expect COVID-related a with in We geared series this economy in stimulating to the probably coincide been towards the China's economic lockdowns earlier following have which shipments rise policies year. of

imports. tightness we coal markets, to globally turn regions energy see continue as Regarding towards more

of ton more has flows sourced while more from and We U.S., has miles. cargo rerouting increased have to and as exports which India Australia, Colombia seen Europe China a coal Russia coal

strong a of reduced to On the volumes. Ukrainian grain a crops portion the export side, corn helped Brazilian offset

begin experience supply which we gradually grain particularly be We haul remains bulk Sea China third weeks shipments, represents to shortages, freight grain positive food minor long expect countries. vessels. help believe trade as for the it but not global new We rates, year the exports, supply Black fluid were elements If in we only the whole from view deal Russia world alleviate highly which Ukrainian ports reopen improve route, increased would may as for to to but in of for a a ports to situation. exporting following economy beneficial a to shipments Brazil end by coming corn with the should

Regarding in is the growth year-to-date fleet the approximately X.X%. supply side net

we environmental the and years. only historically combined keep both positive low percentage book order and a coming low side the forward exceed improved in fleet longer-term freight to to now utilization to happy fleet demand the have lead these we your This Going Overall, with provide foundation growth concludes near-term market, believe our drybulk - a and presentation and questions. order a as of dynamics growth for wide solid in supply would for expected threshold for low and fleet regulations be are take X% net to rates.

Operator

question Riley. you. comes Thank Burke today Liam ahead. go first Please from of Our B. [Operator Instructions]

Liam Burke

Thank and Good John. you. morning, Apostolos. morning Good

John Wobensmith

Good morning, Liam.

Liam Burke

comments expecting equation for the to John side and prepared Vale are second the in or half side of derived the up he How seeing obviously the China, shipments. talking of ore the Peter's, and year of starts. is we're question the about fits supply iron demand you then rates? was capesize ore the viewing a the And iron

John Wobensmith

at longer and hurt say have people imports there's half volumes that even Liam, the that, in than first steel lockdowns side anticipated. on gain And think And Brazil guidance know, in low would iron Having what I lower I in than than would shipped imply values as that of from on versus COVID end than production been Vale. expected. from, expected. has the of revised of more said we you doubt the mentioned, went ore no the second most what more iron the being Peter ore half terms XX% looking still from

and It's I years look demand. ship, you does whatever to if available get think usually less - dependent So past, at outbreak shipped. is on

think do we be iron what going down but still seen Having year those going little that, a appear. in ore we go a see maybe So volumes bit, than prices may are it's said think this to little years later past. we've to I of

you So then usually could yet a very - fourth a quarter and have stronger versus QX. strong QX years we in softer have in a past usually

two just to Chinese a of in. then in And if sort go stimulus, or usually, So the back of before - of see again, click that of the lag, benefits has and the you that started to takes that. terms quarter you

Liam Burke

Great. the vessel And budget, on had daily operating of you your a your expenses, expenses quarter. lot in

that there number? to third fourth is quarter. one-time And much are move third lower budget any to costs going Your in - variable that significantly budgeted second down you expense number Was there? in to

Apostolos Zafolias

Yes, Liam.

higher were to the were things in higher associated that because the that. crew one, Chinese of due repatriating. the expenses We're -- things. the to So costs with second due in changes two done crew Primarily, crews second expenses were two quarter quarter with we now

we replenished the for new the those do So the for our having QX. estimate have secondly, half. spares have JV. second stores lower expenses an expect second therefore, and the vessels, technical significantly on spares half. we management expenses you had R&M for were per significantly of joining After lower vessel then provided per storage the on $X,XXX expect day that and side we we guided And - And expenses that higher vessels for

John Wobensmith

annual we had our budget, particularly the Apostolos in mentioned. - we'll think a Yes, stores able and timing hit spike, still a That's of the than think so issue we anything to spares, else. quarter as more but be second and still

Operator

question We go Nokta Jefferies. take ahead. now will a of Omar from Please

Omar Nokta

guys, Thank just just thanks that point last you, OpEx. and about - touching the on maybe

So $X,XXX does as maybe that that highlight. that's that sounds quarter-over-quarter you that decline guess like $XX suggest sizable confident number does and feeling in could OpEx million, you're pretty sound pretty bringing to it that fair? down really I

Apostolos Zafolias

the right, that's Omar. for that's quarter-over-quarter Yes, right, variant

Omar Nokta

then and And dividends, with you've for that's as second And table I guess, terms reserve the with of and that pretty see the look the far suggests could potentially? we is pretty declared yes, here report solid it significant. you that quarter. a dividend the us you in the higher XQ? you Okay just actually at given third pay kind when how thus $X.XX that rates out the obviously softer that quarter, OpEx slower even a of you potentially Do - into you

John Wobensmith

it. see we how that's Yes,

little $XX,XXX we've So a fixed, a XX% got over almost day.

than XX%, FFA use the quarter. higher you curve be I if think the for definitely quarter a even be dividend the will will remaining third - second

Omar Nokta

going be The - pay about commentary the as say, million actually do how $X.XX the about be debt you $X.XX reserve, that paydown then zero? And obviously you're quarter, that And sheet. doing picture, of in good. your about highlighted, million, you of and done than balance been little which you this each you've strengthening you've sort as going we have think maybe, reserving continuing gives plenty quarter continue - is the kinds a to you bit, actually strong John, those down your is rather beginning the LTV it big the back John, it you'll quarter some net anticipation dividend, job down, very a thinking with of flexibility XX%, are What I to you did guess should terrific just about that, and really Okay a guys of think XXXX visibility, markets. think prepayments to because of really in to you about we third all that in talk to a to utilized fourth being facility? making

John Wobensmith

plan continue on $XX our at of million is to million this paying look, down we'll $X.XX per Omar, quarter. per that build to that, Yes quarter. be also, top the up And reserve point,

where know. want down But that, We're that. changes track we that don't the to the be. second the And guess current is to we is at anything. get see And at I to we'll half year. I evaluate year-end, So still if to anticipate the we'll changing at of - my plan. there's, for let all will that any point, on market don't this

still the reserve, of net end get debt on as If you XXXX. as to to track by repayment well take that zero that we're a quarterly quarterly debt

Omar Nokta

The have Yes make interesting, due just John. XXXX? sure that million on this nothing And to in there's I correct. have okay. $XXX.X today, It's you outstanding debt until that

John Wobensmith

mandatory no now right is prepayment. we're There doing is Everything amortization. voluntary

Operator

next from Please [Operator Lewis go comes of today Instructions] Our question Greg BTIG. ahead.

Greg Lewis

getting a balance like feel the you things, I'm anyway. so, little question, and needs John I a to point, strategy, guys you all think we've a it everybody. about - basis thank quarters as about stock That doesn't and it Hi, it meaningful good start this a relative dividends or? certain it on it doesn't buybacks? ask seem able being like sheet for when on I said, right thinking bit that asking we realizing on should to And like a could is this where and doing started morning now. the seem are we been be At really of heel be. only paying that, going where the you mean, execute it to just couple but

John Wobensmith

certainly, I'm frustrated reality where from around of you trading from terms the standpoint. not Though, today. valuation the X equity markets Greg, history probably so mid-Xs of obviously metric, like the equity I tell like than X be - is in right that. should And that know cooperating in we the don't general would lot but an Yes somewhere enterprise value and you in mid-Xs, And in NAV you a to is a now. EBITDA, - the just even companies. probably is for NAV mid-XXs are

Greg Lewis

Sure.

John Wobensmith

to also this So to strategy, I - will give that once done, get that season. want that, three pointed some start we've out, belt or is four dividend place. it under our really the second and and take you believe we that to the seasoning payout full as only We we more quarters think that truly time

backdrop. that's the So

NAV us a that's in to an make And how buyback. much that few into buybacks, past, order a delever not do quite up on has don't to and very you would up, standpoint, do buybacks. for unless just move That not I in do had market then paper, and then for [ph]. if the you I and just look at like also that, Now, huge but worked companies something they tell levered and see stock sale-leaseback needle more share from expensive we sense you certainly go obviously, can they And who have desirable. would lever the to the done transactions

So looking numbers, work the well. at don't just Greg, that they

multiples to X%, of - cash intention starts accretion the now and payout. right the we the about better talking strategy NAV. in we with on the season to is And that, that trade at that dividend And higher with terms You're X% think flow. start stick

Greg Lewis

Okay I then about in been think grain of North American Liam mean the just - for look way of trade. a to the think trade? couple set of i.e., obviously, know there's I grain grain American the think - That the - about we're we kicking we're of great the grain interesting, Eastern that and about as qualitatively and obvious can lot kind ton North and European you talk, Is kind said, to asking ahead thank Supramaxes. over Any to it's any And trade that that. trade, potentially for up about Europe Eastern the American reasons any being off actually kind next into coming was for that there months? the the European inventories, of what disruptions miles, North - way

John Wobensmith

shipping. easy this equals it plus look, Well C, A wish was is I B as as but

miles. said So extend you is case know having not that going to the have the ton It a U.S. will season. strong that, that's necessarily

timeframe. helpful would do when of This now I seeing the will should one pick the up be That midsized start missing in going Black into - be think region would right October really Black be the the to that the Sea is things season. you of see that we typically vessels. that late the Sea So benefit and September is good.

the you optimistic part a you as same we're And our third into missing forward see see we mouth little were is. time, can But in the the fixing money right now. is strategy pretty the coming I latter of said, quarter that fixtures. that our bit second actually forward kept our where can We for So quarter, But spot. at in the which we year. put

think do the this a midsize we as fourth ships. going So I market on into the to get quarter, you're see into - better

Operator

We go [Paul Fred will from of take question Please now Global a Partners]. ahead. Client

Unidentified Analyst

I morning good Yes good had John, Apostolos. morning questions. two

mix decline. just idea time, The first us of charters of sort spot? optimal time with of your and strategy, time spot? to sort is charters like and an going over about And is chartering talk could which what It mix give that is, of the that can you you're between or your is seems you between comfortable

John Wobensmith

take I in advantage That's volatility don't think where particularly most is. the Capesize of it's a percentage obviously sector. the We opportunities, mix.

we the get Unfortunately, a number, which will done fix So the haven't Capesize in we past. see on have still certain we when rates - sector. we we're to bullish then

with Having the said at opportunity to Capesize months, rates said TCE have Capes last the the and the where it two something our right that, going make of I've that's do really every having off see XXX% years quarter almost at been the that. And table been on as couple a us. for we sense decent if didn't to we're over scrubbers, So exposure move one fleet to rate, of just to fix. take particularly

a I minor bulks the little different. think are

opportunities. well our have We been platform trading able create and and very bookings to benchmarks very cargo there. with creating arbitrage forward and the above do a over alpha We've robust

us will market you'll see So reiterate, to improves But again. that as just the to continue Capesize continue. charters do

Unidentified Analyst

talk then CapEx, drydocking if we could ballast the water treatment. Great. And about

third On went into far quarter, and as are up. idle like and in jump it's light, was third a declining it looks the going again little CapEx expecting half quarter fourth activity, though then put also dock you treatment, a is quarter, water looks while the it $X Can second to it basis even drydocking But on us what quarter on like second as CapEx by came higher about shifted far explain give view [ph] dry than some also And activity as out in $XX million help to the million? preliminary what's going XXXX? there ballast you as into quarter? days

Apostolos Zafolias

sure, Yes Paul.

QX you the quarter, of as of of slipped so was million some off what pointed we we said having are into rightfully for QX coming reason - million, expenses drydock third The $X.X - some $X.X QX, and and $XX.X at was costs from of the costs, out, expenses So QX that, higher expenses CapEx-related million higher QX expense of into some the lower. of originally significantly days for But a expected. at much $XX.X million. replacement than slipping steel - the expect again, for at lower CapEx-related

For $X.X ships. only expense. XXXX, have across days of just we million XX really two It's

those definitely next So year. the tail for numbers off

Unidentified Analyst

And Apostolos, is that - a range drydock or is give that realistic expectation ballast for XXXX? something increase? formula XXXX? I you mean stay lower the are part - an we us CapEx, in you're potentially there dividend which to in treatment Can water - is significantly that that looking just so of at likely

Apostolos Zafolias

correct. the realistic. to drydocking regulations. timing vessels to that's were of XXXX has get special with And pushed order survey do cycles. our yes, And It ahead Yes, obviously, this it some of IMO year and is in into

$X.X at realistic is XXXX million. So

John Wobensmith

to fleet. ourselves we're keep $XX in and year, spending the a mind, IMO efficiency improve position get million this the XXXX devices on energy almost Paul, in Also on saving fuel for

Operator

there concludes more a & call. no Thank This Genco questions. At day. Limited have nice this you, Trading time, Shipping conference and are the

Genco Shipping & Trading Limited (GNK) 4 Aug 222022 Q2 Earnings call transcript