- Earnings call transcript Q3 2022

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Operator

Good morning, ladies and gentlemen and welcome to the Genco Shipping & Trading Limited Third 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 at www.gencoshipping.com.

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

Peter Allen

morning. Good

Such Before such other Private this call and of in Act Securities forward-looking pursuant Litigation we note believe Harbor and as Safe plan, circumstances intend, based project, expect, current XXXX. and connection certain conference performance. discussion estimate, to making similar Reform on of a we the or financial our expectations in are forward-looking be 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 will 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

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

also refer posted our For on our additional presentation website. information, earnings please to

strong financial During quarter achieve continued of XXXX, results. the to third Genco

per of price. per we combined to yield supported in a QX representing and based share were increase XXXX, XX% compared dividend costs. annualized sixth greater quarter current third our a Notably, operating our for TCE declared day the an sequential share with earnings of on than fleet $X.XX quarter an by consecutive XX% of $XX,XXX decline of of Our

have dividends and cycles, value dividends totaling quarterly $X.XX Since focused quarterly to which our on share. have sustainable positioning implementing strategy, we per of XX yield meaningful growth Genco four deleveraging compelling is totaling throughout declared now We $X.XXX paying capitalize and paid consecutive per per share dividends opportunities, XX%. the on

breakeven strategy to shareholders. we mandatory during our our consistent pillars pay goal we zero we quarter, have reduced During continue our value with that shareholders and proactively significant to a attractive markets. and in opportunities environment, have strength we risk sizeable balance industry believe while public sheet of We macro flow drybulk to develop. has reward us advantage dividends low repayments reduce debt further core cash to the pay opportunities we position debt net compelling position of levels take in the enabled flow execute to the and levels. model the time broader to strong of as down remain for do our medium-term cash any benefit not down as debt a achieve the to successfully debt of Irrespective to is paid markets Continuing seeking breakeven most growth

on average charter taking TCE approach XXXX our day for bulk and $X,XXX Baltic market Supramax than the on time Ultramax market. $XX,XXX higher a we during period coverage on cargo of was time Supramax capitalized solid the particularly For generating QX during and cargo coverage the per and per the we then in put QX prudent minor during a significant leverage, fleet, as benchmark drew equivalent significant strength The freight third forward Index of XXXX quarter, during outperformance specifically day the our we operating quarter. strong approximately of charter place our QX rate

to-date on current of Looking respectively. spot over and day $XX,XXX fourth and Capesize based rates the breakeven is of and XX% than It represents above per approximately coverage quarter of per for significantly $XX,XXX $X,XXX estimated ahead, day. approximately TCE $XX,XXX a well higher our our Supramax day rate for of fixtures available vessels also days

In expected given with together Regulations terms fleet low to of freight continued low growth be Environmental historically book XXXX market supportive trends, XXXX are which net we expect IMO for the order rates.

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

Apostolos Zafolias

you, John. Thank

to as the financial a continue of voluntarily reducing or and we XX% flow enabling quarter, maintain low value and $XXX current cumulative to since scrap Notably, loan debt breakeven outstanding. paid On down debt fleet over million record Genco we third debt value is down paid commitment of XX%. of a Xx leverage a we earnings the net rates. net our to of our During start cash XXXX, strong of to achieve our the our levels, basis

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

reflected While remain the latter that increase quarterly dividend lower in from operating XX% expenses revenues QX the period. QX firm to in

million in quarter-over-quarter declined in expenses CapEx invest by Furthermore, fleet. our vessel vessels the our to decreased to Despite from we QX. operating upgrading decline, $X.X $XX.X to select XX% million the within continue drydocking second in $XX.X million Specifically, quarter. large

$X Chinese losses expenses hedges of in per was the fleet quarter cost maintaining company in and progress cost $X.X transition excluding fuel comparatively lower as diluted Adjusted of Technical the of operating will and help $X.XX given expenses, share. out environment the income for vessels challenging COVID-XX earnings or Manager when related of for and million. including to change of million predict various While recorded share crude year. $XX.X success select following unrealized $X.XX to our the upgrading our well as store QX difficult and spare macroeconomic Four transition factors, XXXX, net the balance net per the overall income the basic and completing crews remains our in

million, EBITDA bringing Our EBITDA our million. quarter $XX.X $XXX adjusted months XXXX to third adjusted X was

XXXX, flexibility our totaling XXXX through run-rate significant down of XXXX, unencumbered, of quarterly substantial which availability, acquired position position that vessels with $X.XX XX, was paid In provide three approximately This that cash of when debt million, we remain As pillars representing delivering under value continue $XXX combined $XX.X debt us million. the total the revolver with the for QX provides repayment. comprehensive our Ultramax September strategy. combined our liquidity of the million, voluntary liquidity of to X fact we

debt payments XXXX, plan to net until continue our no amortization John have of to we zero. given as objective we voluntarily to debt our Although medium-term reducing delever, mandatory mentioned,

beginning since limit durations of in interest a interest net debt outstanding through deleveraging $XXX our the XXXX, substantial with $XXX rising exposure third to as rate we in note our March was We also of million. debt our million end have of of caps Following XXXX, which resulted which the rates. that quarter, varying the place

and saving million. repayments of debt of system million, down As $XX.X $X.XX the our I in of $X.X dividend treatment previously announced mentioned, cost million, line ballast a resulted for device from our third calculation. Board operating strategy $XX.XX flow share of this of million Directors with the and dividend formula, cash energy drydock the water Walking and per of value less declared reserve quarter $X.XX

the in than expense completed new quarter year joint of completed continue and our the of management venture transition the period our half during fourth expect as second our our levels have quarter. first to fleet of We technical heaviest vessels the to the remain we lower the to drydocking

cost to at debt on approximately the the and $XX.XX $XX to estimated expense. our to that standards. Peter made of in while discuss the as the based voluntary call is of I included quarter now the million focus which fourth the Allen, expected to optimization safety well SVP on and to side Strategy equation are fundamentals. run-rate the as expected to continue vessel for interest in expense turn QX. be be meet to cash the figure stringent million, continue over We industry is reserve In seeking will maintenance estimated total, repayments And reserve

Peter Allen

Thank you, Apostolos.

seemingly China in believe certain Supramax Capesize since the that vessel the China, the $XX,XXX grain in development remained indices QX. primary averaging drivers Brazilian congestion and were nearly the We freight this saw schedules, $XX,XXX the overall market July quarter per demand the rates decline, Capesize in with a behind type drybulk in ports resulting minor At firm highlights weather-related of, balance restrictive XXXX. freight levels, believe we usual season, for during export fitted of freight shipments. start and tightness rate Capesize iron the development the Despite overall, QX time ore third and freight $XX,XXX seasonally first the events supply underperforming and from of at shortage day inclement rates We as to XXXX, declined per strengthened imposed levels market. respectively in weather policies since over and lack COVID-related of this materialized Ukrainian non-scrubber a of Supramax in of QX and counter prevalent hasn’t During day availability. unwinding rates tonnage the reaction delayed

to the of level dynamic additions in to X capacity persist expect We years. years over this low given the the expected next come

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

to sourced coal more to XXXX, Russia forecasts contraction China Steel rerouting Association from coal the such expected will the which a and believe ore seen return Furthermore, U.S., as demand year, commodities coal. for has and have growth India, Australia. key of and a we We iron steel of after more World Europe cargo an Colombia support while flows as in demand exports next

the a shipments to-date. seasons, augment for grain the third has UN the Black regions corridor side, which grain approximately tons to In of American the resulted the the in of in which a between July, allow On shipments. XX brokered grain represents establishment South deals in and region, saw shipments North million period Sea its typically export from quarter

days the at of to their in However, participation October, only agreement temporarily rejoin later. end ceased the Russia

around expire for Black XXX-day forward. remains Sea the November on set extension going agreements from XX, negotiations the With an there continuing, initial to uncertainty exports

well fleet years. in fleet supply expected term order historically the the environmental as growth X% regulations longer net book in and of are as coming is The the approximately of the side, near-term as keep a fleet low low year-to-date growth Regarding to net just X.X%. percentage

of This and prices attracted owners regulations. require demand high of positive back dynamics exceed to continue demand supply market to for utilization improve upcoming provide to drybulk growth in solid threshold our in the for presentation. freight these investment rates. Additionally, a in level to increased a the fleet-wide low these we tonnage, considering Overall, of foundation believe these concludes and scrap to ships light order lead older be

now We happy your questions. be will take to

Operator

comes from Please go Nokta question first Thank Our sir. Omar from you, [Operator Instructions] ahead. Jefferies.

Omar Nokta

Hi, thank you. morning. guys, good Hey,

Maybe benefit strong say to couple comes did first a the I during performance of it’s Just just Ultra I of and questions. without the the pretty off, Supra want would ask scrubbers. having quarter, about

And had like maybe that and upside the feel had place, how spot so it was related Can you of over time maybe at to first in pretty maybe I but put just charters in such go you guys does the you it quarter? performance. thought you a solid kind drove

John Wobensmith

Good Omar. morning. thanks, Yes,

So you $X,XXX our for Ultra rates and BSI very about sector are over well day industry did a correct, the for quarter. above the by the Supra

did I lower look We and have $XX,XXX. rate benchmark the actually on our were the the was a period numbers, Supras of that think somewhere coverage you $XX,XXX rates actually but Ultras at our some around a at was $XX,XXX spot on day. Ultra If

call, the the happening typically So unfortunate believe were bit what we season rate little skeptical would the Ukraine, saw situation when high a in outperformance happening Black obviously the but about spot quarter, in on on was movements talked a which we for and as I what this drove Sea. that last actually be particular the to third very we grain is –

that the a was has purposely and we occurred be it lot took saw out. time so coverage of began fortunately grain action didn’t grain really the going we for there forward taking Unfortunately, ahead us, of that for and fourth we for third And side on coming it. we to believe quarter, because

have So, a really we led commercial know, led active to what to that platform. And that’s outperformance. very as you

to did take So, the the done ability we opportunities the and we obviously listings, and forward we’ve continue quarter have will in arise. we which to cargo when past this do those

Omar Nokta

Thanks, John.

more $XX are of drydockings sense. year. paying as in recall broadly think to which to compares capital ask been Okay. Yes, think supposed a I for also into makes ‘XX, we just have next you that pretty this maybe about In the go and dividend. $X.X to then years, debt, the cash about year, down you I And diligent reserving past healthy out come the release wanted paying million allocation down have million, I couple

reserve see decline, terms hold much that you in back do Given you how payout? yourselves the of from for adjusting the ‘XX,

John Wobensmith

I If so little into and so Yes, going which is couple and to we – look project is into do sausage how thing to let is you will a know always detail of try go to a speak. maybe a XXXX, things. made a little actually the freight rates. projections at bit to dangerous of There

pretty can sense to go. be difficult. will things good predict a where have day we rates But directionally think, to trying I day

that is data we there SSA tend a well, at at variety look higher. to the data FFA look we providers we SSA use. look And So, versus big providers now, right discrepancy we third-party too where as a that at a data forward, curve, is are have between of of We we series we the – curve low meaning this the the point. significantly curve is feel providers things

that we views on get December, into are point, don’t we towards mind, debt will we look right is And at reserve to what do, as to well we our will the of have so repayments board mandatory we another at XXXX. year, the now. take want any meeting that doing assess what keep because as we end debt have And in pre-payments a as

the where at come let is beginning my out year. of next at the we we goal to really know So will market very of the year. the assess end And

to in late wait So we we going February. until earnings not are announce sometime

in will reserve. as both the as prepaying We do market on plan and it beforehand well let know XXXX on what we

Omar Nokta

Okay, great.

John Wobensmith

interestingly your Hopefully fleet very year the overall, ‘XX Capesize very agree answers That’s fleet And I ‘XX and a but for enough for years not overall for CapEx, question. are us. stat. it’s an industry ‘XX, that But light the with high look, drydocking the you us. for actually on

of actually could drydock that up the fleet So by be and rates percentage large push helping interesting in those years. having for

Omar Nokta

Yes. interesting. That’s

great. Okay, next queue. into turn back thanks, early to year then I’ll John. look the I’ll it Well, and forward

John Wobensmith

Great. Thanks, Omar.

Operator

ahead. BTIG, please Lewis, Greg go

Greg Lewis

and question. a you up morning, Hi, on thanks good my will and question guess allocation in thank little I everybody follow different capital taking John, little a bit I way. Omar’s for around

the least prices also asset step are big can of good ahead have been pulled kind but cash we pretty is sentiment balance of looks I some And have guys a now wondering about here, in what as a have are know bit? am renewal maybe you a manage down of the on upfront FFAs I – and to what as We generating in managing strength fleet. guess just little prices kind think much here I it see little returning back and seen opportunities wondering we around be they challenging. I at whether we as am shareholders, fleet the good based clearly we pretty or I QX to and managing that vessels guess the expanding bit of call could asset we sheet still look low breakeven as cash right. flows and wrong

John Wobensmith

position The balance short offense, have now sheet ourselves pretty fleet, of from even yes, We goal standpoint we just definitely in fleet I answer that overall play the And which renewal. a always put this to an is company beyond set have we normal think Greg. expanding up solidly.

it’s the think a of So, the it’s a of transaction, finding timing. and matter I right matter

freight then are still in have probably match You believe prices we they that I come situation think think a have going different in still where building seen I what that’s a past don’t today. maybe than away. we also little And are years rates are that new But little actually prices down correct, asset I don’t high bit. when exist.

do is one next But freight going any that holding rates asset direct in part a easily. in that most sticky, personal or likely next next So, freight prices the be to My we we information my year. zero is and things years get think year. of are I for rates so to to into think more the going view be I view. the that’s of correlated COVID believe I anyone that, opportunities, there is could as more second quarter way, than probably the don’t the By first China, policy soften or less back that’s else. But little have of few personal

do be of I there the so And think some into we part year. as could opportunities next early get

the us very very of to on the quartiles us off have And it mean correct, which wait in think values. into at some At will for in have is started to as right not very – just year. are will focused a things it see. you bit, next think early think are buying I on little we and healthy. get historical look we come time, are I And buying. to we give I we upper will give us focused We terms I

Greg Lewis

for Okay, down, opportunistic it the wondering to next as bit some today is, No, see are rates a potentially are months, that. was it’s X heading maybe realizing XX is that they rates they do a prices, were of months interesting maybe lot prices a where I of point think I But – rates asset but about year, now and we as you plan debt. started higher? of lot kind things the ago versus realizing, well. could don’t I would one lending hey, are for asset you guys time. follow-up, have little the tonnage interest reopening market did like have Any mean great. on months, clearly, to sense at because we some seem before borrowing hoping impact maybe a to you color don’t and of and share modern is of for spot want Thank it where X where pretty you maybe China debt

John Wobensmith

want take do Yes. that? Apostolos, to you

Apostolos Zafolias

Yes.

as our average a first think XX I various in we XXXX, of address mentioned all, caps rate situation, I durations place for basis interest the weighted points. of to through for just on have call, rate do

terms of covered. are debt, existing hedged we in and the pretty So, well

in overall charging. moved significantly As to market the X% another or that largest is that LIBOR X% LIBOR as could SOFR, financing providers well. that – costs rates the think were have margins financing are SOFR space concerned, high-single banks range add far as I from X% think quite in of I the and mean I hope, for financing that up the obviously and the is and getting anywhere and then digits. higher And which has you alternative costs there terms

also that close in with cash we forward our to have terms the it’s existing unencumbered sheet us, X of do have take advantage And raise how a we can opportunistically well. that combined we position, to vessels going as we For And when million. ability the $XXX of can in that balance utilize revolver place. is

Greg Lewis

guys. helpful very you Thank Super Okay. great much. Have a day.

John Wobensmith

you, Greg. Thank

Apostolos Zafolias

Thanks Greg.

Operator

Instructions] Riley. next ahead. Please And from our Burke [Operator B. Liam from comes question go

Liam Burke

Good you. Apostolos. John. Good morning morning Thank Yes.

John Wobensmith

morning Good Liam.

Liam Burke

vis-à-vis large and spot? was forward you the you management the as of in John, good declining at time fourth How call. the look balance for the it do market. between a fleet a spot was fixed a charters environment, figure you going And market percent spot fleet quarter

John Wobensmith

take let’s segments. think I two look, the No, Yes.

let’s the take talk segment. then segment the Minor So, Capesize and Bulks about

either XX% book And the of on are plus using are somebody commercial cargo more cargoes platform around makes and cargo if that robust with direct have owners. very trade shipping to bulks, in where it sense, and can use will to let meaning operating our those money, else where in when business shift we we able we we those chartered make our cargoes doing we So, a short-term. minor obviously

positioned. makes we doesn’t shorter at months to it’s six is mean if for sense think do But there. three or change it don’t four I from is vessel a of to whether some it’s time-to-time months, So, I that months would where five won’t the look that anything much time coverage, bulks, It charter months minor more going to duration.

again, the think what don’t to that’s a Right other are Now, term do time-to-time, do off front from from by animal. once demand And X that now, low Capesize low. rates right a be to because in mean to thing next the well to the anywhere is on there we these supply picking China a we sometime – charter capes, rates basis I low do because years. very the the recovery capes, take come of going on that year opportunity take the We time of We When is longer year think, it. coverage think volatility we different the that’s is Capesize reopen. table up be sector, situation, as too we the X certain as the the hand, to on for at exposure going the doing. see

have we done. We the longer demonstrated have with in that term the past charters

and It’s which with plus had X were very fix where we think XX%, XX% than we the this far looking the basis. Capesize – existed the day, moved in within particular, that done, well, X% years. seen on the as and all have We that’s at capsize year has very a I interesting, so seen been years, we some on more capes for have or basis. ability day sector. minus has think have X spot I have have this index-related capes daily been on last other rate numbers daily volatility in year successful the And – that But of in a particularly collect this helpful, the that index to also we the charters the term charter. longer also We year, been volatility

and some to have well those of able – deals of and spot have this been lot a been index volatility So, that. year play worked

Liam Burke

sequentially. where pretty off expenses there, second Super. we to in it And third are it or quarter? leveling on one-time Is down is much the go of we in at DVOE, lot the the saw more a you there quarter, had

John Wobensmith

Yes.

more little $X,XXX to We getting are we lower look, normalized. day. guided for fourth quarter, bit per So, a

a feel that that’s else. would just us more about good inflation certainly has The trend OpEx. into say everyone normalized on we So, like getting reality number. is, I And affected

cost spare more. Our parts

get world has Our parts airfreight those to cost more. the around

So, also the side, some best we that that seen there make has get. on have we inflation some crew been want because we inflation And the can do we crew maintaining there. to sure are

more So, level of day, to that year. starting we means when a into But start come into paying are a more say get what little COVID-related normalized would to we than last I did get expenses number that a and fourth $X,XXX way quarter our you down. have

So, a been thing as well. that’s positive

Liam Burke

you, Thank Great. John.

John Wobensmith

Liam. Thanks

Operator

in and Ladies questions gentlemen, additional like remarks. or to closing speakers call any hand our the I you. no back there over as would for queue, the Thank to are

John Wobensmith

Now, everyone appreciate forward soon. to very And thank Thank We I joining. speaking much. look you you you. to

Operator

you you. disconnect. your and may Ladies now gentlemen, today’s concludes for conference call. Thank participation. you Thank This

Genco Shipping & Trading Limited (GNK) 10 Nov 222022 Q3 Earnings call transcript