Earnings call transcript Q4 2022

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Operator

Good morning, ladies and gentlemen. And welcome to the Genco Shipping & Trading Limited Fourth 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 Web site at www.gencoshipping.com. To inform everyone, today’s conference is being recorded and is now being webcast at the company’s Web site www.gencoshipping.com.

question-and-answer the a remarks. conduct will session opening after We that Instructions at will follow time. the accessible XXX-XXXX will during replay conference A of be passcode two by the the weeks at dialing entering (XXXX) and XXXXXX. next time any

this to company. over Please the the I turn ahead. At time, conference will go

Peter Allen

morning. Good

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

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

John Wobensmith

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

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

second shareholder off earnings strong the Genco financial year results, in fourth capped solid and well continued $XXX returns. EBITDA XXXX, million. million, $XXX EBITDA year we of XXXX, achieve generated Notably, marked which of another of During consecutive our quarter excess during of to which

this of our X,XXX Our by drew outperforming million benchmarks earnings were per After a path become by scrubber platform first a on alone. markets, Genco the payout wide on leverage, line in day day, the we public of marked drybulk in low kind high XXXX adjusted best-in-class to our $XX,XXX strategy. a transformational of which first added XXXX embarked commercial from nearly value which fleet company, commercial its dividend as bottom the per year the our $XX platform driven full TCE to

successful price. for totaling the in of stock yield declared February of XXXX, XX% XX, dividends our a XXXX share per closing resulted $X.XX representing dividend execution on year full based Our

the dividends years three marking declared our strength we have capital approach quarter, varying share, we XX% cycles our prudent of per fourth of a believe price. the dividend current during XXth Importantly, of and declared per now $X.XXX our consecutive Since to record track in approximately a company's dividends our quarterly over share dividend. or and share and of of meaningful speaks $X.XX XXXX, half through sheet QX total the allocation. balance sustainable We to

consistent mandatory cash enabled strategy. based the reward take of goal reduce dividends macro debt of pay broader in to drybulk medium to of for a reduce Continuing our advantage freight to growth repayments dividends, net have other cargo sizable meaningful we a to term risk in zero, is flows our typical down year value addition we down our our to that strong with low attractive paying creating debt the position progresses. an debt as shareholders. which a on the a time during to of We markets believe opportunities anticipate further In no flow Proactively us to reopening COVID improving experiencing paying currently compelling levels pay we improvement to and market seasonal breakeven continued focus remain has on to pillars is also develop. debt in Irrespective include position as opportunities catalysts policies with restrictive seeking China's we environment, related the shareholders, rates together balance. while from benefit

demand Importantly, backdrop of low book. order a with coincides a this outlook positive historically newbuilding

freight to of anticipated growth we non-scrubber Ahead in in further up. demand this per to for to fitted the threshold day, order of spot Given supply market vessels. Supramax freight a has a constraints tighten $XX,XXX rates above fundamentals in and growth rates current well outpace exceed fleet rate move days capacity, low our firm by at QX Exchange Capesize Baltic pullback, fixed XX% QX, rate of and published

a our earn to is Importantly, fleet scrubber daily Capesize premium and published fully meaningful able index. this fitted above

of Our cash our per approximately TCE $X,XXX is day. well rate also flow breakeven above

our our with compared both support amounts is our why down lows, of with industry our a like we both prepay over the shipping flow amortization and quarterly policy reserve. with under of to prepayments XXXX, our in facility's Genco chose environments debt for credit prepayments strategy are have of value management's our view, debt to control. into dividend value seeing reserve substantially in our our the highlighted high the what flexibility in seasonal leverage strategy breakeven Periods debt our no differentiator we two announcement drybulk the of business. our peer currently our over structure rate remaining With and operating April leverage and group. last XX% regard maturity to in highly financial XXXX, mandatory in within in As temporary our since we capital inherent are is significant in This core quarter, market first a diverse degree reducing voluntary to built cash years, to debt provides us bringing the although

well pay to pay the continue reserve of quarterly to reduce as subject the flexibility outlook. beginning to improve and to to of our of company assessment plan supporting down capitalized thesis recovery. forward our a off rates in very to are lows we remains stated and development of The market for drybulk of we the remainder early freight see the year we maintain the we dividends liquidity freight rates debt, our While and quarter first past,

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

Apostolos Zafolias

Thank you, John.

a record since Genco down financial have During and $XXX the value of XX%. debt cumulative low the net further our to XX% we to debt our million the the outstanding paid to worth paid XXXX, current of loan voluntarily reducing a or earnings nearly quarter, continued levels, maintain of leverage. achieve value balance. to is of we we Notably, On as basis, fourth times scrap debt a of down start commitment strong X.X debt enabling fleet

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

we expenses year quarter, from QX see with trajectory continued vessel XX% registering levels. the QX operating vessel daily During to of expenses half of operating our declining a low the the first

our quarters, and Additionally, CapEx Despite $X.X fleet. declines $X.X larger from in upgrading vessels drydocking within million in QX to select costs invest declined in the million continued $XX.X to we recent QX million QX. in in in

in the Our in cruise COVID-XX success expenses, out of maintaining technical lower select costs. in and vessels our Chinese including upgrading change the completing comparatively progress of fleet will manager our following crude transition help transition

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

EBITDA Our fourth $XXX full to our XXXX $XX quarter was bringing year EBITDA million, million.

total of the value dividends, vessels million, five that our together of and strategy, provides we substantial combined under availability with when focused December on of XXst, our the with $XX.X position revolver delivering deleveraging significant of fact was growth. As unencumbered, continue $XXX us approximately cash comprehensive liquidity position acquired $XXX million. through provide for XXXX The million, to which pillars of our flexibility three the Ultramax remain liquidity

objective make good net meantime, reducing on our In progress zero. of term the to we our to debt medium continue

our deleveraging was debt end as the the our Following year, $XXX outstanding which $XXX of of last million. since in beginning resulted of of million net substantial XXXX, debt

facility we mandatory until to our we have to payments when with de-lever plan continue voluntarily the strategy. matures, amortization no consistent Although XXXX debt

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

be purchases of day, to We operating spares crew changes expense vessel per to timing and and primarily the levels $X,XXX quarter storage. in our per expect of first vessel due

operating For year per expect expenses vessel of daily $X,XXX per we day. our to the vessel XXXX, full be

standards. to optimization while cost We stringent continue vessel to seeking focus safety meet and maintenance continue to on

call to the Peter the of discuss turn now fundamentals. industry will I to SVP our Allen, Strategy over

Peter Allen

Thank you, Apostolos.

by for of quarter quarter, firm and exports COVID both in and grain earlier XXXX, Black Supramax underperforming poor in Baltic $XX,XXX indexes fourth zero seen of overall Sea the a averaged policy each China's Capesize the the peaks but the counter second time softness Chinese as year, of currently as first Year timing for year. decline During congestion, unwinding below the lower levels typical approximately and experiencing the half during New key Brazilian iron this a seasonal newbuilding driven exports contributed and regions, volumes well to Furthermore, the of quarter, deliveries. the a are XXXX. export from of we

newbuilding by off XX% vessel versus nature temporarily the rose in the and at of ore year book the order average, iron down Specifically, of the deliveries the equation. the Brazilian supply due demand QX while exports start January front loaded to were throwing

the we including earnings believe to of tons further higher exported from due XX% continued South will be stimulus coal QX a while exports month bulk view several expect QX. cargo We market, from expiration the will we in are one of As grain USDA of the ahead, Russia's initiative these less grains end decline that in million war Ukrainian to as seen markets grain since the the we currently Sea during we current approach energy by than into American year. marketing the reopening, season potentially approximately flows over measures, away of China's factors rerouting Capesize forecasts agreement XX Ukraine. Furthermore, grain benefit driver primarily drybulk supporting Black onset look tightness as catalysts The the rates has of inception. we and global

lowest years. well are the near order in low the keep the term the X.X%, of level just term low X%, growth as environmental was since Regarding XXXX net side, regulations growth net coming book and historically The of to in the XXXX. longer fleet a expected supply as percentage fleet as fleet

highlighted, prices increased current the and catalysts level and earnings of demand a older non-scrubber fitted high be outlook supply now to with constructive ships. concludes considering together drybulk for market, scrap vessels, have given for ships various be of environments continue Capesize our to we Overall, your the questions. we required This particularly in tonnage, Additionally, take attractive to presentation fundamentals. the owners historically investment for will strong the side those happy

Operator

Thank your you question [Operator Instructions]. from Jefferies. And Nokta Omar from comes first

Omar Nokta

Obviously, solid, three pillars very the looks where now in as you nice see platform highlighted, want the years, transformation of are dividend, the irrespective is here to really sheet I deleveraging, the to we positioned past ask of complete over do the balance the the couple cycle. growth. pretty and about

a last year. last guess, acquired few early ships, You I

today? ships that We here opportunity have up in -- for you and add seen recently had market in what you to do one, rates. guess, open values also, secondhand the an done pullback that to does then a I

John Wobensmith

it’s So the Clearly, with time sees an positive and but be just those values not where the those -- value improvement market, I rates. But it so of better held private on times rates freight which when I pretty very sticky the are is went a up. the can't markets it's have seen obviously of at downside. side I've we seeing coming, values freight been that owning equity look why ship interesting. the remember

in to have us rotating what I over still some our focused Omar, are into ships, renewal, are which we do. newer see on, think XXs, vessels. older will which your question fleet specifically answer we interested particularly We you is, continued

are flows year. of I much think right some probably aside, But on I right large think fleet that renewal will So M&A they we the now. Capes, scale immediate happen XXXs I scrubber fitted think so cash which putting this but the general, are the are they And good focused now. on, is in earning you see very the very

Omar Nokta

point. good a Yes, definitely

a still much guess with equities, So Board been in the is it's market. what we seeing decision. the reserve, $XX.XX And firm the as sentiment mentioned have second obviously, regarding hand you the million, I the

I to, for million dividend it maybe versus, clearly using consider potentially for actual presumably -- a that can you renewal toggled it fleet You of $XX.XX have guess, say, zero. say, be reducing also payout? How much would

John Wobensmith

haven't in see we how then that So then fixtures. quarter we we and to the had terms pay. have want level up We Omar. where will about sort of And that yet, get conversation to specific want finish we once to of much winds up the conversation XXX%

So your I'm not answering directly question.

there tell rolled between and around the continuing to lot order we this, you, dividends I into and pay can However, to is a in will policy. QX as of we -- we out this reserve was discussion for sure consensus was dip when lot management as the Board are that, make needed, a we there that promised quarterly team there

your in I think back and question. just going a little further going

and about what reserve provided management optionality we the when forward could have quarter, as for volatility freight market. when team seen specific confidence the a like first remember, used this particularly you downside that If have when rolled in recovering we you be lot look out, had a of we in it were we we

quarter, a So It to new come nothing really piece may augment we just dividend. that of the use in may first there.

Omar Nokta

bit have for been read final Obviously, the of have maybe we really call This over. down to weeks spot here are few the before of seen latest slow one it turn Handys. it's bump this across one it's me to we start Anything a guess know breakeven. this early. very move? the Capes in quiet, year. I pretty I bounce below, seeing into to And But rates. a I a just past a have rates been been week. from a board here it, bit The week

John Wobensmith

No.

on the think you you the we low are what the saw very numbers think Cape -- I recovery across do particularly that -- overshot a I think, seeing downside are of board. rates. Capes I to we seeing just I But spot probably some recovery, did, the the again, beginning

We ships well. have as seen midsized it the in

market. are You Brazilian coal I paper are have the And move going we to on think are up that time seeing soybean and into a it of season, in that then forward exports, record to seeing right? period. we Asia starting the we back are get So

into to steel half we really on, note more start the and I we -- Chinese reopening stages up. do sort help move of So and steel a sector things but the And believe to that the year, I all there are then imports. China that is think, actual to it. the you we as also I sector think believe few going the One, is that get driving second would to up. are as see utilization picking service come will reopening, the moving as rates normal are two on focused and occurs, the of the particularly But sector I we government side, continuing iron the up stimulus, out see demand recovery

there a remember, if shoots things year this changed October our the green about of you lot I And on. we you in to timing. of focus of longer and in So but will terms thesis think and positive talked I've don't given answer last is has a back

Operator

question BTIG. Lewis next from comes Your from Greg

Greg Lewis

those guess and some in that like first that's with about Eastern guys 'XX you trades ease ask, appreciate and my we’ll refreshing the grain trade versus want European definitely Europe reserve approaching. 'XX? of are about and are grain call Peter, thinking those the like question. of minds just that. your I mentioned to and I did use of around, John comments our coal of coal comments How you Eastern timelines around the what it some some look

Peter Allen

the we With of us focus times on the seasonality a lot the of trade. grain

Typically, from on what deal -- lot hopefully inspections. to up million be right than longer for -- was we seeing the But Russia currently working X are QX, potentially X seeing macro So is forward the light coal the a a delaying days. export January pretty year up. year particular now the we it's extended tons the of light to supportive the in XXX really potentially really Ukrainian month a are we with per But on grain are very volumes peak an Right grain that's South coal a been on now, looking interesting it's to anywhere on in month. season. everybody season grain really vessel overall development million with American They when really that's been extension. the side, are trade. and the of focused in season focus ramping normal during

been made miles there's new demand. has But investment when and volumes. been we the mines a for around new look really at positive mile coal, actually ton and a of that's and rerouting, such So been lack in story ton

in and year But So yes, parts. the this expect that we very certainly to of term near continue until later a as moving lot well.

Greg Lewis

just the of of the then is in following something with going of Is dark you in tanker And similar always the Russia, there way about fleet. with any and trade, volumes hear out up drybulk some that kind quantify to there that? on

Peter Allen

yes, those substantial. to coal exporting largest the So over lot imports have second tons Russia at to is a supplier and coal of the Russia of is China, year. a China's XX been so actually million trades still India

big pretty think when the coal trade. number So it's a you about

But of largest India, For China obviously. two portion it's overall are volume quite coal bit China, a the to moving Russia small still and use. importers, of coal the a very from which

Greg Lewis

Capes And back months. the out you -- it's at Capes last, markets if underperformed were performance, And outperforming XX call I scrubbers, and would've your don't to imagine smaller vessels. you plus look the the the over then, John, on your off even really I clearly, as comments we for Supramax on around, it, been know,

times couple kind Is that is anything iron Capes. the a of in there just else that's the you ore comfort giving the really that call thinking be throughout about? mention did of or we're out pickup should You expecting Brazil we

John Wobensmith

No. coal. Look, are and I the commodities mean, two iron ore of Capes main

price be going Capes. heard spending to China all the be think trade As have ore we you of coal look is at the ore the and Peter of beneficial has see is pickup to firm. going still iron to that's the and hence iron mention, gone. mean, trade infrastructure reopening you the do I we where the the and to And

over quite it's been volatile, weeks the up a it's few but bit. So net last

positive. between what relationship and terms moved in out against spread. that the The of as is Capes the So the standards Supramaxes pointed you dictate has would historical

I into think going you're going to is that spread is I see up. and back that to going next normalized why this again, into more year. Capesize And move come a demand year think because,

will think the move demand mid-size up I also in ships.

of trade that those because the of was particular things the ships year one where the propping up were container it fact and container containers was hot doesn't However, moving anymore. that mid-size exist the the in last that ships market,

So between boats. all rising again, the spread see more you're tides But sector lift normalized I of and the to forward. a mid-size going going think Capes

So demand. everything is I on think stronger going to back of up the move

Operator

[Operator Instructions] comes Riley. B. from Burke Liam Your from next question

Liam Burke

the of John, you earnings took time the charters. out a your addition little of volatility with

are looking come some directionally off shorter and time waiting up of charter? come between rates durations and the spot As fleet you charter, your -- time the how

John Wobensmith

of take we volatility out time of about, Capesize would would forward sector long in be that. to most charter term going have as So talked we do any the

DCI scrubber have done above done a the very at deals firm numbers from index -- some some strategic have premium. some standpoint, spot a plus We we

as will see have us more do off COAs of and we bulks table further before the market is the the exposure firmness advantage have in the able but Cape we will to I as like of move mentality say with minor portfolio right in Cape with exception those the yet. market in take is up believe likely that stay taking done to now, up. would in approach, the the as will short. charters. the will because time a layered market firms, to just idea this past, time the And what's very We most lot a have past, move we to of the in movement not continue books, market we our on the on upward not any right even going we be we is are now, some that. need and done see we take to just you now But So

Liam Burke

any flexibility Your is low. -- around? drydocking Does to you or are move reserves projections fairly budget that give

Apostolos Zafolias

Yes, flexibility say significantly are the The in help down levels. reducing breakeven further separate conditions. drydocking a and that, our in XXXX, levels. does that conversation. separate of in bucket the on depending our below market is been within they drydocking sort place what has slightly to use were provide which again, a put it, is I'd numbers do of the reserve overall us breakeven a But bit

John Wobensmith

for whole. lower than But having a a for significantly last number lower room breakeven and XXXX dividends as CapEx our year, more gives lowers obviously,

Operator

We As conference please for your thank ask and participating you that there this today. are for concludes call lines. questions disconnect time, no you further this at your

Genco Shipping & Trading Limited (GNK) 23 Feb 232022 Q4 Earnings call transcript