Genco returns to profit

Genco

Genco, the largest U.S. headquartered drybulk shipowner focused on the transportation of major and minor bulk commodities globally, reported its financial results for the three and twelve months ended December 31, 2017.

The following financial review discusses the results for the three and twelve months ended December 31, 2017 and December 31, 2016.


Fourth Quarter 2017 and Year-to-Date Highlights

  • Recorded net income of $2.6 million for the fourth quarter of 2017
    –  Basic and diluted earnings per share of $0.07
    –  First reported quarterly net income since Q4 2011 highlighting the successful implementation of our commercial strategy and cost optimization initiatives together with improving market conditions
  • Voyage revenues minus voyage expenses totaled $59.3 million during Q4 2017, nearly 50% higher than the same period of 2016
  • Time charter equivalent (“TCE”) increased during each quarter of 2017 culminating in $11,017 for Q4 2017 marking a year-over-year improvement of 65%
    –  Currently have fixed 82% of our Q1 2018 days at a TCE of $10,556
  • Concluded 2017 with a cash position of $204.9 million, which compares to $169.1 million of cash at the end of 2016, representing an increase of $35.8 million, and includes restricted cash
  • Paid down the $400 Million Credit Facility by $11.3 million on February 13, 2018, from cash flow from operations during Q4 2017
  • Established Singapore presence with the opening of a new office focusing on the major bulks
  • Completed the withdrawal of 19 vessels from pool agreements and integrated these vessels into our in-house commercial strategy
  • Completed the repositioning of our minor bulk fleet increasing exposure to the Atlantic basin as an investment as part of our new commercial strategy
    –  Completed the final wave of this repositioning effort during Q4 2017
    –  Currently have 80% of our minor bulk fleet with Atlantic redelivery positions
    –  Expect to utilize these positions and our overall platform to drive revenue generation in 2018
  • Substantially increased our customer base having entered into business with over 40 direct cargo customers over the last year
  • Further reduced daily vessel operating expenses (“DVOE”) to $4,387 per vessel per day during Q4 2017 highlighting our industry leading low-cost structure
    –  DVOE for the full year 2017 was $4,417 per vessel per day as we executed on various cost optimization efforts throughout the year
  • Recorded EBITDA of $27.5 million during Q4 2017 and $42.0 million for the full year 2017

John C. Wobensmith, Chief Executive Officer, commented, “The fourth quarter of 2017 represented a major inflection point for Genco. The considerable success we experienced throughout the year transforming our commercial strategy and optimizing our cost structure enabled us to capitalize on improving market conditions, as we returned to profitability for the first time in six years. During the fourth quarter and full year, we expanded our in-house commercial platform, which included incorporating voyage charters and direct cargo liftings to our service offerings, establishing a Singapore presence and appointing industry veterans to spearhead the employment of both our major and minor bulk fleet. With a global presence, full-scale logistics solution and focus on strategic fleet deployment, we believe we are in a strong position to continue to serve leading charterers and cargo customers while further benefiting from industry fundamentals, which we believe will remain favorable in 2018.”

Commercial Strategy Actively Driving Revenue and Margins

Our fleet currently consists of 60 drybulk vessels concentrated on the transportation of major and minor bulk commodities globally. Historically, Genco has employed its fleet through mostly time charter contracts as well as pooling arrangements. In 2017, the Company made the strategic decision to transform its existing in-house commercial operating platform through the transition from a tonnage provider to an active owner-operator model in an effort to increase margins. In order to execute upon this strategy, management undertook various initiatives including the withdrawal of all of our vessels from their respective pools, reallocating a large part of our minor bulk freight exposure to the Atlantic basin to seek to capture the earnings premium historically offered, establishing a presence in Singapore to focus on our major bulk fleet and actively engaging with cargo providers to further expand our network of customers.  Overall, our fleet deployment strategy remains weighted towards short-term fixtures which provides optionality in a potentially rising freight rate environment. We believe that our active commercial strategy together with our low-cost structure should continue to increase margins going forward.

Our fourth quarter of 2017 TCE results by class are listed below. Specifically, for our Capesize fleet, during the fourth quarter we employed several of these vessels on fixed rate period contracts that have a stable cash flow impact while maintaining our portfolio approach to fixtures. Of our 13 Capesize vessels, we currently have six on fixed rate period contracts, four on short-term time charters and three on index linked contracts.

  • Capesize: $16,767
  • Panamax: $10,038
  • Ultramax, Supramax and Handymax: $9,752
  • Handysize: $8,485
  • Total: $11,017

We currently have the following net TCE fixed for the first quarter of 2018, which represents strong performance to date:

  • Capesize: $14,988 for 77% of the available Q1 2018 days
  • Panamax: $9,591 for 81% of the available Q1 2018 days
  • Ultramax, Supramax and Handymax: $10,061 for 85% of the available Q1 2018 days
  • Handysize: $8,197 for 81% of the available Q1 2018 days
  • Total: $10,556 for 82% of the available Q1 2018 days 

Financial Review: 2017 Fourth Quarter

The Company recorded net income for the fourth quarter of 2017 of $2.6 million, or $0.07 basic and diluted net earnings per share. Comparatively, for the three months ended December 31, 2016, the Company recorded a net loss of $25.1 million, or $3.43 basic and diluted net loss per share.

The Company’s revenues increased by 71% to $74.9 million for the three months ended December 31, 2017, compared to $43.9 million for the three months ended December 31, 2016. The increase in revenues was primarily due to the employment of vessels on spot market voyage charters as well as higher spot market rates achieved by the majority of the vessels in our fleet.  These increases were partially offset by the operation of fewer vessels during the fourth quarter of 2017 as compared to the same period of 2016.

The average daily time charter equivalent, or TCE, rates obtained by the Company’s fleet was $11,017 per day for the three months ended December 31, 2017 as compared to $6,659 for the three months ended December 31, 2016. The increase in TCE was primarily due to higher spot rates achieved by the majority of the vessels in our fleet during the fourth quarter of 2017 versus the fourth quarter of 2016. The drybulk freight market strengthened considerably during Q4 2017 as a result of firm Chinese steel output and steel mill margins which led to heightened demand for seaborne iron ore and coal cargoes. This increase in demand was met by minimal net fleet growth, leading to tighter tonnage availability across the sectors. In 2018 to date, various seasonal factors including increased newbuilding deliveries, weather related disruptions and the Chinese New Year have negatively impacted the market in the short-term although freight rates remain significantly above last year’s levels.

Total operating expenses were $64.9 million for the three months ended December 31, 2017 compared to $62.5 million for the three months ended December 31, 2016. Voyage expenses rose to $15.6 million for the three months ended December 31, 2017 versus $4.0 million during the prior year period primarily due to the increased employment of vessels on spot market voyage charters as part of our commercial strategy, in which we incur significantly higher voyage expenses as compared to time charters, spot market-related time charters and pool arrangements. Vessel operating expenses declined to $24.2 million for the three months ended December 31, 2017 compared to $27.5 million for the three months ended December 31, 2016. This decrease was primarily due to lower crew related expenses as well as the operation of fewer vessels during the fourth quarter of 2017 as compared to the same period of the prior year. General and administrative expenses were $5.6 million for the fourth quarter of 2017 compared to $15.1 million for the fourth quarter of 2016, primarily due to a decrease in nonvested stock amortization expense as well as costs related to financing or refinancing activities that were incurred during the fourth quarter of 2016. Included in general and administrative expenses is nonvested stock amortization expense of $0.5 million and $6.2 million for the fourth quarter of 2017 and 2016, respectively. Depreciation and amortization expenses decreased to $17.6 million for the three months ended December 31, 2017 from $18.2 million for the three months ended December 31, 2016, primarily due to the revaluation of our 1999-built vessels to their respective fair values during the third quarter of 2017.

Daily vessel operating expenses, or DVOE, decreased to $4,387 per vessel per day for the fourth quarter of 2017 compared to $4,486 per vessel per day for the same quarter of 2016, predominantly due to lower insurance and crew related expenses as well as the timing of purchases of spare parts partially offset by an increase in maintenance related expenses. We believe daily vessel operating expenses are best measured for comparative purposes over a 12‑month period in order to take into account all of the expenses that each vessel in our fleet will incur over a full year of operation. For the twelve months ended December 31, 2017, our DVOE decreased to $4,417 which is below our 2017 budget of $4,440 set forth at the beginning of the year as well as our 2016 figure of $4,514. Based on estimates provided by our technical managers and management’s views, our DVOE budget for 2018 is $4,440 per vessel per day on a weighted average basis for the entire year for our fleet of 60 vessels.

Apostolos Zafolias, Chief Financial Officer, commented, “Genco increased its 2017 cash position to $204.9 million, returned to profitability in the fourth quarter and increased fourth quarter TCE by 65% highlighting the improving drybulk market conditions and the success of the Company’s commercial, technical and operational initiatives. During 2017, we executed various cost optimization efforts and are pleased to have further reduced our direct vessel operating expenses, as we maintained our cost leadership.  Looking forward, we remain in a strong position to benefit from the ongoing recovery in the drybulk market.”

Financial Review: Twelve Months 2017

The Company recorded a net loss of $58.7 million or $1.71 basic and diluted net loss per share for the twelve months ended December 31, 2017. This compares to a net loss of $217.8 million or $30.03 basic and diluted net loss per share for the twelve months ended December 31, 2016. Net loss for the twelve months ended December 31, 2017 and 2016, includes non-cash vessel impairment charges of $22.0 million and $69.3 million, respectively. Net loss for the twelve months ended December 31, 2017 also includes the gain on sale of vessels in the amount of $7.7 million and $3.6 million due to the sale of vessels during the respective periods. Revenues increased to $209.7 million for the twelve months ended December 31, 2017 compared to $135.6 million for the twelve months ended December 31, 2016. The increase in revenues was primarily due to the employment of vessels on spot market voyage charters beginning during the second half of 2017, as well as higher spot market rates achieved by the majority of our vessels.  These increases were partially offset by the operation of fewer vessels during 2017 as compared to 2016. Voyage expenses increased to $25.3 million during 2017 from $13.2 million in 2016.  This increase was primarily due to the employment of vessels on spot market voyage charters during the second half of 2017 as part of our commercial strategy, in which we incur significantly higher voyage expenses as compared to time charters, spot market-related time charters and pool arrangements. TCE rates obtained by the Company increased to $8,633 per day for the twelve months ended December 31, 2017 from $4,907 per day for the twelve months ended December 31, 2016, due to higher rates achieved by the majority of the vessels in our fleet. Total operating expenses for the twelve months ended December 31, 2017 and 2016 were $239.3 million and $322.1 million, respectively. Adjusted total operating expenses, which excludes a non-cash vessel impairment charge of $22.0 million relating to the revaluation of Genco’s 1999-built vessels and the Genco Surprise to their respective fair values and the gain on sale of vessels of $7.7 million, were $225.0 million for the twelve months ended December 31, 2017. This compares to adjusted total operating expenses, which excludes non-cash vessel impairment charges totaling $69.3 million relating to the revaluation of ten vessels to their estimated net realizable value and the gain on sale of vessels of $3.6 million, of $256.3 million for the twelve months ended December 31, 2016. We believe the presentation of the adjusted amounts above is useful to investors in understanding our current performance and financial condition, as it excludes items that may not be indicative of our core operating results. General and administrative expenses for the twelve months ended December 31, 2017 decreased to $22.2 million as compared to $45.2 million for same period of 2016, primarily due to a decrease in nonvested stock amortization expense as well as costs related to financing or refinancing activities that were incurred during the fourth quarter of 2016. Daily vessel operating expenses per vessel were $4,417 versus $4,514 in the comparative periods predominantly due to lower expenses related to crewing and insurance partially offset by higher drydocking related expenses. EBITDA for the twelve months ended December 31, 2017 amounted to $42.0 million compared to $(112.5) million during the period. During 2017 and 2016, EBITDA included non-cash impairment charges as mentioned above. Excluding these non-cash charges, our adjusted EBTIDA would have amounted to $56.3 million and $(46.7) million, for the respective periods.

Liquidity and Capital Resources

Cash Flow

Net cash provided by operating activities for the year ended December 31, 2017 was $26.5 million as compared to net cash used in operating activities for the year ended December 31, 2016 of $50.0 million.  Included in the net loss during the years ended December 31, 2017 and 2016 are $22.0 million and $72.0 million of non-cash impairment charges, respectively. Also included in the net loss during the years ended December 31, 2017 and 2016 are $4.1 million and $20.7 million, respectively, of non-cash amortization of nonvested stock compensation related to the Company’s equity incentive plans. There was also an increase in the gain on sale of vessels in the amount of $4.2 million, as well as increase in paid in kind interest of $3.7 million related to the $400 Million Credit Facility during the year ended December 31, 2017 as compared to the prior year. Depreciation and amortization expense for the year ended December 31, 2017 decreased by $4.6 million primarily due to the operation of fewer vessels during the year ended December 31, 2017 as well as the revaluation of ten of our vessels to their estimated net realizable value during the first half of 2016. Additionally, the fluctuation in prepaid expenses and other current assets decreased by $12.4 million primarily due to additional fuel inventory as of December 31, 2017 for vessels that were fixed on spot market voyage charters.  Lastly, there was a $5.6 million increase in deferred drydocking costs incurred because there were more vessels that completed drydocking during the year ended December 31, 2017 as compared to the prior year.  This was offset by an increase in the fluctuation in accounts payable and accrued expenses of $6.8 million due to the timing payments.

Net cash provided by investing activities was $15.0 million during the year ended December 31, 2017 as compared to $22.7 million during the year ended December 31, 2016.  The decrease is primarily due to a $10.5 million decrease for the proceeds from the sale of available-for-sale securities.  The remainder of our available-for-sale securities were sold during the fourth quarter of 2016.  This decrease was partially offset by a $2.5 million increase in the proceeds from the sale of vessels.

Net cash used in financing activities was $5.6 million during the year ended December 31, 2017 as compared to net cash provided by financing activities of $55.4 million during the year ended December 31, 2016.  Net cash used in financing activities of $5.6 million for the year ended December 31, 2017 consisted primarily of the following:  $2.8 million repayment of debt under the 2014 Term Loan Facilities; $1.3 million repayment under the $98 Million Credit Facility; $1.1 million payment of Series A Preferred Stock issuance costs; and $0.4 million repayment of debt under the $400 Million Credit Facility.  Net cash provided by financing activities for the year ended December 31, 2016 of $55.4 million consisted primarily of the $400.0 million drawdown on the $400 Million Credit Facility and net proceeds from the issuance of Series A Preferred Stock in the amount of $121.9 million partially offset by the following: $145.3 million repayment of debt under the $253 Million Term Loan Facility, $140.4 million repayment of debt under the $148 Million Credit Facility, $60.1 million repayment of debt under the $100 Million Term Loan Facility, $56.2 million repayment of debt under the 2015 Revolving Credit Facility, $38.5 million repayment of debt under $44 Million Term Loan Facility, $18.6 million repayment of debt under the $22 Million Term Loan Facility, $3.0 million repayment of debt under the $98 Million Credit Facility, $2.8 million repayment of debt under the 2014 Term Loan Facilities and $1.5 million payment of deferred financing costs. On November 15, 2016, the $400 Million Credit Facility refinanced the following six credit facilities: the $253 Million Term Loan Facility, the $148 Million Credit Facility, the $100 Million Term Loan Facility, the 2015 Revolving Credit Facility, the $44 Million Term Loan Facility and the $22 Million Term Loan Facility.

Fleet Renewal Program

The Company plans to undergo a fleet optimization and renewal plan aimed at modernizing its fleet. As part of this plan, the Company has decided to dispose a total of 15 vessels in our fleet at times and on terms to be determined in the future including vessels it had already decided to dispose of. The plan includes eight Supramax vessels, one Handymax vessel and all of our vessels built in 1999 or earlier. As a result of this decision the estimated future undiscounted cash flows for nine of the vessels which are part of this plan did not exceed their net book values, and we have therefore adjusted their values to fair market value during the first quarter. We therefore anticipate a non-cash impairment charge of approximately $56 million in the first quarter of 2018. We plan to redeploy the net sales proceeds from these 15 vessels, subject to lender consent, towards the purchase of modern, high specification vessels that complement our commercial strategy and management’s view of the drybulk supply and demand fundamentals.

Capital Expenditures

We make capital expenditures from time to time in connection with vessel acquisitions. As of February 27, 2018, our fleet consists of 13 Capesize, six Panamax, four Ultramax, 21 Supramax, one Handymax and 15 Handysize vessels with an aggregate capacity of approximately 4,688,000 dwt.

In addition to acquisitions that we may undertake in future periods, we will incur additional capital expenditures due to special surveys and drydockings for our fleet. We did not drydock any of our vessels during the fourth quarter of 2017. We currently expect five of our vessels to be drydocked during 2018 of which two are expected to be drydocked during the first quarter of 2018.

We estimate our capital expenditures related to drydocking for our fleet through 2018 to be:

Q1 2018 Q2-Q4 2018
Estimated Costs (1) $1.7 million $3.8 million
Estimated Offhire Days (2) 40 85

(1) Estimates are based on our budgeted cost of drydocking our vessels in China. Actual costs will vary based on various factors, including where the drydockings are actually performed. We expect to fund these costs with cash from operations. These costs do not include drydock expense items that are reflected in vessel operating expenses. Included are estimated costs associated with the installation of ballast water treatment systems. Estimated costs presented include approximately $3.0 million of costs associated with vessels that could potentially be sold based on our fleet renewal program.

(2) Actual length will vary based on the condition of the vessel, yard schedules and other factors. Estimated offhire presented includes approximately 65 days associated with vessels that could potentially be sold based on our fleet renewal program.

Summary Consolidated Financial and Other Data

The following table summarizes Genco Shipping & Trading Limited’s selected consolidated financial and other data for the periods indicated below.

Three Months Ended December 31, 2017   Three Months Ended December 31, 2016 Twelve Months Ended December 31, 2017   Twelve Months Ended December 31, 2016  
(Dollars in thousands, except share and per share data) (Dollars in thousands, except share and per share data)
(unaudited) (unaudited)
INCOME STATEMENT DATA:
Revenues:
Voyage revenues  $  74,918  $  43,785  $  209,698  $  133,246
Service revenues   –   100   –   2,340
Total revenues   74,918   43,885   209,698   135,586
Operating expenses:
Voyage expenses   15,579   3,995   25,321   13,227
Vessel operating expenses   24,219   27,510   98,086   113,636
General and administrative expenses (inclusive of nonvested stock amortization   5,640   15,074   22,190   45,174
expense of $0.5 million, $6.2 million, $4.1 million and $20.7 million respectively)
Technical management fees   1,925   2,171   7,659   8,932
Depreciation and amortization   17,582   18,178   71,776   76,330
Other operating income   –   (777)   –   (960)
Impairment of vessel assets   –   –   21,993   69,278
Gain on sale of vessels   –   (3,632)   (7,712)   (3,555)
Total operating expenses   64,945   62,519   239,313   322,062
Operating loss   9,973   (18,634)   (29,615)   (186,476)
Other (expense) income:
Impairment of investment   –   –   –   (2,696)
Other (expense) income   (12)   694   (164)   645
Interest income   546   61   1,551   204
Interest expense   (7,938)   (7,254)   (30,497)   (28,453)
Other expense   (7,404)   (6,499)   (29,110)   (30,300)
Income (loss) before reorganization items, net   2,569   (25,133)   (58,725)   (216,776)
Reorganization items, net   –   (29)   –   (272)
Income (loss) before income taxes   2,569   (25,162)   (58,725)   (217,048)
Income tax benefit (expense)   –   58   –   (709)
Net income (loss)  $  2,569  $  (25,104)  $  (58,725)  $  (217,757)
Net earnings (loss) per share – basic  $  0.07  $  (3.43)  $  (1.71)  $  (30.03)
Net earnings (loss) per share – diluted  $  0.07  $  (3.43)  $  (1.71)  $  (30.03)
Weighted average common shares outstanding – basic   34,559,830   7,318,452   34,242,631   7,251,231
Weighted average common shares outstanding – diluted   34,682,302   7,318,452   34,242,631   7,251,231
December 31, 2017   December 31, 2016
BALANCE SHEET DATA (Dollars in thousands): (unaudited)
Assets
Current assets:
Cash and cash equivalents $ 174,479 $ 133,400
Restricted cash 7,234 8,242
Due from charterers, net 12,855 10,373
Prepaid expenses and other current assets 22,671 15,750
Vessels held for sale 4,840
Total current assets 217,239 172,605
Noncurrent assets:
Vessels, net of accumulated depreciation of $213,431 and $163,053, respectively 1,265,577 $ 1,354,760
Deferred drydock, net 13,382 12,637
Fixed assets, net 1,014 1,018
Other noncurrent assets 514 514
Restricted Cash 23,233 27,426
Total noncurrent assets 1,303,720 1,396,355
Total assets $ 1,520,959 $ 1,568,960
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses $ 23,230 22,885
Current portion of long-term debt 24,497 4,576
Deferred revenue 4,722 1,488
Total current liabilities 52,449 28,949
Noncurrent liabilities
Long-term lease obligations 2,588 1,868
Long-term debt, net of deferred financing costs of $9,032 and $11,357, respectively 490,895 508,444
Total noncurrent liabilities 493,483 510,312
Total liabilities 545,932 539,261
Commitments and contingencies
Equity:
Series A Preferred Stock 120,789
Common stock 345 74
Additional paid-in capital 1,628,355 1,503,784
Retained deficit (653,673 ) (594,948 )
Total equity 975,027 1,029,699
Total liabilities and equity $ 1,520,959 $ 1,568,960
Twelve Months Ended
December 31, 2017
  Twelve Months Ended
December 31, 2016
STATEMENT OF CASH FLOWS (Dollars in thousands): (unaudited)
Cash flows from operating activities
Net loss $ (58,725 ) $ (217,757 )
Adjustments to reconcile to net loss to net cash provided by (used in) operating activities:
Depreciation and amortization 71,776 76,330
Amortization of deferred financing costs 2,325 2,847
PIK interest, net 4,542 800
Amortization of nonvested stock compensation expense 4,053 20,680
Impairment of vessel assets 21,993 69,278
Gain on sale of vessels (7,712 ) (3,555 )
Impairment of investment 2,696
Realized gain on sale of investment (689 )
Change in assets and liabilities:
(Increase) decrease in due from charterers (2,482 ) 213
(Increase) decrease in prepaid expenses and other current assets (6,921 ) 5,485
Increase (decrease) in accounts payable and accrued expenses 1,494 (5,309 )
Increase in deferred revenue 3,234 430
Increase in lease obligations 720 719
Deferred drydock costs incurred (7,782 ) (2,150 )
Net cash provided by (used in) operating activities 26,515 (49,982 )
Cash flows from investing activities
Purchase of vessels, including deposits (262 ) (458 )
Purchase of other fixed assets (290 ) (329 )
Net proceeds from sale of vessels 15,513 13,024
Sale of AFS securities 10,489
Net cash provided by investing activities 14,961 22,726
Cash flows from financing activities
Proceeds from $400 Million Credit Facility 400,000
Repayments on the $400 Million Credit Facility (400 )
Repayments on the $100 Million Term Loan Facility (60,099 )
Repayments on the $253 Million Term Loan Facility (145,268 )
Repayments on the 2015 Revolving Credit Facility (56,218 )
Repayments on the $44 Million Term Loan Facility (38,500 )
Repayments on the $98 Million Credit Facility (1,332 ) (3,000 )
Repayments on the $148 Million Credit Facility (140,383 )
Repayments on the $22 Million Term Loan Facility (18,625 )
Repayments on the 2014 term Loan Facilities (2,763 ) (2,763 )
Cash settlement of non-accredited Note holders (101 )
Proceeds from issuance of Series A Preferred Stock 125,000
Payment of Series A Preferred Stock issuance costs (1,103 ) (3,108 )
Payment of deferred financing costs (1,500 )
Net cash (used in) provided by financing activities (5,598 ) 55,435
Net increase in cash, cash equivalents and restricted cash 35,878 28,179
Cash, cash equivalents and restricted cash at beginning of period 169,068 140,889
Cash, cash equivalents and restricted cash at end of period $ 204,946 $ 169,068
Three Months Ended
December 31, 2017
  Three Months Ended
December 31, 2016
Twelve Months Ended
December 31, 2017
  Twelve Months Ended
December 31, 2016
(Dollars in thousands) (Dollars in thousands)
EBITDA Reconciliation: (unaudited) (unaudited)
Net income (loss) $ 2,569 $ (25,104 ) $ (58,725 ) $ (217,757 )
+ Net interest expense 7,392 7,193 28,946 28,249
+ Income tax (benefit) expense (58 ) 709
+ Depreciation and amortization 17,582 18,178 71,776 76,330
EBITDA(1) $ 27,543 $ 209 $ 41,997 $ (112,469 )
Three Months Ended Twelve Months Ended  
December 31, 2017   December 31, 2016 December 31, 2017   December 31, 2016
FLEET DATA: (unaudited) (unaudited)
Total number of vessels at end of period 60 65 60 65
Average number of vessels (2) 60.0 66.7 60.8 68.8
Total ownership days for fleet (3) 5,520 6,132 22,207 25,176
Total available days for fleet (4) 5,386 5,975 21,357 24,457
Total operating days for fleet (5) 5,334 5,869 20,941 24,164
Fleet utilization (6) 99.0% 98.2% 98.1% 98.8%
AVERAGE DAILY RESULTS:
Time charter equivalent (7) $ 11,017 $ 6,659 $ 8,633 $ 4,907
Daily vessel operating expenses per vessel (8) 4,387 4,486 4,417 4,514
  1. EBITDA represents net income (loss) plus net interest expense, taxes, and depreciation and amortization. EBITDA is included because it is used by management and certain investors as a measure of operating performance. EBITDA is used by analysts in the shipping industry as a common performance measure to compare results across peers. Our management uses EBITDA as a performance measure in consolidating internal financial statements and it is presented for review at our board meetings. For these reasons, we believe that EBITDA is a useful measure to present to our investors. EBITDA is not an item recognized by U.S. GAAP (i.e. non-GAAP measure) and should not be considered as an alternative to net income, operating income or any other indicator of a company’s operating performance required by U.S. GAAP. EBITDA is not a source of liquidity or cash flows as shown in our consolidated statement of cash flows. The definition of EBITDA used here may not be comparable to that used by other companies.
  2. Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was part of our fleet during the period divided by the number of calendar days in that period.
  3. We define ownership days as the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.
  4. We define available days as the number of our ownership days less the aggregate number of days that our vessels are off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels between time charters. Companies in the shipping industry generally use available days to measure the number of days in a period during which vessels should be capable of generating revenues.
  5. We define operating days as the number of our available days in a period less the aggregate number of days that our vessels are off-hire due to unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.
  6. We calculate fleet utilization by dividing the number of our operating days during a period by the number of our available days during the period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the number of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning.
  7. We define TCE rates as our voyage revenues less voyage expenses, divided by the number of our available days during the period, which is consistent with industry standards. TCE rate is a common shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charterhire rates for vessels on voyage charters are generally not expressed in per-day amounts while charterhire rates for vessels on time charters generally are expressed in such amounts.
Three Months Ended December 31, 2017   Three Months Ended December 31, 2016 Twelve Months Ended December 31, 2017   Twelve Months Ended December 31, 2016
Total Fleet (unaudited) (unaudited)
Voyage revenues (in thousands)  $  74,918  $  43,785  $  209,698  $  133,246
Voyage expenses (in thousands)   15,579   3,995   25,321   13,227
  59,339   39,790   184,377   120,019
 
Total available days   5,386   5,975     21,357   24,457
Total TCE rate  $  11,017  $  6,659    $  8,633  $  4,907

  1. We define daily vessel operating expenses to include crew wages and related costs, the cost of insurance expenses relating to repairs and maintenance (excluding drydocking), the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses. Daily vessel operating expenses are calculated by dividing vessel operating expenses by ownership days for the relevant period.

Debt Overview

Debt outstanding as of December 31, 2017, gross of unamortized debt issuance costs and inclusive of the current portion of long-term debt, amounted to $524.4 million. On February 13, 2018, we paid down the $400 Million Credit Facility by $11.3 million from excess cash flow generated by the vessels collateralizing this facility during the fourth quarter of 2017.

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