Genco, the largest U.S. headquartered drybulk shipowner focused on the global transportation of commodities, reported its financial results for the three months and six months ended June 30, 2023.
Second Quarter 2023 and Year-to-Date Highlights
- Dividend: Declared a $0.15 per share dividend for Q2 2023
- 16th consecutive quarterly payout
- Cumulative dividends of $4.595 per share or 33% of the share price1
- 16th consecutive quarterly payout
- Financial performance: Net income of $11.6 million for Q2 2023
- Basic and diluted earnings per share of $0.27
- Adjusted EBITDA of $30.0 million for Q2 20232
- Deleveraging: Voluntarily prepaid debt of $8.75 million in Q2 2023
- Reduced debt to $153.5 million at June 30, 2023
- Net loan-to-value of 11%3
- Paid down $295.7 million or 66% of our debt since 2021
- Voyage revenues: Totaled $90.6 million in Q2 2023
- Net revenue2 was $60.7 million during Q2 2023
- Average daily fleet-wide TCE,2 was $15,556 for Q2 2023
- Estimated TCE to date for Q3 2023: $12,262 for 61% of our owned fleet available days, based on both period and current spot fixtures2
John C. Wobensmith, Chief Executive Officer, commented, “During the second quarter, Genco continued to execute the Company’s value strategy, as we voluntarily paid down debt and provided shareholders with a sizeable dividend. Genco has declared 16 consecutive dividends, including our second quarter dividend of $0.15 per share, and paid down 66% of our debt since 2021. We remain committed to our medium-term goal of reducing net debt to zero, enabling us to further reduce our industry-low cash flow breakeven rate. Importantly, our TCE rate increased by 12% in the second quarter relative to the first quarter while we continued to outperform our benchmarks during the period. Based on our unique platform and meaningful earnings power, we are well positioned to continue delivering on our value strategy’s three pillars of dividends, deleveraging, and growth.”
Mr. Wobensmith continued, “Looking ahead, we believe favorable supply and demand fundamentals bode well for the drybulk market’s long-term prospects. While an unwinding of port congestion has temporarily increased effective capacity and adversely impacted rates in the near term, we continue to see solid commodity demand from China and developing Asia. Furthermore, the newbuilding orderbook remains historically low with anticipated constraints going forward in both drybulk fleet and shipyard capacity. Genco is favorably positioned to draw on our sizable fleet, best-in-class commercial platform and barbell approach to fleet composition to capitalize on favorable long-term market fundamentals. Lastly, for the third consecutive year, we are proud to be ranked atop the Webber Research ESG scorecard out of 64 public shipping companies. We believe this is a true testament to our overall initiatives and further highlights the strength of the Genco team.”
1 Genco share price as of August 2, 2023.
2 We believe the non-GAAP measure presented provides investors with a means of better evaluating and understanding the Company’s operating performance. Please see Summary Consolidated Financial and Other Data below for further reconciliation. Regarding Q3 2023 TCE, actual results will vary from current estimates. Net revenue is defined as voyage revenues minus voyage expenses, charter hire expenses and realized gains or losses on fuel hedges.
3 Represents the principal amount of our credit facility debt outstanding less our cash and cash equivalents as of June 30, 2023 divided by estimates of the market value of our fleet as of August 3, 2023 from VesselsValue.com. The actual market value of our vessels may vary.
Comprehensive Value Strategy
Genco’s comprehensive value strategy is centered on three pillars:
- Dividends: paying sizeable quarterly cash dividends to shareholders
- Deleveraging: through voluntary debt prepayments to maintain low financial leverage, and
- Growth: opportunistically growing the Company’s asset base
This strategy is a key differentiator for Genco, which we believe creates a compelling risk-reward balance to drive shareholder value over the long-term. The Company is positioned to pay a sizeable quarterly dividend across diverse market environments while maintaining significant flexibility to grow the fleet through accretive vessel acquisitions.
Key characteristics of our unique platform include:
- Industry low cash flow breakeven rate
- Net loan-to-value of 11% as of August 3, 2023
- Strong liquidity position of $260.9 million, which consists of:
- $53.9 million of cash on the balance sheet
- $207.0 million of revolver availability
- High operating leverage with our scalable fleet across the major and minor bulk sectors
Financial deleveraging
Genco has paid down $295.7 million or 66% of our debt since 2021
- Debt outstanding: $153.5 million as of June 30, 2023
- Voluntarily paid down debt of $8.75 million in Q2 2023
- No mandatory debt amortization payments until 2026 when the facility matures
- We plan to continue to voluntarily pay down debt
- Medium-term goal: reducing net debt to zero
- Longer-term goal: zero debt
Dividend Policy
Genco declared a cash dividend of $0.15 per share for the second quarter of 2023. While our stated formula, with a quarterly reserve of $10.75 million, produced a dividend of $0.13 per share for the quarter, the Board of Directors elected on management’s recommendation to reduce the quarterly reserve to $9.92 million in order to declare the $0.15 per share dividend. A key component of Genco’s value strategy is maintaining a quarterly reserve, as well as the optionality for the use of the reserve as Genco seeks to pay sizeable dividends in diverse market environments.
Genco’s industry low cash flow breakeven rate and low financial leverage, together with our view of an improvement of freight rates from current spot levels gave the Company confidence to utilize part of the quarterly reserve to declare a larger quarterly dividend. This represents our seventh dividend payment under our value strategy with cumulative dividends declared to date of $3.54 per share. The Q2 2023 dividend is payable on or about August 23, 2023 to all shareholders of record as of August 16, 2023.
Under the quarterly dividend policy adopted by our Board of Directors, the amount available for quarterly dividends is to be calculated based on the formula in the table below. The table includes the calculation of the actual Q2 2023 dividend and estimated amounts for the calculation of the dividend for Q3 2023:
Dividend calculation | Q2 2023 actual | Q3 2023 estimates | |||
Net revenue | $ | 60.66 | Fixtures + market | ||
Operating expenses | (30.84 | ) | (33.78 | ) | |
Operating cash flow | $ | 29.82 | |||
Less: debt repayments | (8.75 | ) | (8.75 | ) | |
Less: capex for dydocking/BWTS/ESDs | (4.69 | ) | (5.55 | ) | |
Less: reserve* | (9.92 | ) | (10.75 | ) | |
Cash flow distributable as dividends | $ | 6.46 | Sum of the above | ||
Number of shares to be paid dividends | 43.1 | 43.1 | |||
Dividend per share | $ | 0.15 | |||
Numbers in millions except per share amounts | |||||
*Q2 2023 reserve reduced from $10.75m to $9.92m | |||||
Operating cash flow is defined as net revenue (consisting of voyage revenue less voyage expenses, charter hire expenses, and realized gains or losses on fuel hedges), less operating expenses (consisting of vessel operating expenses, general and administrative expenses other than non-cash restricted stock expenses, technical management fees, and interest expense other than non-cash deferred financing costs), for purposes of the foregoing calculation. Estimated expenses, debt repayments, and capital expenditures for Q3 2023 are estimates presented for illustrative purposes.
The quarterly reserve for the third quarter of 2023 under the Company’s dividend formula is expected to be $10.75 million. Subject to the development of freight rates for the remainder of the third quarter and our assessment of our liquidity and forward outlook, we maintain flexibility to reduce the quarterly reserve to pay dividends or increase the amount of dividends otherwise payable under our formula.
Anticipated uses for the reserve include, but are not limited to:
- Vessel acquisitions
- Debt repayments, and
- General corporate purposes
We plan to set the reserve on a quarterly basis for the subsequent quarter, and it is anticipated to be based on future quarterly debt repayments and interest expense and remains subject to our Board of Directors’ discretion. Maintaining a quarterly reserve as well as optionality for the uses of the reserve are important factors of our corporate strategy that are intended to allow Genco to retain liquidity to take advantage of a variety of market conditions.
The Board expects to reassess the payment of dividends as appropriate from time to time. Our quarterly dividend policy and declaration and payment of dividends are subject to legally available funds, compliance with applicable law and contractual obligations (including our credit facility) and the Board of Directors’ determination that each declaration and payment is at the time in the best interests of the Company and its shareholders after its review of our financial performance.
Peter Allen, Chief Financial Officer, commented, “Genco continues to utilize a prudent capital allocation approach striking a solid balance between debt repayments and dividend distribution during the second quarter. In the year-to-date, we have voluntarily paid down $17.5 million of debt bringing our total debt repayments to nearly $300 million over the last 2.5 years. This has enabled Genco to continue to strengthen its industry-leading balance sheet while also paying meaningful dividends to shareholders. Furthermore, with over $260 million of available liquidity, through cash on the balance sheet and undrawn revolver availability, Genco maintains significant financial flexibility going forward.”
Genco’s Active Commercial Operating Platform and Fleet Deployment Strategy
We utilize a portfolio approach towards revenue generation through a combination of:
- Short-term, spot market employment, and
- Opportunistically booking longer term coverage
Our fleet deployment strategy currently remains weighted towards short-term fixtures, which provide us with optionality on our sizeable fleet.
Our barbell approach towards fleet composition enables Genco to gain exposure to both the major and minor bulk commodities with a fleet whose cargoes carried align with global commodity trade flows. This approach continues to serve us well given the upside potential in major bulk rates together with the relative stability of minor bulk rates.
Based on current fixtures to date, our estimated TCE to date for the third quarter of 2023 on a load-to-discharge basis is presented below. Actual rates for the third quarter will vary based upon future fixtures. These estimates are based on time charter contracts entered by the Company as well as current spot fixtures on the load-to-discharge method, whereby revenue is recognized ratably over the voyage from the commencement of loading to the completion of discharge. The actual TCE rates to be earned will depend on the number of contracted days and the number of ballast days at the end of the period. According to the load-to-discharge accounting method, the Company does not recognize revenue for any ballast days or uncontracted days at the end of the third quarter of 2023. At the same time, expenses for uncontracted days will be recognized.
Estimated net TCE – Q3 2023 to Date | |||
Vessel Type | Fleet-wide | % Fixed | |
Capesize | $ | 16,961 | 57% |
Ultra/Supra | $ | 9,512 | 64% |
Total | $ | 12,262 | 61% |
Our longer term fixed rate and index-linked time charters are listed below.
Vessel | Type | DWT | Year Built | Rate | Duration | Min Expiration | |
Genco Maximus | Capesize | 169,025 | 2009 | $ | 27,500 | 24-30 months | Sep-23 |
Genco Endeavour | Capesize | 181,060 | 2015 | 127% of BCI + scrubber premium | 11-14 months | Jan-24 | |
Genco Resolute | Capesize | 181,060 | 2015 | 127% of BCI + scrubber premium | 11-14 months | Feb-24 | |
Genco Defender | Capesize | 180,021 | 2016 | 125% of BCI + scrubber premium | 11-14 months | Apr-24 | |
We have approximately seven Capesize vessels coming open in the coming weeks, a portion of which we plan to ballast to the Atlantic basin.
Financial Review: 2023 Second Quarter
The Company recorded net income for the second quarter of 2023 of $11.6 million, or $0.27 basic and diluted earnings per share, respectively. Comparatively, for the three months ended June 30, 2022, the Company recorded net income of $47.4 million, or $1.12 and $1.10 basic and diluted earnings per share, respectively.
Revenue / TCE
The Company’s revenues decreased to $90.6 million for the three months ended June 30, 2023, as compared to $137.8 million recorded for the three months ended June 30, 2022, primarily due to lower rates earned by our minor and major bulk vessels. The average daily time charter equivalent, or TCE, rates obtained by the Company’s fleet was $15,556 per day for the three months ended June 30, 2023 as compared to $28,756 per day for the three months ended June 30, 2022.
Voyage expenses
Voyage expenses were $28.8 million for the three months ended June 30, 2023 compared to $32.5 million during the prior year period, primarily due to lower bunker consumption for our minor bulk vessels, as well as decreased fuel prices during the second quarter of 2023 as compared to the same period during 2022.
Vessel operating expenses
Vessel operating expenses decreased to $22.6 million for the three months ended June 30, 2023 from $29.5 million for the three months ended June 30, 2022. Daily vessel operating expenses, or DVOE, amounted to $5,641 per vessel per day for the second quarter of 2023 compared to $7,358 per vessel per day for the second quarter of 2022. The decrease was primarily due to lower COVID-19 related expenses in 2023 over the same period last year, a decrease in the purchase of stores and spare parts, and reduced repair and maintenance costs. We experienced those higher costs last year as we completed the transition of vessels to our new technical management joint venture through the first half of 2022.
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. Based on estimates provided by our technical manager, our DVOE budget for Q3 2023 is $6,250 per vessel per day on a fleet-wide basis. The potential impacts of the war in Ukraine and COVID-19 are unpredictable, and the actual amount of our DVOE could be higher or lower than budgeted as a result.
General and administrative expenses
General and administrative expenses increased to $6.9 million for the second quarter of 2023 compared to $6.4 million for the second quarter of 2022, primarily due to an increase in non-cash stock amortization expenses.
Depreciation and amortization expenses
Depreciation and amortization expenses increased to $16.8 million for the three months ended June 30, 2023 from $14.5 million for the three months ended June 30, 2022, primarily due to an increase in drydocking amortization expense for the major bulk vessels that completed their respective drydockings during the second quarter of 2022 through the first quarter of 2023.
Drybulk market update
In Q2 2023, spot freight rates improved relative to Q1 2023, but remained volatile due to various factors including:
- Solid iron ore and coal shipments into China
- Unwinding of port congestion increasing effective vessel capacity
- Contraction in ex-China steel production as well as demand for certain raw materials
Supply and demand factors for the drybulk market for the balance of the year
- Historically low orderbook as a percentage of the fleet
- Environmental regulations
- Additional stimulus from China to boost demand and support the property sector
- Increased Brazilian iron ore volumes with a seasonal weighting to 2H
- Developments regarding the Black Sea Grain Initiative
Financial Review: Six Months 2023
The Company recorded net income of $14.2 million or $0.33 basic and diluted earnings per share for the six months ended June 30, 2023, respectively. This compares to net income of $89.1 million or $2.11 and $2.07 basic and diluted earnings per share for the six months ended June 30, 2022.
Revenue / TCE
The Company’s revenues decreased to $184.9 million for the six months ended June 30, 2023 compared to $274.0 million for the six months ended June 30, 2022, primarily due to lower rates achieved by our minor and major bulk vessels. TCE rates obtained by the Company decreased to $14,757 per day for the six months ended June 30, 2023 from $26,354 per day for the six months ended June 30, 2022.
Voyage expenses
Voyage expenses decreased to $66.3 million for the six months ended June 30, 2023 from $70.9 million for the same period in 2022, primarily due to lower bunker consumption for our minor bulk vessels, as well as decreased fuel prices during the second quarter of 2023 as compared to the same period during 2022.
Vessel operating expenses
Vessel operating expenses decreased to $47.0 million for the six months ended June 30, 2023 from $56.5 million for the six months ended June 30, 2022. DVOE was $5,899 for the year-to-date period in 2023 versus $7,100 in 2022. The decrease was primarily due to lower COVID-19 related expenses in 2023 over the same period last year, a decrease in the purchase of stores and spare parts, as well as reduced repair and maintenance costs.
General and administrative expenses
General and administrative expenses for the six months ended June 30, 2023 increased to $14.7 million as compared to the $12.4 million in the same period of 2022 primarily due to an increase in non-cash stock amortization expense as well as higher legal and professional fees.
EBITDA
EBITDA for the six months ended June 30, 2023 amounted to $49.8 million compared to $122.2 million during the prior period. During the six months of 2023 and 2022, EBITDA included gains and losses on fuel hedges. Excluding these items, our adjusted EBITDA would have amounted to $49.9 million and $120.5 million, for the respective periods.
Liquidity and Capital Resources
Cash Flow
Net cash provided by operating activities for the six months ended June 30, 2023 and 2022 was $38.9 million and $99.2 million, respectively. This decrease in cash provided by operating activities was primarily due to lower rates earned by our minor and major bulk vessels and changes in working capital. These decreases were partially offset by a decrease in drydocking costs incurred during the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.
Net cash used in investing activities for the six months ended June 30, 2023 and 2022 was $3.5 million and $50.0 million, respectively. This decrease was primarily due to a $45.2 million decrease in the purchase of vessels primarily as a result of the purchase of two Ultramax vessels that delivered during the first quarter of 2022.
Net cash used in financing activities during the six months ended June 30, 2023 and 2022 was $45.6 million and $119.1 million, respectively. The decrease is primarily due to the additional $40.0 million debt repayment made under the $450 Million Credit Facility during the first quarter of 2022. Additionally, there was a $33.4 million decrease in the payment of dividends during the first half of 2023 as compared to the same period during 2022.
Capital Expenditures
Genco’s fleet of 44 vessels as of August 3, 2023, consists of:
- 17 Capesizes
- 15 Ultramaxes
- 12 Supramaxes
The fleet’s average age is 11.4 years and has an aggregate capacity of approximately 4,635,000 dwt.
In addition to acquisitions that we may undertake, we will incur additional capital expenditures due to special surveys and drydockings. Furthermore, we plan to upgrade a portion of our fleet with energy saving devices and apply high performance paint systems to our vessels in order to reduce fuel consumption and emissions.
We estimate our capital expenditures related to drydocking, including capitalized costs incurred during drydocking related to vessel assets and vessel equipment, ballast water treatment system costs, fuel efficiency upgrades and scheduled off-hire days for our fleet for the balance of 2023 and 2024 to be:
Estimated costs ($ in millions) | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | ||||||
Drydock Costs (1) | $ | 3.18 | $ | – | $ | 1.00 | $ | 6.05 | $ | 5.65 | $ | 6.65 |
Fuel Efficiency Upgrade Costs (2) | $ | 2.37 | $ | – | $ | 0.14 | $ | 1.50 | $ | 1.09 | $ | 1.23 |
Total Costs | $ | 5.55 | $ | – | $ | 1.14 | $ | 7.55 | $ | 6.74 | $ | 7.88 |
Estimated Offhire Days (3) | 70 | – | 25 | 120 | 115 | 125 | ||||||
(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 on hand. These costs do not include drydock expense items that are reflected in vessel operating expenses.
(2) Estimated costs associated with the installation of fuel efficiency upgrades are expected to be funded with cash on hand.
(3) Actual length will vary based on the condition of the vessel, yard schedules and other factors. The estimated offhire days per sector scheduled for Q3 2023 consists of 70 days for two Supramax vessels.
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 June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | ||||||||||||||
(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 | $ | 90,556 | $ | 137,764 | $ | 184,947 | $ | 273,991 | |||||||||
Total revenues | 90,556 | 137,764 | 184,947 | 273,991 | |||||||||||||
Operating expenses: | |||||||||||||||||
Voyage expenses | 28,830 | 32,460 | 66,265 | 70,924 | |||||||||||||
Vessel operating expenses | 22,586 | 29,463 | 46,979 | 56,477 | |||||||||||||
Charter hire expenses | 1,040 | 5,044 | 4,705 | 12,682 | |||||||||||||
General and administrative expenses (inclusive of nonvested stock amortization | 6,933 | 6,381 | 14,682 | 12,424 | |||||||||||||
expense of $1.2 million, $0.8 million, $2.8 million and $1.5 million, respectively) | |||||||||||||||||
Technical management fees | 1,349 | 700 | 2,111 | 1,617 | |||||||||||||
Depreciation and amortization | 16,791 | 14,521 | 32,736 | 28,579 | |||||||||||||
Total operating expenses | 77,529 | 88,569 | 167,478 | 182,703 | |||||||||||||
Operating income | 13,027 | 49,195 | 17,469 | 91,288 | |||||||||||||
Other income (expense): | |||||||||||||||||
Other income (expense) | 125 | 767 | (198 | ) | 2,764 | ||||||||||||
Interest income | 520 | 68 | 1,290 | 85 | |||||||||||||
Interest expense | (2,131 | ) | (2,405 | ) | (4,160 | ) | (4,647 | ) | |||||||||
Other expense, net | (1,486 | ) | (1,570 | ) | (3,068 | ) | (1,798 | ) | |||||||||
Net income | $ | 11,541 | $ | 47,625 | $ | 14,401 | $ | 89,490 | |||||||||
Less: Net (loss) income attributable to noncontrolling interest | (21 | ) | 243 | 205 | $ | 419 | |||||||||||
Net income attributable to Genco Shipping & Trading Limited | $ | 11,562 | $ | 47,382 | $ | 14,196 | $ | 89,071 | |||||||||
Earnings per share – basic | $ | 0.27 | $ | 1.12 | $ | 0.33 | $ | 2.11 | |||||||||
Earnings per share – diluted | $ | 0.27 | $ | 1.10 | $ | 0.33 | $ | 2.07 | |||||||||
Weighted average common shares outstanding – basic | 42,786,918 | 42,385,423 | 42,709,916 | 42,276,371 | |||||||||||||
Weighted average common shares outstanding – diluted | 43,134,152 | 42,996,676 | 43,115,859 | 42,932,370 | |||||||||||||
June 30, 2023 | December 31, 2022 | ||||||||||
BALANCE SHEET DATA (Dollars in thousands): | (unaudited) | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 47,934 | $ | 58,142 | |||||||
Restricted cash | 5,643 | 5,643 | |||||||||
Due from charterers, net | 19,693 | 25,333 | |||||||||
Prepaid expenses and other current assets | 10,420 | 8,399 | |||||||||
Inventories | 22,962 | 21,601 | |||||||||
Fair value of derivative instruments | 4,030 | 6,312 | |||||||||
Total current assets | 110,682 | 125,430 | |||||||||
Noncurrent assets: | |||||||||||
Vessels, net of accumulated depreciation of $328,339 and $303,098, respectively | 979,054 | 1,002,810 | |||||||||
Deferred drydock, net | 33,858 | 32,254 | |||||||||
Fixed assets, net | 8,127 | 8,556 | |||||||||
Operating lease right-of-use assets | 3,357 | 4,078 | |||||||||
Restricted cash | 315 | 315 | |||||||||
Fair value of derivative instruments | – | 423 | |||||||||
Total noncurrent assets | 1,024,711 | 1,048,436 | |||||||||
Total assets | $ | 1,135,393 | $ | 1,173,866 | |||||||
Liabilities and Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable and accrued expenses | $ | 19,042 | $ | 29,475 | |||||||
Deferred revenue | 7,945 | 4,958 | |||||||||
Current operating lease liabilities | 2,237 | 2,107 | |||||||||
Total current liabilities | 29,224 | 36,540 | |||||||||
Noncurrent liabilities | |||||||||||
Long-term operating lease liabilities | 2,963 | 4,096 | |||||||||
Long-term debt, net of deferred financing costs of $5,239 and $6,079, respectively | 148,261 | 164,921 | |||||||||
Total noncurrent liabilities | 151,224 | 169,017 | |||||||||
Total liabilities | 180,448 | 205,557 | |||||||||
Commitments and contingencies | |||||||||||
Equity: | |||||||||||
Common stock | 425 | 423 | |||||||||
Additional paid-in capital | 1,563,631 | 1,588,777 | |||||||||
Accumulated other comprehensive income | 3,859 | 6,480 | |||||||||
Accumulated deficit | (614,051 | ) | (628,247 | ) | |||||||
Total Genco Shipping & Trading Limited shareholders’ equity | 953,864 | 967,433 | |||||||||
Noncontrolling interest | 1,081 | 876 | |||||||||
Total equity | 954,945 | 968,309 | |||||||||
Total liabilities and equity | $ | 1,135,393 | $ | 1,173,866 | |||||||
Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |||||||||||
STATEMENT OF CASH FLOWS (Dollars in thousands): | (unaudited) | |||||||||||
Cash flows from operating activities | ||||||||||||
Net income | $ | 14,401 | $ | 89,490 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 32,736 | 28,579 | ||||||||||
Amortization of deferred financing costs | 840 | 841 | ||||||||||
Right-of-use asset amortization | 721 | 705 | ||||||||||
Amortization of nonvested stock compensation expense | 2,778 | 1,516 | ||||||||||
Amortization of premium on derivatives | 84 | 110 | ||||||||||
Insurance proceeds for protection and indemnity claims | 168 | 169 | ||||||||||
Insurance proceeds for loss of hire claims | 152 | – | ||||||||||
Change in assets and liabilities: | ||||||||||||
Decrease (increase) in due from charterers | 5,640 | (4,847 | ) | |||||||||
(Increase) decrease in prepaid expenses and other current assets | (3,743 | ) | 584 | |||||||||
Increase in inventories | (1,361 | ) | (7,177 | ) | ||||||||
(Decrease) increase in accounts payable and accrued expenses | (7,708 | ) | 8,602 | |||||||||
Increase (decrease) in deferred revenue | 2,987 | (4,292 | ) | |||||||||
Decrease in operating lease liabilities | (1,003 | ) | (917 | ) | ||||||||
Deferred drydock costs incurred | (7,744 | ) | (14,204 | ) | ||||||||
Net cash provided by operating activities | 38,948 | 99,159 | ||||||||||
Cash flows from investing activities | ||||||||||||
Purchase of vessels and ballast water treatment systems, including deposits | (3,131 | ) | (48,346 | ) | ||||||||
Purchase of other fixed assets | (1,802 | ) | (1,927 | ) | ||||||||
Insurance proceeds for hull and machinery claims | 1,402 | 293 | ||||||||||
Net cash used in investing activities | (3,531 | ) | (49,980 | ) | ||||||||
Cash flows from financing activities | ||||||||||||
Repayments on the $450 Million Credit Facility | (17,500 | ) | (57,500 | ) | ||||||||
Cash dividends paid | (28,125 | ) | (61,572 | ) | ||||||||
Payment of deferred financing costs | – | (11 | ) | |||||||||
Net cash used in financing activities | (45,625 | ) | (119,083 | ) | ||||||||
Net decrease in cash, cash equivalents and restricted cash | (10,208 | ) | (69,904 | ) | ||||||||
Cash, cash equivalents and restricted cash at beginning of period | 64,100 | 120,531 | ||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 53,892 | $ | 50,627 | ||||||||
Three Months Ended June 30, 2023 | |||||
Net Income Reconciliation | (unaudited) | ||||
Net income attributable to Genco Shipping & Trading Limited | $ | 11,562 | |||
+ | Unrealized loss on fuel hedges | 38 | |||
Adjusted net income | $ | 11,600 | |||
Earnings per share – basic | $ | 0.27 | |||
Earnings per share – diluted | $ | 0.27 | |||
Weighted average common shares outstanding – basic | 42,786,918 | ||||
Weighted average common shares outstanding – diluted | 43,134,152 | ||||
Weighted average common shares outstanding – basic as per financial statements | 42,786,918 | ||||
Dilutive effect of stock options | 170,198 | ||||
Dilutive effect of performance based restricted stock units | 54,712 | ||||
Dilutive effect of restricted stock units | 122,324 | ||||
Weighted average common shares outstanding – diluted as adjusted | 43,134,152 | ||||
Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||
EBITDA Reconciliation: | (unaudited) | (unaudited) | ||||||||||||||||
Net income attributable to Genco Shipping & Trading Limited | $ | 11,562 | $ | 47,382 | $ | 14,196 | $ | 89,071 | ||||||||||
+ | Net interest expense | 1,611 | 2,337 | 2,870 | 4,562 | |||||||||||||
+ | Depreciation and amortization | 16,791 | 14,521 | 32,736 | 28,579 | |||||||||||||
EBITDA(1) | $ | 29,964 | $ | 64,240 | $ | 49,802 | $ | 122,212 | ||||||||||
+ | Unrealized loss (gain) on fuel hedges | 38 | (321 | ) | 80 | (1,760 | ) | |||||||||||
Adjusted EBITDA | $ | 30,002 | $ | 63,919 | $ | 49,882 | $ | 120,452 | ||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |||||||||||||||
FLEET DATA: | (unaudited) | (unaudited) | ||||||||||||||||
Total number of vessels at end of period | 44 | 44 | 44 | 44 | ||||||||||||||
Average number of vessels (2) | 44.0 | 44.0 | 44.0 | 43.9 | ||||||||||||||
Total ownership days for fleet (3) | 4,004 | 4,004 | 7,964 | 7,954 | ||||||||||||||
Total chartered-in days (4) | 70 | 146 | 306 | 457 | ||||||||||||||
Total available days for fleet (5) | 3,969 | 3,656 | 8,035 | 7,730 | ||||||||||||||
Total available days for owned fleet (6) | 3,899 | 3,510 | 7,729 | 7,273 | ||||||||||||||
Total operating days for fleet (7) | 3,919 | 3,611 | 7,898 | 7,568 | ||||||||||||||
Fleet utilization (8) | 97.8 | % | 97.2 | % | 97.2 | % | 95.6 | % | ||||||||||
AVERAGE DAILY RESULTS: | ||||||||||||||||||
Time charter equivalent (9) | $ | 15,556 | $ | 28,756 | $ | 14,757 | $ | 26,354 | ||||||||||
Daily vessel operating expenses per vessel (10) | 5,641 | 7,358 | 5,899 | 7,100 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |||||||||||||
FLEET DATA: | (unaudited) | (unaudited) | ||||||||||||||
Ownership days | ||||||||||||||||
Capesize | 1,547.0 | 1,547.0 | 3,077.0 | 3,077.0 | ||||||||||||
Ultramax | 1,365.0 | 1,365.0 | 2,715.0 | 2,704.9 | ||||||||||||
Supramax | 1,092.0 | 1,092.0 | 2,172.0 | 2,172.0 | ||||||||||||
Total | 4,004.0 | 4,004.0 | 7,964.0 | 7,953.9 | ||||||||||||
Chartered-in days | ||||||||||||||||
Capesize | – | – | – | – | ||||||||||||
Ultramax | 50.3 | – | 239.7 | 190.3 | ||||||||||||
Supramax | 19.7 | 145.7 | 65.9 | 266.3 | ||||||||||||
Total | 70.0 | 145.7 | 305.6 | 456.6 | ||||||||||||
Available days (owned & chartered-in fleet) | ||||||||||||||||
Capesize | 1,543.2 | 1,108.5 | 2,984.0 | 2,610.4 | ||||||||||||
Ultramax | 1,404.9 | 1,341.7 | 2,940.4 | 2,792.7 | ||||||||||||
Supramax | 1,021.1 | 1,205.3 | 2,110.3 | 2,326.8 | ||||||||||||
Total | 3,969.2 | 3,655.5 | 8,034.7 | 7,729.9 | ||||||||||||
Available days (owned fleet) | ||||||||||||||||
Capesize | 1,543.2 | 1,108.5 | 2,984.0 | 2,610.4 | ||||||||||||
Ultramax | 1,354.6 | 1,341.7 | 2,700.7 | 2,602.4 | ||||||||||||
Supramax | 1,001.4 | 1,059.6 | 2,044.4 | 2,060.5 | ||||||||||||
Total | 3,899.2 | 3,509.8 | 7,729.1 | 7,273.3 | ||||||||||||
Operating days | ||||||||||||||||
Capesize | 1,532.1 | 1,100.7 | 2,965.3 | 2,555.9 | ||||||||||||
Ultramax | 1,383.7 | 1,327.4 | 2,857.5 | 2,760.2 | ||||||||||||
Supramax | 1,003.1 | 1,182.6 | 2,075.2 | 2,251.9 | ||||||||||||
Total | 3,918.9 | 3,610.7 | 7,898.0 | 7,568.0 | ||||||||||||
Fleet utilization | ||||||||||||||||
Capesize | 99.0 | % | 97.7 | % | 98.8 | % | 96.9 | % | ||||||||
Ultramax | 97.8 | % | 98.4 | % | 96.7 | % | 96.6 | % | ||||||||
Supramax | 95.9 | % | 95.5 | % | 95.6 | % | 93.1 | % | ||||||||
Fleet average | 97.8 | % | 97.2 | % | 97.2 | % | 95.6 | % | ||||||||
Average Daily Results: | ||||||||||||||||
Time Charter Equivalent | ||||||||||||||||
Capesize | $ | 19,468 | $ | 27,034 | $ | 17,759 | $ | 25,649 | ||||||||
Ultramax | 13,739 | 29,045 | 14,307 | 27,312 | ||||||||||||
Supramax | 11,984 | 30,193 | 10,977 | 26,032 | ||||||||||||
Fleet average | 15,556 | 28,756 | 14,757 | 26,354 | ||||||||||||
Daily vessel operating expenses | ||||||||||||||||
Capesize | $ | 5,928 | $ | 6,816 | $ | 6,247 | $ | 6,716 | ||||||||
Ultramax | 5,174 | 5,732 | 5,365 | 5,922 | ||||||||||||
Supramax | 5,979 | 10,161 | 6,153 | 9,100 | ||||||||||||
Fleet average | 5,641 | 7,358 | 5,899 | 7,100 | ||||||||||||
1) EBITDA represents net income attributable to Genco Shipping & Trading Limited 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. We believe that EBITDA is useful to investors as the shipping industry is capital intensive which often results in significant depreciation and cost of financing. EBITDA presents investors with a measure in addition to net income to evaluate our performance prior to these costs. 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 measure 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 chartered-in days as the aggregate number of days in a period during which we chartered-in third-party vessels.
5) We define available days as the number of our ownership days and chartered-in days less the aggregate number of days that our vessels are off-hire due to familiarization upon acquisition, repairs or repairs under guarantee, vessel upgrades or special surveys. 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.
6) We define available days for the owned fleet as available days less chartered-in days.
7) We define operating days as the number of our total available days in a period less the aggregate number of days that the 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.
8) We calculate fleet utilization as the number of our operating days during a period divided by the number of ownership days plus chartered-in days less drydocking days.
9) We define TCE rates as our voyage revenues less voyage expenses, charter hire expenses, and realized gain or losses on fuel hedges, divided by the number of the available days of our owned fleet during the period. 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. Our estimated TCE for the third quarter of 2023 is based on fixtures booked to date. Actual results may vary based on the actual duration of voyages and other factors. Accordingly, we are unable to provide, without unreasonable efforts, a reconciliation of estimated TCE for the third quarter to the most comparable financial measures presented in accordance with GAAP. When we compare our TCE to the Baltic Supramax Index (BSI) in this release, we adjust the BSI for customary commissions.
Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |||||||||||||
Total Fleet | (unaudited) | (unaudited) | ||||||||||||||
Voyage revenues (in thousands) | $ | 90,556 | $ | 137,764 | $ | 184,947 | $ | 273,991 | ||||||||
Voyage expenses (in thousands) | 28,830 | 32,460 | 66,265 | 70,924 | ||||||||||||
Charter hire expenses (in thousands) | 1,040 | 5,044 | 4,705 | 12,682 | ||||||||||||
Realized (loss) gain on fuel hedges (in thousands) | (27 | ) | 667 | 81 | 1,296 | |||||||||||
60,659 | 100,927 | 114,058 | 191,681 | |||||||||||||
Total available days for owned fleet | 3,899 | 3,510 | 7,729 | 7,273 | ||||||||||||
Total TCE rate | $ | 15,556 | $ | 28,756 | $ | 14,757 | $ | 26,354 | ||||||||
10) 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.