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Genco Shipping & Trading Limited Announces Second Quarter Financial Results

NEW YORK, Aug. 05, 2020 (GLOBE NEWSWIRE) -- Genco Shipping & Trading Limited (NYSE:GNK) (“Genco” or the “Company”), the largest U.S. headquartered drybulk shipowner focused on the transportation of major and minor bulk commodities globally, today reported its financial results for the three months and six months ended June 30, 2020.

The following financial review discusses the results for the three and six months ended June 30, 2020 and June 30, 2019.

Second Quarter 2020 and Year-to-Date Highlights

  • Genco’s focus remains on the health and safety of our crew members and our team onshore during this uncertain time
    • We have taken various proactive measures in response to COVID-19 centered around business continuity, crew protection and headquarters operations
    • We have completed crew rotations on approximately 70% of our fleet in recent months despite various travel and port restrictions and during a time in which seafarers globally have been onboard vessels well in excess of their original contract duration
  • Genco announced a regular quarterly cash dividend of $0.02 per share for the second quarter of 2020
    • Payable on or about August 25, 2020 to all shareholders of record as of August 17, 2020
    • We have now paid or declared cumulative dividends totaling $0.715 per share over the last four quarters
  • Genco maintains a strong financial position with $142.9 million of cash, including $15.2 million of restricted cash, as of June 30, 2020
  • Voyage revenues totaled $74.2 million and net revenue1 (voyage revenues minus voyage expenses and charter hire expenses) totaled $31.1 million during Q2 2020
    • Our average daily fleet-wide time charter equivalent, or TCE1, for Q2 2020 was $6,693
    • We estimate our TCE to date for Q3 2020 to be $11,617 for 62% owned fleet available days, based on current fixtures
  • We recorded a net loss of $18.2 million for the second quarter of 2020
    • Basic and diluted loss per share of $0.43
  • We closed on a $25 million revolving credit facility and subsequently drew down $24.0 million in June 2020
  • In the third quarter, we have completed the sale of two Handysize vessels
    • The Baltic Wind, a 2009-built Handysize, delivered to buyers on July 7, 2020
    • The Baltic Breeze, a 2010-built Handysize, delivered to buyers on July 31, 2020
  • We have also agreed to sell the Genco Bay, a 2010-built Handysize, which we expect to deliver to its buyer during the third quarter

John C. Wobensmith, Chief Executive Officer, commented, “During the second quarter, our focus remained on maintaining the strength of our industry leading balance sheet while continuing to return capital to shareholders. Our substantial liquidity position together with an improving drybulk landscape enabled Genco to declare our fourth consecutive quarterly dividend, increasing total dividends declared to $0.715 since implementing our policy in the third quarter of 2019.”

Mr. Wobensmith continued, “During the second quarter, our barbell approach to fleet composition, consisting of owning both major and minor bulk vessels, has once again proven to be a strength as Capesize freight rates demonstrated their upside potential, crossing the $30,000 per day threshold at the end of June, while minor bulk earnings have risen steadily to year-to-date highs. Overall, freight rates have experienced a meaningful increase as our third quarter estimated TCE to date is nearly 75% higher than what we achieved during the prior quarter. Going forward, we have a favorable outlook for the drybulk market for the balance of the year and into 2021 as the orderbook as a percentage of the fleet is at an all-time low limiting net fleet growth while global economic activity levels continue to recover coinciding with a seasonal uplift in cargo volumes.”

Mr. Wobensmith concluded, “Since the onset of the COVID-19 pandemic, we have prioritized the health and safety of our crew and onshore professionals. An underlying challenge for all ship owners has been successfully executing crew rotations due to various port and travel restrictions globally, and we are proud to have taken proactive measures by implementing industry leading protocols. This has resulted in the completion of crew changes involving over 800 seafarers since the onset of the pandemic. We continue to work diligently to repatriate more of the dedicated mariners on board our vessels who have worked beyond the term of their original contracts.”

1 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 a further reconciliation.

Genco’s active commercial operating platform and fleet deployment strategy

Overall, our fleet deployment strategy remains weighted towards short-term fixtures which provides 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 fluctuation in major and minor bulk rates in the year-to-date.

Regarding our Q3 2020 fixtures to date, the drybulk market improved significantly towards the end of the second quarter and has remained firm through July, led by the Capesize sector. With our active commercial trading strategy currently geared towards spot market employment together with the absence of any scheduled drydockings for the balance of 2020 for our Capesize vessels, we believe our fleet is in position to capture strengthening market fundamentals in the second half of the year as compared to the first half. As such, we plan to ballast select Capesize vessels to the Atlantic basin to take advantage of improving cargo flows from the region.

For our minor bulk vessels, market conditions have also improved led by a strong grain trade coupled with augmented trade flows of commodities closely tied to global economic activity. Based on current fixtures to date, we estimate the following to be our TCE to date for the third quarter of 2020:

  • Capesize: $17,863 for 64% of the owned available Q3 2020 days
  • Ultramax and Supramax: $8,867 for 62% of the owned available Q3 2020 days
  • Handysize: $5,731 for 54% of the owned available Q3 2020 days
  • Fleet average: $11,617 for 62% of the owned available Q3 2020 days

Actual rates for the third quarter will vary based upon future fixtures. The above third quarter to date estimate compares to our second quarter of 2020 TCE results by class which are listed below.

  • Capesize: $9,466
  • Ultramax and Supramax: $5,903
  • Handysize: $3,952
  • Fleet average: $6,693

Regular Quarterly Cash Dividend Policy

For the second quarter of 2020, Genco declared a regular quarterly cash dividend of $0.02 per share. Management and the Board of Directors determined to pay a dividend in light of the Company’s strong balance sheet, its emphasis on returning cash to shareholders and the receipt of net proceeds from the sale of non-core assets. This dividend is payable on or about August 25, 2020, to all shareholders of record as of August 17, 2020.

Dividends going forward remain subject to the determination of our Board of Directors each quarter after its review of our financial performance and will depend upon various factors, including limitations under our credit agreements and applicable provisions of Marshall Islands law. Heightened economic uncertainty as a result of the COVID-19 pandemic and related economic conditions may result in our suspension, reduction, or termination of future quarterly dividends. 

Financial Review: 2020 Second Quarter

The Company recorded a net loss for the second quarter of 2020 of $18.2 million, or $0.43 basic and diluted net loss per share. Comparatively, for the three months ended June 30, 2019, the Company recorded a net loss of $34.5 million, or $0.83 basic and diluted net loss per share. Net loss for the three months ended June 30, 2019, includes non-cash vessel impairment charges of $13.9 million, as well as a $0.2 million non-cash impairment of the operating lease right-of-use asset.

The Company’s revenues decreased to $74.2 million for the three months ended June 30, 2020, as compared to $83.6 million recorded for the three months ended June 30, 2019, primarily due to lower rates achieved by the majority of our vessels, as well as the operation of fewer vessels in our fleet. The average daily time charter equivalent, or TCE, rates obtained by the Company’s fleet was $6,693 per day for the three months ended June 30, 2020 as compared to $7,412 per day for the three months ended June 30, 2019. During the second quarter of 2020, the reduction in global economic activity due to the COVID-19 pandemic combined with constrained Brazilian iron ore exports in April and May resulted in a weaker drybulk freight rate environment. However, during June, as Brazilian iron ore exports recovered while countries gradually eased lockdown measures, freight rates began to markedly improve off of the lows seen earlier in the year. Specifically, Capesize rates, as quoted by the Baltic Exchange, increased from a low of $1,992 on May 14, 2020 to $30,857 on June 30, 2020.

Voyage expenses were $41.7 million for the three months ended June 30, 2020 compared to $41.8 million during the prior year period primarily attributable to changes in bunker prices.  Vessel operating expenses decreased to $21.1 million for the three months ended June 30, 2020, from $24.4 million for the three months ended June 30, 2019 primarily due to fewer owned vessels, as well as lower drydocking and crew related expenses. General and administrative expenses decreased to $5.5 million for the second quarter of 2020 compared to $5.8 million for the second quarter of 2019, primarily due to lower office rent and administrative expenses. Depreciation and amortization expenses decreased to $15.9 million for the three months ended June 30, 2020 from $18.3 million for the three months ended June 30, 2019, primarily due to a decrease in the depreciation expense for the Handysize and Supramax vessels that were impaired during the first quarter of 2020, as well as a decrease for the five vessels that were sold during the fourth quarter of 2019 and first quarter of 2020.  These decreases were partially offset by an increase in depreciation expense related to scrubber additions for our Capesize vessels.

Daily vessel operating expenses, or DVOE, amounted to $4,366 per vessel per day for the second quarter of 2020 compared to $4,615 per vessel per day for the second quarter of 2019. This decline is primarily attributable to lower drydocking and crew related expenses in the second quarter of 2020 as compared to the prior year period. 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 managers, our DVOE budget for 2020 is $4,590 per vessel per day.

Apostolos Zafolias, Chief Financial Officer, commented, “Against a challenging macro-economic backdrop of the second quarter, we continued to strengthen our balance sheet through the closing of a revolving credit facility providing us with increased optionality and flexibility to adapt to rapidly changing market conditions. We also agreed to sell certain non-core Handysize vessels, that were part of our fleet renewal program. Following the drawdown of $24 million under our revolving credit facility in June, we ended the quarter with a substantial cash position of $142.9 million, including restricted cash. We appreciate the continued support of our world class bank group during these unprecedented times, which highlights their confidence in our platform, team and long-term strategy.”

Financial Review: Six Months 2020

The Company recorded a net loss of $138.6 million or $3.31 basic and diluted net loss per share for the six months ended June 30, 2020. This compares to a net loss of $42.3 million or $1.01 basic and diluted net loss per share for the six months ended June 30, 2019. Net loss for the six months ended June 30, 2020 includes $112.8 million in non-cash vessel impairment charges and a $0.5 million loss on sale of vessels. Net loss for the six months ended June 30, 2019, includes non-cash vessel impairment charges of $13.9 million and a $0.6 million gain on sale of vessels. Revenues decreased to $172.5 million for the six months ended June 30, 2020 compared to $177.0 million for the six months ended June 30, 2019, primarily due to the sale of five vessels, as well as a decrease in revenue earned by our minor bulk vessels. Voyage expenses increased to $90.1 million for the six months ended June 30, 2020 from $84.8 million for the same period in 2019.  TCE rates obtained by the Company decreased to $8,251 per day for the six months ended June 30, 2020 from $8,341 per day for the six months ended June 30, 2019. Total operating expenses for the six months ended June 30, 2020 and 2019 were $299.1 million and $205.2 million, respectively. Total operating expenses include $112.8 million in non-cash vessel impairment charges, as well as a loss on sale of vessels of $0.5 million for the six months ending June 30, 2020. For the six months ended June 30, 2019, total operating expenses include non-cash vessel impairment charges of $13.9 million relating to the revaluation of certain vessels that comprise our fleet renewal plan to their respective fair values as well as a gain on the sale of vessels of $0.6 million. General and administrative expenses for the six months ended June 30, 2020 decreased to $11.2 million as compared to the $12.1 million in the same period of 2019, due to a decrease in office rent and administrative expenses, as well as lower legal and professional fees associated with our credit facilities. DVOE was $4,390 for the year to date period in 2020 versus $4,518 in 2019. The decrease in DVOE was predominantly due to lower crew related and drydocking related expenses, partially offset by higher insurance and spare parts. EBITDA for the six months ended June 30, 2020 amounted to $(93.5) million compared to $8.4 million during the prior period. During the six months of 2020 and 2019, EBITDA included non-cash impairment charges, an operating lease right-of-use asset non-cash impairment and gains and losses on sale of vessels as mentioned above. Excluding these items, our adjusted EBITDA would have amounted to $19.8 million and $21.9 million, for the respective periods.

Liquidity and Capital Resources

Cash Flow

Net cash used in operating activities for the six months ended June 30, 2020 was $9.0 million as compared to net cash provided by operating activities of $14.8 million for the six months ended June 30, 2019.  This decrease in cash provided by operating activities was primarily due to an increase in amounts due from charterers as of June 30, 2020 based on the timing of freight payments and other changes in working capital.  

Net cash used by investing activities during the six months ended June 30, 2020 and 2019 was $0.6 million and $13.7 million, respectively.  This decrease was primarily due to an increase in net proceeds from the sale of vessels in 2020 year to date as compared to 2019, as well as a decrease in ballast water treatment system related expenditures. 

Net cash used in financing activities during the six months ended June 30, 2020 and 2019 was $9.8 million and $38.5 million, respectively.  The decrease was primarily due to the $24.0 million drawdown on the $133 Million Credit Facility and the $11.3 million drawdown on the $495 Million Credit Facility during the first half of 2020.  Additionally, there was a $1.3 million decrease in repayments under the $495 Million Credit Facility during the six months ended June 30, 2020 as compared to the same period during 2019.  These decreases were partially offset by $8.1 million payment of dividends during the first half of 2020.

Genco’s business continuity plans and response to COVID-19

As our vessels continue to trade commodities globally, we have taken measures to safeguard our crew and work toward preventing the spread of COVID-19. Crew members have received gloves, face masks, hand sanitizer, goggles and handheld thermometers. Genco requires its crew members to wear masks when in contact with other individuals who board the vessel.  We continue to monitor CDC and WHO guidelines and are also limiting access of shore personnel boarding our vessels. Specifically, no shore personnel with fever or respiratory symptoms are allowed on board, and those that are allowed on board are restricted to designated areas that are thoroughly cleaned after their use. Face masks are also provided to shore personnel prior to boarding a vessel. Precautionary materials are posted in common areas to supplement safety training while personal hygiene best practices are strongly encouraged on board.

We have implemented industry leading protocols with regard to crew rotations to keep our crew members safe and healthy which includes polymerase chain reaction (PCR) testing as well as a 14-day quarantine period prior to boarding a vessel. Genco is enacting crew changes where permitted by regulations of the ports and of the country of origin of the mariners, in addition to strict protocols that safeguard our crews against COVID-19 exposure.

Our business continuity plans onshore for our global offices in New York, Singapore and Copenhagen allowed for an efficient transition to a remote working environment. Our office in Copenhagen reopened in June 2020 following approximately three months during which our team worked remotely.  Regarding our headquarters in New York, we are planning to implement a phased-in approach towards reopening the office; however, a return date has not yet been determined.   Additionally, we have also placed a temporary ban on all non-essential travel.

Capital Expenditures

We make capital expenditures from time to time in connection with vessel acquisitions. As of August 5, 2020, Genco Shipping & Trading Limited’s fleet consists of 17 Capesize, six Ultramax, 20 Supramax and eight Handysize vessels with an aggregate capacity of approximately 4,768,000 dwt and an average age of 10.1 years.

In addition to acquisitions that we may undertake, we will incur additional capital expenditures due to special surveys and drydockings. 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 and scheduled off-hire days for our fleet for the remainder of 2020 and 2021 to be:

 Q3 2020Q4 20202021
Estimated Drydock Costs (1)$2.2 million$2.1 million$9.3 million
Estimated BWTS Costs (2)$1.1 million$0.9 million$5.5 million
Estimated Offhire Days (3)6060230
    

(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. Estimated costs presented include approximately $4.2 million of costs associated with six vessels that could potentially be sold based on our fleet renewal program.

(2) Estimated costs associated with the installation of ballast water treatment systems is expected to be funded with cash on hand. Estimated costs presented include approximately $2.6 million of costs associated with six vessels that could potentially be sold based on our fleet renewal program.

(3) Actual length will vary based on the condition of the vessel, yard schedules and other factors. Estimated offhire presented includes approximately 120 days associated with six vessels that could potentially be sold based on our fleet renewal program. The estimated offhire days per sector scheduled for Q3 2020 consists of 40 days for Supramaxes and 20 days for Handysizes.

Fleet Update

We continue to divest our older, less fuel-efficient tonnage as part of our efforts to modernize our fleet and create a more focused asset base while reducing our carbon footprint. Specifically, during the third quarter of 2020, we delivered the following vessels to their buyers:

  • Baltic Wind, a 2009-built Handysize, on July 7, 2020
  • Baltic Breeze, a 2010-built Handysize, on July 31, 2020

We have also agreed to sell the Genco Bay, a 2010-built Handysize, which we expect to deliver to its buyer during the third quarter. The aggregate gross proceeds of these sales amounts to $23.6 million, while the debt associated with these three vessels is $14.2 million.

As of June 30, 2020, $14.9 million of restricted cash is recorded on our balance sheet relating to the sale of the Genco Raptor, Genco Charger and Genco Thunder, which were sold in previous quarters. Under the terms of our $495 million credit facility, the Company can either repay this amount, which represents the debt associated with these vessels, or utilize the 360-day reinvestment period to redeploy this capital towards the acquisition of a replacement vessel instead of repaying the loan, if the applicable terms and conditions under the facility are met.

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, 2020 Three Months Ended June 30, 2019 Six Months Ended June 30, 2020 Six Months Ended June 30, 2019  
    (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$74,206  $83,550  $172,542  $177,014   
  Total revenues 74,206   83,550   172,542   177,014   
             
Operating expenses:         
 Voyage expenses 41,695   41,800   90,063   84,822   
 Vessel operating expenses 21,058   24,358   42,871   47,549   
 Charter hire expenses 1,432   4,849   4,507   7,267   
 General and administrative expenses (inclusive of nonvested stock amortization 5,471   5,799   11,238   12,109   
 expense of $0.5 million, $0.6 million, $1.0 million and $1.0 million, respectively)         
 Technical management fees 1,724   1,885   3,578   3,825   
 Depreciation and amortization 15,930   18,271   33,504   36,348   
 Impairment of vessel assets -   13,897   112,814   13,897   
 Loss (gain) on sale of vessels -   -   486   (611)  
  Total operating expenses 87,310   110,859   299,061   205,206   
             
             
Operating loss (13,104)  (27,309)  (126,519)  (28,192)  
             
Other (expense) income:         
 Other income (expense) 120   107   (464)  437   
 Interest income 253   1,073   847   2,400   
 Interest expense (5,473)  (8,124)  (12,418)  (16,699)  
 Impairment of right-of-use asset -   (223)  -   (223)  
  Other expense (5,100)  (7,167)  (12,035)  (14,085)  
             
             
Net loss$(18,204) $(34,476) $(138,554) $(42,277)  
             
Net loss per share - basic$(0.43) $(0.83) $(3.31) $(1.01)  
             
Net loss per share - diluted$(0.43) $(0.83) $(3.31) $(1.01)  
             
Weighted average common shares outstanding - basic 41,900,901   41,742,301   41,883,629   41,734,248   
             
Weighted average common shares outstanding - diluted 41,900,901   41,742,301   41,883,629   41,734,248   
             
             
             
      June 30, 2020 December 31, 2019    
BALANCE SHEET DATA (Dollars in thousands):  (unaudited)      
             
Assets         
 Current assets:         
  Cash and cash equivalents  $127,722  $155,889     
  Restricted cash   14,855   6,045     
  Due from charterers, net   13,370   13,701     
  Prepaid expenses and other current assets   8,705   10,049     
  Inventories   23,034   27,208     
  Vessels held for sale   23,252   10,303     
 Total current assets   210,938   223,195     
             
 Noncurrent assets:         
  Vessels, net of accumulated depreciation of $242,465 and $288,373, respectively   1,109,341   1,273,861     
  Deferred drydock, net   19,192   17,304     
  Fixed assets, net   7,215   5,976     
  Operating lease right-of-use assets   7,565   8,241     
  Restricted cash   315   315     
 Total noncurrent assets   1,143,628   1,305,697     
             
 Total assets  $1,354,566  $1,528,892     
             
Liabilities and Equity         
 Current liabilities:         
  Accounts payable and accrued expenses  $24,071  $49,604     
  Current portion of long-term debt   79,522   69,747     
  Deferred revenue   4,368   6,627     
  Current operating lease liabilities   1,720   1,677     
 Total current liabilities   109,681   127,655     
             
 Noncurrent liabilities         
  Long-term operating lease liabilities   8,955   9,826     
  Long-term debt, net of deferred financing costs of $11,648 and $13,094, respectively  403,304   412,983     
 Total noncurrent liabilities   412,259   422,809     
             
 Total liabilities   521,940   550,464     
             
 Commitments and contingencies         
             
 Equity:         
  Common stock   418   417     
  Additional paid-in capital   1,714,019   1,721,268     
  Accumulated deficit   (881,811)  (743,257)    
  Total equity   832,626   978,428     
 Total liabilities and equity  $1,354,566  $1,528,892     
             
             
      Six Months Ended June 30, 2020 Six Months Ended June 30, 2019    
STATEMENT OF CASH FLOWS (Dollars in thousands):  (unaudited)    
             
Cash flows from operating activities         
  Net loss  $(138,554) $(42,277)    
  Adjustments to reconcile net loss to net cash (used in) provided by operating activities:        
  Depreciation and amortization   33,504   36,348     
  Amortization of deferred financing costs   1,909   1,867     
  Noncash operating lease expense   676   577     
  Amortization of nonvested stock compensation expense   957   1,021     
  Impairment of right-of-use asset   -   223     
  Impairment of vessel assets   112,814   13,897     
  Loss (gain) on sale of vessels   486   (611)    
  Insurance proceeds for protection and indemnity claims   278   389     
  Insurance proceeds for loss of hire claims   78   -     
  Change in assets and liabilities:         
   Decrease in due from charterers   331   6,588     
   Decrease in prepaid expenses and other current assets   504   165     
   Decrease in inventories   4,174   223     
   (Decrease) increase in accounts payable and accrued expenses   (17,454)  828     
   (Decrease) increase in deferred revenue   (2,259)  1,859     
   Decrease in operating lease liabilities   (828)  (786)    
   Deferred drydock costs incurred   (5,593)  (5,488)    
  Net cash (used in) provided by operating activities   (8,977)  14,823     
             
Cash flows from investing activities         
  Purchase of vessels and ballast water treatment systems, including deposits   (2,275)  (7,754)    
  Purchase of scrubbers (capitalized in Vessels)   (10,839)  (10,370)    
  Purchase of other fixed assets   (2,716)  (2,494)    
  Net proceeds from sale of vessels   14,726   6,309     
  Insurance proceeds for hull and machinery claims   484   612     
  Net cash used in investing activities   (620)  (13,697)    
             
Cash flows from financing activities         
  Proceeds from the $133 Million Credit Facility   24,000   -     
  Repayments on the $133 Million Credit Facility   (3,280)  (3,160)    
  Proceeds from the $495 Million Credit Facility   11,250   -     
  Repayments on the $495 Million Credit Facility   (33,321)  (34,575)    
  Payment of common stock issuance costs   -   (105)    
  Cash dividends paid   (8,126)  -     
  Payment of deferred financing costs   (283)  (611)    
  Net cash used in financing activities   (9,760)  (38,451)    
             
Net decrease in cash, cash equivalents and restricted cash   (19,357)  (37,325)    
             
Cash, cash equivalents and restricted cash at beginning of period   162,249   202,761     
Cash, cash equivalents and restricted cash at end of period  $142,892  $165,436     
             
             
             
    Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 Six Months Ended June 30, 2020 Six Months Ended June 30, 2019  
    (Dollars in thousands) (Dollars in thousands)  
EBITDA Reconciliation:(unaudited) (unaudited)  
 Net loss$(18,204) $(34,476) $(138,554) $(42,277)  
 +Net interest expense 5,220   7,051   11,571   14,299   
 +Depreciation and amortization 15,930   18,271   33,504   36,348   
   EBITDA(1)$2,946  $(9,154) $(93,479) $8,370   
             
 +Impairment of vessel assets -   13,897   112,814   13,897   
 +Impairment of right-of-use asset - - 223   -   223   
 +Loss (gain) on sale of vessels -   -   486   (611)  
   Adjusted EBITDA$2,946  $4,966  $19,821  $21,879   
             
             
    Three Months Ended Six Months Ended  
    June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019  
FLEET DATA:(unaudited) (unaudited)  
Total number of vessels at end of period 53   58   53   58   
Average number of vessels (2) 53.0   58.0   53.7   58.2   
Total ownership days for fleet (3) 4,823   5,278   9,765   10,525   
Total chartered-in days (4) 248   347   670   640   
Total available days for fleet (5) 4,892   5,326   10,121   10,822   
Total available days for owned fleet (6) 4,643   4,978   9,450   10,181   
Total operating days for fleet (7) 4,827   5,237   9,951   10,612   
Fleet utilization (8) 97.8%  97.7%  97.8%  97.5%  
             
             
AVERAGE DAILY RESULTS:         
Time charter equivalent (9)$6,693  $7,412  $8,251  $8,341   
Daily vessel operating expenses per vessel (10) 4,366   4,615   4,390   4,518   
             
    Three Months Ended Six Months Ended  
    June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019  
FLEET DATA:(unaudited) (unaudited)  
Ownership days         
Capesize 1,547.0   1,547.0   3,094.0   3,077.0   
Panamax -   182.0   64.8   389.2   
Ultramax 546.0   546.0   1,092.0   1,086.0   
Supramax 1,820.0   1,820.0   3,640.0   3,620.0   
Handymax -   -   -   -   
Handysize 910.0   1,183.0   1,874.7   2,353.0   
Total 4,823.0   5,278.0   9,765.5   10,525.2   
             
Chartered-in days         
Capesize -   79.4   -   79.4   
Panamax -   -   -   -   
Ultramax 114.2   66.0   292.5   96.3   
Supramax 98.7   95.4   302.8   281.8   
Handymax -   -   14.5   17.4   
Handysize 35.6   106.6   60.7   165.5   
Total 248.5   347.4   670.5   640.4   
             
Available days (owned & chartered-in fleet)         
Capesize 1,530.1   1,509.9   3,058.4   3,038.7   
Panamax -   182.0   64.4   389.2   
Ultramax 637.2   612.0   1,305.6   1,182.2   
Supramax 1,782.0   1,788.2   3,753.0   3,733.8   
Handymax -   -   14.5   17.4   
Handysize 942.5   1,233.6   1,924.6   2,460.3   
Total 4,891.8   5,325.7   10,120.5   10,821.6   
             
Available days (owned fleet)         
Capesize 1,530.1   1,430.5   3,058.4   2,959.3   
Panamax -   182.0   64.4   389.2   
Ultramax 523.0   546.0   1,013.1   1,085.9   
Supramax 1,683.3   1,692.8   3,450.2   3,452.0   
Handymax -   -   -   -   
Handysize 906.9   1,127.0   1,863.9   2,294.8   
Total 4,643.3   4,978.3   9,450.0   10,181.2   
             
Operating days         
Capesize 1,529.6   1,494.3   3,057.8   3,006.6   
Panamax -   182.0   60.1   381.7   
Ultramax 635.6   610.8   1,303.3   1,142.3   
Supramax 1,765.2   1,760.7   3,707.8   3,672.5   
Handymax -   -   14.5   17.4   
Handysize 896.7   1,189.1   1,807.1   2,391.7   
Total 4,827.1   5,236.9   9,950.6   10,612.2   
             
Fleet utilization         
Capesize 98.9%  97.7%  99.4%  98.3%  
Panamax -   100.0%  92.7%  98.1%  
Ultramax 99.7%  99.8%  99.8%  96.6%  
Supramax 97.7%  97.7%  98.1%  97.3%  
Handymax -   -   100.0%  100.0%  
Handysize 94.8%  96.4%  93.4%  97.1%  
Fleet average 97.8%  97.7%  97.8%  97.5%  
             
Average Daily Results:         
Time Charter Equivalent         
Capesize$9,466  $7,292  $13,062  $9,752   
Panamax -   10,554   5,256   9,135   
Ultramax 7,848   9,873   7,973   9,151   
Supramax 5,301   6,971   5,911   7,887   
Handymax -   -   -   -   
Handysize 3,952   6,517   4,867   6,732   
Fleet average 6,693   7,412   8,251   8,341   
             
Daily vessel operating expenses         
Capesize$5,049  $5,057  $4,968  $5,010   
Panamax -   4,505   3,338   4,410   
Ultramax 3,829   4,738   4,233   4,520   
Supramax 4,190   4,456   4,200   4,362   
Handymax -   -   -   -   
Handysize 3,864   4,246   3,874   4,131   
Fleet average 4,366   4,615   4,390   4,518   
             
             

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. 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 and charter hire expenses, 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 second quarter of 2020 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 second quarter to the most comparable financial measures presented in accordance with GAAP.

           
    Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 Six Months Ended June 30, 2020 Six Months Ended June 30, 2019
Total Fleet(unaudited) (unaudited)
Voyage revenues (in thousands)$  74,206 $  83,550 $  172,542 $  177,014
Voyage expenses (in thousands)  41,695   41,800   90,063   84,822
Charter hire expenses (in thousands)  1,432   4,849   4,507   7,267
      31,079   36,901   77,972   84,925
           
Total available days for owned fleet  4,643   4,978   9,450   10,181
Total TCE rate$  6,693 $  7,412 $  8,251 $  8,341
           
           

 

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.

About Genco Shipping & Trading Limited

Genco Shipping & Trading Limited transports iron ore, coal, grain, steel products and other drybulk cargoes along worldwide shipping routes. As of August 5, 2020, Genco Shipping & Trading Limited’s fleet consists of 17 Capesize, six Ultramax, 20 Supramax and eight Handysize vessels with an aggregate capacity of approximately 4,768,000 dwt and an average age of 10.1 years.

The following table reflects Genco’s fleet list as of August 5, 2020:

      
 VesselDWTYear Built  
Capesize    
1Genco Resolute181,0602015  
2Genco Endeavour181,0602015  
3Genco Constantine180,1832008  
4Genco Augustus180,1512007  
5Genco Liberty180,0322016  
6Genco Defender180,0212016  
7Baltic Lion179,1852012  
8Genco Tiger179,1852011  
9Genco London177,8332007  
10Baltic Wolf177,7522010  
11Genco Titus177,7292007  
12Baltic Bear177,7172010  
13Genco Tiberius175,8742007  
14Genco Commodus169,0982009  
15Genco Hadrian169,0252008  
16Genco Maximus169,0252009  
17Genco Claudius169,0012010  
Ultramax    
1Baltic Hornet63,5742014  
2Baltic Mantis63,4702015  
3Baltic Scorpion63,4622015  
4Baltic Wasp63,3892015  
5Genco Weatherly61,5562014  
6Genco Columbia60,2942016  
Supramax    
1Genco Hunter58,7292007  
2Genco Auvergne58,0202009  
3Genco Rhone58,0182011  
4Genco Ardennes58,0182009  
5Genco Brittany58,0182010  
6Genco Languedoc58,0182010  
7Genco Pyrenees58,0182010  
8Genco Bourgogne58,0182010  
9Genco Aquitaine57,9812009  
10Genco Warrior55,4352005  
11Genco Predator55,4072005  
12Genco Provence55,3172004  
13Genco Picardy55,2572005  
14Genco Normandy53,5962007  
15Baltic Jaguar53,4742009  
16Baltic Leopard53,4472009  
17Baltic Cougar53,4322009  
18Genco Loire53,4302009  
19Genco Lorraine53,4172009  
20Baltic Panther53,3512009  
Handysize    
1Genco Spirit34,4322011  
2Genco Mare34,4282011  
3Genco Ocean34,4092010  
4Baltic Cove34,4032010  
5Genco Avra34,3912011  
6Genco Bay34,2962010  
7Baltic Hare31,8872009  
8Baltic Fox31,8832010  
      

 


Conference Call Announcement

Genco Shipping & Trading Limited will hold a conference call on Thursday, August 6, 2020 at 9:00 a.m. Eastern Time to discuss its 2020 second quarter financial results. The conference call and a presentation will be simultaneously webcast and will be available on the Company’s website, www.GencoShipping.com. To access the conference call, dial (334) 777-6978 or (800) 367-2403 and enter passcode 6606629. A replay of the conference call can also be accessed for two weeks by dialing (888) 203-1112 or (719) 457-0820 and entering the passcode 6606629. The Company intends to place additional materials related to the earnings announcement, including a slide presentation, on its website prior to the conference call.

Website Information

We intend to use our website, www.GencoShipping.com, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in our website’s Investor Relations section. Accordingly, investors should monitor the Investor Relations portion of our website, in addition to following our press releases, SEC filings, public conference calls, and webcasts. To subscribe to our e-mail alert service, please click the “Receive E-mail Alerts” link in the Investor Relations section of our website and submit your email address.  The information contained in, or that may be accessed through, our website is not incorporated by reference into or a part of this document or any other report or document we file with or furnish to the SEC, and any references to our website are intended to be inactive textual references only.

   "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995

This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements use words such as “anticipate,” “budget,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with a discussion of potential future events, circumstances or future operating or financial performance.  These forward-looking statements are based on our management’s current expectations and observations. Included among the factors that, in our view, could cause actual results to differ materially from the forward looking statements contained in this report are the following: (i) declines or sustained weakness in demand in the drybulk shipping industry; (ii) continuation of weakness or declines in drybulk shipping rates; (iii) changes in the supply of or demand for drybulk products, generally or in particular regions; (iv) changes in the supply of drybulk carriers including newbuilding of vessels or lower than anticipated scrapping of older vessels; (v) changes in rules and regulations applicable to the cargo industry, including, without limitation, legislation adopted by international organizations or by individual countries and actions taken by regulatory authorities; (vi) increases in costs and expenses including but not limited to: crew wages, insurance, provisions, lube oil, bunkers, repairs, maintenance, general and administrative expenses, and management fee expenses; (vii) whether our insurance arrangements are adequate; (viii) changes in general domestic and international political conditions; (ix) acts of war, terrorism, or piracy; (x) changes in the condition of the Company’s vessels or applicable maintenance or regulatory standards (which may affect, among other things, our anticipated drydocking or maintenance and repair costs) and unanticipated drydock expenditures; (xi) the Company’s acquisition or disposition of vessels; (xii) the amount of offhire time needed to complete maintenance, repairs, and installation of equipment to comply with applicable regulations on vessels and the timing and amount of any reimbursement by our insurance carriers for insurance claims, including offhire days; (xiii) the completion of definitive documentation with respect to charters; (xiv) charterers’ compliance with the terms of their charters in the current market environment; (xv) the extent to which our operating results continue to be affected by weakness in market conditions and freight and charter rates; (xvi) our ability to maintain contracts that are critical to our operation, to obtain and maintain acceptable terms with our vendors, customers and service providers and to retain key executives, managers and employees; (xvii) completion of documentation for vessel transactions and the performance of the terms thereof by buyers or sellers of vessels and us; (xviii) the relative cost and availability of low sulfur and high sulfur fuel or any additional scrubbers we may seek to install; (xix) our ability to realize the economic benefits or recover the cost of the scrubbers we have installed; (xx) worldwide compliance with sulfur emissions regulations that took effect on January 1, 2020; (xxi) our financial results for the year ending December 31, 2020 and other factors relating to determination of the tax treatment of dividends we have declared; (xxii) the duration and impact of the COVID-19 novel coronavirus epidemic, which may negatively affect general global and regional economic conditions; our ability to charter our vessels at all and the rates at which are able to do so; our ability to call on or depart from ports on a timely basis or at all; our ability to crew, maintain, and repair our vessels, including without limitation the impact diversion of our vessels to perform crew rotations may have on our revenues, expenses, and ability to consummate vessel sales, expense and disruption to our operations that may arise from the inability to rotate crews on schedule, and delay and added expense we may incur in rotating crews in the current environment; our ability to staff and maintain our headquarters and administrative operations; sources of cash and liquidity; our ability to sell vessels in the secondary market, including without limitation the compliance of purchasers and us with the terms of vessel sale contracts, and the prices at which vessels are sold; and other factors relevant to our business described from time to time in our filings with the Securities and Exchange Commission; and (xxiii) other factors listed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent reports on Form 8-K and Form 10-Q. Our ability to pay dividends in any period will depend upon various factors, including the limitations under any credit agreements to which we may be a party, applicable provisions of Marshall Islands law and the final determination by the Board of Directors each quarter after its review of our financial performance. The timing and amount of dividends, if any, could also be affected by factors affecting cash flows, results of operations, required capital expenditures, or reserves.  As a result, the amount of dividends actually paid may vary.  We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

CONTACT:
Apostolos Zafolias
Chief Financial Officer
Genco Shipping & Trading Limited
(646) 443-8550

 

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