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
ended March 31, 2019.
The following financial review discusses the
results for the three months ended March 31, 2019 and March 31,
2018.
First Quarter 2019 and
Year-to-Date Highlights
- Recorded a net loss of $7.8 million
for the first quarter of 2019
- Basic and diluted loss per share of $0.19
- Adjusted net loss of $8.4 million or adjusted basic and diluted
loss per share of $0.20, excluding a $0.6 million gain on sale of
vessels
- Net revenue (voyage revenues minus
voyage expenses and charter hire expenses) totaled $48.0 million
during Q1 2019
- Our average daily fleet-wide time
charter equivalent, or TCE, for Q1 2019 was $9,230 which
outperformed the relevant Baltic Exchange benchmark sub-indices as
adjusted for our owned fleet profile by approximately $2,100 per
vessel per day1
- Maintained low daily vessel
operating expenses (“DVOE”) of $4,420 per vessel per day during Q1
2019, as a result of our industry leading cost efficient
structure
- Our cash position as of March 31,
2019 was $193.0 million
- Recorded EBITDA of $17.5 million
during Q1 2019
- Adjusted EBITDA of $16.9 million for Q1 2019, after excluding a
$0.6 million of gain on sale of vessels2
- Upsized our $460 Million Credit Facility to a $495 Million
Credit Facility through a February 2019 amendment providing an
additional tranche of up to $35 million to finance up to 90% of the
expenses related to the acquisition and installation of exhaust gas
cleaning systems (“scrubbers”) on our 17 Capesize vessels
- Completed the sale of the Genco Vigour, a 1999-built Panamax
vessel, in January 2019 for a gain of $0.6 million
- The Genco Vigour was the Company’s
last remaining unencumbered vessel
John C. Wobensmith, Chief Executive Officer,
commented, “During the first quarter of 2019, we drew upon our
active commercial strategy and our barbell approach to fleet
composition as we effectively operated through a volatile and
challenging freight rate environment. This period highlighted the
key advantage of our barbell strategy that provides direct exposure
to both major and minor drybulk commodities. Specifically, while
the Capesize market came under pressure, the earnings for the
smaller class vessels exhibited relative strength during the
quarter. Subsequently, the Capesize market has shown signs of
improvement and we remain positive on long-term drybulk
fundamentals, led by steady demand growth and low net fleet growth.
Throughout the year-to-date, we have also continued to successfully
execute Genco’s strategic initiatives, which we believe enhances
our position to capitalize on a strengthening market. In
particular, we have further developed our commercial platform,
which outperformed our benchmark by approximately $2,100 per day on
a fleet-wide basis during the first quarter. This outperformance
together with our efficient cost structure, is expected to continue
to allow for increased margins. Finally, we made progress on the
implementation of our comprehensive IMO 2020 plan and continued to
execute our fleet growth and renewal program, completing the sale
of our final 1990s built vessel and improving the age and earnings
profile of the fleet.”
Overall, our fleet deployment strategy remains
weighted towards short-term fixtures, which provides optionality
for the Company. We believe that our active commercial strategy,
together with our efficient cost structure, provides continuing
potential for increased margins. Furthermore, our barbell approach
to fleet composition provides direct exposure to both major and
minor bulk commodities.
Our first quarter of 2019 TCE results by class
are listed below. During the first quarter, we benefited from
coverage taken ahead of the traditionally softer period as well as
the strategic positioning of select vessels to key designated
regions on our minor bulk fleet. During the quarter, Genco’s
approach to fleet composition proved beneficial, as spot earnings
on the smaller vessels found support following a low in early
February despite the decline in Capesize spot rates experienced
throughout the first three months of the year.
- Capesize: $12,054
- Panamax: $7,889
- Ultramax and Supramax: $8,638
- Handysize: $6,938
- Fleet average: $9,230
We currently have the following TCE fixed for
the second quarter of 2019. With 64% of our Q2 available days
covered, we maintain an opportunistic charter strategy to provide
optionality in what has been a rising market so far in the second
quarter. Our spot fixtures tend to have a duration of 30 to 40 days
in which our vessel contracts expire, which enables Genco to
benefit from potentially improving market conditions.
- Capesize: $6,633 for 64% of the available Q2 2019 days
- Panamax: $9,896 for 48% of the available Q2 2019 days
- Ultramax and Supramax: $8,308 for 67% of the available Q2 2019
days
- Handysize: $5,342 for 62% of the available Q2 2019 days
- Fleet average: $7,220 for 64% of the available Q2 2019
days
1 TCE relative performance is benchmarked against the weighted
average of the relevant sub-indices of the Baltic Dry Index as
published by the Baltic Exchange (BCI 5TC, BPI, BSI 58 and BHSI)
net of 5% for commissions, adjusted for our owned fleet composition
as well as the characteristics of our vessels. 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 a further reconciliation.
Scrubber Financing and Credit Facility
Update
On February 28, 2019, we upsized our $460 Million Credit
Facility to a $495 Million Credit Facility through an amendment for
an additional tranche of up to $35 million to finance up to 90% of
the expenses related to the acquisition and installation of
scrubbers on our 17 Capesize vessels. Borrowings under the $35
million tranche will bear interest at LIBOR plus 250 basis points
through September 30, 2019 and LIBOR plus a range of 225 to 275
basis points thereafter, dependent upon total net indebtedness to
consolidated EBITDA for the preceding four calendar quarters.
Nordea Bank ABP, New York Branch, Skandinaviska Enskilda
Banken AB (publ), Crédit Agricole Corporate and Investment Bank,
and Danish Ship Finance A/S are the lenders for the additional
tranche.
In October 2018, we sold the Genco Cavalier, a 2007-built
Supramax vessel, for gross proceeds of $10.0 million, which was one
of the vessels collateralizing the $495 Million Credit Facility. In
April 2019, we paid down the credit facility with $4.6 million of
net sale proceeds, and subsequently amended our quarterly
amortization schedule to $14.9 million.
Financial Review: 2019 First
Quarter
The Company recorded a net loss for the first
quarter of 2019 of $7.8 million, or $0.19 basic and diluted net
loss per share. Comparatively, for the three months ended March 31,
2018, the Company recorded a net loss of $55.8 million, or $1.61
basic and diluted net loss per share.
The Company’s revenues increased to $93.5
million for the three months ended March 31, 2019, 22% higher than
the $76.9 million recorded for the three months ended March 31,
2018. The increase in revenues was primarily due to the increased
employment of vessels on spot market voyage charters as compared to
more time-charter employment in the first quarter of 2018.
The average daily time charter equivalent, or
TCE, rates obtained by the Company’s fleet was $9,230 per day for
the three months ended March 31, 2019 as compared to $10,463 per
day for the three months ended March 31, 2018. In the first quarter
of 2019, seasonal factors such as frontloaded newbuilding
deliveries, the Lunar New Year celebration and weather-related
disruptions hampering cargo availability were exacerbated by the
tragic Vale dam breach, further coal restrictions in China as well
as the overhang of the U.S.-China trade dispute. Subsequently,
during the second quarter, the freight rate environment has begun
to improve as some of these factors have subsided while increased
vessel scrapping has resulted in lower net fleet growth.
Total operating expenses were $94.3 million for
the three months ended March 31, 2019 compared to $125.3 million
for the three months ended March 31, 2018. Included in the three
months ended March 31, 2019 was a gain on sale of vessels totaling
$0.6 million. During the three months ended March 31, 2018, a $56.4
million non-cash impairment charge was recorded as the estimated
future undiscounted cash flows for nine of the 15 vessels that
comprise our fleet renewal plan did not exceed their net book
values, and we therefore adjusted their values to fair market value
during the first quarter. Voyage expenses rose to $43.0 million for
the three months ended March 31, 2019 versus $21.1 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 decreased to $23.2
million for the three months ended March 31, 2019, from $23.8
million for the three months ended March 31, 2018 due to lower
maintenance related expenses as well as fewer owned vessels during
Q1 2019. General and administrative expenses were $6.3 million for
the first quarter of 2019 compared to $5.2 million for the first
quarter of 2018, due to a combination of higher compensation
related expenses and legal and professional fees associated with
the scrubber facility. Depreciation and amortization expenses
increased to $18.1 million for the three months ended March 31,
2019 from $16.9 million for the three months ended March 31, 2018,
due to depreciation expense for the six vessels delivered during
the third quarter of 2018, partially offset by a decrease in
depreciation expense for the eight vessels that were sold during
the second half of 2018 and the first quarter of 2019.
Daily vessel operating expenses, or DVOE,
amounted to $4,420 per vessel per day for the first quarter of
2019, below our budget of $4,525 per vessel per day and compared to
$4,401 per vessel per day for the first quarter of 2018. The
increase in DVOE was predominantly due to higher crew related
expenses, and partially offset by lower 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. Based on estimates
provided by our technical managers and management’s views, our DVOE
budget for 2019 is $4,525 per vessel per day on a weighted average
basis for the entire year for our fleet.
Apostolos Zafolias, Chief Financial Officer,
commented, “During the first quarter, we continued to access
capital under favorable terms. We are pleased to have upsized our
$460 million credit facility to provide an additional tranche of up
to $35 million and support Genco’s comprehensive approach to IMO
2020 compliance. We also continued to benefit from our efficient
cost structure, as our daily vessel operating expenses for the
quarter came in under budget at $4,420 per vessel per day. Our
focus on costs has further strengthened our cash position and
enabled the Company to end the quarter with $193 million in
cash.”
Liquidity and Capital
Resources
Cash Flow
Net cash provided by operating activities for
the three months ended March 31, 2019 was $11.6 million as compared
to $9.5 million for the three months ended March 31, 2018.
Included in the net loss during the three months ended March 31,
2019 was a gain of $0.6 million arising from the sale of the Genco
Vigour. Included in the net loss during the three months
ended March 31, 2018 was $56.4 million of non-cash impairment
charges. Depreciation and amortization expense for the three months
ended March 31, 2019 increased by $1.2 million primarily due to
depreciation expense for the six vessels delivered during the third
quarter of 2018, partially offset by a decrease in depreciation
expense for the eight vessels that were sold during the second half
of 2018 and the first quarter of 2019. Additionally, there
was a $6.1 million increase in the fluctuation in due from
charterers due to the timing of payments received from charterers
and a $4.7 million increase in the fluctuation in prepaid expenses
and other current assets due to a fluctuation in capitalized
contract costs associated with spot market voyages. Lastly,
there was a $3.5 million increase in the fluctuation in inventories
associated with vessels on spot market voyage charters and a $1.0
million decrease in deferred drydocking costs as there were less
vessels that completed drydocking during the first quarter of 2019
as compared to the first quarter of 2018. These fluctuations
were partially offset by a $3.2 million decrease in the fluctuation
accounts payable and accrued expenses due to the timing of payments
made and a $1.8 million decrease in the fluctuation of deferred
revenue due to the timing of payments received from charterers.
Net cash used in investing activities was $4.1
million during the three months ended March 31, 2019 as compared to
net cash provided by investing activities of $1.4 million during
the three months ended March 31, 2018. Net cash used in
investing activities during the three months ended March 31, 2019
consisted primarily of $9.3 million purchase of vessels related
primarily to deposit payments made on scrubbers and ballast water
treatment systems and $1.2 million for the purchase of other fixed
assets due to the purchase of vessel equipment. These cash
outflows during the three months ended March 31, 2019 were
partially offset by $6.4 million of proceeds from the sale of one
vessel during the first quarter of 2019. Net cash provided by
investing activities during the three months ended March 31, 2018
consisted primarily of the proceeds received for hull and machinery
claims related primarily to the receipt of the remaining insurance
settlement for the main engine repair claim for the Genco
Tiger.
Net cash used in financing activities during the
three months ended March 31, 2019 and 2018 was $17.3 million and
$14.7 million, respectively. Net cash used in financing
activities of $17.3 million for the three months ended March 31,
2019 consisted primarily of the following: $15.0 million
repayment of debt under the $495 Million Credit Facility; $1.6
million repayment of debt under the $108 Million Credit Facility;
$0.6 million payment of deferred financing costs; and $0.1 million
payment of common stock issuance costs. Net cash used in
financing activities of $14.7 million for the three months ended
March 31, 2018 consisted primarily of the following: $11.4
million repayment of debt under the $400 Million Credit Facility,
$2.5 million repayment of debt under the $98 Million Credit
Facility and $0.7 million repayment of debt under the 2014 Term
Loan Facilities. On August 14, 2018, we entered into the $108
Million Credit Facility to finance a portion of the purchase price
for the six vessels acquired during the third quarter of
2018. On June 5, 2018, the $495 Million Credit Facility
refinanced the following three existing credit facilities; the $400
Million Credit Facility, the $98 Million Credit Facility and the
2014 Term Loan Facilities. Additionally, on February 28,
2019, the $495 Million Credit Facility was amended to add a tranche
of $35 million for the purchase of scrubbers in addition to the
original $460 million tranche used for the refinancing on June 5,
2018.
Capital Expenditures
We make capital expenditures from time to time
in connection with vessel acquisitions. As of May 8, 2019, our
fleet consists of 17 Capesize, two Panamax, six Ultramax, 20
Supramax, and 13 Handysize vessels with an aggregate capacity of
approximately 5,075,000 dwt and an average age of 9.3 years.
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 had one vessel begin its drydock during the first quarter of
2019 and did not complete until April. We currently expect 16
vessels to drydock during the second quarter of 2019. Furthermore,
we anticipate an additional 14 vessels and 4 vessels to drydock
during the third and fourth quarters, respectively. To timely
implement our comprehensive IMO 2020 compliance program while
promoting availability of our vessels for the seasonally stronger
fourth quarter, we have strategically planned to drydock a greater
number of our vessels in 2019 during the second quarter.
We also anticipate incurring capital
expenditures with respect to the installation of ballast water
treatment systems, which we intend to fund with cash on hand.
Furthermore, we expect to incur capital expenditures for the
installation of scrubbers on our 17 Capesize vessels. We expect the
cost for our Capesize vessels, including installation, to be
approximately $2.25 million per vessel, which may vary according to
the specifications of our vessels and technical aspects of the
installation, among other variables. We anticipate funding the
acquisition and installation of scrubbers on our 17 Capesize
vessels through a combination of commercial bank debt from the
additional tranche of up to $35 million under our $495 Million
Credit Facility and cash on hand.
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, scrubber costs and scheduled off-hire days
for our fleet for the remainder of 2019 to be:
|
Q2 2019 |
Q3 2019 |
Q4 2019 |
Estimated Drydock Costs (1) |
$12.3 million |
$4.8 million |
$2.3 million |
Estimated BWTS Costs (2) |
$6.2 million |
$1.9 million |
$0.8 million |
Estimated Scrubber Costs (3) |
$11.3 million |
$18.8 million |
$1.9 million |
Estimated Offhire Days (4) |
400 |
385 |
90 |
|
|
|
|
(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 $4.0 million of costs associated with five 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 include approximately
$1.7 million of costs associated with five vessels that could
potentially be sold based on our fleet renewal program.
(3) We anticipate funding the acquisition and
installation of scrubbers on our 17 Capesize vessels through a
combination of commercial bank debt and cash on hand. Figures
presented assume expenditures on date of installation.
(4) Actual length will vary based on the
condition of the vessel, yard schedules and other factors.
Estimated offhire presented includes approximately 100 days
associated with five vessels that could potentially be sold based
on our fleet renewal program.
Fleet Renewal Program
During the second half of 2018, the Company
agreed to sell eight vessels as part of our previously announced
fleet renewal program, achieving total gross proceeds of $52.5
million. Seven of these vessels were delivered to their respective
buyers in 2018, while the Genco Vigour delivered in January 2019.
We completed the sale of the 1999-built Panamax vessel on January
28, 2019 for a gain of $0.6 million. The Genco Vigour was our last
remaining unencumbered vessel. As a result of the sales, Genco will
save anticipated drydocking and ballast water treatment system
installation costs of approximately $11.5 million previously
scheduled for 2018 and 2019.
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 March 31, 2019 |
|
Three Months Ended March 31, 2018 |
|
(Dollars in thousands, except share and per share data) |
|
(unaudited) |
INCOME STATEMENT
DATA: |
|
|
|
Revenues: |
|
|
|
Voyage revenues |
$ |
93,464 |
|
|
$ |
76,916 |
|
Total revenues |
|
93,464 |
|
|
|
76,916 |
|
|
|
|
|
Operating expenses: |
|
|
|
Voyage expenses |
|
43,022 |
|
|
|
21,093 |
|
Vessel operating expenses |
|
23,190 |
|
|
|
23,767 |
|
Charter hire expenses |
|
2,419 |
|
|
|
- |
|
General and administrative expenses (inclusive of nonvested stock
amortization expense of $0.5 million and $0.5 million,
respectively) |
|
6,310 |
|
|
|
5,218 |
|
Technical management fees |
|
1,940 |
|
|
|
1,948 |
|
Depreciation and amortization |
|
18,076 |
|
|
|
16,886 |
|
Impairment of vessel assets |
|
- |
|
|
|
56,402 |
|
Gain on sale of vessels |
|
(611 |
) |
|
|
- |
|
Total operating expenses |
|
94,346 |
|
|
|
125,314 |
|
|
|
|
|
|
|
|
|
Operating loss |
|
(882 |
) |
|
|
(48,398 |
) |
|
|
|
|
Other (expense) income: |
|
|
|
Other income (expense) |
|
329 |
|
|
|
(85 |
) |
Interest income |
|
1,327 |
|
|
|
794 |
|
Interest expense |
|
(8,575 |
) |
|
|
(8,124 |
) |
Other expense |
|
(6,919 |
) |
|
|
(7,415 |
) |
|
|
|
|
Loss before income taxes |
|
(7,801 |
) |
|
|
(55,813 |
) |
Income tax expense |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(7,801 |
) |
|
$ |
(55,813 |
) |
|
|
|
|
Net loss per share -
basic |
$ |
(0.19 |
) |
|
$ |
(1.61 |
) |
|
|
|
|
Net loss per share -
diluted |
$ |
(0.19 |
) |
|
$ |
(1.61 |
) |
|
|
|
|
Weighted average common shares
outstanding - basic |
|
41,726,106 |
|
|
|
34,577,990 |
|
|
|
|
|
Weighted average common shares
outstanding - diluted |
|
41,726,106 |
|
|
|
34,577,990 |
|
|
|
|
|
|
|
|
|
|
March 31, 2019 |
|
December 31, 2018 |
BALANCE SHEET DATA
(Dollars in thousands): |
(unaudited) |
|
|
|
|
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
187,713 |
|
|
$ |
197,499 |
|
Restricted cash |
|
4,947 |
|
|
|
4,947 |
|
Due from charterers, net |
|
17,265 |
|
|
|
22,306 |
|
Prepaid expenses and other current assets |
|
9,213 |
|
|
|
10,449 |
|
Inventories |
|
30,625 |
|
|
|
29,548 |
|
Vessels held for sale |
|
- |
|
|
|
5,702 |
|
Total current assets |
|
249,763 |
|
|
|
270,451 |
|
|
|
|
|
Noncurrent assets: |
|
|
|
Vessels, net of accumulated depreciation of $261,017 and $244,529,
respectively |
|
1,335,048 |
|
|
|
1,344,870 |
|
Deferred drydock, net |
|
8,520 |
|
|
|
9,544 |
|
Fixed assets, net |
|
3,099 |
|
|
|
2,290 |
|
Operating lease right-of-use assets |
|
9,425 |
|
|
|
- |
|
Restricted cash |
|
315 |
|
|
|
315 |
|
Total noncurrent assets |
|
1,356,407 |
|
|
|
1,357,019 |
|
|
|
|
|
Total assets |
$ |
1,606,170 |
|
|
$ |
1,627,470 |
|
|
|
|
|
Liabilities and
Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable and accrued expenses |
$ |
24,137 |
|
|
$ |
29,143 |
|
Current portion of long-term debt |
|
70,351 |
|
|
|
66,320 |
|
Deferred revenue |
|
4,497 |
|
|
|
6,404 |
|
Current operating lease liabilities |
|
1,613 |
|
|
|
- |
|
Total current liabilities |
|
100,598 |
|
|
|
101,867 |
|
|
|
|
|
Noncurrent liabilities |
|
|
|
Long-term operating lease liabilities |
|
11,092 |
|
|
|
- |
|
Deferred rent |
|
- |
|
|
|
3,468 |
|
Long-term debt, net of deferred financing costs of $15,967 and
$16,272, respectively |
|
448,522 |
|
|
|
468,828 |
|
Total noncurrent liabilities |
|
459,614 |
|
|
|
472,296 |
|
|
|
|
|
Total liabilities |
|
560,212 |
|
|
|
574,163 |
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
Equity: |
|
|
|
Common stock |
|
416 |
|
|
|
416 |
|
Additional paid-in capital |
|
1,740,615 |
|
|
|
1,740,163 |
|
Retained deficit |
|
(695,073 |
) |
|
|
(687,272 |
) |
Total equity |
|
1,045,958 |
|
|
|
1,053,307 |
|
Total liabilities and equity |
$ |
1,606,170 |
|
|
$ |
1,627,470 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2019 |
|
Three Months Ended March 31, 2018 |
STATEMENT OF CASH
FLOWS (Dollars in thousands): |
(unaudited) |
|
|
|
|
Cash flows from
operating activities |
|
|
|
Net loss |
$ |
(7,801 |
) |
|
$ |
(55,813 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
Depreciation and amortization |
|
18,076 |
|
|
|
16,886 |
|
Amortization of deferred financing costs |
|
915 |
|
|
|
573 |
|
Noncash operating lease expense |
|
285 |
|
|
|
- |
|
Amortization of nonvested stock compensation expense |
|
452 |
|
|
|
493 |
|
Impairment of vessel assets |
|
- |
|
|
|
56,402 |
|
Gain on sale of vessels |
|
(611 |
) |
|
|
- |
|
Insurance proceeds for protection and indemnity claims |
|
226 |
|
|
|
68 |
|
Change in assets and liabilities: |
|
|
|
Decrease (increase) in due from charterers |
|
5,041 |
|
|
|
(1,079 |
) |
Decrease (increase) in prepaid expenses and other current
assets |
|
927 |
|
|
|
(3,740 |
) |
Increase in inventories |
|
(1,077 |
) |
|
|
(4,561 |
) |
Decrease in other noncurrent assets |
|
- |
|
|
|
514 |
|
(Decrease) increase in accounts payable and accrued expenses |
|
(2,114 |
) |
|
|
1,094 |
|
Decrease in deferred revenue |
|
(1,907 |
) |
|
|
(110 |
) |
Decrease in operating lease liabilities |
|
(390 |
) |
|
|
- |
|
Increase in deferred rent |
|
- |
|
|
|
180 |
|
Deferred drydock costs incurred |
|
(410 |
) |
|
|
(1,446 |
) |
Net cash provided by operating activities |
|
11,612 |
|
|
|
9,461 |
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
Purchase of vessels, including deposits |
|
(9,274 |
) |
|
|
- |
|
Purchase of other fixed assets |
|
(1,199 |
) |
|
|
(158 |
) |
Net proceeds from sale of vessels |
|
6,351 |
|
|
|
- |
|
Insurance proceeds for hull and machinery claims |
|
- |
|
|
|
1,607 |
|
Net cash (used in) provided by investing activities |
|
(4,122 |
) |
|
|
1,449 |
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
Repayments on the $108 Million Credit Facility |
|
(1,580 |
) |
|
|
- |
|
Repayments on the $495 Million Credit Facility |
|
(15,000 |
) |
|
|
- |
|
Repayments on the $400 Million Credit Facility |
|
- |
|
|
|
(11,434 |
) |
Repayments on the $98 Million Credit Facility |
|
- |
|
|
|
(2,542 |
) |
Repayments on the 2014 Term Loan Facilities |
|
- |
|
|
|
(681 |
) |
Payment of common stock issuance costs |
|
(105 |
) |
|
|
- |
|
Payment of deferred financing costs |
|
(591 |
) |
|
|
- |
|
Net cash used in financing activities |
|
(17,276 |
) |
|
|
(14,657 |
) |
|
|
|
|
Net decrease in cash, cash
equivalents and restricted cash |
|
(9,786 |
) |
|
|
(3,747 |
) |
|
|
|
|
Cash, cash equivalents and
restricted cash at beginning of period |
|
202,761 |
|
|
|
204,946 |
|
Cash, cash equivalents and
restricted cash at end of period |
$ |
192,975 |
|
|
$ |
201,199 |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2019 |
Adjusted
Net Loss Reconciliation |
(unaudited) |
Net loss |
$ |
(7,801 |
) |
- |
Gain on sale of vessels |
|
(611 |
) |
|
Adjusted net loss |
$ |
(8,412 |
) |
|
|
|
|
Adjusted net loss per share - basic |
$ |
(0.20 |
) |
|
Adjusted net loss per share - diluted |
$ |
(0.20 |
) |
|
|
|
|
Weighted average common shares outstanding - basic |
|
41,726,106 |
|
|
Weighted average common shares outstanding - diluted |
|
41,726,106 |
|
|
|
|
|
Weighted average common shares outstanding - basic as per financial
statements |
|
41,726,106 |
|
|
Dilutive effect of stock options |
|
- |
|
|
Dilutive effect of restricted stock awards |
|
- |
|
|
Weighted average common shares outstanding - diluted as
adjusted |
|
41,726,106 |
|
|
|
|
|
|
|
Three Months Ended March 31, 2019 |
|
Three Months Ended March 31, 2018 |
|
|
(Dollars in thousands) |
EBITDA
Reconciliation: |
(unaudited) |
Net loss |
$ |
(7,801 |
) |
|
$ |
(55,813 |
) |
+ |
Net interest expense |
|
7,248 |
|
|
|
7,330 |
|
+ |
Depreciation and amortization |
|
18,076 |
|
|
|
16,886 |
|
|
EBITDA(1) |
$ |
17,523 |
|
|
$ |
(31,597 |
) |
|
|
|
|
|
+ |
Impairment of vessel assets |
|
- |
|
|
|
56,402 |
|
- |
Gain on sale of vessels |
|
(611 |
) |
|
|
- |
|
|
Adjusted EBITDA |
$ |
16,912 |
|
|
$ |
24,805 |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, 2019 |
|
March 31, 2018 |
FLEET
DATA: |
(unaudited) |
Total number of
vessels at end of period |
|
58 |
|
|
|
60 |
|
Average number of
vessels (2) |
|
58.3 |
|
|
|
60.0 |
|
Total ownership
days for fleet (3) |
|
5,247 |
|
|
|
5,400 |
|
Total chartered-in
days (4) |
|
293 |
|
|
|
- |
|
Total available
days for fleet (5) |
|
5,496 |
|
|
|
5,335 |
|
Total available
days for owned fleet (6) |
|
5,203 |
|
|
|
5,335 |
|
Total operating
days for fleet (7) |
|
5,383 |
|
|
|
5,292 |
|
Fleet utilization
(8) |
|
97.4 |
% |
|
|
98.9 |
% |
|
|
|
|
|
|
|
|
|
|
AVERAGE
DAILY RESULTS: |
|
|
|
Time charter
equivalent (9) |
$ |
9,230 |
|
|
$ |
10,463 |
|
Daily vessel
operating expenses per vessel (10) |
|
4,420 |
|
|
|
4,401 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
March 31, 2019 |
|
March 31, 2018 |
FLEET
DATA: |
(unaudited) |
Ownership days |
|
|
|
Capesize |
|
1,530.0 |
|
|
|
1,170.0 |
|
Panamax |
|
207.2 |
|
|
|
540.0 |
|
Ultramax |
|
540.0 |
|
|
|
360.0 |
|
Supramax |
|
1,800.0 |
|
|
|
1,890.0 |
|
Handymax |
|
- |
|
|
|
90.0 |
|
Handysize |
|
1,170.0 |
|
|
|
1,350.0 |
|
Total |
|
5,247.2 |
|
|
|
5,400.0 |
|
|
|
|
|
Chartered-in days |
|
|
|
Capesize |
|
- |
|
|
|
- |
|
Panamax |
|
- |
|
|
|
- |
|
Ultramax |
|
30.4 |
|
|
|
- |
|
Supramax |
|
186.4 |
|
|
|
- |
|
Handymax |
|
17.4 |
|
|
|
- |
|
Handysize |
|
58.9 |
|
|
|
- |
|
Total |
|
293.1 |
|
|
|
- |
|
|
|
|
|
Available days (owned &
chartered-in fleet) |
|
|
|
Capesize |
|
1,528.8 |
|
|
|
1,137.8 |
|
Panamax |
|
207.2 |
|
|
|
540.0 |
|
Ultramax |
|
570.2 |
|
|
|
359.7 |
|
Supramax |
|
1,945.6 |
|
|
|
1,889.6 |
|
Handymax |
|
17.4 |
|
|
|
81.8 |
|
Handysize |
|
1,226.9 |
|
|
|
1,326.6 |
|
Total |
|
5,496.1 |
|
|
|
5,335.5 |
|
|
|
|
|
Available days (owned
fleet) |
|
|
|
Capesize |
|
1,528.8 |
|
|
|
1,137.8 |
|
Panamax |
|
207.2 |
|
|
|
540.0 |
|
Ultramax |
|
539.8 |
|
|
|
359.7 |
|
Supramax |
|
1,759.2 |
|
|
|
1,889.6 |
|
Handymax |
|
- |
|
|
|
81.8 |
|
Handysize |
|
1,168.0 |
|
|
|
1,326.6 |
|
Total |
|
5,203.0 |
|
|
|
5,335.5 |
|
|
|
|
|
Operating days |
|
|
|
Capesize |
|
1,515.3 |
|
|
|
1,137.8 |
|
Panamax |
|
199.7 |
|
|
|
536.7 |
|
Ultramax |
|
531.5 |
|
|
|
353.5 |
|
Supramax |
|
1,915.9 |
|
|
|
1,869.1 |
|
Handymax |
|
17.4 |
|
|
|
81.8 |
|
Handysize |
|
1,202.7 |
|
|
|
1,312.8 |
|
Total |
|
5,382.5 |
|
|
|
5,291.7 |
|
|
|
|
|
Fleet utilization |
|
|
|
Capesize |
|
99.0 |
% |
|
|
99.3 |
% |
Panamax |
|
96.4 |
% |
|
|
99.4 |
% |
Ultramax |
|
93.2 |
% |
|
|
98.2 |
% |
Supramax |
|
97.1 |
% |
|
|
98.9 |
% |
Handymax |
|
100.0 |
% |
|
|
90.9 |
% |
Handysize |
|
97.9 |
% |
|
|
98.9 |
% |
Fleet average |
|
97.4 |
% |
|
|
98.9 |
% |
|
|
|
|
Average Daily
Results: |
|
|
|
Time Charter Equivalent |
|
|
|
Capesize |
$ |
12,054 |
|
|
$ |
13,739 |
|
Panamax |
|
7,889 |
|
|
|
8,987 |
|
Ultramax |
|
8,421 |
|
|
|
10,895 |
|
Supramax |
|
8,769 |
|
|
|
9,965 |
|
Handymax |
|
- |
|
|
|
10,519 |
|
Handysize |
|
6,938 |
|
|
|
8,842 |
|
Fleet average |
|
9,230 |
|
|
|
10,463 |
|
|
|
|
|
Daily vessel operating
expenses |
|
|
|
Capesize |
$ |
4,963 |
|
|
$ |
4,702 |
|
Panamax |
|
4,327 |
|
|
|
4,392 |
|
Ultramax |
|
4,300 |
|
|
|
4,334 |
|
Supramax |
|
4,268 |
|
|
|
4,419 |
|
Handymax |
|
- |
|
|
|
5,971 |
|
Handysize |
|
4,015 |
|
|
|
4,033 |
|
Fleet average |
|
4,420 |
|
|
|
4,401 |
|
|
|
|
|
|
|
|
|
- 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.
- 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.
- 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.
- We define chartered-in days as the
aggregate number of days in a period during which we chartered-in
third-party vessels.
- We define available days, which
Genco has recently updated and incorporated in the table above to
better demonstrate the manner in which Genco evaluates its
business, 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.
- We define available days for the
owned fleet as available days less chartered-in days.
- 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.
- We calculate fleet utilization,
which Genco has recently updated and incorporated in the table
above to better demonstrate the manner in which Genco evaluates its
business, as the number of our operating days during a period
divided by the number of ownership days plus chartered-in days less
drydocking days.
- 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, 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 March 31, 2019 |
|
Three Months Ended March 31, 2018 |
Total
Fleet |
(unaudited) |
Voyage revenues (in thousands) |
$ |
93,464 |
|
$ |
76,916 |
Voyage expenses (in
thousands) |
|
43,022 |
|
|
21,093 |
Charter hire expenses (in
thousands) |
|
2,419 |
|
|
- |
|
|
48,023 |
|
|
55,823 |
|
|
|
|
Total available days for owned
fleet |
|
5,203 |
|
|
5,335 |
Total TCE rate |
$ |
9,230 |
|
$ |
10,463 |
|
|
|
|
|
|
|
|
- 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 March 31, 2019, gross of
unamortized debt issuance costs and inclusive of the current
portion of long-term debt, amounted to $535 million. On February
28, 2019, we upsized our $460 Million Credit Facility to a $495
Million Credit Facility through an amendment providing an
additional tranche of up to $35 million to finance up to 90% of the
expenses related to the acquisition and installation of scrubbers
on our 17 Capesize vessels. Borrowings under the $35 million
tranche will bear interest at LIBOR plus 250 basis points through
September 30, 2019 and LIBOR plus a range of 225 to 275 basis
points thereafter. In April, we paid down the $4.6 million of net
sale proceeds from the Genco Cavalier that corresponded to debt,
and subsequently amended our quarterly amortization schedule to
$14.9 million.
|
|
|
March 31, 2019 |
|
December 31, 2018 |
|
|
Long-term debt, net
consists of the following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal amount |
|
|
$ |
534,840 |
|
|
$ |
551,420 |
|
|
|
Less: Unamortized debt
issuance costs |
|
|
|
(15,967 |
) |
|
|
(16,272 |
) |
|
|
Less: Current portion |
|
|
|
(70,351 |
) |
|
|
(66,320 |
) |
|
|
Long-term debt, net |
|
|
$ |
448,522 |
|
|
$ |
468,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019 |
|
December 31, 2018 |
|
Principal |
|
Unamortized Debt Issuance Cost |
|
Principal |
|
Unamortized Debt Issuance Cost |
|
|
|
|
$495 Million Credit Facility |
$ |
430,000 |
|
$ |
14,213 |
|
|
$ |
445,000 |
|
|
$ |
14,423 |
$108 Million Credit
Facility |
|
104,840 |
|
|
1,754 |
|
|
|
106,420 |
|
|
|
1,849 |
|
$ |
534,840 |
|
$ |
15,967 |
|
|
$ |
551,420 |
|
|
$ |
16,272 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 May 8, 2019, Genco Shipping
& Trading Limited’s fleet consists of 17 Capesize, two Panamax,
six Ultramax, 20 Supramax and 13 Handysize vessels with an
aggregate capacity of approximately 5,075,000 dwt and an average
age of 9.3 years.
The following table reflects Genco’s fleet list
as of May 8, 2019:
|
Vessel |
DWT |
Year Built |
Capesize |
|
|
1 |
Genco Resolute |
181,060 |
2015 |
2 |
Genco Endeavour |
181,060 |
2015 |
3 |
Genco Constantine |
180,183 |
2008 |
4 |
Genco Augustus |
180,151 |
2007 |
5 |
Genco Liberty |
180,032 |
2016 |
6 |
Genco Defender |
180,021 |
2016 |
7 |
Baltic Lion |
179,185 |
2012 |
8 |
Genco Tiger |
179,185 |
2011 |
9 |
Genco London |
177,833 |
2007 |
10 |
Baltic Wolf |
177,752 |
2010 |
11 |
Genco Titus |
177,729 |
2007 |
12 |
Baltic Bear |
177,717 |
2010 |
13 |
Genco Tiberius |
175,874 |
2007 |
14 |
Genco Commodus |
169,098 |
2009 |
15 |
Genco Hadrian |
169,025 |
2008 |
16 |
Genco Maximus |
169,025 |
2009 |
17 |
Genco Claudius |
169,001 |
2010 |
Panamax |
|
|
1 |
Genco Thunder |
76,588 |
2007 |
2 |
Genco Raptor |
76,499 |
2007 |
Ultramax |
|
|
1 |
Baltic Hornet |
63,574 |
2014 |
2 |
Baltic Mantis |
63,470 |
2015 |
3 |
Baltic Scorpion |
63,462 |
2015 |
4 |
Baltic Wasp |
63,389 |
2015 |
5 |
Genco Weatherly |
61,556 |
2014 |
6 |
Genco Columbia |
60,294 |
2016 |
Supramax |
|
|
1 |
Genco Hunter |
58,729 |
2007 |
2 |
Genco Auvergne |
58,020 |
2009 |
3 |
Genco Rhone |
58,018 |
2011 |
4 |
Genco Ardennes |
58,018 |
2009 |
5 |
Genco Brittany |
58,018 |
2010 |
6 |
Genco Languedoc |
58,018 |
2010 |
7 |
Genco Pyrenees |
58,018 |
2010 |
8 |
Genco Bourgogne |
58,018 |
2010 |
9 |
Genco Aquitaine |
57,981 |
2009 |
10 |
Genco Warrior |
55,435 |
2005 |
11 |
Genco Predator |
55,407 |
2005 |
12 |
Genco Provence |
55,317 |
2004 |
13 |
Genco Picardy |
55,257 |
2005 |
14 |
Genco Normandy |
53,596 |
2007 |
15 |
Baltic Jaguar |
53,474 |
2009 |
16 |
Baltic Leopard |
53,447 |
2009 |
17 |
Baltic Cougar |
53,432 |
2009 |
18 |
Genco Loire |
53,430 |
2009 |
19 |
Genco Lorraine |
53,417 |
2009 |
20 |
Baltic Panther |
53,351 |
2009 |
Handysize |
|
|
1 |
Genco Spirit |
34,432 |
2011 |
2 |
Genco Mare |
34,428 |
2011 |
3 |
Genco Ocean |
34,409 |
2010 |
4 |
Baltic Wind |
34,409 |
2009 |
5 |
Baltic Cove |
34,403 |
2010 |
6 |
Genco Avra |
34,391 |
2011 |
7 |
Baltic Breeze |
34,386 |
2010 |
8 |
Genco Bay |
34,296 |
2010 |
9 |
Baltic Hare |
31,887 |
2009 |
10 |
Baltic Fox |
31,883 |
2010 |
11 |
Genco Champion |
28,445 |
2006 |
12 |
Genco Challenger |
28,428 |
2003 |
13 |
Genco
Charger |
28,398 |
2005 |
|
|
|
|
Conference Call Announcement
Genco Shipping & Trading Limited will hold a
conference call on Thursday, May 9, 2019 at 8:00 a.m. Eastern Time
to discuss its 2019 first 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) 781-6650 or (800) 682-9934
and enter passcode 6246906. 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 6246906. 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 presentation 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 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 and general,
administrative, 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
repairs 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 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) the completion of documentation for vessel
transactions and the performance of the terms thereof by buyers or
sellers of vessels and us; (xviii) the terms of definitive
documentation for the purchase and installation of scrubbers and
our ability to have scrubbers installed within the price range and
time frame anticipated; (xix) our ability to obtain any additional
financing we may seek for scrubbers on acceptable terms; (xx) the
relative cost and availability of low sulfur and high sulfur fuel
or any additional scrubbers we may seek to install; (xxi) our
ability to realize the economic benefits or recover the cost of the
scrubbers we plan to install; (xxii) worldwide compliance with IMO
2020 regulations and other factors listed from time to time in our
public filings with the Securities and Exchange Commission
including, without limitation, the Company’s Annual Report on Form
10-K for the year ended December 31, 2018 and our subsequent
reports on Form 10-Q and Form 8-K. 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 ZafoliasChief
Financial OfficerGenco Shipping & Trading Limited(646)
443-8550
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