Genco Shipping & Trading Limited Announces Q3 2024 Financial Results
NEW YORK, Nov. 06, 2024 (GLOBE NEWSWIRE) -- Genco Shipping & Trading Limited (NYSE:GNK) ("Genco" or the "Company"), the largest U.S. headquartered drybulk shipowner focused on the global transportation of commodities, today reported its financial results for the three months and nine months ended September 30, 2024.
Third Quarter 2024 and Year-to-Date Highlights
Dividend: Declared a $0.40 per share dividend for Q3 2024
21st consecutive quarterly dividend
Cumulative dividends of $6.315 per share or approximately 40% of our share price1
Q3 2024 dividend is payable on or about November 25, 2024 to all shareholders of record as of November 18, 2024
Genco enhanced its dividend policy to exclude the drydocking capex line item from the dividend calculation beginning in Q3 2024
This resulted in incremental dividends of $0.27 per share in Q3 2024
Growth: Acquired the Genco Intrepid, a high specification 2016-built 180,000 dwt Capesize vessel that delivered to the Company in October
Financial performance: Net income of $21.5 million for Q3 2024, or basic and diluted earnings per share of $0.50 and $0.49, respectively
Adjusted net income of $18.1 million or basic and diluted earnings per share of $0.42 and $0.41, respectively, excluding a gain on sale of vessels of $4.5 million, non-cash vessel impairment charges of $1.0 million and unrealized fuel losses of $0.1 million
Adjusted EBITDA of $36.9 million for Q3 20242
Voyage revenues: Totaled $99.3 million in Q3 2024
Net revenue2 was $69.8 million during Q3 2024
Average daily fleet-wide TCE2 was $19,260 for Q3 2024
Estimated TCE to date for Q4 2024: $18,786 for 65% of our owned fleet available days, based on both period and current spot fixtures2
John C. Wobensmith, Chief Executive Officer, commented, "Execution of our value strategy was once again strong. We enhanced our dividend policy to increase cash distributions to shareholders, resulting in an 18% increase in our third quarter dividend over the prior quarter. Returning significant capital to shareholders remains a top priority for management and we have now declared 21 consecutive dividends, representing $6.315 per share, or ~40% of our current share price. Advancing our growth strategy also remains an important focus for management and subsequent to quarter's end, we took delivery of another high specification Capesize vessel. Including this acquisition, we have now invested ~$285 million in fleet expansion and modernization since the implementation of our value strategy. Consistent with our stated objective, we are pleased to have reinvested proceeds from the sales of older, less fuel-efficient vessels into this high-quality Capesize vessel to further increase our earnings power and modernize our fleet."
Mr. Wobensmith continued, "Drawing on our leading commercial platform, we increased TCE 59% year-over-year. As we look to the end of the year, drybulk fundamentals remain positive, driven by ongoing capacity constraints, firm commodity demand and the beginning of fiscal and monetary easy cycles in key global economies. We are well positioned to continue to benefit from our significant operating leverage during a time when we continue to capitalize on our significant financial strength to take advantage of attractive growth opportunities, while delivering sizeable dividends to shareholders under our newly enhanced dividend policy."
1 Genco share price as of November 5, 2024.
2 We believe the non-GAAP measure presented provides investors with a means of better evaluating and understanding the Company's operating performance. Please see Summary Consolidated Financial and Other Data below for further reconciliation. Regarding Q4 2024 TCE, actual results will vary from current estimates. Net revenue is defined as voyage revenues minus voyage expenses, charter hire expenses and realized gains or losses on fuel hedges.
Comprehensive Value Strategy
Genco's comprehensive value strategy is centered on three pillars:
Dividends: paying sizeable quarterly cash dividends to shareholders
Deleveraging: through voluntary debt repayments to maintain low financial leverage, and
Growth: opportunistically growing and renewing the Company's asset base
This strategy is a key differentiator for Genco, which we believe creates a compelling risk-reward balance to drive shareholder value over the long-term. The Company intends to pay a sizeable quarterly dividend across the cyclicality of the drybulk market while maintaining significant flexibility to grow the fleet through accretive vessel acquisitions.
Key characteristics of our unique platform include:
Industry low cash flow breakeven rate
Net loan-to-value of 5%3
Strong liquidity position of $380.0 million at September 30, 2024, which consists of:
$47.0 million of cash on the balance sheet
$333.0 million of revolver availability
High operating leverage with our scalable fleet across the major and minor bulk sectors
3 Represents the principal amount of our credit facility debt outstanding less our cash and cash equivalents as of September 30, 2024 divided by estimates of the market value of our fleet as of November 5, 2024 from VesselsValue.com. These figures are pro forma for vessel transactions that were consummated in Q4 2024. The actual market value of our vessels may vary.
Financial Deleveraging
82% debt reduction since 2021
Debt outstanding: $80.0 million as of September 30, 2024
Paid down $25.0 million of debt in Q3 as we continue to actively manage our debt outstanding under our $500 million revolver to reduce interest expense and our cash flow breakeven rate
In Q4 2024, Genco drew down $20.0 million to partially fund the acquisition of the Genco Intrepid
We plan to continue to voluntarily pay down debt with a goal of zero net debt in order to enhance our ability to pay meaningful dividends and take advantage of strategic opportunities throughout drybulk market cycles
Fleet Renewal
Acquired the Genco Intrepid, a 2016-built 180,000 dwt Capesize vessel, for $47.5 million constructed at Dalian Shipbuilding in China. We took delivery of the vessel on the October 23, 2024. This is the third high-specification Capesize vessel that we have acquired over the past 12 months.
Furthermore, we sold the Genco Warrior, a 2005-built 55,000 dwt Supramax vessel, for $11.95 million and the Genco Hadrian, a 2008-built 169,000 dwt Capesize vessel, for $25.0 million. Both of these vessels were scheduled to drydock in 2025, saving Genco approximately $5.0 million in drydocking expenses next year. The Genco Warrior was delivered to its buyer on July 5, 2024, and the Genco Hadrian was delivered to its buyer on October 4, 2024.
Dividend Policy
Genco declared a cash dividend of $0.40 per share for the third quarter of 2024. The Q3 2024 dividend is payable on or about November 25, 2024 to all shareholders of record as of November 18, 2024.
Quarterly dividend policy: 100% of quarterly operating cash flow less a voluntary reserve. During the third quarter of 2024, Genco enhanced its dividend policy to exclude the drydocking capex line item from the dividend calculation.
Under the quarterly dividend policy adopted by our Board of Directors, the amount available for quarterly dividends is to be calculated based on the formula in the table below. The table includes the calculation of the actual Q3 2024 dividend and estimated amounts for the calculation of the dividend for Q4 2024:
Dividend calculation
Q3 2024 actual
Q4 2024 estimates
Net revenue
$
69.82
Fixtures + market
Operating expenses
(32.89
)
(32.95
)
Operating cash flow
$
36.93
Sum of the above
Less: voluntary quarterly reserve
(19.50
)
(19.50
)
Cash flow distributable as dividends
$
17.43
Sum of the above
Number of shares to be paid dividends
43.5
43.5
Dividend per share
$
0.40
Numbers in millions except per share amounts
Operating cash flow is defined as net revenue (consisting of voyage revenue less voyage expenses, charter hire expenses, and realized gains or losses on fuel hedges), less operating expenses (consisting of vessel operating expenses, general and administrative expenses other than non-cash restricted stock expenses, technical management expenses, and interest expense other than non-cash deferred financing costs), for purposes of the foregoing calculation. Estimated expenses for Q4 2024 are estimates and subject to change.
The voluntary quarterly reserve for the fourth quarter of 2024 under the Company's dividend formula is expected to be $19.50 million, which remains fully within our discretion. A key component of Genco's value strategy is maintaining a voluntary quarterly reserve, as well as the optionality for the use of the reserve as Genco seeks to pay sizeable dividends across the cyclicality of the drybulk market. Subject to the development of freight rates for the remainder of the fourth quarter and our assessment of our liquidity and forward outlook, we maintain flexibility to reduce the quarterly reserve to pay dividends or increase the amount of dividends otherwise payable under our formula. The reserve is set by our Board of Directors at its discretion, and our Board has generally allotted an amount for anticipated debt prepayments plus an additional amount. We plan to set the voluntary reserve on a quarterly basis for the subsequent quarter.
Anticipated uses for the voluntary reserve include, but are not limited to:
Vessel acquisitions
Debt repayments, and
General corporate purposes
The Board expects to reassess the payment of dividends as appropriate from time to time. Our quarterly dividend policy and declaration and payment of dividends are subject to legally available funds, compliance with applicable law and contractual obligations (including our credit facility) and the Board of Directors' determination that each declaration and payment is at the time in the best interests of the Company and its shareholders after its review of our financial performance.
Peter Allen, Chief Financial Officer, commented, "During the third quarter of 2024, Genco continued to generate strong earnings achieving adjusted EBITDA of $36.9 million during the period. This brought year-to-date adjusted EBITDA to $118.5 million, already greater than the full year of 2023. Furthermore, the Company's decision to enhance the quarterly dividend calculation by removing the drydocking capex line item increased the amount of cash available for distribution augmenting our third quarter dividend. The ability to implement this adjustment was in large part due to Genco's industry low net loan-to-value ratio as we have reduced our debt by a total of 82% since implementing our value strategy in 2021. With $333 million in undrawn revolver capacity, Genco has significant financial flexibility and remains in a strong position to take advantage of accretive growth opportunities."
Genco's Active Commercial Operating Platform and Fleet Deployment Strategy
We utilize a portfolio approach towards revenue generation through a combination of:
Short-term, spot market employment, and
Opportunistically booking longer term coverage
Our fleet deployment strategy currently remains weighted towards short-term fixtures, which provide us with optionality on our sizeable fleet.
Our barbell approach towards fleet composition enables Genco to gain exposure to both the major and minor bulk commodities with a fleet whose cargoes carried align with global commodity trade flows. This approach continues to serve us well given the upside potential in major bulk rates together with the relative stability of minor bulk rates.
Based on current fixtures to date, our estimated TCE to date for the fourth quarter of 2024 on a load-to-discharge basis is presented below. Actual rates for the fourth quarter will vary based upon future fixtures. These estimates are based on time charter contracts entered by the Company as well as current spot fixtures on the load-to-discharge method, whereby revenue is recognized ratably over the voyage from the commencement of loading to the completion of discharge. The actual TCE rates to be earned will depend on the number of contracted days and the number of ballast days at the end of the period. According to the load-to-discharge accounting method, the Company does not recognize revenue for any ballast days or uncontracted days at the end of the fourth quarter of 2024. At the same time, expenses for uncontracted days will be recognized.
Estimated net TCE - Q4 2024 to Date
Vessel Type
Fleet-wide
% Fixed
Capesize
$
25,962
59
%
Ultra/Supra
$
14,851
68
%
Total
$
18,786
65
%
Our index-linked and period time charters are listed below:
Vessel
Type
DWT
Year Built
Rate
Duration
Min Expiration
Genco Reliance
Capesize
181,146
2016
BCI + 28% + scrubber
10-12 months
Jan-25
Genco Ranger
Capesize
180,882
2016
BCI + 28% + scrubber
11-14 months
Feb-25
Genco Liberty
Capesize
180,032
2016
$
35,000
11-14 months
Feb-25
Genco Resolute
Capesize
181,060
2015
BCI + 23% + scrubber
11-14 months
Apr-25
Genco Defender
Capesize
180,021
2016
BCI + 23% + scrubber
11-14 months
Apr-25
Genco Endeavour
Capesize
181,057
2015
$
30,565
12-15 months
Oct-25
Financial Review: 2024 Third Quarter
The Company recorded net income for the third quarter of 2024 of $21.5 million, or $0.50 and $0.49 basic and diluted earnings per share, respectively. Adjusted net income amounted to $18.1 million, or $0.42 and $0.41 basic and diluted earnings per share, respectively, excluding a gain on sale of vessels of $4.5 million, non-cash vessel impairment charges of $1.0 million and unrealized fuel losses of $0.1 million. Comparatively, for the three months ended September 30, 2023, the Company recorded a net loss of $32.0 million, or $0.75 basic and diluted loss per share. Adjusted net loss is $3.9 million or $0.09 basic and diluted loss per share excluding a non-cash vessel impairment charge of $28.1 million.
Revenue / TCE
The Company's revenues increased to $99.3 million for the three months ended September 30, 2024, as compared to $83.4 million recorded for the three months ended September 30, 2023, primarily due to higher rates earned by our major and minor bulk vessels. The average daily time charter equivalent, or TCE, rates obtained by the Company's fleet was $19,260 per day for the three months ended September 30, 2024 as compared to $12,082 per day for the three months ended September 30, 2023.
Voyage expensesVoyage expenses decreased to $28.2 million for the three months ended September 30, 2024 from $34.3 million during the prior year period. The decrease was primarily due to lower voyage expenses for our major bulk vessels, including lower bunker consumption.
Vessel operating expensesVessel operating expenses increased to $24.8 million for the three months ended September 30, 2024 from $24.7 million for the three months ended September 30, 2023. Daily vessel operating expenses, or DVOE, amounted to $6,423 per vessel per day for the third quarter of 2024 compared to $6,113 per vessel per day for the third quarter of 2023. The increase was primarily due to the timing of the purchase of stores and higher repair and maintenance costs.
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 current estimates, our DVOE budget for Q4 2024 is $6,200 per vessel per day on a fleet-wide basis.
General and administrative expensesGeneral and administrative expenses increased to $6.8 million for the third quarter of 2024 compared to $6.6 million for the third quarter of 2023 due to higher nonvested stock amortization expense.
Depreciation and amortization expensesDepreciation and amortization expenses decreased to $16.6 million for the three months ended September 30, 2024 from $17.0 million for the three months ended September 30, 2023.
Financial Review: Nine Months 2024
The Company recorded net income of $63.7 million or $1.48 and $1.46 basic and diluted earnings per share, respectively, for the nine months ended September 30, 2024. Adjusted net income amounted to $59.4 million, or $1.38 and $1.36 basic and diluted earnings per share, respectively, excluding a gain on sale of vessels of $16.7 million, non-cash vessel impairment charges of $6.6 million, other operating expense of $5.7 million and unrealized fuel losses of $0.1 million. This compares to net loss of $17.8 million or $0.42 basic and diluted loss per share, for the nine months ended September 30, 2023. Adjusted net income is $10.3 million or $0.24 basic and diluted earnings per share excluding a non-cash vessel impairment charge of $28.1 million.
Revenue / TCE
The Company's revenues increased to $323.8 million for the nine months ended September 30, 2024 compared to $268.3 million for the nine months ended September 30, 2023. The increase in voyage revenues was primarily due to higher rates earned by our major bulk vessels and our Ultrabulk vessels that are in our minor bulk fleet. TCE rates obtained by the Company increased to $19,458 per day for the nine months ended September 30, 2024 from $13,855 per day for the nine months ended September 30, 2023.
Voyage expensesVoyage expenses decreased to $95.7 million for the nine months ended September 30, 2024 from $100.5 million for the same period in 2023.
Vessel operating expensesVessel operating expenses increased to $77.8 million for the nine months ended September 30, 2024 from $71.7 million for the nine months ended September 30, 2023. DVOE was $6,514 for the first nine months of 2024 versus $5,971 in the first nine months of 2023. The increase was primarily due to the timing of the purchase of stores and spares, higher repair and maintenance costs, and higher crew costs.
General and administrative expensesGeneral and administrative expenses for the nine months ended September 30, 2024 decreased to $20.8 million as compared to $21.3 million in the same period of 2023 primarily due to lower legal and professional fees.
EBITDAEBITDA for the nine months ended September 30, 2024 amounted to $122.8 million compared to $36.2 million during the prior year period. During the nine months of 2024 and 2023, EBITDA included non-cash impairment charges, other operating expenses, gains on sale of vessels as well as gains and losses on fuel hedges. Excluding these items, our adjusted EBITDA would have amounted to $118.5 million and $64.4 million, for the respective periods.
Liquidity and Capital Resources
Cash Flow
Net cash provided by operating activities for the nine months ended September 30, 2024 and 2023 was $96.9 million and $52.2 million, respectively. This increase in cash provided by operating activities was primarily due to higher freight rates earned by our major bulk vessels and our Ultramax vessels, as well as changes in working capital. This increase was partially offset by an increase in drydocking costs incurred during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.
Net cash provided by (used in) investing activities for the nine months ended September 30, 2024 and 2023 was $73.7 million and ($3.3) million, respectively. This fluctuation was primarily a result of $79.1 million of proceeds from the sale of the Genco Commodus, the Genco Claudius, the Genco Maximus and the Genco Warrior during the nine months ended September 30, 2024.
Net cash used in financing activities during the nine months ended September 30, 2024 and 2023 was $170.4 million and $60.8 million, respectively. The increase is primarily due to a $93.8 million increase in debt repayments made during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. There was also a $15.9 million increase in the payment of dividends during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.
Capital Expenditures
Genco's fleet consists of 42 vessels with an average age of 11.9 years and an aggregate capacity of approximately 4,446,000 dwt as follows:
16 Capesizes
15 Ultramaxes
11 Supramaxes
In addition to acquisitions that we may undertake, we will incur additional capital expenditures due to special surveys and drydockings. Furthermore, we plan to upgrade a portion of our fleet with energy saving devices and apply high performance paint systems to our vessels in order to reduce fuel consumption and emissions.
We estimate our capital expenditures related to drydocking, including capitalized costs incurred during drydocking related to vessel assets and vessel equipment, ballast water treatment system costs, fuel efficiency upgrades and scheduled off-hire days for our fleet for the balance of 2024 and 2025 to be:
Estimated costs ($ in millions)
Q4 2024
Q1 2025
Q2 2025
Q3 2025
Q4 2025
Drydock Costs(1)
$
6.99
$
19.50
$
11.55
$
6.65
$
3.10
Estimated BWTS Costs(2)
$
-
$
0.53
$
0.53
$
-
$
-
Fuel Efficiency Upgrade Costs(3)
$
1.77
$
2.57
$
0.68
$
2.41
$
0.14
Total Costs
$
8.76
$
22.59
$
12.76
$
9.06
$
3.24
Estimated Offhire Days(4)
111
265
165
95
55
(1) Estimates are based on our budgeted cost of drydocking our vessels in China. Actual costs will vary based on various factors, including where the drydockings are actually performed. We expect to fund these costs with cash on hand. These costs do not include drydock expense items that are reflected in vessel operating expenses.
(2) Estimated costs associated with the installation of ballast water treatment systems are expected to be funded with cash on hand.
(3) Estimated costs associated with the installation of fuel efficiency upgrades are expected to be funded with cash on hand.
(4) Actual length will vary based on the condition of the vessel, yard schedules and other factors. The estimated offhire days per sector scheduled for Q4 2024 consists of 111 days for one Ultramax and three Supramaxes.
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 September 30, 2024
Three Months Ended September 30, 2023
Nine Months Ended September 30, 2024
Nine Months Ended September 30, 2023
(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
$
99,332
$
83,361
$
323,814
$
268,309
Total revenues
99,332
83,361
323,814
268,309
Operating expenses:
Voyage expenses
28,232
34,256
95,705
100,522
Vessel operating expenses
24,847
24,746
77,756
71,725
Charter hire expenses
1,267
2,026
7,232
6,731
General and administrative expenses (inclusive of nonvested stock amortization
6,831
6,585
20,815
21,267
expense of $1,508, $1,397, $4,341 and $4,175, respectively)
Technical management expenses
1,005
973
3,296
3,084
Depreciation and amortization
16,620
17,026
50,939
49,762
Impairment of vessel assets
961
28,102
6,595
28,102
Gain on sale of vessels
(4,465
)
-
(16,693
)
-
Other operating expense
-
-
5,728
-
Total operating expenses
75,298
113,714
251,373
281,193
Operating income (loss)
24,034
(30,353
)
72,441
(12,884
)
Other (expense) income:
Other expense
(239
)
(100
)
(263
)
(298
)
Interest income
749
588
2,294
1,877
Interest expense
(2,970
)
(1,999
)
(10,462
)
(6,158
)
Other expense, net
(2,460
)
(1,511
)
(8,431
)
(4,579
)
Net income (loss)
$
21,574
$
(31,864
)
$
64,010
$
(17,463
)
Less: Net income attributable to noncontrolling interest
115
140
286
$
345
Net income (loss) attributable to Genco Shipping & Trading Limited
$
21,459
$
(32,004
)
$
63,724
$
(17,808
)
