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Genco Shipping & Trading Limited Announces Second Quarter Financial Results

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Executing on Genco's Strategic Growth Initiatives Through the Acquisition of Six Modern, Fuel Efficient Capesize and Ultramax Vessels

Accessed Commercial Bank Financing and the Capital Markets with a New Credit Facility and the Successful Completion of a $116 Million Equity Offering

NEW YORK, Aug. 08, 2018 (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, 2018.

The following financial review discusses the results for the three and six months ended June 30, 2018 and June 30, 2017.

Second Quarter 2018 and Year-to-Date Highlights

  • Agreed to acquire a total of six high specification, fuel efficient Capesize and Ultramax vessels, specifically:
    • In June 2018, we agreed to acquire two 2015 Chinese built 180,000 dwt Capesize vessels, one 2016 Japanese built Ultramax vessel and one 2014 Chinese built Ultramax vessel for an en bloc purchase price of approximately $141 million
    • In July 2018, we agreed to acquire two 2016 South Korean built 180,000 dwt Capesize vessels for an en bloc purchase price of approximately $98 million
  • Received a commitment for a five-year senior secured credit facility with an estimated aggregate principal amount of approximately $107 million to partially finance or refinance these acquisitions
  • Completed a common stock offering for gross proceeds of $115.7 million
    • Issued 7,015,000 new shares, which included the exercise in full of the underwriters' option to purchase up to 915,000 shares of common stock
    • As a result, 41,547,004 shares of common stock were outstanding following completion of the offering
  • Entered into agreements for the sale of three 1990s-built vessels, including one Panamax, the Genco Surprise and two Handysizes, the Genco Explorer and the Genco Progress, as part of our fleet renewal program
  • Closed a senior secured term loan facility with an aggregate principal amount of $460 million to -
    • Refinance our four prior credit facilities and
    • Provide the Company with added flexibility in regards to vessel acquisitions, additional indebtedness and potential dividends
  • Recorded a net loss of $1.1 million for the second quarter of 2018
    • Basic and diluted loss per share of $0.03
  • Adjusted net income of $3.6 million or adjusted basic and diluted earnings per share of $0.10, after excluding:
    • $4.5 million for the extinguishment of debt associated with the $460 Million Credit Facility refinancing and
    • $0.2 million of non-cash impairment charges related to the sale of the Genco Surprise1
  • Net revenue (voyage revenues minus voyage expenses and charter hire expenses) totaled $59.7 million during Q2 2018, nearly 35% higher than the same period of 2017
  • Time charter equivalent ("TCE") increased to $10,964 for Q2 2018 marking a year-over-year improvement of 31%
  • Maintained low daily vessel operating expenses ("DVOE") of $4,344 per vessel per day during Q2 2018 highlighting our industry leading low-cost structure
    • Costs remained under our 2018 budget without sacrificing our high safety and maintenance standards
  • Recorded EBITDA of $22.9 million during Q2 2018
    • Adjusted EBITDA of $27.6 million, after excluding $4.5 million and $0.2 million of debt extinguishment and non-cash impairment charges, respectively1

________________________

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.

John C. Wobensmith, Chief Executive Officer, commented, "We continued to benefit from our strengthened commercial platform in the second quarter while further implementing our strategy to position Genco to more fully capitalize on a robust drybulk market. Drawing on Genco's strong access to the capital markets and our long-standing relationships with our leading bank group, we completed a successful capital raise and arranged for two new credit facilities. Based on this success, we took advantage of the opportunity to further strengthen and grow our fleet and enhance the Company's earnings power. We are pleased to have identified and acquired six modern, fuel efficient Capesize and Ultramax vessels which we anticipate will be delivered to us during the seasonally stronger second half of the year. We believe this is an attractive entry point in the cycle given the earnings environment for both of these sectors, strong demand for drybulk commodities, and multi-decade low vessel supply growth rates."

Vessel Acquisitions and Fleet Renewal Program

Genco has agreed to acquire six high specification, fuel efficient Capesize and Ultramax vessels. Specifically, in June 2018, we agreed to acquire two 2015 Chinese built 180,000 dwt Capesize vessels, one 2016 Japanese built Ultramax vessel and one 2014 Chinese built Ultramax vessel for an en bloc purchase price of approximately $141 million. Furthermore, in July 2018, we agreed to acquire two 2016 South Korean built 180,000 dwt Capesize vessels for an en bloc purchase price of approximately $98 million. On July 26, 2018, we took delivery of the Genco Weatherly, a 2014-built 61,000 dwt Ultramax vessel. The remaining five acquisition vessels are scheduled to be delivered to the Company by the end of the third quarter of 2018.

Regarding our fleet renewal program announced earlier in the year, we have agreed to sell three older vessels consisting of the Genco Surprise, a 1998-built Panamax vessel which delivered to buyers on August 7, 2018, and the Genco Explorer and Genco Progress, two 1999-built Handysize vessels. These vessels were scheduled to drydock in 2018 and 2019. As a result of the sale, Genco will save anticipated drydocking and ballast water treatment system installation costs of approximately $4.7 million. There will be no debt repayment associated with the sale of these three vessels as they are unencumbered as part of the $460 Million Credit Facility refinancing.

Following the acquisition of the six vessels we have agreed to acquire and the sale of three vessels we have agreed to sell, our fleet will consist of 63 vessels with a carrying capacity of 5,400,000 dwt. On a per sector basis, the fleet will consist of 17 Capesize, five Panamax, six Ultramax, 21 Supramax, one Handymax and 13 Handysize vessels with an average age of 9.2 years, representing an over one year reduction in average age from 10.3 years for the prior fleet composition of 60 vessels before any of the recent sale and purchase activity.

Credit Facility Update

$460 Million Credit Facility
On June 5, 2018, the Company closed a previously announced five-year senior secured credit facility in an aggregate principal amount of up to $460 million. Proceeds from this credit facility were used, together with cash on hand, to refinance all of the Company's prior credit facilities into one facility and pay down the debt on the oldest seven vessels in Genco's fleet.

The $460 Million Credit Facility lowers Genco's interest costs through improved pricing, eliminates near-term refinancing risk by extending loan maturity to 2023, establishes an attractive amortization profile and enhances the Company's flexibility to execute its fleet growth and renewal program by lifting restrictions on vessel acquisitions and additional indebtedness.

New Credit Facility
In addition to the $460 Million Credit Facility, we also received a commitment for a five-year senior secured credit facility (the "New Credit Facility") to be led by Crédit Agricole Corporate & Investment Bank with an estimated aggregate principal amount of approximately $107 million. Under the terms of the New Credit Facility, borrowings are to 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 Genco's ratio of total net indebtedness to the last twelve months EBITDA.

Our Commercial Strategy Continues to Actively Drive Revenue and Margin Growth

Our strong performance during the second quarter of 2018 was primarily driven by our in-house commercial expertise in designated regions in which we trade our vessels together with identified trade lanes per vessel, our expanded global presence and our active engagement with cargo providers to further grow our network of customers. Overall, our fleet deployment strategy remains weighted towards short-term fixtures which provides optionality in a potentially rising freight rate environment. We believe that our active commercial strategy together with our low-cost structure should continue to increase margins going forward.

Our second quarter of 2018 TCE results by class are listed below. Our TCE performance during the second quarter of 2018 improved by 31% compared to the same period the year before and rose by 5% from the prior quarter.

  • Capesize: $15,162
  • Panamax: $10,209
  • Ultramax, Supramax and Handymax: $10,503
  • Handysize: $8,402
  • Fleet average: $10,964

We currently have the following net TCE fixed for the third quarter of 2018. We note that TCE booked in the third quarter to date has been negatively impacted by the timing of backhaul fixtures from the Pacific to the Atlantic basin for select Capesize vessels as well as positioning of our minor bulk fleet during the early part of the quarter. These backhaul fixtures were concluded to strategically position these vessels to take advantage of anticipated stronger export volumes towards the end of the third quarter and into the fourth quarter in the specific regions. Additionally, we note that existing fixtures on several of our Capesize vessels are due to expire between now and the end of the third quarter and will potentially benefit from the improving drybulk market. We also expect to have several vessels in our minor bulk fleet favorably positioned between now and the end of the quarter.

  • Capesize: $15,794 for 61% of the available Q3 2018 days
  • Panamax: $8,806 for 55% of the available Q3 2018 days
  • Ultramax, Supramax and Handymax: $9,535 for 65% of the available Q3 2018 days
  • Handysize: $7,537 for 57% of the available Q3 2018 days
  • Fleet average: $10,362 for 62% of the available Q3 2018 days 

Financial Review: 2018 Second Quarter

The Company recorded a net loss for the second quarter of 2018 of $1.1 million, or $0.03 basic and diluted net loss per share. Comparatively, for the three months ended June 30, 2017, the Company recorded a net loss of $14.5 million, or $0.42 basic and diluted net loss per share.

The Company's revenues increased to $86.2 million for the three months ended June 30, 2018, nearly double when compared to $45.4 million for the three months ended June 30, 2017. The increase in revenues was primarily due to the employment of vessels on spot market voyage charters as well as higher spot market rates achieved by the majority of our vessels.  

The average daily time charter equivalent, or TCE, rates obtained by the Company's fleet was $10,964 per day for the three months ended June 30, 2018 as compared to $8,351 for the three months ended June 30, 2017. The increase in TCE was primarily due to higher rates achieved by the majority of the vessels in our fleet during the second quarter of 2018 versus the second quarter of 2017. During the second quarter of 2018, the drybulk freight market strengthened relative to the first quarter with sequential increases in Capesize, Supramax and Handysize average earnings as reported by the Baltic Exchange. Demand for raw materials remains strong as global steel production has increased by 4.6% in the year-to-date led primarily by China and India at growth rates of 6.0% and 5.1%, respectively. On the supply side, net fleet growth remains low at under 2.0% since the end of last year as newbuilding deliveries have fallen significantly.

Total operating expenses were $75.3 million for the three months ended June 30, 2018 compared to $52.6 million for the three months ended June 30, 2017. During the three months ended June 30, 2018, a $0.2 million non-cash impairment charge was recorded in relation to the anticipated sale of the Genco Surprise. During the three months ended June 30, 2017, non-cash charges of $3.3 million and $1.3 million were recorded due to a vessel impairment and a gain on sale of vessel, respectively. Voyage expenses rose to $26.0 million for the three months ended June 30, 2018 versus $1.0 million during the prior year period primarily due to the increased employment of vessels on spot market voyage charters as part of our commercial strategy, in which we incur significantly higher voyage expenses as compared to time charters, spot market-related time charters and pool arrangements. Vessel operating expenses marginally declined to $23.7 million for the three months ended June 30, 2018 compared to $23.9 million for the three months ended June 30, 2017. General and administrative expenses were $6.5 million for the second quarter of 2018 compared to $5.8 million for the second quarter of 2017, primarily due to higher legal expenses due to the $460 Million Credit Facility refinancing and compensation related expenses in connection with the buildout of our commercial platform. This was partially offset by lower nonvested stock amortization expense. Included in general and administrative expenses is nonvested stock amortization expense of $0.6 million and $1.6 million for the second quarter of 2018 and 2017, respectively. Depreciation and amortization expenses decreased to $16.5 million for the three months ended June 30, 2018 from $18.2 million for the three months ended June 30, 2017, primarily due to the revaluation of 15 of our vessels to their respective fair values during the first quarter of 2018 as well as the second and third quarters of 2017.

Daily vessel operating expenses, or DVOE, amounted to $4,344 per vessel per day for the second quarter of 2018, below our budget of $4,440 per vessel per day and compares to $4,333 per vessel per day for the same quarter of 2017. 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 2018 is $4,440 per vessel per day on a weighted average basis for the entire year for our fleet.

Apostolos Zafolias, Chief Financial Officer, commented, "During the quarter, we continued to generate positive operating cash flow to further strengthen our liquidity position. Furthermore, in support of our growth initiatives, we successfully completed a $116 million common stock offering and closed on the $460 Million Credit Facility, which refinanced our existing indebtedness and was significantly oversubscribed. Following our successful refinancing, we obtained a commitment for a five-year senior secured credit facility with an estimated principal amount of $107 million. We are pleased with the terms of both facilities and our success in reducing the Company's cost of capital."

Financial Review: Six Months 2018

The Company recorded a net loss of $56.9 million or $1.62 basic and diluted net loss per share for the six months ended June 30, 2018. This compares to a net loss of $30.1 million or $0.89 basic and diluted net loss per share for the six months ended June 30, 2017. Net loss for the six months ended June 30, 2018 and 2017, includes non-cash vessel impairment charges of $56.6 million and $3.3 million, respectively. Net loss for the six months ended June 30, 2018 also includes a loss on debt extinguishment in the amount of $4.5 million. Net loss for the six months ended June 30, 2017 includes a gain on sale of vessels in the amount of $7.7 million due to the sale of vessels. Revenues increased to $163.1 million for the six months ended June 30, 2018 compared to $83.6 million for the six months ended June 30, 2017. The increase in revenues was primarily due to the employment of vessels on spot market voyage charters as well as higher spot market rates achieved by the majority of our vessels.  Voyage expenses increased to $47.1 million for the six months ended June 30, 2018 from $4.2 million for the same period in 2017.  This increase was primarily due to the employment of vessels on spot market voyage charters during the first half of 2018 as part of our commercial strategy, in which we incur significantly higher voyage expenses as compared to time charters, spot market-related time charters and pool arrangements. TCE rates obtained by the Company increased to $10,716 per day for the six months ended June 30, 2018 from $7,318 per day for the six months ended June 30, 2017, due to higher rates achieved by the majority of the vessels in our fleet. Total operating expenses for the six months ended June 30, 2018 and 2017 were $200.6 million and $99.4 million, respectively. Total operating expenses includes non-cash vessel impairment charges of $56.6 million relating to the revaluation of certain vessels that comprise our fleet renewal plan to their respective fair values for the six months ended June 30, 2018. For the six months ended June 30, 2017, total operating expenses includes non-cash vessel impairment charges totaling $3.3 million and a gain on sale of vessels of $7.7 million. General and administrative expenses for the six months ended June 30, 2018 increased to $11.7 million as compared to $10.7 million for same period of 2017, primarily due to higher legal expenses due to the $460 Million Credit Facility refinancing and compensation related expenses in connection with the buildout of our commercial platform partially offset by lower nonvested stock amortization expense. Daily vessel operating expenses per vessel were $4,373 versus $4,364 in the comparative periods. EBITDA for the six months ended June 30, 2018 amounted to $(8.7) million compared to $20.4 million during the prior period. During the first six months of 2018 and 2017, EBITDA included non-cash impairment charges, loss on debt extinguishment and gains on sale of vessels as mentioned above. Excluding these non-cash charges, our adjusted EBTIDA would have amounted to $52.4 million and $16.1 million, for the respective periods.

Liquidity and Capital Resources

Cash Flow

Net cash provided by operating activities for the six months ended June 30, 2018 was $25.0 million as compared to net cash used in operating activities for the six months ended June 30, 2017 of $1.2 million.  Included in the net loss during the six months ended June 30, 2018 were $56.6 million of non-cash impairment charges, as well as a $4.5 million loss on the extinguishment of debt and a $5.3 million payment on the $400 Million Credit Facility. Included in the net loss during the six months ended June 30, 2017 was a gain on sale of vessels in the amount of $7.7 million due to the sale of five vessels and paid in kind interest incurred of $3.0 million related to the $400 Million Credit Facility. Depreciation and amortization expense for the six months ended June 30, 2018 decreased by $3.0 million primarily due to the revaluation of six of our vessels that were written down to their estimated fair market value during the second and third quarters of 2017, as well as the revaluation of an additional nine of our vessels that were written down to their estimated fair market value during the first quarter of 2018.  Additionally, the fluctuation in inventories decreased by $7.9 million due to additional fuel inventory for our vessels as the result of the employment of our vessels on spot market voyage charters. There was also a $6.1 million decrease in the fluctuation in due from charterers due to the timing of payments received from charterers.  These decreases were partially offset by a $3.8 million decrease in deferred drydocking costs incurred because there were less vessels that completed drydocking during the six months ended June 30, 2018 as compared to the same period during 2017.  Lastly, there was an increase in the fluctuation in accounts payable and accrued expenses of $3.7 million and an increase in the fluctuation in prepaid expenses and other current assets of $4.9 million due to the timing of payments.

Net cash provided by investing activities was $1.9 million during the six months ended June 30, 2018 as compared to $15.8 million during the six months ended June 30, 2017.  The decrease is primarily due to $15.5 million proceeds from the sale of five vessels during the six months ended June 20, 2017 as compared to no vessels sold during the six months ended June 30, 2018.  This decrease was partially offset by a $2.5 million increase in the insurance proceeds received for hull and machinery claims primarily due to the receipt of the remaining settlement of the main engine repair claim for the Genco Tiger during the six months ended June 30, 2018.

Net cash provided by financing activities during the six months ended June 30, 2018 was $38.5 million as compared to net cash used in financing activities of $2.7 million during the six months ended June 30, 2017.  Net cash provided by financing activities of $38.5 million for the six months ended June 30, 2018 consisted primarily of the $460.0 million drawdown on the $460 Million Credit Facility and the net proceeds from the issuance of common stock on June 19, 2018 of $110.2 million partially offset by the following:  $399.6 million repayment of debt under the $400 Million Credit Facility; $93.9 million repayment of debt under the $98 Million Credit Facility; $25.5 million repayment of debt under the 2014 Term Loan Facilities; $9.7 million payment of deferred financing costs; and $3.0 million payment of debt extinguishment costs.  On June 5, 2018, the $460 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.  Net cash used in financing activities of $2.7 million for the six months ended June 30, 2017 consisted of the following: $1.4 million repayment of debt under the 2014 Term Loan Facilities; $1.1 million payment of Series A Preferred Stock issuance costs; and $0.2 million repayment of debt under the $400 Million Credit Facility.

Capital Expenditures

We make capital expenditures from time to time in connection with vessel acquisitions. As of June 30, 2018, we had remaining installment payment obligations for the agreed upon acquisitions of vessels aggregating $238.3 million. We anticipate making these payments in the third quarter of 2018 using a combination of cash on hand and commercial bank financing as previously described. 

In addition to acquisitions that we may undertake in future periods, we will incur additional capital expenditures due to special surveys and drydockings for our fleet. We did not drydock any of our vessels during the second quarter of 2018. We currently have two of our vessels scheduled to drydock during the remainder of 2018.

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

  Q3 2018 Q4 2018
Estimated Costs (1) $0.9 million $1.5 million
Estimated Offhire Days (2) 20 20

(1) Estimates are based on our budgeted cost of drydocking our vessels in China. Actual costs will vary based on various factors, including where the drydockings are actually performed. We expect to fund these costs with cash from operations. These costs do not include drydock expense items that are reflected in vessel operating expenses. Included are estimated costs associated with the installation of ballast water treatment systems. Estimated costs presented include approximately $1.5 million of costs associated with vessels that could potentially be sold based on our fleet renewal program.
(2) Actual length will vary based on the condition of the vessel, yard schedules and other factors. Estimated offhire presented includes approximately 20 days associated with vessels that could potentially be sold based on our fleet renewal program.

Summary Consolidated Financial and Other Data

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

                       
        Three Months Ended
June 30, 2018
  Three Months Ended
June 30, 2017
  Six Months Ended
June 30, 2018
  Six Months Ended
June 30, 2017
 
        (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 $   86,157     $   45,370     $   163,073     $   83,619    
    Total revenues     86,157         45,370         163,073         83,619    
                       
Operating expenses:                
  Voyage expenses     25,983         951         47,075         4,192    
  Vessel operating expenses     23,720         23,852         47,487         48,736    
  Charter hire expenses     509         -          509         -     
  General and administrative expenses (inclusive of nonvested stock amortization      6,510         5,752         11,727         10,661    
  expense of $0.6 million, $1.6 million, $1.1 million and $2.3 million, respectively)                
  Technical management fees     1,950         1,871         3,898         3,852    
  Depreciation and amortization     16,450         18,185         33,336         36,358    
  Impairment of vessel assets     184         3,339         56,586         3,339    
  Gain on sale of vessels     -          (1,343 )       -          (7,712 )  
    Total operating expenses     75,306         52,607         200,618         99,426    
                       
                       
Operating income (loss)     10,851         (7,237 )       (37,545 )       (15,807 )  
                       
Other (expense) income:                
  Other income (expense)      144         (50 )       59         (115 )  
  Interest income     887         338         1,681         512    
  Interest expense     (8,469 )       (7,564 )       (16,593 )       (14,702 )  
  Loss on debt extinguishment     (4,533 )       -          (4,533 )       -     
    Other expense     (11,971 )       (7,276 )       (19,386 )       (14,305 )  
                       
Loss before income taxes     (1,120 )       (14,513 )       (56,931 )       (30,112 )  
  Income tax expense     -          -          -          -     
                       
                       
Net loss $   (1,120 )   $   (14,513 )   $   (56,931 )   $   (30,112 )  
                       
Net loss per share - basic $   (0.03 )   $   (0.42 )   $   (1.62 )   $   (0.89 )  
                       
Net loss per share - diluted $   (0.03 )   $   (0.42 )   $   (1.62 )   $   (0.89 )  
                       
Weighted average common shares outstanding - basic     35,516,058         34,430,766         35,049,615         33,965,835    
                       
Weighted average common shares outstanding - diluted     35,516,058         34,430,766         35,049,615         33,965,835    
                       

   

     

                       
            June 30, 2018   December 31, 2017      
BALANCE SHEET DATA (Dollars in thousands):      (unaudited)           
                       
Assets                
  Current assets:                
    Cash and cash equivalents     $   269,996     $   174,479        
    Restricted cash         -          7,234        
    Due from charterers, net         14,408         12,855        
    Prepaid expenses and other current assets         7,371         7,338        
    Inventories         23,064         15,333        
    Vessels held for sale         7,443         -         
  Total current assets         322,282         217,239        
                       
  Noncurrent assets:                
    Vessels, net of accumulated depreciation of $213,771 and $213,431, respectively         1,172,246     $   1,265,577        
    Deposits on vessels         885         -         
    Deferred drydock, net          11,123         13,382        
    Fixed assets, net         1,247         1,014        
    Other noncurrent assets         -          514        
    Restricted cash         315         23,233        
  Total noncurrent assets         1,185,816         1,303,720        
                       
  Total assets     $   1,508,098     $   1,520,959        
                       
Liabilities and Equity                
  Current liabilities:                
    Accounts payable and accrued expenses     $   26,392         23,230        
    Current portion of long-term debt         45,000         24,497        
    Deferred revenue         6,399         4,722        
  Total current liabilities         77,791         52,449        
                       
  Noncurrent liabilities                 
    Long-term lease obligations         3,127         2,588        
    Long-term debt, net of deferred financing costs of $16,063 and $9,032, respectively         398,937         490,895        
  Total noncurrent liabilities          402,064         493,483        
                       
  Total liabilities         479,855         545,932        
                       
  Commitments and contingencies                
                       
  Equity:                
    Common stock         415         345        
    Additional paid-in capital         1,739,091         1,628,355        
    Retained deficit         (711,263 )       (653,673 )      
    Total equity         1,028,243         975,027        
  Total liabilities and equity     $   1,508,098     $   1,520,959        
                       
                       
            Six Months Ended
June 30, 2018
  Six Months Ended
June 30, 2017
     
STATEMENT OF CASH FLOWS (Dollars in thousands):      (unaudited)       
                       
Cash flows from operating activities                
    Net loss     $   (56,931 )   $   (30,112 )      
    Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                
    Depreciation and amortization         33,336         36,358        
    Amortization of deferred financing costs         1,239         1,153        
    PIK interest, net         -          3,028        
    Payment of PIK interest         (5,341 )       -         
    Amortization of nonvested stock compensation expense         1,131         2,281        
    Impairment of vessel assets         56,586         3,339        
    Gain on sale of vessels         -          (7,712 )      
    Loss on debt extinguishment         4,533         -         
    Insurance proceeds for protection and indemnity claims         187         269        
    Insurance proceeds for loss of hire claims         58         21        
    Change in assets and liabilities:                
      (Increase) decrease in due from charterers         (2,201 )       3,940        
      Increase in prepaid expenses and other current assets         (2,910 )       (7,762 )      
      (Increase) decrease in inventories         (7,731 )       205        
      Decrease in other noncurrent assets         514         -         
      Increase (decrease) in accounts payable and accrued expenses         2,284         (1,406 )      
      Increase in deferred revenue         1,185         160        
      Increase in lease obligations         539         360        
      Deferred drydock costs incurred         (1,459 )       (5,291 )      
    Net cash provided by (used in) operating activities         25,019         (1,169 )      
                       
Cash flows from investing activities                
    Purchase of vessels, including deposits         (747 )       (252 )      
    Purchase of other fixed assets         (491 )       (65 )      
    Net proceeds from sale of vessels         -          15,513        
    Insurance proceeds for hull and machinery claims         3,107         584        
    Net cash provided by investing activities         1,869         15,780        
                       
Cash flows from financing activities                
    Proceeds from the $460 Million Credit Facility         460,000         -         
    Repayments on the $400 Million Credit Facility         (399,600 )       (200 )      
    Repayments on the $98 Million Credit Facility         (93,939 )       -         
    Repayments on the 2014 term Loan Facilities         (25,544 )       (1,381 )      
    Payment of debt extinguishment costs         (2,962 )       -         
    Proceeds from issuance of common stock         110,249         -         
    Payment of common stock issuance costs         (48 )       -         
    Payment of Series A Preferred Stock issuance costs         -          (1,103 )      
    Payment of deferred financing costs         (9,679 )       -         
    Net cash provided by (used in) financing activities         38,477         (2,684 )      
                       
Net increase in cash, cash equivalents and restricted cash         65,365         11,927        
                       
Cash, cash equivalents and restricted cash at beginning of period         204,946         169,068        
Cash, cash equivalents and restricted cash at end of period     $   270,311     $   180,995        
                       
       

 
               
                       
        Three Months Ended June 30, 2018              
Adjusted Net Income Reconciliation (unaudited)              
Net loss $   (1,120 )              
  + Impairment of vessel assets     184                
  + Loss on debt extinguishment     4,533                
      Adjusted net income $   3,597                
                       
      Adjusted net earnings per share - basic $   0.10                
      Adjusted net earnings per share - diluted $   0.10                
                       
      Weighted average common shares outstanding - basic     35,516,058                
      Weighted average common shares outstanding - diluted     35,758,969                
                       
      Weighted average common shares outstanding - diluted as per financial statements     35,516,058                
      Dilutive effect of stock options     69,952                
      Dilutive effect of restricted stock awards     172,959                
      Weighted average common shares outstanding - diluted as adjusted     35,758,969                
                 


                       
        Three Months Ended
June 30, 2018
  Three Months Ended
June 30, 2017
  Six Months Ended
June 30, 2018
  Six Months Ended
June 30, 2017
 
        (Dollars in thousands)   (Dollars in thousands)  
EBITDA Reconciliation: (unaudited)   (unaudited)  
  Net loss $   (1,120 )   $   (14,513 )   $   (56,931 )   $   (30,112 )  
  + Net interest expense     7,582         7,226         14,912         14,190    
  + Income tax (benefit) expense     -          -          -          -     
  + Depreciation and amortization     16,450         18,185         33,336         36,358    
      EBITDA(1) $   22,912     $   10,898     $   (8,683 )   $   20,436    
                       
  + Impairment of vessel assets     184         3,339         56,586         3,339    
  -   Gain on sale of vessels     -          (1,343 )       -          (7,712 )  
  + Loss on debt extinguishment     4,533         -          4,533         -     
      Adjusted EBITDA $   27,629     $   12,894     $   52,436     $   16,063    
                 
                       
        Three Months Ended   Six Months Ended  
        June 30, 2018   June 30, 2017   June 30, 2018   June 30, 2017  
FLEET DATA: (unaudited)   (unaudited)  
Total number of vessels at end of period     60         60         60         60    
Average number of vessels (2)     60.0         60.5         60.0         61.7    
Total ownership days for fleet (3)     5,460         5,505         10,860         11,167    
Total chartered-in days (4)     49         -          49         -     
Total available days for fleet (5)     5,492         5,319         10,826         10,853    
Total available days for owned fleet (6)     5,442         5,319         10,777         10,853    
Total operating days for fleet (7)     5,422         5,204         10,699         10,705    
Fleet utilization (8)   98.4 %     96.7 %     98.5 %     97.9 %  
                       
                       
AVERAGE DAILY RESULTS:                
Time charter equivalent (9) $   10,964     $   8,351     $   10,716     $   7,318    
Daily vessel operating expenses per vessel (10)     4,344         4,333         4,373         4,364    


                       
        Three Months Ended   Six Months Ended  
        June 30, 2018   June 30, 2017   June 30, 2018   June 30, 2017  
FLEET DATA: (unaudited)   (unaudited)  
Ownership days                
Capesize     1,183.0         1,183.0         2,353.0         2,353.0    
Panamax     546.0         546.0         1,086.0         1,086.0    
Ultramax     364.0         364.0         724.0         724.0    
Supramax     1,911.0         1,911.0         3,801.0         3,801.0    
Handymax     91.0         136.2         181.0         448.8    
Handysize     1,365.0         1,365.0         2,715.0         2,754.6    
Total     5,460.0         5,505.2         10,860.0         11,167.4    
                       
Chartered-in days                
Capesize     -          -          -          -     
Panamax     -          -          -          -     
Ultramax     -          -          -          -     
Supramax     49.4         -          49.4         -     
Handymax     -          -          -          -     
Handysize     -          -          -          -     
Total     49.4         -          49.4         -     
                       
Available days (owned & chartered-in fleet)                
Capesize     1,182.2         1,133.5         2,319.9         2,260.5    
Panamax     546.0         455.1         1,086.0         966.7    
Ultramax     364.0         363.4         723.7         723.4    
Supramax     1,957.6         1,899.0         3,846.8         3,763.7    
Handymax     89.4         122.5         171.0         428.6    
Handysize     1,352.4         1,345.3         2,679.0         2,710.4    
Total     5,491.6         5,318.8         10,826.4         10,853.4    
                       
Available days (owned fleet)                
Capesize     1,182.2         1,133.5         2,319.9         2,260.5    
Panamax     546.0         455.1         1,086.0         966.7    
Ultramax     364.0         363.4         723.7         723.4    
Supramax     1,908.2         1,899.0         3,797.4         3,763.7    
Handymax     89.4         122.5         171.0         428.6    
Handysize     1,352.4         1,345.3         2,679.0         2,710.4    
Total     5,442.2         5,318.8         10,777.0         10,853.4    
                       
Operating days                
Capesize     1,182.1         1,044.0         2,319.9         2,164.9    
Panamax     541.5         453.5         1,076.0         961.6    
Ultramax     361.4         359.4         705.2         719.4    
Supramax     1,929.9         1,891.3         3,798.4         3,747.4    
Handymax     87.3         110.0         168.8         407.7    
Handysize     1,319.5         1,345.3         2,630.5         2,704.1    
Total     5,421.6         5,203.5         10,698.8         10,705.1    
                       
Fleet utilization                
Capesize   99.9 %     89.7 %     99.6 %     94.3 %  
Panamax   99.2 %     97.4 %     99.1 %     97.8 %  
Ultramax   99.3 %     98.7 %     97.4 %     99.4 %  
Supramax   98.4 %     99.3 %     98.7 %     99.3 %  
Handymax   95.9 %     80.8 %     93.3 %     90.8 %  
Handysize   96.7 %     99.8 %     97.7 %     99.6 %  
Fleet average   98.4 %     96.7 %     98.5 %     97.9 %  
                       
Average Daily Results:                
Time Charter Equivalent                
Capesize $   15,162     $   11,833     $   14,464     $   9,430    
Panamax     10,209         5,186         9,601         6,413    
Ultramax     11,277         8,369         11,087         7,984    
Supramax     10,364         7,677         10,166         6,668    
Handymax     10,337         9,140         10,437         7,207    
Handysize     8,402         7,364         8,620         6,622    
Fleet average     10,964         8,351         10,716         7,318    
                       
Daily vessel operating expenses                
Capesize $   4,631     $   4,725     $   4,666     $   4,672    
Panamax     4,007         4,460         4,199         4,545    
Ultramax     4,249         4,457         4,292         4,395    
Supramax     4,351         4,330         4,385         4,415    
Handymax     5,161         4,172         5,564         4,269    
Handysize     4,192         3,928         4,113         3,967    
Fleet average     4,344         4,333         4,373         4,364    
                       

   

  1. EBITDA represents net 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, 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.  Amounts for available days in the table above for the periods ended June 30, 2017 have been adjusted for our updated method of calculating available days.  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. Amounts for operating days in the table above for the periods ended June 30, 2017 have been adjusted for our updated method of calculating available days. 
  8. 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. Amounts for fleet utilization in the table above for the periods ended June 30, 2017 have been adjusted for our updated method of calculating fleet utilization. 
  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, 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
June 30, 2018
  Three Months Ended
June 30, 2017
  Six Months Ended
June 30, 2018
  Six Months Ended
June 30, 2017
 
Total Fleet (unaudited)   (unaudited)  
Voyage revenues (in thousands) $   86,157   $   45,370   $   163,073   $   83,619  
Voyage expenses (in thousands)     25,983       951       47,075       4,192  
Charter hire expenses (in thousands)     509       -        509       -   
            59,665       44,419       115,489       79,427  
                       
Total available days for owned fleet     5,442       5,319       10,777       10,853  
Total TCE rate $   10,964   $   8,351   $   10,716   $   7,318  
                 


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

Debt Overview

Debt outstanding as of June 30, 2018, gross of unamortized debt issuance costs and inclusive of the current portion of long-term debt, amounted to $460.0 million. On June 5, 2018, we closed the previously announced $460 Million Credit Facility in which proceeds were used, together with cash on hand, to refinance all of the Company's existing credit facilities into one facility.
  

 

                       
            June 30, 2018   December 31, 2017      
Long-term debt, net consists of the following:            
                       
Principal amount     $   460,000     $   519,083        
PIK interest         -          5,341        
Less: Unamortized debt issuance costs         (16,063 )       (9,032 )      
Less: Current portion         (45,000 )       (24,497 )      
Long-term debt, net     $   398,937     $   490,895        
                       
                       
        June 30, 2018   December 31, 2017  
        Principal   Unamortized Debt
Issuance Cost
  Principal   Unamortized Debt
Issuance Cost
 
               
$460 Million Credit Facility $   460,000   $   16,063     $   -      $   -   
$400 Million Credit Facility     -        -          399,600         6,332  
$98 Million Credit Facility     -        -          93,939         1,370  
2014 Term Loan Facilities     -        -          25,544         1,330  
PIK interest     -        -          5,341         -   
        $   460,000   $   16,063     $   524,424     $   9,032  
                 


Genco Shipping & Trading Limited's Fleet

Genco Shipping & Trading Limited transports iron ore, coal, grain, steel products and other drybulk cargoes along worldwide shipping routes. As of August 8, 2018, Genco Shipping & Trading Limited's fleet consists of 13 Capesize, five Panamax, five Ultramax, 21 Supramax, one Handymax and 15 Handysize vessels with an aggregate capacity of approximately 4,677,000 dwt. Following the acquisition of the remaining five vessels we have agreed to acquire as well as the sale of three 1990s-built vessels previously described, our fleet will consist of 17 Capesize, five Panamax, six Ultramax, 21 Supramax, one Handymax and 13 Handysize vessels with a carrying capacity of 5,400,000 dwt.

Our current fleet contains 14 groups of sister ships, which are vessels of virtually identical sizes and specifications. We believe that maintaining a fleet that includes sister ships reduces costs by creating economies of scale in the maintenance, supply and crewing of our vessels. As of August 8, 2018, the average age of our current 60 vessel fleet was 10.1 years. Following the sale and purchase of the previously mentioned vessels, the average age of our fleet will be 9.2 years.

The following table reflects Genco's fleet list as of August 8, 2018: 

       
  Vessel DWT Year Built
Capesize    
1 Genco Constantine   180,183 2008
2 Genco Augustus   180,151 2007
3 Baltic Lion   179,185 2012
4 Genco Tiger   179,185 2011
5 Genco London   177,833 2007
6 Baltic Wolf   177,752 2010
7 Genco Titus   177,729 2007
8 Baltic Bear   177,717 2010
9 Genco Tiberius   175,874 2007
10 Genco Commodus   169,098 2009
11 Genco Hadrian   169,025 2008
12 Genco Maximus   169,025 2009
13 Genco Claudius   169,001 2010
Panamax    
1 Genco Thunder   76,588 2007
2 Genco Raptor   76,499 2007
3 Genco Beauty   73,941 1999
4 Genco Vigour   73,941 1999
5 Genco Knight   73,941 1999
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
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 Aquitaine   57,981 2009
6 Genco Brittany   58,018 2010
7 Genco Languedoc   58,018 2010
8 Genco Pyrenees   58,018 2010
9 Genco Bourgogne   58,018 2010
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 Cavalier   53,617 2007
15 Baltic Cougar   53,432 2009
16 Genco Loire   53,430 2009
17 Genco Normandy   53,596 2007
18 Genco Lorraine   53,417 2009
19 Baltic Panther   53,351 2009
20 Baltic Leopard   53,447 2009
21 Baltic Jaguar   53,474 2009
Handymax    
1 Genco Muse   48,913 2001
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 Challenger   28,428 2003
12 Genco Charger   28,398 2005
13 Genco Champion   28,445 2006
14 Genco Progress   29,952 1999
15 Genco Explorer   29,952 1999
       
Vessels To Be Acquired
  Vessel DWT Year Built
Capesize    
1 Genco Endeavour   180,000 2015
2 Genco Resolute   180,000 2015
3 Genco Defender   180,000 2016
4 Genco Liberty   180,000 2016
Ultramax    
1 Genco Columbia   60,000 2016


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 8, 2018, Genco Shipping & Trading Limited's fleet consists of 13 Capesize, five Panamax, five Ultramax, 21 Supramax, one Handymax and 15 Handysize vessels with an aggregate capacity of approximately 4,677,000 dwt.

Conference Call Announcement

Genco Shipping & Trading Limited will hold a conference call on Thursday, August 9, 2018 at 8:30 a.m. Eastern Time to discuss its 2018 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) 323-0522 or (877) 260-1479 and enter passcode 4282601. 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 4282601. 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 press 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 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 definitive documentation and fulfillment of conditions precedent under the New Credit Facility; (xviii) completion of documentation for vessel transactions and the performance of the terms thereof by buyers or sellers of vessels and us; 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, 2017 and its 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 Zafolias
Chief Financial Officer
Genco Shipping & Trading Limited
(646) 443-8550

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