Genco Shipping & Trading Limited Q2 FY2025 earnings call

• Genco declared a $0.15 per share dividend for Q2, extending 24 consecutive quarters of dividends. Including Q2, total dividends per share are $6.915, representing 41% of the current share price.
• Completed 12 drydockings in Q2, with majority of 2025 drydocking schedule to be completed by end of Q3; cash flow breakeven expected to revert to ~$9,800 per day by Q4.
• Closed $600 million revolving credit facility, agreed to purchase a 2020 Imabari built scrubber-fitted Capesize vessel to expand Capesize fleet, using capital from the revolver.
• Over past 4 years, invested ~$350 million in high-quality vessels, distributed $257 million in dividends, and paid down $349 million in debt; transformed balance sheet and increased earnings power.

Genco's fleet composition pro forma for the latest acquisition includes 17 Capesize vessels and 26 Ultramax and Supramax vessels. On a vessel ownership basis, ownership splits are 40% Capesize and 60% Ultramax/Supramax. However, on an asset value or net revenue basis, Genco is over 50% weighted towards Capesize vessels, providing significant operating leverage.

• Q3 TCE estimates are 17% higher than Q2, with Capesize rates up nearly 25% from Q2.
• Cash flow breakeven rate expected to revert to approximately $9,800 per day by Q4 2025.
• Plan to use capital from the recently closed $600 million revolving credit facility to fund the purchase of a 2020 Capesize vessel, expanding the Capesize fleet.
• Anticipate strong Q4 performance with high fleet utilization and improved cash flow breakeven.

• Volatility in drybulk freight rates remains a concern.
• Geopolitical factors, such as trade deals and tariffs, could impact shipping demand.
• Uncertainty in supply and demand dynamics within the drybulk market, including potential changes in iron ore and grain trade volumes.

Q: Congrats on the new credit facility. Could you talk about the attractiveness of the 2020 built Cape and appetite for more?

A: The 2020 Capesize vessel is high-quality, fuel-efficient, and scrubber-fitted; Genco has appetite for more Capesize vessels due to strong supply and demand fundamentals in the sector, especially from iron ore and bauxite demand growth.

Q: Do you think you'll sell more Supras to fund Cape acquisitions?

A: May divest older Supramax vessels for fleet renewal, but currently focused on maintaining the fleet; Supramax rates have increased, making divestment more attractive under the right market conditions.

Q: What's driving the 40% growth in non-Capesize rates?

A: Robust corn and soybean crops from Brazil, recovery in coal volumes, and clearer tariff situation contributing to improved rates in the Supramax sector.

Q: Are there still deals making sense for Capesize purchases?

A: Deals depend on price analysis; while asset values are firm, focus is on timing and ensuring purchases align with supply and demand fundamentals, particularly for future growth in iron ore trade from West Africa.

Q: Discussions with new shareholder?

A: We speak to investors regularly, but don't comment on details of specific conversations; refer to public statements indicating the shareholder's investment is passive.

Q: Chinese coal demand this quarter?

A: Chinese coal imports were soft during the quarter, but recent buying has been observed, with potential for recovery in Q4 as the year ends.

Q: TCE outlook for Q4?

A: Forward curve shows strong Q4 performance, fleet is mostly spot with minimal fixed for Q4, and cash flow breakeven is expected to be around $9,800 per day.