UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number
(Exact name of registrant as specified in its charter)
Republic of the | ||
(State or other jurisdiction of | (I.R.S. Employer |
(Address of principal executive offices) (Zip Code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of exchange on which registered |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Accelerated filer ◻ | Non-accelerated filer ◻ | Smaller reporting company | ||||||
Emerging growth company | ||||||||
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ⌧ No ◻
The number of shares outstanding of each of the issuer’s classes of common stock, as of November 6, 2024: Common stock, par value $0.01 per share —
Genco Shipping & Trading Limited
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Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 | 4 | ||
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25 | ||
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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 section. Accordingly, investors should monitor the Investor portion of our website, in addition to following our press releases, filings with the U.S. Securities and Exchange Commission (the “SEC”), public conference calls, and webcasts. To subscribe to our e-mail alert service, please submit your e-mail address at the Investor Relations Home page of the Investor section of our website. 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.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Genco Shipping & Trading Limited
Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023
(U.S. Dollars in thousands, except for share and per share data)
(Unaudited)
September 30, | December 31, | ||||||
| 2024 |
| 2023 |
| |||
|
|
| |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | | $ | | |||
Due from charterers, net of a reserve of $ |
| |
| | |||
Prepaid expenses and other current assets | | | |||||
Inventories | | | |||||
Fair value of derivative instruments | — | | |||||
Vessels held for sale | | | |||||
Total current assets |
| |
| | |||
Noncurrent assets: | |||||||
Vessels, net of accumulated depreciation of $ |
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Deferred drydock, net of accumulated amortization of $ |
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Fixed assets, net of accumulated depreciation and amortization of $ |
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Operating lease right-of-use assets |
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Restricted cash |
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Total noncurrent assets |
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Total assets | $ | | $ | | |||
Liabilities and Equity | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | | $ | | |||
Deferred revenue |
| |
| | |||
Current operating lease liabilities | | | |||||
Total current liabilities: |
| |
| | |||
Noncurrent liabilities: | |||||||
Long-term operating lease liabilities | — | | |||||
Long-term debt, net of deferred financing costs of $ | | | |||||
Total noncurrent liabilities |
| |
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Total liabilities |
| |
| | |||
Commitments and contingencies (Note 14) | |||||||
Equity: | |||||||
Common stock, par value $ | | | |||||
Additional paid-in capital | | | |||||
Accumulated other comprehensive income |
| — |
| | |||
Accumulated deficit |
| ( |
| ( | |||
Total Genco Shipping & Trading Limited shareholders’ equity |
| |
| | |||
Noncontrolling interest |
| |
| | |||
Total equity |
| |
| | |||
Total liabilities and equity | $ | | $ | | |||
See accompanying notes to Condensed Consolidated Financial Statements.
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Genco Shipping & Trading Limited
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023
(U.S. Dollars in Thousands, Except for Earnings Per Share and Share Data)
(Unaudited)
For the Three Months Ended | For the Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 |
| |||||
Revenues: | |||||||||||||
Voyage revenues | $ | | $ | | $ | | $ | | |||||
Total revenues | |
| | |
| | |||||||
Operating expenses: | |||||||||||||
Voyage expenses | |
| | |
| | |||||||
Vessel operating expenses | |
| | |
| | |||||||
Charter hire expenses | | | | | |||||||||
General and administrative expenses (inclusive of nonvested stock amortization expense of $ | |
| | |
| | |||||||
Technical management expenses | | | | | |||||||||
Depreciation and amortization | |
| | |
| | |||||||
Impairment of vessel assets | | | | | |||||||||
Net gain on sale of vessels | ( | — | ( | — | |||||||||
Other operating expense | — | — | | — | |||||||||
Total operating expenses | |
| | |
| | |||||||
Operating income (loss) | |
| ( | |
| ( | |||||||
Other (expense) income: | |||||||||||||
Other expense | ( |
| ( | ( |
| ( | |||||||
Interest income | |
| | |
| | |||||||
Interest expense | ( |
| ( | ( | ( | ||||||||
Other expense, net | ( |
| ( | ( |
| ( | |||||||
Net income (loss) | | ( | | ( | |||||||||
Less: Net income attributable to noncontrolling interest | |
| | |
| | |||||||
Net income (loss) attributable to Genco Shipping & Trading Limited | $ | | $ | ( | $ | | $ | ( | |||||
Net earnings (loss) per share-basic | $ | | $ | ( | $ | | $ | ( | |||||
Net earnings (loss) per share-diluted | $ | | $ | ( | $ | | $ | ( | |||||
Weighted average common shares outstanding-basic | |
| | |
| | |||||||
Weighted average common shares outstanding-diluted | |
| | |
| | |||||||
See accompanying notes to Condensed Consolidated Financial Statements.
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Genco Shipping & Trading Limited
Condensed Consolidated Statements of Comprehensive Income (Loss)
For the Three and Nine Months Ended September 30, 2024 and 2023
(U.S. Dollars in Thousands)
(Unaudited)
For the Three Months Ended | For the Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 |
| |||||
Net income (loss) | $ | |
| $ | ( | $ | |
| $ | ( | |||
Other comprehensive loss | — |
| ( | ( | ( | ||||||||
Comprehensive income (loss) | | ( | | ( | |||||||||
Less: Comprehensive income attributable to noncontrolling interest | |
| | | | ||||||||
Comprehensive income (loss) attributable to Genco Shipping & Trading Limited | $ | |
| $ | ( | $ | |
| $ | ( | |||
See accompanying notes to Condensed Consolidated Financial Statements.
6
Genco Shipping & Trading Limited
Condensed Consolidated Statements of Equity
For the Three and Nine Months Ended September 30, 2024 and 2023
(U.S. Dollars in Thousands)
Genco | ||||||||||||||||||||||
Shipping & | ||||||||||||||||||||||
Accumulated | Trading | |||||||||||||||||||||
Additional | Other | Limited | ||||||||||||||||||||
Common | Paid-in | Comprehensive | Accumulated | Shareholders' | Noncontrolling | |||||||||||||||||
| Stock |
| Capital |
| Income |
| Deficit |
| Equity |
| Interest |
| Total Equity | |||||||||
Balance — January 1, 2024 | $ | | $ | | $ | | $ | ( | $ | | $ | | $ | | ||||||||
Net income | | | | |||||||||||||||||||
Other comprehensive loss | ( | ( | ( | |||||||||||||||||||
Issuance of shares due to vesting of RSUs and exercise of options | | ( | — | — | ||||||||||||||||||
Cash dividends declared ($ | ( | ( | ( | |||||||||||||||||||
Nonvested stock amortization | | | | |||||||||||||||||||
Balance — March 31, 2024 | $ | | $ | | $ | — | $ | ( | $ | | $ | | $ | | ||||||||
Net income | | | | | ||||||||||||||||||
Issuance of shares due to vesting of RSUs | — | — | — | — | ||||||||||||||||||
Cash dividends declared ($ | ( | ( | ( | |||||||||||||||||||
Nonvested stock amortization | | | | |||||||||||||||||||
Balance — June 30, 2024 | $ | | $ | | $ | — | $ | ( | $ | | $ | | $ | | ||||||||
Net income | | | | | ||||||||||||||||||
Cash dividends declared ($ | ( | ( | ( | |||||||||||||||||||
Nonvested stock amortization | | | | |||||||||||||||||||
Balance — September 30, 2024 | $ | | $ | | $ | — | $ | ( | $ | | $ | | $ | | ||||||||
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Genco | ||||||||||||||||||||||
Shipping & | ||||||||||||||||||||||
Accumulated | Trading | |||||||||||||||||||||
Additional | Other | Limited | ||||||||||||||||||||
Common | Paid-in | Comprehensive | Accumulated | Shareholders' | Noncontrolling | |||||||||||||||||
| Stock |
| Capital |
| Income |
| Deficit |
| Equity |
| Interest |
| Total Equity | |||||||||
Balance — January 1, 2023 | $ | | $ | | $ | | $ | ( | $ | | $ | | $ | | ||||||||
Net income | | | | |||||||||||||||||||
Other comprehensive loss | ( | ( | ( | |||||||||||||||||||
Issuance of shares due to vesting of RSUs and exercise of options | | ( | — | — | ||||||||||||||||||
Cash dividends declared ($ | ( | ( | ( | |||||||||||||||||||
Nonvested stock amortization | | | | |||||||||||||||||||
Balance — March 31, 2023 | $ | | $ | | $ | | $ | ( | $ | | $ | | $ | | ||||||||
Net income (loss) | | | ( | | ||||||||||||||||||
Other comprehensive loss | ( | ( | ( | |||||||||||||||||||
Issuance of shares due to vesting of RSUs and exercise of options, net of forfeitures | — | — | — | — | ||||||||||||||||||
Cash dividends declared ($ | ( | ( | ( | |||||||||||||||||||
Nonvested stock amortization | | | | |||||||||||||||||||
Balance — June 30, 2023 | $ | | $ | | $ | | $ | ( | $ | | $ | | $ | | ||||||||
Net (loss) income | ( | ( | ( | |||||||||||||||||||
Other comprehensive loss | ( | ( | ( | |||||||||||||||||||
Issuance of shares due to vesting of RSUs | — | — | — | — | ||||||||||||||||||
Cash dividends declared ($ | ( | ( | ( | |||||||||||||||||||
Nonvested stock amortization | | | | |||||||||||||||||||
Balance — September 30, 2023 | $ | | $ | | $ | | $ | ( | $ | | $ | | $ | | ||||||||
See accompanying notes to Condensed Consolidated Financial Statements.
8
Genco Shipping & Trading Limited
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023
(U.S. Dollars in Thousands)
(Unaudited)
For the Nine Months Ended | |||||||
September 30, | |||||||
| 2024 |
| 2023 |
| |||
Cash flows from operating activities: | |||||||
Net income (loss) |
| $ | | $ | ( | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | |
| | ||||
Amortization of deferred financing costs | |
| | ||||
Right-of-use asset amortization | | | |||||
Amortization of nonvested stock compensation expense | |
| | ||||
Impairment of vessel assets | |
| | ||||
Net gain on sale of vessels | ( |
| — | ||||
Amortization of premium on derivatives | | | |||||
Insurance proceeds for protection and indemnity claims | | | |||||
Insurance proceeds for loss of hire claims | | | |||||
Change in assets and liabilities: | |||||||
(Increase) decrease in due from charterers | ( |
| | ||||
Increase in prepaid expenses and other current assets | ( |
| ( | ||||
Decrease (increase) in inventories | | ( | |||||
Increase in accounts payable and accrued expenses | |
| | ||||
(Decrease) increase in deferred revenue | ( |
| | ||||
Decrease in operating lease liabilities | ( | ( | |||||
Deferred drydock costs incurred | ( |
| ( | ||||
Net cash provided by operating activities | |
| | ||||
Cash flows from investing activities: | |||||||
Purchase of vessels and ballast water treatment systems, including deposits | ( |
| ( | ||||
Purchase of other fixed assets | ( |
| ( | ||||
Net proceeds from sale of vessels | | — | |||||
Insurance proceeds for hull and machinery claims | | | |||||
Net cash provided by (used in) investing activities | |
| ( | ||||
Cash flows from financing activities: | |||||||
Repayments on the $500 Million Revolver | ( | — | |||||
Repayments on the $450 Million Credit Facility | — | ( | |||||
Cash dividends paid | ( | ( | |||||
Payment of deferred financing costs | ( |
| — | ||||
Net cash used in financing activities | ( |
| ( | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | |
| ( | ||||
Cash, cash equivalents and restricted cash at beginning of period | |
| | ||||
Cash, cash equivalents and restricted cash at end of period |
| $ | | $ | | ||
See accompanying notes to Condensed Consolidated Financial Statements.
9
Genco Shipping & Trading Limited
(U.S. Dollars in Thousands, Except Per Share and Share Data)
Notes to Condensed Consolidated Financial Statements (unaudited)
1 – GENERAL INFORMATION
The accompanying Condensed Consolidated Financial Statements include the accounts of Genco Shipping & Trading Limited (“GS&T”) and its direct and indirect subsidiaries (collectively, the “Company”). The Company is engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk vessels and operates in
As of September 30, 2024, the Company’s fleet consisted of
During September 2021, the Company and Synergy Marine Pte. Ltd. (“Synergy”), a third party, formed a joint venture, GS Shipmanagement Pte. Ltd. (“GSSM”). GSSM is owned
Management has determined that GSSM qualifies as a variable interest entity, and, when aggregating the variable interest held by the Company and Synergy, the Company is the primary beneficiary as the Company has the ability to direct the activities that most significantly impact GSSM’s economic performance. Accordingly, the Company consolidates GSSM.
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and the rules and regulations of the SEC that apply to interim financial statements, including the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the disclosures and footnotes normally included in complete consolidated financial statements prepared in conformity with U.S. GAAP. They should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 27, 2024 (the “2023 10-K”). The accompanying Condensed Consolidated Financial Statements include the accounts of GS&T and its direct and indirect wholly-owned subsidiaries and GSSM. All intercompany accounts and transactions have been eliminated in consolidation.
In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and operating results have been included in the statements. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the operating results to be expected for the year ending December 31, 2024.
Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include vessel valuations, impairment of vessels, the valuation of amounts due from charterers, performance claims, residual value of vessels, useful life of vessels, the fair value of time charters acquired, performance-based restricted stock units and the fair value of derivative instruments, if any. Actual results could differ from those estimates.
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Cash, cash equivalents and restricted cash
The Company considers highly liquid investments, such as money market funds and certificates of deposit with an original maturity of three months or less at the time of purchase to be cash equivalents. Non-current restricted cash includes cash that is restricted pursuant to our lease agreement. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same amounts shown in the Condensed Consolidated Statements of Cash Flows:
September 30, | December 31, | ||||||
| 2024 |
| 2023 |
| |||
Cash and cash equivalents |
| $ | |
| $ | | |
Restricted cash – current | — | — | |||||
Restricted cash – noncurrent |
| |
| | |||
Cash, cash equivalents and restricted cash |
| $ | |
| $ | | |
Vessels held for sale
On July 16, 2024, the Company entered into an agreement to sell the Genco Hadrian and the sale of the vessel was completed on October 4, 2024. The relevant vessel assets have been classified as held for sale in the Condensed Consolidated Balance Sheet as of September 30, 2024.
On May 21, 2024, the Company entered into an agreement to sell the Genco Warrior and the sale of the vessel was completed on July 5, 2024.
On November 14, 2023, the Company entered into an agreement to sell the Genco Commodus and the sale of the vessel was completed on February 7, 2024. The relevant vessel assets have been classified as held for sale in the Condensed Consolidated Balance Sheet as of December 31, 2023.
Additionally, on December 21, 2023 the Company entered into agreements to sell the Genco Claudius and Genco Maximus. On February 24, 2024, the Company terminated its agreements to sell the Genco Claudius and the Genco Maximus due to the buyers’ breach of the agreements’ terms. During the first quarter of 2024, the Company commenced arbitration with the buyers, seeking a declaration that it validly terminated the agreements due to the buyers’ breach, and to retain the deposits paid by the buyers in connection with the sales, totaling $
Bunker swap and forward fuel purchase agreements
From time to time, the Company may enter into fuel hedge agreements with the objective of reducing the risk of the effect of changing fuel prices. The Company has entered into bunker swap agreements and forward fuel purchase agreements. The Company’s bunker swap agreements and forward fuel purchase agreements do not qualify for hedge
11
accounting treatment; therefore, any unrealized or realized gains and losses are recorded in the Condensed Consolidated Statements of Operations. Derivatives are Level 2 instruments in the fair value hierarchy.
During the three months ended September 30, 2024 and 2023, the Company recorded ($
During the nine months ended September 30, 2024 and 2023, the Company recorded $
The total fair value of the bunker swap agreements and forward fuel purchase agreements in an asset position as of September 30, 2024 and December 31, 2023 is $
Voyage expense recognition
In time charters and spot market-related time charters, operating costs including crews, maintenance and insurance are typically paid by the owner of the vessel and specified voyage costs such as fuel and port charges are paid by the charterer. These expenses are borne by the Company during spot market voyage charters. As such, there are significantly higher voyage expenses for spot market voyage charters as compared to time charters and spot market-related time charters. There are certain other non-specified voyage expenses, such as commissions, which are typically borne by the Company. At the inception of a time charter, the Company records the difference between the cost of bunker fuel delivered by the terminating charterer and the bunker fuel sold to the new charterer as a gain or loss within voyage expenses. Additionally, the Company records lower of cost and net realizable value adjustments to re-value the bunker fuel on a quarterly basis for certain time charter agreements where the inventory is subject to gains and losses. These differences in bunkers, including any lower of cost and net realizable value adjustments, resulted in a net loss (gain) of $
Impairment of vessel assets
Impairment of vessel assets includes the impairment of vessel assets in accordance with Accounting Standards Codification (“ASC”) 360 — “Property, Plant and Equipment” (“ASC 360”), as well as any losses incurred related to the disposal of replaced equipment on the vessels.
During the three and nine months ended September 30, 2024, the Company recorded $
On July 16, 2024, the Company entered into an agreement to sell the Genco Hadrian, a 2008-built Capesize vessel, to a third party for $
On September 30, 2023, the Company determined that the expected estimated future undiscounted cash flows for
12
net book value of these vessels as of September 30, 2023. This resulted in an impairment loss of $
Net gain on sale of vessels
During the three and nine months ended September 30, 2024, the Company recorded a net gain of $
Other operating expense
Other operating expense of $
3 – CASH FLOW INFORMATION
For the nine months ended September 30, 2024, the Company had non-cash investing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $
For the nine months ended September 30, 2023, the Company had non-cash investing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $
During the nine months ended September 30, 2024 and 2023, cash paid for interest was $
During the nine months ended September 30, 2024 and 2023, any cash paid for income taxes was insignificant.
All stock options exercised during the nine months ended September 30, 2024 and 2023 were cashless. Refer to Note 13 — Stock-Based Compensation for further information.
On May 23, 2024, the Company granted
On February 21, 2024, the Company granted
On June 16, 2023, the Company granted
13
On May 16, 2023, the Company granted
On April 14, 2023, the Company granted
On April 3, 2023, the Company granted
On March 10, 2023, the Company granted
On February 21, 2023, the Company granted
Refer to Note 13 — Stock-Based Compensation for further information regarding the aforementioned grants.
Supplemental Condensed Consolidated Cash Flow information related to leases is as follows:
For the Nine Months Ended | |||||||
September 30, | |||||||
2024 | 2023 | ||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||
Operating cash flows from operating leases | $ | | $ | | |||
4 – VESSEL ACQUISITIONS AND DISPOSITIONS
Vessel Acquisitions
On October 10, 2023, the Company entered into an agreement to acquire a 2016-built
Vessel Dispositions
On November 14, 2023, the Company entered into an agreement to sell the Genco Commodus, a 2009-built Capesize vessel, to a third party for $
Additionally, on December 21, 2023, the Company entered into agreements to sell the Genco Claudius, a 2010-built Capesize vessel, to a third party for $
14
On May 21, 2024, the Company entered into an agreement to sell the Genco Warrior, a 2005-built Supramax vessel, to a third party for $
On July 16, 2024, the Company entered into an agreement to sell the Genco Hadrian, a 2008-built Capesize vessel, to a third party for $
5 – NET EARNINGS (LOSS) PER SHARE
The computation of basic net earnings (loss) per share is based on the weighted-average number of common shares outstanding during the reporting period. The computation of diluted net earnings (loss) per share assumes the vesting of nonvested stock awards and the exercise of stock options (refer to Note 13 — Stock-Based Compensation), for which the assumed proceeds upon vesting are deemed to be the amount of compensation cost attributable to future services and are not yet recognized using the treasury stock method, to the extent dilutive.
The components of the denominator for the calculation of basic and diluted net earnings (loss) per share are as follows:
For the Three Months Ended | For the Nine Months Ended | ||||||||
September 30, | September 30, | ||||||||
2024 |
| 2023 |
| 2024 |
| 2023 |
| ||
Common shares outstanding, basic: | |||||||||
Weighted-average common shares outstanding, basic | |
| | |
| | |||
Common shares outstanding, diluted: | |||||||||
Weighted-average common shares outstanding, basic | |
| | |
| | |||
Dilutive effect of stock options | | — | | — | |||||
Dilutive effect of performance-based restricted stock units | | — | | — | |||||
Dilutive effect of restricted stock units | |
| — | |
| — | |||
Weighted-average common shares outstanding, diluted | |
| | |
| | |||
6 – RELATED PARTY TRANSACTIONS
During the three and nine months ended September 30, 2024 and 2023, the Company did
15
7 – DEBT
Long-term debt, net consists of the following:
September 30, | December 31, | ||||||
| 2024 |
| 2023 |
| |||
Principal amount |
| $ | |
| $ | | |
Less: Unamortized deferred financing costs |
| ( |
| ( | |||
Less: Current portion |
| — |
| — | |||
Long-term debt, net |
| $ | |
| $ | | |
$
On November 29, 2023, the Company entered into a fourth amendment to amend, extend and upsize its existing $450 Million Credit Facility (as defined below). The amended structure consists of a $
As of September 30, 2024, there was $
As of September 30, 2024, the Company was in compliance with all of the financial covenants under the $500 Million Revolver.
$450 Million Credit Facility
On August 3, 2021, the Company entered into the $
On May 30, 2023, the Company entered into an amendment to the $450 Million Credit Facility to transition from the use of the London Inter-Bank Offered Rate (“LIBOR”) to calculate interest to the Secured Overnight Financing Rate (“SOFR”) effective June 30, 2023. Borrowings began bearing interest at SOFR plus the applicable margin effective June 30, 2023.
Total debt repayments of $
On November 29, 2023, the Company entered into a fourth amendment to the $450 Million Credit Facility; refer to the “$500 Million Revolver” section above.
Interest rates
The following table sets forth the effective interest rate associated with the interest expense for the Company’s debt facilities noted above, including the cost associated with unused commitment fees, if applicable. The effective
16
interest rate below does not include the effect of any interest rate cap agreements. The following table also includes the range of interest rates on the debt, excluding the impact of unused commitment fees, if applicable:
For the Three Months Ended | For the Nine Months Ended | |||||||||
September 30, | September 30, | |||||||||
2024 | 2023 | 2024 | 2023 | |||||||
Effective Interest Rate | | % | | % | | % | | % | ||
Range of Interest Rates (excluding unused commitment fees) | % | % | % | % | ||||||
8 – DERIVATIVE INSTRUMENTS
The Company is exposed to interest rate risk on its floating rate debt. As of December 31, 2023, the Company had
The Company recorded a $
The Effect of Cash Flow Hedge Accounting on the Statements of Operations | |||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||
2024 |
| 2023 |
| 2024 |
| 2023 | |||||||
Interest Expense | Interest Expense | Interest Expense | Interest Expense | ||||||||||
Total amounts of income and expense line items presented in the statements of operations in which the effects of cash flow hedges are recorded | $ | | $ | | $ | | $ | | |||||
The effects of cash flow hedging | |||||||||||||
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20: | |||||||||||||
Interest contracts: | |||||||||||||
Amount of gain or (loss) reclassified from AOCI to income | $ | — | $ | ( | $ | ( | $ | ( | |||||
Premium excluded and recognized on an amortized basis | — | | | | |||||||||
Amount of gain or (loss) reclassified from AOCI to income as a result that a forecasted transaction is no longer probable of occurring | — | — | — | — | |||||||||
17
The following table shows the interest rate cap assets as of September 30, 2024 and December 31, 2023:
September 30, | December 31, | ||||||||
Balance Sheet Location | 2024 | 2023 | |||||||
Derivatives designated as hedging instruments | |||||||||
Interest rate caps | Fair value of derivative instruments - current | $ | — | $ | | ||||
Interest rate caps | Fair value of derivative instruments - noncurrent | $ | — | $ | — | ||||
Derivatives not designated as hedging instruments | |||||||||
Interest rate caps | Fair value of derivative instruments - current | $ | — | $ | | ||||
Interest rate caps | Fair value of derivative instruments - noncurrent | $ | — | $ | — | ||||
The components of AOCI included in the accompanying Condensed Consolidated Balance Sheet consists of net unrealized losses on cash flow hedges as of September 30, 2024.
AOCI — January 1, 2024 | $ | | ||
Amount recognized in OCI on derivative, intrinsic |
| ( | ||
Amount recognized in OCI on derivative, excluded |
| | ||
Amount reclassified from OCI into income |
| — | ||
AOCI — September 30, 2024 | $ | — |
9 – FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values and carrying values of the Company’s financial instruments as of September 30, 2024 and December 31, 2023 which are required to be disclosed at fair value, but not recorded at fair value, are noted below.
September 30, 2024 | December 31, 2023 | ||||||||||||
| Carrying |
|
| Carrying |
|
| |||||||
| Value |
| Fair Value |
| Value |
| Fair Value |
| |||||
Cash and cash equivalents | $ | | $ | | $ | | $ | | |||||
Restricted cash |
| |
| |
| |
| | |||||
Principal amount of floating rate debt |
| |
| |
| |
| | |||||
The carrying value of the borrowings under the $500 Million Revolver as of September 30, 2024 and December 31, 2023, which excludes the impact of deferred financing costs, approximate their fair value due to the variable interest nature thereof as this credit facility represents a floating rate loan. The carrying amounts of the Company’s other financial instruments as of September 30, 2024 and December 31, 2023 (principally Due from charterers and Accounts payable and accrued expenses) approximate fair values because of the relatively short maturity of these instruments.
ASC Subtopic 820-10, “Fair Value Measurements & Disclosures” (“ASC 820-10”), applies to all assets and liabilities that are being measured and reported on a fair value basis. This guidance enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumption (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 requires significant management judgment. The three levels are defined as follows:
18
| ● | Level 1—Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree of judgment. |
| ● | Level 2—Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. |
| ● | Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
Cash and cash equivalents and restricted cash are considered Level 1 items, as they represent liquid assets with short-term maturities. Floating rate debt is considered to be a Level 2 item, as the Company considers the estimate of rates it could obtain for similar debt or based upon transactions amongst third parties. Interest rate cap agreements, bunker swap agreements and forward fuel purchase agreements are considered to be Level 2 items. Refer to Note 8 — Derivative Instruments and Note 2 — Summary of Significant Accounting Policies, respectively, for further information. Nonrecurring fair value measurements include vessel impairment assessments completed during the interim period and at year-end as determined based on third-party quotes, which are based on various data points, including comparable sales of similar vessels, which are Level 2 inputs. During the nine months ended September 30, 2024, the vessel assets for
The fair value determination for the operating lease right-of-use assets is based on third party quotes, which is considered a Level 2 input. Nonrecurring fair value measurements may include impairment tests of the Company’s operating lease right-of-use assets if there are indicators of impairments. During the three and nine months ended September 30, 2024 and 2023, there were
The Company did
10 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
| September 30, |
| December 31, | ||||
| 2024 |
| 2023 |
| |||
Accounts payable | $ | | $ | | |||
Accrued general and administrative expenses |
| |
| | |||
Accrued vessel operating expenses |
| |
| | |||
Total accounts payable and accrued expenses | $ | | $ | | |||
11 – VOYAGE REVENUES
Total voyage revenues include revenue earned on fixed rate time charters, spot market voyage charters and spot market-related time charters, as well as the sale of bunkers consumed during short-term time charters. For the three months ended September 30, 2024 and 2023, the Company earned $
19
Total voyage revenues recognized in the Condensed Consolidated Statements of Operations includes the following:
For the Three Months Ended | For the Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
| 2024 |
| 2023 | 2024 |
| 2023 | |||||||
Lease revenue | $ | | $ | | $ | | $ | | |||||
Spot market voyage revenue | | | | | |||||||||
Total voyage revenues | $ | | $ | | $ | | $ | | |||||
12 – LEASES
On June 14, 2019, the Company entered into a sublease agreement for a portion of the leased space for its main office in New York, New York that commenced on July 26, 2019 and will end on September 29, 2025. There was $
The Company charters in third-party vessels and the Company is the lessee in these agreements under ASC 842. The Company has elected the practical expedient under ASC 842 to not recognize right-of-use assets and lease liabilities for short-term leases. During the three and nine months ended September 30, 2024 and 2023, all charter-in agreements for third-party vessels were less than twelve months and considered short-term leases.
13 – STOCK-BASED COMPENSATION
2015 Equity Incentive Plan
Stock Options
The following table summarizes the stock option activity for the nine months ended September 30, 2024:
Weighted | Weighted | ||||||||||
Number | Average | Average | |||||||||
of | Exercise | Fair | |||||||||
| Options |
| Price |
| Value |
| |||||
Outstanding as of January 1, 2024 |
| |
| $ | | $ | | ||||
Granted |
| — | — | — | |||||||
Exercised |
| ( | | | |||||||
Forfeited |
| — | — | — | |||||||
Outstanding as of September 30, 2024 |
| |
| $ | | $ | | ||||
Exercisable as of September 30, 2024 |
| |
| $ | | $ | | ||||
20
The following table summarizes certain information about the options outstanding as of September 30, 2024:
Options Outstanding and Unvested, | Options Outstanding and Exercisable, | |||||||||||||||
September 30, 2024 | September 30, 2024 | |||||||||||||||
Weighted | Weighted |
| Weighted | |||||||||||||
Average |
| Weighted | Average | Weighted | Average | |||||||||||
Exercise Price of |
| Average | Remaining | Average | Remaining | |||||||||||
Outstanding | Number of | Exercise | Contractual | Number of | Exercise | Contractual | ||||||||||
Options |
| Options |
| Price |
| Life |
| Options |
| Price |
| Life |
| |||
$ | | — | $ | — | | $ | | |||||||||
As of September 30, 2024 and December 31, 2023, a total of
There was
For the three and nine months ended September 30, 2024 and 2023, the Company recognized amortization expense of the fair value of its stock options, which is included in General and administrative expenses, as follows:
For the Three Months Ended | For the Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2024 | 2023 | 2024 |
| 2023 |
| ||||||||
General and administrative expenses | $ | — | $ | | $ | | $ | | |||||
Restricted Stock Units
The Company has granted restricted stock units (“RSUs”) under the Company’s 2015 Equity Incentive Plan, as amended (the “2015 Plan”), to certain members of the Board of Directors and certain executives and employees of the Company, which represent the right to receive a share of common stock, or in the sole discretion of the Company’s Compensation Committee, the value of a share of common stock on the date that the RSU vests. As of September 30, 2024 and December 31, 2023,
The RSUs that have been issued to certain members of the Board of Directors generally vest on the date of the annual shareholders meeting of the Company following the date of the grant. In lieu of cash dividends issued for vested and nonvested shares held by certain members of the Board of Directors, the Company will grant additional vested and nonvested RSUs, respectively, which are calculated by dividing the amount of the dividend by the closing price per share of the Company’s common stock on the dividend payment date and will have the same terms as other RSUs issued to members of the Board of Directors. The RSUs that have been issued to other individuals vest in equal installments on each of the anniversaries of the determined vesting date, over the or
21
The table below summarizes the Company’s unvested RSUs for the nine months ended September 30, 2024:
Weighted | ||||||
Number of | Average Grant | |||||
| RSUs | Date Price | ||||
Outstanding as of January 1, 2024 | | $ | | |||
Granted | | | ||||
Vested | ( | | ||||
Forfeited | — | — | ||||
Outstanding as of September 30, 2024 | | $ | | |||
The total fair value of the RSUs that vested during the nine months ended September 30, 2024 and 2023 was $
The following table summarizes certain information of the RSUs unvested and vested as of September 30, 2024:
Unvested RSUs | Vested RSUs | ||||||||||
September 30, 2024 | September 30, 2024 | ||||||||||
Weighted | |||||||||||
Weighted | Average | Weighted | |||||||||
Average | Remaining | Average | |||||||||
Number of | Grant Date | Contractual | Number of | Grant Date | |||||||
RSUs |
| Price |
| Life |
| RSUs |
| Price |
| ||
| $ | | | $ | | ||||||
The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures. As of September 30, 2024, unrecognized compensation cost of $
For the three and nine months ended September 30, 2024 and 2023, the Company recognized nonvested stock amortization expense for the RSUs, which is included in General and administrative expenses as follows:
| For the Three Months Ended | For the Nine Months Ended | |||||||||||
September 30, | September 30, | ||||||||||||
2024 | 2023 |
| 2024 |
| 2023 |
| |||||||
General and administrative expenses | $ | | $ | | $ | | $ | | |||||
Performance-Based Restricted Stock Units
The Company has granted performance-based restricted stock units (“PRSUs”) under the 2015 Plan to certain employees of the Company, some of which are contingent upon the Company’s relative total shareholder return (“TSR”) and some of which are contingent upon the Company’s return on invested capital (“ROIC”) for a
The TSR is calculated based on the Company’s total shareholder return compared to that of certain peer companies specified in the award agreements over the performance period and is calculated based on the change in the average daily closing stock price over a
22
The grant date fair value of the ROIC awards was estimated using the closing share price of the Company’s stock on the date of grant. The total quantity of PRSUs eligible to vest under these awards range from
The table below summarizes the Company’s unvested PRSUs for the nine months ended September 30, 2024:
Number of | |||
| PRSUs |
| |
Outstanding as of January 1, 2024 |
| |
|
Granted |
| | |
Vested |
| — | |
Forfeited |
| — | |
Outstanding as of September 30, 2024 |
| |
|
The PRSUs, if earned, will ordinarily vest during the first quarter after the
Significant inputs used in the estimation of the fair value of these awards outstanding as of September 30, 2024 and December 31, 2023 are as follows:
Significant Input | September 30, 2024 | December 31, 2023 | |||
Closing share price of our common stock | $ | $ | |||
Risk-free rate of return | |||||
Expected volatility of our common stock | |||||
Holding period discount |
|
| |||
Simulation term (in years) |
|
| |||
Range of target |
|
|
For the three and nine months ended September 30, 2024 and 2023, the Company recognized nonvested stock amortization expense for the PRSUs, which is included in General and administrative expenses as follows:
For the Three Months Ended | For the Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | ||||||
General and administrative expenses | $ | | $ | | $ | | $ | | |||||
23
14 – LEGAL PROCEEDINGS
From time to time, the Company may be subject to other legal proceedings and claims in the ordinary course of its business, principally personal injury and property casualty claims. Such claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. The Company is not aware of any such legal proceedings or claims that it believes will have, individually or in the aggregate, a material effect on the Company, its financial condition, results of operations or cash flows.
15 – SUBSEQUENT EVENTS
On October 3, 2024, the Company entered into an agreement to acquire the Genco Intrepid, a 2016-built
On October 4, 2024, the Company completed the sale of the Genco Hadrian, a 2008-built Capesize vessel, to a third party for $
On October 14, 2024, the Company entered into a lease agreement to extend its current lease agreement for its main office space in New York, New York which will commence on October 1, 2025 until July 31, 2036. The lease agreement is for only the space currently occupied by the Company and the portion of the current lease that is currently being sublet will still expire on September 30, 2025. Annual rent expense under the new lease agreement will be approximately $
On
24
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995
This report contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements use words such as “anticipate,” “budget”, “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with a discussion of potential future events, circumstances or future operating or financial performance. These forward-looking statements are based on our management’s current expectations and observations. Included among the factors that, in our view, could cause actual results to differ materially from the forward looking statements contained in this report are the following: (i) declines or sustained weakness in demand in the drybulk shipping industry; (ii) weakness or declines in drybulk shipping rates; (iii) changes in the supply of or demand for drybulk products, generally or in particular regions; (iv) changes in the supply of drybulk carriers including newbuilding of vessels or lower than anticipated scrapping of older vessels; (v) changes in rules and regulations applicable to the cargo industry, including, without limitation, legislation adopted by international organizations or by individual countries and actions taken by regulatory authorities; (vi) increases in costs and expenses including but not limited to: crew wages, insurance, provisions, lube oil, bunkers, repairs, maintenance, general and administrative expenses, and management expenses; (vii) whether our insurance arrangements are adequate; (viii) changes in general domestic and international political conditions; (ix) acts of war, terrorism, or piracy, including without limitation the ongoing war in Ukraine, the Israel-Hamas war, and attacks on vessels in the Red Sea; (x) changes in the condition of the Company’s vessels or applicable maintenance or regulatory standards (which may affect, among other things, our anticipated drydocking or maintenance and repair costs) and unanticipated drydock expenditures; (xi) the Company’s acquisition or disposition of vessels; (xii) the amount of offhire time needed to complete maintenance, repairs, and installation of equipment to comply with applicable regulations on vessels and the timing and amount of any reimbursement by our insurance carriers for insurance claims, including offhire days; (xiii) the completion of definitive documentation with respect to charters; (xiv) charterers’ compliance with the terms of their charters in the current market environment; (xv) the extent to which our operating results are affected by weakness in market conditions and freight and charter rates; (xvi) our ability to maintain contracts that are critical to our operation, to obtain and maintain acceptable terms with our vendors, customers and service providers and to retain key executives, managers and employees; (xvii) completion of documentation for vessel transactions and the performance of the terms thereof by buyers or sellers of vessels and us; (xviii) the relative cost and availability of low sulfur and high sulfur fuel, worldwide compliance with sulfur emissions regulations that took effect on January 1, 2020 and our ability to realize the economic benefits or recover the cost of the scrubbers we have installed; (xix) our financial results for the year ending December 31, 2024 and other factors relating to determination of the tax treatment of dividends we have declared; (xx) the financial results we achieve for each quarter that apply to the formula under our dividend policy, including without limitation the actual amounts earned by our vessels and the amounts of various expenses we incur, as a significant decrease in such earnings or a significant increase in such expenses may affect our ability to carry out our new value strategy; (xxi) the exercise of the discretion of our Board regarding the declaration of dividends, including without limitation the amount that our Board determines to set aside for reserves under our dividend policy; (xxii) outbreaks of disease such as the COVID-19 pandemic; and (xxiii) other factors listed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 2023 and subsequent reports on Form 8-K and Form 10-Q. Our ability to pay dividends in any period will depend upon various factors, including the limitations under any credit agreements to which we may be a party, applicable provisions of Marshall Islands law and the final determination by the Board of Directors each quarter after its review of our financial performance, market developments, and the best interests of the Company and its shareholders. 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.
The following management’s discussion and analysis should be read in conjunction with our historical consolidated financial statements and the related notes included in this Form 10-Q.
25
General
We are a New York City-based company incorporated in the Marshall Islands that transports iron ore, coal, grain, steel products and other drybulk cargoes along worldwide shipping routes through the ownership and operation of drybulk vessels. Our fleet currently consists of 42 drybulk vessels, including 16 Capesize, 15 Ultramax and eleven Supramax vessels, with an aggregate carrying capacity of approximately 4,446,000 deadweight tons (“dwt”) and an average age of approximately 11.9 years. We seek to deploy our vessels on time charters, spot market voyage charters, spot market-related time charters or in vessel pools trading in the spot market, to reputable charterers.
See pages 35 - 36 for a table of our current fleet.
Our approach towards fleet composition is to own a high-quality fleet of vessels focused on Capesize, Ultramax and Supramax vessels. Capesize vessels represent our major bulk vessel category, while Ultramax and Supramax vessels represent our minor bulk vessel category. Our major bulk vessels are primarily used to transport iron ore, coal and bauxite, while our minor bulk vessels are primarily used to transport grains, steel products and other drybulk cargoes such as cement, scrap, fertilizer, nickel ore, salt and sugar. This approach of owning ships that transport both major and minor bulk commodities provide us with exposure to a wide range of drybulk trade flows. We employ an active commercial strategy which consists of a global team located in the U.S., Copenhagen and Singapore. Overall, we utilize a portfolio approach to revenue generation through a combination of short-term, spot market employment, index-linked time charters as well as opportunistically booking longer term fixed-rate coverage. Our fleet deployment strategy currently is weighted towards short-term fixtures, which provides us with optionality on our sizeable fleet. However, depending on market conditions, we may seek to enter into additional longer term time charters or contracts of affreightment. In addition to both short and long-term time charters, we fix our vessels on spot market voyage charters as well as spot market-related time charters depending on market conditions and management’s outlook.
Our approach to capital allocation, through our comprehensive value strategy, focuses on three key factors:
| ● | Compelling dividends, |
| ● | Financial deleveraging, and |
| ● | Accretive growth of our fleet |
Since 2021, we have executed this strategy by reducing our debt by $369.2 million cumulatively through September 30, 2024 while expanding our core Capesize and Ultramax fleet. This has resulted in a debt balance of $80.0 million as of September 30, 2024, a 82% reduction from January 1, 2021 levels. These actions have enabled us to further reduce our cash flow breakeven rate positioning us to pay sizeable quarterly dividends across diverse market environments.
After a drawdown of $20.0 million on October 10, 2024 to partially fund the purchase of the Genco Intrepid, a 2016-built Capesize vessel that was delivered on October 23, 2024, our debt balance increased to $100.0 million.
In addition to the $47.0 million of cash on our balance sheet as of September 30, 2024, we currently have undrawn revolver availability after the $20.0 million drawdown of $313.0 million, bringing our current total liquidity to $360.0 million. Furthermore, since the fourth quarter of 2021 through the third quarter of 2024, we have declared cumulative dividends under our value strategy of $5.26 per share.
IMO 2023 Compliance
In 2021, Genco initiated a plan to comply with upcoming International Maritime Organization (“IMO”) regulations that took effect in 2023, namely the Energy Efficiency Existing Ship Index (“EEXI”) and the Carbon Intensity Indicator (“CII”) metrics, which call for a reduction in vessel greenhouse gas emissions. These metrics are intended to assess and measure the energy efficiency of all ships and these new regulations set required attainment values, with the goal of reducing the carbon intensity of international shipping.
26
We have invested and plan to continue to invest in energy conservation programs to install various energy-saving devices, or ESDs, high performance paint systems, upgrade propellers among other initiatives on select vessels in our fleet. We began installing these ESDs on certain ships that entered drydocking in 2022, and we plan to continue to invest in our fleet.
IMO 2030 to 2050 Guidelines
In July 2023, the Marine Environment Protection Committee, a sub-committee of the IMO, focused on medium to long term decarbonization targets for the shipping industry. New targets for greenhouse gas emissions reductions as compared to 2008 levels are below which are to be reviewed every five years:
| ● | 2030: 20% reduction while striving for 30% |
| ● | 2040: 70% reduction while striving for 80% |
| ● | 2050: net zero at or around 2050 |
Vessel Sales and Acquisitions
On October 3, 2024, we entered into an agreement to acquire the Genco Intrepid, a 2016-built 180,000 dwt Capesize vessel, for a purchase price of $47.5 million. The vessel was delivered on October 23, 2024. We drew down $20 million on our $500 Million Revolver during the fourth quarter of 2024 and utilized cash on hand to finance the purchase.
On October 10, 2023 and November 14, 2023, we entered into agreements to acquire two 2016-built 181,000 dwt Capesize vessels, the Genco Ranger and Genco Reliance, respectively. The purchase price of the Genco Ranger and Genco Reliance were $43.1 million and $43.0 million, respectively, and the vessels were delivered on November 27, 2023 and November 21, 2023, respectively. We drew down a total of $65 million on our revolving credit facility under the $450 Million Credit Facility during the fourth quarter of 2023 and utilized cash on hand to finance the purchases.
In order to opportunistically renew our fleet, in addition to the above vessel purchases, we agreed to divest three older, less fuel efficient vessels with their third special survey due in 2024. During the fourth quarter of 2023, we entered into agreements to sell three of our Capesize vessels, the Genco Commodus, the Genco Claudius and the Genco Maximus. The sale of these vessels were completed on February 7, 2024, April 22, 2024 and April 2, 2024, respectively.
Additionally, on May 21, 2024, we entered into an agreement to sell the Genco Warrior, a 2005-built Supramax vessel, for $11.95 million less a 3.0% commission payable to a third-party and the sale was completed on July 5, 2024. Also, on July 16, 2024, we entered into an agreement to sell the Genco Hadrian, a 2008-built Capesize vessel, for $25.0 million less a 2.0% commission payable to a third-party and the sale was completed on October 4, 2024.
We will continue to seek opportunities to renew our fleet going forward.
Our Operations
We report financial information and evaluate our operations by charter revenues and not by the length of ship employment for our customers, i.e., spot or time charters. Each of our vessels serves the same type of customer, has similar operations and maintenance requirements, operates in the same regulatory environment, and is subject to similar economic characteristics. Based on this, we have determined that we operate in one reportable segment in which we are engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels.
27
Our management team and our other employees are responsible for the commercial and strategic management of our fleet. Commercial management includes the negotiation of charters for vessels, managing the mix of various types of charters, such as time charters, spot market voyage charters and spot market-related time charters, and monitoring the performance of our vessels under their charters. Strategic management includes locating, purchasing, financing and selling vessels. Technical management involves the day-to-day management of vessels, including performing routine maintenance, attending to vessel operations and arranging for crews and supplies. Our technical management joint venture, GS Shipmanagement Pte. Ltd. (“GSSM”), and Synergy Marine Pte. Ltd. currently provide the technical management to the vessels in our fleet and members of our New York City-based management team oversee their activities.
28
Factors Affecting Our Results of Operations
We believe that the following table reflects important measures for analyzing trends in our results of operations. The table reflects our ownership days, chartered-in days, available days, operating days, fleet utilization, TCE rates and daily vessel operating expenses for the three and nine months ended September 30, 2024 and 2023 on a consolidated basis.
For the Three Months Ended |
| |||||||||||
September 30, | Increase |
| ||||||||||
| 2024 |
| 2023 |
| (Decrease) |
| % Change |
| ||||
Fleet Data: |
| |||||||||||
Ownership days (1) | ||||||||||||
Capesize |
| 1,472.0 | 1,564.0 | (92.0) |
| (5.9) | % | |||||
Panamax |
| — | — | — |
| — | % | |||||
Ultramax |
| 1,380.0 | 1,380.0 | — |
| — | % | |||||
Supramax |
| 1,016.3 | 1,104.0 | (87.7) |
| (7.9) | % | |||||
Total |
| 3,868.3 | 4,048.0 | (179.7) |
| (4.4) | % | |||||
Chartered-in days (2) | ||||||||||||
Capesize | — | — | — | — | % | |||||||
Panamax | — | — | — | — | % | |||||||
Ultramax | 71.0 | 91.1 | (20.1) | (22.1) | % | |||||||
Supramax | — | 55.0 | (55.0) |
| (100.0) | % | ||||||
Total | 71.0 | 146.1 | (75.1) | (51.4) | % | |||||||
Available days (owned & chartered-in fleet) (3) | ||||||||||||
Capesize |
| 1,366.3 | 1,556.9 | (190.6) |
| (12.2) | % | |||||
Panamax |
| — | — | — |
| — | % | |||||
Ultramax |
| 1,370.0 | 1,459.2 | (89.2) |
| (6.1) | % | |||||
Supramax |
| 959.8 | 1,040.3 | (80.5) |
| (7.7) | % | |||||
Total |
| 3,696.1 | 4,056.4 | (360.3) |
| (8.9) | % | |||||
Available days (owned fleet) (4) | ||||||||||||
Capesize | 1,366.3 | 1,556.9 | (190.6) |
| (12.2) | % | ||||||
Panamax | — | — | — |
| — | % | ||||||
Ultramax | 1,299.0 | 1,368.1 | (69.1) |
| (5.1) | % | ||||||
Supramax | 959.8 | 985.3 | (25.5) |
| (2.6) | % | ||||||
Total | 3,625.1 | 3,910.3 | (285.2) |
| (7.3) | % | ||||||
Operating days (5) | ||||||||||||
Capesize |
| 1,360.6 | 1,550.1 | (189.5) |
| (12.2) | % | |||||
Panamax |
| — | — | — |
| — | % | |||||
Ultramax |
| 1,357.7 | 1,426.2 | (68.5) |
| (4.8) | % | |||||
Supramax |
| 955.0 | 1,029.2 | (74.2) |
| (7.2) | % | |||||
Total |
| 3,673.3 | 4,005.5 | (332.2) |
| (8.3) | % | |||||
Fleet utilization (6) | ||||||||||||
Capesize |
| 97.2 | % | 99.1 | % | (1.9) | % | (1.9) | % | |||
Panamax |
| — | % | — | % | — | % | — | % | |||
Ultramax |
| 98.5 | % | 96.9 | % | 1.6 | % | 1.7 | % | |||
Supramax |
| 97.9 | % | 96.7 | % | 1.2 | % | 1.2 | % | |||
Fleet average |
| 97.9 | % | 97.7 | % | 0.2 | % | 0.2 | % | |||
29
For the Three Months Ended | ||||||||||||
September 30, | Increase | |||||||||||
| 2024 |
| 2023 |
| (Decrease) |
| % Change |
| ||||
Average Daily Results: | ||||||||||||
Time Charter Equivalent (7) | ||||||||||||
Capesize | $ | 26,951 | $ | 15,424 | $ | 11,527 |
| 74.7 | % | |||
Panamax |
| — |
| — |
| — |
| — | % | |||
Ultramax |
| 15,336 |
| 10,317 |
| 5,019 |
| 48.6 | % | |||
Supramax |
| 13,622 |
| 9,251 |
| 4,371 |
| 47.2 | % | |||
Fleet average |
| 19,260 |
| 12,082 |
| 7,178 |
| 59.4 | % | |||
Major bulk vessels | 26,951 | 15,424 | 11,527 | 74.7 | % | |||||||
Minor bulk vessels | 14,608 | 10,296 | 4,312 | 41.9 | % | |||||||
Daily vessel operating expenses (8) | ||||||||||||
Capesize | $ | 6,783 | $ | 6,236 | $ | 547 |
| 8.8 | % | |||
Panamax |
| — |
| — |
| — |
| — | % | |||
Ultramax |
| 5,845 |
| 5,576 |
| 269 |
| 4.8 | % | |||
Supramax |
| 6,668 |
| 6,603 |
| 65 |
| 1.0 | % | |||
Fleet average |
| 6,423 |
| 6,113 |
| 310 |
| 5.1 | % | |||
For the Nine Months Ended |
| |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, | Increase |
| ||||||||||
| 2024 |
| 2023 |
| (Decrease) |
| % Change |
| ||||
Fleet Data: | ||||||||||||
Ownership days (1) | ||||||||||||
Capesize |
| 4,626.1 | 4,641.0 | (14.9) |
| (0.3) | % | |||||
Panamax |
| — | — | — |
| — | % | |||||
Ultramax |
| 4,110.0 | 4,095.0 | 15.0 |
| 0.4 | % | |||||
Supramax |
| 3,200.3 | 3,276.0 | (75.7) |
| (2.3) | % | |||||
Total |
| 11,936.4 | 12,012.0 | (75.6) |
| (0.6) | % | |||||
Chartered-in days (2) | ||||||||||||
Capesize | — | — | — | — | % | |||||||
Panamax | 66.2 | — | 66.2 | 100.0 | % | |||||||
Ultramax | 239.4 | 330.8 | (91.4) | (27.6) | % | |||||||
Supramax | 97.1 | 120.9 | (23.8) |
| (19.7) | % | ||||||
Total | 402.7 | 451.7 | (49.0) | (10.8) | % | |||||||
Available days (owned & chartered-in fleet) (3) | ||||||||||||
Capesize |
| 4,395.9 | 4,542.1 | (146.2) |
| (3.2) | % | |||||
Panamax |
| 66.2 | — | 66.2 |
| 100.0 | % | |||||
Ultramax |
| 4,139.3 | 4,400.5 | (261.2) |
| (5.9) | % | |||||
Supramax |
| 3,157.7 | 3,151.6 | 6.1 |
| 0.2 | % | |||||
Total |
| 11,759.1 | 12,094.2 | (335.1) |
| (2.8) | % | |||||
Available days (owned fleet) (4) | ||||||||||||
Capesize | 4,395.9 | 4,542.1 | (146.2) |
| (3.2) | % | ||||||
Panamax | — | — | — |
| — | % | ||||||
Ultramax | 3,899.9 | 4,069.7 | (169.8) |
| (4.2) | % | ||||||
Supramax | 3,060.6 | 3,030.6 | 30.0 |
| 1.0 | % | ||||||
Total | 11,356.4 | 11,642.4 | (286.0) |
| (2.5) | % | ||||||
Operating days (5) | ||||||||||||
Capesize |
| 4,330.3 | 4,513.6 | (183.3) |
| (4.1) | % | |||||
Panamax |
| 66.2 | — | 66.2 |
| 100.0 | % | |||||
30
For the Nine Months Ended |
| |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, | Increase |
| ||||||||||
| 2024 |
| 2023 |
| (Decrease) |
| % Change |
| ||||
Ultramax |
| 4,095.9 | 4,280.4 | (184.5) |
| (4.3) | % | |||||
Supramax |
| 3,119.7 | 3,105.1 | 14.6 |
| 0.5 | % | |||||
Total |
| 11,612.1 | 11,899.1 | (287.0) |
| (2.4) | % | |||||
Fleet utilization (6) | ||||||||||||
Capesize |
| 95.2 | % | 98.9 | % | (3.7) | % | (3.7) | % | |||
Panamax |
| 100.0 | % | — | % | 100.0 | % | 100.0 | % | |||
Ultramax |
| 98.3 | % | 96.7 | % | 1.6 | % | 1.7 | % | |||
Supramax |
| 97.1 | % | 96.0 | % | 1.1 | % | 1.1 | % | |||
Fleet average |
| 96.8 | % | 97.3 | % | (0.5) | % | (0.5) | % | |||
For the Nine Months Ended | ||||||||||||
September 30, | Increase | |||||||||||
| 2024 |
| 2023 |
| (Decrease) |
| % Change |
| ||||
Average Daily Results: | ||||||||||||
Time Charter Equivalent (7) | ||||||||||||
Capesize | $ | 27,160 | $ | 16,954 | $ | 10,206 |
| 60.2 | % | |||
Panamax |
| — |
| — |
| — |
| — | % | |||
Ultramax |
| 15,185 |
| 12,962 |
| 2,223 |
| 17.2 | % | |||
Supramax |
| 13,784 |
| 10,412 |
| 3,372 |
| 32.4 | % | |||
Fleet average |
| 19,458 |
| 13,855 |
| 5,603 |
| 40.4 | % | |||
Major bulk vessels | 27,160 | 16,954 | 10,206 | 60.2 | % | |||||||
Minor bulk vessels | 14,594 | 11,872 | 2,722 | 22.9 | % | |||||||
Daily vessel operating expenses (8) | ||||||||||||
Capesize | $ | 7,017 | $ | 6,243 | $ | 774 |
| 12.4 | % | |||
Panamax |
| — |
| — |
| — |
| — | % | |||
Ultramax |
| 5,917 |
| 5,437 |
| 480 |
| 8.8 | % | |||
Supramax |
| 6,548 |
| 6,305 |
| 243 |
| 3.9 | % | |||
Fleet average |
| 6,514 |
| 5,971 |
| 543 |
| 9.1 | % | |||
Definitions
In order to understand our discussion of our results of operations, it is important to understand the meaning of the following terms used in our analysis and the factors that influence our results of operations.
(1) Ownership days. 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.
(2) Chartered-in days. We define chartered-in days as the aggregate number of days in a period during which we chartered-in third-party vessels.
(3) Available days (owned and chartered-in fleet). We define available days as the number of our ownership days and chartered-in days less the aggregate number of days that our vessels are off-hire due to familiarization upon acquisition, repairs or repairs under guarantee, vessel upgrades or special surveys. Companies in the shipping industry generally use available days to measure the number of days in a period during which vessels should be capable of generating revenues.
(4) Available days (owned fleet). We define available days for the owned fleet as available days less chartered-in days.
31
(5) Operating days. We define operating days as the number of our total available days in a period less the aggregate number of days that our 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.
(6) Fleet utilization. We calculate fleet utilization as the number of our operating days during a period divided by the number of ownership days plus chartered-in days less drydocking days.
(7) Time charter equivalent. We define time charter equivalent (“TCE”) rates as our voyage revenues less voyage expenses, charter-hire expenses and realized gains or losses on fuel hedges, divided by the number of the available days of our owned fleet during the period. TCE rate is not an item recognized by U.S. GAAP (i.e., it is a non-GAAP measure). However, it 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.
Entire Fleet | Major Bulk | Minor Bulk |
| |||||||||||||||||
For the Three Months Ended | For the Three Months Ended | For the Three Months Ended | ||||||||||||||||||
September 30, | September 30, | September 30, | ||||||||||||||||||
| 2024 |
| 2023 | 2024 |
| 2023 | 2024 |
| 2023 |
| ||||||||||
Voyage revenues (in thousands) | $ | 99,332 | $ | 83,361 | $ | 52,494 | $ | 44,690 | $ | 46,838 | $ | 38,671 | ||||||||
Voyage expenses (in thousands) |
| 28,232 |
| 34,256 |
| 15,672 |
| 20,677 |
| 12,560 |
| 12,579 | ||||||||
Charter hire expenses (in thousands) | 1,267 | 2,026 | — | — | 1,267 | 2,026 | ||||||||||||||
Realized (loss) gain on fuel hedges (in thousands) | (15) | 164 | — | — | (15) | 164 | ||||||||||||||
| 69,818 |
| 47,243 |
| 36,822 |
| 24,013 |
| 32,996 |
| 24,230 | |||||||||
Total available days for owned fleet |
| 3,625 |
| 3,910 |
| 1,366 | 1,557 |
| 2,259 |
| 2,353 | |||||||||
Total TCE rate | $ | 19,260 | $ | 12,082 | $ | 26,951 | $ | 15,424 | $ | 14,608 | $ | 10,296 | ||||||||
Entire Fleet | Major Bulk | Minor Bulk | ||||||||||||||||||
For the Nine Months Ended | For the Nine Months Ended | For the Nine Months Ended | ||||||||||||||||||
September 30, | September 30, | September 30, | ||||||||||||||||||
2024 |
| 2023 | 2024 |
| 2023 | 2024 |
| 2023 |
| |||||||||||
Voyage revenues (in thousands) | $ | 323,814 | $ | 268,309 | $ | 172,727 | $ | 128,042 | $ | 151,087 | $ | 140,267 | ||||||||
Voyage expenses (in thousands) |
| 95,705 |
| 100,522 |
| 53,338 |
| 51,035 |
| 42,367 |
| 49,487 | ||||||||
Charter hire expenses (in thousands) | 7,232 | 6,731 | — | — | 7,232 | 6,731 | ||||||||||||||
Realized gain on fuel hedges (in thousands) | 95 | 245 | — | — | 95 | 245 | ||||||||||||||
| 220,972 |
| 161,301 |
| 119,389 |
| 77,007 |
| 101,583 |
| 84,294 | |||||||||
Total available days for owned fleet |
| 11,356 |
| 11,642 |
| 4,396 |
| 4,542 |
| 6,961 |
| 7,100 | ||||||||
Total TCE rate | $ | 19,458 | $ | 13,855 | $ | 27,160 | $ | 16,954 | $ | 14,594 | $ | 11,872 | ||||||||
(8) Daily vessel operating expenses. 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.
32
Operating Data
The following tables represent the operating data for the three and nine months ended September 30, 2024 and 2023 on a consolidated basis.
For the Three Months Ended |
| |||||||||||
September 30, |
| |||||||||||
| 2024 |
| 2023 |
| Change |
| % Change |
| ||||
(U.S. dollars in thousands, except for per share amounts) |
| |||||||||||
Revenue: | ||||||||||||
Voyage revenues |
| $ | 99,332 |
| $ | 83,361 |
| $ | 15,971 |
| 19.2 | % |
Total revenues |
| 99,332 |
| 83,361 |
| 15,971 |
| 19.2 | % | |||
Operating Expenses: | ||||||||||||
Voyage expenses |
| 28,232 |
| 34,256 |
| (6,024) |
| (17.6) | % | |||
Vessel operating expenses |
| 24,847 |
| 24,746 |
| 101 |
| 0.4 | % | |||
Charter hire expenses | 1,267 | 2,026 | (759) | (37.5) | % | |||||||
General and administrative expenses (inclusive of nonvested stock amortization expense of $1,508 and $1,397, respectively) |
| 6,831 |
| 6,585 |
| 246 |
| 3.7 | % | |||
Technical management expenses | 1,005 | 973 | 32 | 3.3 | % | |||||||
Depreciation and amortization |
| 16,620 |
| 17,026 |
| (406) |
| (2.4) | % | |||
Impairment of vessel assets | 961 | 28,102 | (27,141) | (96.6) | % | |||||||
Net gain on sale of vessels |
| (4,465) | — | (4,465) | (100.0) | % | ||||||
Total operating expenses |
| 75,298 |
| 113,714 |
| (38,416) |
| (33.8) | % | |||
Operating income (loss) |
| 24,034 |
| (30,353) |
| 54,387 |
| (179.2) | % | |||
Other expense, net |
| (2,460) |
| (1,511) |
| (949) |
| 62.8 | % | |||
Net income (loss) | 21,574 | (31,864) | 53,438 |
| (167.7) | % | ||||||
Less: Net income attributable to noncontrolling interest |
| 115 |
| 140 |
| (25) |
| (17.9) | % | |||
Net income (loss) attributable to Genco Shipping & Trading Limited |
| $ | 21,459 |
| $ | (32,004) |
| $ | 53,463 |
| (167.1) | % |
Net earnings (loss) per share - basic |
| $ | 0.50 |
| $ | (0.75) | $ | 1.25 |
| (166.7) | % | |
Net earnings (loss) per share - diluted |
| $ | 0.49 |
| $ | (0.75) | $ | 1.24 |
| (165.3) | % | |
Weighted average common shares outstanding - basic |
| 43,108,844 |
| 42,816,045 |
| 292,799 |
| 0.7 | % | |||
Weighted average common shares outstanding - diluted |
| 43,656,385 |
| 42,816,045 |
| 840,340 |
| 2.0 | % | |||
EBITDA (1) |
| $ | 40,300 |
| $ | (13,567) |
| $ | 53,867 |
| (397.0) | % |
33
For the Nine Months Ended |
| |||||||||||
September 30, |
| |||||||||||
| 2024 |
| 2023 |
| Change |
| % Change |
| ||||
(U.S. dollars in thousands, except for per share amounts) |
| |||||||||||
Revenue: | ||||||||||||
Voyage revenues |
| $ | 323,814 |
| $ | 268,309 |
| $ | 55,505 |
| 20.7 | % |
Total revenues |
| 323,814 |
| 268,309 |
| 55,505 |
| 20.7 | % | |||
Operating Expenses: | ||||||||||||
Voyage expenses |
| 95,705 |
| 100,522 |
| (4,817) |
| (4.8) | % | |||
Vessel operating expenses |
| 77,756 |
| 71,725 |
| 6,031 |
| 8.4 | % | |||
Charter hire expenses | 7,232 | 6,731 | 501 | 7.4 | % | |||||||
General and administrative expenses (inclusive of nonvested stock amortization expense of $4,341 and $4,175 respectively) |
| 20,815 |
| 21,267 |
| (452) |
| (2.1) | % | |||
Technical management expenses | 3,296 | 3,084 | 212 |
| 6.9 | % | ||||||
Depreciation and amortization |
| 50,939 |
| 49,762 |
| 1,177 |
| 2.4 | % | |||
Impairment of vessel assets | 6,595 | 28,102 | (21,507) | (76.5) | % | |||||||
Net gain on sale of vessels |
| (16,693) |
| — |
| (16,693) |
| (100.0) | % | |||
Other operating expense |
| 5,728 |
| — |
| 5,728 |
| 100.0 | % | |||
Total operating expenses |
| 251,373 |
| 281,193 |
| (29,820) |
| (10.6) | % | |||
Operating income (loss) |
| 72,441 |
| (12,884) |
| 85,325 |
| (662.3) | % | |||
Other expense |
| (8,431) |
| (4,579) |
| (3,852) |
| 84.1 | % | |||
Net income (loss) | 64,010 | (17,463) | 81,473 |
| (466.5) | % | ||||||
Less: Net income attributable to noncontrolling interest |
| 286 |
| 345 |
| (59) |
| (17.1) | % | |||
Net income (loss) attributable to Genco Shipping & Trading Limited |
| $ | 63,724 |
| $ | (17,808) |
| $ | 81,532 |
| (457.8) | % |
Net earnings (loss) per share - basic |
| $ | 1.48 |
| $ | (0.42) |
| 1.90 |
| (452.4) | % | |
Net earnings (loss) per share - diluted |
| $ | 1.46 |
| $ | (0.42) |
| 1.88 |
| (447.6) | % | |
Weighted average common shares outstanding - basic |
| 43,033,786 |
| 42,745,681 |
| 288,105 |
| 0.7 | % | |||
Weighted average common shares outstanding - diluted |
| 43,642,521 |
| 42,745,681 |
| 896,840 |
| 2.1 | % | |||
EBITDA (1) |
| $ | 122,831 |
| $ | 36,235 |
| $ | 86,596 |
| 239.0 | % |
34
| (1) | EBITDA represents net income (loss) attributable to Genco Shipping & Trading Limited 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 our consolidated 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 a 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 Condensed Consolidated Statements of Cash Flows. The definition of EBITDA used here may not be comparable to that used by other companies. The following table demonstrates our calculation of EBITDA and provides a reconciliation of EBITDA to net income (loss) attributable to Genco Shipping & Trading Limited for each of the periods presented above: |
For the Three Months Ended |
| For the Nine Months Ended |
| ||||||||||
September 30, |
| September 30, |
| ||||||||||
2024 | 2023 |
| 2024 |
| 2023 |
| |||||||
Net income (loss) attributable to Genco Shipping & Trading Limited |
| $ | 21,459 |
| $ | (32,004) | $ | 63,724 |
| $ | (17,808) | ||
Net interest expense |
| 2,221 |
| 1,411 |
| 8,168 |
| 4,281 | |||||
Income tax expense |
| — |
| — |
| — |
| — | |||||
Depreciation and amortization |
| 16,620 |
| 17,026 |
| 50,939 |
| 49,762 | |||||
EBITDA (1) |
| $ | 40,300 |
| $ | (13,567) | $ | 122,831 |
| $ | 36,235 | ||
Results of Operations
The following table sets forth information about the most recent employment of the vessels in our fleet as of November 5, 2024:
| Year |
| Charter |
| |||
|---|---|---|---|---|---|---|---|
Vessel |
| Built |
| Expiration(1) |
| Cash Daily Rate(2) |
|
Capesize Vessels | |||||||
Genco Augustus |
| 2007 |
| December 2024 |
| Voyage | |
Genco Tiberius |
| 2007 |
| December 2024 |
| Voyage | |
Genco London |
| 2007 |
| November 2024 | Voyage | ||
Genco Titus |
| 2007 |
| November 2024 | Voyage | ||
Genco Constantine |
| 2008 |
| November 2024 | Voyage | ||
Genco Tiger |
| 2011 |
| December 2024 | Voyage | ||
Genco Lion |
| 2012 |
| December 2024 | Voyage | ||
Baltic Bear |
| 2010 |
| November 2024 | Voyage | ||
Baltic Wolf |
| 2010 |
| November 2024 | $30,000 | ||
Genco Resolute | 2015 | April 2025 | 123% of BCI (3) | ||||
Genco Endeavour | 2015 | October 2025 | $30,565 (4) | ||||
Genco Defender | 2016 | April 2025 | 123% of BCI (3) | ||||
Genco Liberty | 2016 | February 2025 | $35,000 | ||||
Genco Ranger | 2016 | February 2025 | 128% of BCI (3) | ||||
Genco Reliance | 2016 | January 2025 | 128% of BCI (3) | ||||
Genco Intrepid | 2016 | December 2024 | $15,850 | ||||
Ultramax Vessels | |||||||
Baltic Hornet |
| 2014 |
| November 2024 | $15,500 | ||
Baltic Wasp |
| 2015 |
| December 2024 | $16,500 | ||
Baltic Scorpion |
| 2015 |
| December 2024 | $9,300 | ||
Baltic Mantis |
| 2015 |
| December 2024 | Voyage |
35
| Year |
| Charter |
| |||
|---|---|---|---|---|---|---|---|
Vessel |
| Built |
| Expiration(1) |
| Cash Daily Rate(2) |
|
Genco Weatherly | 2014 | April 2025 | $17,000 | ||||
Genco Columbia | 2016 | November 2024 | $17,250 | ||||
Genco Magic | 2014 | December 2024 | $13,250 | ||||
Genco Vigilant | 2015 | November 2024 | $12,950 | ||||
Genco Freedom | 2015 | November 2024 | $16,000 | ||||
Genco Enterprise | 2016 | November 2024 | Voyage | ||||
Genco Constellation | 2017 | December 2024 | $16,000 | ||||
Genco Madeleine | 2014 | December 2024 | $14,250 | ||||
Genco Mayflower | 2017 | November 2024 | $19,000 | ||||
Genco Mary | 2022 | November 2024 | Voyage | ||||
Genco Laddey | 2022 | December 2024 | $17,500 | ||||
Supramax Vessels | |||||||
Genco Predator |
| 2005 |
| November 2024 | $7,450 | ||
Genco Hunter |
| 2007 |
| December 2024 | Voyage | ||
Genco Aquitaine |
| 2009 |
| December 2024 | $11,500 | ||
Genco Ardennes |
| 2009 |
| December 2024 | $14,500 | ||
Genco Auvergne |
| 2009 |
| October 2024 | $15,000 | ||
Genco Bourgogne |
| 2010 |
| November 2024 | $19,250 | ||
Genco Brittany |
| 2010 |
| November 2024 | $11,500 | ||
Genco Languedoc |
| 2010 |
| November 2024 | $16,500 | ||
Genco Picardy |
| 2005 |
| December 2024 | Voyage | ||
Genco Pyrenees |
| 2010 |
| November 2024 | $11,750 | ||
Genco Rhone |
| 2011 |
| November 2024 | Voyage |
| (1) | The charter expiration dates presented represent the earliest dates that our charters may be terminated in the ordinary course. Under the terms of certain contracts, the charterer is entitled to extend the time charter from two to four months in order to complete the vessel's final voyage plus any time the vessel has been off-hire. |
| (2) | Time charter rates presented are the gross daily charterhire rates before third-party brokerage commission generally ranging from 1.25% to 6.25%. In a time charter, the charterer is responsible for voyage expenses such as bunkers, port expenses, agents’ fees and canal dues. |
| (3) | BCI is the Baltic Capesize Index |
| (4) | Represents the annualized daily rate. |
Three months ended September 30, 2024 compared to the three months ended September 30, 2023
VOYAGE REVENUES-
For the three months ended September 30, 2024, voyage revenues increased by $16.0 million, or 19.2%, to $99.3 million as compared to $83.4 million for the three months ended September 30, 2023. The increase in voyage revenues was primarily due to higher rates earned by our major and minor bulk vessels, partially offset by a decrease related to the operation of a smaller fleet. In the third quarter of 2024, the drybulk market remained at firm levels led by increased Brazilian iron ore exports, as well as solid coal and bauxite trades together with continued commodity demand from China.
The average TCE rate of our overall fleet increased 59.4% to $19,260 a day during the third quarter of 2024 from $12,082 a day during the third quarter of 2023. The TCE for our major bulk vessels increased by 74.7% from $15,424 a day during the third quarter of 2023 to $26,951 a day during the third quarter of 2024. This increase was primarily a result of higher rates achieved by our Capesize vessels. The TCE for our minor bulk vessels increased by 41.9% from $10,296 a day during the third quarter of 2023 to $14,608 a day during the third quarter of 2024 primarily a result of higher rates achieved by our Ultramax and Supramax vessels.
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Total ownership days decreased from 4,048.0 during the third quarter of 2023 to 3,868.3 during the third quarter of 2024 due to the sale of three Capesize vessels and one Supramax vessels during the nine months ended September 30, 2024, partially offset by the delivery of two Capesize vessels during the fourth quarter of 2023. Fleet utilization increased marginally from 97.7% during the third quarter of 2023 to 97.9% during the third quarter of 2024. During the year ended December 31, 2025, we expect approximately 580 days of offhire related to scheduled drydockings and special surveys. Refer to “Capital Expenditures” section below for further details.
VOYAGE EXPENSES-
In time charters and spot market-related time charters, operating costs including crews, maintenance and insurance are typically paid by the owner of the vessel and specified voyage costs such as fuel and port charges are paid by the charterer. These expenses are borne by the Company during spot market voyage charters. There are certain other non-specified voyage expenses such as commissions, which are typically borne by us. Voyage expenses include port and canal charges, fuel (bunker) expenses and brokerage commissions payable to unaffiliated third parties. Port and canal charges and bunker expenses primarily increase in periods during which vessels are employed on spot market voyage charters because these expenses are for the account of the vessel owner. At the inception of a time charter, we record the difference between the cost of bunker fuel delivered by the terminating charterer and the bunker fuel sold to the new charterer as a gain or loss within voyage expenses. Voyage expenses also include the cost of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement. Additionally, we may record lower of cost and net realizable value adjustments to re-value the bunker fuel on a quarterly basis for certain time charter agreements where the inventory is subject to gains and losses. Refer to Note 2 — Summary of Significant Accounting Policies in our Condensed Consolidated Financial Statements.
Voyage expenses decreased from $34.3 million during the three months ended September 30, 2023 to $28.2 million during the three months ended September 30, 2024. The decrease was primarily due to lower voyage expenses for our major bulk vessels, including lower bunker consumption, as the major bulk vessels were fixed on fewer spot voyages during three months ended September 30, 2024 as compared to the three months ended September 30, 2023 .
VESSEL OPERATING EXPENSES-
Vessel operating expenses increased marginally by $0.1 million from $24.7 million during the three months ended September 30, 2023 to $24.8 million during the three months ended September 30, 2024.
Average daily vessel operating expenses (“DVOE”) for our fleet increased to $6,423 per vessel per day for the three months ended September 30, 2024 from $6,113 per day for the three months ended September 30, 2023. The increase in daily vessel operating expense 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.
The DVOE budget for the fourth quarter of 2024 is expected to be $6,200 per vessel per day on a fleet-wide basis. The potential impacts of various macroeconomic events, including but not limited to the war in Ukraine, the Israel-Hamas war and the Houthi conflict in the Red Sea, are unpredictable, and the actual amount of our DVOE could be higher or lower than budgeted as a result.
Our vessel operating expenses increase to the extent our fleet expands. Other factors beyond our control, some of which may affect the shipping industry in general, including, for instance, developments relating to market prices for crewing, lubes, and insurance, may also cause these expenses to increase. Crew costs on our vessels could increase in the future due to higher wages as a result of the potential impact of the war in Ukraine, the Israel-Hamas war, and the Houthi conflict in the Red Sea among other potential macroeconomic events, are unpredictable, and the actual amount of our DVOE could be higher or lower than budgeted as a result.
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CHARTER HIRE EXPENSES-
Charter hire expenses decreased by $0.7 million from $2.0 million during the three months ended September 30, 2023 to $1.3 million during the three months ended September 30, 2024. The decrease was primarily due to a decrease in chartered-in days, partially offset by an increase in hire rates.
GENERAL AND ADMINISTRATIVE EXPENSES-
We incur general and administrative expenses that relate to our onshore non-vessel-related activities. Our general and administrative expenses include our payroll expenses, including those relating to our executive officers, operating lease expense, legal, auditing and other professional expenses. General and administrative expenses include nonvested stock amortization expense which represent the amortization of stock-based compensation that has been issued to our Directors and employees pursuant to the 2015 Equity Incentive Plan. Refer to Note 13 — Stock-Based Compensation in our Condensed Consolidated Financial Statements. General and administrative expenses also include legal and professional fees associated with our credit facilities, which are not capitalizable to deferred financing costs. We also incur general and administrative expenses for our overseas offices located in Singapore and Copenhagen.
For the three months ended September 30, 2024 and 2023, general and administrative expenses increased from $6.6 million during the three months ended September 30, 2023 to $6.8 million during the three months ended September 30, 2024. This increase was primarily due to higher nonvested stock amortization expense.
TECHNICAL MANAGEMENT EXPENSES-
Technical management expenses include the direct costs incurred by GSSM for the technical management of the vessels under its management. Technical management expenses were $1.0 million during the three months ended September 30, 2024 and 2023.
DEPRECIATION AND AMORTIZATION-
Depreciation and amortization expense decreased by $0.4 million to $16.6 million during the three months ended September 30, 2024 as compared to $17.0 million during the three months ended September 30, 2023. This decrease was primarily due to a decrease in depreciation expense as a result of the operation of a smaller fleet during the third quarter of 2024 as compared to the third quarter of 2023. The decrease in vessel deprecation expense was partially offset by an increase in drydocking amortization expense for certain vessels that completed their respective drydockings during 2023.
IMPAIRMENT OF VESSEL ASSETS-
During the three months ended September 30, 2024, we recorded $1.0 million of losses related to the disposal of replaced equipment on certain vessels. During the three months ended September 30, 2023, we recorded $28.1 million of impairment expense for three of our Capesize vessels. Refer to Note 2 — Summary of Significant Accounting Policies in our Condensed Consolidated Financial Statements for further information regarding the impairment of these vessels.
NET GAIN ON SALE OF VESSELS-
During the third quarter of 2024, we recorded a net gain on sale of vessels of $4.5 million related primarily to the sale of the Genco Warrior during the third quarter of 2024. There were no vessels sold during the third quarter of 2023.
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OTHER (EXPENSE) INCOME -
INTEREST EXPENSE –
Interest expense increased from $2.0 million during the three months ended September 30, 2023 to $3.0 million during the three months ended September 30, 2024. Interest expense during the three months ended September 30, 2024 and 2023 consisted primarily of interest expense under our credit facilities and amortization of deferred financing costs for those facilities. The increase was primarily a result of lower settlement payments received under our interest rate cap agreements as a result of the expiration of these agreements. There were no interest rate cap agreements during the third quarter of 2024. This increase was partially offset by a decrease due to lower outstanding debt during the third quarter of 2024 as compared to the third quarter of 2023.
INTEREST INCOME –
Interest income increased by $0.1 million from $0.6 million during the three months ended September 30, 2023 to $0.7 million during the three months ended September 30, 2024 primarily due to higher interest income earned on our cash and cash equivalents.
OTHER EXPENSE –
Other expense increased marginally by $0.1 million from $0.1 million during three months ended September 30, 2023 to $0.2 million during the three months ended September 30, 2024.
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST –
During the three months ended September 30, 2024 and 2023, net income attributable to noncontrolling interest was $0.1 million which is associated with the net income attributable to the noncontrolling interest of GSSM.
Nine months ended September 30, 2024 compared to the nine months ended September 30, 2023
VOYAGE REVENUES-
For the nine months ended September 30, 2024, voyage revenues increased by $55.5 million, or 20.7%, to $323.8 million as 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 Ultramax vessels that are in the minor bulk fleet. Refer to the discussion above included under the section “Three months ended September 30, 2024 compared to the three months ended September 30, 2023 – Voyage Revenues” for further information.
The average TCE rate of our overall fleet increased 40.4% to $19,458 a day during the nine months ended September 30, 2024 from $13,855 a day during the nine months ended September 30, 2023. The TCE for our major bulk vessels increased by 60.2% from $16,954 a day during the nine months ended September 30, 2023 to $27,160 a day during the nine months ended September 30, 2024. This increase was primarily a result of higher rates achieved by our Capesize vessels. The TCE for our minor bulk vessels increased by 22.9% from $11,872 a day during the nine months ended September 30, 2023 to $14,594 a day during the nine months ended September 30, 2024 primarily a result of higher rates achieved by our Ultramax and Supramax vessels.
Fleet utilization decreased from 97.3% during the nine months ended September 30, 2023 to 96.8% during the nine months ended September 30, 2024 primarily due to additionally offhire days for our Capesize vessels.
VOYAGE EXPENSES-
Voyage expenses were $95.7 million and $100.5 million during the nine months ended September 30, 2024 and 2023, respectively. The decrease in voyage expenses was primarily due to a decrease in voyage expenses for our Supramax vessels, part of our minor bulk vessels, including a decrease in bunker consumption as well as lower overall
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voyage expenses primarily due to the vessels being fixed on fewer spot voyages during the nine month ended September 30, 2024 as compared to the same period during 2023 . This decrease was partially offset by an increase in voyage expenses for our major bulk vessels primarily due to higher bunker consumption resulting from the vessels being fixed on more spot voyages during the nine months ended September 30, 2024 as compared to the same period during 2023.
VESSEL OPERATING EXPENSES-
Vessel operating expenses increased by $6.1 million from $71.7 million during the nine months ended September 30, 2023 to $77.8 million during the nine months ended September 30, 2024. The increase was primarily due to the timing of the purchase of stores and spares, higher crew costs, and higher repair and maintenance costs.
DVOE for our fleet increased to $6,514 per vessel per day for the nine months ended September 30, 2024 from $5,971 per day for the nine months ended September 30, 2023. The increase in daily vessel operating expense was primarily due to the timing of the purchase of stores and spares, higher repair and maintenance costs and higher crew 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.
CHARTER HIRE EXPENSES-
Charter hire expenses increased by $0.5 million from $6.7 million during the nine months ended September 30, 2023 to $7.2 million during the nine months ended September 30, 2024. The increase was primarily due to an increase in hire rates, partially offset by a decrease in chartered-in days.
GENERAL AND ADMINISTRATIVE EXPENSES-
For the nine months ended September 30, 2024 and 2023, general and administrative expenses were $20.8 million and $21.3 million, respectively. This decrease was primarily due to lower legal and professional fees.
TECHNICAL MANAGEMENT FEES-
Technical management fees were $3.3 million and $3.1 million during the nine months ended September 30, 2024 and 2023, respectively, with the variance due to timing of expenses during the year.
DEPRECIATION AND AMORTIZATION-
Depreciation and amortization expense increased by $1.1 million from $49.8 million during the nine months ended September 30, 2023 to $50.9 million during the nine months ended September 30, 2024. This increase was primarily due to an increase in drydocking amortization expense for certain vessels that completed their respective drydockings during 2023. This increase was partially offset by a decrease in depreciation expense due to the operation of smaller fleet.
IMPAIRMENT OF VESSEL ASSETS-
During the nine months ended September 30, 2024, we recorded $6.6 million of impairment of vessel assets. This includes $5.6 million impairment for the Genco Hadrian, a Capesize vessel, which was impaired during the second
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quarter of 2024. Additionally, during the nine months ended September 30, 2024, we recorded $1.0 million of losses related to the disposal of replaced equipment on certain vessels.
During the nine months ended September 30, 2023, we recorded $28.1 million of impairment of vessel assets. This represented impairment for three of our Capesize vessels.
Refer to Note 2 — Summary of Significant Accounting Policies in our Condensed Consolidated Financial Statements for further information regarding the impairment of these vessels.
NET GAIN ON SALE OF VESSELS-
During the nine months ended September 30, 2024, we recorded a net gain on sale of vessels of $16.7 million related primarily to the gains on the sale of the Genco Warrior during the third quarter of 2024 and the Genco Claudius and the Genco Maximus during the second quarter of 2024, partially offset by losses on the sale of the Genco Commodus during the first quarter of 2024. There were no vessels sold during the nine months ended September 30, 2023.
OTHER OPERATING EXPENSE-
Other operating expense of $5.7 million recorded during the nine months ended September 30, 2024 consists of costs incremental to routine expenses that were incurred related to our 2024 annual meeting held on May 23, 2024.
OTHER (EXPENSE) INCOME-
INTEREST EXPENSE –
Interest expense increased by $4.3 million from $6.2 million during the nine months ended September 30, 2023 to $10.5 million during the nine months ended September 30, 2024. The increase was primarily a result of lower settlement payments received under our interest rate cap agreements during the nine months ended September 30, 2024 as compared to the same period during 2023 as a result of the expiration of these agreements. This increase was partially offset by a decrease due to lower outstanding debt during the nine months ended September 30, 2024 as compared to the same period during 2023.
INTEREST INCOME –
Interest income increased by $0.4 million from $1.9 million during the nine months ended September 30, 2023 to $2.3 million during the nine months ended September 30, 2024 primarily due to higher interest income earned on our cash and cash equivalents.
OTHER EXPENSE –
Other expense was $0.3 million during the nine months ended September 30, 2024 and 2023, respectively.
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST –
During the nine months ended September 30, 2024 and 2023, net income attributable to noncontrolling interest was $0.3 million which is associated with the net income attributable to the noncontrolling interest of GSSM.
LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity are cash flow from operations, cash on hand, equity offerings and credit facility borrowings. We currently use our funds primarily for the acquisition of vessels, fleet renewal, drydocking for our vessels, payment of dividends, debt repayments and satisfying working capital requirements as may be needed to support our business. Our ability to continue to meet our liquidity needs is subject to and will be affected by cash utilized in operations, the economic or business environment in which we operate, shipping industry conditions, the financial
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condition of our customers, vendors and service providers, our ability to comply with the financial and other covenants of our indebtedness, and other factors.
We believe, given our current cash holdings, if drybulk shipping rates do not decline significantly from current levels, our capital resources, including cash anticipated to be generated within the year, are sufficient to fund our operations for at least the next twelve months. Such resources include unrestricted cash and cash equivalents of $46.7 million as of September 30, 2024 in addition to the $333.0 million availability under the $500 Million Revolver as of September 30, 2024, which compares to a minimum liquidity requirement under our credit facility of approximately $21 million as of September 30, 2024, as well as the net proceeds from the sale of the Genco Hadrian of approximately $24 million, which was received in October 2024. Given anticipated capital expenditures related to vessel acquisitions, drydockings and fuel efficiency upgrade costs of $56.3 million and $47.7 million during the remainder of 2024 and 2025, respectively, as well as any quarterly dividend payments, we anticipate to continue to have significant cash expenditures. Refer to “Capital Expenditures” below for further details. However, if market conditions were to worsen significantly due to the war in Ukraine, the Houthi conflict in the Red Sea, the Israel-Hamas war, or other causes, then our cash resources may decline to a level that may put at risk our ability to pay dividends per our capital allocation strategy or at all.
Throughout 2022, 2023 and the nine months ended September 30, 2024, the Company made a total of $231.0 million of voluntary debt prepayments, resulting in a reduced cash flow breakeven rate from previous levels. During the fourth quarter of 2023, partially offsetting this debt reduction, we opportunistically drew down $65 million under the revolver of the $450 Million Credit Facility to partially fund the purchase of two Capesize vessels that were delivered during the fourth quarter of 2023. Additionally, during the fourth quarter of 2024, we drew down $20 million under the $500 Million Revolver to partially fund the purchase of one Capesize vessel that was delivered during the fourth quarter of 2024. Going forward, given the nature of our revolving credit facility, we plan to actively manage our debt balance to reduce interest expense and may also opportunistically draw down debt to assist in funding accretive growth opportunities. As of September 30, 2024, there are no mandatory debt repayments until we must repay $80.0 million in 2028. Although we do not have any mandatory debt repayments until 2028, we intend to continue to pay down debt on a voluntary basis with a medium-term goal of zero net debt.
As of September 30, 2024, the $500 Million Revolver contained collateral maintenance covenants that require the aggregate appraised value of collateral vessels to be at least 140% of the principal amount of the loan outstanding under such facility. If the values of our vessels were to decline as a result of the various geopolitical factors previously mentioned or otherwise, we may not satisfy this collateral maintenance requirement. If we do not satisfy the collateral maintenance requirement, we will need to post additional collateral or prepay outstanding loans to bring us back into compliance, or we will need to seek waivers, which may not be available or may be subject to conditions.
In the future, we may require capital to fund acquisitions or to improve or support our ongoing operations and debt structure, particularly in light of economic conditions resulting from the war in Ukraine, the Houthi conflict in the Red Sea, the Israel-Hamas war, and the trajectory of China’s economic recovery and stimulus measures. We may from time to time seek to raise additional capital through equity or debt offerings, selling vessels or other assets, pursuing strategic opportunities, or otherwise. We may also from time to time seek to incur additional debt financing from private or public sector sources, refinance our indebtedness or obtain waivers or modifications to our credit agreements to obtain more favorable terms, enhance flexibility in conducting our business, or otherwise. We may also seek to manage our interest rate exposure through hedging transactions. We may seek to accomplish any of these independently or in conjunction with one or more of these actions. However, if market conditions are unfavorable, we may be unable to accomplish any of the foregoing on acceptable terms or at all.
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On November 29, 2023, we entered into a fourth amendment to amend, extend and upsize our existing $450 Million Credit Facility and implement the $500 Million Revolver. The amended structure consists of a $500 million revolving credit facility, which can be utilized to support growth of our asset base as well as general corporate purposes. Refer to Note 7 — Debt in our Condensed Consolidated Financial Statements for further details regarding the terms of the $500 Million Revolver, which information is incorporated herein by reference.
As of September 30, 2024, we were in compliance with all financial covenants under the $500 Million Revolver.
Dividends
Under our quarterly dividend policy, the amount available for quarterly dividends is to be calculated based on the following formula:
Operating cash flow
Less: Voluntary quarterly reserve
Cash flow distributable as dividends
The amount of dividends payable under the foregoing formula for each quarter of the year will be determined on a quarterly basis.
For purposes of the foregoing calculation, operating cash flow is defined as voyage revenue less voyage expenses, charter hire expenses, realized gains or losses on fuel hedges, vessel operating expenses, general and administrative expenses other than non-cash restricted stock expenses, technical management fees, and interest expense other than non-cash deferred financing costs. Anticipated uses for the voluntary quarterly reserve include, but are not limited to, vessel acquisitions, debt prepayments and repayments, and general corporate purposes. In order to set aside funds for these purposes, the voluntary reserve will be set on a quarterly basis in the discretion of our Board and is anticipated to be based on future quarterly debt repayments and interest expense.
On November 6, 2024, we announced a quarterly dividend of $0.40 per share. 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 facilities) and our Board’s determination that each declaration and payment is at that time in the best interests of the Company and its shareholders after its review of our financial performance.
In connection with our comprehensive value strategy, we have paid down additional indebtedness under our credit facilities.
The declaration and payment of any dividend or any stock repurchase is subject to the discretion of our Board of Directors. Our Board of Directors and management continue to closely monitor market developments together with the evaluation of our quarterly dividend policy in the current market environment. The principal business factors that our Board of Directors expects to consider when determining the timing and amount of dividend payments or stock repurchases include our earnings, financial condition, and cash requirements at the time. Marshall Islands law generally prohibits the declaration and payment of dividends or stock repurchases other than from surplus. Marshall Islands law also prohibits the declaration and payment of dividends or stock repurchases while a company is insolvent or would be rendered insolvent by the payment of such a dividend or such a stock repurchase. Heightened economic uncertainty and the potential for renewed drybulk market weakness as a result of the war in Ukraine, the Israel-Hamas war, the Houthi conflict in the Red Sea, and related economic conditions may result in our suspension, reduction, or termination of future quarterly dividends.
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U.S. Federal Income Tax Treatment of Dividends
U.S. Holders
For purposes of this discussion, the term "U.S. Holder" means a beneficial owner of our common stock that is, for U.S. federal income tax purposes, (i) an individual U.S. citizen or resident, (ii) a corporation that is created or organized in or under the laws of the United States, any state thereof or the District of Columbia, or any other U.S. entity taxable as a corporation, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust if either (x) a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (y) the trust has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. If a partnership, or an entity treated for U.S. federal income tax purposes as a partnership, such as a limited liability company, holds common stock, the tax treatment of a partner will generally depend on the status of the partner and upon the activities of the partnership. If you are a partner in such a partnership holding our common stock, you are encouraged to consult your tax advisor. A beneficial owner of our common stock (other than a partnership) that is not a U.S. Holder is referred to below as a "Non-U.S. Holder."
Subject to the discussion of passive foreign investment company (PFIC) status on pages 36 – 37 in the 2023 10-K, any distributions made by us to a U.S. Holder with respect to our common shares generally will constitute dividends to the extent of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of those earnings and profits will be treated first as a nontaxable return of capital to the extent of the U.S. Holder's tax basis in our common shares (determined on a share-by-share basis), and thereafter as capital gain. U.S. Holders that are corporations for U.S. federal income tax purposes and own at least 10% of our shares may be able to claim a dividends-received-deduction and should consult their tax advisors.
Dividends paid on our common shares to a U.S. Holder who is an individual, trust or estate, or a "non-corporate U.S. Holder," will generally be treated as "qualified dividend income" that is taxable to such non-corporate U.S. Holder at preferential tax rates, provided that (1) our common shares are readily tradable on an established securities market in the United States (such as the NYSE, on which our common shares are traded); (2) we are not a PFIC for the taxable year during which the dividend is paid or the immediately preceding taxable year (which we do not believe we have been, are, or will be); (3) the non-corporate U.S. Holder's holding period of our common shares includes more than 60 days in the 121-day period beginning 60 days before the date on which our common shares becomes ex-dividend; and (4) the non-corporate U.S. Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property. A non-corporate U.S. Holder will be able to take qualified dividend income into account in determining its deductible investment interest (which is generally limited to its net investment income) only if it elects to do so; in such case, the dividend will be taxed at ordinary income rates. Non-corporate U.S. Holders also may be required to pay a 3.8% surtax on all or part of such holder's "net investment income," which includes, among other items, dividends on our shares, subject to certain limitations and exceptions. Investors are encouraged to consult their own tax advisors regarding the effect, if any, of this surtax on their ownership of our shares.
Amounts taxable as dividends generally will be treated as passive income from sources outside the U.S. However, if (a) we are 50% or more owned, by vote or value, by U.S. Holders and (b) at least 10% of our earnings and profits are attributable to sources within the U.S., then for foreign tax credit purposes, a portion of our dividends would be treated as derived from sources within the U.S. With respect to any dividend paid for any taxable year, the U.S. source ratio of our dividends for foreign tax credit purposes would be equal to the portion of our earnings and profits from sources within the U.S. for such taxable year divided by the total amount of our earnings and profits for such taxable year. The rules related to U.S. foreign tax credits are complex and U.S. Holders should consult their tax advisors to determine whether and to what extent a credit would be available.
Special rules may apply to any "extraordinary dividend" — generally, a dividend in an amount which is equal to or in excess of 10% of a shareholder's adjusted basis (or fair market value in certain circumstances) in a share of our common shares — paid by us. If we pay an "extraordinary dividend" on our common shares that is treated as "qualified dividend income", then any loss derived by a non-corporate U.S. Holder from the sale or exchange of such common shares will be treated as long-term capital loss to the extent of such dividend.
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Tax Consequences if We Are a Passive Foreign Investment Company
As discussed in “U.S. tax authorities could treat us as a “passive foreign investment company,” which could have adverse U.S. federal income tax consequences to U.S. shareholders” in Item 1.A Risk Factors in our 2023 10-K, a foreign corporation generally will be treated as a PFIC for U.S. federal income tax purposes if, after applying certain look through rules, either (1) at least 75% of its gross income for any taxable year consists of “passive income” or (2) at least 50% of the average value or adjusted bases of its assets (determined on a quarterly basis) produce or are held for the production of passive income, i.e., “passive assets.” As discussed above, we do not believe that our past or existing operations would cause, or would have caused, us to be deemed a PFIC with respect to any taxable year. No assurance can be given that the IRS or a court of law will accept our position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, there can be no assurance that we will not become a PFIC in any future taxable year because the PFIC test is an annual test, there are uncertainties in the application of the PFIC rules, and although we intend to manage our business so as to avoid PFIC status to the extent consistent with our other business goals, there could be changes in the nature and extent of our operations in future taxable years.
If we were to be treated as a PFIC for any taxable year in which a U.S. Holder owns shares of our common stock (and regardless of whether we remain a PFIC for subsequent taxable years), the tax consequences to such a U.S. holder upon the receipt of distributions in respect of such shares that are treated as “excess distributions” would differ from those described above. In general, an excess distribution is the amount of distributions received during a taxable year that exceed 125% of the average amount of distributions received by a U.S. Holder in respect of the common shares during the preceding three taxable years, or if shorter, during the U.S. Holder’s holding period prior to the taxable year of the distribution. The distributions that are excess distributions would be allocated ratably over the U.S. Holder’s holding period for the common shares. The amount allocated to the current taxable year and any taxable year prior to the first taxable year in which we were a PFIC would be taxed as ordinary income. The amount allocated to each of the other taxable years would be subject to tax at the highest marginal rate in effect for the U.S. Holder for that taxable year, and an interest charge for the deemed deferral benefit would be imposed on the resulting tax allocated to such other taxable years. The tax liability with respect to the amount allocated to taxable years prior to the year of the distribution cannot be offset by net operating losses. As an alternative to such tax treatment, a U.S. Holder may make a “qualified electing fund” election or “mark to market” election, to the extent available, in which event different rules would apply. The U.S. federal income tax consequences to a U.S. Holder if we were to be classified as a PFIC are complex. A U.S. Holder should consult with his or her own advisor with regard to those consequences, as well as with regard to whether he or she is eligible to and should make either of the elections described above.
Non-U.S. Holders
Non-U.S. Holders generally will not be subject to U.S. federal income tax on dividends received from us on our common shares unless the income is effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States (“effectively connected income”) (and, if an applicable income tax treaty so provides, the dividends are attributable to a permanent establishment maintained by the Non-U.S. Holder in the U.S.). Effectively connected income (or, if an income tax treaty applies, income attributable to a permanent establishment maintained in the U.S.) generally will be subject to regular U.S. federal income tax in the same manner discussed above relating to taxation of U.S. Holders. In addition, earnings and profits of a corporate Non-U.S. Holder that are attributable to such income, as determined after allowance for certain adjustments, may be subject to an additional branch profits tax at a rate of 30%, or at a lower rate as may be specified by an applicable income tax treaty. Non-U.S. Holders may be subject to tax in jurisdictions other than the United States on dividends received from us on our common shares.
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Dividends paid on our common shares to a non-corporate U.S. Holder may be subject to U.S. federal backup withholding tax if the non-corporate U.S. Holder:
| ● | fails to provide us with an accurate taxpayer identification number; |
| ● | is notified by the IRS that they have become subject to backup withholding because they previously failed to report all interest and dividends required to be shown on their federal income tax returns; or |
| ● | fails to comply with applicable certification requirements |
A holder that is not a U.S. Holder or a partnership may be subject to U.S. federal backup withholding with respect to such dividends unless the holder certifies that it is a non-U.S. person, under penalties of perjury, or otherwise establishes an exemption therefrom. Backup withholding tax is not an additional tax. Holders generally may obtain a refund of any amounts withheld under backup withholding rules that exceed their income tax liability by timely filing a refund claim with the IRS.
You are encouraged to consult your own tax advisor concerning the overall tax consequences arising in your own particular situation under U.S. federal, state, local, or foreign law from the payment of dividends on our common stock.
Cash Flows
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.
Credit Facilities
On November 29, 2023, we entered into a fourth amendment to amend, extend and upsize our existing $450 Million Credit Facility, implementing the $500 Million Revolver. The amended structure consists of a $500 million revolving credit facility, which can be utilized to support growth of our asset base as well as general corporate purposes.
Interest Rate Swap and Cap Agreements, Forward Freight Agreements and Currency Swap Agreements
During the first quarter of 2024, our last remaining interest rate cap agreement that we used to manage interest costs and the risk associated with changing interest rates expired. Such agreements cap the borrowing rate on our variable debt to provide a hedge against the risk of rising rates. At September 30, 2024, the total notional principal amount of the interest rate cap agreements is $0.
Refer to Note 8 — Derivative instruments of our Condensed Consolidated Financial Statements for further information.
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As part of our business strategy, we may enter into interest rate swap agreements to manage interest costs and the risk associated with changing interest rates. In determining the fair value of interest rate derivatives, we consider the creditworthiness of both the counterparty and ourselves, which has not changed significantly and has no effect on the valuation. Valuations prior to any adjustments for credit risk would be validated by comparison with counterparty valuations. Amounts would not and should not be identical due to the different modeling assumptions. Any material differences would be investigated.
As part of our business strategy, we may enter into arrangements commonly known as forward freight agreements, or FFAs, to hedge and manage our exposure to the charter market risks relating to the deployment of our vessels. Generally, these arrangements would bind us and each counterparty in the arrangement to buy or sell a specified tonnage freighting commitment “forward” at an agreed time and price and for a particular route. Upon settlement, if the contracted charter rate is less than the average of the rates (as reported by an identified index) for the specified route and period, the seller of the FFA is required to pay the buyer an amount equal to the difference between the contracted rate and the settlement rate multiplied by the number of days in the specific period. Conversely, if the contracted rate is greater than the settlement rate, the buyer is required to pay the seller the settlement sum. Although FFAs can be entered into for a variety of purposes, including for hedging, as an option, for trading, or for arbitrage, if we decided to enter into FFAs, our objective would be to hedge and manage market risks as part of our commercial management. It is not currently our intention to enter into FFAs to generate a stream of income independent of the revenues we derive from the operation of our fleet of vessels. If we determine to enter into FFAs, we may reduce our exposure to any declines in our results from operations due to weak market conditions or downturns, but may also limit our ability to benefit economically during periods of strong demand in the market. We have not entered into any FFAs as of September 30, 2024 and December 31, 2023.
Capital Expenditures
We make capital expenditures from time to time in connection with our vessel acquisitions. Our fleet currently consists of 42 drybulk vessels, including 16 Capesize, 15 Ultramax and eleven Supramax vessels.
As previously announced, we have implemented a fuel efficiency upgrade program for certain of our vessels in an effort to generate fuel savings and increase the future earnings potential for these vessels. The upgrades have been successfully installed during previous drydockings.
Under our comprehensive IMO 2023 compliance plan, we have installed and intend to install energy saving devices and apply high performance paint systems in order to reduce fuel consumption and emissions among other key initiatives, on select vessels. We have and plan to undertake most, if not all, of these initiatives while our vessels undergo their regularly scheduled drydocking. The future estimated expenditures are included in the table below.
In addition to acquisitions that we may undertake in future periods, we will incur additional expenditures due to special surveys and drydockings for our fleet.
We estimate our drydocking costs, including capitalized costs incurred during drydocking related to vessel assets and vessel equipment, ballast water treatment systems (“BWTS”) costs, fuel efficiency upgrades and scheduled off-hire days for our fleet through 2025 to be:
Year |
| Estimated Drydocking | Estimated BWTS |
| Estimated Fuel Efficiency Upgrade Costs | Estimated Off-hire |
| |||||
(U.S. dollars in millions) |
| |||||||||||
October 1 - December 31, 2024 | $ | 7.0 | $ | — | $ | 1.8 | 111 | |||||
2025 | $ | 40.8 | $ | 1.1 | $ | 5.8 | 580 | |||||
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The costs reflected are estimates based on 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.
Actual length of drydocking will vary based on the condition of the vessel, yard schedules and other factors. Higher repairs and maintenance expense during drydocking for vessels which are over 15 years old typically result in a higher number of off-hire days depending on the condition of the vessel.
During the nine months ended September 30, 2024 and 2023, we incurred a total of $15.8 million and $10.7 million of drydocking costs, respectively, excluding costs incurred during drydocking that were capitalized to vessel assets or vessel equipment.
We completed the drydocking of seven of our vessels during the nine months ended September 30, 2024. Additionally, the drydocking for one of our vessels began during the third quarter of 2024 and completed during the fourth quarter of 2024. We estimate that an additional three of our vessels will be drydocked during the remainder of 2024 and 18 of our vessels will be drydocked during 2025.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Inflation
Inflation has only a moderate effect on our expenses given current economic conditions. In the event that significant global inflationary pressures appear, these pressures would increase our operating, voyage, general and administrative, and financing costs.
CRITICAL ACCOUNTING POLICIES
Except as described below, there have been no changes or updates to our critical accounting policies as disclosed in the 2023 10-K.
Vessels and Depreciation
We record the value of our vessels at their cost (which includes acquisition costs directly attributable to the vessel and expenditures made to prepare the vessel for its initial voyage) less accumulated depreciation. We depreciate our drybulk vessels on a straight-line basis over their estimated useful lives, estimated to be 25 years from the date of initial delivery from the shipyard. Depreciation is based on cost less the estimated residual scrap value of $400/lightweight ton (lwt) based on the 15-year average scrap value of steel. An increase in the residual value of the vessels will decrease the annual depreciation charge over the remaining useful life of the vessels. Similarly, an increase in the useful life of a drybulk vessel would also decrease the annual depreciation charge. Comparatively, a decrease in the useful life of a drybulk vessel or in its residual value would have the effect of increasing the annual depreciation charge. However, when regulations place limitations over the ability of a vessel to trade on a worldwide basis, we will adjust the vessel’s useful life to end at the date such regulations preclude such vessel’s further commercial use.
The carrying value of each of our vessels does not represent the fair market value of such vessel or the amount we could obtain if we were to sell any of our vessels, which could be more or less. Under U.S. GAAP, we would not record a loss if the fair market value of a vessel (excluding its charter) is below our carrying value unless and until we determine to sell that vessel or the vessel is impaired as discussed in the 2023 10-K.
During the nine months ended September 30, 2024, we recorded an impairment loss for the Genco Hadrian, one of our Capesize vessels, and the vessel has been classified as held for sale as of September 30, 2024. The sale of the Genco Hadrian was completed on October 4, 2024. There were no impairment losses recorded during the three months
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ended September 30, 2024. During the year ended December 31, 2023, we recorded an impairment loss for three of our Capesize vessels (the Genco Commodus, the Genco Claudius and the Genco Maximus). The Genco Commodus, the Genco Claudius and the Genco Maximus were classified as held for sale as of December 31, 2023 and the sale of these vessels were completed during the nine months ended September 30, 2024. Refer to Note 2 — Summary of Significant Accounting Policies in our Condensed Consolidated Financial Statements for further information.
Under our credit facility, we regularly submit to the lenders valuations of our vessels on an individual charter free basis in order to evidence our compliance with the collateral maintenance covenants under our credit facility. Such a valuation is not necessarily the same as the amount any vessel may bring upon sale, which may be more or less, and should not be relied upon as such. We were in compliance with the collateral maintenance covenant under our $500 Million Revolver as of September 30, 2024. We obtained valuations for all of the vessels in our fleet pursuant to the terms of the $500 Million Revolver.
We compare the carrying value of our vessels with the vessel valuations obtained for covenant compliance purposes to determine whether an indicator of impairment is present (excluding any vessels held for sale as noted above). As of September 30, 2024 and December 31, 2023, four and eight of our Capesize vessels, respectively, had carrying values that exceeded their vessel valuations, which is an indicator of impairment. However, based on an analysis of the anticipated undiscounted future net cash flows to be derived from each of these vessels as described in the 2023 10-K, there were no impairment losses recorded for these vessels incurred during the three and nine months ended September 30, 2024 or the three months ended December 31, 2023 (excluding the one and three vessels held for sale as of September 30, 2024 and December 31, 2023, respectively as noted above).
The amount by which the carrying value at September 30, 2024 of four of our Capesize vessels exceeded the valuation of such vessels for covenant compliance purposes ranged, on an individual vessel basis, from $1.0 million to $2.0 million per vessel, and $5.8 million on an aggregate basis for these four vessels. Comparatively, the amount by which the carrying value at December 31, 2023 of eight of our Capesize vessels exceeded the valuation of such vessels for covenant compliance purposes ranged, on an individual vessel basis, from $4.1 million to $8.3 million per vessel, and $47.9 million on an aggregate basis for these eight vessels. The average amount by which the carrying value of these vessels exceeded the valuation of such vessels for covenant compliance purposes was $1.4 million at September 30, 2024 and $6.0 million as of December 31, 2023. However, neither such valuation nor the carrying value in the table below reflects the value of long-term time charters, if any, related to some of our vessels.
In the chart below, we list each of our vessels, the year it was built, the year we acquired it, and its carrying value as of September 30, 2024 and December 31, 2023. Vessels have been grouped according to their collateralized status as of September 30, 2024 and does not include any vessels held for sale.
Carrying Value (U.S. |
| ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
dollars in |
| ||||||||||
thousands) as of |
| ||||||||||
|
| Year |
| September 30, |
| December 31, |
| ||||
Vessels |
| Year Built |
| Acquired |
| 2024 |
| 2023 |
| ||
$500 Million Revolver | |||||||||||
Baltic Bear |
| 2010 |
| 2010 | $ | 31,239 | $ | 32,724 | |||
Baltic Wolf |
| 2010 |
| 2010 |
| 31,621 |
| 33,078 | |||
Genco Lion |
| 2012 |
| 2013 |
| 27,563 |
| 28,508 | |||
Genco Tiger | 2011 | 2013 | 26,042 | 26,954 | |||||||
Baltic Scorpion |
| 2015 |
| 2015 |
| 20,683 |
| 21,440 | |||
Baltic Mantis |
| 2015 |
| 2015 |
| 20,918 |
| 21,677 | |||
Genco Hunter |
| 2007 |
| 2007 |
| 7,225 |
| 7,564 | |||
Genco Aquitaine |
| 2009 |
| 2010 |
| 7,981 |
| 7,948 | |||
Genco Ardennes |
| 2009 |
| 2010 |
| 8,029 |
| 7,955 | |||
Genco Auvergne |
| 2009 |
| 2010 |
| 7,822 |
| 7,971 | |||
Genco Bourgogne |
| 2010 |
| 2010 |
| 8,305 |
| 8,580 | |||
Genco Brittany |
| 2010 |
| 2010 |
| 8,408 |
| 8,590 | |||
Genco Languedoc |
| 2010 |
| 2010 |
| 8,417 |
| 8,588 | |||
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Carrying Value (U.S. |
| ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
dollars in |
| ||||||||||
thousands) as of |
| ||||||||||
|
| Year |
| September 30, |
| December 31, |
| ||||
Vessels |
| Year Built |
| Acquired |
| 2024 |
| 2023 |
| ||
$500 Million Revolver | |||||||||||
Genco Picardy |
| 2005 |
| 2010 |
| 6,570 |
| 6,972 | |||
Genco Pyrenees |
| 2010 |
| 2010 |
| 8,374 |
| 8,641 | |||
Genco Rhone |
| 2011 |
| 2011 |
| 9,480 |
| 9,792 | |||
Genco Constantine |
| 2008 |
| 2008 |
| 27,686 |
| 29,377 | |||
Genco Augustus |
| 2007 |
| 2007 |
| 25,368 |
| 27,052 | |||
Genco London |
| 2007 |
| 2007 |
| 25,807 |
| 27,295 | |||
Genco Titus |
| 2007 |
| 2007 |
| 26,362 |
| 27,856 | |||
Genco Tiberius |
| 2007 |
| 2007 |
| 25,162 |
| 27,127 | |||
Genco Hadrian |
| 2008 |
| 2008 |
| — |
| 29,671 | |||
Genco Predator |
| 2005 |
| 2007 |
| 6,490 |
| 6,888 | |||
Baltic Hornet |
| 2014 |
| 2014 |
| 19,423 |
| 20,084 | |||
Baltic Wasp |
| 2015 |
| 2015 |
| 19,595 |
| 20,326 | |||
Genco Endeavour | 2015 | 2018 |
| 38,786 |
| 39,022 | |||||
Genco Resolute | 2015 | 2018 |
| 37,898 |
| 39,177 | |||||
Genco Columbia | 2016 | 2018 |
| 21,723 |
| 22,455 | |||||
Genco Weatherly | 2014 | 2018 |
| 17,655 |
| 18,118 | |||||
Genco Liberty | 2016 | 2018 |
| 40,787 |
| 42,162 | |||||
Genco Defender | 2016 | 2018 |
| 40,783 |
| 42,165 | |||||
Genco Magic | 2014 | 2020 | 13,408 | 13,373 | |||||||
Genco Vigilant | 2015 | 2021 | 13,880 | 14,323 | |||||||
Genco Freedom | 2015 | 2021 | 13,952 | 14,407 | |||||||
Genco Enterprise | 2016 | 2021 | 18,390 | 18,996 | |||||||
Genco Madeleine | 2014 | 2021 | 20,425 | 21,209 | |||||||
Genco Constellation | 2017 | 2021 | 23,074 | 23,872 | |||||||
Genco Mayflower | 2017 | 2021 | 23,437 | 24,251 | |||||||
Genco Laddey | 2022 |
| 2022 |
| 27,561 |
| 28,299 | ||||
Genco Mary | 2022 |
| 2022 |
| 27,596 |
| 28,336 | ||||
Genco Ranger | 2016 | 2023 | 41,984 | 43,108 | |||||||
TOTAL | $ | 835,909 | $ | 895,931 | |||||||
Unencumbered / Sold | |||||||||||
Genco Reliance |
| 2016 | 2023 | $ | 41,928 | $ | 42,972 | ||||
Genco Warrior | 2005 | 2007 | — | 6,211 | |||||||
$ | 41,928 | $ | 49,183 | ||||||||
Consolidated Total | $ | 877,837 | $ | 945,114 | |||||||
If we were to sell a vessel or hold a vessel for sale, and the carrying value of the vessel were to exceed its fair market value, net of costs to sell, we would record a loss in the amount of the difference. Refer to Note 2 — Summary of Significant Accounting Policies and Note 4 — Vessel Acquisitions and Dispositions in our Condensed Consolidated Financial Statements for information regarding the sale of vessel assets.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest rate risk
We are exposed to the impact of interest rate changes. Our objective is to manage the impact of interest rate changes on our earnings and cash flow in relation to our borrowings. During the first quarter of 2024, our last remaining interest rate cap agreement that we used to manage interest costs and the risk associated with changing interest rates expired. Refer to Note 8 — Derivative Instruments of our Condensed Consolidated Financial Statements.
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Interest rate cap agreements cap the borrowing rate on our variable debt to provide a hedge against the risk of rising rates.
We are subject to market risks relating to changes in SOFR rates because we have significant amounts of floating rate debt outstanding. On May 30, 2023, we entered into an amendment to the $450 Million Credit Facility to transition from the use of LIBOR to calculate interest to SOFR effective June 30, 2023. During the three and nine months ended September 30, 2024 and 2023, we were subject to the following interest rates on the outstanding debt under our credit facilities (refer to Note 7 — Debt in our Condensed Consolidated Financial Statements for effective dates and termination dates for our credit facilities outlined below):
| ● | $450 Million Credit Facility |
| ● | One-month or three-month LIBOR plus 2.15% until June 30, 2023. Effective June 30, 2023, we transitioned from the use of LIBOR to SOFR Rates. Additionally, on August 3, 2023, the applicable margin was reduced from 2.15% to 2.10% pursuant to the sustainability link term of the facility. These rates were applicable until November 29, 2023, when we entered into the $500 Million Revolver. |
| ● | $500 Million Revolver |
| ● | One-month SOFR plus 1.85% until August 1, 2024 when the applicable margin was increased from 1.85% to 1.90% pursuant to the sustainability link term of the facility. |
A 1% increase in SOFR would result in an increase of $1.1 million in interest expense for the nine months ended September 30, 2024.
From time to time, the Company may consider derivative financial instruments such as swaps and caps or other means to protect itself against interest rate fluctuations.
Derivative financial instruments
As part of our business strategy, we may enter into interest rate swaps or interest rate cap agreements to manage interest costs and the risk associated with changing interest rates. During the first quarter of 2024, our last remaining interest rate cap agreement that we used to manage interest costs and the risk associated with changing interest rates expired. Refer to Note 8 — Derivative Instruments of our Condensed Consolidated Financial Statements.
Our prior interest rate cap agreements were initially designated and qualified as cash flow hedges. The premium paid was recognized in income on a rational basis, and all changes in the value of the caps were deferred in AOCI and were subsequently reclassified into Interest expense in the period when the hedged interest affects earnings.
Refer to “Interest rate risk” section above for further information regarding interest rate swap agreements.
We have entered into bunker swap and forward fuel purchase agreements with the objective of reducing the risk of the effect of changing fuel prices. Our bunker swap and forward fuel purchase agreements do not qualify for hedge accounting treatment; therefore, any unrealized or realized gains or losses are recognized as other (expense) income. Refer to the “Bunker swap and forward fuel purchase agreements” section of Note 2 — Summary of Significant Accounting Policies for further information.
Currency and exchange rates risk
The majority of transactions in the international shipping industry are denominated in U.S. Dollars. Virtually all of our revenues and most of our operating costs are in U.S. Dollars. We incur certain operating expenses in currencies other than the U.S. dollar, and the foreign exchange risk associated with these operating expenses is immaterial.
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ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including our Chief Executive Officer and President and our Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and President and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been
PART II – OTHER INFORMATION
ITEM 6. EXHIBITS
The Exhibit Index attached to this report is incorporated into this Item 6 by reference.
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EXHIBIT INDEX
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101 | The following materials from Genco Shipping & Trading Limited’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 (Unaudited), (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023 (Unaudited), (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2024 and 2023 (Unaudited), (iv) Condensed Consolidated Statements of Equity for the three and nine months ended September 30, 2024 and 2023 (Unaudited), (v) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 (Unaudited), and (vi) Notes to Condensed Consolidated Financial Statements (Unaudited).(*) | ||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | ||
(*) | Filed with this report. | |
(1) | Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on July 15, 2014. | |
(2) | Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on July 17, 2015. | |
(3) | Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on April 15, 2016. | |
(4) | Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on July 7, 2016. | |
(5) | Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on January 4, 2017. | |
(6) | Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on July 15, 2020. | |
(7) | Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on May 31, 2021. | |
(8) | Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on November 15, 2016. | |
(9) | Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on June 5, 2018. | |
(10) | Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on January 11, 2021. | |
(11) | Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on March 31, 2023. | |
(12) | Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 10-Q, filed with the Securities and Exchange Commission on May 3, 2023. | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GENCO SHIPPING & TRADING LIMITED | ||||
DATE: November 6, 2024 | By: | /s/ John C. Wobensmith | ||
John C. Wobensmith | ||||
Chief Executive Officer and President | ||||
(Principal Executive Officer) | ||||
DATE: November 6, 2024 | By: | /s/ Peter Allen | ||
Peter Allen | ||||
Chief Financial Officer | ||||
(Principal Financial Officer) | ||||
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