Genco Shipping & Trading Ltd

Good morning, ladies and gentlemen, and welcome to the Genco Shipping and Trading Limited Second Quarter 2021 Earnings Conference call and presentation. Before we begin, please know that there will be a slide presentation accompanying today's conference call. That presentation can be obtained from Genco's website at www.gencoshipping.com. To inform everyone, today's conference is being recorded and is now being webcast at the company's website at www.gencoshipping.com. We will conduct a question and answer session after the opening marks. Instructions will follow at that time. A replay of the conference will be accessible at any time during the next two weeks by dialing 888203. or 7194570820 and entering the passcode 8885406. At this time, I will turn the conference over to the company. Please go ahead.

Good morning. Before we begin our presentation, I note that in this conference call, we will be making certain forward-looking statements 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 in terms of similar meaning in connection with a discussion of potential future events, circumstances, or future operating or financial performance. These forward-looking statements are based on management's current expectations and observations. For a discussion of factors that could cause results to differ, please see the company's press release that was issued yesterday, the materials relating to this call posted on the company's website, and the company's filings with the Securities and Exchange Commission, including, without limitation, the company's annual report on Form 10-K for the year ended December 31, 2020, and the company's reports on Form 10-Q and Form 8-K subsequently filed with the SEC. At this time, I would like to introduce John Wildensmith, Chief Executive Officer of Genco Shipping and Trading Limited.

Good morning, everyone. Welcome to Genco's second quarter 2021 conference call. We'll begin today's call by reviewing our year-to-date highlights, providing an update on the company's new comprehensive value strategy, financial results for the quarter, and the industry's current fundamentals, and then open the call up for questions. For additional information, please also refer to our earnings presentation posted on our website. The second quarter of 2021 was a transformative period for Genco. In April, we announced our new comprehensive value strategy centered around growth, fee leveraging, and dividends. Since then, we have made notable progress working towards paying our first dividend under this strategy. Highlighting our strong progress in achieving growth objectives over the last four months, we have agreed to purchase six modern fuel-efficient Ultramax vessels to build out this core portion of our fleet to 15 ships. We believe that we are at a unique point in the dry-bulk cycle with freight rates at their highest levels in over a decade, while values, which have increased year-to-date, have lagged the upward trajectory of earnings. This creates compelling return on capital opportunities. To capitalize this and to de-risk our latest purchase of three Ultramaxes, we secured three two-year charters at rates ranging from $23,375 to $25,500 per day, locking in an unlevered cash-on-cash return of approximately 50% over this period on those three newly acquired ships. In terms of our proactive de-leveraging progress, During the first half of 2021, we repaid $82.2 million of debt, or 18% of the beginning of the year debt balance. This included the retirement of our scrubber facility, as well as the prepayment of our revolver. Financial deleveraging is a key part of our value strategy. Therefore, given the strong market, we believe it is prudent to accelerate debt repayments to further fortify our balance sheet as we position the company to distribute sizable dividends in diverse rate environments. By the end of this year, we are targeting a net loan-to-value of 20%, which we are currently on track towards achieving. Ultimately, our medium-term goal is to reduce our net debt position to zero through additional debt repayments over the coming years. Importantly, we have now achieved a foundational component of our corporate strategy and a key milestone towards full implementation. Specifically, we are pleased to have entered into a new credit facility to complete the global rebate We expect the new facility to significantly enhance our capital structure, improve key terms of our debt, reduce our cash flow breakeven rate, and provide further optionality for the company. Later in the call, Apostolos will elaborate on some of the details and features of this new credit facility. Regarding returning capital to shareholders and our current quarterly dividend for the second quarter, we increased our payout to 10 cents per share, our second consecutive quarterly increase. We have now declared a total of 90.5 cents per share in dividends over the last eight quarters. We are pleased with the progress we are making and continue to target Q4 2021 results for our anticipated first dividend under our new corporate strategy, which would be payable in Q1 2022. In addition to the measures taken to execute our value strategy from an earnings perspective, the second quarter was our strongest in over a decade. Our net income of $32 million and our time charter equivalent rate of $21,137 per day both marked our highest since 2010. Additionally, our first half adjusted EBITDA was $70.9 million and is nearly identical to our full year 2020 adjusted EBITDA of $71.8 million. Looking ahead to the third quarter, our estimates point to continued strong results with a time chart equivalent over $27,000 per day based on fixtures to date across the fleet. moreover we will have the majority of our cape size vessels open for fixing in the coming weeks to take advantage of the meaningful increase in rates we have recently seen highlighting our significant operating leverage in a robust and improving dry bulk market in addition to the current firm market conditions we view the market outlook favorably. The order book as a percentage of the fleet is at a historical low, limiting net fleet growth, while unprecedented stimulus as well as the Brazilian iron ore export recovery have combined to create improving supply and demand dynamics. Our positive market outlook, together with our robust balance sheet, has positioned Genco well to implement our new comprehensive value strategy as we focus on unlocking shareholder value. not to be overshadowed by measures we have taken on the value strategy there were several other key corporate updates that occurred in the recent months genco was ranked number one out of 52 public shipping companies in the weber research 2021 esg scorecard To that end, on the environmental side, we joined a working group alongside 33 other participants across the maritime value chain to study the feasibility of ammonia as an alternative fuel as part of the long-term goal to decarbonize shipping. Additionally, we plan to enter into a new joint venture, GS Ship Management, with the Synergy Group for the technical management of our fleet. We expect the creation of this joint venture will provide a unique and transparent service to the management of our vessels and result in increased visibility and control over vessel operations, increased fleet-wide fuel efficiency to lower our carbon footprint, and potentially unlock further vessel operating expense savings. At this point, I will now turn the call over to Apulso Sifolios, our Chief Financial Officer.