Genco Shipping & Trading Ltd

Good morning, ladies and gentlemen, and welcome to the Genco Shipping and Trading Limited Third Quarter 2021 Earnings Conference Call and Presentation. Before we begin, please note 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, www.gencoshipping.com. We will conduct a question and answer session after the opening remarks. Instructions will follow at that time. A replay of the conference will be accessible any time during the next two weeks by dialing 888-203-1112 or 719-457-0820 and entering the passcode of 866-7167. 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. In other words, in terms of similar meaning in connection with the 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 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'd like to introduce John Robinsmith, Chief Executive Officer of Genco Shipping and Trading Limited.

Good morning, everyone. Welcome to Genco's third quarter 2021 conference call. I will begin today's call by reviewing our year-to-date highlights, providing an update on the company's comprehensive value strategy, financial results for the quarter, and the industry's current fundamentals before opening the call up for questions. For additional information, please also refer to our earnings presentation posted on our website. Since announcing our comprehensive value strategy in April, we have worked diligently to implement this strategy to drive shareholder value. Our approach centers around growth, financial deleveraging, and positioning GENCO to distribute compelling dividends. During the third quarter, we continue to execute on key initiatives covering all components of our strategy and are on schedule to declare our first dividend under our new policy. In terms of opportunistic growth, during the quarter, we grew our core minor bulk fleet to 27 vessels on a pro forma basis, which effectively complements our major bulk fleet of 17 cape-sized vessels. By taking delivery of four Ultramaxes in August and September, we now have more than doubled the number of Ultramaxes we owned at this time last year, strengthening our position to benefit from the favorable fundamentals in this sector. Additionally, we expect delivery of two additional Ultramaxes in January of next year to further augment our earnings power. We also made significant progress proactively deleveraging, repaying $144.2 million of debt or 32% of the beginning of the year debt balance through September. Given the strong market in the year to date and the important role deleveraging plays in our value strategy, we accelerated our debt repayments to further fortify our balance sheet as we position the company to distribute sizable dividends in diverse rate environments. Importantly, both our debt paydowns as well as vessel acquisitions were funded without the need to raise equity capital in the public markets, highlighting not only the significant operating cash flows of the company in the year to date, but also the strong financial foundation that we have built over the last several years. Additionally, we closed on a $450 million credit facility, which includes a $300 million revolver. This facility has improved key terms and helped to lower our cash flow breakeven rates, which a post list will discuss in further detail later on the call. Regarding returning capital to shareholders and our current quarterly dividend for the third quarter, we increased our payout to $0.15 per share, our third consecutive quarterly increase. We have now declared a total of $1.05. and 5.5 cents per share in dividends over the last nine quarters. We expect to continue on this upward dividend trajectory with the first dividend under our value strategy to be paid based on Q4 2021 results during Q1 2022. As outlined in our presentation, our quarterly dividend calculation to be applied next quarter is based on operating cash flow, less debt repayments, dry-docking capex, and a reserve. We plan to repay $59 million of debt in Q4 2021, reducing our debt balance to $246 million by year-end, representing what would be a 45% decrease from the start of 2021. We estimate that our December 31st, 2021 debt balance will be approximately 60% of the current scrap value of our fleet, highlighting our strong financial standing. We believe this low financial leverage position, together with a compelling and consistent dividend, will provide an attractive risk-reward balance that has been absent in dry bulk shipping historically. Furthermore, our reserve for the fourth quarter is expected to be $10.75 million, which is based on $8.75 million of voluntary debt repayments planned to be made in the first quarter of 2022, as well as estimated cash interest expense on our debt. Continuing to pay down debt despite having no mandatory debt repayments required is consistent with our medium-term goal to reduce our net debt position to zero and our longer-term goal of zero debt. We are focused on rewarding shareholders in the near term through compelling dividends while continuing to deliver, to be in a position to reward shareholders over the longer term and support sustainable dividends. We view this as prudent to further improve our financial standing over time to put Genco in an even stronger position to take advantage of attractive growth opportunities as markets develop. The reserve will be assessed on a quarterly basis by management and the board of directors and will be communicated in advance. Our quarterly reserve as well as optionality for the uses of the reserve are important factors for the corporate strategy as it enables GENCO to be flexible depending on market conditions and provide a more tailored approach to GENCO's overall business model. In addition to the measures taken to execute our value strategy from an earnings perspective, the third quarter was our strongest in over a decade, led by net income of $57 million and our time charter equivalent rate of $29,287 per day. Additionally, our third quarter adjusted EBITDA was $79.8 million, which to put in perspective is higher than adjusted EBITDA for all of 2020. Looking ahead to the fourth quarter, our estimates point to continued strong results, with a TCE of approximately $37,000 per day based on fixtures to date across the fleet for 71% of our owned available days. Consistent with our portfolio approach to fixture activity, which consists of mostly spot trading and opportunistic period time charters and forward cargo coverage, We have fixed seven vessels on period time charters for one to two years at rates ranging from $23,375 to $32,000 per day. To best illustrate this, in our earnings release, we have broken out our fourth quarter TCE estimates, highlighting our spot TCE in the quarter to date, which on our Cape size and ultra supermax fleet is approximately $51,000 and $37,600, respectively. Importantly, in line with our portfolio approach, we also have approximately 20% of our Cape Size days for the first quarter of 2022 fixed at $28,500 per day. While we expect traditional freight rate seasonality to materialize in the coming months, we believe we are in a cyclical dry bulk market upturn. They remain solid visibility, particularly on the supply side, given the historically low new building order book that will be supportive for the market over the coming years. At this point, I will now turn the call over to Opozo Sofolius, our Chief Financial Officer.