Genco Shipping & Trading Ltd

Good morning, ladies and gentlemen, and welcome to the Genco Shipping and Trading Limited Fourth 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 anytime during the next two weeks by dialing 888-203-1112 or 719-457-0820 and entering the passcode 9610869. 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've been 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 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 this morning, the materials relating to the 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 Wilkinsmith, Chief Executive Officer of Genco Shipping and Trading Limited.

Good morning, everyone. Welcome to Genco's fourth quarter 2021 conference call. I will begin today's call by reviewing our 2021 and year-to-date highlights, providing an update on our implemented 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. Looking back at 2021, it was truly a transformational year for Genco across the board, capped off by a Q4 that was the best since 2008. Nearly a year ago, we proactively pivoted our capital allocation strategy towards a low leverage, compelling dividend model. We spent the balance of 2021 laser focused on the implementation of the strategy following the blueprint we laid out back in April 2021. After completing initiatives centered around financial deleveraging and growth, we are now in a position to distribute meaningful quarterly dividends commencing in the fourth quarter of 2021 to be paid this March. As we stand here today, we are pleased to have developed a unique dry bulk vehicle that offers an attractive risk-reward profile for the benefit of shareholders. We believe our platform represents a differentiated dry bulk offering given our industry low cash flow break-even rate and low financial leverage combined with high operating leverage through the scale of our balanced fleet, a best-in-class commercial team, and a strong liquidity position. The company that can check all of these boxes has not been previously in place in the dry bulk public markets, which is why we are so excited to roll out our fourth quarter results that have capped off a year of not only significant cash flows for the company, but also significant financial discipline. Over the course of last year, we paid down $203 million of debt, representing 45% of our debt balance at the start of 2021. Importantly, we are now in a position in which the current scrap value of our fleet is nearly two times our debt outstanding. These paydowns, together with a global refinancing completed mid-last year, have ensured that Genco has no mandatory debt repayments until 2026. In addition, this has resulted in lower overall cash flow breakeven rates, which we believe will enable Genco to pay dividends across diverse rate environments. Continuing to pay down debt during a time with no mandatory debt repayments is consistent with our medium term goal to reduce our net debt position to zero. In the near term, we are focused on rewarding shareholders through compelling dividends while continuing to de-lever 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. Furthermore, in early 2021, we opportunistically grew our core minor bulk fleet, capitalizing on a disconnect between freight rates and ship values to augment our earnings power. Specifically, we purchased six high-quality, fuel-efficient Ultramax vessels for an aggregate of $150 million. In January of 2022, we took delivery of the final two of those vessels, the Genco Mary and the Genco Laddie, both built in 2022 at Dax Shipyard. Throughout the course of the year, on a parallel path to our deleveraging and taking advantage of growth opportunities, we also steadily ramped up our quarterly dividend from two cents per share in Q4 2020, up to 15 cents per share in Q3 2021. For the fourth quarter 2021, we declared a quarterly dividend of 67 cents per share, representing a nearly 350% increase versus the previous quarter, and marking our first dividend under our value strategy methodology. This substantial dividend represents an annualized yield of 14% based on Genco's closing share price as of February 23, 2022. Interestingly, if we pay down our targeted quarterly run rate of $8.75 million of debt in Q4 2021 instead of the $59 million of debt we actually paid, Our quarterly dividend would have been $1.85 per share, nearly three times higher than the actual payout. This highlights the dividend capacity and significant operating leverage combined with our industry low breakeven rate. Management maintained its disciplined approach towards capital allocation, which we believe will well position the company in both now and going forward. We have now declared dividends for 10 consecutive quarters, for cumulative dividends totaling $1.72 and a half cents per share, or approximately 9% of yesterday's closing share price. In addition to the measures taken to execute on our value strategy, from an earnings perspective, the fourth quarter was our strongest in over a decade, led by net income of $90.99 million and a time charter equivalent rate of $35,200 per day. Looking ahead to the first quarter, our estimates point to continued strong results with a time charter equivalent of approximately $24,215 per day based on fixtures to date across the fleet for 87% of our owned available days. This firm number highlights our proactive approach to securing revenue ahead of a seasonally softer market period, as well as incremental earnings generated through our opportunistic container fixtures. In addition, the container fixtures demonstrates Genco's innovative approach towards developing niche trades, and they have proven to be highly beneficial for the company by generating premium rates above the typical dry bulk specific backhaul route while further insulating Genco from the softer January market and providing premium paying positions upon re-delivery. In line with our portfolio approach to fixture activity, which consists mostly of spot trading, opportunistic period charters, and forward cargo coverage last year, we fixed seven vessels on period time charters for one to two years at rates ranging from $23,375 to $32,000 per day. To illustrate this, our earnings release contains our estimated TCE to date for the first quarter of 2022, broken out by vessel class and spot and fixed rate time charter equivalent rates. Our scrubber fitted Cape size vessels are also benefiting from the widening fuel spreads, which currently stand at over $200 per ton. This provides us with a competitive advantage in a high fuel price environment in two ways. First, we can purchase less expensive fuel while completing a voyage. And second, it reduces the investment of ballasting vessels to the Atlantic basin to capture developing trends in cargo flows. From a market perspective, we continue to have a positive outlook for dry bulk rates due to the low order book. We are starting to see timing and weather-related disruptions that impacted the market early in the year subside. Overall, we believe we are in a cyclical dry bulk market upturn and have solid visibility, as I mentioned, particularly on the supply side, given the historically low new building order book that we believe will support the market over the coming years. At this point, I will now turn the call over to Apostolos Sofolios, our Chief Financial Officer.