Genco Shipping & Trading Ltd

Good morning, ladies and gentlemen, and welcome to the Genco Shipping and Trading Limited first quarter 2023 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 at 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 at any time during the next two weeks by dialing 1-877-674-7070 and entering the passcode 959617. 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 and 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 31st, 2022, 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 Woebensmith, Chief Executive Officer of Genco Shipping and Trading Limited.

Good morning, everyone. Welcome to Genco's first quarter 2023 conference call. I will begin today's call by reviewing our Q1 2023 and year-to-date highlights, providing an update on our 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 websites. Following a year during which we generated sizable earnings and returned significant capital to shareholders, we continued to execute our value strategy for the benefit of shareholders. During the first quarter of 2023, Genco continued to achieve solid financial results in what has historically been a seasonal low period for dry bulk freight rates. We achieved the time charter equivalent rate for the quarter of $13,947 per day, which was nearly $3,000 a day above our scrubber adjusted benchmarks as we drew upon our best in class commercial platform. This led to net income for the quarter of $2.6 million, the company's 11th straight quarter of profitability. While dry bulk cycles have historically been approximately one to two years in duration, I note that Genco has now achieved adjusted net income for nearly three consecutive years, highlighting what has been a longer and sustained period of profitability due to favorable market fundamentals. Given the visibility we have currently with the order book near historical lows and the time in which new capacity can come online, we expect this cycle will continue to be extended. Looking ahead, our earnings power remains strong as our Q2 time chart or equivalent guidance of $16,679 per day. represents a 20% increase versus the Q1 level and well above our estimated cash flow breakeven rate for the quarter of approximately 9,400 hours per vessel per day. Importantly, we have a light dry docking schedule for the balance of this year, enabling the company to increase fleet-wide utilization during what we view as a firming market period. For the first quarter of 2023, we declared a dividend of 15 cents per share While our stated formula with a quarterly reserve of $10.75 million did not produce a dividend for the quarter, the Board of Directors on management's recommendation to utilize a portion of our quarterly reserve to declare the 15% per share dividend. A central component of JNCO's value strategy is maintaining a quarterly reserve as well as the optionality for the use of the reserve when appropriate as Genco seeks to pay sizable dividends in diverse market environments. During the first quarter, the dry bulk shipping markets experienced seasonal volatility in freight rates. However, Genco continued to voluntarily pay down debt. The dry bulk market realized a significant rebound since March, and our positive outlook for the balance of the year underpinned by minimal supply growth, together with Genco's industry low cash flow breakeven rate and low financial leverage gave the company confidence to reduce the quarterly reserve for the first quarter to declare a meaningful quarterly dividend. This represents our sixth dividend payment under our value strategy with cumulative dividends declared to date of $3.39 per share over those six quarters. Consistent with our previously announced intention to maintain flexibility under our dividend policy, we reduced our reserve from $10.75 million to $2.19 million for the first quarter of 2023. This is a lever we've highlighted since inception of our value strategy back in April of 2021 to utilize the reserve to smooth out periods of downward volatility. Importantly, we did not dip into amounts reserved in previous quarters, raise debt, or sell assets in order to pay the quarterly dividend. We relied solely on reducing the reserve for the first quarter. Periods like this, Q1 2023, highlight Genco's key market differentiators, which are industry low cash flow breakeven rate, strong balance sheet, and low financial leverage position. Despite a temporarily softer rate environment in the first half of Q1, we were still able to voluntarily repay debt and declare a sizable dividend, two key pillars of our capital allocation strategy. Since Q3 2019, we have now declared a total of $4.44 per share in dividends, or approximately 31% of our current share price. We believe our track record of meaningful and sustainable dividends, almost over four years through varying cycles, speaks to the strength of the company's balance sheet and our prudent approach to capital allocation. In addition, in addition to seeking to pay meaningful dividends, we continue to focus on proactively paying down debt, continuing to pay down debt during a time in which we have no mandatory debt repayments is consistent with our medium term goal to reduce our net debt position to zero, having created a compelling risk reward model. Regarding the current dry bulk market, freight rates have rebounded meaningfully since the February lows and currently stand at year-to-date highs for Cape sizes at over $19,000 per day on the non-scrubber fitted Baltic Cape size index. We remain positive for the balance of the year given the reopening in China and the impact this has on the dry bulk market, which continues to be geared towards not only the world's second largest economy, but also developing Asia. The new building order book remains near historical lows, which will limit net fleet growth over the coming years, providing a solid foundation for an improving market. Given constraints in fleet capacity, demand growth has a low threshold to exceed in order to outpace supply growth to further tighten market fundamentals and move freight rates up. Before I close, I'd like to point out that this is the last earnings call for our CFO, Apostolos Sifoulias, as he will be leaving the company in mid-June and will then serve as a consultant through year-end. On behalf of the management team and the board of directors, I once again thank Apostolos for the outstanding job he did over the course of nearly two decades at Genco Shipping. We wish him and his family all the best going forward. At this point, I will now turn the call over to Apostolos, our Chief Financial Officer.