Genco Shipping & Trading (GNK) - 2021 Q1 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. Financial Statements This section presents Genco Shipping & Trading Limited's unaudited condensed consolidated financial statements for Q1 2021 and 2020, along with detailed explanatory notes Condensed Consolidated Balance Sheets%20Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2021, total assets and liabilities decreased, while total equity slightly increased, primarily due to changes in cash, vessels, and long-term debt Condensed Consolidated Balance Sheet Highlights (in thousands USD) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | $1,180,343 | $1,232,809 | | Cash and cash equivalents | $123,191 | $143,872 | | Vessels, net | $924,468 | $919,114 | | Total Liabilities | $433,526 | $487,815 | | Current portion of long-term debt | $65,277 | $80,642 | | Long-term debt, net | $327,064 | $358,933 | | Total Equity | $746,817 | $744,994 | Condensed Consolidated Statements of Operations%20Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a net income of $2.0 million in Q1 2021, a significant turnaround from a $120.4 million net loss in Q1 2020, primarily due to the absence of a vessel impairment charge Q1 Statement of Operations Summary (in thousands USD, except per share data) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Voyage Revenues | $87,591 | $98,336 | | Total Operating Expenses | $81,282 | $211,751 | | Impairment of vessel assets | $0 | $112,814 | | Operating Income (Loss) | $6,309 | ($113,415) | | Net Income (Loss) | $1,985 | ($120,350) | | Net Earnings (Loss) per Share-diluted | $0.05 | ($2.87) | Condensed Consolidated Statements of Comprehensive Income (Loss)%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The company reported a comprehensive income of $2.1 million in Q1 2021, a significant improvement from a $120.4 million comprehensive loss in Q1 2020 Comprehensive Income (Loss) (in thousands USD) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net Income (Loss) | $1,985 | ($120,350) | | Other comprehensive income | $161 | $0 | | Comprehensive Income (Loss) | $2,146 | ($120,350) | Condensed Consolidated Statements of Equity%20Condensed%20Consolidated%20Statements%20of%20Equity) Total equity increased to $746.8 million in Q1 2021, driven by net income and other comprehensive income, partially offset by cash dividends - Key changes in equity for Q1 2021 included a net income of $1.985 million and the declaration of cash dividends amounting to $845 thousand ($0.02 per share)[17] Condensed Consolidated Statements of Cash Flows%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2021, net cash provided by operating activities significantly improved to $13.5 million, while investing activities provided $20.0 million and financing activities used $49.1 million, resulting in a net cash decrease Q1 Cash Flow Summary (in thousands USD) | Cash Flow Activity | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $13,494 | ($4,038) | | Net cash provided by investing activities | $19,950 | $5,577 | | Net cash used in financing activities | ($49,098) | ($14,280) | | Net decrease in cash, cash equivalents and restricted cash | ($15,654) | ($12,741) | Notes to Condensed Consolidated Financial Statements%20Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide context to the financial statements, detailing the company's business, accounting policies, fleet composition, credit facilities, risk management, and subsequent events - As of March 31, 2021, the company's fleet consisted of 41 drybulk vessels, including 17 Capesize, 9 Ultramax, and 15 Supramax carriers[24] - In Q1 2020, the company recorded a significant vessel impairment charge of $112.8 million, primarily on ten Handysize and four Supramax vessels, with no impairment recorded in Q1 2021[38][39][40] - As part of a vessel exchange agreement, the company acquired two Ultramax vessels and disposed of five Handysize vessels during Q1 2021[54] - Total debt principal outstanding as of March 31, 2021, was $401.0 million, down from $449.2 million at year-end 2020, consisting of the $495 Million and $133 Million Credit Facilities[64] - The company utilizes three interest rate cap agreements with a total notional amount of $200 million to hedge against interest rate risk on its floating rate debt[78][79][80] - Subsequent to quarter end, on May 4, 2021, the company declared a quarterly dividend of $0.05 per share and entered into an agreement to purchase a 2016-built Ultramax vessel for $20.2 million[111][113] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's Q1 2021 financial performance, highlighting a return to profitability, strong liquidity, and a new value strategy focused on debt reduction, dividends, and fleet renewal - In April 2021, the company announced a new value strategy focused on reducing debt, lowering cash flow breakeven levels, and paying a sizeable quarterly dividend, with the first anticipated payment in Q1 2022 for Q4 2021 results[122] - The company has installed scrubbers on all 17 of its Capesize vessels to comply with IMO 2020 sulfur emission regulations, with the final installation completed in January 2020[135] Fleet Average Daily Results Comparison | Metric | Q1 2021 | Q1 2020 | % Change | | :--- | :--- | :--- | :--- | | Time Charter Equivalent (TCE) | $12,197 | $9,755 | 25.0% | | Daily vessel operating expenses | $4,887 | $4,413 | 10.7% | - The company's liquidity is considered sufficient for the next twelve months, with $123.2 million in unrestricted cash and cash equivalents as of March 31, 2021, against a minimum requirement of approximately $30 million[188] Results of Operations Q1 2021 saw a 10.9% decrease in voyage revenues but a sharp 61.6% reduction in total operating expenses, primarily due to the absence of a vessel impairment charge, resulting in an operating income turnaround - Voyage revenues decreased by $10.7 million (10.9%) in Q1 2021 compared to Q1 2020, mainly due to operating fewer vessels and lower rates for Capesize vessels[162] - The average Time Charter Equivalent (TCE) rate for the fleet increased by 25% to $12,197 per day in Q1 2021, with minor bulk vessel TCE increasing by 72.9% and major bulk vessel TCE decreasing by 18.4%[164] - Vessel operating expenses decreased by $2.8 million, but average daily vessel operating expenses increased by 10.7% to $4,887 per day, primarily due to COVID-19 related expenditures and higher crew costs[170][171] - Depreciation and amortization decreased by $4.1 million due to vessel sales and impairments that occurred during 2020[181] Liquidity and Capital Resources The company maintains strong liquidity with $123.2 million in unrestricted cash, supported by operating cash flow and credit facilities, and has adopted a new dividend policy while focusing capital expenditures on fleet compliance - Net cash provided by operating activities increased to $13.5 million in Q1 2021 from a $4.0 million use of cash in Q1 2020, driven by higher rates for minor bulk vessels and lower drydocking expenses[213] - The Board adopted a new quarterly dividend policy, effective for Q4 2021 results, based on operating cash flow less debt repayments, drydocking capital expenditures, and a discretionary reserve[195][196] Estimated Future Capital Expenditures (in millions USD) | Year | Estimated Drydocking Cost | Estimated BWTS Cost | | :--- | :--- | :--- | | Remainder of 2021 | $7.4 | $3.2 | | 2022 | $7.5 | $4.0 | - The company has completed the installation of scrubbers on all 17 of its Capesize vessels as of January 17, 2020[232] Quantitative and Qualitative Disclosures About Market Risk The company is primarily exposed to interest rate risk on its floating-rate debt, mitigated by interest rate cap agreements, while currency risk is considered immaterial - As of March 31, 2021, the company held three interest rate cap agreements with a total notional amount of $200.0 million to manage interest rate risk on its variable debt[246] - A 1% increase in LIBOR would result in an estimated $1.1 million increase in interest expense for the three months ended March 31, 2021[249] - Currency and exchange rate risk is deemed immaterial as the vast majority of revenues and operating costs are denominated in U.S. Dollars[253] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective as of March 31, 2021[254] - No material changes to the company's internal control over financial reporting occurred during the first quarter of 2021[255] PART II —OTHER INFORMATION Risk Factors This section updates previously disclosed risk factors, specifically highlighting increased risks and costs related to crew rotations involving Indian crew members due to the COVID-19 outbreak - The company highlights a specific new risk related to the severe COVID-19 outbreak in India, leading to increased costs and difficulties for crew rotations involving Indian crew members[257] Exhibits This section lists the exhibits filed with the quarterly report, including CEO and CFO certifications and interactive data files for financial statements - The exhibits filed with this report include CEO and CFO certifications pursuant to SEC rules and Section 1350, as well as Inline XBRL data for the financial statements[258][260]