Part I Item 1. Financial Statements (unaudited) This section presents Genco Shipping & Trading Limited's unaudited condensed consolidated financial statements for Q1 2024 and 2023, covering balance sheets, operations, and cash flows with detailed notes Condensed Consolidated Balance Sheets Total assets decreased slightly to $1.118 billion as of March 31, 2024, from $1.142 billion at year-end 2023, while total liabilities decreased to $201.2 million and total equity increased to $916.6 million Condensed Consolidated Balance Sheet Highlights (in thousands USD) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $48,364 | $46,542 | | Vessels, net | $934,572 | $945,114 | | Vessels held for sale | $36,218 | $55,440 | | Total Assets | $1,117,806 | $1,141,902 | | Liabilities & Equity | | | | Total current liabilities | $39,300 | $35,286 | | Long-term debt, net | $160,668 | $190,169 | | Total Liabilities | $201,176 | $227,256 | | Total Equity | $916,630 | $914,646 | Condensed Consolidated Statements of Operations Net income surged to $18.8 million in Q1 2024 from $2.6 million in Q1 2023, driven by a 24.4% increase in voyage revenues and resulting in diluted EPS of $0.43 Q1 2024 vs Q1 2023 Performance (in thousands USD, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Voyage Revenues | $117,435 | $94,391 | | Total Operating Expenses | $95,342 | $89,948 | | Operating Income | $22,093 | $4,443 | | Net Income Attributable to Genco | $18,798 | $2,634 | | Earnings Per Share-diluted | $0.43 | $0.06 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities increased to $32.3 million in Q1 2024, while investing activities provided $17.5 million and financing activities used $47.9 million Cash Flow Summary (in thousands USD) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $32,251 | $19,566 | | Net cash provided by (used in) investing activities | $17,494 | ($2,853) | | Net cash used in financing activities | ($47,923) | ($30,416) | | Net increase (decrease) in cash | $1,822 | ($13,703) | Notes to Condensed Consolidated Financial Statements The notes detail the company's 45-vessel drybulk fleet, recent vessel sales, $170 million outstanding debt under its $500 million revolving credit facility, and subsequent events including debt prepayments and a $0.42 per share dividend - As of March 31, 2024, the Company's fleet consisted of 45 drybulk vessels with an aggregate carrying capacity of approximately 4,828,000 dwt25 - The sale of the Genco Commodus was completed on February 7, 2024. New agreements to sell the Genco Claudius and Genco Maximus were signed on March 1, 2024, and these sales were completed in April 20244849 - As of March 31, 2024, the company had $170 million in principal debt outstanding under its $500 Million Revolver, with $298.9 million available5355 - Subsequent to quarter end, the company made voluntary debt prepayments totaling $55 million in April 2024 and declared a quarterly dividend of $0.42 per share in May 20249697 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's strong Q1 2024 performance, driven by higher charter rates, its value strategy of deleveraging and dividends, and robust liquidity of $347.6 million, alongside operational metrics and capital expenditure plans Overview and Strategy Genco operates a 43-vessel drybulk fleet, executing a value strategy focused on dividends, deleveraging, and accretive fleet growth, achieving a 62% debt reduction and $4.52 cumulative dividends per share since 2021 - The company's capital allocation strategy focuses on three key pillars: compelling dividends, financial deleveraging, and accretive fleet growth104 - Since 2021, Genco has reduced its debt by $279.2 million, a 62% reduction from Jan 1, 2021 levels, with the debt balance at $170.0 million as of March 31, 2024104 - The company has declared cumulative dividends of $4.52 per share from Q4 2021 through Q1 2024 under its value strategy104 Results of Operations (Q1 2024 vs. Q1 2023) Q1 2024 saw voyage revenues increase 24.4% to $117.4 million, driven by a 37.8% rise in average TCE to $19,219 per day, leading to operating income of $22.1 million and net income of $18.9 million Key Operational Metrics (Q1 2024 vs Q1 2023, USD) | Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Fleet Average TCE (USD/day) | $19,219 | $13,947 | 37.8% | | Capesize TCE (USD/day) | $25,601 | $15,929 | 60.7% | | Fleet Average DVOE (USD/day) | $6,275 | $6,160 | 1.9% | - The increase in voyage revenues was primarily due to higher rates earned by major bulk vessels, as the drybulk market remained firm, led by increased Brazilian iron ore exports and solid coal and bauxite trades130 - Other operating expense of $1.8 million was recorded in Q1 2024 for costs related to the 2024 annual meeting145 Liquidity and Capital Resources As of March 31, 2024, Genco maintained strong liquidity of $347.6 million, comprising $48.4 million cash and $298.9 million revolver availability, while pursuing a zero net debt goal and declaring a $0.42 per share dividend - Total liquidity as of March 31, 2024, was $347.6 million, consisting of $48.4 million in cash and $298.9 million in revolver availability104151 - The company intends to continue paying down debt voluntarily with a medium-term goal of zero net debt, with no mandatory debt repayments until 2028152 - On May 8, 2024, the company announced a quarterly dividend of $0.42 per share, payable around May 30, 202497161 Capital Expenditures Planned capital expenditures for the remainder of 2024 include $15.8 million for drydocking, $0.6 million for BWTS, and $2.9 million for fuel efficiency upgrades, with higher estimates for 2025 Estimated Future Capital Expenditures (in millions USD) | Year | Estimated Drydocking Costs (millions USD) | Estimated BWTS Costs (millions USD) | Estimated Fuel Efficiency Upgrade Costs (millions USD) | | :--- | :--- | :--- | :--- | | Apr 1 - Dec 31, 2024 | $15.8 | $0.6 | $2.9 | | 2025 | $35.6 | $1.1 | $4.1 | - The company estimates that eight vessels will be drydocked during the remainder of 2024 and 20 vessels will be drydocked during 2025187 Critical Accounting Policies The primary critical accounting policy is vessel valuation and impairment, where eight Capesize vessels had carrying values exceeding market valuations by $17.9 million, though no impairment loss was recorded after cash flow analysis - As of March 31, 2024, eight Capesize vessels had carrying values that exceeded their vessel valuations, indicating potential impairment196 - The aggregate amount by which the carrying value of these eight vessels exceeded their valuation was $17.9 million, but no impairment loss was recorded after a future cash flow analysis196197 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate risk from floating-rate debt, with a 1% SOFR increase raising quarterly interest expense by $0.5 million, and manages fuel price risk using bunker swaps, while currency risk is immaterial - The company is subject to market risk from changes in SOFR on its floating-rate debt, where a 1% increase in SOFR would result in an estimated $0.5 million increase in interest expense for the quarter204205 - The company's last remaining interest rate cap agreement expired during Q1 2024, increasing its exposure to interest rate fluctuations202206 - The company uses bunker swap and forward fuel purchase agreements to reduce risk from changing fuel prices, with gains and losses recognized in other income (expense)208 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2024, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of the end of the reporting period, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective210 - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, these controls211 Part II Item 5. Other Information On March 12, 2024, executive officers adopted Rule 10b5-1 sales plans for the orderly sale of common stock from vested RSUs and PRSUs to cover tax obligations - On March 12, 2024, key executive officers, including the CEO and CFO, adopted Rule 10b5-1 sales plans to sell shares to satisfy tax obligations related to vesting stock awards212 Item 6. Exhibits This section provides an index of all exhibits filed with the Form 10-Q, including corporate governance documents, new RSU and PRSU grant agreements, and CEO/CFO certifications - The Exhibit Index lists documents filed with the report, including new Restricted Stock Unit (RSU) and Performance-Based RSU (PRSU) grant agreements for executive officers dated February 21, 2024213214
Genco Shipping & Trading (GNK) - 2024 Q1 - Quarterly Report