Genco Shipping & Trading Limited Announces First Quarter Financial Results

New York - May 09, 2017

Genco Shipping & Trading Limited (NYSE:GNK) (“Genco” or the “Company”) today reported its financial results for the three months ended March 31, 2017.

The following financial review discusses the results for the three months ended March 31, 2017 and March 31, 2016.

First Quarter 2017 and Year-to-Date Highlights

• Recorded a net loss of $15.6 million for the first quarter of 2017
- Basic and diluted loss per share of $0.47
- Adjusted basic and diluted loss of $22.0 million or $0.66 per share, excluding $6.4 million for gain on sale of vessels1

• During the first quarter of 2017 we delivered four vessels to buyers
- Sold the Genco Wisdom, the Genco Carrier, the Genco Reliance and the Genco Success for total net proceeds of $12.7 million, which were recorded as cash on the balance sheet

• Expect to sell the Genco Prosperity, the last of the ten vessels identified for sale, for total net proceeds of $2.9 million
- Anticipate the vessel to be delivered to buyers by May 20, 2017, and net proceeds to be recorded as cash on the balance sheet

(1) We believe the non-GAAP measure presented provides investors with a means of better evaluating and understanding the Company’s operating performance.

Financial Review: 2017 First Quarter
The Company recorded a net loss for the first quarter of 2017 of $15.6 million, or $0.47 basic and diluted net loss per share. Comparatively, for the three months ended March 31, 2016, the Company recorded a net loss of $54.5 million, or $7.55 basic and diluted net loss per share. Basic and diluted net loss per share for the three months ended March 31, 2016 has been adjusted for the one-for-ten reverse stock split of Genco’s common stock effected on July 7, 2016.

John C. Wobensmith, Chief Executive Officer, commented, “During the first quarter, our focus remained on further enhancing the Company’s commercial strategy and advancing Genco’s position as a leading low-cost operator. Specifically, we have taken steps during the quarter to strengthen our chartering team to further enhance our commercial prospects focusing on both major and minor bulks, improve the age profile of our fleet and maintain a low breakeven level. As supply and demand fundamentals continue to come into balance, we believe Genco is well positioned to take advantage of a market recovery due to our improved platform and significant operating leverage. Our financial flexibility also provides the Company the potential to pursue compelling growth opportunities for shareholders.”

The Company’s revenues increased to $38.2 million for the three months ended March 31, 2017, compared to $20.9 million for the three months ended March 31, 2016. The increase was primarily due to higher spot market rates achieved by the majority of the vessels in our fleet during the first quarter of 2017 versus the same period last year partially offset by the operation of fewer vessels during the first quarter of 2017 as compared to the first quarter of 2016.

The average daily time charter equivalent, or TCE, rates obtained by the Company’s fleet was $6,498 per day for the three months ended March 31, 2017 as compared to $2,629 for the three months ended March 31, 2016. The increase in TCE was primarily due to higher spot rates achieved by the majority of the vessels in our fleet during the first quarter of 2017 versus the first quarter of 2016. During January and February of 2017, the drybulk market experienced various seasonal events that pressured freight rates, including increased newbuilding vessel deliveries, weather related disruptions and the Chinese New Year holiday. In March, however, freight rates found support led by heightened Chinese demand for iron ore cargoes particularly from Brazil due to augmented Chinese steel production, increased coal shipments to China as well as the onset of the South American grain season. Specifically, on March 29, 2017 the BDI reached a year-to-date high of 1,338, with Capesize freight rates, as quoted by the Baltic Exchange, trading significantly higher than the same point of last year.

Total operating expenses were $46.8 million for the three months ended March 31, 2017 compared to $67.9 million for the three months ended March 31, 2016. Vessel operating expenses declined to $24.9 million for the three months ended March 31, 2017 compared to $29.1 million for the three months ended March 31, 2016. This decrease was primarily due to the operation of fewer vessels during the first quarter of 2017 as compared to the same period of the prior year. This decrease was also due to lower expenses related to crewing and insurance as well as the timing of purchases of stores and spares partially offset by higher drydocking related expenses. General and administrative expenses were $4.9 million for the first quarter of 2017 compared to $10.6 million for the first quarter of 2016, primarily due to a decrease in non-cash compensation expenses. Included in general and administrative expenses is nonvested stock amortization expense of $0.7 million and $5.5 million for the first quarter of 2017 and 2016, respectively. Depreciation and amortization expenses decreased to $18.2 million for the three months ended March 31, 2017 from $20.3 million for the three months ended March 31, 2016, primarily due to the revaluation of ten of our vessels to their estimated net realizable value during the first half of 2016.

Daily vessel operating expenses, or DVOE, decreased to $4,395 per vessel per day for the first quarter of 2017 compared to $4,573 per vessel per day for the same quarter of 2016 predominantly due to lower expenses related to crewing and insurance as well as the timing of purchases of stores and spares partially offset by higher drydocking related expenses. We believe daily vessel operating expenses are best measured for comparative purposes over a 12-month period in order to take into account all of the expenses that each vessel in our fleet will incur over a full year of operation. Furthermore, based on estimates provided by our technical managers and management’s views, our DVOE budget for 2017 is $4,440 per vessel per day on a weighted average basis for the entire year for the core fleet of 60 vessels.

Apostolos Zafolias, Chief Financial Officer, commented, “Genco continues to maintain a strong financial foundation, ending the first quarter with $174 million in cash. Our continued focus on cost-saving initiatives has enabled Genco to significantly lower its cash breakeven levels, which are among the lowest in the industry. We believe our low-cost structure, as well as our significant liquidity position, will serve the Company well in a drybulk recovery.”

Full report

Genco Shipping & Trading Limited press release