Genco Shipping & Trading Limited Announces Fourth Quarter Financial Results

New York - March 01, 2017

Genco Shipping & Trading Limited (NYSE:GNK) (“Genco” or the “Company”) today reported its financial results for the three and twelve months ended December 31, 2016.

The following financial review discusses the results for the three and twelve months ended December 31, 2016 and December 31, 2015.

Fourth Quarter 2016 and Year-to-Date Highlights

• Recorded a net loss attributable to Genco Shipping & Trading Limited of $24.5 million for the fourth quarter of 2016
- Basic and diluted loss per share of $3.35

• Closed our $400 million credit facility on November 15, 2016
- Refinances all of our existing credit facilities with the exception of the $98 Million Credit Facility and the 2014 Term Loan Facilities
- No significant fixed amortization payments until 2019
- Elimination of collateral maintenance covenants through the first half of 2018

• Completed the sale of an aggregate of $125 million of Series A Preferred Stock at a price of $4.85 per share on November 15, 2016 and the conversion of the Preferred Stock to common stock on January 4, 2017

• Delivered four vessels to buyers during the fourth quarter of 2016
- Sold the Genco Sugar, the Genco Pioneer, the Genco Leader and the Genco Acheron, achieving net proceeds of $11.5 million

• In 2017 to date we have delivered three additional vessels to buyers
- Sold the Genco Wisdom, the Genco Carrier and the Genco Reliance for total net proceeds of $10.0 million, which will be recorded as cash on the balance sheet

• Entered into agreements to sell the last two of the ten vessels identified for sale, the Genco Prosperity and the Genco Success, for total net proceeds of $5.7 million
- Vessels to be delivered to their buyers by June 30, 2017, and net proceeds to be recorded as cash on the balance sheet

Financial Review: 2016 Fourth Quarter
The Company recorded a net loss attributable to Genco Shipping & Trading Limited for the fourth quarter of 2016 of $24.5 million, or $3.35 basic and diluted net loss per share. Comparatively, for the three months ended December 31, 2015, the Company recorded a net loss attributable to Genco Shipping & Trading Limited of $49.5 million, or $6.86 basic and diluted net loss per share. Basic and diluted net loss per share for both periods has been adjusted for the one-for-ten reverse stock split of Genco’s common stock effected on July 7, 2016.

John C. Wobensmith, President, commented, “During the fourth quarter and full-year 2016, Genco took important steps to further strengthen its leading drybulk platform and reposition the Company to capitalize on a market recovery. We completed a $125 million capital raise and closed on a $400 million credit facility, which transformed our balance sheet and capital structure. We also continued to optimize the deployment, strategic positioning and profile of our diversified fleet, strengthening our ability to take advantage of improving drybulk fundamentals. Finally, our focus on maintaining cost effective operations enabled the Company to further reduce direct vessel operating expenses and continue the significant progress we have made since 2014. We enter 2017 in a strong position to utilize our modern fleet to serve leading charterers, while drawing upon our significant financial flexibility to take advantage of compelling growth opportunities.”

The Company’s revenues increased to $43.9 million for the three months ended December 31, 2016, compared to $35.0 million for the three months ended December 31, 2015. The increase was primarily due to higher spot market rates achieved by the majority of the vessels in our fleet during the fourth quarter of 2016 versus the same period last year.

The average daily time charter equivalent, or TCE, rates obtained by the Company’s fleet was $6,659 per day for the three months ended December 31, 2016 as compared to $4,711 for the three months ended December 31, 2015. The increase in TCE was primarily due to higher spot rates achieved by the majority of the vessels in our fleet during the fourth quarter of 2016 versus the fourth quarter of 2015. During the fourth quarter of 2016, the Baltic Dry Index (“BDI”) continued to increase from all-time lows registered earlier in the year. Freight rates during the quarter were primarily supported by heightened demand for iron ore cargoes due to augmented Chinese steel production and increased coal shipments to China. With regard to supply, net fleet growth in the fourth quarter remained relatively low in a historical context. During the first two months of 2017, the drybulk market experienced seasonal pressure primarily due to increased newbuilding vessel deliveries, weather related disruptions and the Chinese New Year holiday. More recently, the BDI has rebounded to 871 points as of March 1, 2017, with Capesize freight rates, as quoted by the Baltic Exchange, trading significantly higher than the same point of last year.

Total operating expenses were $61.9 million for the three months ended December 31, 2016 compared to $72.6 million for the three months ended December 31, 2015. Vessel operating expenses declined to $27.5 million for the three months ended December 31, 2016 compared to $31.9 million for the three months ended December 31, 2015. This was primarily due to lower expenses related to maintenance as well as the timing of purchases of stores and spares. Additionally, this variance was due to the operation of fewer vessels during the fourth quarter of 2016 as compared to the same period of the prior year. General and administrative expenses were $8.3 million for the fourth quarter of 2016 compared to $2.4 million for the fourth quarter of 2015, primarily due to an increase in costs related to financing or refinancing activities. Depreciation and amortization expenses decreased to $18.2 million for the three months ended December 31, 2016 from $20.6 million for the three months ended December 31, 2015, 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 $4,486 per vessel per day for the fourth quarter of 2016 compared to $4,954 per vessel per day for the same quarter of 2015 predominantly due to lower expenses related to maintenance as well as the timing of purchases of stores and spares. 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. For the year ended 2016 our DVOE decreased to $4,514 from $4,870 for 2015. 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, “We are pleased to have completed our capital raise and closed on our new credit facility in the fourth quarter. This success has significantly increased our liquidity position and strengthened Genco’s balance sheet, providing Genco with a strong financial foundation for the future. In addition, the favorable terms of our new credit facility, combined with our cost saving initiatives, have allowed us to significantly reduce Genco’s cash break-even levels.”

Financial Review: Twelve Months 2016
The Company recorded a net loss attributable to Genco Shipping & Trading Limited of $217.2 million or $29.95 basic and diluted net loss per share for the twelve months ended December 31, 2016. This compares to a net loss attributable to Genco Shipping & Trading Limited of $194.9 million or $29.61 basic and diluted net loss per share for the twelve months ended December 31, 2015. Basic and diluted net loss per share for both periods has been adjusted for the one-for-ten reverse stock split of Genco’s common stock effected on July 7, 2016. Net income for the twelve months ended December 31, 2016 and 2015, includes non-cash vessel impairment charges of $69.3 million and $39.9 million, respectively. Revenues decreased to $135.6 million for the twelve months ended December 31, 2016 compared to $154.0 million for the twelve months ended December 31, 2015 due to lower spot market rates achieved by the majority of our vessels. TCE rates obtained by the Company decreased to $4,907 per day for the twelve months ended December 31, 2016 from $5,445 per day for the twelve months ended December 31, 2015, due to lower rates achieved by the majority of the vessels in our fleet. Total operating expenses for the twelve months ended December 31, 2016 and 2015 were $321.5 million and $346.8 million, respectively. Excluding non-cash vessel impairment charges totaling $69.3 million relating to the revaluation of ten vessels to their estimated net realizable value, our adjusted total operating expenses were $252.2 million for the twelve months ended December 31, 2016. This compares to adjusted total operating expenses, which excludes a non-cash vessel impairment charge of $35.4 million relating to the sale of the Baltic Tiger and the Baltic Lion in April 2015 as well as a $4.5 million non-cash impairment charge to adjust the value of the Genco Marine to its fair value as of December 31, 2015, of $306.9 million for the twelve months ended December 31, 2015. We believe the presentation of the adjusted amounts above is useful to investors in understanding our current performance and financial condition, as it excludes items that may not be indicative of our core operating results. General and administrative expenses for 2016 decreased to $23.9 million as compared to $32.8 million for 2015. Daily vessel operating expenses per vessel were $4,514 versus $4,870 in the comparative periods due to lower expenses related to maintenance as well as crewing and insurance.

Full report

Genco Shipping & Trading Limited press release