Declares $0.60 per Share Dividend for Q1 2006NEW YORK, NY, May 03, 2006 (MARKET WIRE via COMTEX News Network) -- Genco Shipping & Trading Limited (NASDAQ: GSTL) today reported its
financial results for the three months ended March 31, 2006.
The following financial review discusses the results for the three
months ended March 31, 2006 and for the three months ended March 31,
2005.
First Quarter 2006 Highlights
- Declared a $0.60 per share dividend payable on or about May 26, 2006
to all shareholders of record as at May 15, 2006 based on Q1 2006 results;
- Recorded net income of $16.6 million, or $0.66 basic earnings per
share, in Q1 2006;
- Paid a $0.60 per share dividend on March 10, 2006 based on Q4 2005
results; and
- Entered into two forward interest rate swaps for a total notional
amount of $100 million.
Financial Review: 2006 First Quarter
The Company recorded net income of $16.6 million or $0.66 basic
earnings per share for the three months ended March 31, 2006.
Comparatively, for the three months ended March 31, 2005 net income
was $11.4 million. The increase in net income was attributable
primarily to the operation of a full fleet of 17 vessels for the
three months ended March 31, 2006 versus an average of 11 vessels for
the three months ended March 31, 2005.
Robert Gerald Buchanan, President, commented, "During the first
quarter of 2006, we continued to successfully execute our strategy
and benefit from the strong operational and financial foundation that
we put in place at the time of the Company's inception. Our
significant time charter coverage at rates that are between 40% and
80% above the current one-year time charter market once again served
the Company and its shareholders well in the quarter. Our success at
securing 77% of our fleet's available days on contracts for the year
at rates that continue to be superior to the market bodes well for
the Company's ability to provide shareholders with stable earnings
through 2006. With a sizeable and modern fleet, Genco is in a strong
position to take advantage of favorable long-term fundamentals for
the drybulk shipping industry."
Operating income increased to $17.7 million for the three months
ended March 31, 2006 compared to $13.9 million for the three months
ended March 31, 2005 as a result of operating a greater number of
vessels during the three-month period ending March 31, 2006. EBITDA
for the three months ended March 31, 2006 was $25.0 million compared
to $17.9 million for the period ended March 31, 2005 (please see
"Summary Consolidated Financial and Other Data" for a reconciliation
of net income to EBITDA).
The average daily time charter equivalent, or TCE, rates obtained by
the Company's fleet decreased slightly to $20,687 per day for the
three months ended March 31, 2006 compared to $20,904 for the three
months ended March 31, 2005. The decrease was due mostly to higher
charter rates achieved in the first quarter of 2005 versus the first
quarter of 2006 for the Genco Leader, which is subject to
fluctuations of the spot market.
Total operating expenses increased to $14.9 million for the three
months ended March 31, 2006 from $7.5 million for the three-month
period ended March 31, 2005. Vessel operating expenses grew to $4.6
million for the three months ended March 31, 2006 compared to $2.0
million for the three-month period ended March 31, 2005 due to the
operation of a larger fleet. General and administrative expenses
increased to $2.4 million from $0.3 million during the comparative
periods primarily due to the expansion of our fleet during 2005 and
costs associated with operating as a publicly traded company.
Management fees for the three months ended March 31, 2006 and the
three months ended March 31, 2005 were $0.3 million and relate to
fees paid to our independent technical manager.
Daily vessel operating expenses rose to $2,980 per vessel day during
the first quarter of 2006 from $2,042 for the same quarter last year.
As the first quarter of 2005 was our initial period of operations for
the majority of our fleet, we believe the three-month period ended
March 31, 2006 is more reflective of our daily vessel operating
expenses. We believe daily vessel operating expenses are best
measured for comparative purposes over a 12-month period and will
vary on a quarter to quarter basis. For the quarter ended March 31,
2006, daily vessel operating expenses for our fleet remain below the
$3,184 budgeted by the Company and our technical manager for the
12-month period of 2006.
Liquidity and Capital Resources
Cash Flow
Net cash provided by operating activities for the three months ended
March 31, 2006 and 2005, was $23.9 and $17.7 million, respectively.
Net cash from operating activities for three months ended March 31,
2006 was primarily a result of recorded net income of $16.6 million,
and depreciation and amortization charges of $6.4 million. For the
three months ended March 31, 2005, net cash provided from operating
activities was primarily a result of recorded net income of $11.4
million, and depreciation and amortization charges of $4.0 million.
Net cash used in investing activities for the three months ended
March 31, 2006 and 2005 was $0.6 and $193.3 million, respectively.
For the three months ended March 31 2006, the cash used in investing
activities related predominantly to the purchase of fixed assets
associated with the Company's office. For the three months ended
March 31, 2005, the cash used in investing activities related solely
to the acquisition of ten vessels.
Net cash (used in) provided by financing activities for the three
months ended March 31, 2006 and 2005 was ($15.3) and $185.5 million,
respectively. For the three months ended March 31 2006, net cash used
by financing activities consisted primarily of payment of cash
dividends of $15.3 million. For the three months ended March 31,
2005, the primary sources of net cash provided by financing
activities were proceeds of $192.9 from the Original Credit Facility
to fund vessel acquisitions.
Capital Expenditures
We make capital expenditures from time to time in connection with
vessel acquisitions. Our recent vessel acquisitions consist of our
fleet of five Panamax drybulk carriers, seven Handymax drybulk
carriers and five Handysize drybulk carriers.
In addition to acquisitions that we may undertake in future periods,
we will incur additional capital expenditures due to special surveys
and drydockings for our fleet. We estimate our drydocking costs for
our fleet for 2006 and 2007 to be:
2006 2007
-------------------------------------
Estimated Costs (1) $2.5 million $2.8 million
Estimated Offhire Days (2) 180 160
(1) Estimates are based on our budgeted cost of drydocking our vessels in
China (except with respect to one vessel which is currently expected to be
drydocked in Europe in 2006). Actual costs will vary based on various
factors, including where the drydockings are actually performed. We
expect to fund these costs with cash from operations.
(2) Assumes 20 days per drydocking per vessel. Actual length will vary
based on the condition of the vessel, yard schedules and other factors.
During the first quarter of 2006, we had one vessel, the Genco
Trader, in drydock. We expect one vessel to drydock in the second
quarter, and estimate an additional seven vessels will drydock in the
second half of 2006.
Summary Consolidated Financial and Other Data
The following table summarizes Genco Shipping & Trading Limited's
selected consolidated financial and other data for the periods
indicated below.
Three Months Three Months
Ended Ended
March 31, 2006 March 31, 2005
-------------- --------------
(Dollars in thousands,
except share data)
(unaudited)
------------------------------
INCOME STATEMENT DATA:
Revenues $ 32,572 $ 21,399
Operating expenses:
Voyage expenses 1,104 890
Vessel operating expenses 4,559 2,016
General and administrative expenses 2,449 260
Management fees 347 331
Depreciation and amortization 6,417 3,981
-------------- --------------
Total operating expenses 14,876 7,478
-------------- --------------
Operating income 17,696 13,921
-------------- --------------
Other (expense) income:
Income from derivative instruments 476 -
Interest income 569 83
Interest expense (2,163) (2,620)
-------------- --------------
Other (expense) income (1,118) (2,537)
-------------- --------------
Net income $ 16,578 $ 11,384
============== ==============
Earnings per share - basic $ 0.66 $ 0.84
============== ==============
Earnings per share - diluted $ 0.66 $ 0.84
============== ==============
Weighted average shares outstanding - basic 25,260,000 13,500,000
============== ==============
Weighted average shares outstanding -
diluted 25,304,448 13,500,000
============== ==============
March 31, 2006 Dec. 31, 2005
--------------- ---------------
BALANCE SHEET DATA: (unaudited)
Cash $ 54,894 $ 46,912
Current assets, including cash 57,644 49,705
Total assets 496,036 489,958
Current liabilities, including current
portion of long-term debt 5,909 5,978
Total long-term debt, including current
portion 130,683 130,683
Shareholders' equity 354,062 348,242
Three Months Three Months
Ended Ended
March 31, 2006 March 31, 2005
-------------- --------------
(unaudited)
Net cash provided by operating activities $ 23,912 $ 17,675
Net cash used in investing activities (642) (193,270)
Net cash provided by financing activities (15,288) 185,494
EBITDA (1) 25,045 17,902
-------------- --------------
Three Months Three Months
Ended Ended
March 31, 2006 Dec. 31, 2005
-------------- --------------
(unaudited)
FLEET DATA:
Total number of vessels at end of period 17 14
Average number of vessels (2) 17.0 11.0
Total ownership days for fleet (3) 1,530 987
Total available days for fleet (4) 1,521 981
Total operating days for fleet (5) 1,517 974
Fleet utilization (6) 99.7% 99.2%
AVERAGE DAILY RESULTS:
Time charter equivalent (7) $ 20,687 $ 20,904
Daily vessel operating expenses per vessel
(8) 2,980 2,042
-------------- --------------
Three Months Three Months
Ended Ended
March 31, 2006 Dec. 31, 2005
(Dollars in thousands)
-------------- --------------
(unaudited)
EBITDA Reconciliation:
Net Income $ 16,578 $ 11,384
+ Net interest expense 1,594 2,537
+ Depreciation and amortization 6,417 3,981
+ Amortization of value of time charter
acquired 456 -
-------------- --------------
EBITDA 25,045 17,902
============== ==============
(1) EBITDA represents net income plus net interest expense, income tax
expense, depreciation and amortization, and amortization of the value of
time charter acquired. EBITDA is included because it is used by management
and certain investors as a measure of operating performance. EBITDA is used
by analysts in the shipping industry as a common performance measure to
compare results across peers. Our management uses EBITDA as a performance
measure in consolidating monthly internal financial statements and it is
presented for review at our board meetings. EBITDA is also used by our
lenders in certain loan covenants. For these reasons, we believe that
EBITDA is a useful measure to present to our investors. EBITDA is not an
item recognized by U.S. GAAP and should not be considered as an alternative
to net income, operating income or any other indicator of a company's
operating performance required by U.S. GAAP. EBITDA is not a source of
liquidity or cash flows as shown in our consolidated statement of cash
flows. The definition of EBITDA used here may not be comparable to that
used by other companies.
(2) Average number of vessels is the number of vessels that constituted our
fleet for the relevant period, as measured by the sum of the number of days
each vessel was part of our fleet during the period divided by the number
of calendar days in that period.
(3) We define ownership days as the aggregate number of days in a period
during which each vessel in our fleet has been owned by us. Ownership days
are an indicator of the size of our fleet over a period and affect both the
amount of revenues and the amount of expenses that we record during a
period.
(4) We define available days as the number of our ownership days less the
aggregate number of days that our vessels are off-hire due to scheduled
repairs or repairs under guarantee, vessel upgrades or special surveys and
the aggregate amount of time that we spend positioning our vessels.
Companies in the shipping industry generally use available days to measure
the number of days in a period during which vessels should be capable of
generating revenues.
(5) We define operating days as the number of our available days in a
period less the aggregate number of days that our vessels are off-hire due
to unforeseen circumstances. The shipping industry uses operating days to
measure the aggregate number of days in a period during which vessels
actually generate revenues.
(6) We calculate fleet utilization by dividing the number of our operating
days during a period by the number of our available days during the period.
The shipping industry uses fleet utilization to measure a company's
efficiency in finding suitable employment for its vessels and minimizing
the number of days that its vessels are off-hire for reasons other than
scheduled repairs or repairs under guarantee, vessel upgrades, special
surveys or vessel positioning.
(7) We define TCE rates as our revenues (net of voyage expenses) divided by
the number of our available days during the period, which is consistent
with industry standards. TCE rate is a common shipping industry performance
measure used primarily to compare daily earnings generated by vessels on
time charters with daily earnings generated by vessels on voyage charters,
because charterhire rates for vessels on voyage charters are generally not
expressed in per-day amounts while charterhire rates for vessels on time
charters generally are expressed in such amounts.
(8) We define daily vessel operating expenses to include crew wages and
related costs, the cost of insurance expenses relating to repairs and
maintenance (excluding drydocking), the costs of spares and consumable
stores, tonnage taxes and other miscellaneous expenses. Daily vessel
operating expenses are calculated by dividing vessel operating expenses by
ownership days for the relevant period.
Genco Shipping & Trading Limited's Fleet
As of March 31, 2006, Genco Shipping & Trading Limited's fleet
consisted of five Panamax, seven Handymax and five Handysize drybulk
carriers, with a total carrying capacity of approximately 839,000
deadweight tons, or dwt.
We were incorporated on September 27, 2004 and took delivery of our
first six vessels in December 2004. The next ten vessels of our fleet
were delivered in the first six months of 2005. On October 14, 2005,
we took delivery of the Genco Muse, the latest vessel in the fleet,
which is a 48,913 DWT Handymax bulk carrier built in 2001 in Japan.
The average age of the Company's fleet as of March 31, 2006 was 8.8
years. Fifteen of the 17 vessels in our fleet are on long-term time
charters with an average remaining life of 0.7 years as of March 31,
2006.
2006
--------------------------------------------------------------------------
Expiration Current Time
Vessel Vessel Type Date(1) Charter Rates(2)
------- ---------------- ---------------- --------------- ---------------
1 Genco Beauty Panamax February 2007 $ 29,000
2 Genco Knight Panamax February 2007 $ 29,000
3 Genco Leader Panamax Spot(3) N/A
4 Genco Trader Panamax Spot(3) N/A
5 Genco Vigour Panamax December 2006 $ 29,000
6 Genco Muse Handymax September 2007 $ 26,500(4)
7 Genco Marine Handymax March 2007 $ 26,000(5)
8 Genco Prosperity Handymax March 2007 $ 23,000
9 Genco Carrier Handymax December 2006 $ 24,000
10 Genco Wisdom Handymax January 2007 $ 24,000
11 Genco Success Handymax January 2007 $ 23,850
12 Genco Glory Handymax December 2006 $ 18,250
13 Genco Explorer Handysize August 2006 $ 17,250
14 Genco Pioneer Handysize September 2006 $ 17,250
15 Genco Progress Handysize September 2006 $ 17,250(6)
16 Genco Reliance Handysize August 2006 $ 17,250
17 Genco Sugar Handysize August 2006 $ 17,250
--------------------------------------------------------------------------
(1) The dates presented on this table represent the earliest dates that our
charters may be terminated. Except with respect to the Genco Trader and
Genco Leader charters, under the terms of the contracts, charterers are
entitled to extend time charters from two to four months in order to
complete the vessel's final voyage plus any time the vessel has been
off-hire.
(2) Time charter rates presented are the gross daily charterhire rates
before the payments of brokerage commissions ranging from 1.25% to 5% to
unaffiliated third parties. In a time charter, the charterer is responsible
for voyage expenses such as bunkers, port expenses, agents' fees and canal
dues.
(3) The Genco Trader and Genco Leader entered into the Baumarine Pool
arrangement in December 2005 and February 2006, respectively.
(4) Since this vessel was acquired with an existing time charter at an
above market rate, the Company allocates the purchase price between the
vessel and a deferred asset for the value assigned to the above market
charterhire. This deferred asset is amortized as a reduction to voyage
revenues over the remaining term of the charter, resulting in a daily rate
of approximately $21,500 recognized as revenue. For cash flow purposes, the
Company will continue to receive $26,500 per day less commissions.
(5) The time charter rate is $26,000 until March 2006 and $18,000
thereafter. For purposes of revenue recognition, the charter contract is
reflected on a straight-line basis in accordance with GAAP.
(6) The time charter rate was $21,560 through March 2005 and $17,250
thereafter. For purposes of revenue recognition, the charter contract is
reflected on a straight-line basis in accordance with GAAP.
Q1 2006 Dividend Announcement
The Company's Board of Directors declared a first quarter 2006
dividend of $0.60 per share payable on or about May 26, 2006 to all
shareholders of record as at May 15, 2006. As previously announced,
the Company plans to declare quarterly dividends to shareholders by
each February, May, August and November, in amounts substantially
equal to our available cash from operations during the previous
quarter, less cash expenses for that quarter (principally vessel
operating expenses and debt service) and any reserves our board of
directors determines we should maintain. These reserves may cover,
among other things, drydocking, repairs, claims, liabilities and
other obligations, interest expense and debt amortization,
acquisitions of additional assets and working capital. The Q1 2006
dividend of $0.60 equates to an annualized yield of 14% based on the
closing price of Genco Shipping & Trading's common stock as of May 2,
2006 at $17.23.
John C. Wobensmith, Chief Financial Officer, commented, "We are
pleased to distribute a sizeable dividend to shareholders during a
time when we continue to seek opportunities to further consolidate
the drybulk industry. The Company's capital structure combined with
management's significant consolidation experience creates a strategic
advantage for benefiting from an industry that is highly fragmented.
In actively pursuing our goal of becoming the drybulk shipping
industry leader, we intend to utilize the Company's $319 million
undrawn credit commitment and adhere to strict investment criteria as
we look to acquire additional modern vessels and expand our industry
leadership."
Forward Interest Rate Swap Agreements
The Company, on March 24, 2006, entered into a forward interest rate
swap,
with a notional amount of $50 million and has a fixed interest rate
on the notional amount of 5.075% from January 2, 2008 through January
2, 2013. The change in the value of this swap and the rate
differential to be paid or received for this swap agreement is
recognized as a component of other (expense) income.
The Company, on March 29, 2006, entered into a forward interest rate
swap with a notional amount of $50 million and has a fixed interest
rate on the notional amount of 5.25% from January 2, 2007 through
January 2, 2014. The change in the value of this swap and the rate
differential to be paid or received for this swap agreement is
recognized as a component of other (expense) income.
About Genco Shipping & Trading Limited
Genco Shipping & Trading Limited transports iron ore, coal, grain,
steel products and other drybulk cargoes along worldwide shipping
routes. Genco Shipping & Trading Limited currently owns a fleet of 17
drybulk carriers, consisting of five Panamax, seven Handymax and five
Handysize vessels, with a carrying capacity of approximately 839,000
dwt.
Conference Call Announcement
Genco Shipping & Trading Limited announced that it will hold a
conference call on May 4, 2006 at 8:30 a.m. Eastern Time to discuss
its 2006 first quarter financial results. The conference call and a
presentation will be simultaneously webcast and will be available on
the Company's website, www.GencoShipping.com. To access the
conference call, dial (888) 208-1812 or (719) 457-2654 and enter
passcode 7624088. A replay of the conference call can also be
accessed until May 17, 2006 by dialing (888) 203-1112 or (719)
457-0820 and entering the passcode 7624088. The Company intends to
place additional materials related to the earnings announcement,
including a slide presentation, on its website prior to the conference
call.
"Safe Harbor" Statement Under the Private Securities Litigation
Reform Act of 1995
This press release contains forward-looking statements made pursuant
to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are based on
management's current expectations and observations. Included among
the factors that, in our view, could cause actual results to differ
materially from the forward looking statements contained in this
report are the following: (i) changes in demand or rates in the
drybulk shipping industry; (ii) changes in the supply of or demand
for drybulk products, generally or in particular regions; (iii)
changes in the supply of drybulk carriers including newbuilding of
vessels or lower than anticipated scrapping of older vessels; (iv)
changes in rules and regulations applicable to the cargo industry,
including, without limitation, legislation adopted by international
organizations or by individual countries and actions taken by
regulatory authorities; (v) increases in costs and expenses including
but not limited to: crew wages, insurance, provisions, repairs,
maintenance and general and administrative expenses; (vi) the
adequacy of our insurance arrangements; (vii) changes in general
domestic and international political conditions; (viii) changes in
the condition of the Company's vessels or applicable maintenance or
regulatory standards (which may affect, among other things, our
anticipated drydocking or maintenance and repair costs) and
unanticipated drydock expenditures; and other factors listed from
time to time in our public filings with the Securities and Exchange
Commission including, without limitation, our Annual Report on Form
10-K for 2005 and subsequent filings on Form 8-K. Our ability to pay
dividends in any period will depend upon factors including the
limitations under our loan agreements, applicable provisions of
Marshall Islands law and the final determination by the Board of
Directors each quarter after its review of our financial performance.
The timing and amount of dividends, if any, could also be affected
by factors affecting cash flows, results of operations, required
capital expenditures, or reserves. As a result, the amount of
dividends actually paid may vary.
CONTACT:
John C. Wobensmith
Chief Financial Officer
Genco Shipping & Trading Limited
(646) 443-8555
SOURCE: Genco Shipping & Trading Limited