GENCO SHIPPING & TRADING LTD [GNK] Filings

10-Q 1 gnk-20220930x10q.htm 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

⌧

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

◻

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-33393

GENCO SHIPPING & TRADING LIMITED

(Exact name of registrant as specified in its charter)

Republic of the Marshall Islands

98-0439758

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

299 Park Avenue, 12th Floor, New York, New York 10171

(Address of principal executive offices) (Zip Code)

(646) 443-8550

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common stock, par value $0.01 per share	GNK	New York Stock Exchange (NYSE)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ◻	Accelerated filer ⌧	Non-accelerated filer ◻	Smaller reporting company ☐
			Emerging growth company ◻

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ⌧ No ◻

The number of shares outstanding of each of the issuer’s classes of common stock, as of November 9, 2022: Common stock, par value $0.01 per share — 42,327,181 shares.

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Genco Shipping & Trading Limited

			Page

	PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)		4

	a)	Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	4

	b)	Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2022 and 2021	5

	c)	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months ended September 30, 2022 and 2021	6

	d)	Condensed Consolidated Statements of Equity for the Three and Nine Months ended September 30, 2022 and 2021	7

	e)	Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2022 and 2021	9

	f)	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		51

Item 4.	Controls and Procedures		52

	PART II —OTHER INFORMATION

Item 1A.	Risk Factors		52

Item 6.	Exhibits		53

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Website Information

We intend to use our website, www.GencoShipping.com, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in our website’s Investor section. Accordingly, investors should monitor the Investor portion of our website, in addition to following our press releases, filings with the U.S. Securities and Exchange Commission (the “SEC”), public conference calls, and webcasts. To subscribe to our e-mail alert service, please submit your e-mail address at the Investor Relations Home page of the Investor section of our website. The information contained in, or that may be accessed through, our website is not incorporated by reference into or a part of this document or any other report or document we file with or furnish to the SEC, and any references to our website are intended to be inactive textual references only.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Genco Shipping & Trading Limited

Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021

(U.S. Dollars in thousands, except for share and per share data)

(Unaudited)


	September 30,		December 31,
	2022		2021

Assets
Current assets:
Cash and cash equivalents	$	65,532	$	114,573
Restricted cash		5,643		5,643
Due from charterers, net of a reserve of $2,061 and $1,403, respectively		25,866		20,116
Prepaid expenses and other current assets		10,817		9,935
Inventories		32,181		24,563
Fair value of derivative instruments		5,724		—
Total current assets		145,763		174,830

Noncurrent assets:
Vessels, net of accumulated depreciation of $290,291 and $253,005, respectively		1,014,154		981,141
Deposits on vessels		—		18,543
Deferred drydock, net of accumulated amortization of $13,695 and $12,879 respectively		31,282		14,275
Fixed assets, net of accumulated depreciation and amortization of $5,611 and $3,984, respectively		8,125		7,237
Operating lease right-of-use assets		4,435		5,495
Restricted cash		315		315
Fair value of derivative instruments		1,659		1,166
Total noncurrent assets		1,059,970		1,028,172

Total assets	$	1,205,733	$	1,203,002

Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses	$	38,831	$	29,956
Deferred revenue		14,464		10,081
Current operating lease liabilities		2,025		1,858
Total current liabilities:		55,320		41,895

Noncurrent liabilities:
Long-term operating lease liabilities		4,652		6,203
Long-term debt, net of deferred financing costs of $6,505 and $7,771, respectively		173,245		238,229
Total noncurrent liabilities		177,897		244,432

Total liabilities		233,217		286,327

Commitments and contingencies (Note 13)

Equity:
Common stock, par value $0.01; 500,000,000 shares authorized; 42,327,181 and 41,924,597 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		423		419
Additional paid-in capital		1,621,185		1,702,166
Accumulated other comprehensive income		7,105		825
Accumulated deficit		(656,924)		(786,823)
Total Genco Shipping & Trading Limited shareholders’ equity		971,789		916,587
Noncontrolling interest		727		88
Total equity		972,516		916,675
Total liabilities and equity	$	1,205,733	$	1,203,002

See accompanying notes to Condensed Consolidated Financial Statements.

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Genco Shipping & Trading Limited

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021

(U.S. Dollars in Thousands, Except for Earnings Per Share and Share Data)

(Unaudited)


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Revenues:
Voyage revenues	$	135,970	$	155,252	$	409,961	$	363,851

Total revenues		135,970		155,252		409,961		363,851

Operating expenses:
Voyage expenses		39,496		37,797		110,420		109,572
Vessel operating expenses		22,090		21,788		78,567		59,622
Charter hire expenses		6,952		8,644		19,633		22,405
General and administrative expenses (inclusive of nonvested stock amortization expense of $840, $597, $2,356 and $1,670, respectively)		5,911		5,659		18,334		17,616
Technical management fees		761		1,631		2,378		4,400
Depreciation and amortization		15,582		14,200		44,162		41,409
Loss on sale of vessels		—		159		—		894

Total operating expenses		90,792		89,878		273,494		255,918

Operating income		45,178		65,374		136,467		107,933

Other income (expense):
Other (expense) income		(2,146)		84		617		440
Interest income		292		25		377		144
Interest expense		(2,276)		(3,943)		(6,923)		(12,955)
Loss on debt extinguishment		—		(4,408)		—		(4,408)

Other expense, net		(4,130)		(8,242)		(5,929)		(16,779)

Net income	$	41,048	$	57,132		130,538		91,154
Less: Net income attributable to noncontrolling interest		220		—		639		—
Net income attributable to Genco Shipping & Trading Limited	$	40,828	$	57,132	$	129,899	$	91,154

Earnings per share-basic	$	0.96	$	1.36	$	3.07	$	2.17
Earnings per share-diluted	$	0.95	$	1.34	$	3.03	$	2.14
Weighted average common shares outstanding-basic		42,529,865		42,095,211		42,361,797		42,047,115
Weighted average common shares outstanding-diluted		42,881,541		42,750,836		42,915,240		42,548,187

See accompanying notes to Condensed Consolidated Financial Statements.

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Genco Shipping & Trading Limited

Condensed Consolidated Statements of Comprehensive Income

For the Three and Nine Months Ended September 30, 2022 and 2021

(U.S. Dollars in Thousands)

(Unaudited)


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021

Net income	$	41,048	$	57,132	$	130,538	$	91,154

Other comprehensive income (loss)		1,488		(98)		6,280		40

Comprehensive income	$	42,536	$	57,034	$	136,818	$	91,194
Less: Comprehensive income attributable to noncontrolling interest		220		—		639		—
Comprehensive income attributable to Genco Shipping & Trading Limited	$	42,316	$	57,034	$	136,179	$	91,194

See accompanying notes to Condensed Consolidated Financial Statements.

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Genco Shipping & Trading Limited

Condensed Consolidated Statements of Equity

For the Three and Nine Months Ended September 30, 2022 and 2021

(U.S. Dollars in Thousands)

aaw
									Genco
									Shipping &
					Accumulated				Trading
			Additional		Other				Limited
	Common		Paid-in		Comprehensive		Accumulated		Shareholders'		Noncontrolling
	Stock		Capital		Income		Deficit		Equity		Interest		Total Equity
Balance — January 1, 2022	$	419	$	1,702,166	$	825	$	(786,823)	$	916,587	$	88	$	916,675

Net income								41,689		41,689		176		41,865

Other comprehensive income						3,293				3,293				3,293

Issuance of shares due to vesting of RSUs and exercise of options		2		(2)						—				—

Cash dividends declared ($0.67 per share)				(28,454)						(28,454)				(28,454)

Nonvested stock amortization				690						690				690

Balance — March 31, 2022	$	421	$	1,674,400	$	4,118	$	(745,134)	$	933,805	$	264	$	934,069

Net income								47,382		47,382		243		47,625

Other comprehensive income						1,499				1,499				1,499

Issuance of shares due to vesting of RSUs and exercise of options		2		(2)						—				—

Cash dividends declared ($0.79 per share)				(33,560)						(33,560)				(33,560)

Nonvested stock amortization				826						826				826

Balance — June 30, 2022	$	423	$	1,641,664	$	5,617	$	(697,752)	$	949,952	$	507	$	950,459

Net income								40,828		40,828		220		41,048

Other comprehensive income						1,488				1,488				1,488

Issuance of shares due to exercise of options		—		—						—				—

Cash dividends declared ($0.50 per share)				(21,319)						(21,319)				(21,319)

Nonvested stock amortization				840						840				840

Balance — September 30, 2022	$	423	$	1,621,185	$	7,105	$	(656,924)	$	971,789	$	727	$	972,516

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									Genco
									Shipping &
					Accumulated				Trading
			Additional		Other				Limited
	Common		Paid-in		Comprehensive		Accumulated		Shareholders'		Noncontrolling
	Stock		Capital		Income		Deficit		Equity		Interest		Total Equity
Balance — January 1, 2021	$	418	$	1,713,406	$	—	$	(968,830)	$	744,994	$	—	$	744,994

Net income								1,985		1,985				1,985

Other comprehensive income						161				161				161

Issuance of shares due to vesting of RSUs and exercise of options		1		(1)						—				—

Cash dividends declared ($0.02 per share)				(845)						(845)				(845)

Nonvested stock amortization

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