10-Q 1 gnk-20220331x10q.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 March 31, 2022

OR

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 May 4, 2022: Common stock, par value $0.01 per share — 42,102,336 shares.

Genco Shipping & Trading Limited

Page

PART I — FINANCIAL INFORMATION

Item 1.

Financial Statements (unaudited)

4

a)

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

4

b)

Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2022 and 2021

5

c)

Condensed Consolidated Statements of Comprehensive Income for the Three Months ended March 31, 2022 and 2021

6

d)

Condensed Consolidated Statements of Equity for the Three Months ended March 31, 2022 and 2021

7

e)

Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2022 and 2021

8

f)

Notes to Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

48

Item 4.

Controls and Procedures

49

PART II —OTHER INFORMATION

Item 1A.

Risk Factors

49

Item 6.

Exhibits

50

2

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.

3

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Genco Shipping & Trading Limited

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

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

(Unaudited)

March 31, 

December 31, 

    

2022

    

2021

 

    

    

 

Assets

Current assets:

Cash and cash equivalents

$

43,113

$

114,573

Restricted cash

 

5,643

 

5,643

Due from charterers, net of a reserve of $1,556 and $1,403, respectively

 

20,039

 

20,116

Prepaid expenses and other current assets

11,186

9,935

Inventories

23,337

24,563

Fair value of derivative instruments

1,822

Total current assets

 

105,140

 

174,830

Noncurrent assets:

Vessels, net of accumulated depreciation of $265,189 and $253,005, respectively

 

1,031,948

 

981,141

Deposits on vessels

 

 

18,543

Deferred drydock, net of accumulated amortization of $13,660 and $12,879 respectively

 

14,577

 

14,275

Fixed assets, net of accumulated depreciation and amortization of $4,593 and $3,984, respectively

 

7,784

 

7,237

Operating lease right-of-use assets

 

5,144

 

5,495

Restricted cash

 

315

 

315

Fair value of derivative instruments

 

2,594

 

1,166

Total noncurrent assets

 

1,062,362

 

1,028,172

Total assets

$

1,167,502

$

1,203,002

Liabilities and Equity

Current liabilities:

Accounts payable and accrued expenses

$

25,800

$

29,956

Deferred revenue

 

10,133

 

10,081

Current operating lease liabilities

1,882

1,858

Total current liabilities:

 

37,815

 

41,895

Noncurrent liabilities:

Long-term operating lease liabilities

5,723

6,203

Long-term debt, net of deferred financing costs of $7,355 and $7,771, respectively

189,895

238,229

Total noncurrent liabilities

 

195,618

 

244,432

Total liabilities

 

233,433

 

286,327

Commitments and contingencies (Note 13)

Equity:

Common stock, par value $0.01; 500,000,000 shares authorized; 42,102,336 and 41,924,597 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

421

419

Additional paid-in capital

1,674,400

1,702,166

Accumulated other comprehensive income

 

4,118

 

825

Accumulated deficit

 

(745,134)

 

(786,823)

Total Genco Shipping & Trading Limited shareholders’ equity

 

933,805

 

916,587

Noncontrolling interest

 

264

 

88

Total equity

 

934,069

 

916,675

Total liabilities and equity

$

1,167,502

$

1,203,002

See accompanying notes to Condensed Consolidated Financial Statements.

4

Genco Shipping & Trading Limited

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021

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

(Unaudited)

For the Three Months Ended

March 31, 

    

2022

    

2021

   

Revenues:

Voyage revenues

$

136,227

$

87,591

Total revenues

136,227

 

87,591

Operating expenses:

Voyage expenses

38,464

 

35,074

Vessel operating expenses

27,013

 

19,046

Charter hire expenses

7,638

5,435

General and administrative expenses (inclusive of nonvested stock amortization expense of $690 and $522, respectively)

6,043

 

6,102

Technical management fees

917

1,464

Depreciation and amortization

14,059

 

13,441

Loss on sale of vessels

720

Total operating expenses

94,134

 

81,282

Operating income

42,093

 

6,309

Other income (expense):

Other income

1,997

 

146

Interest income

17

 

71

Interest expense

(2,242)

(4,541)

Other expense, net

(228)

 

(4,324)

Net income

41,865

1,985

Less: Net income attributable to noncontrolling interest

176

 

Net income attributable to Genco Shipping & Trading Limited

$

41,689

$

1,985

Net earnings per share-basic

$

0.99

$

0.05

Net earnings per share-diluted

$

0.97

$

0.05

Weighted average common shares outstanding-basic

42,166,106

 

41,973,782

Weighted average common shares outstanding-diluted

42,867,349

 

42,276,380

See accompanying notes to Condensed Consolidated Financial Statements.

5

Genco Shipping & Trading Limited

Condensed Consolidated Statements of Comprehensive Income

For the Three Months Ended March 31, 2022 and 2021

(U.S. Dollars in Thousands)

(Unaudited)

For the Three Months Ended

March 31, 

    

2022

    

2021

 

Net income

$

41,865

 

$

1,985

Other comprehensive income

3,293

 

161

Comprehensive income

$

45,158

$

2,146

Less: Comprehensive income attributable to noncontrolling interest

176

Comprehensive income attributable to Genco Shipping & Trading Limited

$

44,982

 

$

2,146

See accompanying notes to Condensed Consolidated Financial Statements.

6

Genco Shipping & Trading Limited

Condensed Consolidated Statements of Equity

For the Three Months Ended March 31, 2022 and 2021

(U.S. Dollars in Thousands)

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

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

522

522

522

Balance — March 31, 2021

$

419

$

1,713,082

$

161

$

(966,845)

$

746,817

$

$

746,817

See accompanying notes to Condensed Consolidated Financial Statements.

7

Genco Shipping & Trading Limited

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021

(U.S. Dollars in Thousands)

(Unaudited)

For the Three Months Ended

March 31, 

    

2022

    

2021

 

Cash flows from operating activities:

Net income

 

$

41,865

$

1,985

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

14,059

 

13,441

Amortization of deferred financing costs

418

 

976

Right-of-use asset amortization

351

344

Amortization of nonvested stock compensation expense

690

 

522

Loss on sale of vessels

 

720

Amortization of premium on derivative

43

69

Interest rate cap premium payment

(240)

Insurance proceeds for protection and indemnity claims

99

41

Change in assets and liabilities:

Decrease in due from charterers

77

 

1,748

Increase in prepaid expenses and other current assets

(1,350)

 

(2,692)

Decrease (increase) in inventories

1,226

(2,565)

(Decrease) increase in accounts payable and accrued expenses

(2,834)

 

1,548

Increase (decrease) in deferred revenue

52

 

(1,032)

Decrease in operating lease liabilities

(456)

(432)

Deferred drydock costs incurred

(1,685)

 

(939)

Net cash provided by operating activities

52,555

 

13,494

Cash flows from investing activities:

Purchase of vessels and ballast water treatment systems, including deposits

(45,482)

 

(1,190)

Purchase of scrubbers (capitalized in Vessels)

(41)

Purchase of other fixed assets

(1,483)

 

(152)

Net proceeds from sale of vessels

21,272

Insurance proceeds for hull and machinery claims

61

Net cash (used in) provided by investing activities

(46,965)

 

19,950

Cash flows from financing activities:

Repayments on the $450 Million Credit Facility

(48,750)

Repayments on the $133 Million Credit Facility

(22,740)

Repayments on the $495 Million Credit Facility

(25,470)

Cash dividends paid

(28,289)

(888)

Payment of deferred financing costs

(11)

 

Net cash used in financing activities

(77,050)

 

(49,098)

Net decrease in cash, cash equivalents and restricted cash

(71,460)

 

(15,654)

Cash, cash equivalents and restricted cash at beginning of period

120,531

 

179,679

Cash, cash equivalents and restricted cash at end of period

 

$

49,071

$

164,025

See accompanying notes to Condensed Consolidated Financial Statements.

8

Genco Shipping & Trading Limited

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

Notes to Condensed Consolidated Financial Statements (unaudited)

1 - GENERAL INFORMATION

The accompanying Condensed Consolidated Financial Statements include the accounts of Genco Shipping & Trading Limited (“GS&T”) and its direct and indirect subsidiaries (collectively, the “Company”). The Company is engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels and operates in one business segment.

At March 31, 2022, the Company’s fleet consisted of 44 drybulk vessels, including 17 Capesize drybulk carriers, 15 Ultramax drybulk carriers and twelve Supramax drybulk carriers, with an aggregate carrying capacity of approximately 4,636,000 dwt and an average age of approximately 10.1 years.

During September 2021, the Company and Synergy Marine Pte. Ltd. (“Synergy”), a third party, formed a joint venture, GS Shipmanagement Pte. Ltd. (“GSSM”). GSSM is owned 50% by the Company and 50% by Synergy as of March 31, 2022 and December 31, 2021, and was formed to provide ship management services to the Company’s vessels. As of March 31, 2022 and December 31, 2021, the investments GSSM received from the Company and Synergy totaled $50 and $50, respectively, which were used for expenditures directly related to the operations of GSSM.

Management has determined that GSSM qualifies as a variable interest entity, and, when aggregating the variable interest held by the Company and Synergy, the Company is the primary beneficiary as the Company has the ability to direct the activities that most significantly impact GSSM’s economic performance. Accordingly, the Company consolidates GSSM.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus strain, or COVID-19, to be a pandemic. The COVID-19 pandemic is having widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices. Over the course of the pandemic, governments have implemented measures in an effort to contain the virus, including social distancing, travel restrictions, border closures, limitations on public gatherings, working from home, supply chain logistical changes, and closure of non-essential businesses. This led to a significant slowdown in overall economic activity levels globally and a decline in demand for certain of the raw materials that our vessels transport.

At present, it is not possible to ascertain any future impact of COVID-19 on the Company’s operational and financial performance, which may take some time to materialize and may not be fully reflected in the results for 2022.  However, an increase in the severity or duration or a resurgence of the COVID-19 pandemic, any potential variants and the timing of wide-scale vaccine distribution could have a material adverse effect on the Company’s business, results of operations, cash flows, financial condition, the carrying value of the Company’s assets, the fair values of the Company’s vessels, and the Company’s ability to pay dividends. 

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and the rules and regulations of the SEC that apply to interim financial statements, including the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the disclosures and footnotes normally included in complete consolidated financial statements prepared in conformity with U.S. GAAP. They should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2021 Annual Report on Form 10-K, filed with the SEC on February 24, 2022. The accompanying Condensed Consolidated Financial Statements include the accounts of GS&T and its direct and indirect wholly-owned subsidiaries and GSSM. All intercompany accounts and transactions have been eliminated in consolidation.

9

Basis of presentation

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with U.S. GAAP for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and operating results have been included in the statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2021 (the “2021 10-K”). The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the operating results to be expected for the year ending December 31, 2022.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Significant estimates include vessel valuations, the valuation of amounts due from charterers, residual value of vessels, useful life of vessels, the fair value of time charters acquired, and the fair value of derivative instruments, if any.  Actual results could differ from those estimates.

Cash, cash equivalents and restricted cash

The Company considers highly liquid investments, such as money market funds and certificates of deposit with an original maturity of three months or less at the time of purchase to be cash equivalents. Current and non-current restricted cash includes cash that is restricted pursuant to our credit facilities. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same amounts shown in the Condensed Consolidated Statements of Cash Flows:

March 31, 

December 31, 

    

2022

    

2021

 

Cash and cash equivalents

 

$

43,113

 

$

114,573

Restricted cash - current

5,643

5,643

Restricted cash - noncurrent

 

315

 

315

Cash, cash equivalents and restricted cash

 

$

49,071

 

$

120,531

Bunker swap and forward fuel purchase agreements

From time to time, the Company may enter into fuel hedge agreements with the objective of reducing the risk of the effect of changing fuel prices. The Company has entered into bunker swap agreements and forward fuel purchase agreements. The Company’s bunker swap agreements and forward fuel purchase agreements do not qualify for hedge accounting treatment; therefore any unrealized or realized gains and losses are recorded in the Condensed Consolidated Statements of Operations. Derivatives are Level 2 instruments in the fair value hierarchy.

During the three months ended March 31, 2022 and 2021, the Company recorded $629 and $155 of realized gains in other income, respectively. During the three months ended March 31, 2022 and 2021, the Company recorded $1,439 and ($116) of unrealized gains (losses) in other income, respectively. The total fair value of the bunker swap agreements and forward fuel purchase agreements in an asset position as of March 31, 2022 and December 31, 2021 is $1,602 and $82 and are recorded in prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets. The total fair value of the bunker swap agreements and forward fuel purchase agreements in a liability position

10

as of March 31, 2022 and December 31, 2021 is $70 and $139 and are recorded in accounts payable and accrued expenses in the Condensed Consolidated Balance Sheets.

Vessels, net

Vessels, net is stated at cost less accumulated depreciation. Included in vessel costs are acquisition costs directly attributable to the acquisition of a vessel and expenditures made to prepare the vessel for its initial voyage. The Company also capitalizes interest costs for a vessel under construction as a cost that is directly attributable to the acquisition of a vessel. Vessels are depreciated on a straight-line basis over their estimated useful lives, determined to be 25 years from the date of initial delivery from the shipyard. Depreciation for vessels during the three months ended March 31, 2022 and 2021 was $12,184 and $11,769, respectively.

Depreciation expense is calculated based on cost less the estimated residual scrap value. The costs of significant replacements, renewals and betterments are capitalized and depreciated over the shorter of the vessel’s remaining estimated useful life or the estimated life of the renewal or betterment. Undepreciated cost of any asset component being replaced that was acquired after the initial vessel purchase is written off as a component of vessel operating expense. Expenditures for routine maintenance and repairs are expensed as incurred. Scrap value is estimated by the Company by taking the cost of steel times the weight of the ship noted in lightweight tons (lwt). Effective January 1, 2022, the Company increased the estimated scrap value of the vessels from $310 per lwt to $400 per lwt prospectively based on the average of the 15-year average scrap value of steel. During the three months ended March 31, 2022, the increase in the estimated scrap value resulted in a decrease in depreciation expense of $1,146. The decrease in depreciation expense resulted in a $0.03 and $0.02 change to the basic and diluted net earnings per share, respectively, during the three months ended March 31, 2022. The basic and diluted net earnings per share for the three months ended March 31, 2022 would have been $0.96 per share and $0.95 per share, respectively, if there was no change in the estimated scrap value.

Voyage expense recognition

In time charters and spot market-related time charters, operating costs including crews, maintenance and insurance are typically paid by the owner of the vessel and specified voyage costs such as fuel and port charges are paid by the charterer. These expenses are borne by the Company during spot market voyage charters. As such, there are significantly higher voyage expenses for spot market voyage charters as compared to time charters and spot market-related time charters. Refer to Note 11 — Voyage Revenues for further discussion of the accounting for fuel expenses for spot market voyage charters. There are certain other non-specified voyage expenses, such as commissions, which are typically borne by the Company. At the inception of a time charter, the Company records the difference between the cost of bunker fuel delivered by the terminating charterer and the bunker fuel sold to the new charterer as a gain or loss within voyage expenses. Additionally, the Company records lower of cost and net realizable value adjustments to re-value the bunker fuel on a quarterly basis for certain time charter agreements where the inventory is subject to gains and losses. These differences in bunkers, including any lower of cost and net realizable value adjustments, resulted in a net gain of $2,004 and $493 during the three months ended March 31, 2022 and 2021, respectively. Additionally, voyage expenses include the cost of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement.

Technical management fees

Technical management fees include the direct costs, including operating costs, incurred by GSSM for the technical management of the vessels under its management. Additionally, prior to the transfer of our vessels to GSSM for technical management, we incurred management fees payable to third party technical management companies for the

11

day-to-day management of our vessels, including performing routine maintenance, attending to vessel operation and arranging for crews and supplies.

Loss on sale of vessels

During the three months ended March 31, 2021, the Company recorded a net loss of $720 related primarily to the sale of the Baltic Panther, the Baltic Hare and the Baltic Cougar, as well as net losses associated with the exchange of the Baltic Cove, the Baltic Fox, the Genco Spirit, the Genco Avra and the Genco Mare. Refer to Note 4 — Vessel Acquisitions and Dispositions for further detail regarding the sale of these vessels. There were no vessels sold during the three months ended March 31, 2022.

Recent accounting pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”)” which provides temporary optional expedients and exceptions to the guidance in U.S. GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848) – Scope (“ASU 2021-01”),” which permits entities to apply optional expedients in Topic 848 to derivative instruments modified because of discounting transition resulting from reference rate reform. ASU 2020-04 became effective upon issuance and may be applied prospectively to contract modification made on or before December 31, 2022. ASU 2021-01 became effective upon issuance and may be applied on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 or prospectively for contract modification made on or before December 31, 2022. The Company has evaluated the impact of the adoption of ASU 2020-04 and ASU 2021-01 and has determined that there is no effect on its Condensed Consolidated Financial Statements and related disclosures.

3 - CASH FLOW INFORMATION

For the three months ended March 31, 2022, the Company had non-cash investing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $615 for the Purchase of vessels and ballast water treatment systems, including deposits, and $716 for the Purchase of other fixed assets. For the three months ended March 31, 2022, the Company had non-cash financing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expense consisting of $322 for Cash dividends payable.

For the three months ended March 31, 2021, the Company had non-cash investing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $975 for the Purchase of vessels and ballast water treatment systems, including deposits, $17 for the Purchase of scrubbers, $154 for the Purchase of other fixed assets and $61 for the Net proceeds from sale of vessels. For the three months ended March 31, 2021, the Company had non-cash financing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expense consisting of $71 for Cash dividends payable.

During the three months ended March 31, 2022 and 2021, cash paid for interest, net of amounts capitalized, was $1,793 and $3,583, respectively.

During the three months ended March 31, 2022 and 2021, there was no cash paid for income taxes.

During the three months ended March 31, 2022, the Company reclassified $18,543 from Deposits on vessels to Vessels, net of accumulated depreciation upon the delivery of the Genco May and Genco Laddey. Refer to Note 4 — Vessel Acquisitions and Dispositions.

12

During the three months ended March 31, 2021, the Company reclassified $15,630 from Vessels, net of accumulated depreciation to Vessels held for sale as the Company entered into agreements to sell the Baltic Leopard and Genco Lorraine prior to March 31, 2021.  

On February 23, 2022, the Company issued 201,934 restricted stock units to certain individuals. The aggregate fair value of these restricted stock units was $3,950.

On February 23, 2021, the Company issued 103,599 restricted stock units and options to purchase 118,552 shares of the Company’s stock at an exercise price of $9.91 to certain individuals. The fair value of these restricted stock units and stock options were $1,027 and $513, respectively.

Refer to Note 14 — Stock-Based Compensation for further information regarding the aforementioned grants.

Supplemental Condensed Consolidated Cash Flow information related to leases is as follows:

For the Three Months Ended

March 31, 

2022

2021

 

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

$

557

$

557

4 - VESSEL ACQUISITIONS AND DISPOSITIONS

Vessel Acquisitions

On May 18, 2021, the Company entered into agreements to acquire two 2022-built 61,000 dwt newbuilding Ultramax vessels from Dalian Cosco KHI Ship Engineering Co. Ltd. for a purchase price of $29,170 each, that were renamed the Genco Mary and the Genco Laddey. The vessels were delivered to the Company on January 6, 2022. The Company used cash on hand to finance the purchase. As of December 31, 2021, deposits on vessels were $18,543. The remaining purchase price of $40,838 was paid during the three months ended March 31, 2022 upon delivery of the vessels

Capitalized interest expense associated with these newbuilding contracts for the three months ended March 31, 2022 and 2021 was $5 and $0, respectively.

Vessel Exchange

On December 17, 2020, the Company entered into an agreement to acquire three Ultramax vessels in exchange for six Handysize vessels for a fair value of $46,000 less a 1.0% commission payable to a third party. The Genco Magic, a 2014-built Ultramax vessel, and the Genco Vigilant and the Genco Freedom, both 2015-built Ultramax vessels, were delivered to the Company on December 23, 2020, January 28, 2021 and February 20, 2021, respectively. The Genco Ocean, the Baltic Cove and the Baltic Fox, all 2010-built Handysize vessels, were delivered to the buyers on December 29, 2020, January 30, 2021 and February 2, 2021, respectively. The Genco Spirit, the Genco Avra and the Genco Mare, all 2011-built Handysize vessels, were delivered to the buyers on February 15, 2021, February 21, 2021 and February 24, 2021, respectively.

Vessel Dispositions

As of March 31, 2022 and December 31, 2021, the Company recorded $5,643 of current restricted cash in the Condensed Consolidated Balance Sheets, representing the net proceeds from the sale of the Genco Provence on November 2, 2021 which served as collateral under the $450 Million Credit Facility. Pursuant to the $450 Million Credit Facility, the net proceeds received from the sale will remain classified as restricted cash for 360 days following the sale date. That amount can be used towards the financing of replacement vessels or vessels meeting certain

13

requirements and added as collateral under the facility. If such a replacement vessel is not added as collateral within such 360 day period, the Company will be required to use the proceeds as a loan prepayment. Refer to Note 7 — Debt for further information

During November 2020, the Company entered into agreements to sell the Baltic Cougar, the Baltic Hare and the Baltic Panther. The sale of the Baltic Hare, the Baltic Panther and the Baltic Cougar were completed on January 15, 2021, January 4, 2021 and February 24, 2021, respectively.

Refer to the “Loss on sale of vessels” section in Note 2 — Summary of Significant Accounting Policies for discussion of the net loss on sale of vessels recorded during the three months ended March 31, 2022 and 2021.

5 – NET EARNINGS PER SHARE

The computation of basic net earnings per share is based on the weighted-average number of common shares outstanding during the reporting period. The computation of diluted net earnings per share assumes the vesting of nonvested stock awards and the exercise of stock options (refer to Note 14 — Stock-Based Compensation), for which the assumed proceeds upon vesting are deemed to be the amount of compensation cost attributable to future services and are not yet recognized using the treasury stock method, to the extent dilutive. There were 260,693 and 215,240 restricted stock units that were dilutive during the three months ended March 31, 2022 and 2021, respectively. There were 440,550 and 87,358 stock options that were dilutive during the three months ended March 31, 2022 and 2021, respectively.

The components of the denominator for the calculation of basic and diluted net earnings per share are as follows:

<

For the Three Months Ended

March 31, 

    

2022

    

2021

 

Common shares outstanding, basic:

Weighted-average common shares outstanding, basic

42,166,106

 

41,973,782

Common shares outstanding, diluted:

Weighted-average common shares outstanding, basic

42,166,106

 

41,973,782

Dilutive effect of stock options

440,550

87,358