Genco Shipping & Trading Ltd. (NYSE:GNK) Q2 2018 Earnings Conference Call - Final Transcript

Aug 09, 2018 • 08:30 am ET

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Genco Shipping & Trading Ltd. (NYSE:GNK) Q2 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning, ladies and gentlemen, and welcome to the Genco Shipping & Trading Limited Second Quarter 2018 Earnings Conference Call and Presentation. Before we begin, please note that there will be a slide presentation accompanying today's conference call. That presentation can be obtained from Genco's website at www.GencoShipping.com.

To inform everyone, today's conference is being recorded and is now being webcast at the Company's website, www.GencoShipping.com. We will conduct a question-and-answer session after the opening remarks. Instructions will follow at that time. A replay of the conference will be accessible at any time during the next two weeks by dialing 1 (888) 203-1112 or 1 (719) 457-0821 and entering the passcode 4282601.

At this time, I will turn the conference over to the Company. Please go ahead.

Executive
Unidentified Company Representative

Good morning. (Forward-Looking Cautionary Statements)

At this time, I would like to introduce John Wobensmith, CEO of Genco Shipping & Trading Limited.

Executive
John Wobensmith

Good morning, everyone. Welcome to Genco's Second Quarter 2018 Conference Call.

I will begin today's call by reviewing our second quarter highlights. We will then discuss our financial results for the quarter and the industry's current fundamentals and then finally open up the call for questions.

Starting on Slide 5, we review Genco's second quarter highlights. Following our success in transforming Genco's commercial platform, we took important steps during the second quarter to implement our growth strategy and position Genco to more fully capitalize on a robust drybulk market.

In June, we successfully completed a common stock offering for gross proceeds of $115.7 million. We issued 7,015,000 shares, which included the exercise in full of the underwriters' option to purchase up to 915,000 shares of common stock. We're utilizing the proceeds from this successful offering to fund a portion of our fleet growth initiatives.

We are pleased to have entered into agreements to acquire six high specification, fuel efficient Capesize and Ultramax vessels, further enhancing our earnings power and strengthening our position to take advantage of a drybulk market that is exhibiting significantly improved supply and demand fundamentals.

In June, we agreed to acquire two 2015 Chinese-built 180,000 deadweight ton Capesize vessels, one 2016 Japanese-built 60,000 deadweight ton Ultramax vessel, and one 2014 Chinese-built 61,000 deadweight ton Ultramax vessel for an en bloc purchase price of approximately $141 million. We followed up these transactions in July by agreeing to acquire two 2016 South Korean built 180,000 deadweight ton Capesize vessels for an en bloc purchase price of approximately $98 million. Of note, we have already taken delivery of one of these Ultramax vessels, the Genco Weatherly, and we expect to take delivery of the remaining five vessels by the first half of September, ahead of a seasonally stronger fourth quarter. We believe these acquisitions come at an attractive point in the cycle, given the earnings environment for both the Capesize and the Ultramax sectors.

Complementing our success in growing our fleet, we entered into agreements for the sale of three 1990s-built vessels, including one Panamax, the Genco Surprise, which delivered to buyers