New York-listed Genco Shipping & Trading has ended the suspense over the size of its first “full” dividend payout under a new capital allocation model. The distribution of $0.79 per share is 18% larger than the $0.67 paid for the fourth quarter of 2021, Genco’s largest payment last year. It represents a 14% yield based on the recent share price. It follows a seasonally weaker first quarter that nonetheless was Genco’s strongest start to a year since 2010.
“During the first quarter we generated strong TCE [time-charter equivalents] in a seasonally softer market, as we benefited from our past success fixing forward cargos at attractive rates,” said chief executive John Wobensmith. “We also made further progress implementing our value strategy, resulting in the first full payout based on our quarterly debt repayment run rate.”
Genco’s quarter was good for net income of $41.7m, or $0.97 per share, a figure that just beat analyst estimates by a penny. Voyage revenue of $136.2m, up 189% from the first quarter of 2021, also beat analyst estimates by $42.3m. Genco said its fleet of bulkers ranging from capesizes to supramaxes brought in a time charter equivalent average of $24,093, a 98% improvement over the year-ago period.
The New York-based shipowner is guiding to a stronger $27,596 per with 68% of days booked in the current quarter, although the figure covers both spot and period fixtures. These figures are well above what Genco says is a sector-low financial breakeven rate of $8,900 across its fleet, driven lower by a concerted effort to slash debt.
The company said it had $270.9m in liquidity on 31 March, including $49.1m in cash and $221.8m available under a revolving loan. “Genco remains well-positioned to capitalize on favorable dry bulk fundamentals, which remain intact and are driven by the attractive supply and demand balance and, specifically, the historically low newbuilding orderbook,” Wobensmith said. “We continue to monitor near-term changes in dry bulk trade flows as result of Russia’s war in Ukraine as we meet customer needs and support our crew during these challenging times.”
The first quarter is usually the weakest period for dry bulk owners. To underscore the difference from the back half of 2021, Genco has told investors that its new model would have yielded a dividend of $1.85 per share for the fourth quarter, which was Genco’s strongest since 2008. For the first quarter of 2021, Genco recorded net income of $2m, or $0.05 per share.