Oct. 28, 2009 (PR Newswire) -- NEW YORK, Oct. 28 /PRNewswire-FirstCall/ -- Genco Shipping & Trading Limited (NYSE: GNK) today reported its financial results for the three months ended September 30, 2009.

The following financial review discusses the results for the three months and nine months ended September 30, 2009 and September 30, 2008.

Third Quarter 2009 and Year-to-Date Highlights

    --  Recorded net income of $34.3 million, or $1.10 basic and $1.09 diluted
earnings per share for the third quarter;

    --  Took delivery of the Genco Commodus and delivered the vessel to Morgan
Stanley Capital Group Inc. for the commencement of a 23 to 25 month time
charter at a rate of $36,000 per day;

    --  Took delivery of the Genco Maximus and delivered the vessel to Cargill
International S.A. for the commencement of a 3 to 5.5 month time charter
at a rate of $31,750 per day; and

    --  Signed short-term time charter agreements for three Panamax vessels, two
Supramax vessels and two Handymax vessels.

Financial Review: 2009 Third Quarter

The Company recorded net income for the third quarter of 2009 of $34.3 million, or $1.10 basic and $1.09 diluted earnings per share. Comparatively, for the three months ended September 30, 2008 net income was $63.0 million or $2.00 basic and $1.99 diluted earnings per share.

EBITDA was $72.5 million for the three months ended September 30, 2009 versus $93.2 million for the three months ended September 30, 2008.

Robert Gerald Buchanan, President, commented, "Our strong performance for the third quarter highlights management's success in locking away a large portion of our fleet on long-term time charters with a diverse group of leading multi-national companies. Currently, we have approximately 75% of our fleet's available days secured on contracts for the remainder of 2009 and 45% in 2010. Genco's sizeable contracted revenue streams provide shareholders with a high degree of earnings visibility while maintaining the ability to benefit from future rate increases. As we remain focused on executing our time charter strategy, we will seek to continue to deliver service that meets the highest operational standards for our leading customers."

Genco Shipping & Trading Limited revenues decreased 13.7% to $92.9 million for the three months ended September 30, 2009 versus $107.6 million for the three months ended September 30, 2008 due to lower charter rates achieved for some of our vessels.

The average daily time charter equivalent, or TCE, rates obtained by the Company's fleet decreased 21.9% to $30,743 per day for the three months ended September 30, 2009 compared to $39,349 for the three months ended September 30, 2008. The decrease in TCE rates resulted from lower charter rates achieved in the third quarter of 2009 versus the third quarter of 2008 for five of the Panamax vessels, six of the Supramax and Handymax vessels, and five of the Handysize vessels in our current fleet. Furthermore, lower TCE rates were achieved in the third quarter of 2009 versus the same period last year due to the comparatively lower revenue from the profit sharing agreements on two of our Capesize vessels. This was slightly offset by higher revenues on one of our Handymax vessels.

Total operating expenses increased to $42.7 million for the three months ended September 30, 2009 from $36.9 million for the three month period ended September 30, 2008 due to higher vessel operating expenses, management fees and depreciation and amortization related to the operation of a larger fleet. Vessel operating expenses were $14.8 million for the third quarter of 2009 compared to $11.5 million for the same period last year. The increase in vessel operating expenses was due to the operation of a larger fleet, higher crewing expenses, as well as the operation of more Capesize vessels for the third quarter of 2009 versus the same period last year. We expect our vessel operating expenses, which generally represent variable costs, to further increase as a result of the expansion of our fleet as well as general inflation associated with costs of insurance, crewing, lube oil and spare parts.

Depreciation and amortization expenses increased to $22.3 million for the third quarter of 2009 from $18.8 million for the third quarter of 2008 as a result of the growth of our fleet. General and administrative expenses decreased to $3.8 million from $4.1 million during the comparative periods due to a decrease in costs associated with employee non-cash compensation, and other administrative costs. Management fees were $0.9 million for the three months ended September 30, 2009 and $0.7 million for the three months ended September 30, 2008, respectively, and relate to fees paid to our independent technical managers.

Daily vessel operating expenses, or DVOE, grew to $4,878 per vessel per day during the third quarter of 2009 from $4,187 for the same quarter last year as a result of higher crew and insurance expenses as well as the operation of a greater number of Capesize vessels. Daily vessel operating expenses year to date have been below budget due to the timing of purchases of spare parts as well as lower than anticipated crew costs. We believe daily vessel operating expenses are best measured for comparative purposes over a 12month period in order to take into account all of the expenses that each vessel in our fleet will incur over a full year of operation. Based on estimates provided by our technical managers and management's expectations, our 2009 DVOE budget is $5,350 per vessel per day on a weighted average basis.

John C. Wobensmith, Chief Financial Officer, commented, "During the third quarter, Genco further strengthened its leadership position by taking delivery of two Capesize newbuildings. Drawing upon our considerable financial strength, we intend to take delivery of our remaining Capesize newbuilding during the fourth quarter of 2009. As we continue to execute our growth strategy, we expect to increase the earnings power of our modern fleet and capitalize on the positive long-term demand for essential commodities in China, India and other developing countries. Management remains committed to actively consolidating the drybulk industry as we have consistently done since going public in July of 2005. In pursuing future growth opportunities, we intend to maintain our disciplined approach by adhering to a strict set of return criteria related to earnings and cash flow accretion as well as return on capital hurdles."

Financial Review: Nine Months 2009

Net income was $113.1 million or $3.62 basic and $3.60 diluted earnings per share for the nine months ended September 30, 2009, compared to $197.9 million or $6.60 basic and $6.56 diluted earnings per share for the nine months ended September 30, 2008. Included in net income for the nine months ended September 30, 2008 is a $26.2 million gain from the sale of the Genco Trader, $7.0 million of income received from our investment in stock of Jinhui Shipping and Transportation Limited, and a loss from derivative instruments of $2.0 million. Revenues decreased to $283.3 million for the nine months ended September 30, 2009 compared to $303.8 million for the nine months ended September 30, 2008. EBITDA was $222.5 million for the nine months ended September 30, 2009 versus $283.2 for the nine months ended September 30, 2008. TCE rates obtained by the Company decreased to $32,044 per day for the nine months ended September 30, 2009 from $38,742 for the same period in 2008. Total operating expenses were $124.7 million for the nine months ended September 30, 2009 compared to $77.1 for the nine months ended September 30, 2008, and daily vessel operating expenses per vessel were $4,789 versus $4,279 for the comparative periods.

Liquidity and Capital Resources

Cash Flow

Net cash provided by operating activities for the nine months ended September 30, 2009 and 2008 was $166.3 million and $207.4 million, respectively. The decrease in cash provided by operating activities was primarily due to a decrease in cash flows generated by the operation of our fleet due to lower charter rates and higher operating expenses. In addition, cash paid for interest increased by $7.2 million during the nine months ended September 30, 2009 as a result of an increase in the debt outstanding under the Company's 2007 Credit Facility. During the nine months ended September 30, 2008, a $26.2 million gain on sale of vessels was recognized from the sale of the Genco Trader and $7.0 million of income was received from our investment in stock of Jinhui Shipping and Transportation Limited.

Net cash used in investing activities for the nine months ended September 30, 2009 and 2008 was $210.1 million and $426.3 million, respectively. The decrease was primarily due to decreases in cash used for the purchase of vessels and deposits on vessels offset by a decline in cash provided by the sale of vessels. For the nine months ended September 30, 2009, cash used in investing activities primarily related to the purchase of vessels in the amount of $191.5 million and deposits of restricted cash in the amount of $17 million. For the nine months ended September 30, 2008, net cash used in investing activities primarily related to the purchase of vessels in the amount of $412.0 million as well as deposits on vessels in the amount of $57.4 million and the purchase of short term investments of $10.3 million, offset by the proceeds from the sale of the Genco Trader in the amount of $43.1 million and $7.0 million of income received from our investment in Jinhui Shipping and Transportation Limited.

Net cash provided by financing activities was $162.6 million during the nine months ended September 30, 2009 as compared to $289.8 million during the nine months ended September 30, 2008. The $127.2 million decrease in net cash provided by financing activities was primarily due to the issuance of common stock in the amount of $195.6 million, completed during the nine month period last year, and was offset by $85.6 million of cash dividends paid during the same period. For the nine months ended September 30, 2009 cash provided by financing activities consisted of $166.2 million of proceeds from the 2007 credit facility slightly offset by $3.5 million of deferred financing costs. For the same period last year, net cash provided by financing activities consisted of the drawdown of $461.5 million related to the purchase of vessels and $195.6 million in net proceeds from our May 2008 follow-on offering. These inflows were offset by the repayment of $268.0 million under the 2007 credit facility and the payment of cash dividends of $85.6 million.

Capital Expenditures

We make capital expenditures from time to time in connection with vessel acquisitions. Our current fleet consists of eight Capesize, eight Panamax, four Supramax, six Handymax and eight Handysize vessels, with an aggregate carrying capacity of approximately 2,734,000 dwt. After the expected delivery of the Genco Claudius, the last of the vessels that the Company has agreed to acquire, Genco Shipping & Trading Limited will own a fleet of 35 drybulk vessels, consisting of nine Capesize, eight Panamax, four Supramax, six Handymax and eight Handysize vessels, with an aggregate carrying capacity of approximately 2,905,000 dwt.

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 that one of our vessels will be drydocked in the fourth quarter of 2009. We further anticipate that nine of our vessels will be drydocked in 2010.

We estimate our drydocking costs for our fleet through 2010 to be:

Q4 2009             2010
Estimated Costs (1)                    $0.6 million      $5.1 million
Estimated Offhire Days (2)                  20               160

(1) Estimates are based on our budgeted cost of drydocking our vessels in
China.  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.
Two of the Capesize vessels drydocking in 2010 are anticipated to complete
the required maintenance in only ten days.

The Genco Beauty, Reliance and Warrior completed their drydockings during the third quarter of 2009 at an aggregate cost of approximately $1.5 million.