Good morning, ladies and gentlemen, and welcome to the Genco Shipping & Trading Limited Second Quarter 2025 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 opening remarks. Instruction will follow at that time. A webcast replay will also be available via link provided in today's conference press release as well as on the company's website. At this time, I will now turn the conference over to the company. Please go ahead.

Good morning. Before we begin our presentation, I note that in this conference call, we will be making certain forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements use words such as anticipate, budget, estimate, expect, project, intend, plan, believe and other words in terms of similar meaning in connection with the discussion of potential future events, circumstances or future operating or financial performance. These forward-looking statements are based on management's current expectations and observations. For a discussion of factors that could cause results to differ, please see the company's press release that was issued yesterday, the materials relating to this call posted on the company's website and the company's filings with the Securities and Exchange Commission, including, without limitation, the company's annual report on Form 10-K for the year ended December 31, 2024, and the company's reports on Form 10-Q and Form 8-K subsequently filed with the SEC. At this time, I would like to introduce John Wobensmith, Chief Executive Officer of Genco Shipping & Trading Limited.

Good morning, everyone. I will begin today's call by reviewing our Q2 2025 and year-to-date highlights. Additionally, we will provide an update on our value strategy, discuss our financial results for the quarter as well as the industry's current fundamentals before opening the call up for questions. For additional information, please also refer to our earnings presentation posted on our website. Starting on Slide 5. During the second quarter, we continue to prioritize returning cash to shareholders through market cycles while taking additional steps to further expand our earnings power. For the second quarter, we declared a dividend of $0.15 per share despite an intensive dry docking quarter, extending our track record of 24 quarters of consecutive dividends and marking the longest period of uninterrupted dividends in our drybulk. Including the Q2 dividend, Genco has declared $6.915 in dividends per share, representing 41% of our current share price. Notably, for the second quarter of 2025, our dividend formula, including a voluntary reserve of $19.5 million would not have produced a dividend. However, management and the Board chose to maintain the voluntary reserve but reduce it from $19.5 million to $7.9 million for the quarter, resulting in the $0.15 per share dividend. This highlights our commitment to regular shareholder returns as well as our favorable view of the long-term fundamentals of the drybulk industry and the seasonally stronger freight rate environment that has emerged in the second half of the year thus far. To that end, we have front-loaded the majority of our drydockings having completed 12 to date. In the coming weeks, we'll be completed with the majority of our 2025 drydocking schedule and our cash flow breakeven rate is expected to revert back to approximately $9,800 a day by Q4 of this year. Subsequent to the end of the…

Thank you, John. On Slides 11 through 13, we highlight our second quarter financial results. Genco recorded a net loss of $6.8 million or $0.16 basic and diluted net loss per share. Adjusted net loss is $0.14 per share, excluding a noncash impairment charge of $0.7 million. Adjusted EBITDA for Q2 totaled $14.3 million. Our cash position as of June 30, 2025, was $35.8 million, and we have $100 million of debt outstanding, resulting in a net loan-to-value of 7% as stated on Slide 14. Pro forma for the acquisition of the 2020 built Capesize vessel, we expect our net loan to value to be approximately 13% with capital utilized from the revolver to fund the vessel purchase. In July, we closed on our $600 million revolving credit facility under attractive terms, achieving several key objectives as highlighted on Slide 15. We increased our borrowing capacity by $200 million or 50%, further strengthening our ability to pursue accretive growth opportunities for the benefit of shareholders while lowering margin and commitment fees. Additionally, with no commitment reductions until March 31, 2027, Genco maintains the full $600 million of borrowing capacity for an extended period of time, adding to our optionality as markets develop. Furthermore, the accordion feature could provide an additional $300 million of potential capacity to fund acquisitions. With the revolver structure, we plan to continue to actively manage our cash and debt positions to reduce interest expense while maintaining access to capital to quickly act on growth opportunities as we did with the most recent agreement to acquire a high-specification fuel-efficient Capesize vessel. We appreciate the continued support of our high-quality bank group as we continue to execute Genco's strategy. Moving to Slide 16, we highlight our quarterly dividend policy, which targets a distribution based on 100% of operating…

Thank you, Peter. Beginning on Slide 18, the drybulk freight rate environment meaningfully improved in June, crossing the $30,000 per day level in the middle of the month or double the May average. This increase was driven by record Port Hedland iron ore shipments as Australian miners pushed to hit June 30 fiscal year-end targets, while in the Atlantic Basin, exports from Brazil ramped up over lower levels seen earlier in the year, together with continued strong bauxite shipments. Notably, Brazilian iron ore exports from April to June increased by 20%, which on an annualized basis represents enough cargo to absorb approximately 100 Capes or nearly 5% of the Capesize fleet. Limited Capesize net fleet growth, combined with augmented seaborne cargo availability have resulted in a 30% increase in volatility in the Capesize sector this year versus last year. In July, we once again saw the BCI exceed the $30,000 threshold, hitting a year-to- date high of nearly $32,000 a day on July 25 and representing a 132% increase from the prior 2-week period. We believe that freight rate development so far in 2025 represent a more traditional trajectory than what we've seen in recent years. As this year, we've seen a softer Q1 and a sequential improvement in Q2, followed by a stronger market in the second half of the year. Over the last decade, 90% of the time, the highest quarter for Capes has occurred in Q3 or Q4, which appears to be playing out once again. Turning to Page 19, we point to China's steel complex. Specifically, the country's iron ore imports fell by 3% during the first half of the year, but increased to over 100 million tons in June as seaborne supplies recovered. China's iron ore port inventories have been drawn down by 11% earlier…

[Operator Instructions] And our first question comes from the line of Omar Nokta with Jefferies.

Congrats on the new credit facility. Obviously gives you plenty of flexibility and perhaps some firepower. You've acquired this 2020 built Cape. It looks like a high-quality ship. Could you maybe just talk about the attractiveness of that vessel and why you made it? And what's your appetite for more?

Yes. So on the vessel front, Omar, it's a gem. It's Japanese built. We know that's from a performance standpoint, the highest quality that's turned out. It's 2020. So it's relatively new, so very high on the fuel efficiency standpoint. And then it also has a scrubber. It's just a very well-rounded vessel that we're very happy that we were able to conclude. In terms of further appetite, we definitely have more appetite on the Capesize sector that we referenced in the opening remarks. We think that sector -- while we're positive on all the dry bulk vessels, we think the Capesize sector has the most compelling supply and demand fundamentals because there is demand growth coming for the larger ships in terms of iron ore out of West Africa, more bauxite, and we expect even Vale to continue to up their production. So you've got demand growth, but then you also have a very low supply situation. It's actually the lowest supply situation within the drybulk sector. It doesn't mean that we're still focused on minor bulks, and we have a very robust commercial platform that we're able to use for trading as well on the arbitrage side. But I think you'll see most of what we do, at least for the time being, a little more -- trying to weight a little more towards the larger vessels.

Okay. And I guess, maybe just on that point, you monetized some of the older vessels last year. Do you think you'll do more of that maybe selling more of the Supras to fund the Cape acquisitions to kind of get more weight there? Or do you want to keep that fleet intact?

I think -- look, in general, we want to keep the fleet. However, there are 2 ships right now, the Genco Predator and the Genco Picardy, which are 20 years old. So those are definitely a focus for divesting from a fleet renewal standpoint. We tend to time our buys and ourselves at pretty attractive opportunities. And quite frankly, a few months ago, the Supramax market was soft. We were at $9,000 a day, and there was not a lot of action on the older ships in the S&P market. That has now changed. Supramax rates are up 40% since then, and we're seeing a lot more interest on even the older ships. And we're -- as you know, we're always about maximizing price on these ships. So -- and we have the balance sheet to be patient during these periods of time. So yes, I do think before the end of the year, you'll see a couple more go.

And your next question comes from the line of Liam Burke with B. Riley Securities.

John, the supply-demand layout for the Capesize is pretty clear. We've seen nice move on the non-Capesize rates. Is it just grain, as Michael laid out? Or what do you see driving this 40% growth in rates from the bottom?

It's definitely a robust corn crop out of Brazil, soybeans as well. That has been helpful. I would say coal is also starting to come back. We had a [indiscernible]for a few months on the coal side, but we're seeing more coal being shipped also. So I think it's a combination. And this is a big intangible, but we're mostly on the other side of knowing what's happening on the tariff front. And I do think while it does -- it never directly affected drybulk shipping, I do believe that it added some negative sentiment into the market. And that seems to be -- while the tariffs may not be behind us, I think knowing what the tariffs are going to be is pretty clear now. So we're able to operate effectively.

Okay. On the -- getting back to the Capes, you've got good news, bad news. You've got tight supply, steady demand, asset values are higher, especially in your fleet assets. What does that [bode] for potential asset purchases on the Capesize? Are there still deals out there that make sense?

There are deals that make sense and then there are deals that don't make sense. We do a lot of analysis looking at from a historical standpoint, where we're buying in terms of percentiles. And I mean, I'll just give you an example. The 2020 that we bought, when you actually ran the cash flows and the return numbers at what we paid for it versus we were also looking at a 2017 build and the 2021 out. So we obviously moved in that direction. So it look, it all comes down to price. I agree, asset values are firm, particularly in the modern vessels. But starting in the second half of next year, which is when we believe the real demand growth will come from the iron ore front and West Africa going into very low supply in '27, '28, we just see a longer runway than maybe what we've -- what history has given to us. Having said that, the volatility is not going away. So that's important to recognize. But we do have a positive view for the next -- at least the next few years in terms of what we can see on the supply side.

Volatility in shipping rates?

Yes, not profound, I know.

[Operator Instructions] And your next question comes from the line of Chris Robertson with JPMorgan -- with Deutsche Bank.

John, just returning to the fleet renewal front, obviously, with the purchase of the modern Cape here. But can you touch on other vessel upgrades and equipment that you guys are currently looking at and working on during your drydocking process that makes the current ships more efficient? Can you talk about that in terms of kind of fuel efficiency and performance? And what do you think the next technological landscape kind of looks like over the coming years outside of the normal discussion around alternative fuels?

So we've been installing energy-saving devices on our ships as we've been drydocking, and that can vary from used docks, new propellers, certainly new paint systems. We're using much more robust paint systems. We are -- and I should add, we're exploring, which goes a little bit to your next question, but we're exploring certain robotic cleaning devices, which stay with the ship so that we can clean more often and actually cut costs on the cleaning side. So that's a small thing we're looking at as well. But it's really the energy-saving devices, and we think we can save around 5% on the fuel side. So very quick payback on the money that we're spending. In terms of things outside of alternative fuels, which unfortunately, I still think are quite a ways away in terms of really being used. We have been doing -- we have been using biofuel and biofuel mixes. That's been helpful, particularly with the EU system. We've looked at carbon capture. We're not fully there on that yet, but we've looked at it. And then there's always the long shot, but interesting, and that's the nuclear option, so to speak, because I do think that, that's a really interesting technology that could be one of these days in the future developed by the shipping industry.

Your next question comes from the line of Poe Fratt with AGP Alliance Global Partners.

John, you covered a lot of ground about the market and just capital allocation. Can you just close the loop on how you're going to use the stock buyback program?

Yes. So we did not do any shares during the last quarter. And I think the most important thing is that the program is viewed as supplemental to dividends. It's an add-on because dividends are the primary means of returning capital in our mind to shareholders. But as of this quarter, we didn't really observe market conditions that would have led us to buy under the program. So it's in place. And if we have downward volatility such as we saw a few months ago, then we have it at our disposal.

Great. That's helpful. And then history never is exactly the same, but you now have a shareholder that's close to 10%. I'm not sure you want to comment, but can you just give us a flavor for whether you've had any discussions with the new shareholder?

So look, I mean, we speak to investors all the time, but we clearly don't talk details about who we're speaking to or the nature of that conversation. I would refer you to Diana's public statements, which indicate this is a passive investment, but I can't comment any further on that at this point.

And your next question comes from the line of Michael Mathison with Sidoti.

Just a couple of questions for me. In your slides last quarter, you showed that Chinese coal demand had declined overall, and there was a shift in demand from the U.S. to Brazil. What did you see in terms of Chinese demand this quarter?

From an import standpoint, we've definitely seen it fall off. The exception to that is over the last month or so, we've started to see the Chinese buying again. We could see a recovery as we're going into the end of the year. But for the quarter, we definitely saw soft Chinese buying on the coal side.

Okay. There was a lot of information about a rebound in TCE rates in Q3 here. Do you have an early read on what TCE might look like in Q4?

No. I mean you can look at the forward curve, and the forward curve is showing a nice strong Q4. But predicting actual rate levels is difficult. We're fairly adept at predicting direction. But I would say the fleet is mostly spot. We have maybe not even 5% fixed for the fourth quarter. So we will be able to take advantage of what the fourth quarter brings in terms of rates. And the other nice thing is, as we mentioned earlier, we have most of our drydockings done. I think there are only 2 drydockings in Q4. So we're going to have very high utilization of the fleet in Q4 and our breakeven -- cash flow breakeven comes back down below $10,000 a day at somewhere around $9,800 a day. So we're set up nicely for Q4.

Terrific. That's the inform I was looking for. I never thought you could pick a number to the dime or anything like that.

As there are no further questions at this time. This concludes your conference call for today. We thank you for your participating and ask you to please disconnect your lines.