I wish I had access to the old Motley Fool boards. Then I would have access to one or two threads on Genco Shipping (GNK). In the absence of that data, I will just have to gather some relevant points and see if that kludges well.
Genco Shipping (GNK) is a dry bulk shipping company that attempts to differentiate itself from peers in two ways
- Operates what they term a barbell strategy i.e. own a fleet with vessels that carry major bulk (iron, steel, grain) and minor bulk (steel, fertilizer, cement, other agricultural products,etc). In GNK’s case, they own 17 Cape vessels (for major bulk) and 27 Supramax or Ultramax vessels (for minor bulk)
- Low leverage - Per early Nov 2022, the company indicated it had a net LTV of 11%. There might be some small nuances there, so let me rephrase the point slightly different. Shipping is a capital intensive sector and GNK’s fleet has an avg debt load of $4.1M per vessel. That’s quite low
In late 2021, Genco consolidated all its debt to one $450M financing facility comprised of a loan facility ($150M) and a revolving debt facility ($300M). GNK currently has about $180M in debt, but can continue to draw on the revolver as needed. Genco is in Year 1 of the facility and probably in Year 4 or Year 5, there might be some restrictions on how much of the revolver the company can utilize. But their cash position, and access to the revolver gives GNK a lot of liquidity.
Dividends? Genco - We have a formula!! https://emoji.discourse-cdn.com/twitter/grinning.png?v=12
But being serious for a moment, starting in 2022, the company rolled out a formula for determining the quarterly payout.
A - Operating cash flow
B - Debt repayment ($8.75M)
C - Maintenance capex
D - Reserve ($10.75M)
E - Shares outstanding
dividend = [A - (B+C+D)]/E
Digest on that. The next part I will discuss Q3 2022 results (shares already trading Q3 ex-div, so no urgency on a decision)