Good morning, ladies and gentlemen, and welcome to the Genco Shipping & Trading Limited Fourth Quarter 2017 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 anytime during the next two weeks by dialing 1-888-203-1112 or 719-457-0820 and entering the passcode 2891933. At this time, I will 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, expects, projects, intend, plan, believe and other words and 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, 2016, and the Company’s report 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 fourth quarter 2017 and year-to-date highlights. We will then discuss our financial results for the quarter and the industry’s current fundamentals, and then open up the call for questions. Turning to Slide 5, we reviewed Genco’s fourth quarter highlights. During the fourth quarter, the drybulk markets strengthened considerably due to firm Chinese deal output and steel mill margins as well as improved world GDP growth, which led to heightened demand for seaborne iron ore coal and minor bulk cargos. This increase in demand combined with minimal net fleet growth drove freight rates higher. The fourth quarter marked a major inflection point for Genco as we drew upon our success transforming our commercial strategy and optimizing our cost structure to capitalize on these improving market conditions and return to profitability for the first time in six years. Our fleet performed well during the quarter as net voyage revenues increased by nearly 50% on a year-over-year basis underscoring the earnings power of our fleet. For the fourth quarter, we recorded a net income of $2.6 million or $0.07 basic and diluted income per share. Our strong quarterly performance also included generating EBITDA of $27.5 million and increasing our cash position to $204.9 million as of December 31, 2017. We also paid down our $400 million credit facility by $11.3 million in February 2018 from cash flow from operations during the fourth quarter. We are pleased to have posted strong operating results following the execution of various initiatives to enhance our commercial platform throughout the course of the year. Notably, we increased our time charter equivalent rate in each quarter of 2017 culminating in an $11,017 a day in the fourth quarter, a 65% improvement year-over-year. During the fourth quarter, we made…

Thank you, John. Turning to Slide 9, our financial results are presented. For the fourth quarter and 12 months ended December 31, 2017, the company generated revenues of $74.9 million and $209.7 million, respectively. This compares with revenues for the fourth quarter of 2016 and the 12 months ended December 31, 2016 of $43.9 million and $135.6 million, respectively. The increased revenues in both 2017 periods were primarily due to the employment of vessels on spot market voyage charters, as well as the result of higher spot market rates achieved by the majority of the vessels in our fleet versus the same period last year. These increases were partially offset by the operation of fewer vessels during the comparative periods. For the fourth quarter of 2017, the company recorded a net income of $2.6 million, or $0.07 basic and diluted income per share. This compares to a net loss of $25.1 million or $3.43 basic and diluted loss per share for the fourth quarter of 2016. For the 12 months ended December 31, 2017, the company recorded a net loss of $58.7 million, or $1.71 basic and diluted loss per share. This compares to a net loss of $217.8 million or $30.03 basic and diluted loss per share for the 12 months ended December 31, 2016. Turning to Slide 10, we present key balance sheet items as of December 31, 2017. As John mentioned previously, our cash position, including restricted cash includes $204.9 million for the quarter. Our total assets were $1.5 billion, which consists primarily of the vessels in our fleet and cash. Our total debt outstanding gross of $9 million of unamortized debt issuance costs was $524.4 million as of December 31, 2017. Moving to Slide 11, our utilization rate was 99% for the fourth quarter of 2017.…

Thank you, Apostolos. I’ll begin with Slide 16, which represents the Baltic Dry Index. Following steady increases during each quarter of 2017, the BTI found considerable support during the last three months of the year hitting multiyear highs in the process. The BTI average 1509 during the October to December period and over 30% rise from the prior quarter. Additionally, during December, the BTI crossed 1,700 for the first time since January 2014 propelled by the Capesize sector, which saw spot rates exceed $30,000 per day at times during the end of the year. In 2018, to-date we have seen a seasonal decline in BTI mostly due to the timing of newbuilding deliveries weighted towards the beginning of the year, weather-related disruptions impacting cargo availability and the occurrence of the Lunar New Year Holiday. We do note however that these levels are still meaningfully higher on a year-over-year basis. Turning to Slide 17, we outline some of the key market developments influencing this increase in freight rates. The major trend that drove drybulk demand during 2017 was increased steel production in China by larger steel mills as older, less efficient capacity was removed. Firm domestic steel demand and tightness of supply led to rising steel prices and margins. These strong margins incentivized further production, thus increasing utilization and resulting in augmented demand for high-quality, seaborne iron ore from Brazil and Australia as mills look to maximize productivity. The end result was an increase of 5% year-over-year or 50 million tons in China’s iron ore imports during 2017. This trend has continued so far into 2018 as China imported 100.3 million tons of iron ore in January, the second highest monthly total on record. As 2018 progresses, we expect Brazilian iron ore shipments to be a primary growth driver as Vale…

[Operator Instructions] And we’ll go first to Randy Gibbons with Jefferies.

Good morning. So first and foremost, congrats on the first quarterly profit and quite some time sure. Hopefully, it’s a sign of things to come. So congrats on that.

Thanks, Randy.

Yes. Few quick questions to you. So for the 15 vessel disposals, assuming this will be a combination of scrap and sales, do you have some kind of timeframe for that for when you expect to start and kind of conclude these disposals?

Yes, I think the – I think, I would say it’s going to be this year. I don’t see a scrapping any vessels by the way. I see all these ships being sold on for further trading. So there should be quite – particularly on the older Panamaxes, there should be quite a premium to the scrap value based on current – based on the current market and current values. But, it is something that we are anticipating completing this year.

Okay, excellent. And then, looking at your cash balance of, almost $200 million upcoming proceeds from these disposals or sales and then, obviously, pretty strong free cash flow in upcoming quarters. It looks like you’ll be able to acquire kind of at least 10 to 15 plus new vessels without any additional equities. Is this a fair assumption?

Look, I think it depends with vessel classes we go into, right. We have – from a commercial standpoint, we’ve set up strong operations in the Capesize in the Ultramax. I think we’ve been fairly public that those are the sectors that we want to grow in. So it’s really going to come down to what sort of mix we decide to go forward with. I know that didn’t precisely answer your question, but I think, there are quite a few things that we are looking at in terms of vessels. So, we need to come to a conclusion on that.

Sure. Still that’s being one of the more underlevered companies, so. Lot of room on the debt side. And then, one more question for me, I guess, for the Copenhagen office you mentioned, what are the costs related to this and then, kind of the benefits of that.

So, the benefits are really to be closer to cargo interest in Europe. We have, obviously a heavy presence in New York. We now have a good presence in Singapore and we think it’s very important to have that European presence to be able to be close to the grain companies and some of the backhaul cargos that are coming out of Europe. It’s clear that as we’ve been rounding this out, we’ve seen some emphasis where maybe we’ve missed a direct cargo listing because it’s been done in European time morning and as you know this is very much a relationship business. So there have a chartering team in Europe is going to be very beneficial to us and we think it’s going to round out the platform. It also allows us to focus also on arbitrage type trades, particularly with our minor bulk fleet which we think we’ll be enhancing to revenues. In terms of cost, this is already baked into the G&A budget for 2018. So if you look at the break-even slide, see we are at a little over sort of 14 – sorry, not 14, $840 a day on the G&A side. So that budget includes the European office. It’s a minimum spend.

Got it. All right. Well, thanks again and congrats on being back in black.

Thank you.

And we’ll go next to Jon Chappell with Evercore.

Close enough. Hey, good morning guys.

Good morning, Jon.

So, just to follow-up on the fleet renewal and as it relates to both the capital structure and uses of cash going forward. Should we think about maybe a one-to-one and obviously not in number of ships or deadweight tonnage but more dollars in dollars out, but what you can dispose of the 15 vessels for it? And what you aim to spend? Or will you lever that up 50-50, 40-60 and then, part C, I guess to that question is, the prepayment of the debt in the first quarter was noticeable at the operating cash flow. If you do had some leverage to the fleet renewal program, would you expect to continue to use operating cash flow for debt repayment above and beyond the amortization schedule?

Yes, so let me deal with the fleet renewal first. We plan to spend dollar-for-dollar. So, dollar out, dollar in and the goal is to match EBITDA as well. So that we are not dilutive from an EBITDA or an earnings standpoint. And that will have that dollar-for-dollar has leverage on it now. I don’t see us part of levering that up. So the leverage to the company shouldn’t change, but we do plan to redeploy again, dollar-for-dollar on the capital side.

Okay. And then on the operating cash flow?

Yes, so on the operating cash flow as you know, we have a cash flow suite built into the credit facility. That cash flow suite produced $11.3 million of excess cash flow in the fourth quarter, which was payable in the first quarter. So, based on our forward numbers, certainly, you can do the math, but it’s and our break-even rate around $7800 per day that we put out for the first quarter. So, yes, we expect to continue to repay with cash flow suites from that $400 million facility.

Okay. And then, on the commercial strategy, I know this is an evolution if you will in somewhat in the early inning. Can you kind of give a reassessment of 2017, how that process went? How you think you did relative to the market, maybe even without numbers just, kind of the premium that you are able to earn as you brought these ships in-house and added new people? And then, if we kind of think about going forward, would you say that, you’ve had the low hanging fruit and there is a lot of opportunity or you are just at the very tip of the iceberg and you see lot more potential into 2018. How do you kind of balance what’s happened already to progress going forward?

First of all, I see a lot more potential in 2018, one from a rising market standpoint, but also the foundation has been laid in 2017. 2017, we took all of our ships back from the pool. That process was anywhere from really, June through say, October of this year and obviously those ships were placed in the Pacific, in most cases when they were put out of the pool. So, we did backhaul cargos to reposition into the Atlantic, which is where we really think we have strength from a commercial standpoint. So I look at 2017 as a building year. I would say, if you actually look at our minor bulk fleet, we were – I would say, right there at the benchmark, which I am very happy about because of all the backhauls that we did from the Pacific. And then, on the Capes, we lagged a little bit, but as you can see in the first quarter that has really turned the corner. So, I look at2018, we have laid a very good foundation and we are going to start bearing the fruit of that in 2018, which you can see already in the first quarter numbers.

Right, okay, that’s a clearly helpful. Thanks, John.

Thanks, Jon.

We’ll go next to Magnus Fyhr with Seaport Global.

Thank you and congrats on the quarter. Just a couple of follow-up questions on the capital allocation. With the – I know you have the cash suite, but what’s your thoughts there fleet renewal versus paying down debt and maybe lifting some of these covenants that prevents you from paying a dividend currently?

Okay, so, Magnus, first of all, as I mentioned to Jon, the fleet renewal program itself and those identified 15 vessels. They will, throughout the course of the year, as within timing opportunistic, we will sell those and dollar-for-dollar reinvest that into modern fuel-efficient vessels. So that’s one bucket if you will. The credit facilities in general, we certainly have a desire to redo in a sense that we fully understand how important it is to get a stable dividend, predictable dividend back in place for Genco. So we are definitely going to work with the bank in order to try to redo those credit facilities with over $200 million in cash. It gives us a lot of flexibility, a lot of levers to pull as well as the low loan to value that exists today. So, again, we all recognize how important it is on the covenant side, some of the restrictions, but particularly the dividend. So that’s something that we are working on it now.

Okay, all right, great. And just on the commercial strategy, I don’t know if you – are you pretty much done now? Or are there more expenses outside the Copenhagen office? And do you have any targets for 2018, 2019 with the build out of the commercial platform?

Yes, so, Magnus, with the Copenhagen office, which again is a minimum spend which is built in already to the 2018 G&A budget and the breakeven that we put forward. That rounds out our commercial team and as I said to Jon, we really look at 2018 as a year that not only will we benefit from continued recovery in the markets, but also outperforming benchmarks.

All right. And then, just one last question. You mentioned, CapEx going forward, pretty minimal, I guess, in 2018, but within new ballast water treatment systems regulations coming up, what – I know you are selling 15 ships and what are your thoughts there, I mean, with these ships going into drydocking beyond 2018? And any cost estimates on upgrading these ships?

Well, first of all, as you pointed out, those 15 – a lot of those 15 ships would have had ballast water treatment systems themselves. So, the idea is to not have that CapEx and the idea is to focus on modern tonnage that most likely we already had ballast water treatment systems installed as we acquire them. We only have one ballast water treatment system that needs to be installed this year and it is at the very end of 2018. We are in the process of identifying through a – not just a cost benefit, but from a spec standpoint, what ballast water treatment system or systems we want to implement on the fleet going forward. We are still making that assessment. As you know, the U.S. Coastguard is still approving systems or in the process of approving systems and clearly we want to see the outcome of that, particularly with our minor bulk fleet and all the trading that we do to – in the Atlantic and the U.S. So, all of that is being assessed, but those 15 ships, clearly part of that process is not doing the CapEx on drydocking and ballast water treatment system. And this year, we only have five drydockings and only one of those which is one of the – I think it’s the Genco Muse would have a ballast water treatment system, but it’s not till the very end of the year. So, that gives us a lot of time to either sell it or make sure that we have the right solution on a ballast water treatment system. In terms of cost, I think the cost of these are going to come down and clearly that is part of our analysis, whether we want to go with one provider or we want to go with multiple providers, one provider most likely or even two providers which should be able to get economies of scale on the cost side.

All right, great. Well, thanks. That’s it for me.

Thanks, Magnus.

[Operator Instructions] We’ll go next to Max [indiscernible] with Morgan Stanley.

Hey guys. Thank you for taking the call and congratulations on the quarter.

Thanks, Max good morning.

Yes, good morning. So, kind of follow-up on Magnus’ question for ballast water, can you kind of apply that to – low sulphur 2020 regulations kind of, how do you think about that in terms of your – or maybe you are looking at newbuilds and installing it then. How do you think about that?

I don’t see us going out and doing any newbuild orders at this point. We don’t believe in adding to the existing fleet in any potential - anymore deliveries that order book that would come end of 2019 or 2020. I think it’s very clear that it is a focus of the company to become – to make sure that we are as fuel-efficient as possible, which is why you are seeing us exiting some of these older ships. And again, going in and buying newer more fuel-efficient ships with electronic engines. I think that’s a very important thing. We are also – we also have an initiative on the fuel management program, in terms of installing physical fuel flow meters on our vessels, so we can monitor from a real-time standpoint fuel burn speed, et cetera and optimize that. It’s clearly, a very important factor in a potentially rising oil market, but also the increased cost and the spread that will come from burning ultra-low sulphur fuel.

Okay, thank you. That’s helpful. And just as the market kind of improves through the year, how are we thinking about fixed term contracts going forward?

So, if you ask me right now, I would – we are definitely with a short-term bias, because we continue to see an improving market in 2018. I think, as you get towards the end of 2018 in a seasonally strong period in the third and fourth quarter, we will certainly assess longer-term employment, particularly in the Capesize sector. But, we are a ways away from that right now.

Okay, all right, thank you for the color.

Thank you.

And that does conclude today’s conference. Thank you for your participation. You may now disconnect.

Thank you.