Good morning, ladies and gentlemen, and welcome to the Genco Shipping & Trading Limited Second Quarter 2019 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 at any time during the next two weeks by dialing 888-203-1112 or 719-457-0820 and entering the passcode 3272187.At this time, I would like to 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 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, 2018 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. Welcome to Genco's second quarter 2019 conference call. I will begin today's call by reviewing our second quarter 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 review Genco's second quarter and year to date highlights. During the first half of the year, we continue to outperform our benchmarks, advanced our comprehensive IMO 2020 strategy and further strengthened our fleet profile and earnings power. In the year-to-date, our focus remained undrawn [ph] upon our active commercial strategy and our barbell approach to fleet composition, maintaining exposure both the major and minor bulk commodities.The benefits of this approach have been evident throughout 2019 as the relative stability of the minor bulks supported earnings earlier in the year. While towards the end of Q2 and into Q3 we have begun once again to realize the upside potential of our modern Capesize fleet.An important differentiator of Genco is that we maintain the upside potential of the iron ore trade through the ownership of 17 Capesize vessels, while the remaining fleet of 41 minor bulk vessels that primarily transport commodities such as grain, bauxite fertilizers and cement, among various other commodities is expected to provide us with a steadier stream of cash flows.Regarding the progress of our IMO 2020 strategy, we have completed the fitting of scrubbers on four of our Capesize vessels to-date, and anticipate the balance of our Capesize fleet to be fitted with scrubbers by year end before the deadline of January 1, 2020.Furthermore, we've continued our fleet modernization efforts. Following the sale of our last 1990s built vessel in Q1, we agreed to sell our oldest remaining vessel the Genco Challenger, a 2003 built Handysize vessel.…

Thank you, John. Turning to Slide 12, our financial results were presented. For the three and six months ended June 30 2019, the Company generated revenues of $83.6 million and a $177 million respectively. This compares with revenues for the three and six months ended June 30 2018 of $86.2 million and $163.1 million respectively.Second quarter of 2019 the Company recorded the net loss of $34.5 million or 83 basic and diluted loss -- $0.83 basic and diluted loss per share. Excluding $13.9 million in noncash vessel impairment charges, as well as a $0.2 million noncash impairment of the operating lease rate of use asset adjusted net loss for the quarter was $20.4 million. This compares the net loss of $1.1 million or $0.03 basic and diluted loss per share for the second quarter of 2018.For the six months ended June 30, 2019, the Company recorded the net loss of $42.3 million or $1.01 basic and diluted loss per share. This compares to a net loss of $56.9 million or $1.62 basic and diluted loss per share for the six months ended June 30, 2018.Turning to Slide 13. We present key balance sheet items as of June 30, 2019. Our cash position including restricted cash was $165.4 million. Our total assets were $1.6 million, and consist primarily of the vessels in our fleet and cash. Our total debt outstanding gross of $15 million of unamortized debt issuance costs and inclusive of the current portion of long-term debt was $513.7 million as of June 30, 2019.Moving to Slide 14, our utilization rate was 97.7% for the second quarter. Our TCE for the second quarter was $7,412 per vessel per day, which compares to $10,964 per vessel per day recorded in the same period of last year. The decrease in TCE was…

Thank you, Apostolos. I'll begin with Slide 18, which represents the daily spot rates for the sub-indices of the Baltic Dry Index. During the second quarter of 2019, there was an overall uplift in freight rates relative to the first quarter with the improvement accelerating rapidly towards the end of June and subsequently into Q3 to date.Specifically, Capesize rates rose from an early April low of approximately $3,500 to a five year highs nearly $33,000 a 9.5 times increase in less than four months. We do note that freight rates have pulled back from recent highs of late but still stand at strong levels at over $23,000.Several factors have led to the two vastly different markets we've experienced in the first and second halves of this year as outlined on Slide 19. In particular, earlier in the year, seasonal developments such as increased new buildings deliveries the Lunar New Year celebration and weather related cargo disruptions that traditionally lead to a weaker Q1 market were exacerbated by the Vale dam incident.The combination of these factors resulted in a meaningful decline in cargo availability hampering the iron ore trade and Capesize rate specifically. These market conditions led to a sharp increase in vessel scrapping, keeping a lid on net fleet growth and disincentivizing owners to ballast their shifts to the Atlantic due to the lack of Vale iron ore cargoes.Towards the end of June and into the second half of 2018 operations at the Brucutu mine restarted, leading to an improvement in iron ore volumes from Vale. The aggregate impact of more iron ore cargoes and shortage of vessels in the region resulted in a squeeze in the Atlantic basin, and a subsequent spike in Capesize rates.Of note Vale has indicated a substantial improvement in sales volume in the coming months…

Thank you very much. [Operator instructions] Our first question will come from Randy Giveans, Jefferies.

Gentleman how's it going?

Good morning Randy.

A few question for me. The first one is going to be multifaceted. I know you appreciate that. The incredible rally in drybulk spot rates as obviously been evident this summer. But how has that impacted the one year time charter rates and asset values in recent months?For example, you recently agreed to sell the challenger for looks like $5.3 million, what would this price have been back in May? And also for the time charter rates, are you seeing any premiums for those with scrubbers on the Capesizes? And if so is it 2000, 4000, 6000 a day?

Okay. So let's talk about asset values for a second. The difference between May and now and the Handysize market, I don't think values have moved all that much, maybe. What I would say is there's more liquidity that's come back into the market, so you're not having to take a discount from last done.We felt that was a pretty strong sale that we're able to get on that age of a ship that has drydocking and a ballast water treatment system that still needs to be installed. I think in general, though, asset values particularly in the larger ships have started to move back up again. And I would anticipate as people get more and more comfortable with the recovery going into the second half, and then into 2020 those asset values will continue to move up.On the time charter market in terms of Capes, I still think it's a little too early. We haven't seen too much -- too many time charters that have been done bases a scrubber fitted ship. And I think as you get closer to the end of the year, and you have the IMO 2020 fuel switchover that's when you'll start to see the premiums in the time charter market, versus a ship that is -- that does not have a scrubber on board.But so to put into perspective, the time charter market today for say a five year old Cape is probably somewhere between $19,000 and $20,000 a day for a year. And you would expect that when you do get into looking at charters with scrubbers, you should hope -- you should be able to get a $4,000 to $5,000 premium because of the scrubber install.

Perfect. Okay. So seems -- certainly seems like asset values on larger stuff, it's been a very illiquid market. So it seems like the current prices should be higher than last done in July, June, for that matter.Alright, second question…

I think..

There have been … Go ahead.

I was just going to say, I think you're right, Randy. And I think the one of the more important things is that there is liquidity back in the S&P market. There are transactions being done, Capes all the way down to Handysize which a few months ago, it was pretty stagnant.

Got you. And then one more question here. So there have been obviously some headlines of excessive delays for scrubber retrofits recently. But looking at your scrubber CapEx timing for retrofits, you're still guiding to all 17 Capesizes being completed this year. So I guess two part question. What's causing the delays for others, is it equipment, is it shipyard space? And then what makes you confident that those delays, won't push you into 2020?

Look, I think there's a few things that are effect -- that are causing the delays. I think some of the yards probably overbooked their slots and waiting periods maybe a little bit longer. And so I think there's been some over promising on the yard front. I think there have been -- there's also been some equipment procurement issues, particularly on the piping, discharge piping and getting logistics set up in China.You've also got some a lot of these scrubbers are coming from Europe. So there are logistical issues with that. I think in China in particular where a lot of these are installations are being done. There has been a lot of rain over the last couple months, there's been currently a lot of heat and hot weather, which has affected the working conditions there.As it pertains to Genco, we are highly confident we will have all of our scrubbers installed by the end of the year, as we have done four so far. In pretty -- we actually did those in pretty quick succession. Those were done really in the late June through July time period, four off the ships were done. And we're very confident on the other 13 getting done before the end of the year.That doesn't mean that -- within the scheduling, there have been some delays by a week or two, but we've been able to logistically work around that from a commercial standpoint and work with the yards. And that's why I have the confidence that everything will be done before year end.

Sure. Thanks. Sounds good. We're looking forward to seeing the next few months here. Thank you.

You’re welcome.

Thank you. Our next question will come from Amit Mehrotra, Deutsche Bank.

Hey, good morning. This is Chris Snyder on from Amit. So the first question is just what do you think caused the Cape recovery to be so strong and so sharp? Obviously we have Vale ramping, but overall export volumes out of Brazil are still down year-on-year and really below expectations heading into the year. So it was like the really aggressive ramp just the result of Capes being positioned in the Pacific for scrubber installations or maybe just a global fleet got spread out as other regions are maybe juicing production to take advantage of high prices?

Look, I think it's a few things. I think it's Vale coming back online, quicker than what was anticipated in the market, both in terms of Brucutu coming online, but also their logistical system being able to shift production more into S-11D. I think that took people by surprise. And because of that, there were not a lot of ships positioned in the Atlantic. And so the Atlantic market got squeezed and really pushed the index rates up.I agree with you. I think a lot of the ships are trading in the Pacific because of the Vale situation but also because of scrubber installs. And we really had started to see the beginning of a big push, and a lot of activity in the yard on the scrubber side, which is taking ships out of the market also.So from a from a simple supply standpoint, supply of shifts, being able to lift cargos that number's being reduced because of the scrubber installs. And we certainly expect that to continue through the end of the year. So, I think it's a combination of things. But I think one of the big things is Vale coming back online quicker.

So the Cape market has pulled back here over the last couple of weeks, just as some of that supply is now returning back into the Atlantic. Can you maybe just talk about where the -- how the fundamentals in the Atlantic stand right now? Do you see there still become this more downward pressure or do you think that the market now maybe in the low to mid 20-range is kind of starting to be more of a stable environment?

It seems to be settling out. If you look at the FFAs, that paper will certainly tell you that things are stable. I -- we still anticipate another push upwards on rates before the end of the year. I also would tell you, we're -- from a seasonal standpoint, I think we're taking an overall pause in the iron ore market. And with the price of iron or having dropped pretty quickly over the last couple weeks. That's usually a short term phenomenon in the sense that people pull back on their purchases.So as soon as that price stabilizes again, I think you're going to see more buyers come back into the market and Cape rate should continue to move back up. But I -- we do feel that there's a fairly stable floor right now that is set in on the Capesize sector.

Thanks for that. And then next question. And sorry if you touched on this already, but just around fleet positioning.And I believe last summer you repositioned a chunk of the midsized fleet. It's kind of weight on Q2 results that set you guys up for a better second half. Did you undertake similar repositioning this summer? And is it really or mostly just superheroes [ph] in anticipation of the grand season?

Yes. Okay. So a few things. So if you if you look at last year, we actually did quite a bit of that repositioning and backhauling in Q3, which set up for a very strong fourth quarter. This year, we've done a lot of that in the second quarter and anticipation of a strong Black Sea Med region, which has panned out and you can see it in the ford fixtures in the mid-size and smaller ships going into Q3.And on the cape, as I said because of the scrubber installs, we have been trading those ships exclusively in the Pacific as those ships come out of the yard with their scrubber installed will go back to a more balanced approach in the Capesize sector of having some exposure in the Atlantic and some exposure in the Pacific.I mean, I look at what we did for the first half of the year, which compared to the index is very strong. And we have a stated goal of beating the index of $500 per day for over a calendar year and we still have all the all the confidence that that's going to pan out as we get to December 31st. But I think if you look at the forward fixture, if you look at the forward fixtures, they're very strong for Q3.

Yeah. And then if I could just ask one more on the grain trade and especially because you guys have kind of did the repositioning a little earlier. If I remember correctly, last year as South America took share from the US and international grain market, we saw a lot of that grain trade pulled forward into Q3 and then the Q4 volumes kind of disappointed. Is that maybe why you reposition a little earlier this year? And do you think that's the way the markets setting up for this year?

I think there's a little bit of a difference this year over last year. So the Black Sea and Med has -- that has come a lot earlier than what we saw last year, which is again, why we were repositioning in the second quarter to hopefully capture that, which is proven successful.The other difference this year, versus last year, is that last year Argentina went through a drought, so there was not a lot of soybean and there was not a lot of corn, that was exported out of Argentina. That situation has reversed this year, where there is more soybean and a lot more corn availability for export out of Argentina. And I would tell you Brazil on the soybean front is probably flat to slightly below last year's numbers.So we still expect East Coast of South America to remain strong for quite some time.

Well, I appreciate all that color. And that's it for me. Thank you.

Thanks, Chris.

Thank you very much. [Operator Instructions] Thank you. Our next question will come from Eric Jobe, Clarksons [ph]. Eric Jobe, your line is open. If you're on mute, would you please unmute your line now?

Sorry about that. Hi, guys.

Hi, Eric. Good morning.

Good morning. So you talked about the repositioning into the Pacific or discovery installations and bulk coming back in line. So regarding the Capesize market for the remainder of the year, it's now looks to me like it is going to do the same transition over to the Pacific basin to the pitch scrubbers. How is that in your view going to affect the market for the remainder of the year?

On the on the Vale VLOCs?

Yeah.

Yeah, look, I mean, most of those vessels are under contract. So clearly, taking those ships out of service will most likely require more spot fixtures coming out of Vale. You couple that, again, with the fact that you've got a recovery, that that's going on volumes overall. We obviously expect that to be a positive.I look at those VLOCs in terms of the entire Capesize fleet and looking at the numbers that are going to be coming off line, basically that started in July all the way through the first quarter of next year to have scrubber installs. But particularly those VLOCs that in the Atlantic should be very helpful to the to the Cape market.

And you guys are also getting at way, I guess with the Capesizes and going back into the market, hopefully turning stronger due to multiple factors there so.

Yeah. And we are ….

And…

Well, the only thing I was going to say was, we're obviously talking about the second half of the year which is fine. But -- and we're positive on that. But we're also looking forward to 2020 from just a pure supply and demand standpoint where demand is projected to outstrip the number of ships delivering by 1 point to 2 points. That is setting up also for a nice part of the recovery going into next year. Lot of that is driven again by Vale continuing to ramp up and will probably most likely get back to at least 2018 levels in terms of tons of iron ore shipped.

That's helpful. Thank you.

Thank you very much. Ladies and gentlemen, at this time, this now concludes today's conference. Thank you for joining us. You may disconnect your phone lines and have a great rest of the week. Thank you.