Genco Shipping & Trading Elevates Dividend Approach to Benefit Shareholders

Innovative Dividend Strategy by Genco Shipping & Trading Limited

Genco Shipping & Trading Limited (NYSE: GNK), recognized as a leader in the U.S. drybulk shipping sector, has announced a strategic adjustment to its dividend policy. This change will enable the company to distribute more cash to its shareholders, commencing from the third quarter of 2024. By removing the drydocking capital expenditure (capex) line from its calculation of quarterly dividends, Genco is taking a progressive step to enhance shareholder value.

Updated Formula for Dividend Calculation

From Q3 2024 onwards, Genco will employ a revised formula for determining the dividend amount available for shareholders. This updated approach focuses on maximizing the cash flow distributable as dividends. Notably, the calculation will exclude the previously included drydocking expenses, allowing greater flexibility in cash distribution.

Understanding the New Dividend Formula

The new formula will consider the company’s net revenue, subtract operational expenses, and account for a voluntary quarterly reserve before determining the cash flow available for dividends. As an illustration, for the third quarter of 2024, Genco has set a voluntary reserve at $19.50 million, leaving plenty of room for shareholder distributions.

Projected Capital Expenditures

Over the next several quarters, Genco anticipates its drydocking capex will reach significant figures. It estimates a total of $11 million for Q3 2024 and $7 million for Q4 2024, culminating in approximately $41 million throughout the entire year of 2025. These figures underline the company's commitment to maintaining operational excellence while also securing returns for its investors.

Leadership Comments on Enhanced Strategy

John C. Wobensmith, the CEO of Genco, expressed his enthusiasm about the improved dividend strategy. He emphasized the importance of strengthening shareholder returns and achieving a net debt-free position. The removal of drydocking capex from the dividend calculation is viewed as an essential step toward rewarding shareholders, particularly in light of the company's impressive capital allocation accomplishments.

Commitment to Long-Term Value Generation

Wobensmith noted the significant progress made by Genco under its three-pillar value strategy over the last three years. With 20 consecutive quarterly dividends distributed, Genco has returned approximately $5.915 per share to its investors, marking around 35% of the company's current share price. Alongside reduced debt levels—nearly 80% since 2021—this reinforces the firm’s solid footing in the market.

About Genco Shipping & Trading Limited

As an industry leader in drybulk shipping, Genco Shipping & Trading Limited focuses on the global transportation of various commodities. With an in-house commercial operating platform, Genco serves a broad range of customers, moving cargoes such as iron ore, grain, and various other goods across worldwide shipping routes. The company boasts a modern fleet, consisting of large Capesize vessels as well as medium-sized Ultramax and Supramax ships, capable of efficiently transporting a wide spectrum of commodities.

Frequently Asked Questions

What changes has Genco Shipping made to its dividend policy?

Genco Shipping has removed the drydocking capex from its quarterly dividend calculation, increasing cash available for shareholders.

When will the new dividend calculation take effect?

The updated dividend approach will be implemented starting in the third quarter of 2024.

What are the projected capital expenditures for Genco?

Genco expects to spend $11 million in Q3 2024 and $7 million in Q4 2024 on drydocking, totaling approximately $41 million for FY 2025.

How many dividends has Genco distributed to its shareholders?

Genco has distributed a total of 20 consecutive quarterly dividends, reflecting its commitment to shareholder returns.

What cargoes does Genco Shipping primarily transport?

Genco Shipping transports key cargoes including iron ore, grain, steel products, and others globally.

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