Give it a second. All right. Good morning, everyone, and welcome to day two of our conference. My name is Stefan Gill. It is my pleasure to welcome the management team from Genco Shipping, ticker GNK. With me today is John Wobensmith, CEO, Peter Allen, CFO, and Michael Orr, Vice President of Finance. We will have a total of 30 minutes, including Q&A at the end of the presentation. We greatly appreciate your participation, so please submit your questions at the bottom of your screen. With that, I'll turn it over to you guys. Take it away.
Great. Thank you very much for having us today. My name's John Wobensmith. I am the CEO of Genco Shipping & Trading. Also with me today is our CFO, Peter Allen, and our AVP of Finance, who will be going through the industry section of the presentation, Michael Orr. So starting out at a high level, Genco Shipping & Trading is the largest U.S.-based dry bulk ship owner. We have 43 vessels on the water today. The company is headquartered in New York City. We are also traded on the New York Stock Exchange, and we have commercial offices in both Singapore and Copenhagen, along with our headquarters in New York. In terms of what we transport, we're very focused on the iron ore, coal, and bauxite markets on the larger ships.
We also trade minor bulks, which are grains consisting of soybean, corn, and wheat, as well as cement, fertilizers, and really runs the gamut in terms of minor bulk commodities. We'll get into that a little bit further into the presentation. We are transporting these commodities across the globe and all the relevant shipping routes. We have direct exposure to all the dry bulk trades. We have a full-service logistics solution that we provide to our customers. What I mean by that is our customers are direct with Genco, and we are pricing freight on a holistic basis. We're tasked with using our ships to get the cargo from A to B, and we're handling everything in between.
In terms of our low leverage and high dividend payout, we're at 7% on a net loan-to-value basis, excuse me, low net loan-to-value today, high dividend payout, as well as a very low cash flow breakeven. What that allows us to do is pay out high dividends based on our quarterly cash flows. We think we've created the best risk-return profile that's in the industry today from a peer group standpoint. We are a U.S. filer, no related party transactions, very transparent. We have been rated number one in the ESG Shipping Company Index that Webber Research puts together on an annual basis. That is on a global look of 64 companies around the world.
Taking a look at our Q1 highlights, we had net income of $0.43 a share, our adjusted EBITDA almost $42 million, and our Q1 2024 time charter equivalent rate was $19,219. We have given guidance for 85% of our days fixed for Q2 at $19,000 a day. That was put out on May 24th. If you look at our dividends, Q1, we paid $0.42 a share. That's our 19th consecutive quarterly dividend totaling 26% of the current share price. Again, we are the longest-run dividend payer within the peer group at this point. 7% net loan-to-value. Growth, we did fleet renewal at the end of last year where we purchased two 2016 highly fuel-efficient Capesize vessels. We sold three of our older, much less fuel-efficient vessels around the same time. We will continue to do fleet renewal along those lines this year as well.
So if we look at our comprehensive value strategy, it's really based on three pillars: the high dividend payout, which I spoke about, the continued deleveraging, our goal is to get to net leverage zero in a relatively short period of time, but also growth and fleet renewal in particular, where we are selling our older, less fuel-efficient vessels and trading those into newer, more fuel-efficient vessels, which generate higher revenues and higher cash flows. Looking at our progress on our value strategy, this really began in the early part of 2021. We spent a lot of time paying down debt. First, we've paid down $279 million of debt. We've invested in fleet renewal $236 million. We've paid out $188 million in dividends since 2021.
We are now at the point where, again, we really believe we have created the best risk-reward model in the peer group because of the low leverage, the low cash flow breakeven that allows us to pay out a very high dividend yield. We've also maintained significant flexibility, again, to continue that fleet renewal program. We are targeting that quarterly dividend based on the cash flows that are generated during the quarter, less a reserve, which Pete will go into in more detail in a minute here. Taking a look at the global dry bulk trade routes, we've broken this down between the iron ore routes, the coal routes, the grain routes, which again are soybean, corn, as well as wheat, and then the minor bulks. Within the minor bulks is the bauxite trade that is coming out of West Africa and going into China.
You can see the iron ore routes, particularly from Brazil, and the grain routes from Brazil. Those are the longest ton-mile demand routes within the shipping industry. There's a tremendous amount of operating leverage because of the length of those routes. And then the other major iron ore route is from Australia going into China. You can see the major coal routes. And as I was stating earlier, the bauxite trade out of West Africa, that is really a trade that has developed over the last couple of years. It's become meaningful, and it is still seeing 8%-10% growth from a volume standpoint going into China. If we look at what Genco does and we look at 2023, over 50% of our cargoes were in the iron ore trade.
You can see the metallurgical coal and thermal coal at 13%, grains, fertilizers, cement, pig iron, bauxite, all that make up the minor bulks. The minor bulks are transported on the medium-sized ships, and the major bulks, which are the iron ore and coal trades, as well as bauxite, are traded on our larger Capesize vessels. On the left-hand side of the slide, you can see the primary use that each of these commodities go into, with iron ore being the fuel for steel production, mostly in China in terms of how dry bulk is considered. Our fleet composition, this is a very well-thought-out strategy. We think it's very important to have direct exposure to all the dry bulk commodities. When you look at the Capesize vessels, which are carrying primarily iron ore and coal, those do have a higher beta.
But we think that's very important, again, to have the direct exposure to the commodities, but also for the equity creating upside with the volatility. And then over on the right, the 27 mid-sized vessels give us a more stable cash flow stream. And we have a robust trading platform on the logistics side that allows us to create arbitrage opportunities within the markets and ultimately create alpha over and above the Baltic Capesize Index, as well as the Baltic Supramax Index. This gives you a sense of our value strategy and the concept that we always want the company to be playing offense. And what I mean by that is in periods of time, particularly today, where we have good freight rates, elevated freight rates, we can pay robust dividends. When we have that downward cyclicality, we can continue to perform.
We'll use those opportunities to grow when we're able to acquire assets at lower prices. So again, it's all about that risk-reward model, always being able to pay a dividend, but also always being able to play offense. So just to sum this up before I turn this over to Peter Allen, very low financial leverage, that low cash flow breakeven allows us to pay very compelling quarterly dividends. We've returned over 26% of the current share price in dividends over 19 consecutive quarters. That is the longest in the peer group in terms of continuity. Growth of the asset base we have been having using our fleet renewal proceeds from selling our older ships, redeploying it into newer vessels.
We have our barbell approach to fleet composition, both direct exposure in the Capesize sector to iron ore and coal, but also the stability of the minor bulks with the Ultramax and the Supramax vessels. You put all this together with the volatility that exists in the market and the cyclicality of dry bulk shipping, and we think that we've created the best risk-reward model for shareholders going forward.
Great. Thanks, John. I'll do a little bit of a deeper dive on our capital allocation approach, which, as John alluded to, essentially focuses on three key elements, which is paying quarterly compelling dividends to shareholders, low financial leverage, as well as growth and renewal of the asset base. When we look at a cyclical and volatile industry like dry bulk shipping, if you want to pay dividends and grow the fleet in a healthy and sustainable way over the long term, the balance sheet has to be really strong. Essentially what Genco has done over the last several years has been a core differentiator of the company, paying down nearly 70% or 75% of our overall debt balance to date.
In deleveraging the company, that 7% net loan-to-value that John mentioned earlier, we've not only reduced interest expense in a high interest rate environment, we've also created a situation where we have no mandatory debt amortization through 2028. What this has done is it's lowered our cash flow rate significantly to an industry low of under $10,000 per day. This allows us to pay those compelling quarterly dividends, to opportunistically grow the fleet. What we did last quarter, actually, I should say in Q4 and also in Q1, was to renew our fleet through these opportunistic amortizations. Given our low financial leverage position, we were able to draw down $65 million of debt by $85 million of the assets, essentially a 75% loan-to-value, but it didn't really move the needle on overall debt structure.
We were able to buy 2 high-quality eco-Capesize vessels and then use that RCF as bridge financing and then backfill that transaction with sales of older, less fuel-efficient ships that had significant maintenance and CapEx schedules due in 2024. So we've maximized Capesize fleet-wide utilization in a current strong market. We reduced our expenses, and essentially that savings flowed right into the dividend and will continue as the year progresses as that savings materializes. So these are the types of fleet renewal strategies that we're looking at going forward with our current fleet. And this here is just illustrating that leg that we executed on our fleet renewal trajectory. On the dividend side, as John mentioned, we've paid 19 consecutive quarterly dividends since Q3 2019, repaying about 25% of the share price to shareholders.
Over this period of time, the Genco stock price has appreciated by 230%, more than doubled the S&P 500 over that period of time. We are very committed to the dividend. We have increased it over the last couple of quarters, primarily as the stock price has appreciated, as the earnings have appreciated as well. That current yield of the $0.42 per share of our dividend is about an 8% yield today, which is very competitive, obviously, relative to Treasuries, etc. When we look at our transparent dividend policy, it's a variable dividend. The policy is paying out 100% of excess quarterly cash flow, excluding maintenance and holding for future investment. This really highlights the operating leverage within the company. It's a variable dividend, like I mentioned. So when the earnings go up, net revenue increases, that flows directly into the dividend calculation.
We talk about operating leverage and shipping all the time, but it's really been on display over the last couple of quarters. Primarily in Q1, our EBITDA doubled year-over-year. Our TC increased by about 40%, while the cost structure was essentially flat. That was led by our Capesize vessels, which have a tremendous amount of operating leverage. That materialized into the dividend, where we paid $0.42 in Q1 2024, which compared to just $0.15 in Q1 2023. You can see how the earnings environment of the fleet materialized into the dividend calculation. Overall, putting this together from a capital allocation perspective, when we look at Genco as compared to the peer group, we have the lowest net loan-to-value, we have the lowest cash flow breakeven rate, and we also have the most undrawn revolver availability.
So it really puts Genco in an advantageous situation where we have a lot of financial flexibility and optionality to continue to grow the asset base through creative acquisitions, but also take advantage of the current market as well. So with that, I'll turn it over to Michael Orr to discuss the market.
Thanks, Pete. Following an extremely strong start of the year, freight rates have remained at elevated and firm levels. Capesize rates are currently at approximately $25,000 per day, with Supramax rates at approximately $14,000-$15,000 per day. There continues to be a tax on commercial vessels in the Southern Red Sea and Gulf of Aden area. This has forced most major shipowners to reroute their vessels via the Cape of Good Hope in South Africa. Daily Suez Canal bulker transits are down by over 50% since their levels seen in November.
We don't expect any change in the near term to this rerouting. China is off to a very strong start of the year in terms of dry bulk commodity imports. Iron ore imports are up over 7%, while coal imports are up over 13%. Another interesting trade that has come up is steel exports. China has increased their steel exports by over 16% year to date. We expect this trade to continue in the coming months. During this slide 24, as John alluded to, we've seen a growing global bauxite trade, averaging about 8% growth over the past decade. Majority of this bauxite is coming from West Africa, in particular Guinea, which now accounts for over 70% of the trade. This long-haul trade from West Africa to China, a strong ton-mile demand boost to the Capesize segment. We expect this trade to grow in the years to come.
Turning to slide 25, we are currently in peak South American grain season. We're seeing strong Brazilian and Argentinian grain exports. The majority of this grain is being shipped to the Far East. And as John alluded to, this long-haul trade from South America to China is a strong boost to ton-mile demand growth, in particular the minor bulk, Ultramax, and Supramax vessels. In terms of the supply-side picture, we remain quite optimistic. About 18% of the fleet is now 16 years or older, with 9% of the fleet at 20 years or older. This compares to an order book of only 9% of the on-the-water fleet. Finally, in terms of fleet inefficiencies, we have seen an uptick since the start of the year. Majority of the second half of last year, global port congestion was actually at the lowest pre-COVID levels. We are now in line with historical averages.
This uptick in port congestion has had a meaningful boost to freight rates, in particular in the Capesize segments.
Great. Thanks, Mike. So just finishing up to go back through a few items, just starting with our revenue generation. Again, we've built a very strong commercial platform that is not only booking cargo, but has the ability to create alpha over and above the indices through arbitrage trades that we're looking at on a daily basis. Going counterclockwise, very strong corporate governance. We are a U.S. filer. Everything is very transparent. There are no related party transactions. And that has really been backed up by being ranked number one on an ESG basis for three years in a row out of 64 companies globally by Webber Research. Fleet renewal and growth, that will continue this year.
As Peter went into the specifics of fleet renewal in his part of the presentation, we've been able to do this in a very lucrative manner, creating additional revenues and cash flows as we trade the older ships for newer on-the-water vessels. Very strong balance sheet, high liquidity, 7% net loan-to-value today. That allows a very low cash flow breakeven rate. In fact, it's the lowest in the peer group from an industry standpoint. You put all of this together. Again, we think we've created a very balanced and probably the best risk-reward strategy within the peer group. With that, I will open it up for Q&A.
Okay. So we have a few questions here. So we will go through them here starting at the top. So the first question is, what differentiates Genco versus the peers on an ESG basis?
So from an environmental standpoint, again, the fleet renewal and reducing our carbon footprint, we've been doing quite a bit of that over the last few years. From a corporate governance, I think that's probably the biggest thing that stands out. We really are the only U.S. filer now. All the other companies are foreign filers, so do not provide as much transparency and information. And I would say we're also one of the few companies that do not have related party transactions. Everything is contained within Genco, within the public company. And to put a fine point on it, the management team nor anybody on the board owns any companies outside of Genco that Genco does business with. It's a very clean structure, which again is why we've been ranked number one on the corporate governance side.
Great. The next question would be, how should we think about cost/cash flow benefits of fleet renewal moving forward?
Yeah, sure. I'll take it. So look, we kind of walked through some of the latest leg of our fleet renewal strategy earlier. But going forward, I think when you look at the fleet, there are certain ships that are certainly older in the 2005 to 2008, 2009 range that you could evaluate potentially renewing and then redeploying the capital. A lot of the times we'll look at the dry docking timing and do you want to invest $2 million-$3 million in a 15+-year-old ship, and will you get that money back over time, or could you then cycle out of that ship and then redeploy the capital to maximize utilization currently? Cash flows today are much more beneficial and much more valuable than cash flows two, three years down the road. So that's certainly a calculus that we're working through on a daily basis here.
The values have certainly pushed. There's opportunities that present themselves. It's a constant push and pull in the S&P market.
So just two other things. Again, just going back to the newer ships burn less fuel. So from an earnings standpoint, we set this up so that we can actually generate higher cash flows with the newer vessels versus the ships that we are selling that are less fuel efficient and older. The second thing, which Pete touched on, but there was a very specific slide on it, just from the Capesize transaction that we did at the end of last year, that saved us this year $10 million of CapEx in dry docking and special surveys. And that $10 million can go right out and increase the dividend amount, which again is one of the major goals.
Next question is, can you discuss recent trends in dry bulk rates?
So we definitely saw an unseasonable firming in the first quarter. And the reason why I say unseasonable is typically that is more of a rainy season in Brazil. So you see the iron ore trade from a volume standpoint pull back. We saw the exact opposite this year with the El Niño effect. So a lot drier period in Brazil. So we saw more iron ore coming out of Brazil. And as you all recall, that is the longest dry bulk trade route from a ton-mile demand standpoint in dry bulk shipping. As Pete said, a lot of operating leverage in that trade. So we saw higher iron ore exports in the first quarter. Coal was up in the first quarter. The bauxite trade was fully up and going. So things are running on all cylinders. So things look pretty good.
We've seen a little bit of a pullback, which is not unusual that the iron ore trade can be very volatile from a volume standpoint. We've seen a little bit of that over the last month and a half or so. We do expect that to return as we get into the second half of the year. But the big thing I would point out, and what we really hang our hat on here, is the low supply situation, the number of new vessels that are coming over the next four years. As Mike said, it's at a historical low of around 9%. And it's not really growth. It's more renewal of an aging fleet with 9% of the fleet 20 years or older today. And when you have incremental demand growth that averages 2%-3% per year, that sets up very nicely.
You have runway in terms of viewing that supply situation really going all the way out to 2028 at this point, because if you're going to order a ship today, that's when you can expect delivery. Very good setup from a supply standpoint, which means you just don't need very much incremental demand to continue to have freight rates firm on a general basis.
So next question is, how do you manage the fleet from an insurance perspective, and how are those costs trending?
So I guess there are a lot of cross currents here. So we typically have H&M Insurance, War Risk Insurance, Loss of Hire. We actually have Loss of Hire Insurance, which is unique. Not a lot of companies have that, which essentially protects you from any extended period of off-hire time. But there's also, obviously, there's the Red Sea situation. So there's a few things going on. And then the Baltimore Bridge situation, which we have not seen flow into insurance costs yet. Overall, from an insurance perspective on the typical renewals for hull and machinery insurance, it's more or less been status quo. We haven't seen any big moves there.
But certainly, we're all watching the Baltimore situation to see if there's any knock-on effect, but more or less status quo on the cost side. And that's one of the things when we kind of go back to shipping, it's much more about the movement and freight rates and the operating leverage of the company. The cost structure tends to be flat. I gave the example earlier how our revenue increased by 40% year-over-year, but our cost structure was like 2% different. So it's really an operating leverage and revenue story as opposed to a cost story because those are more known ahead of time. And then the next question, we touched on this a little bit, but can we talk about the expected life of your ships and anything about updating your fleet and acquiring new ships?
Yeah. So useful life is 20-25 years old. The Capesize, the larger ships tend to be more towards the 20-year-old side, whereas the mid-sized ships tend to be more towards the 25-year-old side. As we talked about earlier, it's about creating additional revenues and cash flows by buying the newer vessels, which are less fuel efficient, reduces our carbon footprint as well. So it's a win-win. But then we're also looking at, well, what do we have coming up over the next year or two in terms of large dry docking bills? So that also goes into the equation.
We're coming up on time here. We have a couple more that we can get to. Next question is, do you see any opportunities to acquire other shipping companies, public or private? If so, how do you evaluate large-scale M&A?
So there are always opportunities out there. I think with any M&A transaction, you have to look at 10+ deals, and maybe you get one done. They tend to be very difficult. I would tell you right now, we're more focused on the fleet renewal program than large-scale M&A. Though we continue to look at transactions, but where vessel values are, where they are in sort of the 90th percentile, we would prefer to use shares as currency rather than levering up. But with the very large caveat that our shares need to be trading at net asset value or above for us to consider using them as currency for obvious reasons. We want to make sure we're creating accretive transactions in terms of anything that we do going forward.
Great. And I think, so again, we're pushing up against it here. But yeah, last question kind of goes right to what you were saying, John. Are you considering equity issuance above anything?
Only for a transaction. I mean, we're not here to just issue equity for the sake of issuing equity. There has to be a transaction involved that, again, is accretive. And whoever wrote that question, you're spot on. It has to be at or above NAV.
Great. All right. Well, yeah, I think that's it for everyone. Yes, Steven, if you want to take it over.
I didn't know if you have time for one more. I mean, we've got a minute left, if you don't mind.
Sure. Sure.
I know you mentioned your low financial leverage in your presentation. Do you have a target cap rate or debt rate that you guys aim to maintain?
I don't think it's a matter of maintaining. I mean, right now, we're focused on getting to net debt zero in the sort of medium term, which I think we'll get to. We've always said that the right transaction and the right time in the market that we would consider levering up, but it's not going to be high leverage situations. Maybe we go back to 25% or 30% again for the right transaction and the right time in the market. And then we'll do it all over again and pay it down as the market comes back. But right now, we're focused on the net debt zero. It's all about the dividend, driving that cash over a given rate down as far as we can so we can pay robust dividends.
We obviously still have the reserve, which you need to have for fleet renewal because you have a depreciating asset base. So we think we've created, again, I'll go back to the best risk-reward model in dry bulk shipping.
Well, thank you so much, guys, for participating. Thank you, our audience, for watching. I hope this was very informative.
Thank you, guys.
Thank you for having us. Much appreciated. Take care.