Just type your question in, and management will answer them after the prepared remarks. Fortunately, we are joined today by Genco Shipping & Trading. Let me introduce the team. We have Michael Orr, VP Finance; Peter Allen, the CFO; and John Wobensmith, President and CEO. John will be doing the presenting. John, please go ahead.
Great. Thank you very much, and we appreciate you all having us today. Beginning with just a little basis background on the company, we are the largest U.S.-based dry bulk shipping company. We have 42 modern ships on the water today, made up of both our large vessel types, which are Capesize vessels, and then our mid-sized vessels, our UltraMax and SuperMax, and I'll go into one more detail in a minute. We are headquartered in New York, but we also have commercial offices in Singapore as well as Copenhagen. We transfer both major and minor bulks, major being iron ore and coal and bauxite predominantly, minor bulks being grain, cement, fertilizers, sugar, salt, gypsum, really runs the gamut. All of our trade routes, which we'll see in a minute, are very global.
We have direct exposure to all the dry bulk trades with the mix of our fleet, which we believe is very important to having a full look at the industry and what is happening on a day-to-day basis. We do provide a full-service logistics solution to our customers, so we are getting our customers' cargo from point A to point B and managing everything in between. We believe we've got, from an equity standpoint, the best risk-return profile of the peer group with a very low leverage of 6% for net loan to value, but we also have a high dividend payout, and Peter is going to go through that in more detail in a few minutes. We're very proud that for the last three years, we've been ranked number one from an ESG standpoint in terms of global shipping companies that are publicly traded.
I believe there are 64 in that group. We are a U.S. filer, so high transparency, and we are the only listed dry bulk shipping company with zero related party transactions. That really goes as a testament to how we view the company as well as our very high corporate governance scores. We are traded under GNK on the New York Stock Exchange. If we look at the commodities that we primarily ship, iron ore is the biggest at 44%. You can see over on the left or the middle part of the slide, iron ore is used in steel production. We also ship metallurgical and thermal coal for steel production and power generation. Grain, which can be used for human consumption, but it is actually more on the livestock side in terms of corn, soybeans. We also ship wheat, which is obviously on the human consumption side.
Minor bulks, again, really runs the gamut. You can see over on the right, fertilizers, cements, pig iron. There is a big 10% miscellaneous, which again could be sugar, salt, gypsum. If you look at global seaborne trade, in total, dry actually makes up 46% of that total world trade. These are the key trade routes for iron ore, coal, grain, and the minor bulks. I think the routes that are very interesting to pay attention to are the iron ore and the bauxite, as well as the grain routes, particularly coming out of South America, going into China. There is also iron ore that goes out of Australia, but those iron ore routes are the longest shipping routes in terms of dry bulk, which means they have a tremendous amount of operating leverage.
They're taking ships out of the market for a much longer period of time than some of the shorter haul routes. We focus a lot on those iron ore, grain, and bauxite routes, bauxite coming out of West Africa. We have what we like to refer to as a barbell approach to our fleet makeup. We have 16 Capesize vessels, which again are trading iron ore, coal, and bauxite predominantly, and then 26 minor bulks and the UltraMax and SuperMax. One of the differences is the UltraMax and SuperMax can self-load and self-discharge as they have cranes on board, whereas the Capes are going to more of a terminal type structure. The Capesize definitely has a higher beta versus the more stable earnings in the minor bulks.
We think, again, it's important to have that stability that the minor bulks bring to us and the ability to create arbitrage opportunities and additional cash flows and beta, but also have the direct exposure to the iron ore markets, giving high operating leverage and upside to the equity. If you look at our approach to capital allocation, three pillars: dividends, deleveraging, and growth. You can see we've paid 23 consecutive quarterly dividends since Q3 of 2019, again, the longest in the peer group, aggregate dividends of $6.76, which represents about 50% of our current share price paid over time. We have paid down debt in a meaningful way over the last few years. 80% of the original debt since the end of 2020 has been paid down, so we're at that 6% net loan to value today. We do continue to grow, particularly in fleet renewal.
We have been divesting our older, less fuel-efficient assets, redeploying in more modern, more fuel-efficient shipping assets. Just finishing up before I turn it over to Peter, this is a really interesting graph. It shows the volatility that exists in shipping, particularly in the larger vessels. What we are getting across here is that we have set the company now up from a risk-reward standpoint where we can always play offense. As freight rates rise, there is clearly significant operating leverage built into the fleet, particularly the larger Capesize vessels. When things are softer, it presents opportunities from a countercyclical standpoint because of the strong balance sheet. I would also tell you, just to finish up on dividends, again, we have had those consecutive dividends, but dividends are very important to shareholders. We believe heavily in returning capital, and that plan will continue going forward.
With that, I will turn it over to Peter Allen, our CFO.
Great. Thanks, John. So I'll touch a little bit more on our comprehensive value strategy, which is essentially Genco's approach to capital allocation. As John alluded to, we have a low financial leverage model, but we take advantage of the high operating leverage inherent in the dry bulk business. In terms of our balance sheet, we have a cash balance of $31 million as of March 31 and debt of only $90 million, resulting in a net debt position of about $60 million on an asset base of approximately $1 billion. That results in a net loan to value of about 6%. On top of that, we have significant undrawn revolver availability of $324 million that we can utilize for accretive growth opportunities as markets develop. It gives us a lot of financial flexibility within our balance sheet and capital structure.
In terms of debt repayment, since inception of our value strategy, we've paid down about 80% of our debt, as John alluded to. That's about $350 million that has been used in this current cycle to delever the balance sheet and really transform the balance sheet over that period of time. We've also opportunistically utilized our debt and credit facility to purchase vessels as we see various opportunities, as we did in Q4 of 2023 and once again in Q4 of 2024, investing in high-quality modern assets. We've been able to delever the balance sheet, grow the fleet, and we've also paid a significant amount of dividends over that time. Turning to our dividend policy, it's a variable quarterly dividend. It's based on 100% of operating cash flow, less a voluntary reserve. It does vary from quarter to quarter.
The beauty of it is that the operating leverage baked into the dry bulk business flows through the financial statements and also flows through the dividend policy. The paying 100% of operating quarterly cash flow. We also have that voluntary reserve, which is within management and the board's discretion and can be flexed up or down in a given quarter. In the first quarter in particular, which is highlighted on this page, our voluntary reserve is usually $19.5 million. With the softer Q1, we reduced that to $1.1 million, paying out a $0.15 dividend, which is about a 4% annualized yield. On top of our dividend policy, in May of this year, we also implemented a $50 million share repurchase program that the board approved, and that will be used opportunistically going forward.
With that, I'll turn it over to Michael Orr to discuss the dry bulk market dynamics.
Thanks, Pete. Beginning on slide 15, this chart really highlights the volatility and operating leverage of the cape-sized segment. This is the year-to-date cape rates as well as SuperMax rates. The cape rates have nearly doubled in the last four weeks and are currently at year-to-date highs of approximately $26,000 per day, with SuperMax rates at approximately $9,000-$10,000 per day. The uptick in rates has been in large part thanks to strong volumes coming out of Brazil, with that in May saw the strongest iron ore exports since October of last year. Over the last two years, China has imported a significant amount of iron ore, and over that time, stockpiles have increased significantly. What is encouraging is that stockpiles have been coming down in China, with stockpiles currently 7% lower than they were last year.
They are currently at their lowest level since February of last year. China has been drawing down those stockpiles. With that, steel production is actually positive year-to-date, with a significant amount of that steel being exported. In the near term, we expect significant volumes to come online in both iron ore and bauxite from the Atlantic Basin, from Brazil, as well as West Africa and Guinea. What is important is that for every one cargo coming out of the Atlantic Basin, that has three times the ton-mile impact of one cargo coming from Australia. That is really where you see the fleet get stretched out, where you can see a pop in rates as supply of vessels becomes thinned out. I want to touch briefly on the bauxite trade, which has really turned into a significant cape trade on the cape-sized segment.
We have seen 10% annualized growth over the past decade, with the majority of these volumes coming from West Africa. As I mentioned on the prior slide, this is long-haul tons, both predominantly shipped on cape-sized segments that has that ton-mile impact from the Atlantic Basin. In terms of the grain trade, we are currently in South American grain season with strong volumes coming from both Brazil as well as Argentina. China has been aggressive in purchasing large volumes from South America, as there is uncertainty in terms of their supply come the fall when we turn more towards North American grain season. Finally, in terms of the supply side, the order book is currently approximately 10%, which is roughly in line with 10% of the fleet that is currently 20 years or older. We view this order book largely as replacement tonnage.
As the fleet gets older and older, these ships will be removed from the market and replaced with this order book tonnage. This one-for-one swap is quite encouraging in terms of the supply side fundamentals. With that, I will turn it back over to John.
Great. Thanks, Michael. Just to finish up, a quick recap. I think the most important thing is that we have a very balanced risk-reward strategy. In fact, I would argue that we are the best risk-reward model in the peer group because of our low leverage and high dividend payout and our ability, again, to play offense in any type of volatile market. We have an industry low cash flow break-even rate, which Peter Allen went through, very strong balance sheet, high liquidity through our revolving credit facility, which allows us to manage interest rate risk very well. We have a fleet renewal growth strategy that is active, very strong corporate governance, as I mentioned before, number one ranked for over the last three years from an ESG standpoint.
In terms of revenue generation, Michael presented a fairly strong picture in the years to come, particularly because of the low supply and the low order book. Ordering today, you really cannot expect to get a new ship until late 2028, early 2029. You can put a lot of faith in what that supply situation looks like, which, as Michael pointed out, is effectively fleet replacement when you look at ships 20 years and older versus what is on order today. With that, we will open it up for questions.
Terrific. We got a few questions come in, so let me read them off. The first, no surprise, would come to the impact of tariffs on your business, how you've managed through that, how it's affected your planning, as well as execution and results.
It has not affected our business directly from a dry bulk standpoint, keeping in mind that with the exception of grains, there is very little dry bulk cargo going in and out of the U.S. On the grain front, there is a 10% tariff that will be in place. We will see what actually happens as we get into North American grain season, which really will not come until September, October timeframe. In terms of our largest commodities, though, iron ore, coal, bauxite, that is all international trade. It is not subject to any tariffs, whether it is the U.S. or China. Directly, not affected. Indirectly, and I think we have seen this over the last few months, it has affected China's economy in a positive view.
That probably means they're going to continue their stimulus efforts, which is good for infrastructure building, which is good for steel production, which is good for iron ore consumption. I still take a cautious outlook from the tariffs that were put in place a few months ago. Clearly, today, there seems to be a deal on the table, but I also think it's a little bit of a waiting game until things are signed off officially by both countries.
Terrific. Just kind of sticking with China there because they're such an important factor. You had a slide that showed that effectively the iron ore imports turn into steel exports. And I'm wondering if you're seeing any vulnerability there, any slowdown.
Iron ore goes into steel production, as you pointed out. I would say most of that steel production is consumed domestically. However, they have been exporting. There is not a lot of exporting to the U.S. on the steel front. I know there is a lot of noise around steel tariffs, but the reality is there just is not a lot coming in, and there has not been for a long time. Most of that steel that is being exported is being exported to other Asian countries as well as the Middle East.
Okay, great. Just looking to the Q1 results that you announced probably a month or so ago, you also announced a share buyback program. Could you talk a little bit about that decision from a capital allocation standpoint and see if there's anything else you want to share about it?
Sure. Yeah, I'll start on that one. So yes, we had a net loss in Q1. Q1 is typically the seasonally worst quarter, and that came to fruition very much so in Q1 of this year. You have poor weather in Brazil and Australia, new building delivery timing being front-loaded, and then the Chinese New Year, the confluent, the aggregate of that really impacting the overall dry bulk market. So we're essentially looking through that. We are a little bit more positive as we get on through the balance of this year, particularly into next year. Having said that, from a capital allocation perspective, we saw that there was a lot of noise, particularly in the macro, and that was disconnecting many equities, not just ours, but many equities and valuations to the specific supply and demand fundamentals of our business.
We thought it was an opportunistic tool within our tool belt to utilize that capital allocation methodology and add that buyback program on top of our favorable dividend policy.
Right.
Yeah, just to put a fine point on it, it is incremental to our dividend policy. There is no fungibility between the two. They are two very separate things. As Pete pointed out, we put that in place from an opportunistic standpoint. If we do see large volatility to the downside like we saw a couple of months ago, then we have it at our disposal to use.
Great. Maybe if we could come back to some of the demand drivers in your business. You mentioned that there had been an upsurge in demand for shipping from Brazilian ports. Could you describe how you're taking advantage of that?
Mike, you want to?
Yeah. Brazilian iron ore exports have increased month over month for the past three. Typically, Q1 is the seasonally weakest point for Brazilian exports, largely because of rainy conditions that hinder movement of iron ore. Once Brazilian iron ore exports ramp up, what's great is that it's a 90-day voyage from Brazil to China. Every time a ship loads in Brazil, it takes it out of the market for basically a whole quarter. As compared to when it calls an Australian port, it takes it out of the market for 30-40 days. When Brazilian exports really ramp up, you really see a stretching of the fleet, and that's where freight rates really rise because there's an artificial supply reduction of capes on the market.
Kind of plunging into the details there of how you manage the fleet, what is your approach for ensuring just the highest asset utilization you can? Is there anything you'd like to share there?
Yeah, sure. So we certainly have very high utilization. We always have, and it's the nature of the industry. It certainly comes down more to rates with that utilization. Depending on the time of year, we'll deploy more in the Brazilian trade, less in the Australian trade, and then vice versa. We also have a few ships that are on index-type charters, which are pegged to the Baltic Cape Size Index, plus a nice premium because they're relatively new, fuel-efficient vessels. I would call we have more of a portfolio approach to how we generate revenues in the cape-sized sector, simply because of the very large volatility that exists there, both to the upside and at times down. Right now, I would say we're fairly evenly deployed between Brazil and Australia.
As Mike pointed out, that Brazilian trade being 90 days, there's a tremendous amount of operating leverage for the fleet on that trade. Australia being shorter, if we believe the market is going up, we'll tend to wait a little more towards Australia because it's shorter trade, and you want to make sure you don't miss any uptick in the market.
Right. Turning to how you manage the business, you had a slide that showed very low leverage levels, and that's unusual for the shipping industry. Could you describe why you chose to do that, what it means to you strategically?
Yeah. So again, it's a couple of things. One, always wanting to play offense, right? Companies that have over-leveraged themselves tend to wind up not being able to take advantage of opportunities that are presented when the market does have downward volatility. We want to be able to take advantage of that situation, but we also want to use when rates are up, we want to pay out higher dividends. We obviously have a variable dividend policy. That dividend is very important. And we believe the way to keep a dividend going and not having to turn it off is having low leverage so that no matter what the market throws at you, you can react, and you can react in a positive way and continue to pay dividends.
Right. There was also an interesting slide that, in effect, all of the new builds that are contracted for would be swallowed up by growth and demand for bauxite and other minerals being shipped to Asia. When do you feel that will really start to pinch and start driving rates up?
If you look at the projects that are coming online, Pete, do you have that slide?
Yep.
All right. The IRR. There we go. If you look at the West African bauxite, it is alive and well and continues to grow today. It is actually a pretty significant trade now, and that has really only happened over the last two to three years. The Vale iron ore production, that is coming on starting next year. The big one is the West Africa iron ore at 120 million tons. They say that they are going to make their first shipments at the end of this year. I am a little skeptical in terms of seeing that really ramp up until we get into the middle of next year. That is when I think you really start that West African iron ore trade growing. I think to get to that 120 million tons is somewhere around mid-2027. Is that right, Peter?
Yeah. Yeah.
That's the timeframe on all this. And as you pointed out, it is very positive demand growth when you balance it again versus what's actually going to be delivered over the next few years in terms of new builds.
Here's a question pointed sort of directly at the stock price. What do you feel investors are missing? What is the market missing? Why should people be looking seriously at GNK today?
There's no doubt we're trading at a discount to net asset value. That's very clear. I think when you look at, again, our leverage profile, our risk-reward model, and our very high corporate governance, which gets lost in this industry quite a bit, unfortunately. This company is set up to be very shareholder-friendly in those multifaceted ways. I think my view is, again, and it's an opinion, I think anything to do with China right now has been sold off. Because when we go back and look at share prices versus where rates are today, there's very much a mismatch that's going on. I'm sure there are other things that are going into why these small-cap shipping stocks are trading at discounts. We're obviously not the only one. I do believe it's sort of this China off-trade right now. That presents opportunity.
I mean, it's clearly a value stock at this point.
Interesting. Looks like we have time for one more question. Could you just talk about your competitive advantages versus your peers?
Yeah. Again, as I said, best risk-reward model, set up to play offense no matter what the market brings our way. The dividend and then the very strong culture of high corporate governance. I think that is very important in this industry. I'll say it again, we're the only peer that has no related-party transactions. Everything we do, our ship management, our commercial management, it is all in-house contained within the public entity.
You mentioned the absence of related-party transactions, and you know far more than I would about the industry, but it does seem pervasive. Why, again, have you chosen to be different? What's the strategy there?
We've always had the mindset that we don't want related-party transactions. We think they create conflicts. There are certainly cases in a lot of these related parties where there are higher fees that are being charged to the company in order to manage vessels. In order to keep our operating expenses, our G&A, anything to do with the ships at the lowest we can, we like to have it in-house. We don't believe in having those related parties. Again, the biggest created conflicts. Decision-making from this management team is solely made based on Genco, which I think is a big positive.
Excellent presentation. Thank you, gentlemen, very much. We really appreciate that. If we did not get to all of the questions, and there were quite a few, please contact your Sidoti representative. We will help you run down answers. Thanks, everybody, for joining. Hope to see you next time. Thanks.
Thank you. Thank you again.
Bye then.
Bye-bye.