Take it away.
Great. Thank you very much again for having us here today, Michael. As we start out and we look at an overview of Genco Shipping & Trading. We are the largest U.S.-based dry bulk shipowner. We are headquartered in New York. We have offices commercially, both in Singapore and Copenhagen. We have 43 modern high-quality dry bulk vessels on the water today. We have a diverse fleet, so what we can be able to transport all of the dry bulk commodities, both the major bulks, which are iron ore and coal, but as well as the minor bulks on our mid-size ships, which is grains consisting of corn, soybeans, and wheat, cement, fertilizers, sugar, salt, really runs the gamut on the minor bulk side.
All of these shipping routes are global, worldwide, and we'll get into a little more detail on the major trading patterns a little later in the presentation. As I said, we have direct exposure to all the dry bulk trades. We think that is very important, and it is something that sets Genco apart from most of the peers. We have a very robust commercial platform in terms of generating revenue. We are direct with cargo owners so that we can provide a full-service logistics solution to all of those customers and cargo owners. With the idea of being direct, we can create alpha over and above the daily indices that are published. We have a very good risk-return profile.
We call it our value strategy, which Peter Allen is gonna go into a little more detail again later in the presentation. The premise of it is having a low leverage model. We're at about a 12% net loan-to-value today, coupled with a high dividend payout model. As you all may recall, we paid out a very healthy $0.50 dividend in the fourth quarter basis operating cash flows for that quarter. In terms of corporate governance, very highly ranked among public shipping companies. We're in the top quartile, and we are listed on the New York Stock Exchange under the ticker symbol GNK. Great. In terms of assets, we have what we like to call a barbell approach. We have both the major bulk, which are our Newcastlemax and Capesize vessels, our largest ships.
We have 19 of those. We also have 26 of the minor bulk Ultramax and Supramax vessels. The main difference is they're obviously above and beyond what the vessels are carrying. Again, the Capesize and the Newcastlemaxes are focused on coal and more importantly, iron ore. That class of ships has a higher beta, which we think is extremely important to have within a public equity to recognize upside, which again, we're very positive on, and we'll talk about that going forward. We also think it's important to have our trading platform around the minor bulk vessels, which provide a little more stability to the earning stream, more diverse trade routes, and it allows us to create arbitrage opportunities from time to time with cargo. Go to the next slide. Thank you.
If we look at what Genco did in 2025, 48% of our cargoes were iron ore-based, and then grains comes in second at 14%, and then the coal with 13%, and then the rest of the minor bulk sort of runs the gamut. Iron ore, just to give a quick refresher, iron ore is paramount in steel production. It's the major input in steel production. Then met thermal coal, the met coal on the steel production side, thermal coal on the power generation side, and then the grain. The wheat is human consumption, but corn and soybean is more used in animal feed, which again is in a growth stage. We have the other minor bulks that are really linked to global GDP growth. Our value strategy.
When we look back to 2021, we wanted to transform Genco into a low leverage, high dividend payout company. But also maintain a lot of flexibility on the growth side and fleet renewal, switching from our older vessels into newer, modern, more fuel-efficient vessels. We wanted to target paying quarterly dividend based on cash flows, and keeping in place a voluntary quarterly reserve. These are depreciating assets, so we do feel we need to hold back so we can continue fleet renewal and ultimately growth. That was in 2021. Where are we now? We've paid $270 million in dividends. We've paid down almost $250 million of debt, getting us down to that 12% net loan-to-value figure.
We've invested another $347 million in high specification new vessels to our fleet. We've also been able to pay sizable dividends throughout the cycles. Again, this is a very key pillar of the value strategy, and that is even though there may be lower periods or softer periods in the dry bulk market due to volatility and seasonal factors, we wanna make sure that we're in a situation where we can pay a dividend every single quarter. Our view is the way you're able to do that is maintaining a low leverage on the debt side structure. Again, if you look at the large dividend we paid in Q4 of 2025, you have to go all the way back to fourth quarter of 2022. That is very market-driven.
The market has been doing well, and we expect for first quarter, on a year-on-year basis to have a higher dividend than what we paid in Q1 of 2025. Again, based on operating cash flows. We've grown our fleet. We purchased two Newcastlemax ships, which are the largest dry bulk ships. They're above and beyond Capesize, but they do transport the same raw materials, iron ore, and to a lesser degree, coal. We spent $343 million since 2023, and we purchased three ships last year that equated to $200 million, again, increasing our earnings capacity, our dividend capacity.
We've been very focused for the last few years on growing the Capesize and the Newcastlemax fleet, larger ships, iron ore-based, and we see both a low supply of new ships coming on, particularly in the Newcastlemax and Capesize sector. That is also where there is projected to be demand growth on the iron ore front, more recently on the coal front as well, and then bauxite coming out of West Africa. Michael will get into, again, a little more detail on that when we get to the industry section. This is one of my favorite slides. It really shows how Genco is set up from a capital allocation standpoint. During periods of lower volatility, there's a presentation of countercyclical opportunities and opportunities to buy vessels.
We wanna make sure that in the lower parts of the market, the balance sheet is strong enough where we can deploy capital where others cannot. Vice versa, when we're in a very high cash flow environment, which, you know, I would say we're in today, it allows us to pay sizable dividends and return capital to shareholders. What this all sums up to is the company is set up to always play offense, no matter what the market is doing, or whether the market is high or whether the market is experiencing, you know, short-term low volatility. If we look at our strong corporate governance, this is something we're very proud of. We're actually the only U.S. filer with no related party transactions, and the only U.S.-listed dry bulk shipping company with no related party transactions.
We have a diverse and independent board of directors, 50% of which is female. Audit compensation, ESG, nominating corporate governance committees fully consist of independent directors. Just summing up, Genco is a leader on the industry side in corporate governance across the board of all public shipping companies. With that, I will turn it over to Peter Allen, our CFO, to go through the financial side and our dividend policy.
Great. Thanks, John. As John alluded to, we had a really strong end to the year in Q4 of 2025, hitting multiyear highs in several of our key metrics, including EBITDA and TCE. On a capital allocation and shareholder returns perspective from a dividend growth and leverage point of view, we had our highest dividend payout of the year in Q4 at $0.50 per share, which represents an annualized yield of close to 10%. As John pointed out, that was our highest since Q4 of 2022. During the second half of last year, we also agreed to acquire three 2020-built Capesize and Newcastlemax vessels, which increased our fleet on a numbers basis by 7%, but more importantly, increased the amount of capital invested and the asset value of the fleet by 20%.
Significant growth and premium earning assets that are coming into the fleet. From a leverage point of view, at year-end, we were at a 12% net loan-to-value with significant undrawn revolver availability for continued growth opportunities. When we drill down on TCE, Time Charter Equivalent is our net revenue metric on a per vessel per day basis. You can see throughout the year from Q1 of 2025 through Q4 of 2025, it increased every quarter sequentially, culminating in a $20,000 per vessel per day Q4 2025 TCE, a 26% increase relative to the prior quarter.
Then when that flows into, given the operating leverage of the of the sector, you know, you can see that Time Charter Equivalent and the net revenue metric flow right into the EBITDA side of things where the cost structure remains relatively stable, and then there's upside with the net revenue side of things. When we look at Q4, we generated EBITDA of $42 million, which was roughly half of our full year 2025 EBITDA. We really set ourselves up for a strong Q4. Not only was it the highest earning and market-driven quarter of the year, but from a dry docking perspective, we were 90% done with our dry docking schedule. We had bought a ship that delivered to the company in October, and we also had very few off-hire days.
We really maximized utilization during what was the strongest quarter of the year, and that ultimately led to a very strong EBITDA and company performance in the fourth quarter. Drilling down a little bit more on the operating leverage, we think there's so much operating leverage in this business, there's less of a need for financial leverage. That high dividend, low leverage, and high operating leverage model is really what we think provides the best risk-reward profile. Then when we look specifically, every $1,000 fleet-wide increase in Time Charter Equivalent rates equates to $16 million of annualized EBITDA or $0.37 annualized earnings and dividend per share, as that increased earnings flows directly to our dividend calculation.
When we look specifically at our Capesize fleet, which tends to have higher beta and a little bit more volatile, every $5,000 increase in our Cape TC is $34 million of annualized EBITDA or nearly $0.80 per share. When we go down to our dividend policy, this is based on 100% of quarterly cash flow, less a voluntary reserve. As we mentioned, we paid $0.50 a share last quarter, in terms of our dividend, which is roughly a 10% annualized yield. We've paid 26 consecutive quarters of dividends, which is the highest among our dry bulk peer group. That equates to over $7.5 per share or more than 35% of our current share price.
On the right of the page, we highlight the formula, which is operating cash flow, which is essentially net revenue minus our operating expenses, less our voluntary reserve, that walks down to the cash flow distributable as dividends. When we put it all together, you know, we think that Genco is in a very strong financial position. We have our 43 ships at the end of the year. The cash flow break-even rate, the lowest in the industry at under $10,000 per day. We have no mandatory debt amortization, given the low leverage situation that we have, which brings down our cash break-even significantly, which is a differentiator to many of our peers. Our net loan-to-value position is 12% at year-end.
At year-end, we have $400 million of undrawn revolver availability that we can utilize for accretive growth opportunities, as markets develop. With that, I'll turn it over to Mike Orr to discuss the dry bulk market.
Thanks, Pete. During the first quarter, the Baltic Dry Index has averaged the strongest first quarter since 2022, and prior to that, the strongest year since 2010. Cape rates have averaged about $23,000 per day, which is extremely firm for what is typically the seasonally weakest part of the year, while Supramax rates have averaged about $12,000 per day. These strong rates have been in large part due to a very firm Atlantic iron ore exports, particularly coming from Brazil. Last year, Brazilian iron ore exports grew by 8% year-over-year. What's interesting is that so far this year, exports have increased by 1%.
They're roughly flat year-over-year, which we actually take as a positive that these rates could be this firm without significant year-over-year growth coming out of Brazil, which we expect to see more in the second half of the year. As John alluded to, also coming from the Atlantic Basin, has been the significant growth in Guinean bauxite exports. Year to date, exports have grown by about 30%. This is coming off of already record growth last year. That's an incremental 12 million tons shipped so far this year. What's important is that 75% of this bauxite is being shipped to China, which is a long-haul ton-mile trade, predominantly shipped on Capesize vessels. In terms of the grain trade, we are currently in South American grain season.
China has reportedly met the 12 million ton soybean purchase agreement agreed between the two countries back in the fall. Donald Trump is expected to meet with Xi Jinping in China in the coming weeks, and we expect to get more clarity in terms of the future of that trade at that point. Finally, in terms of the supply side, the order book has ticked up in recent months. The current order book is about 12%-13% of the on-the-water fleet. What's interesting is that on the current on-the-water fleet, approximately 11% is 20 years or older. We view this order book to be largely replacement tonnage for a rapidly aging on-the-water fleet. With that, I will turn it back to John.
Great. Thank you, Michael. Just to finish up, again, we have positioned the company to always play offense and create value through all the dry bulk cycles, both on the upside and when we experience short-term downward volatility. That is all because of our strong balance sheet, 12% net loan-to-value today, but it gives us a lot of financial flexibility for accretive growth going forward. Quarterly dividends across all cycles, which has been mentioned several times, but that was really the genesis of the entire value strategy, is being able to return capital to shareholders, no matter what the market cycle or what area of the market cycle it's in. High quality asset base.
We've been focused more on the larger ships in terms of growth over the last few years because of the growth in iron ore and the bauxite trades, which we see coming from now over the next two to three years. That minor bulk fleet is very important, and we're creating very good alpha above and beyond the Baltic Supramax Index on a daily basis because of the direct relationships and the voyage chartering that the team is doing.
Strong operating leverage, Peter mentioned that again several times, upside from the Capesize sector, which we believe will continue this year. The commercial operating platform is first class, and then our strict corporate governance standards. As I said before, we are the only U.S.-listed company with no related party transactions, and we consistently rank globally among public shipping companies in the top quartile. With that, we will open it up for Q&A.
Great. Let's go through some of the questions that we have here. First question is: The voluntary quarterly reserve for Q1 2026 is targeted at $19.5 million. Under what specific liquidity or market conditions would the board consider reducing this reserve to further boost the payout, especially given your stated goal of a higher year-over-year dividend in Q1?
Pete, you wanna take that?
Sure. You know, we've had our reserve at $19.5 million. It's been the target for several quarters. When we do have periods of seasonal softness with the board and management have flexed that reserve down, and we've paid at least $0.15 per share over the last few quarters. Obviously in Q4, that increased to $0.50. You know, the market in Q1 has been very strong, so when we get to the end of the quarter, obviously the board will have a discussion and see where that reserve is.
You know, the company's in a really strong balance sheet perspective, so, you know, we're able to pay out continuous dividends irrespective of market conditions, over the last 26 quarters, which is the longest among the peer group. Yeah, it's a good problem to have, I guess, with the reserve.
We have guided for the $19.5, right, for Q1 publicly. Obviously there'll be a conversation at the end of the quarter with the board as Peter just said.
Right. Next question. Recent data suggests a significant drop in bulk carrier transit through the Strait of Hormuz. While Genco's direct exposure to that region may be limited, how are you managing the indirect administrative friction or insurance premium spikes affecting your fleet?
We're fortunate in that we did not have any vessels in that area at the time. That area for dry bulk only represents about 2%-3% of overall commodity, so it's a pretty low number. Our insurance premiums at this point and the main reason is 'cause we're not going through there and we don't have any ships in there, have been stable. There hasn't been any upward pressure on the insurance side. The one area of the world that we still do avoid is the Red Sea area and going through the Suez Canal. Again, we've gotten very adept and very efficient at going around, as you know, as needed. We'll continue to stay away from that area, but it doesn't limit our trading abilities at all.
Okay. Next question is: Can you dissect normalized Capesize versus Supramax earnings power over the next two to three years?
Maybe Peter, you can talk a little bit about the average spread in terms of multiples between Capes and Supers, and hopefully that'll lead to an answer to that question.
Yeah, no, absolutely. Historically, that spread has been, you know, 1.5x between Capes and Supramaxes, you know, looking back the last several years. With the Cape supply and demand dynamic that has improved materially over the last few years, that spread has increased. You've seen it many times in recent years that Capes have actually traded upwards of 2x Supramaxes. You know, that's primarily due to what has been a very low order book for Capesize vessels. Up until recently, as things have kinda normalized out in terms of the order book, Capesize had the lowest order book in terms of the dry bulk sectors, and also they have the growth projects that have materialized with West Africa iron ore and bauxite, and then continued growth out of Brazil.
We've really seen Capesize as a sector within dry bulk outperform the most. When we look at that, you know, from a capital allocation perspective, we had seen that development materializing in 2023, and that's where we really started to put our investment dollars, investing in the Capesize vessels, and that's been the best performing sector over those years. When we look ahead, you know, those growth projects that I alluded to, we expect more ton-mile expansion out of West Africa. With the growth projects, and Mike alluded to this as well, there's so much growth that is coming on from a ton-mile perspective, and there's just not enough supply that will meet that growth.
We do think that over time, the supply and demand equation, particularly for the larger ships, will tighten further. But as you know, John always mentions, there's a very high correlation between all the sectors. Supramaxes, you know, the forward curve is pointing to $15,000-$16,000, which are very healthy rates for that sector. And then the Cape market is at very healthy rates as well. Hopefully that helps with the question there. Going to the next question here: Where are you seeing the most attractive returns, spot exposure, short-term index-linked charters or locking in period rates?
Yeah. Look, definitely on the spot side, we're optimistic about the market over the rest of the year. There's definitely been some, what I would call normal seasonal volatility downwards during first quarter, but still very strong rates. You know, definitely in the 20%s, mid-20%s for the larger ships, the Capesize and the Newcastlemaxes. You know, we're gonna continue to focus on the spot market so that we can capture a rising rate environment. The index charters, we still have a couple of the Capes on index, and clearly they will capture a rising market as the Baltic Capesize Index moves up later in the year, which is what our anticipation is.
Again, the spot business, particularly in a firming market, is where you wanna be, and that's where we're concentrating at this point.
Okay. Next question. How should we think about OpEx inflation, crew, insurance, dry dock versus what you can realistically pass through via rates?
Pete, you wanna go through that?
Sure. In terms of OpEx, you know, our OpEx last year actually marginally decreased on a year-over-year basis. Crew is the largest part of our OpEx, so naturally you're gonna expect to see slight increases in crew wages over the years, as is typically the case. You know, in terms of this year, you know, we're forecasting a marginal increase on a year-over-year basis, so nothing too problematic there. Just more typical inflationary related increases. In terms of passing through via rates, I think that's more of a question regarding bunkers, where the price of fuel typically correlates with the freight rate. An increased cost of fuel, in theory, should have a knock-on increase in the cost of freight, keeping that Time Charter Equivalent balance steady, all else equal.
Usually fuel is a pass-through in these sort of voyage charters and time charters that we do. Looking at secondhand vessels values, are you seeing any early signs of distressed selling that could create attractive entry points?
Unfortunately, no. In fact, it's quite the opposite right now. We've actually seen values increasing since January, which again, is unusual. Usually you see a little bit of softness in the first quarter even on the value side, but that just has not been the case, and I think that's a function of the strength in rates and positive sentiment in terms of supply and demand dynamics from a ship owner standpoint going forward. It's been more of an upward and firming trajectory than going down.
Next question here is, can you rank capital allocation priorities between fleet growth, dividends, share repurchases, and debt reduction?
Pete, maybe you can follow up. Look, priority is dividends. That is, you know, because we've built this company the way we have with the low leverage at this point, we're certainly concentrated top of the list on dividends and returning capital to shareholders. We will continue and, you know, through the quarterly reserve, we'll continue to pay down debt and do fleet renewal and set the company up so that, you know, it can experience this next leg of growth when the time is right. Did I hit all the subjects and the questions from a capital allocation standpoint?
Yeah. Yeah.
Look, yeah, I say this all the time, you know, shipping is a very dynamic industry, and our commercial team and our technical management team are constantly adjusting to geopolitical events and navigating that efficiently and in the right way. Capital allocation is a big part of this business, and that's where real decisions are made in terms of creating value for shareholders. That is one of the things that we think we do extremely well and differentiates ourselves from our peers on a consistent basis. We have told the market what we're going to do and announcing the value strategy, and I think you can see that the proof is there that we have done everything that we've said we were gonna do and that has benefited the company as well as shareholders.
Okay. Next one here is, what's the biggest risk to your current earnings outlook that investors are underappreciating?
Pete, you wanna take-
Yeah. Look, I think, you know.
I'll chime in.
Absolutely. You know, overall, we're positive on 2026. We've been setting the company up through our investments over the last three years for a strong 2026 and beyond. You know, we started to see a little bit of that in Q4 of 2025, and investors have seen that with the dividend that was just paid yesterday. Yeah. Overall, our base case is that we are very constructive on 2026 and beyond, just given the supply and demand dynamic. Obviously, when you look at risks, it's a geopolitical, it's a macro business. There's a lot of micro supply and demand equations within that business. There's a lot of imports that are going to developing Asia. There's a lot of commodity demand in those countries.
You know, China is obviously a large component of the overall dry bulk spectrum. Look, there's geopolitical factors that are occurring today that we've touched on. You know, obviously, that's out of each individual company's control. Look, it's something that we obviously monitor very closely, and then the implications of how those impact commodity demand, which is ultimately what we're focused on. Yeah, the geopolitical stuff is obviously front and center on everybody's minds these days.
Well, thanks very much, gentlemen. That brings us to the end of our time. Is there anything you guys would like to say by way of concluding remarks and a wrap-up?
Yeah. Look, it's very, very straightforward. I mean, geopolitical events, as Peter was saying, is front and center in the world today. It has been, you know, for since the dawn of time in shipping. Shipping has a way of adjusting in a positive way to geopolitical shocks, if you will. Genco is set up for any of those shocks. What I mean by that is having that lowly levered balance sheet, we can spend our time on figuring out how to get through geopolitical events in the most efficient manner rather than worrying about our balance sheet. The point of that is, again, to continuously on a quarterly basis, return capital to shareholders.
We think that we have built the best risk reward model in shipping, in dry bulk shipping, by that low leverage and high dividend payout, but maintaining ability to grow.
Well, terrific. Thank you, John and team for presenting. A very informative and enjoyable presentation. Thank you everyone for joining us, and we'll look forward to seeing you next time.
Thank you again for having us.
Very good.