Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Date

Feb. 18, 2026 at 8:30 a.m. ET

Call participants

  • Chief Executive Officer — John C. Wobensmith
  • Chief Financial Officer — Peter Allen
  • Dry Bulk Market Analyst — Michael Orr

Need a quote from a Motley Fool analyst? Email [email protected]

Takeaways

  • Adjusted net income -- $17.3 million, or $0.40 per basic share and $0.39 per diluted share, excluding $1.9 million of shareholder-related expense, as disclosed by Peter Allen.
  • Net income -- $15.4 million, or $0.35 per basic and diluted share, reported for the quarter.
  • Adjusted EBITDA -- $42 million, a 94% increase from Q3, and the highest quarterly level since 2022.
  • Annual dividend -- $0.50 per share declared, representing a 233% increase from Q3 and the highest payout in three years, with 26 consecutive quarterly dividends achieved.
  • Annualized dividend yield -- 9% based on the current share price, the highest since Q4 2022.
  • TCE (Time Charter Equivalent) -- $20,064 per day, the highest TCE for the year, up from approximately $12,000 per day in Q1 2025.
  • Estimated Q1 2026 TCE -- Approximately $18,000 per day fixed for 80% of owned available days, more than 50% higher year over year, as stated by Peter Allen.
  • Net loan-to-value -- 12%, labeled as an industry low.
  • Cash and debt positions -- $55.5 million in cash and $200 million debt at year-end.
  • Revolver availability -- $400 million undrawn at year-end with plans to increase borrowing capacity to $680 million post-acquisition by utilizing the credit facility accordion feature.
  • CapEx for vessel acquisitions -- $131 million remaining to fund the March 2026 delivery of two 2020-built Newcastlemax vessels.
  • Fleet profile -- 43 modern dry bulk vessels at period end; pro forma fleet expands to 45 post-delivery, with 17 Capesize, 15 Ultramax, 11 Supramax, plus newly acquired Newcastlemaxes.
  • Operating leverage disclosure -- Every $1,000 fleetwide TCE increase results in $16 million incremental annualized EBITDA or $0.37 per share; every $5,000 increase in Capesize/Newcastlemax TCE equates to $34 million or $0.77 per share in additional earnings and dividend capacity.
  • Cash breakeven rate -- Sub-$10,000 per day per vessel, supported by low net leverage and no mandatory amortization payments.
  • Dividend policy -- Targets 100% of operating cash flow less a voluntary reserve, with a $19.5 million voluntary reserve in Q4.
  • Fleet exposure -- Only 20% of the fleet is fixed for 2026, making the company 80% exposed to spot market upside.
  • Growth strategy -- $347 million invested in modern vessels since strategy launch in 2021, with a fleet renewal focus on high-specification assets in the Capesize and Newcastlemax segments.
  • Credit facility participants -- Nordea, DNB, ING, and SEB are participating lenders in the revolver upsizing.
  • Peer group positioning -- Genco noted as having the longest run of uninterrupted dividends and among the lowest cash flow breakevens and net leverage in its dry bulk peer group.
  • Governance standing -- Company cited as consistently ranked in the top quartile for governance among public shipping companies, with no related-party transactions.

Summary

Genco Shipping & Trading Limited (GNK 0.25%) reported a quarterly adjusted EBITDA of $42 million, nearly doubling sequentially and representing a three-year high that reflects significant momentum entering the new year. Management emphasized the company's 9% annualized dividend yield and 233% quarter-over-quarter increase, underscoring capital return as a top strategic priority within a stable, low-leverage capital structure. Substantial new investments, including $131 million in CapEx for Newcastlemax acquisitions and a $400 million revolver (planned to expand to $680 million), further enhance the company's scalable operating platform and exposure to market upside, with just 20% of capacity fixed for 2026. The company specifically highlighted low net loan-to-value and sub-$10,000 daily breakeven levels as key differentiators, reinforced by a dividend policy tied directly to operating cash flows.

  • Michael Orr noted that Capesize vessel values increased by nearly $40 million since acquisition, with an internal rate of return above 30% on these ships.
  • Peter Allen indicated operating expense per vessel is expected to rise in Q1 due to crew costs before returning to Q4 levels, demonstrating near-term cost sensitivity to timing of expenses.
  • John Wobensmith stated, "we are fully exposed -- 80% exposed to that positive market and sentiment," highlighting Genco's positioning for potential spot market gains.
  • Orr reported 7% year-over-year growth in China's reported iron ore imports for the quarter and a 12% second-half over first-half increase, suggesting ongoing trade support for dry bulk demand.
  • The management team acknowledged operating cost inflation, particularly for crew and supplies, while maintaining a firm commitment to maintenance for global trading compliance.
  • Genco's Board determined that a nonbinding external acquisition proposal "significantly undervalued Genco" and instead considered "an acquisition by Genco" as a structure that could create shareholder value, but the counterparty declined further engagement.
  • Capesize newbuilding fleet growth remained below 3% for a fourth consecutive year, with global fleet average age reaching nearly 13 years, as per market analyst commentary.

Industry glossary

  • TCE (Time Charter Equivalent): The average daily revenue performance of a vessel after deducting voyage expenses.
  • Net loan-to-value: Ratio of outstanding loan balance to the appraised fleet value, a measure of financial leverage specific to shipping companies.
  • Newcastlemax: Dry bulk vessel class, typically 200,000-210,000 deadweight tons, designed for optimal capacity on Australia's Newcastle port route but widely deployed in major bulk trades.
  • CapEx (Capital Expenditures): Funds used by a company to acquire, upgrade, or maintain physical assets such as vessels.
  • Spot market: Shipping market where vessels are contracted for single voyages or short-term employment at prevailing rates, exposing owners to freight rate volatility.
  • Dividend yield: Annualized dividend per share divided by the current share price, expressed as a percentage.

Full Conference Call Transcript

John Wobensmith: Good morning, everyone, and welcome to Genco's Fourth Quarter 2025 Conference Call. I will begin today's call by reviewing the progress we've made executing our comprehensive value strategy since its implementation in 2021, and then we'll review our Q4 2025 and year-to-date highlights. We will then provide additional details on our financial results for the quarter as well as provide an update on the industry's current fundamentals before opening the call up for questions. For additional information, please also refer to our earnings presentation posted on our website. Starting on Slide 5, 2025 marked the fifth year since our Board and management team formulated and began implementing our comprehensive value strategy centered around dividends, financial deleveraging and opportunistic fleet growth.

When we launched the strategy in April of 2021, we set out to accomplish 3 main objectives: transform Genco into a low leverage, high dividend company, maintain significant flexibility to grow the fleet and pay a sizable quarterly dividend through the cycles based on an established dividend formula. 5 years later, we are pleased to have made notable success executing against each of these objectives. Among our accomplishments, we fortified our balance sheet to effectively operate in diverse rate environments, provided shareholders with sizable returns and invested in our fleet to further expand our earnings power and dividend capacity.

Specifically, over this time, we have invested $347 million in high-quality modern vessels, distributed $270 million in dividends to shareholders and paid down $249 million of debt. Moving to Slide 6. We continue to advance our value strategy in the fourth quarter, ending the year with strong momentum going into the first quarter. We declared our 26th consecutive dividend, representing an annualized yield of 9% on our current share price. Our highest dividend level since Q4 2022 and the longest period of uninterrupted dividends in our dry bulk peer group.

Heading into the fourth quarter, we took important steps to maximize fleet-wide utilization in a strong freight rate environment with the completion of 90% of our 2025 dry docking schedule and delivery of a high-quality modern Capesize vessel early in the quarter. During the fourth quarter, these proactive measures enabled us to generate the highest levels of both EBITDA and TCE for the year at $42 million and $20,064 per day, respectively. Additionally, in November, we agreed to purchase 2 2020-built high-quality premium earning Newcastlemax vessels that we expect to take delivery of in March. Importantly, these well-timed investments further increase our operating leverage and expand our presence in a key sector with compelling supply and demand fundamentals.

We also ended the fourth quarter with an industry low net loan-to-value of 12%. As depicted on Slide 7, we achieved multiyear highs across key metrics in Q4 and have significant momentum going into Q1 2026, building on our success generating TCE and EBITDA levels that were the highest in 3 years, estimated Q1 TCE of approximately $18,000 per day for 80% of the quarter represents a strong start to the year in what is typically a seasonally slower period. Notably, estimated Q1 2026 TCE is our highest Q1 level since 2024 and over 50% above Q1 2025 levels.

Based on our firm fixtures to date and the continued execution of our value strategy, we expect a higher dividend in Q1 on a year-over-year basis. Turning to Slide 8. Genco has one of the lowest cash flow breakeven rates in our peer group. This key differentiator is directly related to our industry low net loan-to-value as well as not having mandatory debt amortization, which further reduces our cash flow breakeven rate compared to peers. As our TCE increased from approximately $12,000 per day in Q1 2025 to $20,000 per day in Q4, our overall profitability and dividend capacity increased as well.

As can be seen from the chart, our estimated Q1 TCE also compares favorably to our low breakeven rate on a cash basis. Turning to Slide 9. Through the execution of our value strategy, Genco has paid compelling quarterly dividends to shareholders across cycles. Notably, we have paid 26 consecutive quarterly dividends to shareholders in diverse rate environments, having distributed between $0.15 and $0.50 a quarter over the past 3 years. In addition to the Q4 dividend being the highest since Q4 2022, it also represents a 233% increase over the Q3 2025 dividend. Supporting our dividend and complementing our low breakeven rate is our balanced approach to fleet composition, which we present on Slide 10.

In addition to the 2 Newcastlemax vessels we agreed to acquire, we own a fleet of 17 Capesize vessels as well as 15 Ultramax and 11 Supramax vessels. We continue to balance the high beta and upside potential of the Capesize sector along with steadier earnings stream of our minor bulk ships. On a vessel ownership basis, our splits are 40% Capes and 60% Ultra Supras. However, when viewed on a net revenue basis over the last 2 years, we are 50% weighted towards Capesize vessels.

With just 20% of our overall fleet fixed for the year, Genco is uniquely positioned relative to some in the peer group to benefit from a strengthening freight rate environment, providing us with meaningful upside exposure to the current strong spot market. Our high operating leverage is balanced against our low financial leverage, which is shown on Slide 11. This provides Genco with significant financial flexibility in various freight market conditions. In strong markets, Genco generates meaningful cash flow with its industry low breakeven rate and scalable fleet. In market downturns, Genco's low financial leverage and undrawn revolver availability allow the company to take advantage of countercyclical growth opportunities.

Specifically, as demonstrated on Slide 12, Genco has taken advantage of our strong liquidity position for opportunistic acquisitions of modern, high-specification premium earning vessels at attractive values, including 6 Capesize and Newcastlemax vessels since 2023. I emphasize the positioning of the fleet today is not an artifact of history or chance. It is the result of the steady execution of our plan to optimize the fleet, which began in 2023. At that time, the management team and the Board formed a specific strategy focused on the compelling supply and demand fundamentals of the Capesize sector, which had the lowest order book among the major dry bulk sectors with long-haul ton-mile expansion on the horizon.

Since 2023, our strategy has been built upon this thesis and over this time, Capesize vessels have been the best-performing dry bulk class from an earnings and an asset value appreciation perspective. Notably, our Capesize vessels have increased in value by nearly $40 million despite several years of age depreciation. Furthermore, we have generated an IRR of over 30% on these ships, since acquisition. In 2025 alone, we agreed to purchase 3 2020-built Capesize and Newcastlemax vessels, growing our pro forma fleet by 20% on an asset value basis and significantly increasing our earnings and dividend capacity in 2026 and beyond while reducing the average age of our fleet.

On Slide 13, both Genco's pro forma 45 vessel fleet and Cape fleet provides significant operating leverage for shareholders. Every $1,000 fleet-wide increase in TCE equates to $16 million of incremental annualized EBITDA or $0.37 per share. Furthermore, our 19 Newcastlemax and Capesize vessels, every $5,000 increase equates to $34 million or $0.77 per share of incremental earnings and dividend capacity. Our fleet strategy has been very successful since we implemented it in 2023. And as you see in these figures, has well positioned the company to continue creating shareholder value going forward. Lastly, turning to Slide 14. Genco continues to prioritize strong corporate governance, which is another key differentiator for the company relative to the peer group.

Specifically, Genco is the largest U.S. headquartered dry bulk shipping company, and we are also a U.S. public company subject to robust SEC and New York Stock Exchange disclosure regimes. We are also the only listed dry bulk shipping company with no related party transactions. We have a diverse and independent Board of Directors and observe U.S. public company governance best practices such as having a lead independent director. We provide detailed disclosures on company performance and initiatives while striving to provide a clear and thoughtful strategy to shareholders as we execute our disciplined approach to capital allocation. We are also consistently ranked in the top quartile on corporate governance among public shipping companies by Webber Research.

Our corporate governance is a core part of Genco's identity and reflects our Board's commitment to upholding the highest standards of fiduciary duty and governance excellence. I will now turn the call over to Peter Allen, our Chief Financial Officer.

Peter Allen: Thank you, John. On Slide 16 through 18, we highlight our fourth quarter financial results. Genco recorded net income of $15.4 million or $0.35 basic and diluted net earnings per share. Adjusted net income is $17.3 million or $0.40 and $0.39 basic and diluted earnings per share, excluding other operating expense of $1.9 million for shareholder-related expenses. Adjusted EBITDA for Q4 totaled $42 million, an increase of 94% as compared to Q3 and bringing the full year 2025 total to $85.9 million. Our cash and debt positions as of December 31, 2025, were $55.5 million and $200 million, respectively. Our undrawn revolver availability at year-end was $400 million.

During March of 2026, we expect to take delivery of 2 2020-built Newcastlemax vessels. We have approximately $131 million of remaining CapEx for these acquisitions, which we expect to fund primarily through proceeds from our revolver. As part of our existing $600 million credit facility, we plan to utilize the accordion feature for $80 million and pledge these 2 vessels as collateral. This would increase our pro forma borrowing capacity to $680 million in total with expected post-acquisition debt outstanding of $330 million and undrawn borrowing capacity of $350 million. Our lenders participating in this revolving credit facility upsizing include Nordea, DNB, ING and SEB.

With our full revolving credit facility structure, we will continue to actively manage our cash and debt positions to reduce interest expense while maintaining access to capital to quickly act on growth opportunities as we have demonstrated in recent years. Moving to Slide 19, we highlight the sequential increases in our quarterly EBITDA throughout the year, culminating in a strong fourth quarter performance and an EBITDA increase of 94% from Q3 2025 and also the highest quarterly level since 2022. As outlined on Slide 20, we believe that Genco is in a highly advantageous position.

With the current fleet of 43 high-quality modern dry bulk vessels, our significant operating leverage, combined with low financial leverage, a sub-$10,000 cash flow breakeven rate and $400 million of undrawn revolver availability collectively provide a compelling risk-reward balance for shareholders. Furthermore, we continue to reward shareholders through our quarterly dividend policy, which targets a distribution based on 100% of operating cash flow less a voluntary reserve as described on Slide 21. For Q4, our Board of Directors declared a $0.50 per share dividend based on operating cash flow of $41 million and a voluntary quarterly reserve of $19.5 million, marking our highest payout in 3 years.

Looking ahead to Q1 2026, we currently have 80% of owned available days fixed at approximately $18,000 per day as compared to our anticipated cash flow breakeven rate, excluding dry docking related CapEx of approximately $9,715 per vessel per day. Importantly, Q1 2026 TCE is on pace to increase over 50% year-over-year. On the expense side, we anticipate vessel operating expense to marginally increase in Q1 compared to Q4 levels due to the timing of crew-related expenses. However, we expect vessel OpEx to revert to levels similar to Q4 moving forward during the year. I will now turn the call over to Michael Orr, our dry bulk market analyst, to discuss the current industry landscape.

Michael Orr: Thank you, Peter. Beginning on Slide 23, the dry bulk freight rate environment meaningfully improved in the second half of 2025, reaching its height in Q4, led by the Capesize sector. The Baltic Capesize Index averaged nearly $29,000 per day in Q4 and approached $45,000 per day in early December, driven by all-time high Brazilian iron ore shipments. Supramax rates were also firm, supported by augmented coal shipments to China as well as firm grain exports. Turning to Slide 24. China reported strong levels of iron ore imports in recent months, led by increased seaborne supplies together with the restocking of iron ore inventories. Specifically, the country's iron ore imports in Q4 rose by 7% year-over-year.

And for the second half of the year, China's iron ore imports rose by 12% as compared to first half levels. On the seaborne supply side, we saw Brazilian iron ore shipments rise by 26% second half over first half. Turning to Slide 25, we highlight the long-haul iron ore and bauxite trade growth expected from Brazil and West Africa in the coming years. Given the scale of the projects, these volumes could absorb potentially over 200 Capesize vessels, which is more than the current Capesize newbuilding order book. Supply constraints in Capesize newbuilding activity combined with added long-haul trading distances are 2 key catalysts for the sector.

We expect West African iron ore flows to ramp up in 2026 after first shipments were made in 2025. In terms of the grain trade, as detailed on Slide 26, China has reportedly fulfilled their 12 million tonne quota from the U.S. as part of the October agreement. However, further reports highlight additional purchases of up to 8 million tons of U.S. soybeans in the coming months. With the onset of South American grain season at the end of Q1, attention is likely to shift to Brazilian soybean volumes.

Regarding the supply side outlined on Slide 27, net fleet growth in 2025 was 3%, split between 1.5% net fleet growth for Capesizes and 4% to 5% net fleet growth for Panamaxes down to Handysize. Importantly, 2025 marked the fourth straight year of sub-3% net fleet growth for Capes, which is the first time on record this lower level hasn't materialized for this long. Additionally, as scrapping has remained low in recent years, the age of the global fleet has risen to nearly 13 years old, the highest average age of the global dry bulk fleet since 2010.

This has increased the pool of potential scrapping candidates at 11% of the on-the-water fleet is 20 years or older, which is nearly identical to the global dry bulk order book as a percentage of the fleet of 12%. This implies net replacement of tonnage over time as opposed to any material net fleet growth. While we expect volatility in the freight market to persist, the foundation of a low supply growth picture provides a solid basis for our positive view of the dry bulk market going forward. I'll now turn the call back over to John to conclude the call.

John Wobensmith: Thank you, Michael. Turning to Slide 29. We have made outstanding progress executing our comprehensive value strategy, providing shareholders with sizable returns and investing in our fleet to further expand Genco's earnings power. With our high-quality and modern fleet, leading commercial operating platform, strong balance sheet and significant operating leverage, we remain well positioned to create meaningful value for shareholders in 2026 and beyond. As we progress through the year, our unrelenting focus will be on continued capital return for shareholders, further growing our high-specification premium earning fleet as well as maintaining our industry-leading leverage profile and strong corporate governance standards.

Before we turn the call over to Q&A, I'd like to briefly address our announcements from last month regarding a nonbinding indicative proposal we received to acquire all outstanding shares of Genco. As detailed in our previous press releases, our Board thoroughly reviewed the proposal with the assistance of external advisers and determined the proposal significantly undervalued Genco. As part of its review, our Board did determine that a differently structured transaction, one organized as an acquisition by Genco would create value for all shareholders. We sought to engage privately on an alternative structure, but our offer to engage was turned down. Our management and Board are focused solely on delivering maximum value for shareholders.

With that said, the purpose of today's call is to discuss our fourth quarter and full year 2025 results and the opportunities ahead for Genco. The company is performing very well today, and we are very excited and confident in the future. We ask that you please keep your questions focused on results, performance and industry trends. Thank you for that in advance. This concludes our presentation, and we would now be happy to take your questions.

Operator: [Operator Instructions] Your first question comes from the line of Omar Nokta with Clarksons (sic) [ Jefferies ].

Omar Nokta: Solid quarter. Obviously, John, yes, the dry bulk market ended '25 on a pretty strong note and as shown in your results, obviously. And so far this year, things are progressing quite nicely. You've upsized your facility by the $80 million, and you're going to take delivery of those 2 Newcastlemaxes next month. Obviously, you have plenty of flexibility. Asset values look like they're on the rise and -- or at least have risen a good amount here over the past few months. Where does that leave Genco kind of strategically?

I know you touched on this a bit at the end of your comments, John, but how are you thinking about Genco strategically, capital allocation as we look ahead here for the rest of '26?

John Wobensmith: Look, in terms of the capital allocation, dividends and the value strategy is top of the list. We will endeavor to continue to cycle out some of the older vessels and redeploy those funds more modern fuel-efficient ships such as we've done or such as we did last year. So I don't think much has changed, but you're correct. Values continue to move up. We're actually in a situation where they're moving up almost weekly at this point, which is obviously very positive basis the timing of the acquisitions that we did last year. But it -- look, it makes newer tonnage more expensive, but it also makes our older tonnage more firm in what we can get.

So dividends and value strategy is the first. And as part of that value strategy, we have a fleet replacement and growth element.

Omar Nokta: And maybe just as a follow-up then, as we referenced asset values having risen. I wanted to ask sort of how are you thinking about the term charter markets? Or what are you seeing there? As we kind of think about it from, say, the crude tankers just as what we've seen there, VLCC values have risen and there's been a lot of charter interest. Are you seeing something similar in the Cape market? And how do you feel about deploying ships on term charter today?

John Wobensmith: I think -- well, there has not been as much liquidity in the dry bulk TC market, as you just mentioned, in the tanker sector. I think a lot of that has to do with the optimism as we look at the supply side and demand growth for the rest of 2026, but then certainly going into 2027 as West African iron ore really starts to ramp up. So I think it's more of a function of, I believe, owners not wanting to lock in currently because of the optimism, again, low supply demand growth coming. Having said that, there have definitely been some 1-, 3-year deals done.

I think there was a 3-year deal done on a new -- at least 1, maybe 2 Newcastlemaxes from an iron ore major excess $30,000 a day. Those are firm rates. And clearly, the market is indicating a bullish stance and positive sentiment. You know that we, from time to time, have taken exposure off the table, particularly in the Capesize sector. We really do look at it as a portfolio approach. But we spend a lot of time and analysis looking at whether we want to lock in. And there could easily come a time this year where maybe we take some exposure off the table. But for the time being, we're going to continue to trade spot.

And I think it's one of the unique things about Genco. We really only have 20% of this year fixed. So with a rising market, we are fully exposed -- 80% exposed to that positive market and sentiment.

Operator: Your next question comes from the line of Liam Burke with B. Riley Securities.

Liam Burke: John, in the past discussions on asset acquisitions, you always like the flexibility of the Capes versus the Newcastlemaxes. Has there anything changed in trading patterns that makes you favor more of the Ultramaxes vis-a-vis a Cape?

John Wobensmith: I'm sorry, the Ultramaxes or the Newcastlemaxes?

Liam Burke: Newcastlemaxes, excuse me.

John Wobensmith: Yes. No. Okay. That's -- yes. No, I wouldn't say anything has drastically changed, though, certainly, on the Brazilian trade, those Newcastlemaxes have always been filled up to their capacity. Over the last several years, that may have not been true with Australia loadings, but that's really changed. And we certainly have seen the bauxite trade develop as well out of West Africa. So that bauxite can go on Newcastlemaxes. So we like the nucs we bought. We like our Capesize fleet. The Newcastlemaxes that we bought are no doubt premium earning assets with very high specifications and low fuel consumption. I think Bulkers 2020 did a fantastic job ordering and kitting out those ships.

So we're very happy to be taking delivery of those. But we're going to continue to look at Capes and Newcastlemaxes. And that's where I think you'll see growth for us. And we'll stay steady with our Ultra Supramax fleet, probably do a little bit of fleet renewal on the Supras.

Liam Burke: Okay. Just as a follow-on, you just mentioned the Supras. Is there any opportunity or is there any interest in adding to that part of the fleet when you're discussing renewal? Or is it just sell the older vessels on elevated asset values?

John Wobensmith: Well, it certainly would be selling older vessels. Again, we're focused on the larger ships in terms of redeploying capital, though I'm not going to rule out that we wouldn't buy an Ultramax. I mean that market is doing pretty well. As you know, these are all correlated. It's just that Capes have certainly more upside potential based on higher beta and volatility. And if you look at, again, the supply side on the Capes is the most favorable in the dry bulk sector and demand growth that is coming is Newcastlemax and Capesize oriented.

Operator: Your next question comes from the line of Chris Robertson with Deutsche Bank Securities, Inc.

Christopher Robertson: John, just on the back of Omar and Liam's questions around the S&P market, I just wanted to touch on -- last year, it was reported that a large number of Chinese buyers of dry bulk vessels were active in the market. I was wondering if you could comment, is that trend still continuing? And where do you see kind of the activity being driven in the S&P market for potential asset sales?

John Wobensmith: Yes. I think the Chinese continue to be very active. I would put them as the #1 buyer right now, particularly of older assets, not on the -- not necessarily on the modern eco side, but the older assets, they're very active on. China is the largest importer of dry bulk commodities, right? So seeing the Chinese go long tonnage, I think that's a positive or a vote of confidence in the market going forward. And you've seen it across the board. I mean, they certainly have been active in older Capes, but they've also been buying some of the older Supramaxes as well. And I'm sure they see the same thing that we see.

Again, the low supply growth on the Capes, the age of the fleet. And I think most importantly, there are additional cargo volumes that are going to be coming both on the bauxite side, but more importantly, on the iron ore front out of West Africa.

Christopher Robertson: Got it. Makes sense. My second question is just related to kind of reevaluating the geopolitical environment and the disruptions that we've seen across various shipping segments over the last few years. Where do things stand in terms of the disruption levels related to dry bulk? And let's say, if there was a reversal, whether it's the Red Sea or Russia, Ukraine, et cetera, where do you see kind of puts and takes around some of those themes?

John Wobensmith: Well, I mean, let's take the Russian-Ukraine situation. If there is a conclusion to that and the Black Sea reopens fully, clearly, that's potential for more grains and to a smaller degree, iron ore. So that would be a net positive for dry bulk shipping. In terms of the Red Sea, we're well aware that there are some container companies that have started operating through Suez and the Red Sea. We're still cautious and we're still not putting our ships through that area. But having said that, it's maybe 1% to 2% max in terms of number of ships that would actually go through the Red Sea.

So deviating around Africa is -- it's not a big factor in dry bulk. It certainly is in containers, but it's not for dry bulk.

Operator: Your next question comes from the line of Sherif Elmaghrabi with BTIG.

Sherif Elmaghrabi: A couple of questions on operating costs here. It looks like the cost of charter hire in Q4 roughly doubled sequentially. So I'm wondering, does the current strength in spot rates change how you think about augmenting your fleet with outside tonnage?

John Wobensmith: Well, in terms of -- again, in terms of growth, we're definitely focused on the larger ships. And hopefully, this is going to be answering your question. If it's not, please feel free to clarify. But when you look at where rates have really moved up, it is in the larger ships, which, again, that's been our strategy of growing that fleet since 2023. And you can definitely see that in the revenue side. It's driven quite a bit of the upside in revenues. Did that answer your question?

Sherif Elmaghrabi: I was asking about the chartered-in fleet.

John Wobensmith: Okay.

Peter Allen: Yes. Sherif. Yes, in terms of the charter-in fleet, that is a very opportunistic part of the business. A lot of the times, the guys will take forward cargoes. And if it makes more sense in the moment to charter in a vessel to create an arbitrage, they'll do that. And that's something that the guys are -- have been really good over the years of assessing whether they can make, whether it's $100,000 plus on a particular cargo. A lot of the times in the first quarter, you'll see that because we'll book forward cargoes. The market will come off relative to Q4, and we'll be able to get that arb. But it's a very opportunistic play.

Some quarters, you'll see higher than others. But certainly, in a strengthening market, being on the longer side and having the spot focus that we have is certainly where you want to be right now.

John Wobensmith: What you're not going to see us do is speculative long-term time charter-ins. It will either be short term backed up by a piece of cargo, as Pete said, but we're not going to just go naked on chartering at Capesize or an Ultramax for that matter, long term into the company. That's not part of the strategy.

Sherif Elmaghrabi: Okay. Yes, that's very clear. And then just looking back at the presentation, Slide 8 highlights your remarkably stable cash breakeven, which has remained below $10,000 a day for a few years now. Is there anything you're doing, obviously, besides keeping leverage low to manage breakeven costs while some other owners have seen operating cost inflation?

John Wobensmith: Look, we've seen operating cost inflation. There's no doubt, particularly on the crew side and when you look at spares and stores just from an inflationary standpoint. We certainly manage to a budget that we set every year, though I want to emphasize, particularly with the larger ships, the bar keeps getting raised calling Australia. So we need to make sure that we are keeping our ships well maintained so that we do not have any issues trading anywhere in the world. So there is a little bit of inflation. We certainly manage and pay very close attention to OpEx, but we're not going to be penny-wise pound foolish.

Operator: As there are no further questions at this time, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.