General Maritime Corporation. Jefferies 2 nd Annual Shipping Conference

Transcription

1 General Maritime Corporation Jefferies 2 nd Annual Shipping Conference 0

2 Today s presentation and discussion will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of These forward-looking statements are based on management's current expectations and observations. Included among the factors that, in the Company's view, could cause actual results to differ materially from the forward looking statements contained in this press release are the following: changes in demand; a material decline or prolonged weakness in rates in the tanker market; changes in production of or demand for oil and petroleum products, generally or in particular regions; greater than anticipated levels of tanker newbuilding orders or lower than anticipated rates of tanker scrapping; changes in rules and regulations applicable to the tanker industry, including, without limitation, legislation adopted by international organizations such as the International Maritime Organization and the European Union or by individual countries; actions taken by regulatory authorities; changes in trading patterns significantly impacting overall tanker tonnage requirements; changes in the typical seasonal variations in tanker charter rates; changes in the cost of other modes of oil transportation; changes in oil transportation technology; increases in costs including without limitation: crew wages, insurance, provisions, repairs and maintenance; changes in general domestic and international political conditions; changes in the condition of the Company's vessels or applicable maintenance or regulatory standards (which may affect, among other things, the Company's anticipated drydocking or maintenance and repair costs); consents by charterers and ship builders to assignments of contracts and other factors listed from time to time in the Company s filings with the Securities and Exchange Commission, including, without limitation, its Annual Report on Form 10-K for the year ended December 31, 2003 and its subsequent reports on Form 10-Q and Form 8-K. For further information, please refer to such filings with the Securities and Exchange Commission including the Company s Current Report on Form 8-K dated as of January 26,

3 Agenda Executive Summary Dividend Policy Industry Outlook Financial Performance Valuation Conclusion Questions 2

4 Key Investment Considerations Industry consolidator with unmatched track record of growth Substantially de-leveraged relative to peers Dividend policy allows shareholders to directly benefit from GMR s earnings power Well positioned to benefit from favorable market conditions in fourth quarter Compelling valuation 3

5 Company Background Young company which retains its entrepreneurial spirit Origins traced to 1991 Current corporate structure formed in 1997 Opportunity in tanker industry Highly fragmented industry poised for consolidation Demand for quality and safety from customers and regulators Inconsistent availability of capital Guiding Principles Serve the mid-sized tanker segment Deliver transparent and accurate financial reports Operate our fleet to the highest standards of quality and safety Maintain a fully integrated operation Profitable growth through consolidation Management s interests aligned with shareholders 4

6 Fleet Growth IPO Metrostar % 70% 60% # of vessels Soponata 50% 40% 30% % 10% Ave # of Vessels Total # of Vessels Leverage 0% 5

7 General Maritime Today Second largest mid-sized tanker fleet in the world with 26 Aframaxes, 17 Suezmaxes and 4 Suezmax Newbuildings to be delivered Average age of 10 years 89% double-hulled or double-sided Total capacity of approximately 5.8 million dwt Transport 33.1 million barrels of oil at any one time 6

8 Our Operating Strategy Optimize Cash Flow Focus (on mid-sized tankers) Balance of time charter vs. spot market Enter into selective COA contracts Diversify into areas of global expansion Manage Costs Homogeneous fleet provides enhanced scheduling and reduces cost Full control of commercial and technical operation Disciplined financial management policies Focus on on Safety Operate high-quality, fleet Proactive maintenance regime Excellent safety and environmental record 7

9 Landmark Acquisitions Soponata Metrostar Largest Portuguese shipping company consisting of: 3 double hull Aframax vessels 2 double sided Suezmax vessels 4 Japanese newbuilding Suezmax vessels on order first to be delivered in 2006, two in 2007, and one in 2008 Integrated Soponata s skilled technical management team Key Advantages: Additional double hull vessels Allows General Maritime to acquire newbuildings without adding to the world s orderbook Further consolidates the mid-sized tanker market Acquired 5 Aframax and 14 Suezmax vessels from Metrostar in 2003 Consistent with our strategy of acquiring modern, second-hand, mid-sized, quality tonnage Rapid integration: Acquisition of vessels commenced in March 2003 and concluded in May 8

10 Blue-Chip Customer Base 9

11 Agenda Executive Summary Dividend Policy Industry Outlook Financial Performance Valuation Conclusion Questions 10

12 Overview of GMR Dividend Policy Dividends will be declared on a quarterly basis in February, April, July and October beginning in April The dividend will be variable and directly tied to our profitability pursuant to a clear formula: EBITDA during the previous quarter; Less interest expense; Less a reserve for indefinite fleet maintenance and renewal The Board currently has established a reserve for 2005 of $100M annually or $25M per quarter $30M for maintenance capital expenditures $70M for the indefinite renewal of the fleet 11

13 Illustrative Dividend for 2005 and Analyst EBITDA Estimate (1) $ $ Net Interest Expense (2) Drydocking Reserve (3) Fleet Renewal Reserve (3) Available For Dividends $ $ Available for Dividends per Share (4) $ 5.63 $ 4.90 Yield (5) 16% 14% NOTE: The information presented herein is for illustrative purposes only. None of the information constitutes the estimates, forecasts or projections of the Company. The Company has not independently verified any of the information obtained from third party sources, does not endorse any such information and does not comment as to the accuracy or validity of any such information. There can be no assurance that the Company s future dividends, financial performance or results of operations will in fact be equal to or similar to the amounts described herein, or that the Company will provide any updates with respect to the information presented. (1) Jeffries Tanker Weekly 9/6/05. The Company has not reconciled this third party estimate against any financial measure of the Company since doing so would require unreasonable efforts. (2) 1 st Half 2004 interest expense annualized. (3) As established by the Board of Directors for 2005 (4) Based on number of shares of Common Stock outstanding as of June 30, (5) Based on share price as of 9/8/05 12

14 Agenda Executive Summary Dividend Policy Industry Outlook Financial Performance Valuation Conclusion Questions 13

15 Current Macro /Industry Environment Negatives Tanker supply growth of 5-7% / per year phase out may not be firm China Imports down in 2005 v 2004 IEA cuts oil demand forecast in part because of Katrina demand destruction Oil supply concerns have been the second leg for the oil price rise Positives Additional supply still less then 2010 phase out Regardless we will see continued phase out of single hulls Chinese likely depleting inventory higher rate of imported in 2004 very likely Base oil demand growth forecast still long term positive for tankers Continued shift to long haul ton mile equation will leverage oil demand There is adequate production Saudi additional capacity Angola Pipelines 14

16 Katrina Effect In many ways still to early to say but for providers of crude oil transport to the USA Near term Q3: Quoted rates spiked, particularly for Aframaxes, but fixtures sparse due to reduced refining capacity Intermediate term Q4 & 1 st half 2006: Refining capacity likely to be restored faster then lost Gulf production Mars platform alone may account for 800k/day for 9 months Estimates of total lost production approximately 100 mm bbls Incremental import transportation requirement (Tanker demand), therefore will outstrip GDP destruction from higher gasoline and heating oil 15

17 Agenda Executive Summary Dividend Policy Industry Outlook Financial Performance Valuation Conclusion Questions 16

18 Q Financial Results Three months ended Six months ended June-05 June-04 June-05 June-04 INCOME STATEMENT DATA (Dollars in thousands, except per share data) Voyage revenues $ 135,475 $ 140,229 $ 297,117 $ 311,817 Voyage expenses (35,345) (30,935) (63,631) (55,818) Net voyage revenues 100, , , ,999 Direct vessel expenses 23,583 23,516 44,330 50,029 General and administrative expenses 11,408 7,817 22,681 14,327 EBITDA 65,047 77, , ,643 Depreciation and amortization 25,469 26,500 50,429 52,201 Operating income 39,670 51, , ,442 Net interest expense 7,517 9,776 15,417 19,483 Other expense Net Income $ 32,061 $ 41,685 $ 100,552 $ 119,959 Basic earnings per share $ 0.86 $ 1.13 $ 2.70 $ 3.24 Diluted earnings per share $ 0.84 $ 1.10 $ 2.64 $ 3.18 Weighted average shares outstanding, thousands 37,237 37,032 37,227 37,011 Diluted average shares outstanding, thousands 38,066 37,781 38,061 37,732 17

19 Strong Balance Sheet Balance Sheet Cash $74,165 Debt $431,734 Net Debt $357,569 Shareholders Equity $926,611 Liquidity Position* Revolving Credit Facility $600,000 Undrawn Facilities $600,000 Cash $74,165 Total Capitalization $1,358,345 Total Liquidity $674,165 *As of June 30,

20 Cost-Efficient Operations Homogeneous, high-quality fleet allows for operational flexibility $ / day and consistent cost control $40,000 $35,000 $30,000 $25,000 $20, Year Average TCE $24,283 $15,000 $10,000 $5,000 $ M Year Average TVOE $ 7,347 TVOE equals direct vessel operating expenses plus G&A 19

21 Third Quarter 2005 Perspective We reaffirm information provided in the company s Q2 press release and earnings conference call Costs DVOE Average of Q1 & Q2 G&A Consistent with Q1 D&A Relatively consistent with Q2 IE Relatively consistent with Q2 Utilization Off hire days Approximately 340 days for Q3 Approximately 100 days for Q4 Rates Aframax - Double hull are low twenties, double sided are mid teens Suezmax - Double hull are high twenties, double sided are low twenties 20

22 Agenda Executive Summary Dividend Policy Industry Outlook Financial Performance Valuation Conclusion Questions 21

23 Enterprise value to 2005 EBITDA 12.0x 11.4x Average: 8.8x x 9.3x 8.3x Average: 6.2x Average: 5.8x x 4.4x 6.7x 6.3x 5.7x 7.0x 5.7x 4.8x ATB VLCCF SFL NAT FRO GMR TOPT TNP Pac Basin Full Dividend Payout Partial Dividend Payout TK OMM OSG Low Dividend Payout 22

24 Valuation ($ in millions) Leverage Current Equity Enterprise EV / EBITDA (c) Price / Earnings (c) Total Debt/ Company Price Value (a) Value (b) 2005E 2006E 2005E 2006E Cap. EBITDA Teekay Shipping Corp. $42.86 $3,615 $5, x 8.2 x 7.4 x 9.2 x 47.7% 2.3 x Frontline Ltd ,288 6, % 2.4 Overseas Shipholding Group Inc ,301 3, % 2.2 Trading OMI Corporation ,513 2, % 2.3 Multiples Ship Finance International Ltd ,489 3, % 5.1 Tsakos Energy Navigation Ltd , % 2.6 Pacific Basin Shipping Ltd % 1.8 Knightsbridge Tankers Ltd % 1.4 Nordic American Tanker Shipping % - Top Tankers Inc % 4.5 Arlington Tankers Ltd % 3.5 Median 6.0 x 6.1 x 5.7 x 5.5 x 50.5% 2.4 x Average % 2.8 General Maritime Corp. $35.70 $1,387 $1, x 4.9 x 5.1 x 6.0 x 31.8% 1.0 x (a) Based on closing stock prices on September 13, (b) Calculated as Equity Value plus total debt, minority interest (at book value unless otherwise noted) and preferred stock, less cash & equivalents. (c) Ratios based on research estimates. 23

25 2005E Free Cash Flow Analysis & Dividend Break Even ($ in millions) except where noted Pro Forma 2005E Cash Expense DVOE 88.0 G&A 40.0 Net Interest Expense 30.0 Cash Operating Expense Drydock Reserve 30.0 Fleet Renewal Reserve 70.0 Total Cash Expense Free Cash Flow ($ millions) $254.4 $ (1) TCE rates Company s 5Y blended spot rate $ year Clarksons spot TCE rates Calander Days 15,695 Total Vessel Operating Expense Breakeven 10,825 Total Cash Flow Break Even 16,438 $0 $16,438 $23,305 $26,372 $37,678 TCE Rates (1) As per company s full year 2004 TCE Rate of $29,001 for Aframax vessels and $49,474 for Suezmax vessels Every $1,000 increase in TCE rates leads to an additional $12.0 million of Free Cash Flow or $0.32 per share available for dividend distribution annually 24

26 GMR 2006 Rate/Dividend Sensitivity Blended Rate TCE Dividend Company Data Points $ 16,438 $ - GMR 5 year low $14,542 20, , , , GMR 5 year average $27,200 30, , , , GMR 5 year high $37,700 Assumes 2005 costs constant, $100 million reserve maintained and average vessels 25

27 Agenda Executive Summary Dividend Policy Industry Outlook Financial Performance Valuation Conclusion Questions 26

28 Why Invest in General Maritime Industry Factors We maintain a positive outlook on the 4 th quarter, including a neutral to positive outlook on the effects of Katrina In the longer term, we believe that performance above traditional long term averages will allow tanker stocks to achieve a re-rating and trade more like other oil service companies Company Factors Straightforward and clearly articulated operating strategy Focus on mid sized tanker segments Operating leverage maintain relatively high exposure to current favorable rates in spot market, while keeping 25-33% time charter coverage. Dividend Policy EBITDA minus net interest and renewal and maintenance reserve We believe our financial strategy will provide greater total returns and the opportunity for multiple expansion in near term Track record and credibility We have delivered on our promise to use shareholders capital to grow consistently and profitably Compelling Valuation 27