May 9, 2018
Operator
Good morning, ladies and gentlemen, and welcome to the Genco Shipping & Trading Limited First Quarter 2018 Earnings Conference Call and Presentation. Before we begin, please note that there will be a slide presentation accompanying today's conference call.
That presentation can be obtained from Genco's website at www.gencoshipping.com. To inform everyone, today's conference is being recorded and is now being webcast at the Company's website, www.gencoshipping.com.
We will conduct a question-and-answer session after the opening remarks, instructions will follow at that time. A replay of the conference will be accessible anytime during the next two weeks by dialing 888-203-1112 or 719-457-0820 and entering the passcode 7776519.
At this time, I will turn the conference over to the Company. Please go ahead.
Unidentified Company Representative
Good morning. Before we begin our presentation, I note that in this conference call, we will be making certain forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements use words such as anticipate, budget, estimate, expect, project, intend, plan, believe and other words and terms of similar meaning in connection with the discussion of potential future events, circumstances or future operating or financial performance. These forward-looking statements are based on management's current expectations and observations.
For a discussion of factors that could cause results to differ, please see the Company's press release that was issued yesterday. The materials relating to this call posted on the Company's website and the Company's filings with the Securities and Exchange Commission, including without limitation, the Company's Annual Report on Form 10-K for the year ended December 31, 2017, and the Company's report subsequently filed with the SEC.
At this time, I would like to introduce John Wobensmith, Chief Executive Officer of Genco Shipping & Trading Limited.
John Wobensmith
Good morning everyone. Welcome to Genco's first quarter 2018 conference call.
I will begin today's call by reviewing our first quarter highlights, we will then discuss our financial results for the quarter, ending industries current fundamentals and then open up the call for questions. Turning to Slide 5, we review Genco's first quarter highlights.
During the first quarter, we benefited from our success transforming and strengthening our lean commercial platform as well as strategic fleet deployment initiatives we implemented to prepare for the seasonally softer first quarter. We're pleased to have outperformed our benchmark consisting of the average of the Baltic Dry indices less commissions adjusted for our vessel specifications and waited by vessel class.
This was driven by strong performance of our Capesize and minor bulk fleet. Specifically the company was able to effectively navigate a seasonally lower first quarter freight rate environment with a marginal drop off from the strong fourth quarter of 2017.
Importantly, as we progressed through the year, we have maintained significant operating leverage to capitalize on the ongoing recovery in the Dry Bulk market. Before discussing our performance in the quarter in more detail, I would like to highlight our recent success entering into a commitment letter for a senior secured loan facility for up to $460 million.
We believe the new facility will strengthen our ability to create value for shareholders during the current market recovery through the removal of restrictions on vessel acquisitions and additional indebtedness while providing the company with the ability to pay dividends. The new credit facility commitments are expected to be oversubscribed by approximately 40%.
Specifically the mandated lead arrangers and bookrunners for this facility are Nordea Bank, SEB, ABN AMRO, DVB, Crédit Agricole and Danish Ship Finance. We appreciate the ongoing support of our leading banking group highlighting Genco's leadership position and strong prospects for capitalizing on favorable industry fundamentals, which we expect to continue at least throughout 2018.
Moving onto our results, we ended the quarter with $201.2 million cash position representing one of the highest cash positions in the industry and reflecting our success growing net revenues nearly 60% year-on-year. Our cost leadership and the considerable earnings power of our fleet.
For the first quarter, we recorded a net loss of $55.8 million or $1.61 basic and diluted net loss per share excluding non-cash impairment charges adjusted net income was $0.6 million or adjusted basic and diluted earnings per share of $0.02. Our strong operating performance in the first quarter was a direct result of our commercial initiatives and our ability to provide leading Dry Bulk commodity producers and charters with a full scale logistic solution.
Following our success increasing our time charter equivalent rate in each quarter of 2017 we're pleased to have increased first quarters 2018 time charter equivalent rate by 66% year-on-year. Turning to Slide 6, we've outlined our leading market position.
During the first quarter we continue to improve margins and expect our commercial, technical and operating initiatives to continue to drive results going forward. In addition to outperforming our benchmarks in the first quarter by over $800 per vessel per day, 64% of our fleet wide available days have been fixed in a time charter equivalent of approximately $11,112 per day for the second quarter.
On Slide 7, I will discuss Genco's unique position for capturing market upside going forward which is made up of three main components. First, as we continue to incorporate voyage charters and direct cargo liftings into our fleet deployment mix as part of our full service logistic solution.
We're well positioned to drive revenue growth further increase margin and outperform benchmark. Notably, we currently have almost half of our minor bulk vessels fixed on voyage based business compared to none, this time last year.
Genco is focused on the transportation of both major and minor bulk commodities provides and important differentiator for the company. Specifically our direct exposure to the iron ore trades or our Capesize fleet provides us with strong upside potential while our Supramax and Handysize fleet transferred in grain and various minor bulk commodities enables us to achieve a level of stability.
In an effort to ensure Genco maintain significant exposure to optionality in a rising market, we continue to maintain a short-term focus with our fleet deployment strategy. Importantly, several of our Capesize vessels will come open between now and the end of the second quarter positioning Genco the benefit from improved market conditions.
Second, we will maintain an active approach to revenue generation leveraging our in-house commercial expertise in relationship to enter into business directly with cargo customers while identifying key trading lanes by vessel. This strategy continues to generate tangible results since last year, we have substantially increased our customer base.
And finally, we have strengthened our global footprint with our Singapore office as well as our recently established presence in Copenhagen. While the Singapore office provides Genco an active profile in the Far East market allowing us to better focus on the employment of our Capesize vessel and backhaul trades on the minor bulk fleet.
The Copenhagen presence further strengthens prospects for the company's minor bulk fleet. Together our European and Far East presence complements our New York operations to create a 24-hour operation while expanding our network of clients and gaining the company closer to cargo interest in order to augment earnings and margins.
I'll now turn the call over to Apostolos Zafolias our Chief Financial Officer to discuss our financials.
Apostolos Zafolias
Thank you, John. Turning to Slide 9, our financial results represented.
For the first quarter ended March 31, 2018 the company's revenues more than doubled to $76.9 million as compared with revenues for the first quarter of 2017 of $38.2 million. The increased revenues were primarily due to higher spot market rates achieved by the majority of the vessels in our fleet and the employment of vessels on spot markets voyage charters.
These increases were partially offset by the operation of fewer vessels during the first quarter of 2018 as compared to the prior year period. For the first quarter of 2018, the company recorded a net loss of $55.8 million or basic and diluted loss per share of $1.61.
This compares to a net loss of $15.6 million or $0.47 basic and diluted loss per share for the first quarter of 2017. Adjusted net income for the first quarter of 2018, was $600,000 or adjusted basic and diluted earnings per share of $0.02 per share excluding $56.4 million of non-cash impairment charges.
Turning to Slide 10, represent key balance sheet items out of March 31, 2018. Our cash position including restricted cash was $201.2 million.
Our total assets were $1.5 billion which consist primarily of the vessels in our fleet and cash. Our total debt outstanding gross of $8.5 million of unamortized debt issuance cost, was $509.8 million as of March 31, 2018.
Moving to Slide 11, our utilization rate were 98.9% for the first quarter of 2018. Our TCE for first three months of the year was $10,463 per vessel per day which compares to $6,321 per vessel per day recorded in the first quarter of 2017.
The increase in TCE was primarily due to higher rate achieved by the vessels in our fleet and the progress we've made in implementing our commercial initiatives. Daily vessel operating expenses were $4,401 per vessel per day for the first quarter of 2018.
The lower budget of $4,440 per vessel per day and compared to $4,395 per vessel per day for the same quarter of 201. We believe daily vessel operating expenses are best measured for comparative purposes over the 12-month period in order to take into account all of the expenses that each vessel in our fleet will incur over a full year of operation.
Based on estimates provided by our technical managers and management views our DVOE budget for 2018 is $4,440 per vessel per day on a weighted average basis for the entire year for our fleet of 60 vessels. As John mentioned, we entered into a commitment letter for five-year, $460 million senior secured credit facility as outlined in Slide 12.
We believe the facility will enable us to accomplish important objectives. Specifically we expect simplify our capital structure by consolidating our existing facilities into one and paying down debt on seven wells identified for sale.
In addition we expect a new facility will reduce our interest expense and extend maturities. The quarterly amortization under the new credit facility is expected to be approximately $15 million per quarter and can be recalculated based on changes in collateral vessels upon our request.
Importantly, under the terms of the new facility and number of restricted covenants will be eliminated enhancing our flexibility to capitalize on attractive growth opportunities and providing the ability for potential dividends. Borrowings under the credit facility are to bear interest at LIBOR plus 325 basis points through December 31, 2018 and LIBOR plus a range of 300 to 350 basis points thereafter dependent upon total net indebtedness to last 12 months EBITDA.
The final maturity date of the facility will be five years following closing, which is expected in the second quarter of 2018 and it is subject to standard conditions in definitive documentation. Turning to Slide 13, we provide select balance sheet items reflecting the expected refinancing of our credit facilities.
Pro forma for the refinancing, our cash and debt balances as of March 31, 2018 would be $137.7 million and $460 million respectively. Turning now to Slide 14, we outline our second quarter cash breakeven rates.
Our breakeven levels remain among the lowest in the industry which is a direct result of the vessel operating expense optimization initiatives, we implemented over the last several years. Reducing operating cost without sacrificing the company's high safety and maintenance standards.
We anticipate Genco's cash breakeven rate to be $7,898 per vessel, per day for the second quarter 2018. We've also provided further details in those rates in the appendix of our presentation for your reference.
In addition on the bottom of the slide, we have provided a drydocking schedule for 2018. We currently expect three of our vessels to be drybulk during the remainder of 2018, one of which is scheduled to occur during the second quarter.
Following the closing of $460 million credit facility we plan to provide updated breakeven rate to reflect the new structure. I will now turn the call over to Peter Allen, our drybulk market analyst to discuss industry fundamentals.
Peter Allen
Thank you, Apostolos. I'll begin with Slide 16, which represents the Baltic Dry Index.
Following a strong fourth quarter of 2017 in which multi-year highs were reached, the BTI came under seasonal pressure during the first quarter of 2018. This was primarily due to the front loaded nature of the order book leading to increase new building deliveries in January together with weather related disruptions in Brazil and Australia, hampering cargo availability as well as the occurrence of the Chinese New Year celebration in February.
Of note, is that the BTI average 1,175 in Q1, 2018 which is nearly 25% higher on a year-over-year basis. Subsequently, in the second quarter the BTI's rapidly increased over 1,400 led by the Capsize sector which more than doubled over a two-week period which included three consecutive days of 15% to 20% increases from April 18 to April 20.
Turning to Slide 17, we outline some of the key market developments influencing this increase in freight rates. After reaching near record of 100 million tonnes in January.
China's iron ore imports ease during the following three months and are essentially flat year-over-year. to feel output restrictions in Northern China that were originally supposed to be lifted in mid-March extended onwards for several weeks thereafter which negatively impacted iron ore buying activity.
This trend is reversed in Q2 as the lifting of these restrictions in the onset of peak spring construction season have had positive impact on demand for raw materials into second half of April. We believe the recent reaction of Capsize rates to the increased volume seen over the last few weeks is a healthy sign for the market going forward.
To that point, Brazilian iron ore shipments remain critical to overall performance of the Capsize sector. During the first quarter Brazilian exports fell by 8% year-over-year.
Also during the time Vale produced only 82 million tonnes of iron ore which was year-over-year decline of 5%. Importantly, Vale reiterated as iron ore production guidance of 390 million tonnes for 2018 which represents year-over-year growth of approximately 23 million tonnes and implies higher concentration of output in Q2 to Q4, 2018.
This is important given the recent announcement made by Anglo American that it's Minas-Rio mine in Brazil will cease operations for the balance of the year, due to a pipeline rupture. Despite this development, we're still of the view the Brazilian iron ore exports will be weighted towards the second half of the year in line with the historical trend as Vale S11 D mine further ramps up.
Turning to Slide 18, we highlight global steel production. After a strong 2017 China's steel output has remained firm in the year-to-date having increased by 5% year-over-year.
A significant development that materialized during Q1, 2018 was the steel inventory build in China. Steel inventory which has been low for several years has been built to multi-year highs in March.
Despite the rapid rise, steel inventories traditionally restocked during Q1 and drawn down throughout the balance of the year. Following strong production, steel stockpiles rose to as high as 20 million tonnes the highest point since March, 2014.
[Indiscernible] has been aggressive destock its inventory has fallen by over 30% from the March peak due to increased demand which is also led to firming [ph] steel prices. In addition to strong steel production in China, output in the rest of the world is been solid in the year-to-date led by India, South Korea and the EU.
This remains important for the drybulk market and highlight of the strengthening global economy. In addition to the steel industry another factor impacting the drybulk market has been the relative strength of the Chinese coal trade.
China's coal imports rose by nearly 10% to the first four months of 2018 on a year-over-year basis. This was primarily due to tight domestic coal supply during peak heating seasons.
With regard to India, coal power plant stockpiles remain low and the lack of developed infrastructure combined with the fact that, many power plants are located near the cost bode well for India's seaborne coal demand. In addition to the global coal and iron ore trades, we highlight the global grain and certain minor bulk trends on Slide 19.
With the improved global economic landscape, we believe this will be beneficial for overall trade growth and will be a positive catalyst particularly for our minor bulk vessels. Specifically, we're currently in the middle of South American grain season in which we expect the strong Brazilian soybean crop to be exported.
China remains a primary destination for Brazilian soybeans given their high protein content relative to other soybean producers. We note that soybeans from the shipments from the US are in a seasonally slow period right now and traditionally don't get momentum until the end of the third quarter.
On Slide 20, we outline current supply side fundamentals as seasonally the case. We saw a spike in newbuilding deliveries during January but then a significant deceleration in the following months.
Newbuilding deliveries are down by over 50% year-over-year, however strapping is also down by approximately 65% over the same period. On the newbuilding front after over 300 orders in 2017, over 50 have been placed in the year-to-date.
This has pushed the order book as the percentage of the fleet to 9.9% from as low as 7.5% in mid-2017. We do note that the current order book as a percentage of the fleet is in line with where it was at this time last year.
The order book also compares to 7% of the current fleet on the water, that is great than or equal to 20 years old, which could potentially offset some of the new tonnage since entered the world fleet. We also point out that remains to be seen how much of the order book will actually deliver considering that slippage rate is approximately 40%.
This concludes our presentation and we would now be happy to take your questions.
Operator
[Operator Instructions] and our first question today comes from Jon Chappell from Evercore. Please go ahead.
Your line is open.
Jon Chappell
John, question for you. Is on the fleet renewal plan, you reported three months ago the plan to sell some of these older non-core unencumbered vessels and kind of three months has passed not much update there.
So just wondering, is the S&P market been pretty liquid, is that what's kind of you on sideline from executing that. I remember your vessel sales from the prior sales process move much quicker, was it seasonality kind of holding now massive values maybe holding up for higher prices, how should we think about you proceeding with that plan?
John Wobensmith
I think you'll start to see us execute on that relatively shortly. You're correct.
First quarter being softer on the freight rate side, which again you can see something that we obviously predicted and what we did with the Capsize fixtures. We obviously want to be in a firmer market where there is more liquidity and asset prices have probably moved up a little bit since the beginning of the year, so I think in terms of executing the sales side of it, we're getting into the right window now.
Jon Chappell
Okay and then that naturally leads to the purchase side of it, too. So just trying to think about your financial flexibility now, great refinancing, a lot of flexibility from that lower cost of debt, all the benefits you laid and as we think about this market recovering and the cash flow generation building an already pretty strong cash balance, how are you thinking about adding to the fleet at this point in the cycle versus like a target leverage area that you want to be in on the debt side versus reintroduction and a potential acceleration of the dividend.
And the reason I ask is, I think there's some healthy debate out there right now about one, whether now is a time to buy or act quickly before the window closely versus kind of return to capital to shareholders and a big question, that it's not out there yet should be, is do you really get paid in a cyclical industry for dividend. So super long question, any insights on that would be helpful?
John Wobensmith
Look we still - I mean the one thing I'll tell you, we still believe that at least as it stands today, asset prices are still at historical low numbers. We think there are good opportunities in both the case, in the Ultramax's the values have been relatively flat and I think I've said on the last quarterly conference call, we could be entering a period this year where, asset values may not move significantly until we get into the third, fourth quarter next year of this year, 2018.
So be able to take advantage of that, you could wind up getting some real outsized return on capital numbers. If you're able to - today, so to speak.
So I still think there's an opportunity there. Clearly by structuring the credit facility the way we did, as it pertains to dividends.
We obviously have those conversations as a company in terms of what the right strategy is there. I think, overall John you're right this is a big question.
Do you get paid for having a dividend in place? I think the argument is that, if you can put in a place a sustainable dividend that is there, that can be there throughout any market cycle that I would be hopeful that you would have a valuation, that would be taken into the valuation now of the equity going forward.
I think unpredictability obviously is a problem in that, if you structure dividend where you're paying out necessarily a variable dividend each quarter, I think that becomes a little more difficult. But I think the ability to put something stable in place and it's certainly something that we're going - we'll look at going forward, we've made no decisions on it.
It could be the way to go.
Jon Chappell
All right, I agree with that. And then just last one because it was lost in the prior question.
Now with this refinancing in place. I mean does this kind - I know you've been focused on deleveraging for a long time now for obvious reasons.
Does this feel like the right place? This $460 million facility you're comfortable with that, both at this point in the cycle and if god forbid, if things were to worsen a little bit.
John Wobensmith
Yes, look I think. Again I don't think our thought process has changed.
We want to be in that sort of 40% to 50% leverage again. Unfortunately and we think this market is going to be relatively strong for at least next 18 months basis the supply and demand fundamentals, but invariably there will be a softer period and we want the company to obviously be able to take advantage of that softer period and the way you do that is managing your leverage.
Jon Chappell
All right, very helpful. Thanks John.
Operator
Thank you. Our next question today comes from Amit Mehrotra from Deutsche Bank.
Please go ahead.
Chris Snyder
This is Chris Snyder on for Amit. So my first question kind of follows up on the potential acquisitions.
Obviously your fleets are pretty diverse, but I think the 15 vessels you guys have targeted to seller on the smaller side. So when you're kind of looking at what vessels you guys will be interested in, will it be just very opportunistic based on prices there, specific asset class you guys have kind of, will be focusing on.
John Wobensmith
So first of all the vessels that we've identified for sale are the older Panamaxes, two of the older Handysize and then the 53,000 deadweight ton Supramaxes. So it's a combination of the older vessels and then the 53,000 deadweight ton.
Again, strategy of the company has not changed in the sense that we have built a strong commercial team around the Capsize sectors at our capes as well as the minor bulk sector which are the Ultramax's all the way down to the Handysize. In terms of where we want to grow, I would say it's opportunistic but again the focus is going to be around growing the Capsize because of what we see on the demand side and the growth on the iron ore trades and then in the minor bulks, where we also see growth basis well GDP growth on the grain side, growth in the box side trades.
So that's what we're going to focus on, we'll focus less on the mid-range, the [indiscernible] or the Panamax's. From an equity strategy, we've been telling the story for a while.
We like the idea of having this minor bulk fleet, a very strong commercial team that can use that fleet to trade and be efficient and increase margins and providing a little more of the stable revenue flow. But then having the capes, which have your clearly a volatile but can have significant upside particularly with the all the iron ore volumes that are predicted to come on this year and next year from the [indiscernible] trade in Brazil.
Chris Snyder
Yes, that's helpful. And the part of the reason I was asking because obviously you guys have a very healthy balance sheet.
Cash flows are starting to inflect higher well above cash breakeven so it does seem like you know you could almost handle more risk in the business by kind of going after more capes, just kind of given kind of the healthy status of the company.
John Wobensmith
I think that's right, but with any risk you want to be paid for it and we think that Capesize sector will do just that.
Chris Snyder
Okay, thank you. And then just next question.
As I think you guys mentioned that the current facility was 40% oversubscribed, your LTV at the moment is still very low. I think you guys kind of said you're targeting 40% to 50%, we have you below that range.
So do you have the ability to kind of upsize this facility to take on more leverage and kind of get into that 40% to 50% range or is that kind of be a future transaction down the road.
Apostolos Zafolias
I think if anything we will take advantage of that additional capacity that is available to us down the road, we will not be adding an upsize off this credit facility at this point.
Chris Snyder
Okay, thanks. That does it for me.
Thanks for your time guys.
Operator
Thank you. Our next question comes from Randy Gibbons from Jefferies.
Please go ahead.
Randy Gibbons
Few quick questions. One, looking at your strategy for spot versus kind of time charters in the quarters ahead.
I know you mentioned your kind of allowing some of the short-term contracts to expire in the coming months, so it sounds like you're getting a little more focused on kind of true spot exposure in the coming quarters, is that kind of accurate?
John Wobensmith
Yes, but I think we've been focused on that since even middle of last year. the entire minor bulk fleet is really spot, in the sense that we're doing direct cargo liftings, short-term voyages anywhere from 25 to 45 days that has not changed and then on the Capesize sector again, we for the most part have been doing short-term voyage, short-term trip charters because we do believe again that as we go through this year both from a seasonal standpoint, but also from a demand and supply standpoint we believe the second half of the year will continue to move up.
Randy Gibbons
Okay and then looking at the new facility using kind of current EBITDA run rate. I know the kind of future margin is 300 to 350 basis points, is kind of tied to that last 12-month EBITDA.
So what using current - what would that kind of equate to going forward after that 325 would be lower to 300, closer to 350 just trying some sensitivity around what is driving that move?
John Wobensmith
Yes, expect it to closer to 300 mark beginning in the first quarter of 2019.
Randy Gibbons
Excellent. All right and then one quick market question.
Recently announced Chinese iron ore imports last months were basically in line with 2017 at 82, 83 million tonnes. Do you see any impact on that government mandated kind of production restrictions that have kind of continued in some parts of China affecting the drybulk market in coming months?
Peter Allen
Well I think we really saw a pick up in the second half of April in particular and you saw that with Capes really spiking [indiscernible] $20,00 today from approximately $7,000 earlier in April. So I think seasonally as we peak steel construction season right now and as that continues and we get into a seasonally stronger second half of the year, we'll see Chinese iron ore imports pick up.
John Wobensmith
I mean I think Randy, I think the biggest thing is what Peter Allen mentioned earlier in the call and that is, that Vale's production was below their sales, which means at least what we takeaway from it is, that they actually drew down inventories in order to push product. So that's why we think from here going forward and particularly in the second half of the year, there's pent up volume that wasn't produced and wasn't shipped in the first quarter from Vale that we will see appearing in the second half and then on top of that, you've got this 23 million tonne of growth coming from their new S11D.
I think you know, so on the iron ore front, we expect quite a lot of growth in the second half of this year over the first half. The only thing I'll add is, the steel inventories in China there was a lot of talk about that, a few months ago and we've seen few inventories come down faster than we've ever seen in bearing this decade and really does tell you that, that the steel industry is strong, the construction industry is strong.
And the margins in the steel industry are strong. So again it kind of plays into this higher quality sea born iron ore trade and the growth attached to that.
Randy Gibbons
Appreciate. All my other questions are asked, so thanks again and congrats.
Operator
Our next question today comes from Aspen [indiscernible] from [indiscernible]. Please go ahead.
Unidentified Analyst
Just following up on the rate comment [indiscernible] as [indiscernible] back up [indiscernible] is essentially flat to confirm by the guidance you have for 2Q. seasonally this segment is going to taper off in April, May and now you also see the Chinese calling for prices down substantially, which historically has been good indicator for where the Panama super rates are going.
I mean, I know this will be a smaller part of your portfolio longer term, but what's your take on the outlook for the coal prone vessels for remainder of 2018.
John Wobensmith
Well coal in general is a difficult one. I think coal imports into China in general will be flat.
I think you saw a lot of growth in the first part of the year, some of that maybe tampered, the Chinese government has closed some of the ports to coal import, but I think it's very difficult to sell in China. I think it's a black box in terms of imports, when it gets turned on, when it gets turned off.
What I'm more optimistic on is, coal imports into India both on the coking coal side to support their growing steel industry as well as imported thermal coal because of the inefficiencies they have from an infrastructure standpoint on domestic coal production and transportation moving it around the country. And I also see growth on the coal side in the Philippines, in Taiwan and Vietnam in particular.
So again China is very difficult I think because of the policies of the government on the coal industry, but as I said, I'm more optimistic on growth in India this year as well as some of the well say lesser Asian countries such as Philippines, Vietnam and Taiwan.
Unidentified Analyst
All right, and then maybe can you talk a bit about - the progress you're doing on the commercial side, fleet positioning the new office in Denmark and you know whether you've feel you've gained any market knowledge so far through these measures.
John Wobensmith
Well there's no doubt, we've gained market knowledge, it's an everyday flow of real-time information. I think the we have now for the last few quarters been doing more and more direct business with cargo and cutting out the operator, cutting out the middleman and keeping that margin for ourselves.
What we've also begun doing is performing arbitrage trades where we have booked the piece of cargo for one of our ships and when it comes time to ship that cargo, maybe there's a situation where there's another ship that we can take from someone else that's cheaper, we charter in [indiscernible] move that piece of cargo and then take our ship and do something with it and capture that spread. So we've been doing few of those trades and that's one of the main reasons for opening up the Copenhagen office to be in a position to more of those arbitrage trades as well as grow the presence in Europe and lot of those cargo trades take place before New York gets up and going.
So we definitely want to make sure that we're attached to that market. It's a big market on the grain side.
Unidentified Analyst
Yes, that's interesting. And then you, I mean you mentioned 50-50 kind of voyage lump sum time charter [indiscernible] correct me, if I'm wrong but I think that's the among the highest in the industry.
How does that split across the feed? I mean are you able to do this on the cape now or is this potentially still going Supra and then downplay.
John Wobensmith
No, the capes we've been - we've actually started doing voyage charters directly with the majors. We have been also doing short-term trip charters particularly and partnering with somebody maybe on a coal tender which actually allows us to outperform the market.
So it's definitely happening in the capes as well. There are 13 cape, so it's a smaller fleet, so we're not doing as much but as we're doing in the minor bulks, but yes it's the same strategy on capes as the minor bulk except everything is based in Singapore for obvious reason.
Unidentified Analyst
Perfect. That's good color.
Thank you guys.
Operator
[Operator Instructions] our next question come from Magnus Fyhr from Seaport Global. Please go ahead.
Magnus Fyhr
Just one question left. You gave good guidance on the drydocking cost and days for 2018.
Have you given any thoughts on the 2019 what you're going to do as far as [indiscernible] water ballast treatment system installations and down base?
John Wobensmith
Magnus we have some guidance already in the last and we'll put some updated guidance in this Q [ph]. In total we expect our 2019 dry-docking including ballast water treatment systems to be $37.5 million but that includes some of the vessels that are sales candidates.
So excluding those, it would be about $20 million for the full year of 2019 and again that would be dry-docking and ballast water treatment systems included.
Magnus Fyhr
And that's about a $1 million per vessel or should we assume about 20 vessels down?
John Wobensmith
It would be 13 vessels or so.
Magnus Fyhr
Okay, great. Thanks for that guidance.
John Wobensmith
Yes Magnus I would focus on the 20 because as you know the fleet renewal plan will be executed.
Magnus Fyhr
Yes, all right very good. Thank you guys.
Operator
Our next question comes from Paul Frat [ph] from Noble Capital Markets. Please go ahead.
Unidentified Analyst
Not much left to talk about, but when you look at tying up the loose ends on the new credit facility, when do you expect that to be done?
John Wobensmith
We expect that to be within the second quarter.
Unidentified Analyst
And is that a - John you allude to executing on the fleet renewal program stay tuned, is that a gaining factor getting this credit facility gone first and then moving forward? And then when you look at the dividend, will you talk about whether you're thinking about special versus a regular dividend and sort of the timing of that decision?
John Wobensmith
All right, so let me take the dividend first. Again we have not made any - look we obviously talk about the idea of dividend and again that's why we structure the credit facility as we did, but no decision has been taken by the board in terms of a dividend going forward at this point.
In terms of the fleet renewal, you have to keep in mind, commitment letter has been signed on the bank facility, so that is in place. So it is just in documentation.
Apostolos said by the end of the second quarter, that's not too far away. So this is - I believe this will happen relatively quickly and no it's not holding up us in terms of setting up the fleet renewal plan.
As you know when you sell a ship it still takes usually a couple months to get from executing in MLA to physical delivery. So those credit facilities will be closed before we get to that.
Meaning just to be very clear, we're actively working on fleet renewal program now.
Unidentified Analyst
Thanks for the clarification and then Apostolos on the working capital is pretty negative for the first quarter or at least use of cash. Can you walk we through the rest of the year as far as working capital changes?
Apostolos Zafolias
Yes so for the first quarter, I think the majority of it was debt paid down amount of $11.2 million beyond that, I mean our cash balance went from $205 million at the end of last quarter to $201 million. And usually the first quarter is seasonally heavier in terms of working capital movements because insurance payments and other payments are weighted towards the first half of the year, the first quarter of the year.
I mean going forward I think we have provided a pro forma balance sheet as of March 31, but pro forma for the credit facilities on Slide 13 of the presentation that doesn't include any of the vessel sales or anything like that, but it gives you an indication of what the pro forma cash balance will be after the refinancing.
Unidentified Analyst
Great and then, if we could just talk about the commercial strategy opening office in Copenhagen, you talked a little bit about it. But what's the best measure of success there.
I think in the last call you mentioned that you were doing direct business with 40 customers, is that a number to focus on and is that expanded into the second quarter sort of give me color on sort of how to measure that commercial success.
John Wobensmith
Yes, so we're now dealing with 50 plus new customers and I expect that number to continue to grow. I mean, I would expect it to get up to 100 over the next sort of six to nine months.
I think the best way to measure how that office was doing and we talked about this earlier, but how the company is doing compared to the adjusted indices. For this quarter, we outperformed by $800 a day, if you adjust the indices to our fleet specifications and that's something that we will continue to report going forward, I think that's probably one of the biggest judges.
Unidentified Analyst
Great. Thanks a lot.
Operator
Ladies and gentlemen, that will conclude today's conference call. Thank you very much for your participation today.
You may now disconnect.