GENCO SHIPPING & TRADING LTD (GNK)

ITEM 2.       MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995

This report contains forward-looking statements made 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 a discussion of potential future events, circumstances or future operating or financial performance. These forward-looking statements are based on our management’s current expectations and observations. Included among the factors that, in our view, could cause actual results to differ materially from the forward looking statements contained in this report are the following: (i) declines or sustained weakness in demand in the drybulk shipping industry; (ii) weakness or declines in drybulk shipping rates; (iii) changes in the supply of or demand for drybulk products, generally or in particular regions; (iv) changes in the supply of drybulk carriers including newbuilding of vessels or lower than anticipated scrapping of older vessels; (v) changes in rules and regulations applicable to the cargo industry, including, without limitation, legislation adopted by international organizations or by individual countries and actions taken by regulatory authorities; (vi) increases in costs and expenses including but not limited to: crew wages, insurance, provisions, lube oil, bunkers, repairs, maintenance, general and administrative expenses, and management expenses; (vii) whether our insurance arrangements are adequate; (viii) changes in general domestic and international political conditions; (ix) military actions, terrorism, or piracy, including without limitation the ongoing conflicts in Ukraine and Iran, and attacks on vessels in the Red Sea, and other conflicts in the Middle East and Venezuela; (x) changes in the condition of the Company’s vessels or applicable maintenance or regulatory standards (which may affect, among other things, our anticipated drydocking or maintenance and repair costs) and unanticipated drydock expenditures; (xi) the Company’s acquisition or disposition of vessels; (xii) the amount of offhire time needed to complete maintenance, repairs, and installation of equipment to comply with applicable regulations on vessels and the timing and amount of any reimbursement by our insurance carriers for insurance claims, including offhire days; (xiii) the completion of definitive documentation with respect to charters; (xiv) charterers’ compliance with the terms of their charters in the current market environment; (xv) the extent to which our operating results are affected by weakness in market conditions and freight and charter rates; (xvi) our ability to maintain contracts that are critical to our operation, to obtain and maintain acceptable terms with our vendors, customers and service providers and to retain key executives, managers and employees; (xvii) completion of documentation for vessel transactions and the performance of the terms thereof by buyers or sellers of vessels and us; (xviii) the relative cost and availability of low sulfur and high sulfur fuel, worldwide compliance with sulfur emissions regulations that took effect on January 1, 2020 and our ability to realize the economic benefits or recover the cost of the scrubbers we have installed; (xix) our financial results for the year ending December 31, 2026 and other factors relating to determination of the tax treatment of dividends we have declared; (xx) the financial results we achieve for each quarter that apply to the formula under our dividend policy, including without limitation the actual amounts earned by our vessels and the amounts of various expenses we incur, as a significant decrease in such earnings or a significant increase in such expenses may affect our ability to carry out our new value strategy; (xxi) the exercise of the discretion of our Board regarding the declaration of dividends, including without limitation the amount that our Board determines to set aside for reserves under our dividend policy; (xxii) outbreaks of disease such as the COVID-19 pandemic; (xxiii) trade conflicts, the imposition or modification of port fees, tariffs and other import restrictions, and the effectiveness and cost of any measures the Company may adopt to avoid or mitigate the impact of the foregoing; and (xxiv) other factors listed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 2025 and subsequent reports on Form 8-K and Form 10-Q. Our ability to pay dividends in any period will depend upon various factors, including the limitations under any credit agreements to which we may be a party, applicable provisions of Marshall Islands law and the final determination by the Board of Directors each quarter after its review of our financial performance, market developments, and the best interests of the Company and its shareholders. The timing and amount of dividends, if any, could also be affected by factors affecting cash flows, results of operations, required capital expenditures, or reserves. As a result, the amount of dividends actually paid may vary. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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The following management’s discussion and analysis should be read in conjunction with our historical consolidated financial statements and the related notes included in this Form 10-Q.

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General

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We are a New York City-based pure-play drybulk ship owning company focused on the seaborne transportation of commodities globally. We transport key cargoes such as iron ore, coal, grain, bauxite, steel products and other drybulk cargoes along worldwide shipping routes. Our fleet currently consists of 43 drybulk vessels, including two Newcastlemax, 17 Capesize, 15 Ultramax and 9 Supramax vessels, with an aggregate carrying capacity of approximately 4,935,000 deadweight tons (“dwt”) and an average age of approximately 12.6 years.

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See pages 33-34 for a table of our current fleet.

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Our approach towards fleet composition is to own a high-quality fleet of vessels focused on Newcastlemax, Capesize, Ultramax and Supramax vessels. Newcastlemax and Capesize vessels represent our major bulk vessel category, while Ultramax and Supramax vessels represent our minor bulk vessel category. Our major bulk vessels are primarily used to transport iron ore, coal and bauxite, while our minor bulk vessels are primarily used to transport grains, steel products and other drybulk cargoes such as cement, scrap, fertilizer, nickel ore, salt and sugar. This approach of owning ships that transport both major and minor bulk commodities provide us with exposure to a wide range of drybulk trade flows.

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We employ an active commercial strategy which consists of a global team located in the U.S., Denmark and Singapore. Overall, we utilize a portfolio approach to revenue generation through a combination of short-term, spot market employment, index-linked time charters as well as opportunistically booking longer term fixed-rate coverage or contracts of affreightment depending on market conditions and management’s outlook. Our fleet deployment strategy currently is weighted towards short-term fixtures, which provides us with optionality on our sizeable fleet.

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Our approach to capital allocation focuses on three key factors:

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Since 2021, we have executed this strategy by reducing our debt by $119.2 million cumulatively through March 31, 2026 while expanding our core major bulk and minor bulk segments. These actions have enabled us to further reduce our cash flow breakeven rate positioning us to pay sizeable quarterly dividends across various market environments.

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In addition to the $54.8 million of cash on our balance sheet as of March 31, 2026, we had undrawn revolver availability of $350.0 million, bringing our total liquidity to $404.8 million.

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On February 27, 2026, we entered into an amendment to upsize our existing $600 Million Revolver. Specifically, we utilized $80 million under the $300 million accordion feature to increase our borrowing capacity from $600 million to $680 million (the “$680 Million Revolver”). The increased borrowing capacity was available upon the delivery of the two Newcastlemax vessels, the Genco Stars and Stripes and the Genco Valkyrie, which were delivered on March 5, 2026 and March 24, 2026, respectively. Refer to Note 8 — Debt in our Condensed Consolidated Financial Statements.

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Including the $0.35 dividend for the first quarter of 2026, we have declared 27 consecutive quarterly dividends, which total $7.915 per share.

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IMO 2023 Compliance Requirements

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The International Maritime Organization (“IMO”) implemented two key measures to enhance energy efficiency in international shipping with effect from January 2023 which are as follows:

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Revised IMO GHG Strategy

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In July 2023, the IMO adopted an updated greenhouse gas (“GHG”) strategy, setting forth the following targets:

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IMO Net-Zero Framework

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At its 83rd session in April 2025, the IMO’s Marine Environment Protection Committee (“MEPC”) approved draft regulations forming the IMO Net-Zero Framework. Key components include:

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At the second extraordinary session of the MEPC, held in October 2025 specifically to consider formal adoption of the IMO Net-Zero Framework as approved at MEPC’s 83rd session, a lack of consensus among member states led to an unexpected adjournment of the session for one year.

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At MEPC’s 84th session in April 2026, member states did not reach agreement on adoption or substantive revision of the IMO Net-Zero Framewor

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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General

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The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the reader understand our results of operations and financial condition. The MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and notes thereto included in Item 8 – Financial Statements and Supplementary Data.

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The MD&A generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on February 21, 2025.

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We are a Marshall Islands company that transports iron ore, coal, grain, bauxite, steel products and other drybulk cargoes along worldwide shipping routes through the ownership and operation of drybulk carrier vessels.  After the expected delivery of two Newcastlemax vessels during March 2026 that we have agreed to acquire, our fleet will consist of 45 drybulk vessels, including two Newcastlemax and 17 Capesize vessels and 15 Ultramax and 11 Supramax vessels with an aggregate carrying capacity of approximately 5,044,000 deadweight tons (“dwt”) and an average age of approximately 12.7 years, pro forma for agreed-upon acquisitions.  We seek to deploy our vessels on time charters, spot market voyage charters, spot market-related time charters or in vessel pools trading in the spot market, to reputable charterers.  The majority of the vessels in our current fleet are presently engaged under time charter, spot market voyage charters and spot market-related time charters that expire (assuming the option periods in the time charters are not exercised) between February 2026 and March 2027.

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See pages 5 for a table of our current fleet.

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IMO 2023 Compliance Requirements

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The International Maritime Organization (“IMO”) implemented two key measures to enhance energy efficiency in international shipping with effect from January 2023 which are as follows:

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These requirements are discussed above under “Item 1 – Environmental and Other Regulations – Air Emissions.”

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Revised IMO GHG Strategy

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In July 2023, the IMO adopted an updated greenhouse gas (“GHG”) strategy, setting forth the following targets:

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These requirements are discussed above under “Item 1 – Environmental and Other Regulations – Greenhouse Gas Regulations.”

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Vessel Acquisitions and Sales

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Acquisitions

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On November 15, 2025, we entered into agreements to acquire two 2020-built 208,000 dwt scrubber-fitted Newcastlemax vessels for a total purchase price of $145.5 million. We drew down $30 million on our $600 Million Revolver on November 20, 2025 in part to fund the $14.6 million deposit made on November 24, 2025, which is being held in an escrow account until we take delivery of the vessels. We expect to take delivery of these two vessels during March 2026 and we expect to fund the remainder of the purchase price with cash on hand and a drawdown on our $600 Million Revolver.

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On July 10, 2025, we entered into an agreement to acquire a vessel that was renamed the Genco Courageous, a 2020-built, 182,000 dwt scrubber-fitted Capesize vessel, for a purchase price of $63.6 million. The vessel was delivered on October 15, 2025. We drew down $10 million on our $500 Million Revolver on June 26, 2025 in part to fund the $6.4 million deposit made on July 23, 2025. For the remainder of the purchase price, we drew down $60 million on our $600 Million Revolver on September 16, 2025 to finance the purchase.

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On October 3, 2024, we entered into an agreement to acquire the Genco Intrepid, a 2016-built, 180,000 dwt Capesize vessel, for a purchase price of $47.5 million. The vessel was delivered on October 23, 2024. We drew down $20 million on our $500 Million Revolver during the fourth quarter of 2024 and utilized cash on hand to finance the purchase.

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Sales

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In order to opportunistically renew our fleet, we agreed to divest three older, less fuel efficient vessels with their third special survey due in 2024. We completed the sale of three of our Capesize vessels, the Genco Commodus, the Genco Claudius and the Genco Maximus, on February 7, 2024, April 22, 2024 and April 2, 2024, respectively.

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Additionally, on July 5, 2024 we completed the sale of the Genco Warrior, a 2005-built Supramax vessel, and on October 4, 2024 we completed the sale of the Genco Hadrian, a 2008-built Capesize vessel.

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We will continue to seek opportunities to renew our fleet going forward.

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Factors Affecting Our Results of Operations

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We believe that the following table reflects important measures for analyzing trends in our results of operations. The table reflects our ownership days, chartered-in days, available days, operating days, fleet utilization, TCE rates and daily vessel operating expenses for the years ended December 31, 2025 and 2024 on a consolidated basis.

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Operating Data

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The following tables represent the operating data and certain balance sheet and other data as of and for the years ended December 31, 2025 and 2024 on a consolidated basis.

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Results of Operations

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VOYAGE REVENUES-

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Our revenues are driven primarily by the number of vessels in our fleet, the number of days during which our vessels operate, the type of fixture our vessels are chartered on (spot market voyage charters or fixed rate time charters), and the amount of daily charterhire or freight rates that our vessels earn, that, in turn, are affected by a number of factors, including:

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During 2025, voyage revenues decreased by $80.9 million, or 19.1%, to $342.1 million as compared to $423.0 million during 2024. The decrease in voyage revenues was primarily due to lower rates earned by our major and minor bulk vessels, the operation of a smaller fleet and additional drydocking days during 2025. During 2025, the drybulk freight market experienced a softer first half of the year before strengthening in the second half of the year driven by record Brazilian iron ore exports, improved coal shipments to China and strong Chinese commodity demand. At the beginning of 2026, freight rates have been impacted by various seasonal factors, including weather related disruptions affecting seaborne cargo availability, the frontloaded nature of the newbuilding orderbook, and the timing of the Chinese

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New Year. These factors have impacted the supply and demand balance leading to reduced freight rates relative to levels seen at the end of 2025; however, freight rates are at firm levels for this time of year.

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The average Time Charter Equivalent, or TCE rate, of our overall fleet decreased by 18.9% to $15,502 a day during 2025 from $19,107 a day during 2024. The TCE for our major bulk vessels decreased by 28.0% from $26,699 a day during 2024 to $19,210 a day during 2025. This decrease was primarily a result of lower rates achieved by our Capesize vessels. The TCE for our minor bulk vessels decreased by 6.9% from $14,351 a day during 2024 to $13,355 a day during 2025 primarily a result of lower rates achieved by our Ultramax and Supramax vessels.

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Total ownership days decreased from 15,781.6 days during 2024 to 15,407.9 days during 2025 due to the sale of four Capesize vessels and one Supramax vessel during 2024, partially offset by the delivery of one Capesize vessel during the fourth quarter of 2024 and one Capesize vessel during the fourth quarter of 2025.  Fleet utilization increased from 96.8% during 2024 to 98.4% during 2025.

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Please see pages 7 - 8 for a table that sets forth information about the current employment of the vessels in our fleet.

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VOYAGE EXPENSES-

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In time charters and spot market-related time charters, operating costs including crews, maintenance and insurance, which are recorded as part of vessel operating expenses, are typically paid by the owner of the vessel and specified voyage costs such as fuel and port charges are paid by the charterer. These expenses are borne by the Company during spot market voyage charters. There are certain other non-specified voyage expenses such as commissions which are typically borne by us. Voyage expenses include port and canal charges, fuel (bunker) expenses and brokerage commissions payable to unaffiliated third parties. Port and canal charges and bunker expenses primarily increase in periods during which vessels are employed on spot market voyage charters because these expenses are for the account of the vessel owner. At the inception of a time charter, we record the difference between the cost of bunker fuel delivered by the terminating charterer and the bunker fuel sold to the new charterer as a gain or loss within voyage expenses.  Voyage expenses also include the cost of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement. Additionally, we may record lower of cost and net realizable value adjustments to re-value the bunker fuel on a quarterly basis for certain time charter agreements where the inventory is subject to gains and losses. Refer to Note 2 — Summary of Significant Accounting Policies in our Consolidated Financial Statements.

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Voyage expenses were $115.3 million and $127.0 million during 2025 and 2024, respectively. This decrease was primarily due to lower bunker consumption on our Capesize vessels due to additional drydocking days during 2025 as well lower bunker prices. Additionally, there was a decrease in bunker consumption during short-term time charters pursuant to the terms of the time charter agreement during 2025 as compared to 2024.

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VESSEL OPERATING EXPENSES-

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Vessel operating expenses decreased by $3.1 million from $101.6 million during 2024 to $98.5 million during 2025. This decrease was primarily due to the operation of a smaller fleet.

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Average daily vessel operating expenses (“DVOE”) for our fleet decreased marginally to $6,395 per vessel per day during 2025 from $6,440 per vessel per day during 2024, primarily due to the timing of purchase of stores, lower insurance costs and lower repairs and maintenance expenses, partially offset by higher crew costs and the timing of the purchase of spares.

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Our vessel operating expenses increase to the extent our fleet expands. Other factors beyond our control, some of which may affect the shipping industry in general, including, for instance, developments relating to market prices for crewing, lubes, and insurance, may also cause these expenses to increase. Crew costs on our vessels could increase in the future due to higher wages as a result of the potential impact of the war in Ukraine, the Israel-Hamas war, and the Houthi conflict in the Red Sea, and other conflicts in the Middle East or Venezuela, among other potential macroeconomic events, are unpredictable, and the actual amount of DVOE could be higher or lower than budgeted as a result.

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Based on estimates provided by GSSM, our DVOE budget for the full year of 2026 is expected to be $6,500 per vessel per day. The potential impacts of various macroeconomic events, including but not limited to the war in Ukraine, the Israel-Hamas war, the Houthi conflict in the Red Sea, and other conflicts in the Middle East or Venezuela, are unpredictable, and the actual amount of our DVOE could be higher or lower than budgeted as a result.

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CHARTER HIRE EXPENSES-

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Charter hire expenses decreased by $3.1 million from $9.1 million during 2024 to $6.0 million during 2025. The decrease was primarily due to a decrease in hire rates, partially offset by an increase in chartered-in days.

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GENERAL AND ADMINISTRATIVE EXPENSES-

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We incur general and administrative expenses which relate to our onshore non-vessel-related activities. Our general and administrative expenses include our payroll expenses, including those relating to our executive officers, operating lease expense, legal, auditing and other professional expenses. General and administrative expenses include nonvested stock amortization expense which represents the amortization of stock-based compensation that has been issued to our Directors and employees pursuant to the 2015 Equity Incentive Plan. Refer to Note 17 — Stock-Based Compensation in our Consolidated Financial Statements. General and administrative expenses also include legal and professional fees associated with our credit facilities, which are not capitalizable to deferred financing costs. We also incur general and administrative expenses for our overseas offices located in Singapore and Copenhagen.

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General and administrative expenses increased by $1.7 million from $29.1 million during 2024 to $30.8 million during 2025. The increase was primarily due to higher nonvested stock amortization expense and higher legal and professional fees.

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TECHNICAL MANAGEMENT EXPENSES-

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Technical management expenses include the direct costs incurred by GSSM for the technical management of the vessels under its management. Technical management fees were $5.2 million and $4.6 million during 2025 and 2024, respectively.  The variance was due to the timing of expenses during the year.

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DEPRECIATION AND AMORTIZATION-

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We depreciate the cost of our vessels on a straight-line basis over the expected useful life of each vessel. Depreciation is based on the cost of the vessel less its estimated residual value.

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Depreciation and amortization expenses increased by $7.5 million from $68.7 million during 2024 to $76.2 million during 2025. This increase was primarily due to an increase in drydocking amortization expense for certain vessels that completed their respective drydockings during 2024 and 2025. Additionally, there was an increase in vessel depreciation expense for the Genco Intrepid and Genco Courageous which were delivered during the fourth quarter of 2024 and 2025, respectively, partially offset by a decrease in vessel depreciation for the Genco Warrior and Genco Hadrian which were sold during the second half of 2024.

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IMPAIRMENT OF VESSEL ASSETS-

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Impairment of vessels assets decreased by $5.9 million from $6.6 million during 2024 to $0.7 million during 2025. During 2025, we recorded $0.7 million of impairment of vessel assets related to the loss on disposal of replaced equipment on certain vessels. During 2024, were recorded $6.6 million of impairment of vessel assets that included $5.6 million impairment losses for the Genco Hadrian, a Capesize vessel, which was impaired during the second quarter of

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2024. Additionally, during 2024, we recorded $1.0 million of losses related to the disposal of replaced equipment on certain vessels.

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Refer to Note 2 — Summary of Significant Accounting Policies in our Consolidated Financial Statements for further information regarding the impairment of the vessels.

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NET GAIN ON SALE OF VESSELS-

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During 2024, we recorded a net gain on sale of vessels of $16.5 million related primarily to the gains on the sale of the Genco Warrior, the Genco Claudius and the Genco Maximus partially offset by losses on the sale of the Genco Commodus and the Genco Hadrian. There were no vessel sales during 2025.

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Refer to Note 5 — Vessel Acquisitions and Dispositions in our Consolidated Financial Statements for further information regarding the sale of these vessels.

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OTHER OPERATING EXPENSE-

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Other operating expense of $1.9 million and $5.7 million recorded during 2025 and 2024, respectively, consists of costs incremental to routine expenses that were incurred related to our 2026 Annual Meeting of Shareholders and our 2024 Annual Meeting of Shareholders, respectively.

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OTHER (EXPENSE) INCOME-

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INTEREST EXPENSE-

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Interest expense decreased by $1.0 million from $13.3 million during 2024 to $12.3 million during 2025. Interest expense during 2025 and 2024 consisted primarily of interest expense under our credit facilities and amortization of deferred financing costs for those facilities. The decrease was primarily due to lower outstanding debt during 2025 as compared to 2024, as well as lower interest rates. This decrease was partially offset by an increase in interest expense as a result of lower settlement payments received under our interest rate cap agreements due to the expiration of these agreements during the first quarter of 2024. There were no interest rate cap agreements during the twelve months ended December 31, 2025. Refer to Note 8 — Debt in the Consolidated Financial Statements for information regarding our credit facilities.

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INTEREST INCOME-

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Interest income decreased by $1.5 million from $3.0 million during 2024 to $1.5 million during 2025 primarily due to lower interest income earned on our cash and cash equivalents.

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LOSS ON DEBT EXTINGUISHMENT –

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During 2025, we recorded $0.7 million related to the loss on the extinguishment of debt as a result of the refinancing of the $500 Million Revolver with the $600 Million Revolver on July 10, 2025. Refer to in Note 8 — Debt in our Consolidated Financial Statements.

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OTHER EXPENSE-

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Other expense was $0.5 million and $0.2 million during 2025 and 2024, respectively.

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NET (LOSS) INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST –

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During 2025 and 2024, net (loss) income attributable to noncontrolling interest was ($0.1) million and $0.1 million, respectively, which is associated with the net (loss) income attributable to the noncontrolling interest of GSSM.

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LIQUIDITY AND CAPITAL RESOURCES

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Our primary sources of liquidity are cash flow from operations, cash on hand, equity offerings and credit facility borrowings. We currently use our funds primarily for the acquisition of vessels, fleet renewal, drydocking for our vessels, payment of dividends, debt repayments and satisfying working capital requirements as may be needed to support our business.  Our ability to continue to meet our liquidity needs is subject to and will be affected by cash utilized in operations, the economic or business environment in which we operate, shipping industry conditions, the financial condition of our customers, vendors and service providers, our ability to comply with the financial and other covenants of our indebtedness, and other factors.

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We believe, given our current cash holdings and undrawn revolver availability, if drybulk shipping rates do not decline significantly from current levels, our capital resources, including cash anticipated to be generated within the year, are sufficient to fund our operations for at least the next twelve months. Such resources include unrestricted cash and cash equivalents of $55.5 million as of December 31, 2025 in addition to the $400 million availability under the $600 Million Revolver as of December 31, 2025, which compares to a minimum liquidity requirement under our credit facility of approximately $21.5 million as of December 31, 2025. Given anticipated capital expenditures related to drydockings and fuel efficiency upgrade costs of $35.1 million and $33.2 million during 2026 and 2027, respectively, the $131.0 remining payment for the purchase of the two Newcastlemax vessels expected to be delivered during the first quarter of 2026, as well as any quarterly dividend payments, we anticipate to continue to have significant cash expenditures. Refer to “Capital Expenditures” below for further details. However, if market conditions were to worsen significantly due to the U.S.-China trade dispute, the imposition of tariffs, the war in Ukraine, the Houthi conflict in the Red Sea, the Israel-Hamas war, other conflicts in the Middle East or Venezuela, or other causes, then our cash resources may decline to a level that may put at risk our ability to pay dividends per our capital allocation strategy or at all.

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Going forward, given the nature of our revolving credit facility, we plan to actively manage our debt balance to reduce interest expense and may also opportunistically draw down debt to assist in funding accretive growth opportunities. As of December 31, 2025, there are no mandatory debt repayments due until we must repay $200 million in 2030. Nonetheless, we intend to continue to pay down debt on a voluntary basis.

As of December 31, 2025, the $600 Million Revolver contained collateral maintenance covenants that require the aggregate appraised value of collateral vessels to be at least 135% of the principal amount of the loan outstanding under such facility. If the values of our vessels were to decline as a result of the various geopolitical factors previously mentioned or otherwise, we may not satisfy this collateral maintenance requirement. If we do not satisfy the collateral maintenance requirement, we will need to post additional collateral or prepay outstanding loans to bring us back into compliance, or we will need to seek waivers, which may not be available or may be subject to conditions.

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In the future, we may require capital to fund acquisitions or to improve or support our ongoing operations and debt structure, particularly in light of economic conditions resulting from the U.S.-China trade dispute, the imposition if tariffs, the war in Ukraine, the Houthi conflict in the Red Sea, the Israel-Hamas war, other conflicts in the Middle East or Venezuela, and the trajectory of China’s economic recovery and stimulus measures.  We may from time to time seek to raise additional capital through equity or debt offerings, selling vessels or other assets, pursuing strategic opportunities, or otherwise.  We may also from time to time seek to incur additional debt financing from private or public sector sources, refinance our indebtedness or obtain waivers or modifications to our credit agreements to obtain more favorable terms, enhance flexibility in conducting our business, or otherwise.  We may also seek to manage our interest rate exposure through hedging transactions. We may seek to accomplish any of these independently or in conjunction with one or more of these actions.  However, if market conditions are unfavorable, we may be unable to accomplish any of the foregoing on acceptable terms or at all.

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On July 10, 2025, we entered into a fifth amendment to amend, extend and upsize our existing $500 Million Revolver and implement the $600 Million Revolver. The amended structure consists of a $600 million revolving credit facility which can be utilized to support growth of our asset base, as well as general corporate purposes. Refer to Note 8 — Debt in our Consolidated Financial Statements for further details regarding the terms of the $600 Million Revolver, which information is incorporated herein by reference.

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As of December 31, 2025, we were in compliance with all financial covenants under the $600 Million Revolver.

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Dividends

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Under our quarterly dividend policy, the amount available for quarterly dividends is to be calculated based on the following formula:

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Operating cash flow

Less: Voluntary quarterly reserve

Cash flow distributable as dividends

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The amount of dividends payable under the foregoing formula for each quarter of the year will be determined on a quarterly basis.

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For purposes of the foregoing calculation, operating cash flow is defined as voyage revenue less voyage expenses, charter hire expenses, realized gains or losses on fuel hedges, vessel operating expenses, general and administrative expenses other than non-cash restricted stock expenses, technical management fees, and interest expense other than non-cash deferred financing costs. Anticipated uses for the voluntary quarterly reserve include, but are not limited to, vessel acquisitions, debt prepayments and repayments, and general corporate purposes. In order to set aside funds for these purposes, the voluntary reserve will be set on a quarterly basis in the discretion of our Board and is anticipated to be based on future quarterly debt repayments and interest expense.

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On February 17, 2026, we announced a quarterly dividend of $0.50 per share. Our quarterly dividend policy and declaration and payment of dividends are subject to legally available funds, compliance with applicable law and contractual obligations (including our credit facilities) and our Board’s determination that each declaration and payment is at that time in the best interests of the Company and its shareholders after its review of our financial performance.

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In connection with our comprehensive value strategy, we have paid down additional indebtedness under our credit facilities.

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The declaration and payment of any dividend or any stock repurchase is subject to the discretion of our Board of Directors. Our Board of Directors and management continue to closely monitor market developments together with the evaluation of our quarterly dividend policy in the current market environment. The principal business factors that our Board of Directors expects to consider when determining the timing and amount of dividend payments or stock repurchases include our earnings, financial condition, and cash requirements at the time. Marshall Islands law generally prohibits the declaration and payment of dividends or stock repurchases other than from surplus. Marshall Islands law also prohibits the declaration and payment of dividends or stock repurchases while a company is insolvent or would be rendered insolvent by the payment of such a dividend or such a stock repurchase. Heightened economic uncertainty and the potential for renewed drybulk market weakness as a result of the war in Ukraine, the Israel-Hamas war, the Houthi conflict in the Red Sea, other conflicts in the Middle East or Venezuela, and related economic conditions may result in our suspension, reduction, or termination of future quarterly dividends.

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U.S. Federal Income Tax Treatment of Dividends

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U.S. Holders

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For purposes of this discussion, the term “U.S. Holder” means a beneficial owner of our common stock that is, for U.S. federal income tax purposes, (i) an individual U.S. citizen or resident, (ii) a corporation that is created or organized in or under the laws of the United States, any state thereof or the District of Columbia, or any other U.S. entity taxable as a corporation, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust if either (x) a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (y) the trust has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. If a partnership, or an entity treated for U.S. federal income tax purposes as a partnership, such as a limited liability company, holds common stock, the tax treatment of a partner will generally depend on the status of the partner and upon the activities of the partnership. If you are a partner in such a partnership holding our common stock, you are encouraged to consult your tax advisor. A beneficial owner of our common stock (other than a partnership) that is not a U.S. Holder is referred to below as a “Non-U.S. Holder.”

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Subject to the discussion of passive foreign investment company (PFIC) status on pages 36 - 37 of this report, any distributions made by us to a U.S. Holder with respect to our common shares generally will constitute dividends to the extent of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of those earnings and profits will be treated first as a nontaxable return of capital to the extent of the U.S. Holder’s tax basis in our common shares (determined on a share-by-share basis), and thereafter as capital gain. U.S. Holders that own at least 10% of our shares may be able to claim a dividends-received-deduction and should consult their tax advisors.

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Dividends paid on our common shares to a U.S. Holder who is an individual, trust or estate, or a “non-corporate U.S. Holder,” will generally be treated as “qualified dividend income” that is taxable to such non-corporate U.S. Holder at preferential tax rates, provided that (1) our common shares are readily tradable on an established securities market in the United States (such as the NYSE, on which our common shares are traded); (2) we are not a PFIC for the taxable year during which the dividend is paid or the immediately preceding taxable year (which we do not believe we have been, are, or will be); (3) the non-corporate U.S. Holder’s holding period of our common shares includes more than 60 days in the 121-day period beginning 60 days before the date on which our common shares becomes ex-dividend; and (4) the non-corporate U.S. Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property. A non-corporate U.S. Holder will be able to take qualified dividend income into account in determining its deductible investment interest (which is generally limited to its net investment income) only if it elects to do so; in such case, the dividend will be taxed at ordinary income rates. Non-corporate U.S. Holders also may be required to pay a 3.8% surtax on all or part of such holder’s “net investment income,” which includes, among other items, dividends on our shares, subject to certain limitations and exceptions. Investors are encouraged to consult their own tax advisors regarding the effect, if any, of this surtax on their ownership of our shares.

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Amounts taxable as dividends generally will be treated as passive income from sources outside the U.S. However, if (a) we are 50% or more owned, by vote or value, by U.S. Holders and (b) at least 10% of our earnings and profits are attributable to sources within the U.S., then for foreign tax credit purposes, a portion of our dividends would be treated as derived from sources within the U.S. With respect to any dividend paid for any taxable year, the U.S. source ratio of our dividends for foreign tax credit purposes would be equal to the portion of our earnings and profits from sources within the U.S. for such taxable year divided by the total amount of our earnings and profits for such taxable year. The rules related to U.S. foreign tax credits are complex and U.S. Holders should consult their tax advisors to determine whether and to what extent a credit would be available.

Special rules may apply to any “extraordinary dividend” — generally, a dividend in an amount which is equal to or in excess of 10% of a shareholder’s adjusted basis (or fair market value in certain circumstances) in a share of our common shares — paid by us. If we pay an “extraordinary dividend” on our common shares that is treated as “qualified dividend income”, then any loss derived by a non-corporate U.S. Holder from the sale or exchange of such common shares will be treated as long-term capital loss to the extent of such dividend.

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Tax Consequences if We Are a Passive Foreign Investment Company

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As discussed in “U.S. tax authorities could treat us as a ‘passive foreign investment company,’ which could have adverse U.S. federal income tax consequences to U.S. shareholders” in Item 1.A Risk Factors in this report, a foreign corporation generally will be treated as a PFIC for U.S. federal income tax purposes if, after applying certain look through rules, either (1) at least 75% of its gross income for any taxable year consists of “passive income” or (2) at least 50% of the average value or adjusted bases of its assets (determined on a quarterly basis) produce or are held for the production of passive income, i.e., “passive assets.”  As discussed above, we do not believe that our past or existing operations would cause, or would have caused, us to be deemed a PFIC with respect to any taxable year.  No assurance can be given that the IRS or a court of law will accept our position, and there is a risk that the IRS or a court of law could determine that we are a PFIC.  Moreover, there can be no assurance that we will not become a PFIC in any future taxable year because the PFIC test is an annual test, there are uncertainties in the application of the PFIC rules, and although we intend to manage our business so as to avoid PFIC status to the extent consistent with our other business goals, there could be changes in the nature and extent of our operations in future taxable years.

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If we were to be treated as a PFIC for any taxable year in which a U.S. Holder owns shares of our common stock (and regardless of whether we remain a PFIC for subsequent taxable years), the tax consequences to such a U.S. holder upon the receipt of distributions in respect of such shares that are treated as “excess distributions” would differ from those described above. In general, an excess distribution is the amount of distributions received during a taxable year that exceed 125% of the average amount of distributions received by a U.S. Holder in respect of the common shares during the preceding three taxable years, or if shorter, during the U.S. Holder’s holding period prior to the taxable year of the distribution. The distributions that are excess distributions would be allocated ratably over the U.S. Holder’s holding period for the common shares. The amount allocated to the current taxable year and any taxable year prior to the first taxable year in which we were a PFIC would be taxed as ordinary income. The amount allocated to each of the other taxable years would be subject to tax at the highest marginal rate in effect for the U.S. Holder for that taxable year, and an interest charge for the deemed deferral benefit would be imposed on the resulting tax allocated to such other taxable years. The tax liability with respect to the amount allocated to taxable years prior to the year of the distribution cannot be offset by net operating losses. As an alternative to such tax treatment, a U.S. Holder may make a “qualified electing fund” election or “mark to market” election, to the extent available, in which event different rules would apply.  The U.S. federal income tax consequences to a U.S. Holder if we were to be classified as a PFIC are complex. A U.S. Holder should consult with his or her own advisor with regard to those consequences, as well as with regard to whether he or she is eligible to and should make either of the elections described above.

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Non-U.S. Holders

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Non-U.S. Holders generally will not be subject to U.S. federal income tax on dividends received from us on our common shares unless the income is effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States (“effectively connected income”) (and, if an applicable income tax treaty so provides, the dividends are attributable to a permanent establishment maintained by the Non-U.S. Holder in the U.S.).  Effectively connected income (or, if an income tax treaty applies, income attributable to a permanent establishment maintained in the U.S.) generally will be subject to regular U.S. federal income tax in the same manner discussed above relating to taxation of U.S. Holders. In addition, earnings and profits of a corporate Non-U.S. Holder that are attributable to such income, as determined after allowance for certain adjustments, may be subject to an additional branch profits tax at a rate of 30%, or at a lower rate as may be specified by an applicable income tax treaty. Non-U.S. Holders may be subject to tax in jurisdictions other than the United States on dividends received from us on our common shares.

Dividends paid on our common shares to a non-corporate U.S. Holder may be subject to U.S. federal backup withholding tax if the non-corporate U.S. Holder:

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A holder that is not a U.S. Holder or a partnership may be subject to U.S. federal backup withholding with respect to such dividends unless the holder certifies that it is a non-U.S. person, under penalties of perjury, or otherwise establishes an exemption therefrom.  Backup withholding tax is not an additional tax. Holders generally may obtain a refund of any amounts withheld under backup withholding rules that exceed their income tax liability by timely filing a refund claim with the IRS.

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You are encouraged to consult your own tax advisor concerning the overall tax consequences arising in your own particular situation under U.S. federal, state, local, or foreign law from the payment of dividends on our common stock.

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Cash Flows

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Net cash provided by operating activities for the years ended December 31, 2025 and 2024 was $31.9 million and $126.8 million, respectively.  This decrease in cash provided by operating activities was primarily due to lower rates earned by our major and minor bulk vessels, as well as changes in working capital. Additionally, there was an increase in drydocking costs incurred during 2025 as compared to 2024.

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Net cash (used in) provided by investing activities during the years ended December 31, 2025 and 2024 was ($91.6) million and $47.8 million, respectively. This fluctuation was primarily a result of $103.4 million of net proceeds from the sale of the Genco Commodus, the Genco Claudius, the Genco Maximus, the Genco Warrior and the Genco Hadrian during 2024. Additionally, there was a $35.6 million increase in the purchase of vessel assets due to the purchase of the Genco Courageous that was delivered on October 15, 2025, as well as deposits made for two Newcastlemax vessels that we agreed to purchase on November 15, 2025, as compared to the purchase of the Genco Intrepid that was delivered on October 23, 2024.

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Net cash provided by (used in) financing activities during the years ended December 31, 2025 and 2024 was $71.2 million and ($177.5) million, respectively. On July 10, 2025, the $500 Million Revolver was refinanced with the $600 Million Revolver. As part of the debt modification, $15.3 million was settled amongst the lenders of the $500 Million Revolver and $600 Million Revolver. The fluctuation is primarily due to a $130.0 million decrease in debt repayments made under our $500 Million Revolver during 2025 as compared to 2024. Additionally, during 2025, the Company made drawdowns of $100.0 million and $10.0 million on the $600 Million Revolver and the $500 Million Revolver, respectively, as compared to $20.0 million on the $500 Million Revolver during 2024. Additionally, there was a $34.7 million decrease in the payment of dividends during 2025 as compared to 2024. These decreases were partially offset by a $5.9 million increase in the payment of deferred financing costs during 2025 related to the $600 Million Revolver.

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Credit Facilities

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On July 10, 2025, the Company entered into a fifth amendment to amend, extend and upsize its existing $500 Million Revolver. The amended structure consists of a $600 million revolving credit facility (the “$600 Million Revolver”) which can be utilized to support growth of its asset base, as well as general corporate purposes. The $100 million debt outstanding under the $500 Million Revolver was transferred to the $600 Million Revolver on July 10, 2025.

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Interest Rate Swap Agreements, Forward Freight Agreements and Currency Swap Agreements

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During the first quarter of 2024, our last remaining interest rate cap agreement that we used to manage interest costs and the risk associated with changing interest rates expired. Such agreements cap the borrowing rate on our variable debt to provide a hedge against the risk of rising rates. At December 31, 2025, the total notional principal amount of the interest rate cap agreements was $0.

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Refer to the table in Note 9 — Derivative instruments of our Consolidated Financial Statements for further information.

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As part of our business strategy, we may enter into interest rate swap agreements to manage interest costs and the risk associated with changing interest rates. In determining the fair value of interest rate derivatives, we consider the

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creditworthiness of both the counterparty and ourselves, which has not changed significantly and has no effect on the valuation. Valuations prior to any adjustments for credit risk would be validated by comparison with counterparty valuations. Amounts would not and should not be identical due to the different modeling assumptions. Any material differences would be investigated.

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As part of our business strategy, we may also enter into arrangements commonly known as forward freight agreements, or FFAs, to hedge and manage our exposure to the charter market risks relating to the deployment of our vessels.  Generally, these arrangements would bind us and each counterparty in the arrangement to buy or sell a specified tonnage freighting commitment “forward” at an agreed time and price and for a particular route.  Upon settlement, if the contracted charter rate is less than the average of the rates (as reported by an identified index) for the specified route and period, the seller of the FFA is required to pay the buyer an amount equal to the difference between the contracted rate and the settlement rate multiplied by the number of days in the specific period.  Conversely, if the contracted rate is greater than the settlement rate, the buyer is required to pay the seller the settlement sum.  Although FFAs can be entered into for a variety of purposes, including for hedging, as an option, for trading or for arbitrage, if we decided to enter into FFAs, our objective would be to hedge and manage market risks as part of our commercial management. It is not currently our intention to enter into FFAs to generate a stream of income independent of the revenues we derive from the operation of our fleet of vessels.  If we determine to enter into FFAs, we may reduce our exposure to any declines in our results from operations due to weak market conditions or downturns, but may also limit our ability to benefit economically during periods of strong demand in the market.  We have not entered into any FFAs as of December 31, 2025 and 2024.

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Interest Rates

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The effective interest rate for the years ended December 31, 2025 and 2024 include interest rates associated with the interest expense for our various credit facilities, including the following: the $600 Million Revolver and the $500 Million Revolver (until the $500 Million Revolver was amended to become the $600 Million Revolver on July 10, 2025).

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The effective interest rate for the aforementioned credit facilities, including the cost associated with unused commitment fees, if applicable, was 8.27% and 9.08% during 2025 and 2024, respectively.  The effective interest rate does not include the effect of any interest rate cap agreements. The interest rate on the debt, excluding unused commitment fees and any interest rate cap agreements, ranged from 5.53% to 6.24% and 6.24% to 7.24% during 2025 and 2024, respectively.

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Capital Expenditures

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We make capital expenditures from time to time in connection with our vessel acquisitions. After the expected delivery of two Newcastlemax vessels we have agreed to acquire, our fleet will consist of 45 drybulk vessels, including two Newcastlemax,17 Capesize vessels, 15 Ultramax and 11 Supramax vessels.

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As previously announced, we have implemented a fuel efficiency upgrade program for certain of our vessels in an effort to generate fuel savings and increase the future earnings potential for these vessels. The upgrades have been successfully installed during previous drydockings.

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The future estimated expenditures are included in the table below.

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In addition to acquisitions that we may undertake in future periods, we will incur additional expenditures due to special surveys and drydockings for our fleet.

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We estimate our drydocking costs, including capitalized costs incurred during drydocking related to vessel assets and vessel equipment, ballast water treatment systems (“BWTS”) costs, fuel efficiency upgrades and scheduled off-hire days for our fleet through 2027 to be:

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The costs reflected are estimates based on drydocking our vessels in China.  Actual costs will vary based on various factors, including where the drydockings are actually performed.  We expect to fund these costs with cash on hand. These costs do not include drydock expense items that are reflected in vessel operating expenses.

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Actual length of drydocking will vary based on the condition of the vessel, yard schedules and other factors. Higher repairs and maintenance expenses during drydocking for vessels which are over 15 years old typically result in a higher number of off-hire days depending on the condition of the vessel.

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During 2025 and 2024, we incurred a total of $55.8 million and $20.6 million of drydocking costs, respectively, excluding costs incurred during drydocking that were capitalized to vessel assets or vessel equipment.

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We completed the drydocking of 17 of our vessels during 2025. Additionally, the drydocking for two of our vessels began during the fourth quarter of 2025 and completed during the first quarter of 2026. We estimate that 11 of our vessels will be drydocked during 2026 and 14 of our vessels will by drydocked during 2027.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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The discussion and analysis of our financial condition and results of operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).  The preparation of those financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements.  Actual results may differ from these estimates under different assumptions and conditions.

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Critical accounting policies are those that reflect significant judgments of uncertainties and potentially result in materially different results under different assumptions and conditions.  We have described below what we believe are our most critical accounting policies, because they generally involve a comparatively higher degree of judgment in their application.  For an additional description of our significant accounting policies, see Note 2 to our Consolidated Financial Statements included in this report.

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Vessels and Depreciation

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We record the value of our vessels at their cost (which includes acquisition costs directly attributable to the vessel and expenditures made to prepare the vessel for its initial voyage) less accumulated depreciation.  We depreciate our drybulk vessels on a straight-line basis over their estimated useful lives, estimated to be 25 years from the date of initial delivery from the shipyard.  Depreciation is based on cost less the estimated residual scrap value of $400/lwt based on the 15-year average scrap value of steel.  An increase in the residual value of the vessels will decrease the annual depreciation charge over the remaining useful life of the vessels. Similarly, an increase in the useful life of a drybulk vessel would also decrease the annual depreciation charge.  Comparatively, a decrease in the useful life of a drybulk vessel or in its residual value would have the effect of increasing the annual depreciation charge. However,

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when regulations place limitations over the ability of a vessel to trade on a worldwide basis, we will adjust the vessel’s useful life to end at the date such regulations preclude such vessel’s further commercial use.

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The carrying value of each of our vessels does not represent the fair market value of such vessel or the amount we could obtain if we were to sell any of our vessels, which could be more or less.  Under U.S. GAAP, we would not record a loss if the fair market value of a vessel (excluding its charter) is below our carrying value unless and until we determine to sell that vessel or the vessel is impaired as discussed below under the heading “Impairment of long-lived assets.”

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During the year ended December 31, 2025, we recorded an impairment loss of $0.7 million for the loss on disposal of replaced equipment on certain vessels. During the year ended December 31, 2024, we recorded $6.6 million of impairment expense, which includes $1.0 million related to the loss on disposal of replaced equipment on certain vessels.

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During the year ended December 31, 2024, we recorded an impairment loss for the Genco Hadrian, one of our Capesize vessels. The sale of the Genco Hadrian was completed on October 4, 2024. Refer to Note 2 — Summary of Significant Accounting Policies in our Consolidated Financial Statements for further information regarding the impairment recorded during the years ended December 31, 2025 and 2024.

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Under our credit facility, we regularly submit to the lenders’ valuations of our vessels on an individual charter free basis in order to evidence our compliance with the collateral maintenance covenants under our credit facility.  Such a valuation is not necessarily the same as the amount any vessel may bring upon sale, which may be more or less, and should not be relied upon as such.  We were in compliance with the collateral maintenance covenant under our $600 Million Revolver as of December 31, 2025. Refer to Note 8 — Debt in our Consolidated Financial Statements for additional information. We obtained valuations for all of the vessels in our fleet pursuant to the terms of the $600 Million Revolver.

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We compare the carrying value of our vessels with the vessel valuations obtained for covenant compliance purposes to determine whether an indicator of impairment is present. As of December 31, 2025, two of our Capesize vessels had carrying values that exceeded their vessel valuations, which is an indicator of impairment. As of December 31, 2024, eight of our Capesize vessels and four of our Ultramax vessels had carrying values that exceeded their vessel valuations, which is an indicator of impairment. However, based on the analysis of the anticipated undiscounted future net cash flows to be derived from each of these vessels as of December 31, 2025 and 2024, there were no impairment losses recorded for these vessels during 2025 and 2024.

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The amount by which the carrying value at December 31, 2025 of two of our Capesize vessels exceeded the valuation of such vessels for covenant compliance purposes ranged, on an individual vessel basis, from $1.5 million to $2.0 million per vessel, and $3.5 million on an aggregate fleet basis. Comparatively, the amount by which the carrying value at December 31, 2024 of eight of our Capesize vessels and four of our Ultramax vessels exceeded the valuation of such vessels for covenant compliance purposes ranged, on an individual vessel basis, from $0.04 million to $6.9 million per vessel, and $38.7 million on an aggregate fleet basis. The average amount by which the carrying value of these vessels exceeded the valuation of such vessels for covenant compliance purposes was $1.8 million and $3.2 million as of December 31, 2025 and 2024, respectively. However, neither such valuation nor the carrying value in the table below reflects the value of long-term time charters, if any, related to some of our vessels.

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In the chart below, we list each of our vessels, the year it was built, the year we acquired it, and its carrying value as of December 31, 2025 and 2024. Vessels have been grouped according to their collateralized status as of December 31, 2025 and does not include any vessels held for sale.

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If we were to sell a vessel or hold a vessel for sale, and the carrying value of the vessel were to exceed its fair market value, net of costs to sell, we would record a loss in the amount of the difference. Refer to Note 2 — Summary of Significant Accounting Policies and Note 5 — Vessel Acquisitions and Dispositions in our Consolidated Financial Statements for information regarding the sale of vessel assets and the classification of vessel assets held for sale as of December 31, 2025 and 2024.

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Deferred drydocking costs

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Our vessels are required to be drydocked approximately every 30 to 60 months for major repairs and maintenance that cannot be performed while the vessels are operating.  We defer the costs associated with drydockings as they occur and amortize these costs on a straight-line basis over the period between drydockings.  Deferred drydocking costs include actual costs incurred at the drydock yard; cost of travel, lodging and subsistence of our personnel sent to the drydocking site to supervise; and the cost of hiring a third party to oversee the drydocking.  We believe that these criteria are consistent with U.S. GAAP guidelines and industry practice and that our policy of deferral reflects the economics and market values of the vessels.  Costs that are not related to drydocking, including routine maintenance and repairs, are expensed as incurred.  If the vessel is drydocked earlier than originally anticipated, any remaining deferred drydock costs that have not been amortized are expensed at the end of the drydock.

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Impairment of long-lived assets

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We follow the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) subtopic 360-10, “Property, Plant and Equipment” (“ASC 360-10”) which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts.  If indicators of impairment are present, which may include events or changes in circumstances affecting the legal environment, the business climate, market value, extent or manner of use,  and physical condition of the vessel assets, we perform an analysis of the anticipated undiscounted future net cash flows to be derived from the related long-lived assets.

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When indicators of impairment are present and our estimate of future undiscounted cash flows for any vessel is lower than the vessel’s carrying value, the carrying value is written down, by recording a charge to operations, to the vessel’s fair market value if the fair market value is lower than the vessel’s carrying value.

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We determined that as of December 31, 2025, the future income streams expected to be earned by such vessels over their remaining operating lives and upon disposal on an undiscounted basis would be sufficient to recover their carrying values.  As of December 31, 2025, two of our Capesize vessels had indicators of impairment and the estimated future undiscounted cash flows for those Capesize vessels exceeded each of those vessels’ carrying values by a margin of approximately 34% of the carrying value. Our vessels remain fully utilized and have a relatively long average remaining useful life of approximately 12 years in which to recover sufficient cash flows on an undiscounted basis to recover their carrying values as of December 31, 2025.  Management will continue to monitor developments in charter rates in the markets in which it participates with respect to the expectation of future rates over an extended period of time that are utilized in the analyses.

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In developing estimates of future undiscounted cash flows, we make assumptions and estimates about the vessels’ future performance, with the significant assumptions being related to charter rates, fleet utilization, vessels’ operating expenses, vessels’ capital expenditures and drydocking requirements, vessels’ residual value and the estimated remaining useful life of each vessel. The assumptions used to develop estimates of future undiscounted cash flows are based on historical trends.  Specifically, we utilize the rates currently in effect for the duration of their current time charters or spot market voyage charters, without assuming additional profit sharing.  For periods of time where our vessels are not fixed on time charters or spot market voyage charters, we utilize an estimated daily time charter equivalent for our vessels’ unfixed days based on the most recent ten-year historical one-year time charter average.  In addition, for our older vessels we evaluate the current market rate environment compared to the ten-year historical one-year time charter average and, if deemed necessary, adjust the rate to better reflect the expected future cash flows. It is reasonably possible that the estimate of undiscounted cash flows may change in the future due to changes in current rates which could adversely affect the average rates being utilized and could result in impairment of certain of our older vessels. It is also reasonably possible that vessels were not subject to impairment testing during 2025 because there was no indicator of impairment could be subject to such testing in the future.

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Of the inputs that the Company uses for its impairment analysis, future charter rates are the most significant and most volatile.  Based on the sensitivity analysis performed by the Company, the Company would record impairment on its vessels for time charter declines as follows:

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For our impairment analysis, we utilize the ten-year historical one-year time charter average, as well as considering the current rate environment, to project future charter rates, which we believe appropriately takes into account the volatility and highs and lows of the shipping cycle.  We note that the ten-year historical one-year time charter average includes historically low rates from 2016 that adversely affect the total average.

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Our time charter equivalent (TCE) rates for our fiscal years ended December 31, 2025 and 2024, respectively, were above or (below) the ten-year historical one-year time charter average as of such dates as follows:

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The projected net operating cash flows are determined by considering the future voyage revenues from existing time charters for the fixed fleet days and an estimated daily time charter equivalent for the unfixed days over the estimated remaining life of the vessel, assumed to be 25 years from the delivery of the vessel from the shipyard, reduced by brokerage and address commissions, expected outflows for vessels’ maintenance and vessel operating expenses (including planned drydocking and special survey expenditures) and required capital expenditures adjusted annually for inflation, assuming fleet utilization of 98%. The salvage value used in the impairment test is estimated to be $400 per light weight ton, consistent with our vessels’ depreciation policy discussed above.

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Although we believe that the assumptions used to evaluate potential impairment are reasonable and appropriate, such assumptions are highly subjective. There can be no assurance as to how long charter rates and vessel values will remain at their current levels or whether they will change by any significant degree. Charter rates may remain at depressed levels for a prolonged period of time, which could adversely affect our revenue and profitability, and future assessments of vessel impairment.

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