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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended
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Sep. 30, 2022
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of presentation | Basis of presentation ​ The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and the rules and regulations of the SEC that apply to interim financial statements, including the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the disclosures and footnotes normally included in complete consolidated financial statements prepared in conformity with U.S. GAAP. They should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2021 Annual Report on Form 10-K, filed with the SEC on February 24, 2022 (the “2021 10-K”). The accompanying Condensed Consolidated Financial Statements include the accounts of GS&T and its direct and indirect wholly-owned subsidiaries and GSSM. All intercompany accounts and transactions have been eliminated in consolidation. ​ In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and operating results have been included in the statements. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the operating results to be expected for the year ending December 31, 2022. ​
Use of estimates | Use of estimates ​ The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include vessel valuations, the valuation of amounts due from charterers, residual value of vessels, useful life of vessels, the fair value of time charters acquired, and the fair value of derivative instruments, if any. Actual results could differ from those estimates.
Cash, cash equivalents and restricted cash | Cash, cash equivalents and restricted cash ​ The Company considers highly liquid investments, such as money market funds and certificates of deposit with an original maturity of three months or less at the time of purchase to be cash equivalents. Current and non-current restricted cash includes cash that is restricted pursuant to our credit facilities. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same amounts shown in the Condensed Consolidated Statements of Cash Flows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, | ​ | December 31, | ​
​ |  | 2022 |  | 2021 |
Cash and cash equivalents |  | $ | 65,532 |  | $ | 114,573 | ​
Restricted cash - current | ​ | ​ | 5,643 | ​ | ​ | 5,643 | ​
Restricted cash - noncurrent | ​ |  | 315 | ​ |  | 315 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash, cash equivalents and restricted cash |  | $ | 71,490 |  | $ | 120,531 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​
Bunker swaps and forward fuel purchase agreements | Bunker swap and forward fuel purchase agreements ​ From time to time, the Company may enter into fuel hedge agreements with the objective of reducing the risk of the effect of changing fuel prices. The Company has entered into bunker swap agreements and forward fuel purchase agreements. The Company’s bunker swap agreements and forward fuel purchase agreements do not qualify for hedge accounting treatment; therefore, any unrealized or realized gains and losses are recorded in the Condensed Consolidated Statements of Operations. Derivatives are Level 2 instruments in the fair value hierarchy. ​ During the three months ended September 30, 2022 and 2021, the Company recorded $326 and $84 of realized gains in other (expense) income, respectively. During the three months ended September 30, 2022 and 2021, the Company recorded ($1,871) and $30 of unrealized (losses) gains in other (expense) income, respectively. During the nine months ended September 30, 2022 and 2021, the Company recorded $1,622 and $299 of realized gains in other (expense) income, respectively. During the nine months ended September 30, 2022 and 2021, the Company recorded ($112) and $81 of unrealized (losses) gains in other (expense) income, respectively. The total fair value of the bunker swap agreements and forward fuel purchase agreements in an asset position as of September 30, 2022 and December 31, 2021 is $316 and $113 and are recorded in prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets. The total fair value of the bunker swap agreements and forward fuel purchase agreements in a liability position as of September 30, 2022 and December 31, 2021 is $334 and $20 and are recorded in accounts payable and accrued expenses in the Condensed Consolidated Balance Sheets.
Vessels, net | Vessels, net ​ Vessels, net is stated at cost less accumulated depreciation. Included in vessel costs are acquisition costs directly attributable to the acquisition of a vessel and expenditures made to prepare the vessel for its initial voyage. The Company also capitalizes interest costs for a vessel under construction as a cost that is directly attributable to the acquisition of a vessel. Vessels are depreciated on a straight-line basis over their estimated useful lives, determined to be 25 years from the date of initial delivery from the shipyard. Depreciation for vessels during the three months ended September 30, 2022 and 2021 was $12,691 and $12,491, respectively. Depreciation for vessels during the nine months ended September 30, 2022 and 2021 was $37,286 and $36,305, respectively. ​ Depreciation expense is calculated based on cost less the estimated residual scrap value. The costs of significant replacements, renewals and betterments are capitalized and depreciated over the shorter of the vessel’s remaining estimated useful life or the estimated life of the renewal or betterment. Undepreciated cost of any asset component being replaced that was acquired after the initial vessel purchase is written off as a component of vessel operating expense. Expenditures for routine maintenance and repairs are expensed as incurred. Scrap value is estimated by the Company by taking the cost of steel times the weight of the ship noted in lightweight tons (lwt). Effective January 1, 2022, the Company increased the estimated scrap value of the vessels from $310 per lwt to $400 per lwt prospectively based on the average of the 15-year average scrap value of steel. ​ During the three months ended September 30, 2022, the increase in the estimated scrap value resulted in a decrease in depreciation expense of $1,171. The decrease in depreciation expense resulted in a $0.03 increase to the basic and diluted net earnings per share during the three months ended September 30, 2022. The basic and diluted net earnings per share for the three months ended September 30, 2022 would have been $0.93 per share and $0.92 per share, respectively, if there were no change in the estimated scrap value. ​ During the nine months ended September 30, 2022, the increase in the estimated scrap value resulted in a decrease in depreciation expense of $3,476. The decrease in depreciation expense resulted in a $0.09 and $0.08 increase to the basic and diluted net earnings per share, respectively, during the nine months ended September 30, 2022. The basic and diluted net earnings per share for the nine months ended September 30, 2022 would have been $2.98 per share and $2.95 per share, respectively, if there were no change in the estimated scrap value.
Voyage expense recognition | Voyage expense recognition ​ In time charters and spot market-related time charters, operating costs including crews, maintenance and insurance 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. As such, there are significantly higher voyage expenses for spot market voyage charters as compared to time charters and spot market-related time charters. There are certain other non-specified voyage expenses, such as commissions, which are typically borne by the Company. At the inception of a time charter, the Company records 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. Additionally, the Company records 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. These differences in bunkers, including any lower of cost and net realizable value adjustments, resulted in a net (loss) gain of ($4) and $176 during the three months ended September 30, 2022 and 2021, respectively, and $4,421 and $1,113 during the nine months ended September 30, 2022 and 2021, respectively. Additionally, voyage expenses include the cost of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement.
Technical management fees | Technical management fees ​ Technical management fees include the direct costs, including operating costs, incurred by GSSM for the technical management of the vessels under its management. Additionally, prior to the transfer of our vessels to GSSM for technical management, we incurred management fees payable to third party technical management companies for the day-to-day management of our vessels, including performing routine maintenance, attending to vessel operation and arranging for crews and supplies. ​
Recent accounting pronouncements | Recent accounting pronouncements ​ In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”)” which provides temporary optional expedients and exceptions to the guidance in U.S. GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848) – Scope (“ASU 2021-01”),” which permits entities to apply optional expedients in Topic 848 to derivative instruments modified because of discounting transition resulting from reference rate reform. ASU 2020-04 became effective upon issuance and may be applied prospectively to contract modification made on or before December 31, 2022. ASU 2021-01 became effective upon issuance and may be applied on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 or prospectively for contract modification made on or before December 31, 2022. The Company has evaluated the impact of the adoption of ASU 2020-04 and ASU 2021-01 and has determined that there is no effect on its Condensed Consolidated Financial Statements and related disclosures.

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