Q4 2021 Pyxis Tankers Inc Earnings Call

Events have set off a shock to the global energy market, and resetting personal and economic priorities as well as global relationships, especially here in Europe .

The ability to effectively manage through these uncertain times is critical.

So stay safe and strong as we all strive to overcome these challenges in the pursuit of a more normal way of life.

Before starting please let me draw your attention to some important legal notifications on slide two by the way recommend you read including our presentation today, which will include forward looking statements. Thank you.

Turning to slide three.

Our most recent quarterly results primarily reflected the impact of one additional EMR in the context of a poor chartering environment.

In the three months period ended December 31st 'twenty to 'twenty, one we generated time charter equivalent revenues of $3 9 million up 9% from the same period in 2020, primarily due to the addition of the Pyxis catheter area, which we acquired last summer.

So fleet wide utilization was better but the medium range tanker charter rates will dramatically lower we.

We had a net loss of $5 6 million in Q4, 'twenty to 'twenty, one which was significantly higher than the same period in the prior year due to higher costs and the $2 4 million noncash loss on sale of the two small tankers, which were non core assets.

Our loss of 14 cents per common share reflected an increased share count of $17 1 million for the most recent period.

Adjusted EBITDA for the period ended December 31st 2021 was a negative 700000.

Over the course of the fourth quarter of 2021, the product tanker chartering environment. Initially experienced an improvement which was subsequently be made by the impact of omicron.

Temporarily reduced mobility and demand for transportation fuels.

Our operating results for Q4 2021, primarily reflected poor results for our models that we're trading in the spot market and lower time charter rates.

The average daily time charter equivalent for our Mas was approximately $8700 dramatically lower than in the same period last year.

However, as Omnicom has subsided in the western hemisphere higher spot rates have occurred as the year progressed, especially very recently with the outbreak of Russia and Ukrainian hostilities for example, as of March 16th 83% of our available days in Q1 2022.

Our remarks were booked at the time charter equivalent of over $14800 per day.

While we are encouraged by improving economic activity some greater mobility in many parts of the world, especially in the United States. We are concerned about potential slowdowns in Europe and China.

Broadly global inventories of mainly refined petroleum products.

No five year averages with prices.

At or near record levels.

Estimates for GDP growth are likely to be revised downward this year.

Given the current environment demand for product tankers has become volatile and unpredictable. However, the supply outlook for product tankers continues to look very promising based on very low new vessel ordering and the record levels of scrapping.

So those actions over the last two years, we have developed a better platform strategically operationally and financially.

During this period.

<unk> market was very challenging, but we successfully raised over $36 million in equity capital source, almost $75 million of lower cost long lived bank debt and renew the fleet by selling three older vessels and acquiring two eco efficient that Mars as well as completing for spares.

Surveys.

With a modern fleet of five months, we are now better positioned for the long term, which should hopefully include a sustainable recovery in charter rates.

Let us now turn to slide four for information on our existing fleet unemployment activities. As you can see we continue to use our mixed chartering strategy of short time and spot charters, which should position us for better chartering markets ahead.

We continue to focus on diversification by charter counter party and duration.

Next.

Please turn to slide six.

Update on the product tanker market. In addition to my prior comments about the market. It is abundantly clear that higher vaccination rates, especially in the developed countries, having that the economic recovery. However, certain countries such as China are experiencing prolonged battle with Covid.

Many of US are feeling the challenges from higher inflation and supply chain bottlenecks. Moreover, we are now experiencing the consequences from hostilities in the Ukraine.

Inventories of oil and refined products have Andre accentuate that those challenges and increased uncertainty.

These conditions have recently.

The real improvement in spot charter rates in the product tanker sector and increasing ton mile activity, but at this point and limited availability of cargoes may impact the period of higher charter rates and increased volatility.

Please turn to slide seven.

Increasing demand and production combined with higher refinery throughput.

Ziv signs the outlook for 2022 global growth is likely to be revised downwards due to the situation we missed in Europe as well as higher inflation and continued supply chain disruptions. Consequently demand growth for refined products may be lower which could soften charter activity.

But the restocking of global inventories as additional supplies become available and combined with fundamental demand should support the chartering market.

They are all back of previous Opex, plus cuts could add $6 2 million incremental barrels of oil in 2022, and more refined products recently and leading research firm estimated growth in seaborne trade of refined products at 6% this year at almost $1 1 billion.

Tons.

Moving to slide eight.

However longer term, we expect demand for the product tanker sector to be supported by a refinery additions led by the Middle East and Asia drove estimated that over $4 9 million barrels per day of new refining capacity.

Refinery capacity scheduled to come online between 2022, and 2026 virtually all of which is outside the OECD.

Shutdowns, mostly in the OECD should result in greater importing of refined products into these mature large markets and ton mile expansion.

Of course unforeseen events like the recent price spikes for products and services in various locations so could create temporary opportunities in the spot market.

Bar chart on slide nine.

The planned refinery additions by region through 2026.

Let's move on to slide 10.

The product tanker supply picture is much clearer as the outlook for <unk> continues to look very promising them or to order book is drifting lower and recently Drury estimated.

At seven 4% of a worldwide fleet of 1615 vessels.

Our gearing has been subdued.

<unk> 35, a month, whereas the last year and only two in the first two months of 2022.

61, Newmont are scheduled for delivery this year and 46 scheduled for 2023.

Moreover, due to the recent surge in ordering of new container ships in dry bulk vessels, mainly engine yards don't have available consult construction slots with deliveries.

<unk> 2024.

Unknown as decision, making process for tanking, you're ordering is further complicated by ongoing developments in chip and engine designs stricter environmental regulations are rapidly escalating shipbuilding cost and involve involving and still tier selection and availability of lower carbon fuels and will linger.

Debate sounding scrubbers.

Demolitions are continuing at a brisk pace are starting to see a modest west crop last year and already seven in the first two months of 2022, the rapid increase as a function of peak.

Metal prices and financial headwinds facing the operation overall, the less efficient vessels due to new environmental regulations, greater maintenance higher banking fuel consumption and lower charter income.

Given these considerations and the fact that seven 2% of the global fleet is 20 years of age or older.

Shown in slide 11, we expect this trend to continue Consequently, we believe net fleet growth should be around 2% this year and next.

Turning to slide 12.

Despite challenging chartering conditions second hand prices, especially for more than equal vessels have picked up newbuild prices on approximately $41 million with delivery in two years.

Stronger asset values are typically a harbinger for greater earnings power.

At this point I would like to turn the call over to Henry Williams, Our Chief Financial Officer, who will discuss our financial results in greater detail.

Thanks, Annie, let's just focus on our unaudited results for the three months ended December 31, 2021 on slide 14, our time charter equivalent.

Revenues for Q4 of 2021, which we define as revenues net minus voyage related costs and commissions were $3 9 million an increase of 9% from the same period in 2020, primarily due to 139 more operating days as we added one MLR.

An experienced greater fleet utilization. Nevertheless, we suffered low charter rates, especially for <unk> that were employed in the spot market.

In the fourth quarter of 'twenty, one our fleet wide daily TCE was approximately $8000 was significantly lower than the comparable 2020 period.

Moving to slide 15, we incurred a net loss to common shareholders of $5 7 million for the three months ended December 31, 2021, or 14, <unk> basic and diluted loss per share based on $38 9 million weighted average shares outstanding compared.

<unk> to a lower net loss of $2 7 million or 12.

Basic and diluted loss per share based upon $17 1 million fewer shares.

Besides lower TCE revenues. The most recent quarterly results were negatively impacted by increases in vessel operating expenses and other costs, including the effects of Covid.

On Crewing expenses, as well as $2 $4 million noncash loss on the sale of the small tankers adjusted EBITDA declined to a negative $700000 in Q4 of 'twenty one.

Now turn to slide 16, which reviews, our recent fleet data by vessel type.

Simply the key takeaway for our <unk> in Q4 of 'twenty, one was tough chartering conditions in the spot market.

Please turn to slide 17 to review our capitalization at December 31, 2021 at quarter close our consolidated leverage ratio of net funded debt stood at approximately 55% of total capitalization.

During the year, we completed a number of debt and equity financings.

Our weighted average interest rate was four 2% for the most recent quarter and the next bank loan maturity is July of 2025.

Our interest rate caps cover.

28% of the current outstanding LIBOR based bank debt with that I would like to turn the call back over to Eddie to conclude our presentation.

Thanks Henry.

While we navigate through unchartered waters, we continue to be positive on the longer term supply demand fundamentals for the product tanker sector right. Now this seems to be interesting opportunities in the spot market, which we hope to take advantage of our fleet of five equally modest mixed charter.

<unk> strategy and experienced management team should help us achieve a balance of risk and return in a rising market.

We appreciate your interest and thank you for joining our call today, we look forward to reporting on future progress at pyxis tankers be safe be well.

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This concludes today's conference call. Thank you for participating you may now disconnect.

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