Q2 2022 Pyxis Tankers Inc Earnings Call

It was a quarter, especially in the spot market.

Our daily TCE for Q2, 2022 for a five equally modest was $26270 per day more than doubling.

Also in the same period last year.

Moreover, we reported net income of $4 6 million or 43 cents basic EPS for the most recent period versus losses in 2021.

Our adjusted EBITDA in Q2.

Climbed to $7.3 million.

Over the course of the second quarter, the product tanker chartering environment continue to strengthen as greater economic activity was met with increased mobility, which amplifying demand for transportation fuels.

The ongoing Russian invasion of the Ukraine has resulted in tightening of product inventories, which continued to be below five year averages change in trading patterns expansion of ton miles dislocation planned markets, creating arbitrage opportunities and higher transportation costs. However, as high.

Inflation unfolded and petroleum product prices, such as gasoline and diesel hit records Consumptions soften at quarter close and prices have subsequently declined by a modest percentage.

Notwithstanding refinery activity continues to be very strong reflecting solid global demand. This.

Development has translated into robust product tanker charter rates in the spot market.

Our bookings rate for Q3 is now 16% higher than we reported for Q2.

As of August 5th almost 57% of our available days for Q3 are booked at an average TCE of $30500 per day.

In this context, we are maintaining our mixed chartering strategy of short term time and spot charters with a focus on diversification by gossamer and duration.

Please turn to slide four for information on our existing fleet unemployment activities.

As you can see two of our vessels are currently in the spot market and the remaining three amas are contracted under short term time charters for the Q3 bookings the average spot charter rate is $43900 per day with an average time charter rate of 25.

<unk> thousand.

We believe our chartering strategy provides a reasonable balance of risk and return, especially for a small company like ours.

Next please turn to slide six for a further update on the product tanker market.

In addition to my prior comments about the market and recent economic activity for most of the world has been amplified by impact of the war and other geopolitical events.

The advent of increasing and severe sanctions against Russian exports of petroleum products have been met with low inventories in many locations, especially Europe .

As previously highlighted.

Tight supplies for gas oil and diesel are changing trade routes and I think Don mice to Voya, just by increasing exports from the refineries located in the middle East.

S and certain parts of Asia.

Increasing travel activity, especially during the summer only compounds that they frequently the difficulties in replenishing gasoline and jet fuel inventories.

Anticipated events, such as the voluntary 50% cutback in natural gas consumption by the EU. Starting this month has been immediately met by erosive, 80% reduction in deliveries from the major pipeline Nord stream one.

Surging natural gas prices and mass market chaos should force some European UK.

Slates alternatives, such as fuel oil for power generation.

Liable secure energy sources will continue to be a major priority.

Please turn to slide seven to review macroeconomic considerations.

Historically seaborne trade of refined products has it been.

They really correlated to global GDP growth.

It's July update the IMF lowered its GDP estimates finally pieces of three 2% for this year and two 9% for 2023.

Lee to leading research firms estimate that the seaborne trade in tons for refined products would grow 3% or more in 2022, even with the I'll get orchestrate the relief of crude from the strategic petroleum reserves of certain IEA members current consumption outweighs supply.

Scheduled production increases from Opex, plus including its revised handle thousands barrels per day increase for September and to a minor extent U S shale oil will add supply as the year progresses, however, even with slowing global economic activity being violent should.

With tight inventories and high oil prices in order to combat record high inflation implementation of stricter governmental monetary policies led by the fed should accelerate this slowdown of economic growth.

Moving to slide eight U S. Refineries are currently achieving high utilization at healthy crack spreads in order to meet strong product demand from the U S Europe and Latin America over the longer term, we expect demand for the product tanker sector to be supported by refinery additions led by the middle East and Asia.

<unk> estimated that over $4 3 million barrels per day of new refinery capacity scheduled to come online by 2025, virtually all of which is outside the OECD.

Planned shutdowns are likely to slow but over the long run me further contribute to the importing of refined products seem to mature large OECD markets and provide additional ton mile expansion.

Unforeseen events, such as Hurricanes could lead to additional price spikes for products that Ferrari shortages in various locations and create arbitrage opportunities in the spot market of course possible wildcard is another variant of COVID-19, which would likely have a negative effect on.

Demand.

Let's move on to slide nine.

The product tanker supply picture is much clearer as the outlook for them or to US continues to look very promising.

The order book continues to drift lower and recently, a leading broking houses estimated overall.

The order book at seven.

2% over worldwide fleet of 1700 53 vessels.

Ordering has been subdued certainly.

Find a marlboro did last year with 25 year to date 2022, 46 Mr's are scheduled for delivery during the remainder of this year with an equal number for 'twenty 'twenty Felipe Dutra.

Due to the recent surge in ordering of new containers <unk> carried some dry bulk vessels, mainly engines yards don't have available construction slot with deliveries until the second half of 'twenty 'twenty four or later over the five year period, ending 2021 delays in delivery of new build mr's.

Ron.

13, 4% per year slip, but is likely to continue.

Pick it up one level.

A known as decision making process for tanker.

The ordering is further complicated by ongoing developments in shaping designs stricter environmental regulations are rapidly escalate in shipbuilding costs and involving and still unclear for election, and the availability of lower carbon fuels due to the strong chartering market and moderating scrap prices that Melissa.

Have slowed in 2022, however, given that 864 vessels or nine 4% of the worldwide fleet is 20 years of age or older than more leasing activity over the next five years should step up.

Consequently, we continue to believe.

Net fleet growth for the month should be around 2% this year and next.

Turning to slide 10 robust charter conditions have led to steep increases this year in asset prices across the board new breathing prices now approach $43 million with delivery in two years or more one leading research firm recently forecasted an additional 20% appreciation in second hand prices.

By the middle of 2023.

Stronger asset values and improving earnings power should lead to higher equity values.

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, Eddie on Slide 12, Let's review our unaudited results for the three months ended June 32022, our time charter revenues for Q2 of 2002, which we define as revenues net minus voyage related costs and commissions.

To $11 $3 million, an increase of 173% from the same period in 2021.

Due to higher charter rates, especially in the spot market or re incurring higher voyage related costs and commissions.

As well as the impact from changes to our fleet and the <unk>.

Last year, we added two mr's and sold two small tankers in the second quarter of 'twenty to the TCE rate for <unk> was $26270 per day, 107% higher than the comparable 2021 period.

Moving to slide 13, we generated a net profit to common shareholders of $4 $6 million for the three months ended June 32022, or <unk> 43 basic.

And 38 cents per diluted EPS.

Impaired to a net loss of $1 5 million or <unk> 16, basic and diluted loss per share in the same period in 2021.

Simply a substantial portion of the increase in TCE revenues during Q2 'twenty to drop to the bottom line.

Adjusted EBITDA climbed to $7 $3 million, an improvement of $6 $9 million from the second quarter of last year.

Please turn to slide 14, which reviews, our recent more data as we operate one echo monocline vessel and for eco efficient tankers.

Given the size of Berkeley changes in these metrics related to a single vessel in one more importing period can have disproportionate effects on the total fleet operating results.

Beyond the significant improvement in TCE for 2022, the key takeaway here is the relative stability of vessel operating expenses.

Despite cost pressures such as cooling loops.

Now I'll turn to slide 15 to review our capitalization at June 32022 at quarter close our consolidated leverage ratio of net funded debt stood at approximately 55% total capitalization.

We continue to be in full compliance with our loan agreements.

Weighted average interest rate was four 6% with the most recent quarter.

And the next bank loan maturity is July of 2025.

We have interest rate protection, covering 14% of our current outstanding LIBOR base.

Thank God.

With that I would like to turn the call back over to Eddie to conclude our presentation.

Thanks Henry.

The impact of recent global events and low broke product inventories in many parts of the world have been considerably beneficial to our sector.

For the near term, we are cautiously optimistic about the prospect prospects of the chartering environment over the longer term, we find solace in the positive supply demand fundamentals of the product tanker sector. While we continue to take advantage of some interesting opportunities in the spot market, we will likely abide by all of them.

Mixed chartering strategy complemented by short term time charters in order to prudently optimize revenues and provide cash flow visibility unless we find an attractive accretive acquisition, we expect to use excess cash flow to further improve our financial position.

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.

Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.

The conference will begin shortly to raise your hand during Q&A you can dial one one.

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