Q1 2023 Pyxis Tankers Inc Earnings Call
Good day and welcome to the Pyxis tankers conference call to discuss the financial results for the first quarter 2023.
As a reminder, today's call is being recorded. Additionally, a live webcast of today's conference call and an accompanying presentation is available on pyxis tankers website, which is www dot pyxis tankers dotcom.
Hosting the call is Mr. Edival onto <unk>, Chairman and Chief Executive Officer of Pyxis tankers and Mr. Henry Williams, Chief Financial Officer of the company I would like to pass the floor over to one of your speakers today Mr. Eddie Walenta. Please go ahead Sir.
Good afternoon, everyone and thank you for joining our call to review the results.
The three months ended March.
Thank you.
The recent announcement by <unk>.
So capex numbers crude oil production by 165 million bonds. Starting this month has now joined US from invasion of the claim of the focal points affecting global energy markets.
Many companies within the OECD continue facility Zillions of the button high inflation tighter monetary policies.
Slowing economic activity.
In spite of.
The product tanker sector continues to be positively affected with it.
Shopping activity and high asset values.
A big Sis, we continue to successfully manage through these uncertain times and are pleased to report good operating and financial results for the most recent period.
Before starting please let me draw your attention to some important legal Lucas.
Jason on slide two that's where it can make you read including our presentation today, which will include forward looking statements. Thank you.
Turning to slide three.
Our most recent quarterly results reflect the solid financial performance and operating revenues.
Combined with a substantial gain on vessel sales.
In the first quarter ended March 31st we generated consolidated time charter equivalent revenues.
<unk> nine.
$9 2 million, an increase of 139% over the same periods in 2022 initially spot charter rates were soft in the Atlantic basin during the first quarter, but subsequently rebounded as the period progressed.
We completed the sale of our oldest tanker fixtures mango in late March for $24 8 million to realize the noncash gain on sale of $8 million and almost $19 million in net cash proceeds in.
In Q1, 'twenty three our daily TCE for RMR was 23500 made more.
More than double the results in the same period last year most importantly.
We reported net income to common shareholders of $8 7 million or 81.
Basic EPS for the most recent period versus significant losses in 2022.
Our adjusted EBITDA in Q1, 'twenty three improved to four 2 million.
Over the course of the first quarter the product tanker chartering environment experienced further strength.
This was a function of increased mobility, which amplified demand for transportation fuels, despite moderating global economic activity and the recovery in China.
The ongoing erosion invasion of the Ukraine resulted in tight stocks of refined petroleum products, many of which continue to be below five year averages in the number of locations around the world changing trade patterns expansion upon months and dislocation blend markets, creating arbitrage opportunities.
April transportation costs, one time placement basis petroleum product prices, such as gasoline and diesel has further declined since the high points.
Points of last summer 'twenty to 'twenty two.
As seasonal turnarounds are up in the northern hemisphere refinery activity continues to be solid, but at lower yet profitable crack spreads stable, reflecting good global demand.
These developments have translated that isn't as healthy prospects and catch up with it.
<unk> spot market, a meaningful time charter activity.
After the recent vessel sales.
Now and operate four expectations and Mas <unk>.
Which have an average rate of eight six years significantly below the industry average.
Our booking rate for Q2 2023 continues to be constructive and as of May 11, 70% of our available days for the second quarter were booked.
With an average estimated TCE of $29160 sequentially up from the Q1 results.
Please turn to slide four for information on existing Cleveland employment activities.
While all our tankers are currently under short term time charters, we expect to maintain our mixed chartering strategy assignments spot charters with a focus on diversification by customer and duration we believe.
Chartering strategy provides a reasonable balance of risk and return, especially for a small company like ours.
Thanks.
Please turn to slide six.
Further update on the product tanker market.
Yeah.
In addition to my prior comments about the market global economic activity continues to be impacted by the war and evolving uncertainty geopolitical events step.
Stepped up Samsung, including the recent ban of Russia.
Refined product cargoes by the EU and the seven countries and.
Related price cap.
And price cuts has reportedly reduced revenues to Russia, which has benefited from trade dislocation and low inventories in many parts of the world and found some new end markets, mostly involving longer sailing distances.
Product exports from the refineries located in the Middle East U S. In certain parts of Asia are also expanding with longer voyages. According to <unk> and independent industry research firm in 2020 to seaborne trade of oil products increased two 8% to over 1 billion tons Whitestone.
<unk> rose six 7% almost three five trillion.
Recently, a leading research firm estimated the global product tanker ton miles increased 13% in the first quarter of 'twenty three versus the same period in the prior year for 'twenty three that's firm estimate of ton miles increased 11% volumes to grow 4% and volumes.
Distances to rise 728% year on year.
Near term demand for refined products should also get a boost as China has lifted the vehicle with the restrictions late last year, we have already seen increasing demand for transportation fuels more recently for air travel as mobility expands in the economy accelerates.
Higher levels of government approved the export quotas have supported chartering activities initially in the Pacific Basin, but may move into more distant markets.
Please turn to slide seven to.
To review several macroeconomic considerations will support fundamental secular demand here.
Historically.
Seaborne trade of refined products has been relatively correlated to global GDP growth in the latest update the IMF slightly lowered its global GDP growth estimate to two 8% for this year due to the effects of high inflation tighter monetary policies and slowing economic activity.
Primarily in the OECD. However, based on first quarter results, China seems to be on track, let's say an estimated growth rate of five 2% for this year. The IAA recently revised its global oil consumption to increase 2 million barrels per day or 2% to an average of approximately one <unk>.
2 million by let's say put per day for 2020.
Despite the recent OPEC plus announcements for the production cut there seems to be adequate supply of crude oil.
<unk> is expected to maintain its current price within the range of 75 to $80 by year end according to various analysts.
IHS updated its 2023 estimates for U S crude production increased five 1% to $12 5 million bonds would be.
Yeah.
Now move to slide eight.
Over the longer term, we expect demand for the product tanker sector to be supported by refinery ambitions led by the Middle East in Asia grew.
<unk> estimates that.
Over four 7 million barrels per day of new refinery capacity is scheduled to come online by 2026, mostly outside those big originally planned shutdowns are likely to slow given better refinery economics and.
And market disruptions, but over the long run closers should further contribute to the importing of refined products into mature large OECD market and provide additional ton mile expansion, thereby reducing available tanker capacity.
Let's move to slide nine.
The product tanker supply picture is much clearer as the outlook for them. Our foods continues to look very promising the order book is historically low with limited northern for product tankers. According to do it as of February 28 2023.
Order book stood at five 8% of the global fleet or 99 vessels of which only 31 are scheduled for delivery during the remainder of the year due.
Due to the surge in new orders for the other types of shapes, mainly as in yards don't have available construction slots for our Mars with deliveries until late 2020 time delays in Newbuild deliveries continue to be a concern as slippers around 15% to 22.
Known as decision, making process for tanking or there is further complicated by ongoing developments in ship and managing designs stricter environmental regulation escalating shipbuilding cost as well as in an evolving and unclear selection and availability of lower carbon fuels.
New iron ore regulations governing field donations, including data collection and ratings under the E. C. III have restarted on may limit available supply due to slow steaming by older vessels only five ml pools were demolished in 2022 zero so far in 2000.
23, principally due to the strong chartering environment. However.
178 vessels or 10, 4% of the global fleet is 20 years of age or older almost doubled their order book.
Given this large number combined with declining economics of running older vessels major scrapping should occur over the next five years. Thus we estimate the net fleet growth for remarks of less than 2% per year through <unk>.
2024.
Turning to slide 10.
Robust charter conditions have led to steep in cases and asset prices across the board.
We're using prime now approached 46 million exclusive of yards supervision and add ons with delivery in late 2000 plentiful.
Bias for young equally efficient MLR tools continue to be near historical highs and acquisition opportunities are right.
Higher asset prices have increased our fleet by the nation and combined with a better balance sheet. Our net asset value is the reason Unfortunately, our share price has not.
At this point I would like to turn the call level two over to Jennifer Williams.
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 March 31 2023.
Our time charter equivalent revenues for Q1 of 'twenty, three which we define as revenues net minus voyage related costs and commissions improved to $9 2 million, an increase of almost $5 4 million.
From the same period in 2022.
Primarily due to higher charter rates in.
In March.
We completed the sale of our oldest tanker.
So by the end of the 2023 period, we operated four mr's.
In the most recent quarter utilization picked up significantly, but importantly, TCE rates for our Mrs was $23508 per day.
A dramatic increase from the comparable 2022.
Moving to slide 13, we generated net income to common shareholders of $8 7 million for.
For the three months ended March 31, 2023 or 81.
Basic.
And 71.
Diluted EPS compared to a net loss of $3 7 million or <unk> 34.
And diluted loss per share in the same period in 2022.
For accounting purposes, the fully diluted earnings calculation in 2020 through assumes the potential conversion of all outstanding series, a convertible preferred stock into common shares and the elimination of the associated dividend.
In Q1, 'twenty three a substantial portion of the increase in TCE revenues drops to the bottom line.
Adjusted EBITDA rose $4 2 million.
<unk> of $4 9 million from.
From Q1 of last year.
Please turn to slide 14, which will boost our recent MRM fleet data as we operated one eco modified vessel from others and for eco efficient tankers, given the size of our fleet changes in these metrics related to a single vessel one reporting period can have disproportionate effects on the <unk>.
Total fleet operating results for example during.
During March 23, we sold the 2009 built eco modified tanker and commenced the special survey of the Pyxis cut to Europe .
Overall, the key takeaways for Q1 of 'twenty three.
Higher charter revenues for the Echo Krish and was more than offset ryzen vessel operating expenses.
But inflation continues to be a concern.
Now, let's flip to slide 15 to review our capitalization at March 31 2023.
At quarter end, our consolidated leverage ratio of net funded debt.
Stood at approximately 23% of total capitalization with book value per fully diluted common share of $5 56.
Due to increases in LIBOR sofa, our weighted average interest rate was $8 one 5% for the more most recent quarter.
And the next bank loan maturity is July of 2020.
For the remainder of this year, we have one special survey, which is scheduled for late summer and estimated total cost of approximately $1 $2 5 million <unk>.
Including BW <unk> installation.
<unk> pointed out that our total cash position at March 31 of $35 million should only increase in the current quarter.
Due to free cash flow generated from operations.
With that I would like to turn the call back over to Eddie to conclude our presentation.
Thanks Henry.
As we've discussed over the near term fundamental demand looks to be relatively in balance with supply.
Despite the recent microeconomics headwind some geopolitical conflicts.
<unk> nation of solid end market consumption relatively low product inventories in many parts of the world changing type content and expanding ton mines continue to support healthy Jonathan environment.
Scheduled additions to the global refinery landscape only enhance the long term outlook of the sector given various uncertainties and growing complexity. We will continue our mixed chartering strategy of time charters complemented by spud employment in order to prudently optimize revenues until.
<unk> cash flow visibility, our sizable and growing cash position and low leverage strengthen our operating and financial flexibility as well as growth in corporate and strategic opportunities for us to further increase shareholder value.
We appreciate your interest and thank you for joining our call today, we look forward to reporting on future progress fixes tanking.
Be well.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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