Q2 2023 United Maritime Corporation Earnings Call

Thank you for sending violators, and gentlemen, and welcome to United Maritime Corporation Conference call on the second quarter ended June 30th two.

123 financial results.

What does for sure stay modest Santana, Chairman and CEO and Mr. Starr Rose just talk as Chief Financial Officer of United Maritime Corporation. At this time, all participants are in a listen only mode. There will be a question and answer session at which time, if you would like to ask a question.

Please press star one on your telephone keypad and you will then hear an automated message advise your hand is Reyes. Please be advised this conference call is being recorded today Thursday August 3rd 2023.

The archived webcast of the conference call will soon be made available under United Maritime website, Www dot United in Maritime and thought she or under the investors section.

Many of our remarks today contain forward looking statements based upon current expectations actual results may differ materially from the results projected from those forward looking statements additional information concerning factors that could cause the actual results to differ materially from those in the forward looking statements.

Contained in the second quarter ended June 30th 'twenty to 'twenty three earnings release, which is available under United Maritime website, again, Www Dot Tonight and Maritime G. R O.

I would now like turn the conference over to one of your speakers today, Chairman and CEO of the company. Mr. Stay modest Santander. Please go ahead Sir.

Okay.

Good afternoon I.

I would like to welcome everyone to United My Times Earnings Conference call, where we're going to discuss our financial performance for the second quarter of 2023 as well as our main corporate and commercial development in the cell.

Quarter over the year, we agreed to sell our last remaining product tanker vessel, concluding our first investment cycle, focusing the tanker sector.

The very strong sale price of $37 5 billion.

Reflects our return on equity for more than 400% on just this particular ship over.

Over the past 12 months, the combined profit from the purchase and sale of the four tankers was approximately $48 million net of all expenses, resulting in a remarkable rate over time on the approximately $60 million of equity.

Employed or 302%.

We have used the proceeds from the sales firstly to regrow our fleet focusing on the dry bulk segment through a total investment of $144 million spread across seven vessels and secondly towards significant shareholder distributions differentiating United Maritime from other shipping spinoff.

Vehicles.

For the second quarter of 2023, our board of Directors has approved another dividend of $7.05 per share while the total dividends declared and paid have been cash at dollar and 23 cents per share or $9 4 million.

We have also recently completed share repurchases for an aggregate amount of $200000 at an average price of $2 $9 per share in.

In total over the past 12 months, we have repurchased three 4 million common shares at an average price of $1.80, that's significantly below where we're trading today.

Overall, we have committed more than $15 million in shareholder rewarding initiatives or approximately two thirds of our current market capitalization, having said this as of the end of the quarter, United Maritimes net asset value is estimated to be more than three times, our current market capitalization and therefore.

Our shares continue to be significantly undervalued.

As a brief market commentary.

<unk> has been so far quite volatile as reduce the vessel congestion and raise the efficiency of the fleet and the release of a significant number of Panamax and capesize vessels from the grain corridor in the Black Sea and crispy effective vessel supply.

Despite vessel demand growing at a healthy pace driven by strong seaborne iron ore volumes and high demand for coal and grains. The growth of the effective fleet supply by more than 5%, so far exerted significant pressure on charter rates.

Port congestion and idle vessels are at historical low levels living hopefully the worst behind us while the order book for new vessels remains at multi decade lows.

As vessel ton miles continue to grow Im optimistic that is solely a matter of time before the market turns positive again.

Now, let's take a few minutes to expand on United's activity over the past few months.

We agreed to charter in 2015, built Japanese panamax vessel, which will be renamed Silversea. The bareboat charter it will have a duration of 12 months and the purchase option at the end of the charter, which if exercised would bring the total acquisition cost to about $27 million, including all scheduled pay.

<unk> the sympathy was delivered to United two days ago on August 1st and we will now enter a floating rate on a time charter basis with a global commodity trading company the duration of 14 to 16 months.

In April we also took delivery of the courtesy.

And the mine built Japanese comes out of Max vessel acquired earlier this year.

And index linked time charter until April 12 to 24 at a minimum in June we entered an agreement to acquire 2011 built panamax vessel that will be renamed <unk> for the purchase price of $17 8 million delivery of the vessel to our fleet is expected to take place around the end of August beginning of.

September 2012 as mentioned earlier in May we agreed to sell our remaining alert to tanker it'd be a philosophy for a price of 37 $5 million with a vessel scheduled to be delivered to its new owners by mid August .

The accounting profit of about $12 million will be recorded in the third quarter of the year when the vessel will be delivered to her new owners.

Upon the completion of all the transactions planned for the next couple of months, we will operate eight ships split between five <unk> and Panamax vessels have three capesize vessels at.

At this point I would like to highlight that we have approximately $55 million equity portion of our $144 million of investments of seven vessels since the beginning of the year has been funded entirely by the proceeds of the tanker sales and cash from operations without resorting.

As to capital raising transactions, which would dilute our shareholders I am optimistic that the positive prospects for the dry bulk market will put us in a position to generate high returns on equity and reward our shareholders Accordingly.

Now I would like to pass the call to our CFO established decades to expand on the financials and the call will return back to me for the conclusions.

Thank you Samantha and welcome everyone to our earnings call. Let me start by reviewing the main highlights of our financial statements for the second quarter of 2023 net revenue for the quarter was equal 10 million, while we recorded adjusted EBITDA of $2 million and adjusted net loss of $2 1 million as mentioned by some.

<unk> in his opening remarks, the dry bulk market in the second quarter fell short of our expectations, resulting in the time charter equivalent rate of $16732 for United which was nevertheless, an important sequential improvement versus the 10300 earned in the first quarter.

The drydocking of the trade issue due to unforeseen repairs impact with our operational results, reducing overall utilization for the quarter to 93% as this metric increase going forward along with higher day rates I am optimistic that it will provide a significant tailwind to our financial performance.

In the six months period, United generated revenues of $12 8 million adjusted EBITDA of 521000, and adjusted net loss of $5 7 million.

These figures are based on a fleet utilization of approximately 89% capturing the drydocking of the financial indicators ship.

Moving onto our balance sheet, we had $7 $3 million of cash at the end of the quarter and $78 2 million of debt outstanding which includes liabilities and there are very routine transactions I E Q2, bareboat hire payments and then deadline purchase options.

The book value of the fleet stood at $158 million in fiscal this equity at approximately $59 million, our cash balance does not reflect the proceeds from the sale of the panacea Seagate as we expect to receive those in the third quarter elevating our cash position to more than 2 million per vessel after concluding.

The acquisition we exceeded.

I am pleased to see our Drybulk fleet, taking shape only using 10 of lithium generated cash and expect that on a fully delivered basis, the company's loan to value ratio should remain at sustainable levels below 60%.

Given the positive dry bulk market fundamentals, we have adopted a balanced approach to leverage aiming to maximize the returns on our equity capital and shareholder distributions, while retaining liquidity and balance sheet flexibility.

Gardening individual financing update on April 26, we entered into a $12 $25 million sale and leaseback agreement with a European lessor to finance part of the acquisition price of the latency.

Agreement will mature in five years with repurchase obligation of $6 4 million amortization of a charter high principal will take place through 60 monthly payments of approximately 100000, each while the interest rate will be equal to three months.

Plus 425% I.

Now some more details are available charter agreement for the <unk> mentioned earlier, but the market.

<unk> charter is for 12 months and the structure includes two down payments for a total of $7 million at daily Bareboat rate of 8000, and the <unk> auction of $17 1 million at the end of the bareboat charter.

Finally regarding the financing will be accelerating the existing lenders of the recently sold the Vanessa banking has agreed to substitute with vessel with excel exam, the loan facility, making essentially available a $15 million loan for this vessel is the balance of the purchase price which is essentially.

Advanced payment has already been funded by our cash reserves and.

This concludes my review I will now turn the call back to commodities, which concluding remarks, Steve Murphy.

Thank you Sabra.

After a successful turnover of our initial vessel investment that has generated very strong returns for our shareholders. We have now grown our fleet without resorting to date to dilutive capital raises we have placed the company in an optimal position to take advantage of another rising market cycle deriving from a strong demand for our materials.

Over the historically low investment in new vessels closing this call I would like to say once again that unite maritime will continue to be a unique value play in the public shipping space aiming at height and immediate shareholder returns through optimally timed sale and purchase transactions in the shipping sector with a strong.

Supply and demand fundamentals from here I would like to turn the call over to the operator and answer any questions. You may have operator, please take the call. Thank you.

As a reminder to ask a question you will need to press star one on your telephone and wait for name to be announced please standby we compile the Q&A roster.

Yeah.

Our first question comes from the line of Sullivan from Maxim Group. Your line is open.

Hello, how are you good desktop you can say.

Good morning.

Good morning.

You mentioned in the press release, your second investment cycle, focusing on the dry bulk ships do you think this will last through based on the delivery schedules and the bareboat options at the end of the bareboat charter and acquisitions through 2024 and might you shift to another sector actually as well.

Yes.

I don't think so right now we will stick to what we have a grade. So we will play in the larger categories of the dry bulk segment so Panama.

Panamaxes <unk> and potentially capes older Capes will say.

So this is what we believe is the best value proposition right now as an entry point across the mainstream shipping sectors. I don't think we will be seeking anything in the tankers anytime soon because the value is up over inflated.

Other segments had done really things that we would be looking at right now so.

No.

Most likely we're going to stick to what we have already done since the beginning of the year.

And Capex you may have mentioned.

Funding is the funding that you mentioned.

Sure the bareboat charter in acquisitions can you fund those acquisitions with debt before exercising the option.

And the way he's a billboard and a high base.

The way the verbal agreements have been structure is that basically the purchase option is a percentage of the value of the ships that we feel comfortable that we can.

We're purely by raising debt at the time will be exercised the purchase option otherwise everything is fully funded we have some maturities coming up.

Early next year on which we are already working but we are relatively confident that we will not face any issues whatsoever in financing our upcoming obligations.

I noticed the comment in the footnote.

With no dilution to shareholders.

But the down payments.

Exactly and briefly something that makes us very proud and differentiates this company from other spinoffs I mean, we have <unk>.

And re growing the fleet without diluting the shareholders to date.

And then Doug.

The purchases that you've made in the dry bulk market. So far have they been from different sellers are mostly from Japanese.

Shareholders.

It's a combination so I would say 50% from Japanese sellers.

Or a little bit more and some from European et cetera. So.

We like to do business with repetitive.

The respective deals with the same people, we like doing good quality business with Japan and will likely continue doing so in the future.

Great well, a great CVA balance capital allocation between using the cash for the acquisition the dividends and repurchases.

Thank you for all the detail.

Thank you Terry Thanks for thanks.

Thank you.

So with that this concludes today's conference call. Thank you for participating you may now disconnect speakers. Please standby.

Yeah.

Okay.

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