Q2 2023 Pyxis Tankers Inc Earnings Call

As a reminder, today's call is being recorded. Additionally, a live webcast of today's conference call.

The accompanying presentation.

He is available on pyxis tankers website, which is www dot pyxis tankers dotcom.

Hosting the call is Mr. Ediva, Lantus, Chairman and Chief Executive Officer of Pyxis tankers and Mr. Henry Williams, Chief Financial Officer of the company.

I'd like to pass the floor to one of your speakers today Mr. Eddie villages. Please go ahead Sir.

Good morning, everyone and thank you for joining our call, but he's out of the three months ended June 30th.

Thanks.

No, let's say, Ukraine logical speeds by the government.

As the market.

Economic and strategic priorities.

Global relationships, it's unchanged.

Thanks, Good morning, Patti policies have resulted in slowing economic activity and most recently the lowering of installation within maybe more than 50 countries.

Think of it as the perfect.

I think essentially maintained solid chartering activity and high asset values.

We continue to successfully navigate through these uncertain times and we are pleased to report.

And financial results.

The most recent period.

Before starting please let me draw your attention to some important legal notifications on slide two.

Including our presentation today, which will include forward looking statements.

Turning to slide three.

Our most recent quarterly results.

The financial performance.

Operating costs.

Despite these advances as we sell the part D piece has been low in late March.

In the second quarter ended June .

We generated consolidated at the time charter equivalent.

P eight.

$8 6 million a decrease of $2 7 million over the same period in Spain. Thank you too.

BPC for export.

Hum.

It was approximately $5000, which was down slightly more than the same quarter last year.

Paul chartering activity.

We posted net income of $2 8 million.

<unk> basic EPS for the most recent period, which was down from last year.

Our adjusted EBITDA.

Thank you.

Five point zoom meeting.

Well when the close of the second quarter.

Thank you saw kind of environment.

Softness.

The reason it wouldn't be mindful that it's the patient feels worldwide moderating economic activity was met with seasonal refinery maintenance program.

The online, but also you're seeing a lot of aimless cities in.

In 19 minutes petroleum products, which ought to be.

No five year averages.

Number of locations around the world changing trade patterns expansion online dislocations when markets, creating a because it was higher.

Hi, I'm going to split basically cost for example in the U S. A recent inventories of gasoline and diesel in the last 7% and 14% respectively.

The five year averages.

Right.

That's significantly lower than a year ago refinery activity continues to be solid with enhancing crack spreads.

Hey, good global demand.

Let's see some Florida contrasting.

Product tanker charter rates.

The lack of lease when competing with a complete those expenses were modeling diesel demand.

But economically viable acquisition and in the meantime.

Our balance sheet.

Limited extent repurchase common shares.

Most recently our board unanimously approved a $6 8 million equity investment in a joint venture with acquisition and then 2016 Japanese B dry.

Ryan Bode well.

60% of the joint Investor and then bottom of scale and bye bye.

<unk> Chairman Mr <unk>.

$28 5 million.

Bethany patches is expected to be funded by $11 8 million of equity.

Being unsecured five year bank at all we'd be least calendar cycle investment and expense class equal, Alaska, which is proper and ballast water treatment systems piece it should.

By contrast at least ask of Pyxis tankers well gotcha.

Anticipated closing of the transaction by late August when we have significant dry powder.

Patients that the decoupling.

Please turn to slide four what information on that existing fleet.

Thank you.

We are continuing to prudently maintain our lead.

<unk> just timing on spot charters with a focus on diversification by cost from that.

As you can see after the same as the big Sis Milo we now operate a fleet of four.

Equally pieces in mind, which has an average.

Haynesville 86 years and is only four years younger than the industry average.

In year three.

Well. Thank you Mackenzie contracted under short term time charters and one in the spot market.

As of July 26, 55% of their available anywhere.

Ooh and Ah.

Estimate the ECA.

Approximately $27800 at least at this point and represents an 11% sequential increase.

To date chartering results.

Next please turn to slide six.

Based on the product tanker market.

Yeah.

In addition to my prior comments about the market recent economic activity for most of the one has been affected by these three states monetary policies.

Sure.

The EU and the seven growth.

But on the whole seaborne cargo so but also in refined products. We've started the 19th February Thank you.

Subsequent price gaps.

That helps them do that create this market dislocation, which has been compounded by low inventories of.

Refined petroleum products in many parts of the world.

Exports from the refineries located in the Middle East U S on certain parts of Asia are expanding.

According to duty and dependent in the state lease expiring in 'twenty and thank you to seaborne trade the volume products increased one 7%.

1 billion top line.

Our minds rose three 2% so almost three points.

According to another leader, leading research Bon ton mile demand should increase.

Thank you.

Cargo volumes grows 4% and the 'twenty 'twenty four or.

The 7%, but it all comes on line and another 4% increase in volumes as expected.

Ladies and changes in trade routes can be seen on slide seven.

Please turn to slide eight to review them.

Macroeconomic considerations would support fundamental sector demand historically seaborne trade.

This has been more directly correlated to global GDP growth in July and the IMF revised its slowing global GDP growth estimates upward.

For this year using <unk> economic activity, primarily in the answer could be offset by the benefit.

Significantly the snake and persistently.

Hi, Thanks.

Recently, the IEA slightly revised its estimate of normalized consumption to increase 2 million barrels per day or two 2%.

To fund the 1 million barrels per day.

A continuation of the recent.

That's fantastic.

Including a half million barrels per day that somebody else is stopping.

Starting in August is expected to result in type of top line. Later this year. However, incremental production is expected to expect that some of the U S Canada, Norway and we are.

Of course, the amazing actions by Iran, and Venezuela.

Hello, My voice all supply.

According to the EIA the U S should increase <unk> hundred joins the vaccine.

By five 6% to almost one 6 million barrels per day, Nevertheless, the expectations tighter supply and solid global demand.

I was hoping that approximate 10% increase in oil prices since the start of the summer.

Now I'll move to slide nine.

Over the longer term, we expect demand for the product tanker sector to be supported by responding patients.

By the Middle East and Asia.

We estimate that almost $4 4 million bias, but they have no refinery capacity net of closures is scheduled to come online.

Eight.

Obviously, the expediency decline however, more recently planned shutdowns.

Given better refinery economics over the long run closes so sad that contribute to the importing of refined products into mature logical each of the markets and provides additional online expansion many refineries, including wells would be to ask continued to experience good.

Jason as profitable crack spreads and others, who need solid product demand.

Processing cheeseburger in Russia has been a recent margin advantage slight refineries, primarily located in India in China supporting domestic supplies unstable excellence, especially with transportation fuels.

Let's move on to slide 10.

The product tanker supply feature as much data as the outlook.

Something has to look very promising one and all of this for the transaction.

Based on things like you said between the order book is sitting there relatively low by historical standards. According to through a joint venture Fund III No order book stood at six 6% of the global fleet.

11 vessels from a weak 17 are scheduled for delivery in the second half of this year.

You have the huge backlogs men's fashion. So you just don't have available subsections blocks very modest.

Deliveries on the 26.

Delays in Newbuild deliveries continued to Vietnam.

Passbook.

<unk> Hara has run almost 12% annually over the last five years.

The decision making process. The pancaking ordinary is further complicated by number of developments in ship and engine design.

Environmental regulation escalating shipbuilding cost as well and with borrowing outstanding on Peter's election, and the whole liability lower carbon fuels as many as 144 lesson or eight 5% of the global fleet is 20 years Omega Rhonda.

Significantly more than the order book.

Given this large amount of their combined with declining economics.

The Mercer major scrapping should they occur over the last five years that we estimate the nestle gorilla or en masse.

Less than 2% a year.

'twenty 'twenty four.

Turning to slide 11.

Good chat and completions have less steep increases in massive prices across the board volumes for the second half is still way above 10 year averages.

But prices for all of US bankers have recently somsak.

Concession comments when you may make now plus $47 million exclusive of the absolutely the reason.

And Athens.

Brian at this point beyond equal increasing their muscles are fresh foods as a near historical high and attractive acquisition opportunities.

Yeah.

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

Thanks, Tony on Slide 13, Let's review our unaudited results for the three months ended June 30th Street.

'twenty three our time charter equivalent revenues for Q2 of 2023, which we define as revenues net minus voyage related costs and commissions declined to $8 $6 million, a decrease of $2 7 million.

From the same periods in 2022 due to lower charter rates, primarily in the spot market.

Which was offset by higher utilization and more importantly, with.

With the sale of our oldest stuff on March 23, we operated one fewer EMR in the most recent period.

For the second quarter, 'twenty, three and TCE rate for March was $25000 per day.

Still a healthy rate, but down 5% from the comparable 2022 period.

Moving to slide 14, we generated net income to common shareholders of $2 $8 million.

For the three months ended June 32023, or 25 basis.

And 23 cents diluted EPS compared to net income of $4 6 million or 40, <unk> basic and <unk> 38 diluted net income per share in the same period of 'twenty two.

For accounting purposes, the full year earnings calculation assumes the potential conversion of all the outstanding series, a convertible preferred stock into common shares and the elimination of the associated dividend.

In Q2, 'twenty, three or a significant portion of the decrease in TCE revenues flowed through the income statement as adjusted EBITDA decreased $2 million.

Two respectful $5 $2 million.

Now, let's flip to slide 13 to review our capitalization at June 32023 at quarter close our consolidated leverage ratio of net funded debt.

At less than 19% of total capitalization.

The increases and sulfur are.

Our weighted average interest rate was about eight 2% for the most recent quarter.

The next bank loan maturity is in about two years.

Point out that at June 32023, our total cash position was approximately $34 $5 million.

Most of our excess cash is invested in short term money market instruments, which currently earning an average fivefold cheaper.

Lastly.

<unk> discussed their half for a second special survey with ballast water treatment system installation later this summer at a cost of approximately $1 4 million and 25 days off hire.

With that I'd like to turn the call back over to Eddie.

To conclude the presentation. Thanks Henry.

Although the near term fundamental demand.

In balance with supply macroeconomic headwind for that setting.

B from geopolitical conflicts.

Challenges and opportunities for the product tanker segment.

We continue to benefit from the combination of solid end market consumption low and buying product inventories in many parts of the world changing trade patterns and expanding product lines.

<unk> developments with a finite landscape only enhance the long term outlook of our sector, we will effectively utilize our strong financial position of excess cash and low leverage as well as deep industry relationships to seize investment opportunities that maximize shareholder value.

We appreciate your interest thank you for joining our call today, we look forward to reporting on our future progress basic tankers enjoy the summer and stay well.

And this concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.