Q4 2023 United Maritime Corp Earnings Call

Okay.

Thank you for standing by ladies and gentlemen, and welcome to the United Maritime Corporation Conference call on the fourth quarter and year ended December 31st 2020 free financial results.

With us Mr. <unk>, <unk>, chairman and CEO and Mr. Stavros gifts decades, Chief financial Officer of United Maritime Corporation.

At this time all participants are in listen only mode. There will be a question and answer session at which time, if you'd like to ask a question. Please press star one and one on your telephone keypad and you. We then had no debated message advising your hand is raised.

Be advised that this conference is being recorded today Tuesday February 20th 'twenty 'twenty four.

The archived webcast of the conference call will soon be made available on the United Maritime website W.

E W. W adult United Maritime don't G L and does investors' section.

Many of our remarks today contain forward looking statements based on 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 is contained in the fourth quarter and year ended December 31st 2020 Free earnings released which is available on the United Maritime website again Www you don't see it.

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I would now like to turn the conference over to one of your speaker today, the chairman and CEO of the company Mr. Stomach. This sentence. Please go ahead Sir.

Okay.

Good afternoon.

Welcome to United Maritimes Conference call regarding our financial results for the fourth quarter and full year periods of 2023.

As well as our recent corporate developments.

Following the profitable sale of our last tanker vessel in the third quarter of 2023, the fourth quarter marked our first period operating purely as a dry bulk company. On this note were pleased with the timing of our transition towards lighter careless brokers as we are recently witnessing the strongest first quarter.

For the dry bulk market of the past decade, even though 2023 set of as a transitional year for our company. We marked a three fold increase of the book value of our fleet by investing $144 million to acquired seven ships, including the implied value of the bareboat in vest.

With purchase options all of this was accomplished organically and avoiding any equity offering dilution for our shareholders. We also marked another profitable year generating adjusted EBITDA of $18 9 million and net income of zero point $2 million.

At the same time, we're fully consistent with our commitment to reward our shareholders both through cash dividends as well as share buybacks. Since November 2022, we have declared approximately $10 7 million.

Or a dollar in 38 cents per share in cash dividends, including the cash dividend of seven five.

For the fourth quarter of 2023. This represents approximately 45% of our market capitalization. Additionally, on our share buyback plan since the beginning of Q4, we have repurchased 84800 <unk> common shares at an average price of $2 $4 per.

Sure, we always evaluate the best way to return capital to our shareholders in conjunction with the Companys liquidity needs and our aim is to continue to engage in share buybacks by means of stabilizing the share price regarding our investment activity, we had been actively evaluating opportunities to grow our fleet and in this manner will have.

Wired is high quality comes out amongst dry bulk vessel built in 2016 in Japan through an 18 month bareboat charter with a purchase option at the end of the charter period.

<unk> on the commercial performance of our fleet all our vessels operate on index linked time charters, providing direct exposure to the positive fundamentals for the dry bulk market for the first quarter of 2024, we exercised our options to fixed daily earnings under these time charters on about half of our operating days at an average gross.

Date of about $14300. The peers that are hedging was a bit premature, but we aim to provide downside protection against the seasonal weakness of the dry bulk market in the first quarter of the year based on the current FSA volumes, we expect to achieve a total net time charter equivalent of <unk>.

About $14200 across our fleet given the recent strength in freight futures, we have started to fix some of our second quarter operating days at considerably higher levels as a brief commercial guidance for 2024 since the start of the fourth quarter, we have experience at a bus.

Dry bulk market conditions, given by healthy commodity demand and limited fleet supply for the Panamax market low water levels in the Panama Canal and increased congestion at Brazil loading ports played an important role in reducing effective vessel supply while the residential changed since December.

<unk> introduced further inefficiencies in the World trading fleet in the Capesize segment, we have witnessed high demand for iron ore and bauxite imports coinciding with increased Brazilian iron ore exports that contributed to high Atlantic basin activity, therefore, leading to a very strong market. Both in Q4 2023.

As well as in the first quarter of 2020 for looking ahead into the next two years net dry bulk fleet growth is expected to be lower than 2% per year, which we believe forms a sound basis for market conditions going forward. We're very encouraged by the strong demand for iron ore coal grants and books.

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Which have not shown any signs of slowing down in the first months of 2024, given the strong demand for metals and energy driven mainly by manufacturing and infrastructure investments globally. It is worth noting that we expect the seaborne volume of related cargoes to continue to increase overall reduce.

Fleet deliveries in combination with steady demand growth should provide a very positive backdrop for the dry bulk market over the next years and its current four and confidence that United Maritime present investors with a very potent platform to benefit from the positive fundamentals for the dry bulk market can.

To deliver a profitable performance with higher capital returns and significant shareholder rewards that concludes my summary of the fourth quarter update and I pass the floor to establish for a more detailed update on the financials of our company.

Stavros. Please go ahead.

Thanks <unk>.

Welcome also from my side.

Let me start by reviewing the main highlights of the financial statements for the fourth quarter and the 12 month period that ended on December 31st 2023, starting with the fourth quarter net revenue was $11 6 million based on the time charter equivalent of 15900 <unk>.

Corresponding figures for the same period last year were $14 9.032 million 200, respectively.

Figures for 2022 are largely driven by the earnings of the tanker vessels through a very strong tanker market. Our adjusted EBITDA in the fourth quarter was $4 6 million, while our net loss of 0.7 million was recorded with respective figures in 2022 were <unk> 42.

$3 million and the net income of $36 5 million, primarily attributed to the sale of three or four previously owned tankers.

For the 12 months period net revenue reached $36 1 million based on the time charter equivalent of 15400, while adjusted EBITDA and net income for the full year 2023 were equal to $18 9 million and 200000 with respect to profitability in the year was impacted by low freight rate.

It's in the dry bulk space in the first nine months of the year and the gradual release of the seven dry bulk vessels through the year, resulting in reduced operating days and additional one off expenses related to the takeover of these vessels with the market has already rebounded rather optimistic outlook for the period ahead as disk.

Just with the market, we expect profitability to improve in the coming quarters. Following the full deployment of our Drybulk fleet yet. It is important to note that we have decided to shed some of our freight exposure into the first quarter of 'twenty 'twenty four lb by fixing about half of our ownership days at an average fixed rate.

A 14300.

On the expense side, we have managed to reduce our daily operating expenses and daily cash G&A on a per vessel basis and expect further optimization going forward as United will be navigating second full 12 month period of operations.

Now moving onto our balance sheet, our cash position at the end of 2023 was $14 5 million during the year, we increased our fleet with seven new vessels, leading to a fleet value of $153 million versus the book value of $50 million at the end of the previous year without resorting to Intel.

<unk> equity offerings.

At the same time outstanding debt, which includes liabilities under our Billboard in transaction stood at $9 6 million translating to a loan to value of approximately 60%, including the bareboat in liabilities that the proceeds from our tanker sales have been the financing sources for our investment.

Strategy. During 2023 this year, we are focusing on improving our overall financing profile given the fact that United has now two years after its inception enhanced its position within the global shipping financing spectrum.

In that vein during the fourth quarter, we concluded the refinancing of our three capesize vessels with a suitable state owned Chinese lessor, specifically, we entered into three separate an identical 10 million sale and leaseback agreements for three of our capes. The proceeds have been utilized to define until it's done.

This was a respective vessels under the previous loan facility enhancing as well our liquidity position by around $7 million each financing amortize through 36 consecutive monthly installments of approximately 140000 and bears an interest rate.

Three months there Mr Farr, plus three 3% per annum.

Considering the <unk> the transaction is expected to reduce our interest expense in the following quarters. Meanwhile, the company has continuous options to replicate the vessels at predetermined prices starting six months after the commencement date.

At the end of each well both periods United has the obligation to repurchase its vessels for $5 million.

In addition over the past few days, we have reached an agreement which is currently subject to definitive documentation with a third party in Japan for the refinancing of actually through a sale and leaseback structure as discussed briefly previously both commodities. We have recently agreed to acquire a high quality cancer dry bulk vessels.

In 2016 in Japan through an 18 months bareboat chartering agreement with a purchase option at the end of the charter period regarding the specific details of the deal which remains subject to definitive documentation. It includes an initial pay down of $7 5 million daily chartering rate of freight.

And a purchase option for $16 6 million finally, before turning the call back to Marty I would like to remind once more that all with significant fleet growth last year was achieved without any dilution of our own vessels, while being consistent on our dividend distributions and our share buyback program.

I will now turn the call back to some rfps for his concluding remarks.

<unk>.

Thanks, Laura.

After successfully completing our tanker investment cycle in the third quarter of 2023, which delivered a very strong returns for our shareholders. We have grown our fleet to eight dry bulk vessels by investing $144 million.

Acquired seven ships without having to engage in dilutive capital Raisings. So far we have declared total cash dividends of $1 <unk> per share or $10 7 million.

Since November of 2022, representing approximately 45% of United Maritime capitalization, United Maritime has a strong balance sheet with high quality index linked fleet and proven commitment to shareholder rewards.

I am confident that we are very well placed to navigate the strong dry bulk market environment and tougher robust total returns throughout the next shipping cycles.

At this point 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.

Thank you.

As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced once again. Please press star one and one on your telephone and wait for your name to be announced.

Please standby, while we compile the Q&A roster.

Okay.

We are now going to proceed with our first question.

And the question comes from the line of Tate Sullivan from Maxim Group. Please ask your question. Your line is open.

Great. Thank you good to hear from me again, how are your thoughts on thank you.

Hello, Good morning, we're all well thank you.

Got it thank you.

Is this.

Just looking back at the historic growth PUC suite is this the second bareboat charter in the fleet that are wondering on for Colin Finalization of the terms with the with the Japanese counter party.

The one we just announced that it's going to be the third one third the third one.

Okay and then all of those can you go into a little bit what would make you decide to exercise the purchase option or not at the end of those charters.

Well for us to given that we're going to exercise the purchase option. So for us it's pretty much more like.

An obligation even though its tourism is an option. So we expect in all cases to exercise a purchase option, which in any case all deals and we expect the third one as well I consider to be upon the date of the exercise to be excellent deals for the company.

Okay.

And is this where the other two with the Japanese counterparty as well too.

Yes, yes, all three with Japanese counterparts correct.

Okay, Great and then.

For G&A in the quarter declined sequentially to about $2 2 million to $7 million was that.

I mean is that the run rate going forward or what was the G&A in the prior quarter attributed to or has that changed and stock based comp mostly.

I think.

Okay.

<unk> seen for the fourth quarter is the levels that we're targeting going forward around 25 3 million.

And we're confident that we're going to achieve such levels now in some cases when there is as you know the equity incentive plan is frontloaded into usually issued in the beginning of the year. So usual in the first quarter. So we give you will see some additional noncash expense during the <unk>.

But otherwise in terms of cash expenses, we don't expect.

Increases in given the.

Fleet size of the company increase the GM.

On a per vessel per day basis will you be using steadily going forward.

Okay, Great and then can you can you.

Do you still have the warrants that you have outstanding is it still about if you mind showing that about $7 million and does the exercise price adjust lower with each dividend player payer or was it just that $1 special dividend no vis vis vis our warrants.

Do not have any adjustment provisions for regular dividends.

Certainly.

One of dividends.

So the quarterly dividends that we're now paying are not affecting the price of the warrants which remains at $2 25.

And we have currently around $6 9 million of those outstanding.

Okay.

Then with the Forbes <unk> strategy going forward or expecting less of a percent of the days after <unk>.

<unk> to be to be fixed.

Is that can you.

You reiterate your comments there please.

Yes, that's correct.

Back in December in November, we decided to fix forward in order to cover the Q1, which is traditionally.

The biggest quarter of the year.

Of course, when we saw levels at 14000 for Q1 when the same thing was in single digits. A few months ago of course that goes on.

Attunity that we have to take in order to reduce our exposure and minimize the loss for the company. So it was a risk control of course, we didn't know at the time that Q1 of 'twenty 'twenty four would be the strongest Q1 over the last 10 15 years. So we did cut our losses and we of course.

Did a very good risk control, but at the same time, we have kind of cut the profits of the company for cure, However, Q2 and going forward. We are now examining our options and if we decide to proceed that's going to be at substantially higher levels of it.

They're expert portal.

And one last one is it correct for the timeline, if you would decide to order a new dry bulk ship, whether a caper cans or panamax would it be I mean at this point based on the other company announcements second half of 2007 the earliest delivery.

Seen opportunities to order before that timeline.

Thats pretty accurate type, yes for Cape sizes, we're touching well into 2027 four comes out March there might be some scattered.

Slots here and there even in 2026, but we're talking about minimal.

You know opportunity this year, but the capesize, which is the most significant but talking about well into 2027%. So that's a very accurate statement.

Okay.

Thank you for answering my questions.

Thank you David <unk> from you. Thank you.

We have no further questions at this time I will now hand back to you for closing remarks.

Excellent. Thank you very much operator, and thanks, everyone for participating in our Q4 and full year 2023 results. Thank you very much you now may disconnect your phones.

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

Okay.

Okay.

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