Q1 2024 C3is Inc Earnings Call
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Good day, and thank you for standing by and welcome to the C. Free I S Q1, 2024 financial and operating results conference call and webcast all participants will be in listen only mode for a while at this conference with no question at all.
Session at the end.
Note that today's conference is being recorded I would now like turn the conference over to your Doctor Yeah man to send royalty space go ahead.
Good morning, everyone and welcome to her she can't get its first quarter earnings conference call and webcast.
This is Jim on behalf of the geography of the company.
Joining me on the call today is our CFO.
The political misrepresentation that would like to remind you that we won't be discussing forward looking statements, which reflect current views with respect to future events and financial performance and are based on current expectations and assumptions, which by nature inherently uncertain and outside of the company's control.
At this stage if you could all take a moment to read our disclaimer on slide two of this presentation.
I would also like to point out that all amounts quoted unless otherwise clarified I am pleased with you stated in us dollars.
Today, we released our earnings results for the first quarter of 'twenty 'twenty four so let's proceed to discuss these results and update you on the company's strategy and the market in general.
Please turn to slide three where we summarize and highlight the company's performance starting with our financial highlights.
We have the great stock for 'twenty 'twenty four we said, maybe the $5 7 million compared to one 4 million for Q1 'twenty two 'twenty three mainly due to the contribution from the Aframax tanker that joined the fleet in Q3 'twenty to 'twenty three.
Our net income was $3 8 million compared to 0.8 million for Q1 2023, an increase of 475%.
Vessels net value was seven 3 million at the end of March 'twenty 'twenty, four compared to $75 2 million at December 31st 2024.
In Q2, 'twenty 'twenty four the vessels bought you will increase by approximately $16 2 million after the delivery of the bulk carrier that the company recently acquired.
Our net cash balance was $34 9 million at the end of March when 74 compared to 9 million at the end of December 2023.
This was a combination of three major items net profit from our normal business operations receivables of 6 million recorded at the end of Q4 2023 that were collected in Q1, 'twenty 'twenty four and the net proceeds of around 12 million from two share offers that took place in the first quarter 'twenty 'twenty four.
Our D C for Q1, 'twenty 'twenty four was $36 five K more than doubled the rate for Q1, 'twenty to 'twenty, three which was $15 92.
The income from the Aframax tanker is the main contributor to this exceptional increase.
On the fleet value the company commenced operations with two handy sized carriers with a total capacity of 64000 deadweight. Since then we acquired an aframax tanker or 415000 dead weight in <unk> 2023 and more recently, an additional 56000 deadweight bulk carriers, bringing that.
Total current fleet capacity to 213000 deadweight, we said number of dates of 15.3 years.
I stated in recent press releases the company received a written notification from NASDAQ as a company shares well below $1 for fact checking these days, which is the minimum bid price for continued listing on the capital market.
In order to regain compliance the company effected and one 400 and the reverse stock split of the company's common stock in April 'twenty 'twenty four.
Moving on to slide four the proceeds from three public offerings had on their lives.
The first offering wasn't July 22, and three which resulted in net proceeds of $4 4 million. The second and third offerings were in January and March 24, respectively. With total net proceeds of $11 3 million warrants exercised offset each other okay.
The culmination of three public offerings resulted in a total of $16 4 million.
Less than one year, our cash balance increased by 285% and our fleet capacity expanded by 274%. After the acquisition of the Aframax tanker in July 23, and handy size die bulk carrier in April 'twenty 'twenty four.
Slide five shows the dry bulk trade during the first quarter of 'twenty 'twenty four global steel output rose, 1% year on year driven by activity outside China.
Production in China fell, 3%, but China still accounted for 54% of the total.
China's imports of iron ore increased by five 3% five year seasonal high.
Weren't seaborne iron ore trade rose, 5%, the additional coming from Brazil, India in Ukraine.
China's production of coal fell by 4.1% due to the oversupply of coal at the end of 2023, the Chinese new year holidays, and vigorous safety inspections across mines contributed to lower production.
Falling prices of a casual commodities and better crop yields in north and South America are expected to support Green trade in 'twenty to 'twenty four sports from China. That's the four year notes due two crushing margins being negative territory since October 2023.
Slide six shows the increasing demand for dry bulk commodities versus the total dry bulk carrier fleet growth.
Dry bulk demand. This is expected to increase by three 6% in 'twenty to 'twenty four.
<unk> seen demand there being highly supported by firm Chinese demand for dry bulk commodities, while we're working away from the Red Sea area on the restrictions imposed in Panama Canal transits further support dry bulk ton mile demand growth.
After contracting 1% in 2022 minor bulk ton mile trade increased by 3% in 2023, while it is expected to increase by five 2% in 2024 and by two 7% in 2025.
On the flip growth the dry bulk carrier order book stood at historically low levels of nine 3% at the end of April.
Eight 6% of the total dry bulk carrier fleet is older than 20 years of age.
The total dry bulk carrier fleet grew by three 1% in 2023 is currently expected to grow by 3% in 'twenty 'twenty four and by two 5% in 2025.
Players with new environmental regulations, coupled with nobody its fleet mining youre scrapping, thus reducing available feed supply.
Moving onto slide seven we see attractive opportunities ahead for the tanker market. Despite the ongoing crude oil production cuts enforced by OPEC members industry participants believe that the tanker market environment will remain healthy through 2025.
Tanker demand outlook remains robust supported by growth in crude oil trade volumes Oswald lives by trade pattern, she's horizon from Red She diversions benefiting long haul routes, thus boosting ton mile demand.
Crude oil demand in ton mile terms grew by five 8% in 'twenty to 'twenty three is expected to grow by three 2% in 2024 and by three 6% in 2025.
Seaborne crude oil trade has been supported by increasing demand from China and rising exports from suppliers in the Americas.
In 2023 crude oil trade is estimated to have increased by five 2% or 334 million deadweight, whereas in 'twenty to 'twenty four it is expected to further increase by two 5% or 342 million deadweight.
The crude tanker trading fleet grew by three 7% in 2023, and Sky and do you expect them to grow by almost zero in 2024 and 0.9% in 2025.
Emissions regulations I'd expect it to have a further moderating impact on active tanker supply.
Slide eight shows the handy size fleet the agent growth.
The order book for handy sized dry bulk carriers stood at 9% of the existing fleet as of May 2024.
Compared to year end 2023, the order book for handy sized dry bulk carriers declined by 12, 4%.
Almost 40% of the handy size dry bulk carrier fleet is between 10 to 14 year, so rates, while the total of 27% of the trading fleet is estimated to be 15 years or older.
Compliance with strict environmental regulations is likely to accelerate demolition, thus reducing available handy size fleet supply.
On the flip side, the handy size dry bulk carrier fleet growth stood at three 2% analysts expect the supportive handy size dry bulk carrier net fleet growth for the years to come specifically net fleet growth is expected to grow by about four 4% in 'twenty 'twenty four and three five <unk>.
Sent in 2025.
Slow steaming retrofitting time asked part of complying with new Environmental regulations are also factors that are expected to reduce available fleet supply in the years to come.
The outlook for the hand, the bulker market in 'twenty 'twenty four cautiously optimistic with room for gradual improvements. According to current projections for the growth in market demand is expected to be slightly above fleet expansion combined with a constrained delivery schedule and the potential for increased demolitions several factors, including the effects from <unk>.
It's in the Gulf of Aden implementation of reduced vessel speeds and extended the retrofitting time due to environmental regulations, coupled with the announced constraints in the Panama Canal, which are likely to last well beyond first half 'twenty 'twenty, four and poised to shape market dynamics.
Slide nine shows the Aframax tanker fleet age and growth.
The order book for Aframax tanker vessels stands at just 6% of the existing fleet in May 2020 for us.
As compared to year end 2023, the order book for Aframax tanker vessels declined by four 3%.
Almost 70% of the Aframax tanker vessel fleet is between 15 to 19 years of age while 20% of the trading fleet is older than 20 years.
I suppose the handy size dry bulk carriers compliant with shrinking there might a mental ablation is likely to accelerate demolition, thus reducing available aframax tanker fleet supply.
In 2020, the net fleet growth for crude Aframax tankers stood at one 7%. It's expected that the fleet will grow by just 0.7% in 2024 and 0.5% in 2025.
Supply and demand fundamentals in the Aframax tanker segment appear balanced as demand is projected to grow at a higher rate than supply by about 2% in 2024 and 3% in 2025.
Slide 10 shows the current fleet of C. Three I guess.
By the end of Q1 2024, she three years owned operated a fleet of two handy sized dry bulk carriers and laden aframax tanker in May 2024. The company took delivery of the 33000 deadweight of dry bulk carriers, the eco speed fire, bringing the total capacity to 213000 deadweight.
And average age of 13 three years.
Payment for Aerosmith fire will have to be made by April 2025.
All vessels have had their ballast water systems already installed. Furthermore, there are no immediate capital commitments for special surveys.
<unk> is in Q3 2025.
All vessels are currently unencumbered and currently employed on short to medium term period charters and spot voyages for the contracted revenues of the company. The Echo Bush fires on time charter at the daily rate of nine and a half thousand until June 2024, the acquaintance bays when a time charter the daily rate of 10000 until.
July 2024, the entrepreneur to extra banner is on spot voyages and the newly acquired Ecofreak fires on the time charter the daily rate of INR 5000 until June 2024.
Slide 11 shows a sample of international Charterers, with whom the management company has developed strategic relationships and has experienced repeat business.
This highlights the confidence our customers have for our operations and the satisfaction of the services we provide.
Because it keeps them maintaining our relationships with these companies are high standards of safety and reliability of service.
I will now turn over the call to lean up India for our financial performance.
Thank you, Jim Mondays and good morning to everyone. Please turn to slide 12, and I will go through our financial performance for the first quarter of 2024.
Revenues for the three months ending 31st of March 'twenty 'twenty four.
Mounted 12.8 million corresponding to a daily TCE of 26400 <unk>.
Compared to Q1, 'twenty three our net revenues increased by 247% and our TCE more than doubled mainly due to the contribution from our Aframax tanker.
Our fleet operational utilization was 93, 4% for the first quarter was plentiful.
Back to 96% for the first quarter of 'twenty three.
Voyage expenses and vessels operating expenses for the three months ended March 31, 'twenty plentiful, what $2 8 million and $1 8 million respectively.
For the first quarter of 'twenty, three that Chico's was 285000 and $1 million.
The increases in both our voyage expenses and vessels operating expenses are attributed to the increase in the average number of vessels due to the addition of their farmer Mac's tanker to the initial fleet.
Voyage expenses for the first quarter of 'twenty four mainly included bunker cost of one 8 million.
Funding to 64% of total voyage expenses are.
Operating expenses for the three months ending 31st of March 10, before mainly included crew expenses of 900000 corresponding to 50% of total operating expenses.
Pass and consumable cost of 400000 corresponding to 22% and maintenance expenses of 200000.
Presenting works and repairs on both the vessels corresponding to 210% of total vessel operating expenses.
Management fees increased by 52% from Q1 'twenty three due to the increase in the average number of vessels.
General and administrative costs were $1 5 million, mainly related to the expenses incurred from the two public offerings and the reverse stock split.
Depreciation recorded in Q1, 24 was $1 4, million% to 50% increase from Q1 of last year.
Due to the increase in the average number of vessels.
Interest and finance finance costs for the period was 543000 and related to the accrued interest expense.
Related party as of March 31st 24 in connection with the $38 $7 million payable, which is part of the acquisition price of the of our Aframax tanker apropos to which is payable by July 24.
And realized loss on warrants for the three months ended March 31st 24 was $630000 and related to the net fair value losses of our class B, one and class B two warrants.
Carl C. One in situ warrants, which way shape during the first quarter of 24 hours.
As a result of the above for the three months ended 31st of March 24, The company reported a net income of $3 8 million.
Net income for the first quarter of 'twenty three was $751000.
Funding to an increase of 484% this quarter.
EBITDA for the three months ended 31st of March 24 amounted to $5 7 million, representing an increase of 301% from Q1 'twenty three.
Turning to slide 13 for the balance sheet. The fleet book value as at the end of March 24 was $73 8 million as at the end of Q1 'twenty for the cash and cash equivalents was $34 9 million an increase of 208, 5%.
From December 31st 293.
The company has no outstanding bank debt.
The financial liability of 39 million relates to the Aframax tanker that was acquired in July 23, and is due in July 24.
Concluding the presentation on slide 14, we outlined the key variables that will assist us progress with our company's growth.
A high quality fleet reduces operating costs improve safety and provides a competitive advantage in securing favorable charters.
We maintain the quality of the vessels by carrying out regular inspections, thus, while in port and at sea and adopting a comprehensive maintenance program for each vessel.
The company's strategy is to follow a disciplined growth with in depth technical and condition assessment review.
Management is continuously seeking timely and selective acquisitions of quality vessels with current focus on short to medium term charters and spot voyages.
We always charter to high quality charterers, such as commodity traders industrial companies and oil producers and and refineries.
The company maintains an adequate level of cash liquidity with no outstanding bank debt.
At this stage of all of our CEO, but Doctor del Monte Sandler your teeth wisdom summarized our concluding remarks for the periodic sampling.
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2024 started with a nonfinancial vigorous activity. So she's here, yes that will enable us to act differently as the windows of growth in the personal shopping.
During the first quarter of the year. We concluded two follow on equity offerings generating aggregate net proceeds of 11 4 million.
We also affected the reverse stock split of one for $100 of our common shares aimed at meeting the minimum bid price requirement for maintaining listing on Nasdaq.
In May we took delivery of our latest addition to the fleet vehicles Spitfire and 33000 deadweight 2012, Japanese built <unk> dry bulk carrier however payment will be affected in April 2025.
Our fleet has increased by 234% since the companys inception in less than a year ago.
Financial results for Q1, 2024 showed increases of 300% of our EBITA, 400% of our net income and 285% and our cash balance.
Things momentum are generally favorable and we are focused on identifying the optimal opportunities with our strategy remaining they've not growth earnings and returns from investments.
We believe that our capital structure comprising of no bank debt and a strong cash balance countries. Finally got over 40 million will further enhance our company's ability to fund selective vessel acquisitions falling payments of the remaining purchase price for our aframax and dry bulk carrier.
We aim at diversifying our fleet so as to have more impact on long term profits by re weighting of exposure different segments, thus, allowing stronger segments to bolster the weaker ones and smoothing the returns over time.
We would like to thank you for joining us today and look forward to having you with US again on our next call for our second quarter of 2024 results.
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Ladies and gentlemen. This concludes today's conference call. Thank you all for participating you may now disconnect your lines. Thank you.
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