Q1 2026 Himalaya Shipping Ltd Earnings Call

May 21, 2026

Speaker #2: Welcome to Himalaya Shipping Q1, 2026 financial results presentation. Today's call is being recorded. If you have any objections, please disconnect at this time. For the first part of this call, all participants will be in a listen-only mode, and afterwards there will be a question-and-answer session.

Operator: Welcome to Himalaya Shipping Q1 2026 Financial Results Presentation. Today's call is being recorded. If you have any objections, please disconnect at this time. For the first part of this call, all participants will be in a listen-only mode, and afterwards, there will be a question and answer session. To ask a question, please press five star on your telephone keypad. I will now turn the call over to CEO, Lars-Christian Svensen. Please begin.

Speaker #2: To ask a question, please press five-star on your telephone keypad. I will now turn the call over to CEO Lars Kristian Svendsen. Please begin.

Speaker #3: Thank you, operator. Welcome to the Q1 2026 conference call for Himalaya Shipping. My name is Lars Kristian Svendsen, and I will be joined here today by our Before we start the presentation, I would like to remind you that we will be discussing matters that are forward-looking.

Lars-Christian Svensen: Thank you, operator. Welcome to the Q1 2026 conference call for Himalaya Shipping. My name is Lars-Christian Svensen, and I will be joined here today by our CFO, Vidar Hasund. Before we start the presentation, I would like to remind you that we will be discussing matters that are forward-looking. These assumptions reflect the company's current views regarding future events and are subject to risks and uncertainties. Actual results may differ materially from those anticipated. I will now continue with the highlights of the quarter. We reported a net profit of $5 million and an EBITDA of $24.5 million. The time charter equivalent earnings for the quarter was approximately $32,300 per day. We entered into new index time charter agreements for both the Mount Etna and the Mount Matterhorn for a period of 11 to 14 and 12 to 14 months respectively, at significant premiums to the prevailing indices.

Speaker #3: These assumptions reflect the company's current views regarding future events and are subject to risks and uncertainties. Actual results may differ materially from those anticipated.

Speaker #3: I will now continue with the highlights of the quarter. We reported a net profit of $5 million and an EBITDA of 24.5 million. The time chart for equivalent earnings for the quarter was approximately 32,300 dollars per day.

Speaker #3: We entered into a new index time chart for agreements for both the Mount Ita and the Mount Matterhorn for a period of 11 to 14 and 12 to 14 months, respectively, at significant premiums to the prevailing indices.

Speaker #3: Cash distributions for the quarter totaled 18 cents. The company also entered into a contract to acquire an additional 4,200 shares in 2020 bulkers management AS from 2020 bulkers limited for 1.1 million Norwegian crowns.

Lars-Christian Svensen: Cash distributions for the quarter totaled $0.18. The company also entered into a contract to acquire an additional 4,200 shares in 2020 Bulkers Management AS from 2020 Bulkers Ltd. for NOK 1.1 million, which will be effective on 1 April 2026, increasing our total ownership from 40% to 54%. In subsequent events, we achieved time charter equivalent earnings for April 2026 of about $41,600 per day, and we declared a cash distribution of $0.15 for the same month. We also entered into a new time charter agreement for the Mount Emei for a period of 12 to 14 months at an index link rate, also at a significant premium to the Baltic Capesize Index. With that, I will now pass the word to Vidar.

Speaker #3: Which will be effective on April the 1st, 2026, increasing our total ownership from 40 to 54 percent. In subsequent events, we achieved time chart equivalent earnings for April 2026 of about 41,600 dollars per day and we declared a cash distribution of 15 cents for the same month.

Speaker #3: We also entered into a new time chart for agreement for the Mount Emi for a period of 12 to 14 months at an index link rate, also at a significant premium to the Baltic Excise Index.

Speaker #3: And with that, I will now pass the word to Vidar.

Speaker #4: Thank you, Lars Kristian. Himalaya Shipping reports a net profit of $5 million and earnings per share of 11 cents for Q1, 2026, compared to a net loss of 6.4 million and loss per share of 14 cents for Q1, 2025.

Vidar Hasund: Thank you, Lars-Christian Svensen. Himalaya Shipping reports a net profit of $5 million and earnings per share of $0.11 for Q1 2026, compared to a net loss of $6.4 million and loss per share of $0.14 for Q1 2025. Operating profit was $17.2 million, and EBITDA was $24.5 million for the quarter, compared to operating profit of $6.5 million and EBITDA of $13.8 million for the same period last year. Operating revenues were $33.6 million for Q1 2026, compared to $22 million for the same quarter in 2025. The increase in revenues is due to higher time charter equivalent earnings achieved, which is up from 21,100 in Q1 2025 to 32,300 in Q1 2026. Vessel operating expenses were $7.4 million in Q1 2026, compared to $6.9 million in Q1 2025. The increase is primarily due to higher costs for crew spares, service fees, and insurance costs.

Speaker #4: Operating profit was 17.2 million dollars and EBITDA was 24.5 million for the quarter, compared to operating profit of 6.5 million and EBITDA of 13.8 million for the same period last year.

Speaker #4: Operating revenues were 33.6 million dollars for Q1, 2026, compared to 22 million for the same quarter in 2025. The increase in revenues is due to higher time chart equivalent earnings achieved, which is up from 21,100 in Q1, 2025 to 32,300 in Q1, 2026.

Speaker #4: Best operating expenses were 7.4 million dollars in Q1, 2026, compared to 6.9 million in Q1, 2025. The increase is primarily due to higher costs for crew spare service fees and insurance costs.

Speaker #4: The average OPEX per day was 6,800 dollars, compared to 6,400 dollars per day during Q1, 2025. GNA for the fourth quarter was 1.2 million dollars, compared to 1.1 million dollars in Q1, 2025.

Vidar Hasund: The average OPEX per day was $6,800, compared to $6,400 per day during Q1 2025. G&A for Q4 was $1.2 million, compared to $1.1 million in Q1 2025. Interest expense was $12.4 million in Q1 2026, which is a $0.7 million decrease compared to the same period in 2025 due to a lower average loan principal outstanding in Q1 2026 as a result of loan repayments. Cash and cash equivalents were $24.5 million at the end of the quarter. Our minimum cash requirement under our sale-lease-back financing is $12.3 million. Outstanding balance on the sale-lease-back financing was approximately $694 million at the end of Q1, down from approximately $701 million at the end of 2025, reflecting scheduled repayments. Cash flow from operations was $9.8 million for Q1, compared to $0.3 million for the same period in 2025.

Speaker #4: Interest expense was 12.4 million dollars in Q1, 2026, which is 0.7 million decrease compared to the same period in 2025, due to a lower average loan principle outstanding in Q1, 2026 as a result of loan repayments.

Speaker #4: Cash and cash equivalents were 24.5 million dollars at the end of the quarter. Our minimum cash requirement under our sale easeback financing is 12.3 million dollars.

Speaker #4: Outstanding balance on the sale easeback financing was approximately 694 million at the end of the first quarter, down from approximately 701 million at the end of 2025, reflecting scheduled repayments.

Speaker #4: Cash flow from operations was 9.8 million dollars for the first quarter, compared to 0.3 million dollars for the same period in 2025. Himalaya Shipping have declared total cash distributions to shareholders of 18 cents per share for the months of January, February, and March 2026.

Vidar Hasund: Himalaya Shipping have declared total cash distributions to shareholders of $0.18 per share for the months of January, February, and March 2026. That completes the financial section. Back to you, Lars-Christian Svensen.

Speaker #4: That completes the financial section and back to you, Lars Kristian.

Speaker #3: Thank you, Vidar. Before I guide you through our market section, here are some company updates. Our fleet of 12 modern Newcastlemaxes with dual-fuel LNG is in the top 1% emission rating for large bulk carriers.

Lars-Christian Svensen: Thank you, Vidar. Before I will guide you through our market section, here are some company updates. Our fleet of 12 modern Newcastlemaxes with dual fuel LNG is in the top 1% emission rating for large bulk carriers. The attractive financing combined with a very clear capital allocation structure has led to 28 monthly consecutive dividends. In Q1 2026, this amount to $0.18. Most of our fleet is fixed out on long-term index link contracts with conversion options. The all-in cash breakeven equivalent to the Baltic Capesize Index is about $17,300 per day, i.e., every time you see the Baltic Capesize Index above $17,300, Himalaya Shipping is turning a profit. Our preferred commercial strategy is still to charter out the majority of our vessels on index link charters.

Speaker #3: The attractive financing, combined with a very clear capital allocation structure, has led to 28 consecutive monthly dividends. In Q1 2026, this amounted to $0.18.

Speaker #3: Most of our fleet is fixed out on long-term index link contracts with conversion options. And they're all in cash break-even equivalent to the Baltic Cape size index is about 17,300 dollars per day.

Speaker #3: I.e., every time you see the Baltic Cape Size Index above $17,300, Himalaya Shipping is turning a profit. Our preferred commercial strategy is still to charter out the majority of our vessels on index-linked charters.

Speaker #3: That allows us to capture the upside at each given market rise and also gives us good flexibility to convert fixed rates with solid counterparts when we see value on the forward FFA curve.

Lars-Christian Svensen: That allows us to capture the upside at each given market rise and also gives us good flexibility to convert fixed rates with solid counterparts when we see value on the forward FFA curve. Currently, 11 out of our 12 ships are exposed to the spot market to capture what we believe will be a continued strong year ahead. To illustrate our fleet and commercial performance, you can see on this slide that since inception, the Himalaya vessels are traded to an average 48% premium to the Baltic Capesize Index and a 25% premium to peers. This is achieved by the extra cargo intake on our vessels and top-tier speed and consumption design on our fleet.

Speaker #3: Currently, 11 out of our 12 ships are exposed to the spot market to capture what we believe will be a continued strong year ahead.

Speaker #3: To illustrate our fleet and commercial performance, you can see on this slide that since inception, the Himalaya vessels are traded to an average 48% premium to the Baltic Cape size index and a 25% premium to PIRS.

Speaker #3: This is achieved by the extra cargo intake on our vessels and top tier speed and consumption design on our fleet. We always strive to have as many tools as possible to navigate this volatile market so that we can turn our position quickly from long to short or vice versa should we see a clear trend.

Lars-Christian Svensen: We always strive to have as many tools as possible to navigate this volatile market so that we can turn our position quickly from long to short, or vice versa, should we see a clear trend. Here you can see our dividend capacity based on various rate scenarios for a standard Capesize vessel. When the Baltic Capesize Index trades around today's levels, $40,000 a day, the company will yield about 18%. When we see moves to around the $50,000 per day range, we will produce a yield of around 28%. When we see $60,000 per day on the Baltic Capesize Index, Himalaya will yield close to 35% on the current share price. Now let's have a look at the market. We had the best start to the Capesize in Newcastlemax market this year since 2010.

Speaker #3: Here you can see our dividend capacity based on various rate scenarios for a standard Cape size vessel. When the Baltic Cape size index trades around today's levels, 40,000 dollars a day, the company will yield about 18%.

Speaker #3: When we see moves to around the 50,000 dollar per day range, we will produce a yield of around 28%. And when we see 60,000 dollars per day on the Baltic Cape size index, Himalaya will yield close to 35% on the current share price.

Speaker #3: Now let's have a look at the market. We had the best start to the Capesize in the Newcastlemax market this year since 2010.

Speaker #3: Much of this can be credited to the large bulk side volumes exported from Guinea, slowed down in speed on the overall fleet, and global port waiting time has also increased.

Lars-Christian Svensen: Much of this can be credited to the large bauxite volumes exported from Guinea, slowdown in speed on the overall fleet, and global port waiting time has also increased. We believe that the structural ton-mile change in the Capesize Newcastlemax trades can drive this market further, as we will be discussing in the following slides. Ton-mile in Q1 for Capesize increased 4.3% year over year. We can yet again thank the increased bauxite volumes from Guinea, which contributed a 23% increase year over year and a 4.8% increase from global iron ore trades. Year over year iron ore export from Brazil was down 1%, Australian iron ore volumes were up 4% in Q1.

Speaker #3: We believe that the structural ton mile change in the Cape size Newcastle Max trades can drive this market further as we will be discussing in the following slides.

Speaker #3: Ton-mile in Q1 for Capesize increased 4.3% year over year. We can yet again thank the increased bulk-side volumes from Guinea, which contributed a 23% increase year over year, and a 4.8% increase from global INO trades.

Speaker #3: Year-over-year INO exports from Brazil were down 1%, and Australian INO volumes were up 4% in Q1. As discussed in the previous slide, we saw that global INO exports are continuing to increase.

Lars-Christian Svensen: As discussed in the previous slide, we saw the global iron ore exports are continuing to increase, albeit a flat quarter compared to last year from Brazil. The Chinese seaborne iron ore imports are up, which again emphasized the Chinese hunger for high-grade iron ore, which can be found outside the country's borders. Chinese imported iron ore inventories are down from the peak. We keenly observed from the bottom right graph that inventories correlate well with the increased Chinese iron ore consumption over the last few years. As we have discussed in previous reports, the domestic Chinese Fe content is reported to be around 20%, but the imported volumes from Brazil and Guinea contains an Fe content of mid to high 60%. This has led to a slowdown in domestic Chinese production. High-grade iron ore from overseas still remains a preference.

Speaker #3: Albeit a flat quarter compared to last year from Brazil, the Chinese Seabourn INO imports are up, which again emphasizes the Chinese hunger for high-grade INO, which can be found outside the country's borders.

Speaker #3: Chinese imported INO inventories are down from the peak, and we keenly observed from the bottom right graph that inventories correlate well with the increased Chinese INO consumption over the last few years.

Speaker #3: As we have discussed in previous reports, the domestic Chinese SE consent is reported to be around 20%, but the imported volumes from Brazil and Guinea contain an SE consent of mid to high 60s.

Speaker #3: This has led to a slowdown in domestic Chinese production and high-grade INO from overseas still remains a preference. We have discussed the bulk side trade extensively in several quarterly presentations and for good reason.

Lars-Christian Svensen: We have discussed the bauxite trade extensively in several quarterly presentations and for good reason. After a record bauxite output from Guinea in 2025, new export records have been registered so far in 2026, which you can see from the left graph. In conjunction with the increasing volumes departing the country, you can also see that the bauxite is taking over more market share from the other commodities and is now responsible for 20% of the total cargo transported on Capes and Newcastlemaxes. This plays directly into the structural ton-mile story that we see unfolding at the moment. The Simandou mine is now up and running, and the first iron ore volumes from this mine commenced in November 2025. The target remains at 120 million tons of exported high-grade iron ore per annum to the market.

Speaker #3: After record bulk side output from Guinea in 2025, new export records have been registered so far in 2026, which you can see from the left graph.

Speaker #3: In conjunction with the increasing volumes departing the country, you can also see that the bulk side is taking over more market share from the other commodities and is now responsible for 20% of the total cargo transported on Capes and Newcastle Maxis.

Speaker #3: This plays directly into the structural ton mile story that we see unfolding at the moment. The Simondu mine is now up and running and the first INO volumes from this mine commenced in November 2025.

Speaker #3: Target remains at 120 million tons of exported high-grade INO per annum to the market. As you can observe from the right graph, export volumes have caught momentum over the last few weeks, which indicates that the mine-to-vessel logistics are improving and further growth can be expected.

Lars-Christian Svensen: As you can observe from the right graph, export volumes have caught momentum over the last few weeks, which indicates that the mine to vessel logistics are improving and further growth can be expected. We're also monitoring closely the capacity increase from Vale, which can add further strength to an already export-focused Atlantic basin to boost ton-mile further. We have seen from other segments that order books can increase quickly. However, in Capesize and Newcastlemax, this has been a slow-moving operation. We keenly observe a 14% order book of the total existing Capesize fleet. Active shipyards are down 60% from the peak of 2008, making it challenging to build any fleet capacity that could distort the favorable supply dynamics over the next few years.

Speaker #3: We're also monitoring closely the capacity increase from Bale, which can add further strength to an already export-focused Atlantic basin to boost ton mile further.

Speaker #3: We have seen from other segments that order books can increase quickly. However, in Cape size in Newcastle Max, this has been a slow-moving operation.

Speaker #3: We keenly observe a 14% order book of the total existing Cape size fleets. Active shipyards are down 60% from the peak of 2008, making it challenging to build any fleet capacity that could distort the favorable supply dynamics over the next few years.

Speaker #3: As a comparison to other shipping segments, you can see from the right graph that the Cape size order book to fleet ratio is still the most compelling in the large shipping space.

Lars-Christian Svensen: As a comparison to other shipping segments, you can see from the right graph that the Capesize order book to fleet ratio is still the most compelling in the large shipping space. In addition to the low order book, the current Capesize and Newcastlemax fleet is aging fast. Around 46% of the total fleet was built between 2009 and 2015. That means that close to 30% of the fleet will be over 20 years of age in 2030. As it looks now, we have visibility into supply for the next 2 years, making it difficult to add any meaningful large dry bulk capacity in time to deal with the rapidly aging fleet. We continue to see a significant increase in dry docks due to mandatory special surveys required on merchant vessels every 5 years.

Speaker #3: In addition to the low order book, the current Cape size in Newcastle Max fleet is aging fast. Around 46% of the total fleet was built between 2009 and 2015.

Speaker #3: That means that close to 30% of the fleet will be over 20 years of age in 2030. As it looks now, we have visibility on the supply for the next two years, making it difficult to add any meaningful large tribal capacity in time to deal with the rapidly aging fleet.

Speaker #3: We continue to see a significant increase in dry docks due to mandatory special surveys, required of merchant vessels every five years. 12% of the entire Cape size fleet was delivered in 2011 and will have to undergo 15-year special surveys in 2026.

Lars-Christian Svensen: 12% of the entire Capesize fleet was delivered in 2011 and will have to undergo 15-year special surveys in 2026. To build 5 and 10-year special surveys as well, meaning around 24% of the total Capesize or Newcastlemax fleet will be competing for dry dock space this year. We estimate a total of 1.7% additional off-hire on the total fleet due to dry docks alone in 2026, not factoring in potential congestion and waiting time. Thank you. I will now pass the word back to the operator and welcome any questions you might have.

Speaker #3: There will be five and 10-year special surveys as well, meaning around 24% of the total Cape size in Newcastle Max fleet will be competing for dry dock space this year.

Speaker #3: We estimate a total of 1.7% additional off-wire on the total fleets due to dry docks alone in 2026, not factoring in potential congestion and waiting time.

Speaker #3: Thank you. And I will now pass the word back to the operator and welcome any questions you might have.

Speaker #5: Thank you. If you do wish to ask a question, please press 5 star on your telephone keypad. To withdraw your question, you may do so by pressing 5 star again.

Operator: Thank you. If you do wish to ask a question, please press five star on your telephone keypad. To withdraw your question, you may do so by pressing five star again. We will have a brief pause while questions are being registered. The first question is from the line of Eirik Kolsrud from Clarksons Securities. Please go ahead. Your line will now be unmuted.

Operator: Thank you. If you do wish to ask a question, please press five star on your telephone keypad. To withdraw your question, you may do so by pressing five star again. We will have a brief pause while questions are being registered. The first question is from the line of Even Kolsgaard from Clarksons Securities. Please go ahead. Your line will now be unmuted.

Speaker #5: We will have a brief pause while questions are being registered. The first question is from the line of Evan Kolzko from Clarkson Securities. Please go ahead.

Speaker #5: Your line will now be unmuted.

Speaker #6: Thank you. So my first question is towards the market outlook. We do sound more optimistic than the broader market, and earlier today you reported calling this the start of a super cycle.

Eirik Kolsrud: Thank you. My first question is towards the market outlook. We do sound more optimistic than the broader market, and earlier today, you reported calling this the start of a super cycle. Looking at the FFA curve and consensus, they are assuming lower rates than your view implies. Where do you think the market is getting it wrong? What do you see as the main drivers that take rates higher from where it is today?

Even Kolsgaard: Thank you. My first question is towards the market outlook. We do sound more optimistic than the broader market, and earlier today, you reported calling this the start of a super cycle. Looking at the FFA curve and consensus, they are assuming lower rates than your view implies. Where do you think the market is getting it wrong? What do you see as the main drivers that take rates higher from where it is today?

Speaker #6: So, looking at the FFA curve and consensus, they are—implies. So, where do you think the market is getting it wrong? And what do you see as the main drivers that take rates higher from where it is today?

Lars-Christian Svensen: Hi there. Well, if you look at the current FFA curve, specifically Q3 and Q4, that has remained fairly stable over the last few months. At the same time, we've seen the tightness in Atlantic, which has also been a big contributor to the current high levels that we have. I don't think we've seen that fully priced yet, in the forward curve. Based on the volumes that we see, especially encouraging to see that Aussie volumes are coming upstream and the very strong bauxite volumes we've seen in Q1. Also the structurally short Atlantic that we have now compared to 3, 4 years ago, where we had more backhaul business from the Pacific into the Atlantic, which we don't really see much of anymore.

Speaker #7: Hi there. Well, if you look at the current FFA curve, then specifically Q3 and Q4, that has remained fairly stable over the last few months.

Speaker #7: But at the same time, we've seen the tightness in Atlantic, which has also been a big contributor to the current high levels that we have.

Speaker #7: And I don't think we've seen that fully priced yet. In the forward curve. So based on the volumes that we see, especially encouraging to see that the Simondu volumes are coming upstream, and the very strong bulk side volumes we've seen in Q1, we'd also the structurally short Atlantic that we have now compared to three, four years ago, where we had more backhaul business from the Pacific into the Atlantic, which we don't really see much of anymore.

Speaker #7: So this structurally short Atlantic with more volumes coming on from Atlantic and out to Pacific, we think that that will have a positive effect on the future market as well.

Lars-Christian Svensen: This structurally short Atlantic with more volumes coming on from Atlantic and out to Pacific, we think that will have a positive effect on the future market as well. Which is naturally reflected in the fact that we have 11 out of our 12 ships in the spot market.

Speaker #7: Which is naturally reflected in the fact that we have 11 out of our 12 ships in the spot market.

Eirik Kolsrud: Given that market outlook, you also have a share now that is trading well above the NAV today based on current broker values, which also gives you currency for potential acquisitions. Given your outlook and your stock as a potential currency, is fleet expansion something that you are considering?

Even Kolsgaard: Given that market outlook, you also have a share now that is trading well above the NAV today based on current broker values, which also gives you currency for potential acquisitions. Given your outlook and your stock as a potential currency, is fleet expansion something that you are considering?

Speaker #6: outlook, you also have a share now that is trading well above the NAV today. Based on current broker values, which also gives you a currency for potential acquisitions.

Speaker #6: So given your outlook and your stock as a potential currency, is fleet expansion something that you are considering?

Speaker #7: Now, we are always trying to make accreted business for the shareholders and also to try and grow the company. But one of the reasons why we trade above our NAV, we have a very simple and transparent model.

Lars-Christian Svensen: No. We are always trying to make accretive business for the shareholders and also to try and grow the company. One of the reasons why we trade above our NAV, we have a very simple and transparent model. The investors know what they're buying. We have solid counterparts, and also we have a low G&A. I think it's a combination of many things, but we're always going to be on the lookout to make the company more interesting for our shareholders.

Speaker #7: The investors know what they're buying. We have solid counterparts. And also we have a low GNA. So I think it's a combination of many things.

Speaker #7: But we're always going to be on the lookout to make the company more interesting for our shareholders.

Speaker #6: Thank you. That's all from me.

Eirik Kolsrud: Thank you. That's all from me.

Even Kolsgaard: Thank you. That's all from me.

Speaker #7: Thank you.

Lars-Christian Svensen: Thank you.

Speaker #5: And let me just remind you that if you do wish to ask a question, please press 5 star on your telephone keypad. It appears that we do not have any further questions at this time.

Operator: Let me just remind you that if you do wish to ask a question, please press 5 star on your telephone keypad. It appears that we do not have any further questions at this time, so I'll hand it back to the speakers. Please go ahead.

Speaker #5: So, I'll hand it back to the speakers. Please go ahead.

Speaker #7: Thank you very much for listening in. And we look forward to speak to you again the next quarter. Thank you very much.

Lars-Christian Svensen: Thank you very much for listening in, and we look forward to speak to you again the next quarter. Thank you very much.

Speaker #6: Thank you.

Eirik Kolsrud: Thank you.

Even Kolsgaard: Thank you.