Harry Vafias
Management
Good morning, everybody and thank you all for joining us at our Q1 '25 conference call for Imperial Petroleum. I'm Harry Vafias, the CEO of the company. Joining me on the call is Ms. Fenia Sakellari, who will be discussing our financial performance. Before we commence our discussion, please read the Safe Harbor disclaimer on Slide 2. In essence, it's clear that this presentation may contain some forward-looking statements as defined by the Private Securities Litigation Reform Act. We raise the attention of our investors to the fact that such forward-looking statements are based upon the current beliefs and expectations of Imperial Petroleum and are subject to risks and uncertainties which would cause future results to differ materially from these forward-looking statements. In addition, we would like to clarify that during this call we will quote monetary amounts. These, unless explicitly stated otherwise, are all denominated in U.S. dollars. On Slide 3, we're summarizing our key operational and financial highlights for Q1 '25. The first quarter of this year was quite eventful with policies such as U.S. tariffs, sanctions on tankers involved in Russian oil, and USD port fees on Chinese-built vessels. These turbulent events, along with ongoing geopolitical factors such as the Russian-Ukraine war, brought volatility to the rates, particularly for tankers. The quarter commenced with a broader softness in day rates, with the market picking up by March. Imperial Petroleum's performance followed the market conditions. We had quite a soft performance during the first couple of months of the year, but we took advantage of the market upside during March, hence managed to produce yet one more profitable quarter. It's worth to note that our quarterly profitability is ongoing since the fourth quarter of 2021. In spite of market rates being evidently softer than the same period of last year, with average rates for Suezmax and product tankers being lower by about 25%. In Q1 we generated revenues of $32.1 million and a net income of $11.3 million. What is satisfactory is that compared to the previous quarter, that is Q4 '24, our performance marked a notable improvement as revenue generation increased by $5.9 million, or 22.5%, while net income increased by $7.4 million, a rise equivalent to almost 190%. We remain profitable and debt-free. Our recurring profitability fuels our cash generation. We ended Q1 '25 with an envious cash base of close to $227 million. The cash base of Imperial Petroleum in isolation is about three times higher than our current market cap. On slide 4, we are providing a summary of our fleet employment. As mentioned, we have increased our time charter coverage. Seven out of our 13 ships are currently under time charter employment. In more detail, our three handysized dry bulk carriers are employed on short TCs, while four of our product tankers are under time charter employment with expiration dates between May '25 and August '27. Let us briefly comment on tanker spread rates. Market conditions in Q1 were softer than the beginning of Q4, still rates were stronger than the second half of Q4. From Q2 '24 onwards, crude oil demand was affected by the closing of East and West Arbitrage, while for products, reduced refinery runs contributed to normalizing earnings. During the first half of Q1 '25, soft earnings continued due to quieter activity in the Asian and Atlantic markets. The effect of sanctions on tankers involved in Russian trade imposed in March '25 tightened the capacity and strengthened the day rates. On slide 5, as we mentioned earlier, geopolitics governed the tanker market in the first quarter of '25. Hence, throughout the quarter, the tanker market was simply navigating and reacting towards the prevailing uncertainty. Q1 began with U.S. announcement of sanctions on 150 tankers involved in Russian and Iranian oil trade, raising sanctioned fleet capacity to 9.5% of the global VLCC fleet, 8.5% of the suezmax fleet, 12.5% of the Aframax fleet. These sanctions came into full effect in beginning of March '25 and had a positive effect on rates. However, the trade tariffs announced within February, with the U.S. imposing a 25% tariff on Canadian and Mexican imports and 10% tariff on Chinese imports, and the respective trading partners announcing retaliations, filled the market with uncertainty. The reason for this is that, over the long term, any trade disruption is a negative development as it affects demand for goods, hence has a direct impact on the shipping market. Currently, the market is not seriously affected, as within May, U.S. and China agreed to roll back tariffs for an initial 90 days period. The announced U.S. spot fees for Chinese-built ships, if implemented, would be excellent news for us, as none of our 19 vessels is Chinese-built. A latest development that has positively affected the tanker market is the OPEC announcement to increase output. The group announced to return 500,000 barrels per day between April and May. This added production gave a positive boost to tanker rates. Given the above, the trade of dirty tankers was positively affected by the OPEC sanctions on Russian business. Overall expectations for the dirty tankers, short to medium term, are positive mostly due to the OPEC unwinding production cuts, the sanctions on Russian and prohibition of the import of Russian crude and dirty products to Europe staying in place. On the clean product side, the weak Q4 '24 continued in Q1 '25. We saw a couple of small spikes in the spot market through Q1 '25, but they were short-lasting, with generally ample supply of ships both East and West of Suez. The situation in the Red Sea Gulf of Aden with the Houthis targeting commercial ships was one of the main reasons that in -- first half '24 was so strong and for the clean product market. Now we are in a situation where the Red Sea Gulf of Aden looks like it could open again following an announced ceasefire agreement between U.S. and Houthis. Should this reopening occur it should be a negative for the clean product tankers. Slide 6, we touch upon the tanker fleet fundamentals which look promising both for the Suezmaxes and product tankers. In both categories, aging fleet outweighs the impact of current order book. In terms of age distribution, about 20% of the product tankers between 44,000 and 50,000 dead with capacity is above 20 years of age, while the order book for these ships for the remainder of '25 and year '26 is in the order of 8.3%. On Suezmaxes, between 155,000 and 162,000 deadweight capacity, about 50% of ships are above 20 years of age, while the current order book up to the end of '26 is in the region of 12%. On slide 7, we are introducing Imperial Petroleum's recent and upcoming dry bulk fleet additions. Imperial Petroleum will add up until the beginning of Q3 a total of 7 ships, 5 supramaxes and 2 kamsarmaxes. With these additions, your fleet size will increase by 60% both in terms of number of ships and deadweight capacity. Following these deliveries, the fleet of Imperial Petroleum will count 19 ships, 10 bulk carriers and 9 tankers, with a total capacity of 1.2 million deadweight. Overall, dry bulk carriers have a less volatile market cycle than tankers, and we believe these strategic additions will add a conservative element of diversification to our broader fleet. In terms of employment, these vessels are typically employed on short-time charters, thus avoiding bunker costs and minimizing idle time. They also have a lower daily operational cost than tankers. Currently, the market for kamsarmax and panamamax dry bulk vessels is soft, but well above breakeven levels. The one year time charter rates for March '25 for a kamsarmax vessel was about $14,000. Due to the sizable element of these acquisitions, we expect every $2,000 increase in daily TC rates for these newly added ships to contribute an additional $5 million to our annual operating cash flow. Total capital commitment for these ships is about $129 million, and currently our cash stands at about $190 million, as within April '25 we repaid about $40 million for the purchase of the vessels Neptulus and Clean Imperial. Even though we'll have sufficient cash surplus following the payment of these dry bulk vessels, we do expect that our profitable operations will allow us to quickly accumulate cash at current levels. I'm now passing the floor to Ms. Sakellari to summarize our financial performance.