Imperial Petroleum Inc. (IMPPP) Q2 2026 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Imperial Petroleum second Quarter 26 Financial and Operating Results Conference Call and Webcast. At this time, all participants are in listen-only mode. Please be advised that this conference is being recorded. I would now like to hand the conference over to our first speaker today, Mr. Harry N. Vafias, CEO. Please go ahead.

Good morning, everyone, and thank you all for joining us for our Q2 and 6 months 26 conference call of Imperial Petroleum. I am Harry N. Vafias, the CEO of the company, and joining me on the call today is Ms. Sakellari, who will be discussing our financial performance. Before we commence our discussion, we would like you all to read the safe harbor disclaimer on Slide 2. In short, today's presentation includes forward looking statements under the Private Securities Litigation Reform Act. These statements reflect Imperial Petroleum's current expectations and beliefs. However, they are naturally subject to risks and uncertainties, meaning our actual future results could differ materially from what we discussed today. We would also like to clarify that all monetary values referenced on the call are US dollars except where explicitly noted. On Slide 3, we summarize our key operational and financial highlights for Q2. The second quarter of 26 was yet another milestone for our company. Characterized by record financial results in terms of revenue strategic fleet optimization and the commitment to a commercial strategy that continues to drive company value. Indeed, we are extremely pleased to report an all time high quarterly revenue of $87.1 million for Q2 representing a remarkable 41.2% sequential growth from Q1 26 and an impressive 140% increase year-over-year. This revenue improvement brought upon our vigorous fleet expansion along with strong markets for both tankers and bulkers fueled the second best quarterly net income in our history. At $34.8 million, up 172% compared to Q2 25. Furthermore, our performance for the first 6 months of 2026 has been exceptional. Net income for the 6 months reached $62.8 million which already exceeds our total net profitability for the entire 12 months of 2025. I. E, $50 million. In addition, our earnings per share for the 6 months is solid and about a quarter of our current share price. This profitability directly enhanced our liquidity, driving cash and cash deposits up to $245.2 million as of June 30. However, our current cash base has increased further and is now around $260 million. We strive to utilize our fleet as efficiently as possible Operational utilization for the second quarter stood at 73.5%, While lower than previous quarters, this temporary utilization decline was a strategic choice. Technical off hire accounted for 10.7% of the total fleet calendar days as we successfully managed a concentrated schedule of 6 dry dockings. Completion of these dry dockings now ensures our fleet operates at maximum efficiency and safety moving forward. We have another 7 dry dockings to complete up until the end of the year. Moreover, we have also been very active on fleet management From a commercial perspective, we continued on our already announced fleet expansion. On April 3rd, we took delivery of the dry bulk carrier, the Eco Czarfire. In the beginning of August, we completed the sale of the 2007-built tanker, the Stealth Enchanted, for a profit in excess of $30 million Not bad for a nearly 20 year old ship. And in addition, on August 21st, we took delivery of the Handysize bulk carrier Outrider. Our fleet now counts 21 vessels, and we have 4 additional vessels 3 handysize bulkers, and 1 product tanker to be delivered until the end of the year. Thus, in a short period of time, we will be operating a sizable fleet of 2025 vessels. On Slide 4, we are providing a summary of our current fleet deployment. About 57% of our fleet is currently under time charter, As customarily, the majority of our dry bulk vessels are on short time charters. The commercial strategy we follow for a dry bulk vessels provides healthy cash flow while minimizing idle time and voyage cost. Rates for the dry sector have been firm throughout the second quarter allowing us to enjoy solid returns from our chartering strategy. In terms of tankers, we employ 5 product tankers and 1 Suezmax tanker in the spot market, while 2 of our product tankers are under time charter employment ranging from short to medium term. On Slide 5, we are discussing the evolution of market rates for both tankers and drybulk vessels. In Q2, market rates remained firm for both tankers and bulkers. Rates for MR tankers peaked in April and eased at the end of May as the Atlantic arbitrage window narrowed. Currently, MR rates are reasonably firm fueled also by the ongoing geopolitical tensions in the Middle East. Rates for Suezmaxes remained strong throughout the quarter, both globally and in the Middle East. We did witness a retreat of rates in May due to the peace negotiation attempts. Following the end of the ceasefire period in July and the Houthi embargo on Saudi Arabia which disrupted trade in the Red Sea, Suezmax rates began to climb and have been at times in excess of $200 thousand a day. In Q2 26, the rates for the dry bulk ships were higher than Q2 25 and Q1 26. Longer haul voyages partially due to Strait of Hormuz disruption along with the improvement of fundamental data from China profitability increase of steel mills increased bauxite exports/imports from Guinea, and rebound of coal trade boosted both freight rates and asset values. On Slide 6, we are reviewing the tanker market. Q2 was firm for both Suezmaxes and product tankers. Both vessel types were affected throughout the second quarter by the geopolitical tensions in the Middle East, For Suezmax tankers, partial reopening of the Strait of Hormuz in the beginning of the quarter brought more ships to the Middle East instead of the Atlantic. Following the end of the ceasefire period in July, we did witness a significant rise in US crude exports due to the very high SPR drawdowns. This was translated to an increased number of Atlantic to Asia voyages, which assisted to sustain ton miles and routes. For product tankers, lost output from the Middle East increased The US Gulf Far East CPP cargoes. As an effect, rates improved. We did witness a weaker activity East Of Suez as the regional refiners were in shortage of Middle East crude hence, had less CPP to export. Long term prospects for both Suezmax and product tankers mostly depend on the Strait of Hormuz status. Should the Strait of Hormuz remain closed for prolonged periods, the markets will be short of cargoes and rates might suffer. In addition, there is some heavy attacks in the Red Sea, of course, further structural changes in trade patterns, a potential reopening of the Strait of Hormuz will affect restocking volumes, which is anticipated to sustain a strong tanker market for a period in excess of 12 months. In terms of tanker market fundamentals, total order book for Suezmax special stands at 30.8% with 31% of the fleet above 20 years of age. For the MR tankers, total order book stands at 16%, while 26% of the fleet is above 20 years of age. As evident, we do have an aging fleet for both Suezmaxes and product tankers. But rate hikes in recent years have facilitated the operation of older tonnage instead of recycling. In addition, new orders for all sizes tankers are being placed every single week. On slide 7, we are discussing the dry bulk market. Q2 was a strong quarter for the drybulk sector. Indeed, the BDI average for Q2 was close to 2.75 thousand which was the best quarter since the fourth quarter of 21. Overall, the dry bulk sector, unlike the tanker market, has remained rather insulated from the Middle East conflict but has greatly benefited from longer routings. At this point, we need to mention that Imperial Petroleum has no drybulk vessels stranded in the Strait of Hormuz since the end of May 26. Commodity fundamentals, while mixed, also support longer routes. Iron ore departures to China increased in Q2 by 3% year-on-year, driven mostly by a rise in port side inventories and weak domestic mining output. Guinean bauxite exports to China rose 12% year-on-year, the government imposed an export cap which is close to 150 million tonnes. This will mostly affect long term trade for Capesize vessels, and any replacement volume required will now be imported from shorter routes, which is a benefit for smaller dry bulk ships. Coal trade, especially thermal coal, marked a strong rebound in Q2. Thermal coal demand decreased so as to compensate for the loss of Middle East LNG supplies and was sustained against firmer demand stemming from India. Since April, Chinese coal demand rebounded ahead of the summer as news around El Nino added pressure on power demand. Smaller and midsized bulkers were supported by grains and minor bulk as Brazilia soybean exports were up 10% compared to 2025. Looking ahead, the Middle East conflict assists dry bulk vessels on longer haul voyages and increased thermal coal trading. However, high oil prices and freights add pressure on commodity traders, thus creating trade risks. The current order book for the Handysize dry bulk vessels is low around 6.5% with 18% of the fleet above 20 years of age. A relatively low at 12.8% is also the order book for Panamax vessels with 20.5% of the fleet being above 20 years of age. I will now pass the floor to Ms. Sakellari to summarize our financial performance.

Thank you, Harry. Good morning to all. In Q2 26, Imperial Petroleum marked the record performance in terms of quarterly revenues and the second best performance of all times in terms of profitability. Geopolitical tensions around the globe persist, creating volatility in the shipping markets affecting trading routes and freight rates. In Q2 26, rates for both tankers and dry bulk carriers were strong, leading to a spike in our revenue. Looking at our income statement for Q2 26 on slide 8, revenues came in at $87.1 million in Q2 26, marking a 140% increase compared to revenues generated in the same period of 2025. Indeed, our daily fleet revenue in Q2 2026 was in excess of $50 thousand compared to $29 thousand daily revenue in Q2 2025. This increase is mainly due to a noticeable increase in market rates for both products and service tankers along with the increase of our fleet by an average of 6.9 vessels. As of the end of Q2 25, rates for product tankers were close to $29 thousand per day, while daily rates for Suezmax tankers were close to $38 thousand. As of the end of Q2 26, we do not go into the potential tensions in the Middle East and the Red Sea daily rates, For product tankers, climbed to about $31 thousand. While daily rates for Suezmax tankers surged in excess of $145 thousand. Voyage cost amounted to $22.1 million, a $14.4 million higher than in Q2 25. This increase is attributed to higher number of spot days by about 58% in conjunction with increased bunker prices. Indeed, the average Brent crude oil price per barrel for Q2 26 was about $97. While for Q2 25, the average brand crude oil price per barrel was about $67. In addition to this, in Q2 26, we had somewhat increased ballasting activity, particularly for the vessels that underwent within the quarter their scheduled dry docking. Our net revenues for the quarter came in at about $65 million, marking a 154% increase between the 2 periods. Running costs amounted to $14.4 million, increased by $6 million, due to the increase of our fleet by an average of 6.9 vessels between the 2 periods. Dry docking costs were quite high in the order of $7.5 million As in Q2 26, we underwent 6 drydockings. As we have already mentioned, we have another 7 dry dockings to complete up to the end of 26. EBITDA for the second quarter of 26 came in at $41.2 million, while net income at $34.8 million corresponding to a basic earnings per share of $0.75 versus $12.8 million corresponding to an EPS of $0.36 in Q2 25. For 6 months 2026 net income came in at 62.8 million corresponding to an EPS of 1.34 with EPS for the last 12 months being close to $2, which is an outstanding yield, especially when compared to our share price levels. Moving on to slide 9, let us take a look at our balance sheet for June 30, 2026. As of June 30, 2026, our free cash, including time deposits, was $245.2 million. Our cash to date is in the region of $260 million. As mentioned, our existing liquidity must support our flow generation remains robust As in 6 months 26, we generated an operating cash flow of $78 million. Our recent and upcoming vessel deliveries continue to enhance our fleet book value. We maintain a flexible capital structure as we are debt-free, thus face 0 interest rate and finance pressures, and highly liquid, a pleasant and advantageous position against our peers, particularly in the event of softer market conditions. Proceeding to Slide 10, we provide the summary of our liquidity, profitability and market considerations going forward. As mentioned, we are highly liquid, maintain a solid balance sheet, and continue to translate our strategic fleet expansion into stability and growth. Yet we still remain undervalued when looking at our share price levels. In Q2 26, our average time charter equivalent per fleet per day was close to $71.5 thousand for our tankers and about $15.1 thousand for our dry bulk fleet. This compares favorable to our cash flow breakeven levels estimated at $8.5 thousand per day for tankers and $6.5 thousand per day for drybulk vessels. In terms of market considerations, the focal point is the US Iran, Israel conflict, which appears to fall in a stable course and it seems that it will have a longer than expected duration. Recent Houthi attacks in the Red Sea add on to the geopolitical uncertainty that distorts the market. In this environment, it is not yet visible how tanker and drybulk market will be affected in the medium term. In any event, Imperial Petroleum is shielded from all and to navigate any market conditions that may arise. At this stage, our CEO, Mr. Harry Vafias, will summarize our concluding remarks for the period examined.

Our exceptional second quarter and first half of 26 demonstrate the power of our commercial strategy and disciplined execution. By securing record revenues of $87.1 million for Q2, expanding our fleet toward a 25-vessel target while remaining debt-free. We have driven net income for the first 6 months to a remarkable $62.8 million already surpassing our total profitability for the entirety of 2025, backed by solid balance sheet with cash to date in the order of approximately $260 million and a fleet value anticipated to increase with our upcoming vessel additions. We are well equipped to navigate shifting geopolitical landscapes, and Imperial Petroleum is in a prime position to produce strong results while holding a flawless balance sheet and a track record of creating value through the company's growth in strategic asset management. We would like to thank you all for joining us at our call today and for your interest and trust in our company, and we look forward to finding you again with us at the next call for our Q3 2026 results. Thank you.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.