Imperial Petroleum Inc (IMPP) 2025 Q3 法說會逐字稿

Good day and thank you for standing by. Welcome to the Q3 2025 Imperial Petroleum Reserves conference call and webcast. At this time, all participants are in a listen-only mode, with no question-and-answer session at the end.

Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Mr. Harry Vafias, CEO of Imperial Petroleum. Please go ahead, sir.

Good morning everyone, and thank you for joining us for our third-quarter nine-months 2025 conference call. I'm Harry Vafiaz, the CEO of Imperial Petroleum, and joining us today is Mrs. 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 made 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 uncerties which would cause future results to differ materially from these forward-looking statements.

In addition, we'd like to clarify that during this conference call, we will quote monetary amounts unless explicitly stated otherwise, are all denominated in US dollars. On slide 3, we're summarizing our key operational financial highlights for Q3 '25.

Our operating performance in the third quarter was more satisfactory. This was the first quarter that our recently acquired seven drybulk ships were fully integrated. Due to this integration, our fleet calendar days increased by 36.1% quarter on quarter. Our fleet operational utilization for Q3 '25 was quite high, about 89%, much improved compared to the same quarter of last year, when operational utilization was only 66%.

Our drybulk ships are most of the time on short period of time charters with low commercial off hire, and this leverages the operating performance of our fleet as a whole. In terms of our fleet deployment mix, in Q3 '25, our majority of our vessels, all of our drybulk ships, and almost half of our product tankers were under time charter employment, so 75% of our voyages were time charted days, while the remaining 25% of our voyage days were dedicated to spot activity.

Touching briefly on our financial performance, the full integration of our drybulk ships in conjunction with strong rates, both in tanker and drybulk markets were reflected in our Q3 numbers and mostly in our operating income.

In Q3, our revenues came in at $41.4 million, marking a 25% increase against the same period of last year. Our operating income for the quarter was in the order of $10.3 million, marking a 72% increase compared to Q3 '24, and a 23% increase compared to Q2 '25. We view it as very positive, but our fleet expansion has led to increased income from our core operations.

We ended the quarter with a net income of $11 million, which was slightly lower compared to the second quarter of '25, due to the income decline from time deposits and minor losses from forecast exchange fluctuations. For the nine months of '25, our net income came in at $35 million, our EBITDA close to $50 million, while our operating cash flow was as high as $57 million. Our organic operations (technical difficulty) operating liquidity.

In terms of our cash, including time deposits, we ended the nine-month period with about $100 million of cash decreased compared to a six month '25, financials due to the $129 million payment for the seven drybulk ships that took place within July and August '25, and our highest base is about $172 million.

On December 1, we concluded a capital raise of $60 million through a registered direct equity offering to institutional investors. These proceeds will be used for further acquisitions as we aim to increase our fleet, ideally to a size between 25 and 30 ships. Through our fleet expansion, we strive to further boost revenue, profits, and asset utilization.

In terms of market conditions, we are under a period that both tanker and drybulk segments are doing quite well. And we see that asset values for both markets we operate in are firming, and should this trend continue, it's highly probable that values will climb higher in the near future.

Imperial Petroleum has solid fundamentals as we have zero debt and a strong operating cash flow, and this gives us comfort that going forward, we're able to satisfy working capital needs. A strong operating cash flow generation supported our fleet expansion during the past couple of years.

A (technical difficulty) cash of approximately $100 million a quarter and is expected to be primarily deployed to our upcoming cash needs, including $52 million of capital expenditures to be paid in Q2 and Q3 '26, related to our three remaining drybulk vessel deliveries and an additional [$14 million] in total docking costs.

In 2026, 12 of our vessels are scheduled to undergo drydocking, driving these cash requirements. On slide 4, we're providing a summary of our current fleet employment. 75% of our fleet is currently under time charter employment, while our drydock vessels are under short-term charter contracts. The commercial strategy we currently follow for our drydock ship provides healthy cash flow while minimizing idle time and voyage costs.

As for our tankers at the moment, we employ three product tankers and ours (technical difficulty) is in the spot market, while the remaining four product tankers are under period employment ranging from short to medium term contracts.

On slide 5, we're discussing the evolution of market rates for both tankers and (technical difficulty) Within Q3, market rates strengthened in both tanker and drybulk segments. Rates for suezmax tankers gained momentum mainly at the back of OpEx output increase, which resulted in the VLCC rates more than doubling and trickling down this positive momentum to the suezmaxes.

The suezmaxes ended the third quarter with a daily rate of about $55,000 a day. Product tanker rates were boosted towards mid-quarter by higher activity in the Atlantic, and stronger refining spreads across USA, Asia, and Europe.

Rates in the drybulk sector exerted within Q3, the highest rise witnessed over the past year. Daily rates for supramaxes climbed within the third quarter from $10,000 to $16,000 a day, while for kamsamaxes increased from $12,000 to $15,000. This is attributed to higher global iron flows that began in June, especially in Chinese iron ore demand from both Australia and Brazil, along with higher activity on minor bulk cargos.

The broader market has been resilient in Q4, particularly for suezmax tankers. Suezmax rates, a couple of weeks ago, were close to $80,000 a day. Rates for products that are gradually escalating within Q4 due to the colder weather combined with the end of the maintenance refinery season. Rates for drybulk vessels have stabilized at these increased levels, witnessed in Q3, and positive market prospects indicate that this trend may continue.

On slide 6, we are reviewing the tanker market. Within Q3, the set up for the tanker market was strong. We witnessed a rebound in refining margins, higher than expected oil demand, and a generous reversal of prior OPEC cuts. The crew tankers exerted a strong performance within the third quarter of '25, with earnings increasing every month. Additional US sanctions imposed on crude tankers tighten the fleet supply, thus helping conventional trades.

Overall, the medium-term outlook for crude tankers remains positive at the back of OPEC exports and Chinese crude imports maintaining a steady pace. However, geopolitical uncertainty such as the ending of the Russian-Ukraine war and the opening of the Suez Canal may pressure the market in the long run.

The performance of product tankers was modest in Q3, maintaining, however, an overall strength compared to the same period of last year. In the Atlantic, trans-Atlantic routes from Europe freight levels (technical difficulty) while the US Gulf remains subdued despite partial recovery later in the quarter.

East of Suez, activity softened on reduced product flows before stabilizing towards the period end. The order book for the product tankers stands at 11.2%, while about 19% of the fleet is above 20 years of age. The order book for the suezmaxes is currently 21%, with about 15% of the fleet being above 20 years of age.

While assessing tanker fleet capacity, we should also look upon the sanctioned fleet percentages. About 6% of the total product tanker fleet is in the EU, UK, and OFAC and [UN] sanctions, and this percentage for the total suezmax tanker fleet is 11.6%.

On slide 7, we're discussing the drybulk market. Following a softer first half, the drybulk market took an upturn in Q3. Rates for both kamsarmax and supramax moved from $12,000 to $16,000. Indeed, Q325 was a stronger period for seaborne coal trade, with coal arrivals from China marking a significant quarter on quarter rise. In addition, volumes in the Atlantic in this mid-size drybulk segment was also supported by the increase of grain volumes in the Atlantic and a rise in US corn exports 25% year on year.

Trade growth is expected to mark a faster expansion in '26, mainly at the back of South Atlantic iron ore and bauxite volumes. The recent US-China trade truce should support freight trades as soyabean exports to China will increase. Indeed, China will continue to drive growth, but at a slower pace than primarily, via the increasing aluminum production and the strong imports of iron ore, bauxite, and minor bulks.

Current order book is quite low for handysize, 7.2%; and supramax, 8.7%, but relatively high for kamsarmax, 14.5%. Ordering activity has slowed down. There's a considerable percentage of age vessels across all dry subsegments. I may pass you the floor to Ms. Sakellari to summarize our financial performance.

Thank you, Harry, and good morning to all. The third quarter of '25 was once more profitable. It was the first quarter that we fully utilized our enhanced drybulk fleet segment, and this paid off as we materially increased our operating income. It's worth mentioning that the daily net revenue from the drybulk vessels increased by about 23% in Q3 '25 compared to the same quarter of '25 (sic - "'24").

Our tanker segment, particularly our suezmax tankers performed strongly. As well, except for one of our product traders involved in CPP trading, as this was a market that remained relatively weak in the third quarter of '25.

Looking at our income statement for Q3 '25 on slight aid, revenues came in at $41.4 million in Q3 '25, marking a 25.5% million increase compared to revenues generated in the same period of '24. This increase is mainly due to a recent rival vessel addition, along with an improvement of market rates, particularly for the suezmax tankers, as rates for these vessels increased within Q3 '25 to $55,000 per day and are now even higher, close to $70,000 per day.

Voyage costs amounted to $11.6 million, marking $1.4 million lower than in Q3 '24. The decrease in voyage expenses attributed to the change in our fleet employment, which now tips towards period coverage. In Q3 '25, our time charter coverage was about 75% versus 27% in Q3 '24.

Our net revenues for the quarter came in at about $30 million compared to $20 million in Q3 '24. This is equivalent to a 50% increase. Our [working] costs amounted to $10.9 million, increased by $3.7 million due to the increase of our fleet by an average of 8.6 vessels between the two periods. The current average daily OpEx for our tanker fleet is around $7,200 and $5,600 for a drybulk fleet.

We incurred negligible drydocking costs this quarter, as none of our vessels have the wet drydocking. As mentioned, we do have a pretty heavy drydocking scheduled for 2026, as 12 of our vessels, we need to be (technical difficulty)

In addition to this quarter and compared to the same period of last year, we faced a reduction in our income from non-core operation due to a reduction of funds, other time deposit, and a foreign exchange loss in minor incurred in the quarter. In Q3 '24, non-operating income was $4 million compared to $700,000 in Q3 '25.

EBITDA for the third quarter of '25 came in at $18 million, while net income at $11 million correspond to a basic earns per share of $0.30. For nine months '25, our EBITDA came in at $37.4 million, our operating cash flow was $57 million, while our net income was $35 million correspond to an EPS of $0.98.

Moving on to slide 9, let us take a look at our balance sheet for the nine months of '25. As of September '25, our free cash, including type deposit, was about $100 million. As already mentioned, within Q3 '25, we paid $129 million for the acquisition of seven drybulk vessels. Hence our cash base declined. We still enjoy a flexible capital structure as we have no debt and solid liquidity. Looking at our fleet book value, this increased to $343 million, reflecting a 65% expansion in the company's asset base within just nine months.

Proceeding to slide 10, we provide the summary of our liquidity, profitability, and market considerations going forward. For the nine months of '25, our operating cash flow was $57 million. Our profitability margin remains wide as market rates are favorable and significantly higher than our breakeven levels. In Q3 '25, our average time charter equivalent per fleet voyage day was close to $23,000 for about $12,000 for a drybulk fleet.

In terms of market consideration, it still remains crucial how the current geopolitical tensions will unravel and if new geopolitical tension will arise, such as the recent friction between US and Venezuela. US trade war seems to have stalled for now, but the question remains how it will play out in the long run. Rates for both tankers and drybulks seem strong. Thus, the prospect for the fourth quarter is favorable.

In slide 11, we summarize some key remarks around the strategy going forward. We base our strong operating performance on the successful commercial management of our highly quality built ships. Going forward, we strive to expand further, while also address our current capital commitments and working capital needs.

At this stage, our CEO, Mr. Harry Vafias, will summarize our concluding remarks for the period examined.

The full integration of our recently delivered (technical difficulty) drybulk ships, increasing our fleet to 19 ships and soon to 22 ships, enhanced within Q3 '25, our income and profitability stemming from core operations. Market rates for both tanker and drybulk markets are solid, and this seems likely to hold in the upcoming quarters.

With our debt-free balance sheet and our cash base that is currently $172 million, and our focus on quality built Japanese and Korean built ships, we aim for an even better performance in the fourth quarter of 2025.

We'd 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 having you again with us at our next call for our Q4 '25 results. Thank you.