Imperial Petroleum Inc (IMPP) 2026 Q2 法說會逐字稿

Good morning, everyone, and thank you all for joining us for our Q2 and six months 2026 conference call of Imperial Petroleum. I'm Harry 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 discuss 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 2026 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 by 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 '26 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 six months is solid and about 1/4 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 six drydockings. The completion of these drydockings now ensures our fleet operates at maximum efficiency and safety moving forward. We have another seven drydockings to complete up until the end of the year. Moreover, we have been also very active on fleet management from a commercial perspective.

We continued on our already announced fleet expansion. On April 3, we took delivery of the dry bulk carrier, the ECO Crossfire. In the beginning of August, we completed the sale of the 2007-built tankers Suez Enchanted for a profit in excess of $30 million (sic - $32 million), not bad for a nearly 20-year-old ship. And in addition, on August 21, we took delivery of the Handysize bulker Outrider. Our fleet now counts 21 vessels, and we have four additional vessels, three Handysize bulkers and one product tanker to be delivered until the end of the year.

Thus, in a short period of time, we'll be operating a sizable fleet of 25-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 custom, the majority of our drybulk vessels are on short time charters. The commercial strategy we currently follow for our drybulk vessels provides healthy cash flow while minimizing idle time and voyage costs. 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 five product tankers and one suezmax tanker in the spot market, while two 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 by the end of May as the Atlantic arbitrage window narrowed. Currently, MR rates are reasonably firm, fueled also by the ongoing geopolitical tension in the Middle East.

Rates for suezmaxes has 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 Saudi Arabia, which disrupted trade in the Red Sea, suezmax rates began to climb and have been at times in excess of $200,000 a day.

In Q2 '26, the rates for the drybulk ships were higher than Q2 '25 and Q1 '26. Longer haul voyages, partially due to the Strait of Hormuz disruption along with the improvement of fundamental data from China, profitability increase of steel mills, increased bauxite exports -- imports from Guinea, 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, a 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 USG- Far East CPP cargoes. As an effect, Atlantic rates improved. We did witness a weaker activity East of Suez- as the region's refineries where in shortage of MEG 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 a prolonged period, the markets will be short of cargoes and rates might suffer. In addition, the recent Houthi attacks in the Red Sea have caused 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 vessels stands at 30.8% with 31% (sic - 31.8%) 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 don't have -- 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 of tankers are being placed every single week. On Slide 7, we are discussing the drybulk market. Q2 was a strong quarter for the drybulk sector.

Indeed, the BDI average for Q2 was close to $2,750, which is the best quarter since the fourth quarter of 2021. Overall, the drybulk 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 drybulk vessels stranded in the Strait of Hormuz since the end of May '26. Commodity fundamentals, although mixed also support longer routes. Iron ore departures to China increased in Q2 by 3% year-on-year, driven mostly by rise in ports side inventories and weak domestic mining output.

Guinean bauxite exports to China rose 12% year-on-year as 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 drybulk ships.

Coal trade, especially thermal coal marked a strong rebound in Q2. Thermal coal demand increased so as to compensate for the lost MEG LNG supplies and were 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 demand as Brazilian soybean exports were up 10% compared to 2025. Looking ahead, the Middle East conflict assists drybulk vessels on longer haul voyages and increased thermal coal trading. However, high oil prices and freights are pressure on commodity traders, thus creating trade risks. The current order book for the handysize drybulk 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/kamsarmax vessels with 20.5% of the fleet being above 20 years of age.

I 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 a 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 drybulk carriers were strong, leading to a spike in our revenues.

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 '25. Indeed, our daily fleet revenue in Q2 was in excess of $50,000 compared to $29,000 daily revenue in Q2 '25. This increase is mainly due to a noticeable increase in market rates for both product and suezmax 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 $29,000 per day, while daily rates for suezmax tankers were close to [$38,000]. As at the end of Q2 '26, with ongoing geopolitical tensions in the Middle East and the Red Sea daily rates for product tanker climbed to about [$31,000], while daily rates for suezmax tankers surged in excess of $145,000.

Voyage costs amounted to $22.1 million, $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 Brent 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, the scheduled drydocking. Our Net Revenues for the quarter came in at about $65 million, marking a 154% increase between the two 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 two periods. Drydocking costs were quite high in the order of $7.5 million as in Q2 '26, we underwent six drydockings. As we have already mentioned, we have another seven drydockings 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 six months '26, 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 6 months '26. As of June 30, '26, our free cash, including time deposits, was $245 million. Our cash to date is in the region of $260 million. As mentioned, our existing liquidity will support and cash 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 places us an 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 to profitability and growth, yet we still remain undervalued when looking at our share price levels. In Q2 '26, our average time charter equivalent per fleet average day was close to $71,500 for our tankers and about $15,100 for our drybulk fleet.

This compares favorable to our cash flow breakeven levels estimated at $8,500 per day for tankers and $6,500 per day for drybulk vessels. In terms of market considerations, the focal point is the US Iran, Israel conflict, which appears to follow a stable course and seems that we have a longer-than-expected duration. Recent attacks in the Red Sea add on to the geopolitical uncertainty that distorts the market. In this environment, it's not yet visible how tanker and drybulk market will be affected in the medium term. In any event, Imperial Petroleum is shielded from all angles 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 a 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 and strategic asset management. 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 finding you again with us at our next call for our Q3 '26 results. Thank you.