C3is Q4 2024 Earnings Report

C3is EPS Results

• Actual EPS: -$638.40
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

C3is Revenue Results

• Actual Revenue: $9.41 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

C3is Announcement Details

• Quarter: Q4 2024
• Date: 3/11/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, March 11, 2025
• Conference Call Time: 10:00AM ET

C3is (NASDAQ:CISS) offers international seaborne transportation services. It provides its services to dry bulk charterers, including national and private industrial users, commodity producers and traders, oil producers, refineries, and commodities traders and producers. The company owns and operates a fleet of two drybulk carriers, which transport major bulks, such as iron ore, coal and grains, as well as minor bulks comprising bauxite, phosphate, and fertilizers, and one Aframax crude oil tanker that transports crude oil. C3is Inc. was founded in 2021 and is based in Athens, Greece.

C3is Q4 2024 Earnings Call Transcript

Key Takeaways

• Revenues rose 47% to $42.3 M in 2024, with net revenues up 33% and adjusted EBITDA increasing 11% year-over-year.
• Adjusted net income fell 7% to $8.7 M, and the company reported a $2.7 M net loss driven by an $11.13 M unrealized fair-value loss on warrants.
• Cash balance grew 39% to $12.6 M at year-end despite $41 M in CapEx, and the company remains debt-free with no bank borrowings.
• Time charter equivalent (TCE) rates averaged $21,000/day in 2024, down 10% from $23,400/day in 2023, reflecting softer drybulk market conditions.
• Fleet capacity expanded by 234% since inception to 213,000 DWT with the addition of the 33,000 DWT Eco Spitfire and no vessels built in China ahead of proposed U.S. tariffs.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the C3is Q4 Earnings Conference Call and webcast. All participants will be in listen-only mode during the call, with no question-and-answer session at the end. Please note that today's conference is being recorded. I will now act on the conference. Over to your speaker, Dr. Diamantis Andriotis, CEO. Please go ahead.

[Diamantis Andriotis, CEO at C3is Inc]

Good morning, everyone, and welcome to our C3is Q4 learning conference call and webcast. This is Dr. Diamantis Andriotis, CEO of the company. Joining on the call today is our CFO, Nina Pyndiah. Before we commence our presentation, I would like to remind you that we will be discussing forward-looking statements which reflect current views with respect to future events and finance performance, and are based on current expectations and assumptions which, by nature, are inherently uncertain and outside of the company's control. At this stage, if you could all take a moment to read our disclaimer on slide two of this presentation. I would also like to point out that all amounts quoted, unless otherwise clarified, are implicitly stated in US dollars.

[Diamantis Andriotis, CEO at C3is Inc]

Today, we released our earnings results for the Q4 of 2024, so let's proceed to discuss these results and update you on the company's strategy and the market in general. Please turn to slide three, where we summarize and highlight the company's performances, starting with our financial highlights. For the year 2024, we reported revenues of $42.3 million, which is an increase of 47% compared to the year 2023. Our Aframax tanker, the Afrapearl II, contributed around 76% to the total revenues. Our net revenues came in at $28 million, an increase of 33% from 2023. Our adjusted EBITDA was $16.4 million, an increase of 11% from 2023. Our adjusted net income came in at $8.7 million, an increase of 7% from 2023.

[Diamantis Andriotis, CEO at C3is Inc]

Our vessel's net book value increased by 12% since year-end 2023 due to the addition of the Eco Spitfire, a handy size dry bulk carrier that joined our fleet in April 2024. Our cash balance was $12.6 million by the end of Q4 2024, an increase of 39% from year-end 2023, despite total CapEx payments of $41 million, $39.5 million for our Aframax tanker, the Afrapearl II, and $1.62 million as a 10% down payment on our bulk carrier, the Eco Spitfire. The balance due on our CapEx is $14.57 million in April 2025, which represents 90% of the purchase price of the handysize bulk carrier, Eco Spitfire. Our short-term bank deposits yielded $1 million for the year 2024. Our TCE for the year 2024 was $21,000 per day, 10% lower than the rate for the year 2023, when it was $23,400 per day.

[Diamantis Andriotis, CEO at C3is Inc]

Slide four shows the dry bulk trade by the end of the Q4 of 2024. Despite global economic fluctuations, the market demonstrated resilience, particularly in the latter half of the year. In terms of the overall global fleet, handysize vessels hold a significant share, catering to minor bulk trades, regional markets, and routes where larger vessels face operational constraints. Their versatility makes them a vital segment in global dry bulk logistics, facilitating trade across a broad range of commodities, including grains, fertilizers, and steel products. Iron ore and coal trade continue to have the lion's share in the dry bulk trade, but the iron ore market is currently navigating a transitional phase, with shifting dynamics influenced by economic trends, structural changes, and environmental pressures. Despite subdued demand, iron ore production remains robust, with major miners maintaining or increasing output levels.

[Diamantis Andriotis, CEO at C3is Inc]

The seaborne coal market in 2024 has been marked by significant shifts in market dynamics. Despite high inventory levels throughout the year, the Chinese thermal coal market remained fundamentally loose, with declining prices and induced volatility distinguishing it from the sharp price swings observed in prior years. Demand dynamics experienced contrasting phases during the year. The first half of 2024 was weaker, as strong renewable energy output suppressed coal demand. However, prolonged hot and dry weather in the second half, coupled with unexpected growth in the chemical sector, spurred a rebound in coal demand. Looking ahead to 2025, demand growth in developing countries, particularly India and Southeast Asia, is expected to offset decline in demand in China. Industrial activity and infrastructure projects in these regions will play pivotal roles in sustaining coal demand.

[Diamantis Andriotis, CEO at C3is Inc]

In the longer term, growth opportunities will increasingly concentrate in emerging markets in Asia, while advanced economies continue to prioritize renewable energy and decarbonization efforts. The global grain trade in 2025 is expected to exhibit a steady but uneven growth, driven by a mix of regional demand patterns, geopolitical factors, and weather-related challenges. Emerging markets in Asia and Africa will continue to drive grain imports growth due to rising populations, increasing incomes, and urbanization. Countries such as Indonesia, Vietnam, and Egypt are likely to remain key importers, supported by their growing food and feed needs. Slide five shows the dry bulk opportunities ahead and the handysize rate performance. The dry bulk seaborne trade is poised for steady growth, with minor bulk trade emerging as a critical driver in the medium and long term.

[Diamantis Andriotis, CEO at C3is Inc]

While major bulks like iron ore and coal face slowing or declining growth rates, minor bulks are expected to gain prominence, supported by structural shifts in global trade and industrial demand. Minor bulk trade is anticipated to experience the highest growth in the long term, fueled by the increasing demand for materials tied to sustainable development. Key drivers include the expansion of renewable energy infrastructure, such as solar and wind energy projects, the rising adoption of electric vehicles, and the ongoing surge in sustainable building practices. Commodities such as steel products, aluminum, and other construction-related materials will be central to meeting the needs of these growing industries. In the medium term, the stabilization of iron ore trade and the modest decline in coal shipments reflect a shift towards cleaner energy systems and reduced reliance on traditional bulk commodities.

[Diamantis Andriotis, CEO at C3is Inc]

Evolving environment policies and industry adaptations are likely to moderate potential downturns, positioning the sector for gradual but necessary transformation. Initiatives such as slower vessel operating speed, retrofitting for energy-saving technologies, increased vessel demolitions, and growing emphasis on sustainability will likely affect supply-side conditions. China has realigned its trade partnership towards nations like Russia, India, and Southeast Asia, reshaping established trade routes and market dynamics. Slide six shows the Aframax tanker market fundamentals. In 2024, there was a significant difference between the first half of the year and the second. The year started with a strong first half on the Aframax market in general and the Aframax market in particular. The Houthi attacks in the Red Sea resulted in substantial changes to the trading pattern of Aframaxes.

[Diamantis Andriotis, CEO at C3is Inc]

The rerouting via the Cape of Good Hope for clean cargoes gave LRs a significant boost in earnings in the first half of the year. This had a knock-on effect in the Aframax market since many dirty but coated vessels cleaned up the tanks and therefore reducing supply on the dirty side. Politics will play an important role in the energy markets in 2025, particularly in the U.S., as the Trump administration is likely to push an agenda aligned with Drill Baby Drill. Trump will improve sentiment towards the oil industry, though with output oil at record levels, it would be difficult to push levels much higher in 2025. Geopolitical tensions and volatility are expected to continue to weigh heavily on oil tanker demand in 2025 and beyond.

[Diamantis Andriotis, CEO at C3is Inc]

Russia is presumed to continue supplying crude and oil products in the market by complying with the price cap or replenishing the shadow fleet. U.S. sanctions during Trump will tighten Iranian crude production exports, reducing exports by 400,000 barrels per day in the 2025-2026 period. The Red Sea will gradually reopen as the Houthis lose financial support from Iran. In addition, the Israel-Hamas tensions are currently easing. Reduced daily transit through the Panama Canal due to low rainfall is not expected to emerge again in the near future. Tanker demand is projected to gain structural support over the next five years. This growth will be driven by the Middle East expanding its crude balance by 2 million barrels per day.

[Diamantis Andriotis, CEO at C3is Inc]

With consistent Russian oil flow, mid-sized tankers will continue to benefit, which could be further supportive when the Red Sea choke point reopens and allows easier Russian oil flows to India, China, and countries in the Middle East. The North American West Coast market continues to garner a large amount of attention regarding the ramp-up of Canada's Trans Mountain Pipeline expansion, TMX project. The pipeline is a more efficient way of sending Canadian barrels to Asia. The TMX will bring an additional 590,000 barrels per day of Canadian crude at full capacity to the port of Vancouver. Canadian crude flows ex-Vancouver are expected to range between the US West Coast, Asia, and likely West Coast Panama. Since the project was completed in the first half of 2024, a total of 155 Aframax tankers have been recorded at Vancouver. Slide seven shows the Handysize fleet age and growth.

[Diamantis Andriotis, CEO at C3is Inc]

The handysize bulk fleet includes many old vessels with plenty of demolition potential. There are hardly any units on order at the moment. 32% of the trading fleet is over 20 years old, 33% is 15-19 years old, 27% is 10-14 years old, 2% is 5-9 years old, while 5% has less than 5 years. The order book to trading ratio is 1.6% in deadweight terms. In 2024, net fleet growth for small handy bulkers of 20,000-34,000 deadweight was minus 0.3.% year on year Net fleet growth is expected to continue at around 0% in 2025 and then at around minus 0.5% in 2026. Fleet growth forecast for 2025-2027 is based on the current order book after assuming slippage and the expected demolition. Slide eight shows the aftermarket stance, fleet age growth, and order book.

[Diamantis Andriotis, CEO at C3is Inc]

The global after-market LRT fleet currently stands at 1,154 vessels. Of these, 262 vessels are over 20 years of age, accounting for 22.7% of the total number of vessels. With a starting tally of 1,134 vessels, the current fleet represents a change of 1.76% in vessel numbers over the years so far. The order book now stands at 213 vessels and presents 18% of the current fleet. Demolition activity is expected to remain strong going forward. Significantly more vessels were built in the early 2000s compared to the 1990s. After-market vessels dominate the 2024 stancure sector, with total new building investments reaching $11.4 billion, claiming the top position for the year among their largest counterparts. New building prices remain at their highest level year to date, although they appear to have stabilized over the latter part of the year. Slide nine shows the current fleet of C3is.

[Diamantis Andriotis, CEO at C3is Inc]

By the end of 2024, C3is owned and operated a fleet of three Handysize dry bulk carriers and one Aframax oil tanker. In May 2024, the company took delivery of the 33,000 deadweight Handysize dry bulk carrier, the Eco Spitfire, bringing the total fleet capacity to 213,000 deadweight with an average age of 14 years. All vessels have had their ballast water systems already installed. Our capital commitment due in 2025 is the special survey of the tanker Afrapearl II, scheduled in Q3 2025. All the vessels are unencumbered and currently employed on short to medium-term period charters and spot voyages. Slide 10 shows a sample of the international charters with whom the management company has developed strategic relationships and has experienced repeat business. Repeat business highlights the confidence our customers have for our operations and the satisfaction of the services we provide.

[Diamantis Andriotis, CEO at C3is Inc]

The key to maintaining our relationships with these companies are high standards of safety and reliability of service. I will now turn over the call to Nina Pyndiah for our financial performance.

[Nina Pyndiah, CFO at C3is Inc]

Thank you, Diamantis, and good morning to everyone. Please turn to slide 11, and I will go through our financial performance for the Q4 and 12 months of 2024. Voyage revenues for the year 2024 amounted to $42.3 million, an increase of 47% compared to 2023. 76% of our total revenues were contributed by our Aframax tanker, the Afrapearl II. Our net revenues for the period January to December 2024 were $28.2 million, an increase of 33% compared to the same period of last year. Our daily time charter equivalent was down by 10% from Q4 2023.

[Nina Pyndiah, CFO at C3is Inc]

Our fleet operational utilization was 90.3% for the 12-month period ending December 31, 2024, compared to 91.6% for the same period in 2023. Voyage expenses and vessels operating expenses for the year 2024 were $14.1 million and $8.4 million. The increase in voyage expenses was related to increases in bunker costs and port expenses, and the vessels operating expenses increase was attributed to the increase in the average number of vessels. Voyage expenses for 2024 mainly included bunker costs of $6.9 million and port expenses of $4.7 million, corresponding to 82% of total voyage expenses. This was due to the fact that our tanker, the Afrapearl II, was operating in the spot market.

[Nina Pyndiah, CFO at C3is Inc]

Operating expenses for 2024 mainly included core expenses of $4.4 million, corresponding to 52% of total operating expenses, spares and consumable costs of $1.8 million, corresponding to 21%, and maintenance expenses of $900,000, representing works and repairs on board the vessels, corresponding to 11% of total vessel operating expenses. Management fees increased by 48% from 2024 due to the increase in the average number of vessels. G&A costs were $3 million and mainly related to the expenses incurred from the two public offerings and the reverse stock split. Depreciation recorded for 2024 was $6.2 million, a 51% increase from last year due to the increase in the average number of vessels.

[Nina Pyndiah, CFO at C3is Inc]

Related party interest and finance costs for the period was $2.5 million and related to the accrued interest expenses as of December 31, 2024, in connection with the balance payable on the acquisition prices of our Aframax tanker Afrapearl II and our bulk carrier, the Eco Spitfire. For accounting purposes, the balance payable on the two vessels had to be recorded as capital due and interest cost, although no interest was charged by the sellers. The final balances paid remained the same as the originally agreed purchase prices. The Afrapearl II was completely paid off in July 2024, and 90% of the balance due on the Eco Spitfire is payable in April 2025. Interest income of $1 million for 2024 was recorded and related to the interest received on our bank deposits.

[Nina Pyndiah, CFO at C3is Inc]

As a result of the above, for the 12 months ended December 31, 2024, the company reported an adjusted net income of $8.7 million compared to an adjusted net income of $9.3 million for the same period of last year, a decrease of 7%. Adjusted EBITDA for the 12 months ended December 31, 2024 amounted to $16.4 million compared to an adjusted EBITDA of $14.7 million for the same period of last year, an increase of 11%. A non-cash item of $11.13 million loss was recorded at year-end 2024, resulting in a net loss of $2.7 million for the year 2024. This non-cash item represents the unrealized loss on the fair value of non-exercised warrants. Discounting this non-cash item would have resulted in a net profit of $8.4 million for 2024.

[Nina Pyndiah, CFO at C3is Inc]

Turning to slide 12 for the balance sheet, our cash balance was $12.6 million by the end of Q4 2024, after paying $39.5 million for the remaining 90% purchase price of our Aframax tanker Afrapearl II in Q3 2024, and $1.62 million, which was 10% of the purchase price of the Handysize drybulk carrier, Eco Spitfire, in Q2 2024. The fleet book value as at the end of December 2024 was $84 million, an increase of 12% from year-end 2023 due to the addition of the bulk carrier, Eco Spitfire. The company has no outstanding bank debt. The financial liability of $16.3 million relates to the following: 90% of the purchase price of the Eco Spitfire of $14.71 million, plus payables of $1.59 million due to the management company and subsequently paid in January 2025.

[Nina Pyndiah, CFO at C3is Inc]

The warrant liability of $10.4 million relates partly to the net fair value losses on non-exercised warrants at year-end 2024. $690,000 from the total fair value losses has been recorded to equity. Concluding the presentation on slide 13, we outline the key variables that we'll assess as progress with our company's growth. Owning a high-quality fleet reduces operating costs, improves safety, and provides a competitive advantage in securing favorable charters. We maintain the quality of the vessels by carrying out regular inspections, both while in port and at sea, and adopting a comprehensive maintenance program for each vessel. None of our vessels were built from Chinese shipyards. Hence, the proposed U.S. tariffs on all Chinese-built ships would be a significant positive shift for our fleet. The company's strategy is to follow a disciplined growth with in-depth technical and condition assessment review.

[Nina Pyndiah, CFO at C3is Inc]

Management is continuously seeking timely and selective acquisitions of quality vessels, with current focus on short to medium-term charters and spot voyages. We always charter to high-quality charters, such as commodity traders, industrial companies, and oil producers and refineries. The company maintains an adequate level of cash flow and liquidity that will enable us to act instantly as the windows of growth and opportunities open. Despite being in operation for less than two years and having increased our fleet by 234% since inception, the company has no bank debts. No interests were charged by the affiliated sellers for the subsequent 90% payments due on the Afrapearll II and the Eco Spitfire. At this stage, our CEO, Dr. Diamantis Andriotis, will summarize the concluding remarks for the period examined.

[Diamantis Andriotis, CEO at C3is Inc]

For the year 2024, we reported voyage revenues of $42.3 million, an increase of 47% from 2023.

[Diamantis Andriotis, CEO at C3is Inc]

Net revenues of $28 million, an increase of 33% from 2023, and adjusted EBITDA of $16.4 million, 11% higher than 2023. We have taken delivery of our fourth vessel this year, bringing our total fleet capacity to 213,000 deadweight, an increase of 234% from the company's inception over a year ago. We have more than tripled our fleet capacity without incurring any bank debt. Our cash balance at year-end 2024 was $12.6 million after CapEx payments of $41 million during the year. Shipping is currently navigating a transitional phase, with shifting dynamics influenced by geopolitical factors, environmental regulations, demand patterns, and weather-related challenges. While navigating these most volatile waters, we are closely monitoring the evolving situations and are focused on identifying those components that would maximize our future profits. Politics will play an important role in shipping in 2025, particularly in the U.S.

[Diamantis Andriotis, CEO at C3is Inc]

The Trump administration is likely to push an agenda aligned with drill, baby, drill. This, combined with the threat of tariffs on all Chinese-built vessels, of which we have none, are two important factors that, if they materialize, could have a significant positive impact on the profitability of our company. With a clear focus on emerging opportunities, we remain confident that 2025 will be a year that will produce strong financial performance and potential growth prospects. We would like to thank you for joining us today and look forward to having you with us again at our next call for our Q1 of 2025 results.

[Operator]

This concludes today's conference call.

[Operator]

Thank you all for participating. You may now disconnect your lines. Thank you.

Participants

Executives

• Diamantis Andriotis, CEO
• Nina Pyndiah, CFO