C3is Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 15, 2025

There are 2 speakers on the call.

Operator

Good morning, everyone, and welcome to our CPIS First Quarter of twenty twenty five Earnings Conference Call and Webcast. This is Doctor. Yamadis Andrioti, CEO of the company. Joining me on the call today is our CFO, Ninap India. 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 financial performance and are based on current expectations and assumptions, which by nature are inherently uncertain and outside of the company's control.

Operator

At this stage, if you could all take a moment to read our disclaimer on Slide two of this presentation. I'd also like to point out that all amounts quoted unless otherwise clarified are implicitly stated in U. S. Dollars. Today, we released our earnings results for the first quarter of twenty twenty five.

Operator

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 first quarter of twenty twenty five, we achieved a net income of 8,000,000 which is an increase of 109% from Q1 twenty twenty four. We reported net revenues of $5,800,000 which is a decrease of 41% compared to the first quarter of twenty twenty four. This was exclusively due to the decrease in charter's rates.

Operator

Our Aframed tanker, the Afropel two, which contributed around 72% to the total revenues, had TCE rates 55% lower than the rate of q one twenty twenty four. The TCE rates for the whole fleet was 56% lower than the rate for the first quarter of twenty twenty four. Our cash balance was $15,700,000 an increase of 25% from the year end 2024. In Q2 twenty twenty five, we paid off the remaining 90% balance that was due on the Echo Speedfire. So we have met all our CapEx requirements, which totaled 59,200,000.0 without resorting to any bank financings.

Operator

None of our vessels are from Chinese shipyards, so we are not affected by the implementation of the new tariffs by the Trump administration. Slide four shows the drybulk trade by the end of the first quarter of twenty twenty five. The steel industry and iron ore market are navigating the regional phase with shifting dynamics influenced by economic trends, structural changes, and environmental pressures. Over the long term, the iron ore market is forecast to enter a multiyear downtrend with price expected to decline. This outlook reflects the structural shift in China's economy away from steel intensive sectors and an increased focus on sustainability globally.

Operator

A global push for decarbonization is reshaping the steel industry and shifting towards green steel. Initiatives like the EU carbon border adjustment mechanism and voluntary corporate commitments are accelerating the shift. Over time, this structural transition could lead to a peak in iron ore demand earlier than anticipated, presenting downside risk to long term projections. As green steel production gains traction and global iron ore output rises, the market will likely experience a looser supply demand balance. The global grain trade in 2025 is expected to exhibit steady but uneven growth, driven by a mix of regional demand patterns, geopolitical factors and weather related challenges.

Operator

China, traditionally a significant player in the global grain market, is expected to slow growth in grain imports. High inventories in domestic agricultural policy adjustments could reduce its reliance on international markets. Slide five shows the drybulk opportunities ahead and the handysize rate performance. The drybulk shipping sector is expected to face lower demand growth in the coming year, driven by a variety of uncertainties. Handysize demand remains reasonably healthy, but it heavily depends on steel related experts making it vulnerable to a potential slowdown in China's steel sector.

Operator

Global dry bulk trading ton miles is forecast to grow by 1.5% in 2025, slightly lagging fleet growth of 3.1%. Chinese bulk demand continues to be critical variable characterized by mixed signals, record high imports, elevated inventories, and challenges in the field sector. While recent economic stimulus measures may provide support, significant downside risks persist. Environmental regulations are set to play a more influential role in market dynamics. Initiatives such as lower vessels operating speed, retrofitting for energy saving technologies, increased vessel demolitions and growing emphasis on sustainability will likely affect supply side conditions.

Operator

Additionally, the global push for green and shipping practices is expected to influence demand for certain cargoes while amplifying inefficiencies and competition across the sector. Despite the challenges, the drybulk market in 2025 is expected to benefit from a relatively balanced supply demand dynamic. Evolving environmental policies and industry adaptations are likely to moderate potential downturns, positioning the sector for gradual but in same transformation. China's monetary policy shift and India's growth trajectory are expected to offer areas of opportunity, particularly in commodities tied to infrastructure and industrial activity. Slide six shows the Aframax tanker market fundamentals.

Operator

The global economic environment is poised for a year of mixed signals in 2025, presenting both risks and opportunities for the oil tanker sector. Economic shocks, financial market response and evolving policy measures are expected to shape the outlook contributing to a cautious yet dynamic landscape. Global growth and inflation challenges are likely to be characterized by slower global economic growth and persistent inflation pressures. Key factors include ongoing vulnerabilities in global supply chains, geopolitical uncertainties, tightening financial conditions across major economies, as well as the ongoing environmental regulation regarding EUTS, CII, and EXI. These headwinds are expected to influence global energy demand with ripple effects on, oil trade flows and tanker utilization.

Operator

China offers a modestly optimistic outlook despite its long term trend of slowing growth. For the first time since 2010, China is expected to adopt a more appropriately used monetary policy stance, signaling significant efforts to rejuvenate economic activity. Policymakers are focused on extraordinary counter cyclical measures to stimulate consumption, enhance investment efficiency, and expand domestic demand. These initiatives are expected to support crude oil and refined product imports, particularly for use in industrial infrastructure sectors. Such developments could provide the stabilizing influence of global oil trade benefiting the tanker market.

Operator

Adding to this outlook, the recent depreciation of the yuan driven by the China's easing monetary policy and increased fiscal spending could have significant implications for the oil tanker sector. A weaker one raises the cost of oil imports, which are predominantly priced in US dollars, potentially tempering China's crude imports volume in the near term. However, these cost pressures are likely to be offset by China's strategic focus on energy security and continued investment in domestic infrastructure. Furthermore, the depreciation may bolster exports to refined products, supporting outbound tanker demand. As part of the sanctions imposed on the Russian Federation as a result of the Russian Ukrainian war on 09/02/2022, finance ministers of the g seven group of nations agreed to cap the price of Russian oil and petroleum products in an effort intended to reduce Russia's ability to finance its war in Ukraine, while at the same time hoping to curb further increases to the twenty twenty one, twenty twenty two inflation surge.

Operator

The g seven is currently considering collectively tightening an oil price cap on Russian petroleum in an effort to cut Moscow's oil revenues as the war in Ukraine rages on. Trump's tariff wars have prompted a slump in oil prices and has made the current price cap pointless. The Russia Ukraine conflict is expected to continue being a factor through March of twenty twenty five. This means Russia will likely have to continue dodging stricter sanctions and potentially struggling to sell its oil during 2025. Its production and refining capacity could also remain targets for Ukrainian drone attacks.

Operator

Slide seven shows the Handysize fleet age and growth. The global Handysize fleet now stands at 3,151 vessels. Of these, five eighty three vessels are over 20 years of age, accounting for 31% of the total number of vessels. With a starting tally of 3,113 vessels, the current fleet represents a change of 1.2% in vessels numbers over the year so far. Over the first quarter of twenty twenty five, the fleet had increased by 38 vessels, while around 1,650,000 deadweight was added to the fleet's total carrying capacity.

Operator

The global handysize order book now stands at 231 vessels. Of these, 96 vessels are still scheduled for delivery within 2025, which is equivalent to 41.6% of the total number of vessels currently on order. Currently, the order book to fleet ratio stands at 7.3%. Following the conclusion of the first quarter, deliveries are holding at levels above the total number of removals from the fleet, creating a net gain in the fleet equivalent to 1.2%. This increase is on par with the change noted in the quarter prior, while compared to last year, there was a decrease in the trend noted.

Operator

Slide eight shows the Aframax tanker fleet age growth in order book. The global Aframax LR2 fleet currently stands at eleven seventy four vessels with an average age of thirteen point three years. Of these, 195 vessels are over 20 years of age, accounting for 16.6% of the total number of vessels. The order book now stands at 215 vessels with 41 vessels scheduled for delivery in 2025, which is equivalent 90% of the total number of vessels on order. Currently, the order book to fleet ratio stands at 18%, while in comparison, 3% of the fleet is over 25 years of age and another 14% is between 20 and 24 years of age.

Operator

This translates to a ratio of order book to vessels over twenty years of 110%. Slide nine shows the current fleet of C3IS. CCIS owns and operates a fleet of three hand sized dry bulk carriers and one Aframax oil tanker. In May 2024, the company took delivery of thirty third of the 33,000 deadweight dry bulk carrier, the Echo Speedfire, bringing the total fleet capacity to 213,000 deadweight with an average age of 14.3. All vessels have had their ballast water systems sold and installed.

Operator

One capital commitment during 2025 is a special survey of the tanker Afrapal two scheduled in q three twenty twenty five. All the vessels are unencumbered and currently employed on short to medium term period charters and spot voyages. None of the vessels were built in Chinese shipyards, hence not affected by the newly imposed tariffs. Slide 10 shows a sample of 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.

Operator

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 Minna Pindia for our financial performance.

Speaker 1

Thank you, Diamantis, and good morning to everyone. Please turn to Slide 11, and I will go through our financial performance for the first quarter of twenty twenty five. We reported total revenues of $8,700,000 for the first quarter of twenty twenty five compared to $12,800,000 for the first quarter of twenty twenty four, a reduction of 32%. This was exclusively due to the decrease in charter rates. Our Aframax tanker, the Afra Pearl-two, which contributed 72% to the total revenues had TCE rates that were 55% lower than the rates for Q1 twenty twenty four.

Speaker 1

The TCE rates for the whole fleet were 56% lower than the rate for Q1 twenty twenty four. Voyage costs for Q1 twenty twenty five were 2,800,000.0 the same as for Q1 twenty twenty four. Vessels operating expenses of $2,100,000 were recorded for Q1 twenty twenty five compared to $1,800,000 for Q1 twenty twenty four. This is the impact of the Echo State Fire that was included in the numbers for Q1 twenty twenty five and not in Q1 twenty twenty four. G and A expenses were $653,000 in Q1 twenty twenty five and related mainly to the stock based compensation costs.

Speaker 1

In Q1 twenty twenty four, the balance was $15,000,000 sorry, and included the costs related to the two share offers that took place at the beginning of twenty twenty four. Depreciation increased from $1,400,000 in Q1 twenty twenty four to $1,600,000 in Q1 twenty twenty five due to the increase in the average number of vessels. A noncash item of $6,900,000 gain was recorded for Q1 twenty twenty five as compared to a loss of 630,000 for Q1 twenty twenty four. This item represents the unrealized gainloss on the fair value of non exercise warrants. This non cash item arose due to the change in the fair value of warrants, that is the issuance date versus 03/31/2025.

Speaker 1

As a result of the above, we reported a net income of $8,000,000 and an adjusted net income of $1,200,000 for Q1 twenty twenty five, an increase of 109 percent on the net income and a decrease of 74% on the adjusted net income compared to Q1 twenty twenty four. Turning to Slide 12 for the balance sheet. We had a cash balance of 15,700,000.0 compared to $12,600,000 at the end of twenty four, an increase of 25%. In Q2 twenty twenty five, we paid off the remaining 90% payment balance due on the Handysize carrier Echo Spitfire plus the bankers remaining onboard, a total of $15,100,000 Other current assets mainly include charter as receivable of $3,000,000 for Q1 twenty twenty five compared to $2,800,000 at December 24, an increase of 10% as well as inventories of 1,600,000.0 compared to $900,000 at December 24. The vessels net value of $82,500,000 of other four vessels less depreciation.

Speaker 1

Trade accounts payable of 1,800,000.0 are balances due to suppliers and brokers. Payable to related party of 17,600,000.0 represent the 90% balance due on the Echo Spitfire of 14,600,000.0 and 3,000,000 due to the management company, Brave Maritime. Both of these items were fully paid for in April 25. A warrant liability of 3,600,000.0 was recorded, a drop of 66% from the balance at year end twenty four when it was 10,400,000.0. In Q1 twenty twenty five, the warrant adjustment was a gain of $6,800,000 The balance at year end twenty four was $10,400,000 hence, resulting in a net value of 3,600,000.0.

Speaker 1

Concluding the presentation on Slide 13, we outlined the key variables that will assist us progress with our company's growth. Owning a high quality fleet reduces operating costs, improve 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 US tariffs of all Chinese built ships would be a significant positive shift for our fleet.

Speaker 1

The company's strategy is to follow a disciplined growth with in-depth technical and condition assessment review. Equity issuances will continue. Management is continuously seeking a timely and selective acquisition of quality non Chinese built vessels with current focus on short to medium term charters and spot voyages. We always charter to high quality charterers 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.

Speaker 1

Despite being in operation for less than two years and having increased our fleet by two thirty four percent since inception, the company has no bank debts. No interest were charged by the affiliated sellers on the purchase prices of the Afropel II and the Echo Spitfire. From July 2023 to date, we have repaid all our CapEx obligations totaling $59,200,000 without resorting to bank loans. At this stage, our CEO, Doctor. Diamantis Andoritis, will summarize the concluding remarks for the period examined.

Operator

For the first quarter of twenty twenty five, we reported the net income of 7,900,000.0 an increase of 109% from the Q1 twenty twenty four, but our revenues decreased by 32% due to the drop in TCE rates. By Q2 twenty twenty five, we have met all our CapEx obligations without resorting to bank loans. We have therefore more than threatened our non Chinese built fleet capacity without incurring any bank debt. The global economic environment is poised for a year of mixed signals in 2025 with risks and opportunities influencing the shipping sector. Economic shocks, financial market responses and the volume policy measures are expected to shape the outlook contributing to a cautious yet dynamic landscape.

Operator

While global growth may be moderate and inflationary pressures persist, these challenges also create room for market adjustments and new trade patterns. CTIS will adapt to these evolving dynamics by focusing on diversification and align with the growing emphasis on sustainable practices, which are poised to reshape trade in the coming years. With careful navigation and that ability, the company is well positioned to leverage regional growth drivers and evolving economic dynamics to maintain resilience in the years ahead. We would like to thank you for joining us today and look forward to having you with us again at our next call for the results of the second quarter of twenty twenty five.

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Earnings Conference Call
C3is Q1 2025
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