Himalaya Shipping Q1 2025 Earnings Report

Himalaya Shipping EPS Results

• Actual EPS: -$0.14
• Consensus EPS: -$0.16
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: N/A

Himalaya Shipping Revenue Results

• Actual Revenue: $21.90 million
• Expected Revenue: $31.18 million
• Beat/Miss: Missed by -$9.28 million
• YoY Revenue Growth: N/A

Himalaya Shipping Announcement Details

• Quarter: Q1 2025
• Date: 5/22/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 22, 2025
• Conference Call Time: 9:00AM ET

Himalaya Shipping (NYSE:HSHP) provides dry bulk shipping services worldwide. The company operates a fleet of vessels. It serves major commodity trading, commodity and energy transition, and multi-modal transport companies. Himalaya Shipping Ltd. was incorporated in 2021 and is based in Hamilton, Bermuda.

Himalaya Shipping Q1 2025 Earnings Call Transcript

Key Takeaways

• Net loss of $6.2M in Q1 2025 and adjusted EBITDA down to $13.8M from $16.8M a year earlier, driven by lower time charter equivalent rates and higher vessel operating costs.
• Entered a new time charter on the Mount Norifjell at Baltic index plus premium and converted two vessels to fixed rates of $32,000 and $31,500 per day through December 2025.
• April TCE reached approximately $25,800 per day gross, and the company declared an April dividend of $0.25 per share, underlining strong cash flow confidence.
• Raised gross proceeds of ≈$50M via private placement at NOK 60.5 per share and applied for uplisting to Euronext Oslo Børs to boost liquidity and institutional access.
• Market fundamentals are supportive with bauxite ton-miles up 43% year-over-year, a Capesize orderbook at just 7.9% of fleet, and 1.3–1.4% additional off-hire days from upcoming dry docks.

Presentation

[Operator]

Welcome to Himalaya Shipping Q1 twenty twenty five Results Presentation Conference Call. This call is being recorded. And I will now turn the call over to CEO, Lars Christian Swenson. Please begin.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

Thank you, operator. Welcome to the Q1 twenty twenty five conference call for Himalaya Shipping. My name is Lars Kristian Svensson, and I will be joined here today by our CFO, Wieder Hasen. Before we start the presentation, I would like to remind you that we will be discussing matters that are forward looking.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

These assumptions reflect the company's current views regarding future events and are subject to risks and uncertainties. Actual results may differ materially from those anticipated. I will now continue with the highlights of the quarter. We reported a net loss of $6,200,000 and an adjusted EBITDA of $13,800,000 The gross time charter equivalent earnings for the quarter was approximately $21,100 We also entered into a new time charter agreement on the Mount Norifjell for fourteen to thirty eight months at the Baltic index rate higher than the average premium on our current charters. The same vessel, Mount Norifjell and the Mount Hua, was later in the quarter converted from index linked time charters to fixed rates from April 1 until thirty first December twenty twenty five at $32,000 and $31,500 gross, respectively.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

The company also completed the private placement of approximately 15,000,000 issuing 2,650,000.00 new shares at NOK 60.5 per share. Total cash distributions for the quarter totaled NOK $0.05 per share for the months of January to March. In subsequent events, we achieved a time charter equivalent for April 2025 of approximately $25,800 per day gross. We also declared a dividend of $0.25 per share for the month of April. Last but not least, we have on the twentieth May applied for an uplisting from Euronext Expand to Euronext Oslo Burs, which is the main stock exchange in Oslo.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

This should further increase the liquidity in our share also with larger funds and investors. And with that, I will pass the word to Wiedar.

[Vidar Hasund, Contracted CFO at Himalaya Shipping]

Thank you, Lars Christian. Himalaya Shipping reports a net loss of $6,400,000 and a loss per share of $0.14 for the first quarter of twenty twenty five compared to a net income of $2,500,000 and earnings per share of $06 for the first quarter of twenty twenty four. Operating income was $6,500,000 and adjusted EBITDA was $13,800,000 for Q1 twenty twenty five compared to operating income of $11,400,000 and adjusted EBITDA of $16,800,000 for Q1 twenty twenty four. Operating revenues were $22,000,000 for Q1 twenty twenty five compared to $23,600,000 in Q1 twenty twenty four. The reduction in revenues is due to lower time charter equivalent earnings achieved, which is down from $30,600 per day in Q1 twenty twenty four to $21,100 per day in Q1 twenty twenty five.

[Vidar Hasund, Contracted CFO at Himalaya Shipping]

This is mainly offset by two eighty two more operational days in Q1 twenty twenty five as a result of the last vessel deliveries during 2024. Vessel operating expenses were $6,900,000 in Q1 twenty twenty five compared to $4,900,000 in Q1 twenty twenty four. The increase is due to higher average operating expenses per ship per day of approximately $6,400 in Q1 twenty twenty five compared to $6,200 in Q1 twenty twenty four as well as a full fleet in operation during Q1 twenty twenty five. G and A for the first quarter was $1,100,000 compared to $1,500,000 in Q1 twenty twenty four. The decrease is primarily due to reduced bonus accruals.

[Vidar Hasund, Contracted CFO at Himalaya Shipping]

Interest expense were $30,000,000 in the first quarter, reflecting an annualized fixed interest rate of approximately 7% on the sale leaseback financing, which matures seven years from each vessel delivery. The interest expense in Q1 twenty twenty five increased compared to Q1 twenty twenty four due to drawdowns on the sale leaseback financing in connection with vessel deliveries during 2024. Cash and cash equivalents were $27,000,000 at the end of the quarter. Our minimum cash requirement under our sale leaseback financing is $12,300,000 Gross total debt was $721,300,000 as of 03/31/2025, down from $727,900,000 as of 12/31/2024, reflecting bareboat payments on the sale leaseback financing. Shareholders' equity was $162,500,000 at the end of the quarter.

[Vidar Hasund, Contracted CFO at Himalaya Shipping]

The company raised gross proceeds of approximately $50,000,000 from the private placement completed in March 2025. Cash flow from operations was $300,000 for the first quarter. The company have declared total cash distribution to shareholders of $05 per share for the months of January, February and March 2025. That completes the financial section. And now back to you, Lars Kesel.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

Thank you, Wilar. Before I will guide you through our market section, here are some company updates. We are pleased to have our first Q1 presentation with all our vessels firmly delivered and trading. All of our modern Newcastle MAX vessels are dual fuel LNG fitted and have scrubbers installed. This flexibility has proven to be appreciated by our charterers, and the entire fleet is out on index linked time charters with conversion options in our favor.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

As previously mentioned in the presentation, we have converted two vessels to fixed rates until the end of the year at 31,500 and $32,000 per day. The remaining 10 vessels are currently running at index linked charters. To illustrate the performance or outperformance, if you'd like, you can see on this slide that since inception, the Himalaya vessels have traded an average 48% premium to the Baltic Capesize Index and a 25% premium to peers. This is achieved by the extra cargo intake on our vessels and top tier speed and consumption design on the fleet. That makes Himalaya shipping a top pick in the Capesize sector, which is also illustrated by our dividend capacity on our next slide.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

This slide shows the theoretical dividend capacity based on various rate scenarios for a standard Capesize vessel. When the Baltic Capesize Index moved to $30,000 per day, the company will yield about 28%. And when we see moves around the $40,000 per day range, we'll produce an enticing yield of around 50%. Our fleet wide cash breakeven is about $17,000 per day on the Baltic Capesize Index. As a reminder, the average Capesize Index over the last four years have been significantly higher.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

Shareholders and management are fully aligned and in this together, where the board and sponsors own onethree of the equity. We do not have any reinvestment plans, and all the free cash flow after debt service is targeted to be paid out to our shareholders via monthly dividends. Now let's have a look at the market. After a challenging end to 2024 with decreasing ton miles and subsequent lower freight rates, q one twenty twenty five has managed well settling at around $13,000 per day on the Baltic Capesize Index. The largest contributor to this has been the solid bauxite moves.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

Bauxite ton miles grew 43% year over year and around 85% of the commodity were destined for China. Brazilian iron ore volumes and ton miles also experienced growth despite Brazil going through a hefty wet season, achieving a 3% year over year growth. The Australian iron ore exporters were, however, disrupted by two large cyclones, thus had a year over year decline of 10% in the first quarter. Global coal ton miles also underperformed and had a 30% contraction year over year due to over 50% less exports from Colombia and less coal than usual transported on Capesize. Please be reminded though that Q1 twenty twenty four was an exceptionally good period in terms of cargo volumes and ton miles.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

So looking at the first quarter of twenty twenty five in historical terms, it has proven decent. Comparing Q4 twenty twenty four in ton miles with Q1 twenty twenty five, we also see a solid improvement of 2.5 overall increase. We have discussed the bauxite trade extensively, and it's good to see the staggering volume growth. As a central component in the alumina industry, China used these imported tons, especially in the electric vehicle production. Imports are increasing and Chinese bauxite stockpiles are declining, which indicates room for further growth as illustrated in the top left graph.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

To the left, you can also see that the Chinese imports are increasing steadily and best of all, the majority of these Chinese import volumes are being shipped on Capesize and New CastleMax vessels. To the right, you can see the increased impact on the bauxite trade in ton miles, where bauxite has now surpassed coal by a good margin. Brazil experienced a wet Q1, but still increased their exports with 3% year over year for the first quarter. The pace has continued into Q2, where the country set a new export record for the month of April with 30,500,000 tonnes of export. We consider these volumes from Brazil encouraging, both in terms of million tonnes exported, but also from a tonne mile perspective as we move into the iron ore high season.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

In addition, we also have more iron ore coming onstream in The Atlantic that will contribute in scale to the Tonmile Newcastle Mac story. The first volumes of iron ore from the Simandou mine in Guinea are expected to be exported in Q4 twenty twenty five according to the latest updates. Over a twenty four month ramp up phase, the mine is targeting 120,000,000 tonnes of high grade iron ore per annum to the market. With the additional Vale capacity increased by 2026, we expect a total of 170,000,000 tonnes of high grade iron ore from the Atlantic, most of which will be exported to China. As you can see from the right graph, comparing these volumes to the record low order book, the supply story strengthens further.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

Let's have a deeper look into the order book. We are at a 25 low, standing at 7.9% of the total existing Capesize fleet. Active shipyards are still 50% down from the peak of 02/2008, making it challenging to build any meaningful fleet capacity that could distort the favorable supply dynamics over the next few years. As a comparison to other shipping segments, you can see from the right graph that the Capesize order book to fleet ratio is by far the most favorable. In addition to the low order book, the current Capesize and New Carson Mac fleet is aging fast.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

Around 50% of the total fleet was built between 02/2009 and 02/2015. That means that 60% of the fleet will be over 20 years of age in 02/1934. Keep in mind that many charterers today will not employ vessels older than 15. Ship owners have historically been good at ruining their own markets by placing new building orders. As it looks now, it will be nearly impossible to build this market to death at this stage in the cycle with a clear visibility of supply for the next three, four years.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

We continue to see a significant increase in dry docks due to mandatory special service required on merchant vessels every fifth year. Vessels delivered in 2010 account for 10% of the total Capesize fleet and will need to undergo the fifteen year special survey in 2025. Additionally, there will be five and ten year special surveys, meaning around 23% of the total Capesize in Newcastle Max fleet will be competing for dry dock space this year with similar numbers expected for 2026. We estimate a total of 1.3% to 1.4% additional off hire on the total fleet due to dry docks alone in 2025 and 2026, not factoring in potential congestion and waiting time. Thank you very much.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

And I will now pass the word back to the operator and welcome any questions that you might have.

[Operator]

Thank you. The first question is from the line of Peter Haugen from ABG. Please go ahead. Your line will now be unmuted.

[Petter Haugen, Partner, Equity Research Analyst at ABG Sundal Collier]

Good afternoon, guys. Just a quick question regarding employment going forward. So as it stands, it looks as if the conventional capsized market is, from the FFA perspective, going to produce somewhere just shy of $20,000 per day, well, a little bit less than that up until Q4, in which those levels will be achieved. Do you find it increasingly to fix out or to swap more of the index linked charterers at these levels?

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

Hi, Perse. To answer your question, the short answer is no. We think the market still has more legs to go on here. So at these levels, we're quite happy with continue with our index linked time charters. If we see a good jump, now we're going into the iron ore high season, and we also see that the Australian iron ore is pushing a lot harder and the bauxite is continuing well.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

So if we see the FFA market spiking and gives us a good cushion into Q3 and Q4, we will obviously consider taking some more cover into fixed rates. But at the moment, we think we have this market as molex.

[Petter Haugen, Partner, Equity Research Analyst at ABG Sundal Collier]

Understood. And that was sort of, to some extent, going into my next question, and which is very, very, I think, both simply and difficult and broad in the sense that how should we now or which catalysts should we look for? Well, I guess, predominantly to the upside, but are there any risks as well? Those would yes, would love to hear more about the more concrete catalysts expected through the summer and into the second half of the year?

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

Yes. Well, going into the summer now, we see that the Brazilians have already picked up the pace rapidly. They set a new record now for the month of April with exports reaching 31,500,000.0. And so far, the supply side on the vessels coming into Atlantic as well to lift all these volumes, it's shortening down in the next couple of months. So we see the increased tonne mile volumes is just going up to get further into the year.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

And now that we also get a lending hand from Australia, the cargo flow starts to starting to improve. So that's the major catalyst. And let's not forget the bauxite volumes. We're coming out of the high season now, but at almost a 45% year on year increase to date. Even if they go into the slow season, they're still going to produce a lot more than what they've done in previous years.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

So the cargo flow is increasing, ton mile intensive. And let's not also forget that we have a utilization rate on the Capesize fleet now getting close to 95%. So we don't need many bottlenecks for this market to get a push, we believe.

[Petter Haugen, Partner, Equity Research Analyst at ABG Sundal Collier]

Okay. That's good color and good to hear. So thank you. That was all from me.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

Thank you,

[Operator]

It does not seem like we have any further questions, so I'll hand it back to Lars for any closing remarks.

[Lars-Christian Svensen, Contracted CCO at Himalaya Shipping]

Thank you very much for listening in, and we'll speak to you again next quarter. Bye

Participants

Executives

• Lars-Christian Svensen, Contracted CCO
• Vidar Hasund, Contracted CFO

Analysts

• Petter Haugen, Partner, Equity Research Analyst at ABG Sundal Collier