Imperial Petroleum Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 23, 2025

There are 3 speakers on the call.

Operator

Good day, and thank you for standing by. Welcome to the Imperial Petroleum Q1 twenty twenty five Results Conference Call and Webcast. Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Mr. Hari Vafias, CEO of Imperial Petroleum.

Operator

Please go ahead.

Speaker 1

Good morning, everybody, and thank you all for joining us at our Q1 twenty twenty five conference call for Imperial Petroleum. I'm Hari Vafias, the CEO of the company. Joining me on the call is Mrs. Fengi Sakilaj, who will be discussing our financial performance. Before we commence our discussion, please read the Safe Harbor disclaimer on Slide two.

Speaker 1

In essence, it's 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 expectations of Imperial Petroleum and are subject to risks and uncertainties, which would cause future results to differ materially from these forward looking statements. In addition, we'd like to clarify that during this call, we will quote monetary amounts. These, unless explicitly stated otherwise, are all denominated in U. S.

Speaker 1

Dollars. On Slide three, we're summarizing our key operational and financial highlights for Q1 twenty twenty five. The first quarter of this year was quite eventful with policies such as U. S. Tariffs, sanctions on tankers involved in Russian oil and USD port fees on Chinese built vessels.

Speaker 1

These terminal events, along with ongoing geopolitical factors such as the Russian Ukraine war, brought volatility to the rates, particularly for tankers. The quarter commenced with a broader softness in day rates with the market picking up by March. Imperial Petroleum's performance followed the market conditions. We had quite a soft performance during the first couple of months of the year, but we took advantage of the market upside during March, hence managed to produce yet one more profitable quarter. It's worth to note that our quarterly profitability is ongoing since the fourth quarter of twenty twenty one.

Speaker 1

In spite of market rates being evidently softer than the same period of last year, with average rates for Suezmax and product tankers being lower by about 25%, in Q1, we generated revenues of $32,100,000 and a net income of 11,300,000.0 What is satisfactory is that compared to the previous quarter, that is Q4 twenty twenty four, our performance marked a notable improvement as revenue generation increased by $5,900,000 or 22.5%, while net income increased by $7,400,000 a rise equivalent to almost 190%. We remain profitable and debt free. Our recurring profitability fuels our cash generation. We ended Q1 twenty twenty five with an Envy's cash base of close to $227,000,000 The cash base of Imperial Petroleum and Isolation is about 3x higher than our current market cap. On Slide four, we are providing a summary of our fleet employment.

Speaker 1

As mentioned, we have increased our time charter coverage. Seven out our 13 ships are currently under time charter employment. In more detail, our three Handysize dry bulk carriers are employed on short DCs, while four of our product tankers are under time charter employment with expiration dates between May 25 and August 27. Let us briefly comment on tanker spot rates. Market conditions in Q1 were softer than the beginning of twenty twenty four.

Speaker 1

Steel rates were stronger than the second half of twenty twenty four. From Q2 twenty twenty four onwards, crude oil demand was affected by the closing of East and West arbitrage, while for products reduced refinery runs contributed to normalizing earnings. During the first half of Q1 twenty twenty five, soft earnings continued due to the quieter activity in the Asian and Atlantic market. The effect of sanctions on tankers involved in Russian trade imposed in March 25 tightened the capacity and strengthened the day rates. On Slide five, as we mentioned earlier, geopolitics governed the tanker market in the first quarter of twenty twenty five.

Speaker 1

Hence, throughout the quarter, the tanker market was simply navigating and reacting towards the prevailing uncertainty. Q1 began with U. S. Announcement of sanctions on 150 tankers involved in Russian and Iranian oil trade, raising sanction fleet capacity to 9.5% of the global VLCC fleet, 8.5% of the Suezmax fleet, 12.5% of the Aframax fleet. These sanctions came into full effect in March '25 and had a positive effect on rates.

Speaker 1

However, the trade tariffs announced within February with The U. S. Imposing a 25% tariff on Canadian and Mexican imports and 10% tariff on Chinese imports and the respective trading partners announcing retaliations fill the market with uncertainty. The reason for this is that over the long term, any trade disruption is a negative development as it affects demand for goods, hence has a direct impact on the shipping market. Currently, the market is not seriously affected as within May, U.

Speaker 1

S. And China agreed to roll back tariffs for an initial ninety days period. The announced U. S. Port fees for Chinese built ships, if implemented, will be excellent news for us as none of our 19 vessels is Chinese built.

Speaker 1

A latest development that has positively affected the tanker market is the OPEC announcement to increase output. The group announced to return 500,000 barrels per day between April and May. This added production gave a positive boost to tanker rates. Given the above, the trade of dirty tankers was positively affected by the OFAC sanctions on Russian business. Overall expectation for the dirty tankers, short to medium term, are positive, mostly due to the OPEC unwinding production cuts, the sanctions on Russian and prohibition of the import of Russian crude and dirty products to Europe staying in place.

Speaker 1

On the clean product side, the weak Q4 'twenty four continued into Q1 'twenty five. We saw a couple of small spikes in the spot market through Q1 'twenty five, but they were short lasting with generally ample supply of ships, both east and West of Suez. The situation in the Red Sea Gulf Of Aden with the holdings targeting commercial ships was one of the main reasons that in first half twenty four was so strong and for the clean product market. Now we are in a situation where Red Sea Gulf Of Aden looks like it could open again following an announced ceasefire agreement between U. S.

Speaker 1

And Hovies. Should this reopening occur, it should be a negative for the clean product tankers. Slide six, we touch upon the tanker fleet fundamentals, which look promising both for the Suezmaxes and product tankers. In both categories, aging fleet outweighs the impact of current order book. In terms of age distribution, about 20% of the product tankers between 94,000 deadweight capacity is above 20 years of age, while the order book for these ships for the remainder of '25 and year '26 is in the order of 8.3%.

Speaker 1

On Suezmaxes, between a 55 and a 62,000 deadweight capacity, about 50% of ships are above twenty years of age, while the current order book up to the end of twenty six is in the region of 12%. On Slide seven, we are introducing Imperial Petroleum recent and upcoming dry bulk fleet additions. Imperial Petroleum will add up until the beginning of Q3 a total of seven ships, five Supramaxes and two Kamsarmaxes. With these additions, your fleet size will increase by 60%, both in terms of number of ships and deadweight capacity. Following these deliveries, the fleet of Imperial Petroleum will count 19 ships, 10 bulk carriers and nine tankers with a total capacity of 1,200,000 deadweight.

Speaker 1

Overall, drybulk carriers have a less volatile market cycle than tankers, and we believe these strategic additions will add a conservative element of diversification to our broader fleet. In terms of employment, these vessels are typically employed on short time charters, thus avoiding bunker costs and minimizing idle time. We also have a lower daily operational cost than tankers. Currently, the market for Camsromax and Panamax drybulk vessels is soft but well above breakeven levels. The one year time charter rates for March 25 for a Camsimax vessel was about $14,000 Due to the sizable element of these acquisitions, we expect every $2,000 increase in daily TCE rates for these newly added ships to contribute an additional $5,000,000 to our annual operating cash flow.

Speaker 1

Total capital commitment for these ships is about $129,000,000 and currently, our cash stands at about $190,000,000 As within April 25, we repaid about $40,000,000 for the purchase of the vessels Neptulos and Clean Imperial. Even though we'll have sufficient cash surplus following the payment of these dry bulk vessels, we do expect that our profitable operations will allow us to quickly accumulate cash at current levels. I'm now passing the floor to Ms. Saquillari to summarize our financial performance.

Speaker 2

Thank you, Harry, and good morning to all. Year 2025 commenced positively for Imperial Petroleum. Q1 twenty twenty five was yet another profitable quarter, significantly improved compared to the fourth quarter of twenty twenty four as our revenue generation increased by 22%, while our net income by 190%. Within Q1 twenty twenty five, we witnessed improved performance from most of our product tankers, plus we did add the product tanker cleaning period in January 2025. As discussed, market in the first quarter of twenty twenty five was event ful in terms of geopolitics, sanctions and trade disruptions.

Speaker 2

The quarter commenced at a low pace but gradually gained a meaningful momentum. Looking at our income statement for Q1 twenty twenty five on Slide eight, revenues came in at $32,100,000 in Q1 twenty twenty five, marking a 22% decline compared to revenues generated the same period of 2024. This decline stems from lower market rates. Indicatively, we mentioned that during Q1 twenty twenty four, average spot rates for product and Swissmax tankers were 2524% higher than average rates in Q1 twenty twenty five. Moreover, during Q1 twenty twenty five, revenue generation was not evenly apportioned across the period as about 55% of revenues were generated within March when market gained momentum.

Speaker 2

Voyage costs amounted to $10,500,000 3 point 1 million dollars lower when compared to Q1 twenty twenty four. This decrease in voyage expense is attributed to increased time charter activity leading a decline in spot days by 16% and thus decreased bunker consumption and lower port expenses. Running costs amounted to $7,000,000 increased by $1,100,000 due to the increase of our fleet by an average of two vessels between the two periods. EBITDA for the first quarter of twenty twenty five came in at $14,700,000 while net income at $11,300,000 corresponding to a basic earnings per share of $0.32 Moving on to Slide nine, let us take a look at our balance sheet for the three months of 2025. We enjoy a hefty cash base of close to $227,000,000 and a debt free balance sheet.

Speaker 2

Within this quarter, we managed to increase our available cash by 10%, while we marked a 9% increase in fleet book value as a result of our fleet expansion. Proceeding to Slide 10, we provide a summary of our liquidity, profitability and market considerations going forward. Our strong liquidity is undisputed both in terms of cash and our on our balance sheet and solid operating cash flow generation. Our available cash have been smartly utilized to assist income from noncore operations. In a single quarter, we generated $2,200,000 of income from time deposits.

Speaker 2

Our daily TCE earnings per fleet go ahead today stand in the order of $20,500 per day, while daily cash flow breakeven per vessel is in the order of 9,000. Given that Imperial Petroleum is a debt free company, it is evident that there is plenty of room for profit generation. In terms of market consideration, the focal point is the duration and next steps pertaining to trade war as well as OPEC plus further output increases, if any. Concluding our presentation with Slide 11, we summarize yet once more our company's strong points, placing emphasis that we operate a quality bid fleet of tankers in drybulk vessels and have managed to demonstrate recurring profitability since since the fourth quarter of twenty twenty one. At this stage, our CEO, mister Harry Bafias, will summarize our concluding remarks for the period examined.

Speaker 1

Another year has commenced with a positive momentum for Imperial Petroleum. We are happy as we consider the $11,300,000 of net income generated in Q1, a very good result given the eventful but softish market. This is a busy period for our company, but at the same time exciting as we're taking on delivery of another six dry bulk ships. Within the short life of Imperial Petroleum, we are expanding our fleet from four vessels to 19 by the second quarter of twenty twenty five, and our goal of growing fast and transforming a small company to a medium sized company was achieved. We feel confident that the diversified quality non Chinese fleet we have created will pay off.

Speaker 1

Imperial Petroleum enjoys fast growth, recurring profits, zero bank debt and liquidity as of March 31 of in excess of $220,000,000 and as per our view, ticks all the boxes that define a successful operation. Thank you for joining us at our call today and for your interest and trust in our company, and we look forward to having you with us again at our next call for our Q2 results. Thank you.

Operator

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you, and have a good day.

Powered by Quartr

Key Takeaways

  • Q1 2025 revenues of $32.1 million and net income of $11.3 million, marking a 22.5% revenue increase and a 190% jump in net income sequentially and continuing profitability since Q4 2021.
  • Imperial Petroleum remains debt free with a cash base of approximately $227 million, about three times its current market capitalization.
  • The fleet will grow by 60% with the addition of seven dry bulk vessels (five Supramax and two Kamsarmax) by Q3 2025, bringing total capacity to 1.2 million dwt across 19 ships.
  • Geopolitical factors—including US sanctions on tankers, trade tariffs, and OPEC production changes—have driven volatility in spot rates, with markets soft early in Q1 but strengthening in March.
  • A potential reopening of Red Sea routes after a ceasefire could reduce freight rates for clean product tankers by restoring capacity and lowering bunker costs.
AI Generated. May Contain Errors.
Earnings Conference Call
Imperial Petroleum Q1 2025
00:00 / 00:00