C3is Inc.

Good morning to everybody and welcome to C3IS first quarter 2023 earnings conference call. I'm Harry Vassias, chairman of the board of C3IS. With me on the call is the company CEO, Mr. Andriotis Yamadis, as well the company CFO, Mrs. Nina Pellia. We're all honored for having you with us today. This is the very first conference call of C3IS following the successful spin-off concluded on June 21st. Before we commence our discussion, I kindly ask you to read the safe harbor language on slide number two of our presentation, which reminds you that today's call may include forward-looking statements that are based on current expectations and assumptions, which by nature are inherently uncertain and outside the company's control. In addition, we have a couple of additional remarks to make. First, the financial results presented were prepared on a carve-out basis from the financial statements of Imperial Petroleum. which was our parent company prior to the completion of the spin-off, and accordingly do not reflect any adjustments for the spin-off, including variations of common shares, series A convertible preferred shares. Secondly, during this call, we will quote monetary amounts, which are all denominated in U.S. dollars, unless explicitly stated otherwise. On slide three, we're introducing a recently listed company called C3IS. Our new company is the outcome of the successful spin-off of two hundred-size dry bulk vessels from Imperial Petroleum. The specific spin-off structure, the rationale of the transaction, and the potential benefits of our shareholders are analyzed in detail in the C3IS registration statement filed with the SEC. C3IS is for the time being a small-scale company with a promising growth potential as it belongs to a shipping group with long-standing experience and proven track record in the industry. Evafia's group has five active shipping companies, three NASDAQ listed, and two private ones. Given that Stealth Gas has been listed on the NASDAQ since 2005, it's quite evident that we hold considerable experience in the capital markets. C3IS strategy is very simple. We'll be focused on healthy growth and profitability. Our short-term goal is to expand our fleet to a minimum of 10 ships. Current market values of dry bike buses are quite attractive, a fact which may assist us to attain our fleet expansion. We have three key words, which are our objectives, growth, stability, and environment. And as an entity, we'll fulfill our responsibility to support these three aims, but our top priority will always be safety for the environment, our crews, and our ships. We are confident that this endeavor will materialize as we aim to leverage upon and replicate the success story of both Imperial Petroleum and actually reap the benefits of economies of scale and know-how that our large affiliated shipping group has to offer. Our experience in the dry bulk sector is undisputed as our management company, Brave Maritime, has been managing dry vessels since the 70s. Of course, that doesn't limit us in one sector and we might make acquisitions in other shipping sectors as well. On slide four, we are discussing our investment rationale behind the spin-off and the gains we feel it brings upon to our shareholders. As already mentioned, Imperial Petroleum spun off two of its hand-sided bulk vessels, which equates to only 15% of its fleet book value as of March 31, 23. A small contribution in terms of value, but with a large economic potential. Imperial Petroleum also supported CFDIS by contributing $5 million of working capital in order to ensure adequate liquidity during its first period of operations. Now, what do Imperial Petroleum shareholders and warren holders have to gain? That basis, the basis of the record rate of June 13 received on June 21 shares of C3IS on a ratio of 1 to 8. We view these shares granted as a dividend to our shareholder base that is an opportunity to participate in a separate public company with promising potential. Most importantly, we feel that C3IS poses an interesting investment opportunity as our company shares may also become as liquid as those of Imperial Petroleum. On slide five, we're presenting your fleet. As said, our fleet is currently small-scale, comprised of two high-quality countryside bulk carriers, the Echo Bushfire built in 2011 and the Echo Angel Bay built in 2009, both built in Japan. Our fleet average age is 12.9 years. Our fleet is unencumbered. We have no immediate capital commitments. Both vessels have ballast water treatment system installed, while the next dry docking is due in the second quarter of 2026. Both vessels are semi-box-shaped, capable of lowering versatile bread bulk and project cargoes, and are certified by class to load most cargoes listed in the IMDG. As for the Echo Bushfire, this vessel is equipped with grabs and not a very common feature amongst vessels of similar size. In terms of wind deployment, both vessels are employed on time-charted trips, expiring in July and September 2013 accordingly. Overall, our current chartering strategy basis current market condition is to employ our investors on time charters or spot voyages up to three months duration. We usually attend high operational utilization. Our investors, our CIS and our manager have developed strong relationships and have repeat business within their national charters. I'll now pass the floor to our CEO who will provide you with a market update.

Thank you, Harry. Before I commence discussing the dry market, I would like to express that as C3IS CEO, I firmly believe in our new company's capabilities and I will provide my full support in order to successfully materialize our growth strategy. Let us move on to slide 6 in order to discuss the dry market prevailing condition and expectations going forward. Overall, the performance of the dry market is customarily dependent upon several variables, such as global microeconomic outlook, China's economy, demand and trade of major commodities like iron, coal, and grain, and the fundamentals of the dry fleet, that is, demand and supply. In terms of global economic outlook, in spite of the recent banking crisis, inflation, the ongoing Russian-Ukrainian conflict, world GDP is forecast to grow in 2023 by 1.9%. In terms of seaborne dry bag trade, we expect 1.5% growth in terms of tones and 2.4% growth in terms of ton miles demand with further improvement possibilities in 2024. Looking at the prospects of the Chinese economy, China has entered into a post-COVID recovery and in 2023 is expected to expand its economy by about 5%. A recovery will be most driven by the consumption and services sector. Indeed, it is expected that in the period of 2023 to 2027, China's import growth will be in a region of 4.2%, gradually slowing down thereafter. The biggest question is whether the housing sector, that heavily affects the demand for steel, will gradually recover. Let us move on to slide 7, so as to look at the trade of major commodities. The global trade of iron ore by sea is expected to increase by approximately 1.5% in the full year of 2023. This growth is driven by stronger demand from China as well as iron ore exports growth mainly from Australia and Brazil. In 2023, global trade of both thermal coal and caulking coal is expected to grow by 3% respectively. Although demand from Europe is expected to stay at similar levels as in 2022 due to the ongoing Russian-Ukraine conflict, we expect to see a rise in coal demand from India and China. Looking at grain trade, this is also anticipated to grow by 4% in 2023, fueled by strong demand from key regions such as China, the economic rebound of countries like Pakistan, Egypt, and Bangladesh, and the increase in corn exports from Brazil. In slide 8, we provide the summary of the hand-designed dry bulk fleet fundamentals. The hand-designed dry bulk segment is quite over-aged and with a very small order book. Currently, the order book to fleet ratio stands at 3.35%, while 70% of the fleet is above 20 years of age. If demolition in the segment intensifies, the small number of orders might cause the handy-sized dry bulk fleet to shrink. New building prices remain well below last year's peak. In addition to this, new orders are mostly focused on the larger 39,000 deadweight segment, and in terms of period charter, rates picked up until March and were above the last five years' average, which then we witnessed a slight decline. In relation to the second quarter of 2023, we have witnessed an overall soft market for the handy-sized dry bulk vessels. We expect the market to show some improvement in the third quarter of 2023, especially if the Chinese government implements economic stimulus packages, as this should lead to a more positive sentiment overall, thus an increase in market rates. I will now hand over the call to NINAP India, the CFO of C3IS, in order to discuss our financial performance.

Thank you Diamantis and good morning to everyone. C3IS Inc. was just listed in NASDAQ, so we will present and analyze CalVAD financials from the parent company Imperial Petroleum. We will base our discussion on our performance during the first quarter of 2023. Before we commence the analysis of our financial performance, I would like to touch upon our financial strategy going forward. As mentioned before, we will aim at growth and fleet expansion while following a prudent financial strategy in terms of leverage. Both of our vessels are unencumbered, hence we have absolutely no financial obligations, which is very positive cash flow-wise, especially now that interest rates are very high and that we are entering into an expansion phase. Focusing on the first quarter 2023 performance, in slide 9, revenues came in at $3.2 million. Our two vessels were employed only on time charter trips. We managed to achieve a high, a strong operational utilization of about 91%, marking only 17 days of commercial or higher. Voyage costs amounted to $0.3 million. Although our vessels were employed on time charters, where no voyage costs are incurred by the owner, this quarter we had about $150,000 of ballasting costs for the Echo bushfire. Our time charter equivalent revenues for Q123 were in the order of $2.9 million, which is translated to a daily TCE of about $16,000, a performance over and above the prevailing market rates during the first quarter of 2023. Our running costs amounted to $1 million. These expenses mainly included crew costs of $0.6 million, corresponding to 60% of total OPEX, and spares and consumables of $0.3 million. Our EBITDA for the quarter was $1.4 million, while our net income was $0.8 million, a satisfactory performance given that we operate a fleet of only two vessels. Compared to Q422, we did generate a higher income, despite daily rates that were slightly higher in the last quarter of 2022. The main reason was that during Q422, one of our vessels, the Echo Angel Bay, underwent its scheduled dry docking, resulting in 0.6 million of dry docking charges and technical off-hires. Moving on to slide 10, let us take a look at our balance sheet and for the first three months of 2023. Our financial structure is simple. We are a debt-free company, while for the time being, almost all of our asset value stems from our fleet book value of $38.2 million. Right after the spin-off was effected, our liquidity was enhanced by the $5 million contributed from Imperial Petroleum as working capital. Going forward, our liquidity will also be boosted from cash flows stemming from our fleet operations. Concluding our presentation in slide 11, we outlined the key variables that will assist us to progress from our company's growth. The fundamentals going forward are our proven growth expertise, our attention to operating costs and leverage levels, management expertise, and our strong relationship with charterers. We hope that we will materialize upon these competitive advantages and make C3IS an investment success story. At this stage, our board chairman, Mr. Harry Vakias, will summarize our concluding remarks for the period examined.