C3is Inc.

Good morning everyone and welcome to our C3IS Q3 2023 Earnings Conference Call and Webcast. This is Dr. Diamandis Andriotis, CEO of the company. With me on the call today is our CFO, Nina Pindia. 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 of financial performance and are based on current expectations and assumptions which by nature are inherently uncertain and outside of companies' control. At this stage, if you could all take a moment to read our disclaimer on slide 2 of this presentation. I would also like to point out that all amounts quoted, unless otherwise clarified, are implicitly stated in US dollars. Today we released our earnings results for the third quarter of 2023. So let's proceed to discuss these results and update you on the company strategy and the market in general. Slide 3 shows the dry bulk market fundamentals. Since Q4 last year, shipment volume growth rose from minus 1% to 4.5%. At 793 million tons, China's imports of iron ore was the highest ever for the January-August period, beating the previous record of 773 million tons in 2013. Year-on-year global coal imports are up 8.6%, and well on track for all-time highs. China's import growth has been tremendous, increasing by 70% year-on-year to 233 million tonnes through August, just slightly below the total import volume of last year. Through to the end of this year, coal demand is likely to remain strong due to seasonal restocking for the winter. Year on year, global grain imports are up by 3.4%. Having entered the post-COVID era, China is expected to increase its imports by around 4.2% for the period 2023-2027. The demand for dry bulk commodities is expected to rebound by 3.1% in terms of tons and 3.7% in terms of ton miles for 2023. while further improvements are expected for 2024. After contracting by 1.1% in 2022, minor bulk ton-mile trade is expected to rise by 2.4% for 2023, while further improvements are expected to materialize in 2024, where a growth of 3.2% is expected. On the handy-sized fleet growth, this segment, 20,000 to 39,000 deadweight, is quite over-aged with a very small order book. The dry bulk carrier order book is standing at the 30 years historical low level, about 8% of the current dry bulk carrier fleet capacity in September 2023, while 16% of the dry bulk handy size fleet is above 20 years of age. The handy size bulk air fleet includes many old vessels with plenty of demolition potential. Compliance with EU environmental regulations, EXI, CII, are likely to accelerate demolition, and this coupled with an overage fleet might induce scrapping, thus reducing available fleet supply. In this size range, 70% of the trading fleet is over 20 years old, 10% is between 15 and 90 years old, 43% is between 10 and 40 years old, 20% is between 5 and 9 years old, while 10% has less than 5 years. True to form, the dry bulk freight market has delivered much upheavals over the past three months. Strong demand, elevated congestion in some places, and subdued supply growth have provided the fertile soil for freight research. The Baltic Dry Index went from a low 933 points early in Q3 to a year high of 1,752 towards the end of the quarter. Handy-sized rates went as low as $7,000 in early August, but rose to a comfortable $12,000 mark in mid-September and have remained there. Moving on to slide 4, the tanker segment shows attractive market opportunities ahead. In September 2023, Saudi Arabia and Russia announced crude oil production cuts of about 1.3 million barrels per day for the remainder of the year. Crude oil demand is affected by several factors, such as the ongoing war in Ukraine, and is creating trading pattern shifts benefiting longer haul routes and causing charter rates for tankers to rise. Crude prices jumped by about 4% following the crisis in the Middle East, which is a fairly typical reaction as markets supply a fair premium premised broadly on the perception of high risk. That's not a huge jump, and the price hike could quickly fade if the oil market continues to function normally. Crude oil demand in ton-mile terms is expected to grow by 6.8% in 2023. Seaborne crude oil trade has been supported by increasing demands from China and rising exports from US, Brazil and Norway. In 2023, crude oil trade is expected to increase by 6.4% or 340.7 million deadweight, whereas in 2024 it is expected to further increase by 4.8% or 357.2 million deadweight. Critically, changes in other factors such as quickly diminished speed or congestion that can increase quickly will provide firmer support for rates than the singular supply-demand balance would suggest. Slide 5 shows the Afronax tanker order schedule and the handy size demolition scenarios. The crude tanker trade in fleet is expected to grow by 2.2% in 2023 and only 0.6% in 2024. The tanker order book remains at historically low levels, standing at 5.8% of the fleet capacity in September 2023. Emissions regulations are expected to have a further moderating impact on active tanker supply. The thin order book as it stands and the difficulty to access CBR slots in the context of firm tanker order books made the overall supply outlook appear rather supportive of a firm market in its own right. Fleet should grow faster from 2026-2027 onwards. The global Afromax order book now stands at 119 vessels. Six vessels are scheduled for delivery within remainder of 2023. Going forward, we do anticipate a shortage of supply of vessels as the ratio of order book to vessels over 20 years of age is 79%, and environmental regulations has a negative impact on new buildings. On the handy-sized segment, scrapping age over the last 10 years has averaged 24 years across all segment groups. A large number of handy-sized vessels will turn 24 years old by 2027, and thus been eligible for demolition under a scenario where 24-year-old ships are scrapped. Over the last three years, however, demolition age has increased to 28 years on average. In 2027, around 12% of the handy-sized fleet will reach 28 years old, impacting fleet growth. Slide 6 shows the current fleet of C3IS. By the end of Q3 2023, C3IS owned and operated a fleet of two handy-sized dry bulk carriers and one Afrax oil tanker with an average age of 13.2 years. All vessels have had their balance wheel treatment systems already installed. Furthermore, there are no immediate capital commitments for special survey, as the next one due is Q3 2025. All vessels are encumbered and currently employed on short to medium term period charters and spot voyages. For the contractor revenues of the company until December 2023, the EcoBoost fire has been on time charter at a daily rate of $8,250,000 from the 1st of October 2023 until 23rd of October. From the 25th of October to the 25th of December the vessel will be on time charter at $20,000 per day. The Echo Angel Bay is on time charter at a daily rate of $26,000 from the 25th of October to the 25th of December. While on her previous employment, the rate was $8,250 per day. The Afrapel 2, ex-Telberana, is on spot voyages. Slide 7 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 satisfaction of the services we provide. The key maintained in our relationships with these companies are high standards of safety and consistency of service. I will now turn over the call to Nina Pindia for our financial performance.

Thank you Diamantis and good morning to everyone. Please turn to slide eight and I will go through our financial performance for the third quarter and nine months of 2023. Voyage revenues for the three months ended September 30, 2023 amounted to 10.1 million and 14.96 million for the nine months ended September 30, 2023. Compared to Q223, our revenues increased by 478% primarily due to the increase in the average number of vessels. Our fleet operational utilization was 98.5% for the three-month period and 93.6% for the nine-month period. For the three months of Q3, the daily TCE was $27,903 and for the nine months of the year, the value was $18,761. Voyage expenses and vessels operating expenses for the three months ended September 30 were $2.8 million and 1.5 million, respectively. For the nine-month period, the figures were 3.25 million and 3.3 million, respectively. The increases in both voyage expenses and vessels operating expenses are attributed to the increase in the average number of vessels. Voyage expenses for the nine months ended September 30, 23 mainly included bunker costs of 1.3 million, corresponding to 48% of total voyage expenses and commissions to third parties of 0.7 million, corresponding to 26% of total voyage expenses. Operating expenses for the nine months ended September 30 mainly included crew expenses of 1.9 million, corresponding to 58% of total operating expenses, spares and consumables costs of 0.7 million, corresponding to 21% and maintenance expenses of 0.3 million representing works and repairs on the vessels corresponding to 9% of total vessel operating expenses. Total calendar days for our fleet were 263 days for the three months ended September 30 and 625 days for the nine months. Of the total calendar days in the third quarter of 23, 180 or 68.4% were time-chartered days, and for the nine months, 506 or 81% were time-chartered days. General and administrative costs for the nine months ended September 30 were $0.9 million and mainly related to the portion of general and administrative expenses incurred by Imperial Petroleum, the former parent of C3IS Inc., that were allocated to C3IS. Depreciation costs for the nine months ended September 30, 23 was 2.7 million, a 2.67 million increase from 0.03 million for the same period of last year due to the increase in the average number of our vessels. Interest and finance costs for the nine months ended September 30 was $0.6 million and related to the accrued interest expense related party as of September 30, in connection with the $38.7 million financial liability, part of the acquisition price of our AfraMax tank, AfraPo2, which is payable by July 24. EBITDA for the nine months ended September 30, 23, amounted to $7.1 million. As a result of the above, for the nine months ended September 30, 23, the company reported a net income of 3.7 million. Turning to slide nine for the balance sheet, the fleet book value as at the end of September 23 was 76.5 million. Other current assets include trade receivables of 3.2 million, inventories of 2.1 million, and advance and prepayments of 18,000. Trade account payables are mainly payments due to suppliers. Concluding the presentation in slide 10, we outlined the key variables that will assist us to progress with our company's growth. Earning a high-quality fleet reduces operating costs, improves safety, and provides a competitive advantage in securing favorable charters. Maintaining the quality of vessels by carrying out regular inspections. both while in port and at sea, and adopting a comprehensive maintenance program for each vessel, discipline growth with in-depth technical and condition assessment review, timely and selective acquisitions of quality vessels, current focus on short- to medium-term charters and spot voyages, chartering to high-quality charters such as commodities traders, industrial companies, and oil producers and refineries. Maintaining adequate level of cash flow and liquidity. No outstanding bank debt. At this stage, our CEO, Dr. Diamantis Andriotis, will summarize the concluding remarks for the period examined.

We are very pleased to announce that even though we have been operating as a newly listed entity for a short period of approximately 4 months following our spin-off from Imperial Petroleum in late June 2023, we have managed to grow our fleet and achieve a remarkably financial performance. Specifically, during the third quarter of 2023, we generated record revenues of 10.1 million and a record net income of 3.3 million representing increases of 478% and 917% respectively, from the previous quarter. Going forward, we strongly believe that the new acquisition of ARA from Axoil Tanker, which was delivered to us in July 2023, will well position us to capture the firm prevailing tanker market conditions and generate significant cash flow with the efficient operations of our expanded and diversified fleet. Specifically, our two handy-sized dry bulk carriers currently operate under short-term time charter contracts. earning gross charter rates ranging from $20,000 to $26,000 per day, and resulting in a fixed revenue backlog of approximately $2.9 million until December 2023. Our already secured revenues are supplemented by operations of our Afromax oil tanker in the spot market, where voyeur charter rates for Afromax tankers currently stand at very high levels, in excess of $65,000 per day. This employment strategy will enhance our ability to finance our outstanding liability by $38.7 million related to the acquisition of our tanker and due in July 2024, partially with cash on hand and cash from operating activities. With our company's impressive performance, we will continue to pursue a growth strategy focused on timely and selective acquisitions of high-quality vessels, which we may consider to be in the best interest of our company and our shareholders. We would like to thank you for joining us today and look forward to having you with us again at our next call on our fourth quarter 2023 results in February 2024.