C3is Inc.

Good day and thank you for standing by. Welcome to the C3IS Fourth Quarter Earnings Conference call and webcast. All participants will be in listen-only mode during the call with no question and answer session at the end. Please note that today's conference is being recorded. I will now act on the conference with the two speakers, Dr. Diamantis Andriotis, CEO.

Please go ahead. Good morning everyone and welcome to our C3IS fourth quarter earnings conference call and webcast.

This is Dr. Diamandis Andriotis, CEO of the company. Joining on the call today is our CFO, Neena 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 and finance performance and are based on current expectations and assumptions which by nature are inherently uncertain and outside of the company's 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 and less otherwise clarified are implicitly stated in US dollars. Today we released our earnings results for the fourth quarter of 2024, 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 3 where we summarize and highlight the company's performances, starting with our financial highlights. For the year 2024, we reported revenues of 42.3 million, which is an increase of 47% compared to the year 2023. Our Afrax tanker, the Afraple II, contributed around 76% to the total revenues. Our net revenues came in at 28 million, an increase of 33% from 2023. Our adjusted EBITDA was 16.4 million and increase of 11% from 2023. Our adjusted net income came in at 8.7 million and decrease of 7% from 2023. Our vessels net book value increased by 12% since year end 2023 due to the addition of the Eco Spitfire, a handy sized dry bulk carrier that joined our fleet in April 2024. Our cash balance was 12.6 million by the end of Q4 2024, an increase of 39% from year-end 2023, despite total capex payments of 41 million, 39.5 for our AlphaMax tanker, the AlphaPle II, and 1.62 million as 10% down payment on our bulk carrier, the Echo Spitfire. The balance due on our CAPEX is 14.57 million in April 2025, which represents 90% of the purchase price of the handy-sized bulk-carrier EcoSpeedFire. Our short-term bank deposits yielded 1 million for the year 2024. Our TCE for the year 2024 was 21,000 per day. 10% lower than the rate for the year 2023, when it was 23.4 thousand per day. Slide 4 shows the dry bulk trade by the end of the fourth quarter of 2024. Despite global economic fluctuations, the market demonstrated resilience, particularly in the latter half of the year. In terms of the overall global fleet, handy-sized vessels hold a significant share, catering to minor bulk trades, regional markets and routes where larger vessels face operational constraints. Their versatility makes them a vital segment in global dry bulk logistics, facilitating trade across a broad range of commodities, including grains, fertilizers and steel products. Iron ore and coal trade continue to have the lion's share in the dry bulk trade. But the iron ore market is currently navigating a transitional phase, with shifting dynamics influenced by economic trends, structural changes and environmental pressures. Despite subdued demand, iron ore production remains robust, with major miners maintaining or increasing output levels. The seaborne coal market in 2024 has been marked by significant shifts in market dynamics. Despite high inventory levels throughout the year, the Chinese thermal coal market remained fundamentally loose, with declining prices and induced volatility distinguishing it from the sharp price swings observed in prior years. Demand dynamics experienced contrasting phases during the year. The first half of 2024 was weaker as strong renewable energy outputs suppressed coal demand. However, prolonged hot and dry weather in the second half, coupled with unexpected growth in the chemical sector, spurred the rebound in coal demand. Looking ahead to 2025, demand growth in developing countries, particularly India and Southeast Asia is expected to offset declining demand in China. Industrial activity and infrastructure projects in these regions will play pivotal roles in sustaining coal demand. In the longer term, growth opportunities will increasingly concentrate in emerging markets in Asia, while advanced economies continue to prioritize renewable energy and decarbonization efforts. The global grain trade in 2025 is expected to exhibit a steady but uneven growth, driven by a mix of regional demand patterns, geopolitical factors and weather-related challenges. Emerging markets in Asia and Africa will continue to drive grain imports growth due to rising populations, increasing incomes and urbanization. Countries such as Indonesia, Vietnam and Egypt are likely to remain key importers, supported by their growing food and feed needs. Slide 5 shows the dry bag opportunities ahead and the handy size rate performance. The dry bag seaborne trade is poised for steady growth, with minor bag trade emerging as a critical driver in the medium and long term. While major bulk like iron ore and coal face slowing or declining growth rates, minor bulks are expected to gain prominence, supported by structural shifts in global trade and industrial demand. Minor bulk trade is anticipated to experience the highest growth in the long term, fueled by the increasing demand for materials tied to sustainable development. Key drivers include the expansion of renewable energy infrastructure such as solar and wind energy projects, the rise in adoption of electric vehicles and the ongoing surge in sustainable building practices. Commodities such as steel products, aluminum and other construction related materials will be central to meeting the needs of these growing industries. In the medium term, the stabilization of iron ore trade and the modest decline in coal shipments reflect the shift towards cleaner energy systems and reduce reliance on traditional bar commodities. Evolving environment policies and industry adaptations are likely to moderate potential downturns positioning the sector for gradual but necessary transformation. Initiatives such as slower vessel operating speed, retrofitting for energy-saving technologies, increased vessel demolitions and growing emphasis on sustainability will likely affect supply-side conditions. China has realigned its trade partnership towards nations like Russia, India and Southeast Asia, reshaping established trade routes and market dynamics. Slide 6 shows the AfriMax tanker market fundamentals. In 2024 there was a significant difference between the first half of the year and the second. The year started with a strong first half on the tanker market in general and the AfriMax market in particular. The Houthi attacks in the Red Sea resulted in substantial changes to the trading pattern of AfriMaxes. The rerouting via the Cape of Good Hope for clean cargoes gave LR2s a significant boost in earnings in the first half of the year. This had a knock-on effect in the Afromax market since many dirty but coated vessels cleaned up the tanks and therefore reducing supply on the dirty side. Politics will play an important role in the energy markets in 2025, particularly in the US, as the Trump administration is likely to push an agenda aligned with drill-baby-drill. Trump will improve sentiment towards the oil industry, though without put already at record levels, it would be difficult to push levels much higher in 2025. Geopolitical tensions and volatility are expected to continue to weigh heavily on oil tanker demand in 2025 and beyond. Russia is presumed to continue supplying crude and oil products in the market by complying with price cap or replenishing the shadow fleet. U.S. sanctions during Trump will tighten Iranian crude production exports, reducing exports by 400,000 barrels per day in the 2025-2026 period. The Red Sea will gradually reopen as the Houthis lose financial support from Iran. In addition, the Israel-Hamas tensions are currently easing. Reduced daily transit through the Panama Canal due to low rainfall is not expected to emerge again in the near future. Tanker demand is projected to gain structural support over the next five years. This growth will be driven by Middle East expanding its crude balance by 2 million barrels per day. With consistent Russian oil flow, mid-sized tankers will continue to benefit, which could be further supported when the Red Sea Chalk Point reopens and allows easier Russian oil flows to India, China and countries in the Middle East. The North American West Coast market continues to garner a large amount of attention regarding the ramp-up of Canada's Trans Mountain Pipeline Expansion, TMX project. The pipeline is a more efficient way of sending Canadian barrels to Asia. The TMX will bring an additional 590,000 barrels per day of Canadian crude at full capacity to the port of Vancouver. Canadian crude flows ex-Vancouver are expected to range between the US West Coast, Asia and likely West Coast Panama. Since the project was completed in first half 2024, a total of 155 AFMAX cargoes have been recorded at Vancouver. Slide 7 shows the handy-sized fleet age and growth. The handy-sized bulk fleet includes many old vessels with plenty of demolition potential. There are hardly any units on order at the moment. 30-2% of the trading fleet is over 20 years old, 33% is 15-19 years old, 27% is 10-14 years old, 2% is 5-9 years old, while 5% has less than 5 years. The order book to trading ratio is 1.6% in deadweight terms. In 2024, net fleet growth for small handy bulkers of 20-34,000 deadweight was minus 0.3% year-on-year. Net flip growth is expected to continue at around 0% in 2025 and then at around minus 0.5% in 2026. Flip growth forecast for 2025-2027 is based on the current order book after assuming slippage and expected demolition. Slide 8 shows the Afromax tankers' flip age, growth and order book. The global AFRAMAX LR2 fleet currently stands at 1,154 vessels. Of these, 262 vessels are over 20 years of age, accounting for 22.7% of the total number of vessels. With a starting tally of 1,134 vessels, the current fleet represents a change of 1.76% in vessel numbers over the years so far. The order book now stands at 213 vessels and presents 18% of the current fleet. Demolition activity is expected to remain strong going forward. Significantly more vessels were built in the early 2000s compared to the 90s. Aframax vessels dominate the 2024 tanker sector, with total new building investments reaching 11.4 billion, claiming the top position for the year among their largest counterparts. New building prices remain at their highest level year-to-date, although they appear to have stabilized over the latter part of the year. Slide 9 shows the current fleet of C3IS. By the end of 2024, C3IS owned and operated a fleet of three handy-sized dry bulk carriers and one AfriMax oil tanker. In May 2024, the company took delivery of the 33,000 deadweight dry bulk carrier, the EcoSpeedFire, bringing the total fleet capacity to 213,000 deadweight with an average age of 14 years. All vessels have had their balanced weather systems already installed. Our capital commitment due in 2025 is the special survey of the tanker Afrapel 2, scheduled in Q3 2025. All the vessels are unencumbered and currently employed on short to medium-term period charters and spread voyages. Slide 10 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 the satisfaction of the services we provide. 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 INNAP India for our financial performance.

Thank you, Diamantis, and good morning to everyone. Please turn to slide 11, and I will go through our financial performance for the fourth quarter and 12 months of 2024. Voyage revenues for the year 24 amounted to 42.3 million, an increase of 47% compared to 23. 76% of our total revenues were contributed by our AfraMax tanker, the AfraPearl2. Our net revenues for the period generated December 24 were $28.2 million, an increase of 33% compared to the same period of last year. Our daily time charter equivalent was down by 10% from Q4 23. Our fleet operational utilization was 90.3% for the 12-month period ending December 31, 24, compared to 91.6% for the same period in 23. Voyage expenses and vessels operating expenses for the year 24 were 14.1 million and 8.4 million. The increase in voyage expenses was related to increases in bunker costs and port expenses, and the vessels operating expenses increase was attributed to the increase in the average number of vessels. Voyage expenses for 2024 mainly included bunker costs of 6.9 million and port expenses of 4.7 million, corresponding to 82% of total voyage expenses. This was due to the fact that our tanker, the Afra Pearl II, was operating in the spot market. Operating expenses for 2024 mainly included core expenses of 4.4 million corresponding to 52% of total operating expenses, spares and consumable costs of 1.8 million, corresponding to 21%, and maintenance expenses of 900,000, representing works and repairs on board the vessels, corresponding to 11% of total vessel operating expenses. Management fees increased by 48% from 24%, due to the increase in the average number of vessels. G&A costs were 3 million and mainly related to the expenses incurred from the two public offerings and the reverse stock split. Depreciation recorded for 24 was 6.2 million, a 51% increase from last year due to the increase in the average number of vessels. Related party interest and finance costs for the period was $2.5 million and related to the accrued interest expenses as of December 31, 24, in connection with the balance payable on the acquisition prices of our AfraMax tanker AfraPearl II and our bulk carrier, the Echo Spitfire. For accounting purposes, the balance payable on the two vessels had to be recorded as capital due and interest costs. although no interest was charged by the sellers. The final balances paid remain the same as the originally agreed purchase prices. The Afra Pearl II was completely paid off in July 24, and 90% of the balance due on the Echo Spitfire is payable in April 25. Interest income of $1 million for 24 was recorded and relate to the interest received on our bank deposits. As a result of the above, for the 12 months ended December 31st, 24, the company reported an adjusted net income of 8.7 million compared to an adjusted net income of 9.3 million for the same period of last year, a decrease of 7%. Adjusted EBITDA for the 12 months ended 31st of December, 24, amounted to $16.4 million compared to an adjusted EBITDA of $14.7 million for the same period of last year, an increase of 11%. A non-cash item of $11.13 million loss was recorded at year end 24, resulting in a net loss of $2.7 million for the year 24. This non-cash item represents the unrealized loss on the fair value of non-exercised warrants. Discounting this non-cash item would have resulted in a net profit of $8.4 million for 2024. Turning to slide 12 for the balance sheet, our cash balance was $12.6 million by the end of Q4 2024, after paying $39.5 million for the remaining 90% purchase price of our AfraMax tanker, AfraPearl 2, in Q3-24, and 1.62 million, which was 10% of the purchase price of the handy-sized dry bulk carrier Echo Spitfire in Q2-24. The fleet book value as at the end of December 24 was 84 million, an increase of 12% from year-end 23 due to the addition of the bulk carrier Echo Spitfire. The company has no outstanding bank debt. The financial liability of $16.3 million relates to the following. 90% of the purchase price of the airco spitfire of $14.71 million plus payables of $1.59 million due to the management company and subsequently paid in January 2025. The warrant liability of $10.4 million relates partly to the net fair value losses on non-exercise warrants at year-end 24. 690,000 from the total fair value losses has been recorded to equity. Concluding the presentation on slide 13, we outlined the key variables that will assess us progress with our company's growth. Owning a high-quality fleet reduces operating costs improves 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 U.S. tariffs on all Chinese-built ships would be a significant positive shift for our fleet. The company's strategy is to follow a disciplined growth with in-depth technical and condition assessment review. Management is continuously seeking a timely and selective acquisition of quality vessels with current focus on short to medium-term charters and sport voyages. We always charter to high-quality charters 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. Despite being in operation for less than two years and having increased our fleet by 234% since inception, the company has no bank debts. No interest was charged by the affiliated sellers for the subsequent 90% payments due on the Afropel 2 and the Echo Spitfire. At this stage, our CEO, Dr. Diamantis Andriotis, will summarize the concluding remarks for the period examined.

For the year 2024, we reported voyage revenues of 42.3 million, an increase of 47% from 2023, net revenues of 28 million, an increase of 33% from 2023, and adjusted EBITDA of 16.4 million, 11% higher than 2023. We have taken delivery of our fourth vessel this year. bringing our total fleet capacity to 213,000 deadweight, an increase of 234% from the company's inception over a year ago. We have more than trebled our fleet capacity without incurring any bank debt. Our cash balance at year end 2024 was 12.6 million, after capex payments of 41 million during the year. Shipping is currently navigating a transitional phase, with shifting dynamics influenced by geopolitical factors, environmental regulations, demand patterns and weather-related challenges. While navigating these most volatile waters, we are closely monitoring the evolving situations and are focused on identifying those components that would maximize our future profits. Politics will play an important role in shipping in 2025, particularly in the US. The Trump administration is likely to push an agenda aligned with drill baby drill. This, combined with the threat of tariffs on all Chinese-built vessels, of which we have none, are two important factors that if they materialize could have a significant positive impact on the profitability of our company. With a clear focus on emerging opportunities, we remain confident that 2025 will be a year that will produce strong financial performance and potential growth prospects. We would like to thank you for joining us today and look forward to having you with us again at our next call for our first quarter of 2025 results.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.