Pyxis Tankers Inc.

Good day and welcome to the Pix's Tankers conference call to discuss the financial results for the fourth quarter 2022. As a reminder, today's call is being recorded. Additionally, a live webcast of today's conference call and an accompanying presentation is available on Pix's Tankers website, which is www.pixstankers.com. Hosting the call is Mr. Eddie Valentes, Chairman and Chief Executive Officer of Pix's Tankers, and Mr. Henry Williams, Chief Financial Officer of the company. I would like to pass the floor to one of your speakers today, Mr. Eddie Valentes. Please go ahead, sir.

Good morning, everyone, and thank you for joining our call for results of the three-month and year-ended December 31, 2022. The Russian invasion of the Ukraine continues to take center stage, affecting global energy markets and resetting personal, economic and strategic priorities, as well as global relationships and trade. Many countries within the OECD are showing resilience as they battle high inflation, cost of living increases and the slowdown in economic activity. In spite of this, The product tanker sector continues to be positively affected with solid chartering activity and high asset values. At Pixis, we continue to successfully manage through these unprecedented times and are pleased to report outstanding operating and financial results for the most recent period. Before starting, please let me draw your attention to some important legal notifications on slide two that we recommend you read, including our presentation today, which will include forward-looking statements. Thank you. Turning to slide three, our most recent quarterly results reflected exceptional financial performances in revenues, operating cost control, and profitability. In the fourth quarter, ended December 31st, 2022, we generated consolidated time chart equivalent revenues, TCE, of 13.8 million, an increase of 10 million over the same period in 2021, and sequential growth of 16% over the previous calendar quarter. Charter rates continue to accelerate during the quarter, especially in the spot markets. Our daily TCE for Q4 2022 for our five eco-MRs was $33,182, sequentially up 14.2% over the prior quarter, and up a factor of 3.8 times versus the results in the same period last year. Moreover, we reported net income of 6.5 million or 61 cents per share basic EPS for the most recent period versus significant losses in 2021. Our adjusted EBITDA in Q4 2022 climbed to 9.7 million dollars. I should point out that last week we announced the sale of our oldest vessel, the Pyxis Malu, for 24.8 million, a very high price in relation to historical averages. The transaction should close by the end of the month and net us about 18 million in cash after repayment of the vessel's debt and related fees and expenses. We expect to book a non-cash gain on the vessel sale of 8 million or 75 cents per basic share in the first quarter of 2023. We will use these funds for general corporate purposes, including further loan repayments and strategic opportunities. Over the course of the fourth quarter, the product tanker chartering environment experienced further strength. This was a function of increased mobility, which amplified demand for transportation fuels, despite moderating economic activity. In addition, the ongoing Russian invasion of Ukraine has resulted in tightening of product inventories, which continue to be below five-year averages in a number of locations around the world, changing trade patterns, expansion of tonne miles, dislocation to end markets, creating arbitrage opportunities and higher transportation costs. While high inflation persists, petroleum product prices such as gasoline and diesel have declined since the high points of last summer, 2022. Refinery activity continues to be solid, with healthy crack spreads reflecting good global demand. These developments have translated in strong product tanker charter rates in the spot market and greater time charter activity. However, and usually winter weather in parts of the northern hemisphere and stockpiling of certain refined petroleum products in Europe, such as diesel, temporarily moderate spot charter rates in the Atlantic Basin in the first part of the new quarter. Our bookings for Q1 2023 continue to be constructive, and as of March 14th, 80% of our available days for the first quarter were booked at an average estimated TCE of $28,000 per day. We're continuing to maintain our mixed chartering strategy of time and spot charters with a focus on diversification by customer and duration. Please turn to slide four for information on our existing fleet and employment activities. As you can see, one of our vessels, the Pixies Malu, is currently in the spot market, and the remaining four MRs are contracted under short-term time charters that run up to next fall. For the Q1 bookings, the average estimated spot charter rate is $26,400 per day and an average time charter rate of $29,400. We believe our chartering strategy provides a reasonable balance of risk and return, especially for a small company like ours. Please note that upon the sale of Malu, the average age of the fleet will be around eight years. Next, please turn to slide six for a further update on the product tanker market. In addition to my prior comments about the market, recent economic activity for most of the world has been affected by the war and other geopolitical events. Initial sanctions on exports of petroleum products have had limited financial impact on Russia, which has benefited from market dislocation and low inventories in many parts of the world. In advance of the EU and G7 group ban on seaborne cargoes of Russian refined products starting in early February 2023, Under related price caps, extensive inventories have been built up in Europe since December. This pull forward of demand is viewed as temporary and high inventories should be unwound by the second quarter. Nevertheless, events like this one add to the complexities of the market. Exports from the refineries located in the Middle East, US and certain parts of Asia are expanding. Last year, U.S. exports of oil products grew on average 10%. According to Drury, an independent industry research firm, in 2022, seaborne trade of oil products increased 2.8% to over 1 billion tons, while ton miles rose 6.7% to almost 3.5 trillion. Overall, research analysts estimate that tough erosion sanctions could potentially provide up to 12% in incremental product tanker demand in 2023. The recent changes in trade routes can be seen on slide seven. Near-term demand for refined products should also get a boost as China has lifted its severe COVID restrictions over the last three years. We have already seen increasing demand for transportation fuels, more recently for air travel as mobility expands and the economy accelerates. Higher levels of government-approved export quotas during the late 2022 and Q1 2023 have supported chartering activities primarily in the Pacific Basin. Please turn to slide eight to review several macroeconomic considerations which support fundamental sector demand. Historically, seaport trade of refined products has been relatively correlated to global GDP growth. In January, the IMF upgraded its GDP growth estimate to 2.9% for this year due to stronger economic activity, primarily in the OECD, and the reopening of China, which is now expected to grow 5.2% versus the recent historical low of 3% last year. The IEA recently revised its global oil consumption to increase 2 million barrels per day or 2% to an average of approximately 102 million barrels per day for 2023. Adequate supply of crude oil should be available from OPEC+. which should adhere to its production quotas through the end of the year. According to the EIA, the U.S. should increase average oil production in 2023 by 4.7% to 12.5 million barrels per day. Exclusive of sanctioned countries such as Venezuela and Iran, added oil production is expected from Canada, Norway, and Guyana.

Now, move to slide nine.