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spk03: The conference will begin shortly. To raise your hand during Q&A, you can dial star 111.
spk04: Good day, and thank you for standing by.
spk03: Welcome to the United Martian Corporation period ending September the 30th, 2022 financial results webcast. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 11 on your telephone. I would now like to hand the conference over to your speaker for today, Stamatis Santanis. You may begin.
spk01: Hello, I would like to welcome everyone to the first earnings call of United Maritime. Today we are presenting the financial figures from the period from the commencement of operations on July 6, 2022 to September 30, 2022. Moreover, I would like to take this opportunity to elaborate on our recent corporate developments and the main pillars of our strategy. United Maritime was created to take advantage of value opportunities across various shipping sectors for the benefit of our investors. With this in mind, we executed successfully on our first investment cycle, capitalizing on the exceptional performance of the tanker sector while maintaining our initial exposure in the dry bulk market. Regardless of the current uncertain economic environment, we are optimistic that our well-defined strategy will continue to create value for our investors. Let's start with some financial highlights before discussing our strategy in more detail. This first period was a transitional period for United since most of our fleet was delivered towards the end of the quarter, thus having a limited contribution to our revenues. we recorded a net income of $1 million over an average time-charted equivalent rate of $23,639 per day. This performance was based on the significant strengthening of the daily spot rates in the Afromaxi and the LR2 markets and a profitable time-charter of our only cape size, the GloryShip, running at a fixed gross rate of $28,000 per day. The figures I just mentioned do not reflect neither the current rates we are enjoying for Q4 nor the very profitable sale of our two Aframax vessels that will be recognized in our Q4 results. Three of our tankers during the period were deployed in the booming spot market. Our fourth tanker was employed under a legacy time charter which was fixed by the previous owners of the ship at a rate of $26,000 per day. This was recently extended at a gross daily rate of $43,500 a day until at least the end of the first quarter of 2023, reflecting more accurately the current earnings environment. On the back of these commercial arrangements, we are confident about United's profitability in the next quarter as we have covered 88% of our ownership days at an average time charter equivalent rate of $33,200 per day. On top of the strong profit from operations, we expect to recognize an additional profit of more than $19 million in Q4 arising from the sale of the two Afra Maxis. This represents a 50% return over the acquisition price and more than 250% realized return on equity within four months. As regards to the remaining two product anchors, Given the low acquisition price when compared to current market values and very favorable market fundamentals, we are content to continue operating these product anchors at historically profitable rates. Meanwhile, we have already completed two separate stock buyback programs of $6 million by repurchasing approximately 3.3 million shares in the open market at an average price of $1.81 per share. As we firmly believe that our common stock is still significantly undervalued, our Board has authorized a third $3 million buyback program. Lastly, we agree to proceed with the redemption of our preferred shares issued to Synergy Maritime in connection with the spin-off. Through this transaction, we will increase the net income available to our common shareholders and at the same time eliminate the risk of dilution. On the financing front, in July, right after the initiation of trading on Nasdaq, we completed a $26 million public equity offering. With this capital, we managed to fund our initial growth of our fleet. The offering of units in July was completed at a 76% premium compared to the average recent buyback price. In addition, our debt currently consists of only fixed-rate loans, a decision that proved to be prudent in the current inflationary environment. Moreover, our cash reserves are solid, giving us the flexibility to pursue our strategy of value acquisitions that will generate consistent shareholder returns. In particular, just the cash per share including the net proceeds from the sale of the two AfraMax tankers and after deducting the prepayment of the CDC convertible preferred shares stands $4.8 per share. That's the current cash reserves of the company just from the sale of the two ships I just mentioned before and after the prepayment of the Series C convertible preferred shares. The last four months can be considered as the first investment cycle for our company and this series of accretive transactions illustrates our flexible sector agnostic and counter-cyclical investment strategy. We plan to continue on the same path by taking advantage of acquisition opportunities in mainstream shipping sectors at attractive valuations based on favorable supply and demand fundamentals. I will now pass the call to our CFO Stavros Giftakis, who is going to discuss more thoroughly our financial results. I will come back at the end of the call for our closing remarks. Stavros, please go ahead.
spk02: Thank you, Stamatis. I would like to welcome everyone from my side as well to our first earnings call. Starting off with some financing updates, on the back of the impressive trading performance of the stock following our spin-off, we completed a 26 million public offering. The capital was used accretively to support the acquisition of four tanker vessels at an ideal timing considering the subsequent steep increase of values and market rates. We also secured a 63.6 million loan facility at an attractive fixed interest rate given the rising momentum of interbank rates. In addition, we concluded a refinancing of 14 million on the loan secured by Glorioship at a fixed rate reduced by 2.6% as compared to the original interest rate at the transfer of the facility from Synergy. All our financings feature a nine-month grace period with amortization commencing only in the second quarter of 2023. About two months after the delivery of the Aframax tankers, we agreed to sell these vessels, securing an impressive return on equity of more than 250%. Following the tanker sales, the respective loans will be prepaid in full, reducing the underlying facility to 31.2 million. Additionally, we agreed to prepay the 14 million glory ship facility by 2 million. One million was applied against the balloon and the other will be applied against the first two installments of the loan to reduce the underlying break-evens. Moving on to our financial performance for the period from the commencement of operations on July 6, 2022 to September 30, 2022. Net vessel revenue was equal to 7.9 million while EBITDA was 2.9 million. Net income was 1 million and the daily time charter equivalent rate of the fleet was 23,600. Continuing with the balance sheet, cash and cash equivalents at the end of the period stood at 21.2 million. Shareholder's equity was 44.1 million and total debt was 76.3 million. The book value for fleet stood at 98.2 million. Now, using the sale price of the Aframax as a proxy for the current market value of all tankers, our leverage is moderate, standing slightly over 40%. This concludes my review. I would now turn the call back to Stamatis for his concluding remarks. Stamatis?
spk01: Thank you, Stavros. As I mentioned earlier in this call, I am confident that the tanker market will continue to be robust at least until the end of 2023. The same thing stands for the dry bulk market, where the gradual improvement of raw material demand and the sharp decline of new vessels allow me to be confident that a strong rebound is around the corner. Following the recent correction in second-hand cape size prices, we believe there are currently attractive investment opportunities and we view the sector as one of the highest potential upsides at the moment. United Maritime will continue to pursue great value opportunities in the following quarters in order to generate strong returns and rewards to our shareholders. From here, I would like to turn the call over to the operator and answer any questions you may have. Operator, please take the call.
spk03: Thank you. As a reminder to ask the question, you will need to press star 11 on your telephone. That's star 11 to ask the question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Tate Sullivan with Maximum Group. Your line is open.
spk00: Hello. Good day and good talking to you on United Maritime. And congratulations on a meaningful gain from the ship sales. in October, and I think I heard you mention a gain of greater than $19 million that you'll mention in 4Q. Can you talk about the financial analysis of deciding to sell? I mean, I know it was such a meaningful return in a short period versus continuing to hold on to the ships and continue to generate cash flow at the high rates that you can secure for those ships, please.
spk01: Of course. Good morning, Tate. I hope everything is well. So basically the structure and the strategy of United Maritime is to be able to quickly turn profit where we see the opportunity. So we will not sacrifice profit and substantial returns for our shareholders just for the sake of growing the company into something bigger for the sake of growth. So we will continue to monitor opportunities to grow the company selectively by finding assets that we believe represent good value for our shareholders. And at the same time, we will be looking for the opportunity to sell those assets and capitalize the gain and the profit and possibly reward in kind or in cash our shareholders without having to wait for prolonged periods of time. This is pretty much the idea of United. That's how we want to do it. As you know, as a group and as management, we have an excellent track record in identifying opportunities and buying ships in low prices. And we want to turn that into profit quickly and reward our shareholders at the same time.
spk00: Great. Thank you. And then also on the strategy, United Maritime, in fact, that is important. Across, I believe, the stated mandate, can you look at opportunities or planning to look at opportunities across the shipping sector? And you mentioned the dry bulk opportunity, but are you evaluating opportunities across most of the sectors of shipping? Are there some that you may stay away from?
spk01: The answer is yes. First of all, let's start with the capital structure of the company. We intend to maintain a very controlled and disciplined share count. to the extent that we can. I'm not saying that we will not be issuing stock if the price goes at much, much higher levels, but at the same time, this management is going to be buying back the stock when we believe it's completely undervalued as it is now. So, you know, we did an offering at a much higher valuation back in July, and at the same time when the stock dropped, we did a massive buyback program which reduced our share count by 25%. Starting with the capital structure and to the share count itself, we have already proven our intentions to maintain a very disciplined share count. So by maintaining a disciplined share count and not doing highly dilutive offerings at cents on the dollar or whatever that is, we will be able to produce profits for our shareholders in a much more disciplined and controlled manner. That's the intention. Now, moving into the selection of assets. We intend to play along the mainstream sectors of shipping without going into extremities or into places where we don't have experience. So we will stick to mainstream tankers and mainstream bulkers where we can identify good value and we will intend to go in and out, hopefully more in than out, in order to grow the company. And we can deliver that growth on a more controlled, structured and very disciplined share count.
spk00: Great, thank you. And following up on it, looking at mainstream tankers and bulkers, is it a matter of the strong market in tankers now? Have there been more transactions historically in the tanker market in terms of the S&P activity versus the bulk market, or does it totally depend on the strength of the sectors?
spk01: Well, we think that the tanker market has still a long way to go. but we don't really see the values of the assets, especially the older assets that we operate, to go much, much higher than that. So you will see cash flows, but I'm not sure that the values will go further up from the 20-year highs or whatever they're trading right now. So it's a good opportunity to sell part of the fleet that we recently acquired and maintain a good position on the product anchors, the product LR2s, which we think will still have a good value for 2023 and onwards so you know reacquiring vessels now after having recently sold ships at the top of the market i don't think it makes good sense for us and our shareholders we will possibly focus in other areas that we believe there's more value into the near future all right thank you very much thank you tate nice to hear from you thank you
spk03: As a reminder, ladies and gentlemen, that's star 11 to ask the question. We do have a follow-up question from Tate. One moment, please. Tate, your line is open.
spk00: Thank you. I realized I had a couple more, please. I think you mentioned an extended rate of $43,500 on one-year shifts and then 88% covered at $38,000, if I heard that correctly. Do you have a rough calculation of the cash break-even level for your fleet as well, too, taking into account the fixed interest costs as well?
spk01: Well, of course, yes. First of all, for Q4, the weighted average time setter equivalent rate for the fleet is $33,200. That excludes the increased rate of the LR2 tanker, which is going to start effectively at the end of December and is going to run all the way for Q1 at this much more increased rate. Stavros is going to give you an idea about the all-in break-even of the fleet right now in a minute.
spk02: Hi, Dave. How are you? Hello. Good. Good. Thank you. So the operating break-even is around 9,000 per day, which includes OPEX, GMA, and the various corporate expenses. Then you calculate around 3,000 to 3,200 for interest per day. And then, as I've told you, as we discussed previously in the call, there is no amortization until the second quarter of 2023. The facilities that... We concluded at the time of the spin-off, we had a nine-month amortization holiday. So right now, your break-even is comprised of the interest and the operating break-even, which is around $12,000 to $12,500. Then when amortizations kick in, this increases by another $9,000 per day. So basically, you go to around $21,000 to $22,000 per day.
spk00: Okay, thank you very much. And then on the current facilities, the bank facility, how much purchasing capacity, if you will, would you have if you fully lever your existing ships to conduct additional acquisitions and then taking into consideration the additional cash from the ship sales as well?
spk01: Well, we have flexible arrangements with our lenders so we can possibly and potentially buy up to the amount that the equity of the company allows us to acquire, like cash and cash equivalent. So there's not going to be any restriction on debt. It's just a matter of how much cash we want to spend from the cash reserves of the company. So whether that's two ships or three ships or four ships, we don't know. It can be at least two ships, to put it this way. Okay.
spk00: All right. Thank you very much for taking my call as well, and have a great rest of the day. Thank you, Tate. Bye. Bye.
spk03: Thank you. I'm sure no further questions in the queue. I will now like to turn the call back over to Samaras for closing remarks.
spk01: Thank you, Towanda. Well, once again, from my side, from me and Stavros, we'd like to thank everyone for attending our initial and inaugural conference call, and we look forward to additional updates and news about United Maritime
spk03: in the coming weeks so thank you very much for joining our first call today thank you ladies and gentlemen this concludes today's conference call thank you for your participation you may now disconnect the conference will begin shortly to raise your hand during q a you can dial star one one
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