Mpc Container Ships As

Welcome to the MPC Container Ships Q3 Report for 2023. For the first part of this call, all participants are in a listen-only mode. Afterwards, there'll be a question and answer session. To ask a question during the Q&A, please press 5-star on your telephone keypad. This call is being recorded. I'll now turn the call over to the speakers. Please begin.

Thank you, operator. Good afternoon and good morning, everyone. This is Konstantin Barg, CEO of MPC Containerships, and I'm joined by our CFO, Moritz Fuhrmann. I would like to welcome you to our Q3 2023 earnings call. Thank you for joining us today to discuss MPC Containerships third quarter earnings. This morning, we have issued a stock market announcement covering MPC's third quarter results for the period ending September 30th, 2023. The release as well as the accompanying presentation for this conference call are available on the investor section of our website. Please be advised that the material provided and our discussion today contain forward-looking statements and indicative figures. Actual results may differ materially from those stated or implied by forward-looking statements due to the risk and uncertainties associated with our business. A few introductory words from my side before we start with today's presentation. We are pleased to present another solid performance and a strong third quarter financial result. Our consistent positive performance, despite a gradual decline in the container market, is a testament to our robust backlog, successful chartering activity, and sustained good operational performance. Owing to the unwavering dedication and great efforts from our entire team onshore, as well as the crews on board of our vessels. Given the prevailing uncertainty in the container market outlook, our focus remains on maintaining prudent capital allocation and enhancing long-term shareholder value. And we remain in an ideal position to balance strategic and selective fleet measures with continued attractive shareholder returns. We will now guide you through a more detailed review of the third quarter, provide a market outlook, as well as a company outlook during today's presentation. And on this note, I would like to hand over to our CFO, Moritz Fuhrmann, who runs you through the first agenda point.

Thank you, Konstantin. Let us start with some highlights of Q3. Obviously, happy to report yet another strong quarter, both financially and operationally, with another dividend distribution as the board declared another dividend of $14 cents for Q3. On the back of the strong financial performance, we also increased the full year 23 financial guidance to 690 to 700 million US dollars for revenues and 500 to 550 million dollars for EBITDA. The leverage remains very low on the balance sheet while we started to dispose older non-core assets and bolstering liquidity on the balance sheet. Looking at the most recent development in the container market, there's obviously a softening both in rates and asset values that we see. However, the most recent fixtures that we've done since the last reporting indicate still healthy levels for our ships, especially in the feeder segment. And overall, and despite the recent market development, MPCC remains in a very competitive position, both with a strong balance sheet, but also the ability to execute on strategic matters in accordance with the shareholder returns. Let us turn the attention to some of the KPIs that we reported in Q3. As you can see, financially, growth, revenue, adjusted EBITDA, and adjusted net profit are more or less in line with the previous quarters. Worth to mention is the adjustments that we made this quarter, so we normalized the impairments that we recorded on some of the vessel sales this quarter, so the net profit that came in is around $68 million, but again, adjusted for non-recurring items, we're looking at $82 million in line with previous quarters. On a balance sheet, both net debt but also leverage ratio is slightly up from previous quarter as we incurred some more debt in accordance with the acquisition of the Ecovessels this summer, but going forward, we expect the leverage ratio to go down again as we intend to repay some of the existing debt. And looking at some of the operational KPIs, as you can see, our OPEX is slightly up from last quarter. This is mostly driven by COVID-related expenses on our ships, but also more one-off items in relation to insurance costs that we don't expect to see in the coming quarter. But obviously very happy to see the high utilization of the vessels of close to 99%, which also is a testament to the operational reliability of our fleet. Turning to the active portfolio management, both operationally and commercially, Q3 has been a very busy quarter. We started our preparatory work for compliance in 24. We will initiate a retrofitting program in 24 relating to 13 of our vessels with a total expected investment volume of 17.5 million US dollars. We expect significant fuel savings from those measures in the tune of 10 to 15%. And obviously worth to mention that this is in conjunction with our customers, meaning this will be a joint effort. The fleet remains in full compliance with EEXI and CII regulations as we speak, and the company is well prepared for the EU ETS regime that will be effective as of January 2024. Looking at the commercial update, since last reporting, we can report five figures. Obviously, very happy to see the rate levels still at decent levels, calling it five figures. However, we see that durations are normalizing, especially relative to the last 24 months. But we can still report good levels of between five to six months, but also up to one year. Worst to mention is the AS Clementina. This is a forward fixture. So initially coming open in 24, we, together with the customer, agreed an early extension up until May 26, July 26th. adding significant backlog to the overall picture, but also worth to mention that this is a blended rate going forward, meaning that the current rate is blended together with the $12,000 that we fixed forward. So overall, we are looking at a rate of around $21,000 up until May 26th, also actively managing some of our 24 position shifting into 26th. At the same time, we have other constructive discussions with our customers, looking at some of the 24 position and discussing some of forward measures to be taken, hopefully rather sooner than later. Turning to the next page and looking at the portfolio optimization that we kicked off earlier this year. Overall, we can report 13 vessel sales versus seven acquisitions year to date. So since the last reporting, we have been selling another eight vessels in addition to the ISM I reported in the summer of 23. Important to note, obviously, is that we managed to significantly bring down the average age of the fleet. So the vessels that we sold are around 18 years of age, while the vessels that we acquired around seven and a half years. And while we reduced the overall capacity, we significantly increased the overall available days on the fleet by roughly 30%. Looking at the right-hand side, you can see the respective Vesta sales. I just mentioned eight further sales since summer of 23, for a total consideration of $61 million. Four of those shifts have already been delivered to the new owners. while the remainder is expected to be delivered in Q4-23, but also Q1-24. And it's worthwhile to mention that we're not just selling non-core assets, we're also actively managing 24 open charter positions, but also 24 dry docking positions. The vessel proceeds will be applied to reduce debt on the balance sheet, but will also bolster liquidity going into 24. Looking at the next slide and some highlights on the cash flow, obviously a very strong operational cash flow with around 135 million US dollars. A chunk of that has been used for acquiring the new ships. So since the summer, we have taken delivery of four echo vessels, but we have also invested into the existing fleet. And we have also financed those acquisitions through loans. So as you can see, we draw down debt in the tune of $120 million since last summer under acquisition financing that we agreed in the summer, but also under a lease agreement with the Chinese lessor. And at the same time, as just previously mentioned, we also started reducing debt again, repaying some of the existing facilities that are currently priced at around 8.5%, 9% all in. Turning to the next slide. We're illustrating the significant shareholder return that we provided to shareholders since Q4 2021. Based on the $14 cents dividend that was just declared by the board, which is roughly $62 million in total, we bring the total dividend paid to shareholders to $730 million. For the year 2022, this is roughly a dividend yield of close to 50%. and the year-to-date dividend yield of a very compelling 43%. As you can see, since the summer, we have been slightly reducing the event-driven distributions from vessel sales. As mentioned before, funds from vessel sales are mostly applied to reducing debt, but also bolstering liquidity on the balance sheet going into 2024 and 2025. But most importantly to note for investors is that we remain committed to our dividend policy of distributing 75% of the adjusted net earnings back to shareholders. And on that note, I'm handing back to Konstantin for some updates on the market.