Mpc Container Ships As

Good morning everyone and thank you for joining us for MPC Container Ships second quarter earnings call. This is Konstantin Waag speaking and I'm joined today by my colleague and co-CEO and CFO, Moritz Fuhrmann. Before we begin, please note that today's discussion includes forward-looking statements as well as indicative figures. Extra results may differ material due to risk and uncertainties inherent in our business. I would like to open today's presentation with a very short reflection. We are pleased to report another solid quarter, both financially and operationally. What stands out to us is the continued modernization and transformation of our fleet, together with the visibility we now have over our backlog and cash flows for the years ahead. This is not by chance, but by design, the result of a series of deliberate steps we have taken over recent quarters and years. With a contract revenue backlog of 2.2 billion and coverage extending well into 2029 and beyond, we believe this visibility leaves us very well positioned for the future. Even as the broader market remains volatile and hard to predict, conditions in our segment have stayed firm. With that backdrop, let me hand over to Moritz to walk us through the highlights of the quarter.

Thank you, Konstantin. Also, good morning from my side. And let's start with the agenda for today. First, our business update, the quarters operational highlights, the fleet transaction and our balance sheet position. Second, the market update. And thirdly, we'll close with our company outlook. Turning to the executive summary, our forward coverage, as we just heard, remains very strong. Almost 100% of open days are covered for the rest of 26, with almost no position open anymore in our fleet. 85% for the following year, already 60% for 28, and 40% for 29, which gives us very, very strong visibility into the years ahead. We acquired four 7,000-year vessels on three-year time charters, as well as secured a new $375 million senior secured term loan to fund our fleet renewal. On the disposal side, we sold two vessels and handed over three, with one further handover completed after the quarter close. Subsequent to the quarter end, we completed a highly oversubscribed private placement, raising 107 million US dollars, as well as fixed seven vessels in a package to a top three liner company on forward positions in Q1, Q2, 27. The capital raise has equipped us with additional investment capacity as we continue to look for creative opportunities to expand our well-working platforms. The market stays very firm throughout the quarter, tight supply, solid fundamental demand, near-term tonnage scarcity, and liners fixing further and further forward to secure capacity. One trend worth flagging, the consolidation in the liner segment, which we have observed over the past decade, is clearly pushing CharterOS towards more selective partnerships, and it's why close tonnage counterparts matter more than ever. On the numbers for the second quarter, $170 million in operating revenues, $65 million in adjusted EBITDA, and $0.04 per share in dividends, which is our 19th consecutive distribution to shareholders, and our revenue backlog remains very firmly and strongly at $2.2 billion. On the next slide, we cover two things, our forward-fixing activity and our fleet renewal progress. The market, as I just mentioned, continues to show real strength from an underlying demand perspective, and our charter activity reflects that resilience. We're fixing vessels further forward on very attractive terms. We just extended a seven-vessel package with Maersk, all new chargers commencing in 2027, and securing between 19 and 33 months of firm coverage at fixed rate levels. Alongside that, we have completed the acquisition of four 2324 built 7000 ecovessels on three year charters to top five liner company. More on that transaction on the next slide. Across our recent fixtures, vessels are now being secured on average about eight to nine months ahead of expiry, well before they actually come open, underscoring just how tight and active the charter market remains. On the disposal side, again, five vessels are now sold in total, with handovers completing through this year and into early next year. A bit more color on the aforementioned transactions on the next slide. Strategically, it fits very well, and the assets are very complementary to our fleet composition. More than 7,000 TU vessels is in strong demand as the aging Panamax fleet retires. The size is versatile enough to deploy across any trade lane, and it's well positioned to benefit from the double-digit demand growth we're seeing in the intra-regional trades. It also supports our broader free transition towards younger, more fuel-efficient, future-proof tonnage, as well as widening the size offering of NPCC to our customers, the liners. On the autonomic side, we acquired the vessels at a significant discount to new building parity or implied discount to new building parity at charter expiration. which is around 30 to 40% giving us a real downside protection. More than 40% of the purchase price is already covered by the secured EBITDA from the initial three year time charter. And while a significant part of the acquisition cost is covered through the employment cash flow, we retain substantial upside on these assets which will only be six to seven years old at that point in time. Turning to our balance sheet, We completed a private placement of more than 44 million new shares and sold two vessels for a total of $40 million, both supporting the funding of our fleet renewal. The 47,000 new vessels were acquired at 340 million and on our new building program after the new 375 million pre- and post-delivery facility was signed this quarter, the lion's share is now financed on well-advanced financing discussions. giving us good visibility on funding needs going forward. As a result, we have around 680 million in pro-forma liquidity, including our undrawn RCF capacity. While gross debt comes in at 450 million, net debt this quarter is actually closer to zero. 30 of our vessels remain debt-free, worth around $770 million at fair market value, and our leverage ratio stands at 28.4%, a very solid position from which we keep further growing. And with that, we're turning to our market update.

Thank you, Moritz. Let's turn to the market section. Slide 8 shows charter rates, asset values on the left-hand side, and forward vessel availability on the right. Chart and asset markets have stayed firm throughout the quarter, as explained by Moritz as well. The HAPEX is near its highest level outside the pandemic spike and basically up 7% year-on-year and second-hand and new building prices remain at multi-year highs. New building prices are in fact at their strongest since 2008. Those worth noting ultra-large raffles actually saw prices soften while small to mid-sized tonnage kept rising. the availability over the next six months is down 11% versus last year and the average vessel is now being fixed around six months ahead of expiry which is basically a record even against the 2021 and 2022 peak with forward fixing even for very small units extending out to 2027 as charters lock in scarce tonnage well in advance Moving from the charter and asset market to the wider market, the near-term market is no longer driven by the classic supply and demand dynamics. It's being shaped also by structural distortions. On the demand side, we're seeing front-loading and tariff-related buying on top of solid underlying growth of 3.5% to 4%. On the supply side, longer trade routes, from the Red Sea and homeless disruptions are adding roughly 12% in TU miles, and port congestion is tying up about 1.7 million TU, or 5% of capacity. That congestion is now 17% above the pandemic peak in absolute terms, though relative to today's larger fleet, it's still below 2022 levels. A third choke point is the Panama Canal. El Nino-driven low water levels are prompting draft cuts and surcharges, and we expect that to persist throughout the second half of the year. So even with net fleet growth of more than 1,300 vessels over the past five years, these distortions continue to support upward pressure on rates. The macro backdrop remains broadly stable. Global growth of 3% in 2026, rising to 3.4% in 2027, with the Iran conflict the key downside risk. Within that, fleet growth is increasingly concentrated in the 6,000 to 8,000 TU segment, where the order book share has roughly tripled this year to over 30%, directly relevant to our own recent fleet additions. That plays well into intra-regional trade, which is projected to grow at 3.6% CAGR, Ahead of the Mainland Trades With Ex-Asia Flows Into Emerging Markets Structurally Supporting Demand For Small To Midsize Vessels Like Ours Together These Dynamics Continue To Underpin A Market Backdrop That Remains Volatile Overall But Certainly Constructive For MPCC So what does that mean for us at mpcc specifically let's move to the company outlook section as of august 2026 our forward charter backlog stands at 2.2 billion translating into roughly 1.4 billion of projected EBITDA based on minimum periods under the charters coverage stands at 99% for 2026 as illustrated here 85% for 2027 60% for 2028 and 39% for 2029. A high degree of earnings visibility for multiple years ahead. Contracted Forward TCE is running in the mid USD 25,000 per day and rising slightly throughout the curve. What's unique is the degree of forward visibility, by far the longest and strongest we have seen since we established MPCC in 2017. This doesn't stop at the year shown on the chart. We already have more than 25% of available days covered through our new building program for 2030 and beyond, which is basically backed by our fleet renewal activities. Looking at what's coming open in the quarters ahead, as you can see here on this slide, relatively few vessels roll off charter through the rest of this year. It's basically one more shift. and also into 2027 and quite a development compared to the previous quarter as we have as Moritz alluded to secured a number of charters including a larger package deal and this is reflecting exactly the scarcity dynamic and we have described on the market slides and also in the highlight section current charter market levels remain firm across our side segments and they're ranging and as you can see on the right hand side from roughly 21,000 per day for the smaller 1300 TU units up to around 32,000 per day for the 3500 TU tonnage with periods typically somewhere between 18 months for the smaller sizes and stretching out to around 30 months for the largest. Again, as mentioned by Moritz, we have extended the number of vessels on 2027 forward positions already and we are entertaining some further discussions on the remaining 2027 charter positions which also underpins the tightness of the market and the interest of liner companies to secure tonnage on forward positions. Let me now explain our balanced approach when it comes to fleet strategy and we have divided this section in new buildings, second hand vessels and retrofits. Let me start with the new buildings. We stay Actively engaged in new building projects to lock in long-term earnings visibility and modern fuel efficient tonnage this increases earnings visibility and Enhances tail end value and optionality for our fleet and for us as a company on second hand vessels We we basically act opportunistically as both a buyer and a seller on the buy side We acquire modern tonnage at a discount to new building currency, which means immediate deployment of capital in instant EPS accretion and and on the sales side we dispose of less efficient tonnage where we do not see a viable retrofit path or where class renewals are approaching provided we can achieve an attractive sales price. Morris already touched on good examples of both earlier the disposal of several less efficient vessels at attractive prices and on the acquisition side our recent purchase of the four more than 7,000 fuel vessels at a substantial discount to new building parity. When it comes to retrofits, we do upgrade existing tonnage to extend economic life and make them commercially more attractive, often in cooperation with our charter partners. This allows us to extend charters. It improves efficiency and makes vessels more appealing in the charter market. So put together, that's kind of a balanced strategy across the cycle, duration and efficiency from new building and retrofits. Optionality from acting opportunistically and rationally on second hand vessels both as a buyer and a seller and that enables us to immediately deploy capital but also free up capital from sales efforts. Now let's look at the development of the fleet over time. Since 2021 we have meaningfully modernized the fleet and the results show that strategy is delivering. The average build year across the fleet has moved from 2007 builds to 2016 builds from 2021 to today. Basically, a decade younger on average, whereas five years have passed. And at the same time, we've grown the fleet's average size from around 2,100 to roughly 3,100 to you. That combination reflects a broader shift in composition. Our vessel count has moved up. And it's on a performer basis 67 today with the eco share of that fleet rising from basically a standing start to 78% of vessels or 83% on a TU rated basis. So the larger newer tonnage is proportion is disproportionately equal. That transformation has been value accretive funded through a mix of internally generated cash and prudent use of leverage and the results are visible across every metric that matters. Since Q3 2021, we have deployed roughly $1.8 billion of fleet renewal capex, taking debt-free vessels from basically zero to 30 today. And over the same period, our revenue backlog has roughly doubled from about $1.1 billion to $2.2 billion. Whilst at the same time, distributions to shareholders have grown from zero to around $1.1 billion. In short, a modern, larger fleet funded on a sound financial footing, delivering strong backlog and stronger returns. We are pleased to see this as evidence that our strategy is working as intended. To wrap up today's presentation, what ties all of this together is a simple idea. We've deliberately built the business to perform well regardless of where the market goes next. The backlog and forward fixing gives us earnings visibility, Further Out And We Have Had Than We Have Had Ever Before The Fleet Renewal Is Compounding That Visibility With Modern More Efficient Tonnage And The Balance Sheet Gives Us The Flexibility To Keep Acting On Opportunities As They Come Rather Than Being Dictated To By This Cycle That We Are In Put Simply We Spill Resilience Into The Business By Design And That Is Exactly What Positions Us Well In A Container Market That Remains As Volatile As It Is Today And with that, we're happy to take your questions.

We will begin by welcoming questions from analysts that we have on the line. First question is from Adam called Scott.

Thank you. So just on the acquisition and the equity raise, so what was your thought process around the cost of raising equity versus the debt capacity? And compared to the price you actually paid for the vessels And yeah, it's constantly.

Yeah. I haven't thanks for the question Let me start with kind of the dynamics around the the acquisition and and more alluded to it But but happy to dig into that in a bit more detail we believe, you know looking at the discount to new building parity at expiry of the Charter that this is a very attractive and acquisition to start with and and a very good deployment of of our capital we are effectively buying into six-year-old ships at expiry of the charter at a discount of 40 to 45 percent to new building parity which basically is is not dissimilar to you know 2017 2018 levels where we acquired you know at a lower point in the cycle as far as asset prices are concerned but at a similar discount to new building parity however the ships back then Where Where Where Basically Much Older Right So We Believe This Is A Way To You Know Acquire Assets And Again This Is Not An Off-The-Shelf Acquisition And But The Way To To Attract Assets That Immediately Create Cash Flow That Also You know, allow us to tap into the slightly larger segment, which we believe as the intra-regional trades grow, that also is a sector that is super interesting for us as well. It's kind of a continuation and extension of our strategy. And certainly the, you know, entry point in our view is very attractive. Now, this is kind of the rationale behind the acquisition. To tie that in with the capital rates, We believe that you know that the timing of the race coincided obviously with this is also linked to the asset acquisition. We feel that you know there's more attractive deals to be done at a similar metrics as far as risk and reward is concerned. And we believe that we need a certain liquidity in order to act opportunistically in the market. This deal alone was, for example, roughly 340 million. Very few parties in the market can actually lift a deal like this in a very short time window. And you need to have the right capitalization that relates to both equity and kind of lines, credit lines and debt. And this is why we have tied the two together and basically did the asset acquisition and then refilled our investment capacity.

And next, we have a question from Heidi Kowalowska. Please go ahead.

Yeah, just a couple of questions, actually. But first, I mean, you don't seem to be guiding this quarter. Is there a reason for that or updating the guidance?

Hi, good morning. The guidance that we have updated throughout the summer remains unchanged because the coverage, as we talked about in 26, is essentially maxed out and we're essentially taking out any volatility on the top-line guidance and same for the EBITDA guidance. the only potential swing factor on the EBITDA side is further vessel sales, where we potentially might see book gains that might require us to change the guidance. But for this quarter, the guidance both on the top line and the EBITDA remains unchanged.

Perfect. And just on the capital allocation as we go forward here, because as you say, you have kind of record high visibility, you have a an exceptional balance sheet, really, when it comes to unencumbered assets and so on. So should we expect at some point that the dividend policy is up for discussion again? Or will this still be kind of key to invest further in attractive opportunities?

I mean, as I mentioned, we have also executed the equity rate in order to be in a position to deliver on both our growth goals and certainly also the ability to act opportunistically in the market and build the company further. I related to that when I spoke to the balanced approach in the presentation, the different compartments that we would want to fill. but that you know should not mean that this comes at the expense of returning capital investors so so we have you know adjusted our dividend policy a while ago we still stick to this we have adjusted it to to stay here for the long run and we have provided a range we have always been in the upper part of the range um over the last couple of quarters and and i think we we definitely believe that part of the capital allocation strategy is also you know, solid and stable return of capital to investors.

And finally, just on the market, because of course, it's quite exceptional, really, what's going on with the forward fixing, you know, liners appear to be a little desperate for tolerance and so on. So can you, when, how is the tone when you discuss with your clients, really, or the main operators? I mean, are there Do you think this can just continue? Should we expect the forward texture window to just increase? Or do we need to see a lot of new builds here? Do you see any reason for kind of big new build programs initiated by the liners? Because it's a bit, from the outside at least, the situation here is just an accelerating interface.

Yeah, maybe I started more can can ship in but you know, as I, you know, indicated in the market section, I think, you know, the normal or usual just looking at demand and supply, you know, assessment is certainly not applicable anymore and hasn't been applicable for the last couple of years. Obviously Also Due To Extraordinary Events But Also Due To The Fact That You Know The Infrastructure Part Of Things In Particular Land Infrastructure Has Also Become Quite A Bottleneck On Various Trades And With All This Disruption There Is A Quite A Degree Of Slack In The System And The Liners Cater For That So We Have As I Said We Have 1,300 more ships or ships more on the water than five years ago. And yet, you know, the system is pumping on all cylinders. In particular, if you look at congestions, which are up compared to the highest levels during COVID. So there is a level of stress in the system. And that is not only caused by the Red Sea. That is caused also by other structural constraints. And we see that that has led to a also different strategic approach when it comes to fleet strategy from some of the liners. In addition, the charter market is drying out. And to your point earlier, we have been fixing the smallest vessels in our fleet on mid-27 positions. I mean, the larger you go, you can easily fix 28 positions. So I think there is a scarcity of assets. There Is A You Know Obviously A Bit Of A Thinking Process On The Liner Side Will This Continue Or Not If It Does Continue And I Don't Secure Assets I'm Probably Holding The Short End Of The Stick So I Think There Is A Bit Of A Dynamic About Uncertainty Where The Market Is Heading At The Same Time And Very Importantly Fundamental Demand Is It's way better than everyone had expected. And that is also a read across if you speak to the various liner companies or even shippers. So I think the fundamental demand is growing. And at the same time, we are also seeing new arteries of trade developing in particular linked to, you know, Asia, sub-Indian continent, sub-Saharan Africa, not the biggest of all trades, but trades that require a number of additional ships as well. So it's a long answer to your question, but I think overall the market dynamics are a tad more complex than they used to be where you just looked at supply and demand, and I think this is the important read-across. Thank you.

And then we have a question from Kristoffer Bart Scheier. Please go ahead.

Hello. So on the congestion side, can you talk a bit on the main drivers here? We see other liners are discussing underinvestments on the terminal side. Do you agree with that take? And if it's a terminal issue, how long could it potentially last?

It's a very good question and certainly the terminal side or land infrastructure I should say is one key aspect of it. Then obviously constant disruptions of certain trade routes and adjusting to that is another factor, right? um i mean the straight of form was not it's not directly a significant impact on con on the container trade flows yet it is a disruption and ships are being you know being trapped and boxes are being trapped logistic chains because it's not only about a ship to go from a to b it's also about the boxes um and and the boxes as we have also seen after after covid they tend to not always be where you need them and that creates a lot of logistical hassle as well so i think it's Really certainly the terminal type certain certainly the land infrastructure side but also the question of schedule reliability and And rescheduling services and and also ensuring the empty boxes are where they are needed Thank you

With no more questions from the analysts, we say thank you for participating and then Konstantin will move on to the written questions that are coming.

Yes, thanks everyone for the questions so far. There's another question here through the web and that is by increasing your fleet as other companies do, do you expect many challenges in particular regarding captains? How is your company regarded as employer? I mean, first of all, I think the crews on this planet have a tough and very challenging job these days with everything that is going on. And indeed, I think on the crewing side there is potentially a bottleneck. There are already constraints. We try to address that by working very professionally and openly with our crews and offering them as much as we can in terms of additional benefits. But for sure, I mean this is this is an industry-wide phenomenon and the crews on this planet are very important for maintaining the ecosystem or the system of global trade in particular. So I think we as a company are regarded positively by our crews. We have a Dedicated crew pool and and we our goal and our intention is to continue to invest in that as well But it is it is a fair question and I can just say that I'll repeat myself by saying is a very important Backbone of our industry and also of our activities going forward Okay, we're looking at the web, whether there are any further questions. I don't see any further questions. So on that note, many thanks for everyone's interest and contribution. And as I said, and as Moritz alluded to as well, we believe we're well positioned for whatever lies ahead, despite some volatility in the market. And we look forward to reporting again next quarter. And all the best and take care. Bye-bye.