United Maritime (USEA) - 2024 Q1 - Quarterly Report

Executive Summary & Financial Highlights Financial Highlights (Q4 & FY 2023) The company reported a Q4 2023 net loss of $0.7 million and a full-year 2023 net income of $0.2 million, both significant declines from 2022 Key Financial Highlights (Q4 2023 vs Q4 2022 & FY 2023 vs FY 2022) | Metric (in million USD except EPS) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022¹ | | :--------------------------------- | :------ | :------ | :------ | :------- | | Net Revenues | $11.6 | $14.9 | $36.1 | $22.8 | | Net (Loss) / Income | $(0.7) | $36.5 | $0.2 | $37.5 | | Adjusted Net (Loss) / Income | $(0.6) | $39.8 | $2.8 | $40.9 | | EBITDA | $4.4 | $38.9 | $16.3 | $41.8 | | Adjusted EBITDA | $4.6 | $42.3 | $18.9 | $45.2 | | (Loss) / Earnings per Share (EPS) Basic | $(0.08) | $4.86 | $0.02 | $7.79 | | (Loss) / Earnings per Share (EPS) Diluted | $(0.08) | $3.55 | $0.02 | $4.92 | | Adjusted (Loss) / Earnings per share Basic | $(0.07) | $5.36 | $0.33 | $8.54 | | Adjusted (Loss) / Earnings per share Diluted | $(0.07) | $3.90 | $0.33 | $5.39 | ¹ From January 20, 2022 (date of inception) to December 31, 2022. Other Key Developments The company continued its shareholder rewards program while investing in fleet expansion and refinancing to enhance liquidity - Declared a quarterly cash dividend of $0.075 per share for Q4 2023, representing an 11% annualized dividend yield[3] - Total cash dividends of $10.7 million, or $1.375 per share, declared since November 2022, representing approximately 45% of United's market capitalization[3] - Repurchased approximately $6.7 million in common shares at an average price of $1.87 per share since Q3 2022[3] - Invested $144 million in 2023 for the acquisition of seven dry bulk vessels and generated $37.5 million from the sale of the last tanker vessel[3] - Completed $30.0 million in refinancings in Q4 2023, adding $6.8 million in extra liquidity, with an additional $13.8 million sale and leaseback agreed in Q1 2024[3] - Agreed to acquire a modern Japanese Kamsarmax through an 18-month bareboat charter with a purchase option[3] Detailed Financial Performance & Strategic Outlook Fourth Quarter 2023 Financial Results The company's Q4 2023 performance declined significantly from Q4 2022, with lower net revenues and a sharp drop in the TCE rate Q4 2023 Financial Performance vs. Q4 2022 | Metric | Q4 2023 (million USD) | Q4 2022 (million USD) | Change (%) | | :------------------- | :-------------------- | :-------------------- | :--------- | | Net Revenues | $11.6 | $14.9 | -22.1% | | Adjusted EBITDA | $4.6 | $42.3 | -89.1% | | Net (Loss) / Income | $(0.7) | $36.5 | N/A | | Adjusted Net (Loss) / Income | $(0.6) | $39.8 | N/A | | TCE Rate (per day) | $15,874 | $32,161 | -50.6% | Full Year 2023 Financial Results The company generated $36.1 million in net revenues and $2.8 million in adjusted net income for the full year 2023 FY 2023 Financial Performance | Metric | FY 2023 (million USD) | | :------------------- | :-------------------- | | Net Revenues | $36.1 | | Adjusted EBITDA | $18.9 | | Net Income | $0.2 | | Adjusted Net Income | $2.8 | | TCE Rate (per day) | $15,380 | - Cash and cash-equivalents and restricted cash stood at $14.5 million as of December 31, 2023[6] - Shareholders' equity was $65.9 million, and long-term debt, finance lease liabilities, and other financial liabilities net of deferred charges were $96.0 million as of December 31, 2023[6] - The book value of the fleet, including two chartered-in Panamax vessels, was $152.5 million as of December 31, 2023[6] CEO Statement & Strategic Priorities The CEO highlighted the 2023 strategy of fleet regrowth in the dry bulk sector, which tripled the fleet's book value organically - Strategic priority for 2023 was to regrow the fleet by reinvesting proceeds into the dry bulk sector, with a total investment of $144 million for seven vessels (two Capesize, two Kamsarmax, three Panamax bulkers)[7] - Achieved positive net income and tripled the book value of the fleet organically, without dilutive equity offerings[7] - Continued uninterrupted shareholder reward program in 2023 through common share buybacks and regular cash dividends, totaling $10.7 million or $1.38 per share in the last 15 months[9] Q1 2024 TCE Rate Guidance & Market Outlook The company projects a Q1 2024 TCE rate of approximately $14,157 per day amid a constructive dry bulk market outlook - Estimated daily net TCE rate for Q1 2024 to average approximately $14,157 per day[10] - Approximately half of Q1 2024 ownership days fixed at an average gross rate of about $14,300 per day, utilizing freight hedging strategy[10] - Constructive outlook for the dry bulk market in 2024, driven by limited new Capesize deliveries, strong dry bulk commodity demand, and reduced vessel availability due to Panama Canal and Red Sea disruptions[11] Fleet Information & Operational Metrics Current Company Fleet The company operates eight dry bulk vessels with a total capacity of 922,054 DWT and an average age of 14.6 years Current Company Fleet Details | Vessel Name | Sector | Capacity (DWT) | Year Built | Yard | Employment Type | | :------------ | :--------------- | :------------- | :--------- | :---------- | :-------------- | | Goodship | Dry Bulk/Capesize | 177,536 | 2005 | Mitsui | T/C Index Linked | | Tradership | Dry Bulk/Capesize | 176,925 | 2006 | Namura | T/C Index Linked | | Gloriuship | Dry Bulk/Capesize | 171,314 | 2004 | Hyundai | T/C Index Linked | | Oasea | Dry Bulk/Kamsarmax | 82,217 | 2010 | Tsuneishi | T/C Index Linked | | Cretansea | Dry Bulk/Kamsarmax | 81,508 | 2009 | Universal | T/C Index Linked | | Chrisea | Dry Bulk/Panamax | 78,173 | 2013 | Shin Kurushima | T/C Index Linked | | Synthesea | Dry Bulk/Panamax | 78,020 | 2015 | Sasebo | T/C Index Linked | | Exelixsea | Dry Bulk/Panamax | 76,361 | 2011 | Oshima | T/C Index Linked | | Total/Average | | 922,054 | 14.6 years | | | Vessel to be Delivered A 2016-built Kamsarmax vessel will be delivered between June and October 2024 under a bareboat charter with a purchase option Vessel to be Delivered | Vessel Name | Sector | Capacity (DWT) | Year Built | Yard | | :------------ | :----------------- | :------------- | :--------- | :----- | | tbr Nisea | Dry Bulk / Kamsarmax | 82,235 | 2016 | Oshima | Fleet Operational Data Fleet expansion in Q4 2023 led to more ownership days but lower utilization and TCE rates compared to Q4 2022 Fleet Operational Data (Q4 2023 vs Q4 2022 & FY 2023 vs FY 2022) | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022¹ | | :----------------------------- | :------ | :------ | :------ | :------- | | Ownership days | 736 | 366 | 2,339 | 614 | | Operating days | 700 | 366 | 2,143 | 610 | | Fleet utilization | 95.1% | 100% | 91.6% | 99.3% | | TCE rate | $15,874 | $32,161 | $15,380 | $28,752 | | Daily Vessel Operating Expenses | $6,788 | $7,057 | $6,861 | $7,265 | ¹ From January 20, 2022 (date of inception) to December 31, 2022. Non-GAAP Financial Measures Reconciliations EBITDA and Adjusted EBITDA Reconciliation EBITDA and Adjusted EBITDA decreased significantly in Q4 and FY 2023 compared to the prior year, reflecting lower net income EBITDA and Adjusted EBITDA Reconciliation (in thousands of U.S. Dollars) | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022¹ | | :-------------------------- | :------ | :------ | :------ | :------- | | Net (loss) / income | (726) | 36,462 | 221 | 37,490 | | Interest and finance costs, net | 2,007 | 1,491 | 6,753 | 2,439 | | Depreciation and amortization | 3,153 | 957 | 9,363 | 1,903 | | EBITDA | 4,434 | 38,910 | 16,337 | 41,832 | | Stock based compensation | 18 | 2,789 | 2,522 | 2,789 | | Loss on extinguishment of debt | 105 | 593 | 85 | 593 | | Adjusted EBITDA | 4,557 | 42,292 | 18,944 | 45,214 | ¹ From January 20, 2022 (date of inception) to December 31, 2022. Adjusted Net (Loss) / Income and Adjusted (Loss) / Earnings Per Share Reconciliation Adjusted metrics, which exclude non-cash items, show a significant decline in profitability for Q4 and FY 2023 versus 2022 Adjusted Net (Loss) / Income and Adjusted (Loss) / Earnings Per Share Reconciliation (in thousands of U.S. Dollars) | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022¹ | | :------------------------------------------ | :------ | :------ | :------ | :------- | | Net (loss) / income | (726) | 36,462 | 221 | 37,490 | | Stock based compensation | 18 | 2,789 | 2,522 | 2,789 | | Loss on extinguishment of debt | 105 | 593 | 85 | 593 | | Adjusted net (loss) / income | (603) | 39,844 | 2,828 | 40,872 | | Adjusted net (loss) / income-common stockholders, basic | (603) | 36,279 | 2,733 | 38,468 | | Adjusted net (loss) / income-common stockholders, diluted | (603) | 37,328 | 2,733 | 39,317 | | Adjusted (loss) / earnings per common share, basic | (0.07) | 5.36 | 0.33 | 8.54 | | Adjusted (loss) / earnings per common share, diluted | (0.07) | 3.90 | 0.33 | 5.39 | | Weighted average number of common shares outstanding, basic | 8,711,308 | 6,769,246 | 8,359,487 | 4,503,397 | | Weighted average number of common shares outstanding, diluted | 8,771,308 | 9,565,410 | 8,359,487 | 7,299,561 | ¹ From January 20, 2022 (date of inception) to December 31, 2022. Cash Interest and Finance Costs Reconciliation Cash interest and finance costs increased in both Q4 and FY 2023 compared to the prior year periods Cash Interest and Finance Costs Reconciliation (in thousands of U.S. Dollars) | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022¹ | | :------------------------------------------ | :------ | :------ | :------ | :------- | | Interest and finance costs | (2,119) | (1,504) | (7,183) | (2,452) | | Interest income | 112 | 13 | 430 | 13 | | Amortization of deferred finance charges and other discounts | 203 | 224 | 781 | 352 | | Cash interest and finance costs | (1,804) | (1,267) | (5,972) | (2,087) | ¹ From January 20, 2022 (date of inception) to December 31, 2022. First Quarter 2024 TCE Rate Guidance First Quarter 2024 TCE Rate Guidance The company projects a Q1 2024 TCE rate of approximately $14,157, with 78% of expected operating days already fixed - Approximately 78% of the Company's fleet expected operating days in Q1 2024 have been fixed at an estimated TCE rate of approximately $13,797[25] - Estimated TCE rate for Q1 2024 is approximately $14,157, assuming average FFA rates for the remaining index-linked operating days[25] Q1 2024 TCE Rate Breakdown | Charter Type | Operating Days | TCE Rate | | :---------------------------- | :------------- | :------- | | TCE - fixed rate (index-linked conversion) | 368 | $13,330 | | TCE – index-linked unhedged | 303 | $15,162 | | Total / Average | 671 | $14,157 | Recent Developments & Corporate Actions Dividend Distributions The company maintained its quarterly dividend, paying $0.075 per share for Q3 2023 and declaring the same for Q4 2023 - Paid quarterly cash dividend of $0.075 per share for Q3 2023 on January 10, 2024[27] - Declared a cash dividend of $0.075 per share for Q4 2023, payable on or about April 10, 2024[28] Share Repurchase Program The company continued its share buyback program, repurchasing 84,813 shares for $0.2 million since Q4 2023 - Repurchased 84,813 common shares for approximately $0.2 million at an average price of $2.41 per share since Q4 2023[29] - All repurchased shares were cancelled and removed from share capital[29] - As of February 16, 2024, 8,677,456 common shares were issued and outstanding[29] Financing Updates The company executed $30.0 million in sale and leaseback agreements in Q4 2023 and an additional $13.8 million in Q1 2024 - Entered into three separate $10.0 million sale and leaseback agreements in November 2023 for M/Vs Gloriuship, Goodship, and Tradership, refinancing outstanding indebtedness[30] - Agreements bear interest of 3-month Term SOFR plus 3.30% per annum, with continuous repurchase options and an obligation to repurchase each vessel for $5.0 million at the end of the 3-year bareboat period[30] - Executed a term sheet in February 2024 for a $13.8 million Japanese sale and leaseback agreement to refinance M/V Exelixsea, bearing an interest rate of 2.65% plus 3-month Term SOFR[31] Vessel Transactions and Commercial Updates The company secured a new Kamsarmax vessel via a bareboat charter and a new time-charter agreement for M/V Chrisea - Agreed to an 18-month bareboat charter for an 82,235 dwt Kamsarmax dry bulk carrier (Nisea), with a down payment of $7.5 million, a daily charter rate of $8,000, and a purchase option of $16.6 million[32] - The aggregate acquisition cost for the Nisea, upon exercise of the purchase option, will be approximately $28.5 million[32] - Entered into a new 12-15 month index-linked time-charter agreement for M/V Chrisea at an improved rate, commencing in June 2024[33] Conference Call Information A conference call was held on February 20, 2024, to discuss Q4 and FY 2023 financial results - Conference call held on Tuesday, February 20, 2024, at 10:00 a.m. Eastern Time[34] - Live and archived webcast available on the Company's website in the 'Investors' section[35] Consolidated Financial Statements Unaudited Condensed Consolidated Balance Sheets Total assets grew to $174.8 million as of December 31, 2023, driven by fleet expansion and a corresponding rise in debt Unaudited Condensed Consolidated Balance Sheets (in thousands of U.S. Dollars) | ASSETS | December 31, 2023 | December 31, 2022* | | :------------------------------------------ | :------------------ | :----------------- | | Cash and cash equivalents and restricted cash | 14,501 | 69,932 | | Vessels and right-of-use assets, net and advances for vessels' acquisitions | 152,525 | 50,200 | | Other assets | 7,779 | 5,523 | | TOTAL ASSETS | 174,805 | 125,655 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Long-term debt, finance lease liability and other financial liabilities, net of deferred finance costs | 95,954 | 42,606 | | Other liabilities | 12,982 | 18,481 | | Stockholders' equity | 65,869 | 64,568 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 174,805 | 125,655 | * Derived from the audited consolidated financial statements as of the period as of that date. Unaudited Condensed Consolidated Statements of Operations The company reported a net loss of $0.7 million in Q4 2023, a sharp reversal from the $36.5 million net income in Q4 2022 Unaudited Condensed Consolidated Statements of Operations (in thousands of U.S. Dollars) | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022¹ | | :------------------------------------------ | :------ | :------ | :------ | :------- | | Vessel Revenue, net | 11,553 | 14,932 | 36,067 | 22,784 | | Voyage expenses | (441) | (3,161) | (3,107) | (5,245) | | Vessel operating expenses | (5,209) | (3,000) | (20,338) | (5,179) | | Management fees | (589) | (295) | (1,966) | (526) | | General and administrative expenses | (734) | (5,082) | (6,018) | (5,524) | | Depreciation and amortization | (3,153) | (957) | (9,363) | (1,903) | | Gain on sale of vessels | - | 36,095 | 11,804 | 36,095 | | Operating income | 1,427 | 38,532 | 7,079 | 40,502 | | Interest and finance costs | (2,119) | (1,504) | (7,183) | (2,452) | | Interest and other income | 215 | 38 | 542 | 39 | | Loss on extinguishment of debt | (105) | (593) | (85) | (593) | | Other, net | (144) | (11) | (132) | (6) | | Total other expenses, net | (2,153) | (2,070) | (6,858) | (3,012) | | Net (loss) / income | (726) | 36,462 | 221 | 37,490 | | Net (loss) / income per common share, basic | (0.08) | 4.86 | 0.02 | 7.79 | | Net (loss) / income per common share, diluted | (0.08) | 3.55 | 0.02 | 4.92 | ¹ From January 20, 2022 (date of inception) to December 31, 2022. Unaudited Condensed Consolidated Cash Flow Data The company experienced negative cash flow from operations and investing activities for the full year 2023 Unaudited Condensed Consolidated Cash Flow Data (in thousands of U.S. Dollars) | Cash Flow Activity | FY 2023 | FY 2022¹ | | :------------------------------------------ | :------ | :------- | | Net cash (used in) / provided by operating activities | (6,228) | 7,875 | | Net cash (used in) / provided by investing activities | (59,138) | 6,488 | | Net cash provided by financing activities | 9,935 | 55,569 | ¹ From January 20, 2022 (date of inception) to December 31, 2022. Company Overview United Maritime is an international shipping company operating a fleet of eight dry bulk vessels with a ninth on the way - United Maritime Corporation is an international shipping company providing worldwide seaborne transportation services[43] - Currently operates a fleet of eight dry bulk vessels with an aggregate cargo carrying capacity of 922,054 DWT[43] - Upon delivery of a third Kamsarmax vessel, the operating fleet will consist of three Capesize, three Kamsarmax, and three Panamax vessels, with an aggregate capacity of 1,004,289 DWT[43] Forward-Looking Statements This section outlines risks and uncertainties that could cause actual results to differ from forward-looking statements - Statements are subject to significant uncertainties and contingencies, many beyond the Company's control, and actual results may differ materially[45] - Risk factors include shipping industry trends (charter rates, vessel values, supply/demand), regulatory changes, financial condition and liquidity, competitive factors, operating costs, vessel damage, acquisitions/dispositions, and geopolitical events (wars, pandemics)[45] Contact Information Contact details are provided for investor relations inquiries - United Investor Relations contact: Tel: +30 213 0181 522, E-mail: ir@usea.gr[46] - Capital Link, Inc. contact: Paul Lampoutis, Tel: (212) 661-7566, E-mail: usea@capitallink.com[46]