Robin Energy Ltd(RBNE) - 2024 Q4 - Annual Report

Explanatory Note Robin Energy Ltd was established via a spin-off from Toro Corp to create a pure-play product tanker company Spin-Off from Toro Corp. Robin Energy Ltd was established as a holding company for Toro Corp's Handysize tanker segment through a spin-off transaction - Robin Energy Ltd was incorporated on September 24, 2024, by Toro Corp to hold its Handysize tanker segment following a spin-off[27] - The spin-off, effective April 14, 2025, involved Toro distributing all of Robin's common shares to Toro's existing stockholders at a ratio of one Robin share for every eight Toro shares held[17][30] - As part of the transaction, Robin received Toro's Handysize tanker-owning subsidiary and $10.36 million in cash for working capital[29] - In exchange for the assets, Robin issued common shares to Toro's stockholders, 2,000,000 Series A Preferred Shares to Toro, and 40,000 Series B Preferred Shares to Pelagos Holdings Corp, a company controlled by the CEO[29] - Due to the CEO's ownership of Series B Preferred Shares, which carry significant voting power, Robin Energy Ltd is classified as a 'controlled company' under Nasdaq Listing Rules[34] PART I Item 3. Key Information This section details significant risks including charter rate volatility, fleet age, and the company's controlled status Risk Factors - The company's business is subject to volatile and cyclical charter rates, which are influenced by the supply and demand for product tankers and the products they transport[47] - An oversupply of product tanker tonnage could lead to depressed charter rates; as of March 4, 2025, the Handysize tanker orderbook stood at 15.2% of the current fleet[54][57] - The company's single vessel is 19.0 years old, which is older than the industry average of 14.0 years, potentially leading to higher operating expenses and chartering challenges[73][133] - The company is dependent on Castor Ships S.A, a related party controlled by the CEO, for the commercial and technical management of its fleet, creating potential conflicts of interest[46][141] - The Chairman and CEO, through ownership of all Series B Preferred Shares, controls 99.9% of the company's aggregate voting power, making the company a 'controlled company' under Nasdaq rules[193][194] - The spin-off distribution is expected to be a taxable event for U.S. shareholders of Toro, treated as a dividend to the extent of Toro's earnings and profits[215] - The company could be treated as a 'Passive Foreign Investment Company' (PFIC), which could have adverse U.S. federal income tax consequences for U.S. shareholders[203][205] Item 4. Information on the Company This section provides an overview of the company's history, business strategy, fleet, and the regulatory environment History and Development of the Company - Robin Energy Ltd was incorporated in the Marshall Islands on September 24, 2024, as part of a spin-off from Toro Corp to operate as a pure-play product tanker company[221] - The company's common shares commenced trading on the Nasdaq Capital Market under the symbol 'RBNE' on April 15, 2025[221] - The company's strategy is to expand its fleet in the future, primarily through secondhand vessel acquisitions, to reduce the average age of its fleet[224] Business Overview Fleet Details (as of March 4, 2025) | Vessel Name | DWT | Year Built | Country of Construction | Charter Type | | :--- | :--- | :--- | :--- | :--- | | M/T Wonder Mimosa | 36,718 | 2006 | S. Korea | Tanker Pool | - The company's single vessel, M/T Wonder Mimosa, has a cargo-carrying capacity of 0.03 million dwt and an age of 19.0 years as of April 14, 2025[222] - The company's chartering strategy is to employ its vessel predominantly in the spot voyage market or through pool arrangements to optimize employment[230] - The company's business is managed by Castor Ships S.A, a related party, which provides commercial, technical, and administrative services[235] - The company is subject to extensive environmental regulations, including IMO 2020 sulfur limits, ballast water management (BWM) conventions, and upcoming greenhouse gas (GHG) reduction measures like EEXI and CII, which require significant compliance costs[237][242][249][259] Item 5. Operating and Financial Review and Prospects (MD&A) This section analyzes carve-out financial performance, which was impacted by a vessel sale in 2023 Operating Results Combined Results of Operations (2023 vs. 2024) | Metric | Year ended Dec 31, 2023 | Year ended Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total revenues | $15,611,872 | $6,768,672 | ($8,843,200) | | Vessel operating expenses | ($5,164,248) | ($2,310,287) | $2,853,961 | | Gain on sale of vessel | $8,226,258 | $0 | ($8,226,258) | | Operating income | $15,488,421 | $1,066,094 | ($14,422,327) | | Net income | $15,425,465 | $1,051,403 | ($14,374,062) | - The significant decrease in total revenues and operating expenses in 2024 compared to 2023 was primarily due to the sale of the M/T Wonder Formosa on November 16, 2023[340][342] Key Operational Metrics | Metric | 2022 | 2023 | 2024 | | :--- | :--- | :--- | :--- | | Daily TCE Rate | $21,121 | $24,008 | $19,796 | | Ownership Days | 730 | 685 | 366 | | Fleet Utilization | 100% | 99% | 100% | | EBITDA | $10,054,935 | $16,969,068 | $2,233,024 | - Net income for 2023 was significantly boosted by an $8.2 million gain from the sale of the M/T Wonder Formosa[353] Liquidity and Capital Resources Working Capital | Date | Working Capital | | :--- | :--- | | Dec 31, 2023 | $18.5 million | | Dec 31, 2024 | $12.4 million | - In connection with the spin-off on April 14, 2025, Toro contributed $10.4 million in cash to the company for additional working capital[358] Cash Flow Summary (2023 vs. 2024) | Cash Flow Activity | Year ended Dec 31, 2023 | Year ended Dec 31, 2024 | | :--- | :--- | :--- | | Operating Activities | ($6,342,748) | $6,894,288 | | Investing Activities | $16,437,915 | ($71,786) | | Financing Activities | ($14,895,715) | ($6,822,484) | - Net cash from investing activities in 2023 was primarily driven by $17.2 million in net proceeds from the sale of the M/T Wonder Formosa[368][374] - Net cash used in financing activities in both 2023 and 2024 primarily reflects dividends and returns of capital to the parent company, Toro, following the vessel sale[369][375] Item 6. Directors, Senior Management and Employees This section introduces the company's leadership, board structure, and compensation arrangements Key Management and Directors | Name | Age | Position | | :--- | :--- | :--- | | Petros Panagiotidis | 35 | Chairman, Chief Executive Officer | | Theologos Pagiaslis | 39 | Chief Financial Officer | | Dionysios Makris | 44 | Secretary and Director | | John Paul Syriopoulos | 34 | Director | - The Board of Directors is divided into three staggered classes, with each director serving a three-year term[386] - The Chairman and CEO, Petros Panagiotidis, does not receive separate compensation from the company; his services are included in the Master Management Agreement with Castor Ships[392] - Non-executive directors receive an annual fee of $10,000 each, plus reimbursement for expenses[392] - The company has no employees; its vessel is managed by the related-party manager, Castor Ships[396] Item 7. Major Shareholders and Related Party Transactions This section details the CEO's controlling ownership and the comprehensive management agreement with a related party Major Shareholder Ownership | Name of Beneficial Owner | No. of Common Shares | Percentage | Total Voting Power | | :--- | :--- | :--- | :--- | | Pani Corp (controlled by CEO Petros Panagiotidis) | 1,296,405 | 54.3% | 99.97% | - The CEO's control is established through ownership of common shares and all 40,000 Series B Preferred Shares, each carrying 100,000 votes[406] - The company has a Master Management Agreement with Castor Ships S.A (controlled by the CEO) for all commercial, technical, and administrative services[404][405] Fees Paid to Castor Ships S.A. | Fee Type | Rate | | :--- | :--- | | Flat Management Fee | $0.2 million per quarter | | Ship Management Fee | $1,071 per vessel per day | | Chartering Commission | Up to 6.25% of gross income (aggregate) | | Sale & Purchase Commission | 1% on consummated transactions | | Capital Raising Commission | 1% on gross proceeds from capital/debt markets | - The company entered into a Contribution and Spin Off Distribution Agreement with Toro, which governs the separation of assets and liabilities[411][413] Item 8. Financial Information This section outlines the company's dividend policy, which prioritizes Series A Preferred shareholders - The company does not have a declared dividend policy for its common shares, and any future dividends are at the sole discretion of the Board[418] - Dividends on Series A Preferred Shares are cumulative and accrue at a rate of 1.00% per annum on a $25.00 per share stated amount, ranking senior to any distributions on common shares[419] - Series B Preferred Shares have no dividend rights, except in the case of a stock dividend of a subsidiary[420] - As of the date of the annual report, the company has not paid any dividends to its shareholders[424] Item 10. Additional Information This section details the company's corporate structure, securities rights, and material tax considerations Memorandum and Articles of Association - The company's authorized capital consists of 3.9 billion common shares and 100 million preferred shares[436] - Series A Preferred Shares are convertible into common shares after two years, rank senior to common stock for dividends and liquidation, and pay a 1.00% cumulative annual dividend[439][440][445] - Each of the 40,000 Series B Preferred Shares, held by a company controlled by the CEO, carries the voting power of 100,000 common shares, granting effective voting control[447][450] - The company has adopted a Shareholder Protection Rights Agreement (a 'poison pill') that is triggered if a person or group acquires 15% or more of the outstanding common shares without Board approval[189][452] - The company's bylaws establish the High Court of the Marshall Islands and the U.S. District Court for the Southern District of New York as exclusive forums for certain claims[460] Taxation - As a Marshall Islands corporation, the company is not subject to tax on income or capital gains in the Marshall Islands[467] - The company expects to be exempt from U.S. federal income tax on its U.S. source shipping income under Section 883 of the Code[472][478] - The spin-off distribution of Robin shares to Toro shareholders will likely be treated as a taxable dividend for U.S. Holders[485][486] - There is a risk that the company could be classified as a Passive Foreign Investment Company (PFIC), which would result in adverse U.S. federal income tax consequences for U.S. Holders[498][501] Item 11. Quantitative and Qualitative Disclosures About Market Risk This section addresses the company's exposure to interest rate, foreign currency, and inflation risks - The company's sensitivity to interest rate changes is expected to increase if it enters into debt agreements for future vessel acquisitions[529] - Foreign currency exchange risk is currently not material, as all revenues are in U.S. dollars and only a small percentage of operating expenses are in other currencies[530] - Significant global inflationary pressures could increase the company's operating costs[531] PART II Item 15. Controls and Procedures This section confirms the effectiveness of disclosure controls and procedures as of December 31, 2024 - Management concluded that as of December 31, 2024, the company's disclosure controls and procedures were effective at a reasonable assurance level[538][541] - The annual report does not include a management assessment or auditor attestation on internal control over financial reporting, as permitted for newly public companies[542][543] Item 16. Corporate Governance and Other Disclosures This section covers governance practices, accountant fees, and the cybersecurity risk management framework Principal Accountant Fees and Services Audit Fees Paid to Deloitte | Year | Audit Fees | | :--- | :--- | | 2023 | $0 | | 2024 | $130,739 | Corporate Governance - As a foreign private issuer and a controlled company, Robin Energy Ltd follows certain home country (Marshall Islands) practices instead of Nasdaq corporate governance requirements[557] - Key differences from Nasdaq standards include not having nominating/corporate governance or compensation committees and having a smaller audit committee than required for U.S. companies[557] Cybersecurity - The company's cybersecurity risk management is managed by the Information Technology and Cybersecurity (ITC) Department of its manager, Castor Ships[561][563] - The full Board of Directors oversees the company's cybersecurity strategy and risks, receiving periodic reports from the ITC Department[566] - The company has not detected any cybersecurity incidents that have materially affected or are reasonably likely to materially affect its business, operations, or financial condition[562] PART III Item 18. Financial Statements This section contains the audited combined carve-out financial statements for fiscal years 2022, 2023, and 2024 Combined Carve-Out Balance Sheet Highlights (As of Dec 31) | Metric | 2023 | 2024 | | :--- | :--- | :--- | | Total Assets | $27,591,618 | $21,581,980 | | Vessels, net | $7,416,892 | $6,875,903 | | Total Current Assets | $19,249,715 | $12,883,940 | | Total Liabilities | $708,715 | $470,158 | | Net Parent Investment | $26,882,903 | $21,111,822 | Combined Carve-Out Statement of Comprehensive Income Highlights (Year Ended Dec 31) | Metric | 2022 | 2023 | 2024 | | :--- | :--- | :--- | :--- | | Total Vessel Revenues | $15,637,653 | $15,611,872 | $6,768,672 | | Operating Income | $8,651,670 | $15,488,421 | $1,066,094 | | Net Income | $8,640,325 | $15,425,465 | $1,051,403 | - The financial statements are prepared on a 'carve-out' basis from the historical records of Toro Corp and include allocations of general and administrative expenses from the parent[601][603] - On November 16, 2023, the company completed the sale of the M/T Wonder Formosa for a gross price of $18.0 million, resulting in a net gain of $8.2 million[599][646]