Himalaya Shipping .(US:HSHP)2024-03-27 11:32Company Operations - Himalaya Shipping Ltd. operates 12 Newcastlemax dry bulk vessels, with six delivered in 2023 and three more expected by Q2 2024[26]. - The company has nine vessels in operation, all delivered after 2022, with agreements to acquire three additional vessels estimated for delivery in 2024[56]. - The company has three newbuilding dry bulk carriers under construction, with delivery estimated in the second quarter of 2024, facing risks of delays and cost overruns[63]. - The company has chartered out 11 vessels on index-linked charters, with five converted to fixed rate charters for periods ranging from 4 to 9 months[65]. - The company’s vessels are equipped with dual fuel LNG technology, which is expected to help mitigate fuel consumption costs in the future[179]. Financial Performance - The company reported consolidated financial statements in U.S. dollars for the years ended December 31, 2023, and 2022[30]. - Average Time Charter Equivalent (TCE) earnings are a key non-GAAP measure used to assess daily revenue performance of vessels[33]. - The company is largely dependent on cash generated from operations, cash on hand, and borrowings under Financing Arrangements to meet operating expenses and service indebtedness[54]. - The time charter market is highly competitive, and fluctuations in spot market charter hire rates may significantly impact the company's profitability[58]. - A significant decrease in the market values of the company's vessels could lead to impairment losses, adversely affecting its ability to obtain additional financing[53]. Risks and Challenges - The company is subject to various risks, including changes in demand in the dry bulk shipping industry and fluctuations in foreign currency exchange rates[39]. - Rising crew costs and inflation could adversely affect the company's results of operations due to increased demand for crew and upward pressure on wages[60]. - The company is subject to counterparty risks related to various contracts, including charter parties and newbuilding contracts, which could lead to significant losses if counterparties fail to meet their obligations[61]. - Liquidity risk could impair the company's ability to fund operations and jeopardize its financial condition and growth prospects[54]. - The company may face litigation that could have a material adverse effect on its business and financial condition if not resolved favorably[67]. Market Conditions - The company anticipates trends in the dry bulk shipping industry, including fluctuations in charter hire rates and vessel values[38]. - The dry bulk shipping industry is cyclical, with charter hire rates potentially decreasing below cash break-even rates, adversely affecting business operations and financial condition[111]. - Political instability and international conflicts, such as the war in Ukraine and tensions between the U.S. and China, could negatively impact the shipping industry and the company's financial results[120][127]. - The availability of financing for new vessels and shipping activities has become more difficult due to increased interest rates and tighter lending standards in the credit markets[122]. - The ongoing military conflict in Israel and Gaza could materially and adversely affect the company's business operations[132]. Regulatory and Compliance - The company is subject to data privacy laws, including the GDPR, with potential fines up to 4% of worldwide turnover or €20 million for non-compliance[88]. - Compliance with the Bermuda Economic Substance Act is required, and failure to comply could result in financial penalties and adverse effects on the company's operations[83]. - The company may incur additional costs related to climate-related disclosures as mandated by the SEC, impacting financial performance[163]. - The company is required to report sustainability and ESG-related information under the Corporate Sustainability Reporting Directive (CSRD) starting January 1, 2025, which will involve significant time and costs[160]. - The company may face reputational damage and financial penalties if found in violation of sanctions laws when operating in sanctioned jurisdictions[169]. Shareholder Information - The company has 43,900,000 common shares outstanding as of March 20, 2024, out of an authorized share capital of 140,010,000 common shares[191]. - The largest shareholder, Drew Holdings, owns 31.5% of the company's shares, which may limit other shareholders' influence over key transactions[203]. - The company completed its initial public offering (IPO) in the U.S. in April 2023, issuing 7,720,000 common shares at an offering price of $5.80 per share, followed by an additional 910,000 shares in May 2023[219]. - As an "emerging growth company," the company is subject to reduced disclosure requirements and may not be required to comply with certain auditor attestation requirements[222]. - The company may incur expenses that reduce cash available for dividends, impacting shareholder returns[210].