Performance Shipping (PSHG) - 2023 Q2 - Quarterly Report

Q1 2023 Earnings Highlights & Management Commentary Performance Shipping Inc. achieved record Q1 2023 net income and EPS, driven by robust tanker market fundamentals and strategic fleet growth Q1 2023 Financial Highlights Performance Shipping Inc. achieved significant financial growth in Q1 2023, with record net income and EPS, primarily due to strong Time Charter Equivalent (TCE) rates in the tanker market | Metric | Q1 2023 | Q1 2022 | Change (YoY) | | :--- | :--- | :--- | :--- | | Financial Performance | | | | | Net Income | $15.7 million | ($2.1) million | 855% increase | | Net Income Attributable to Common Stockholders | $4.6 million | ($11.5) million | Significant improvement | | Basic Earnings Per Share (EPS) | $0.68 | ($51.46) | Significant improvement | | Diluted Earnings Per Share (EPS) | $0.55 | ($51.46) | Significant improvement | | Revenue | $29.5 million | $8.6 million | 245% increase | | Net Revenue After Voyage Expenses | $28.0 million | $5.2 million | Significant growth | | Operating Metrics | | | | | Average Time Charter Equivalent (TCE) Rate | $41,157 | $12,352 | 233% increase | | Net Cash Flow from Operating Activities | $18.7 million | ($3.9) million | Significant improvement | CEO Commentary & Strategic Outlook CEO Andreas Michalopoulos highlighted the sustained strength of tanker market fundamentals, driven by shifting trade patterns and recovering Chinese demand, with the company leveraging market advantages through fleet expansion, renewal, and a $2 million share repurchase program to enhance shareholder value - Tanker market fundamentals remain strong, benefiting from shifting trade patterns due to Russian crude oil export sanctions and recovering Chinese demand, which drives longer-haul tanker transportation needs[3] - The company completed the timely acquisition of four younger Aframax tankers in 2022 and signed a contract in Q1 2023 for a newbuild LNG-ready LR2 Aframax vessel for 2025 delivery, aiming for fleet expansion and renewal[4] - A $2 million share repurchase program has been initiated, with 1,518,113 common shares repurchased to date at an average price of $0.84 per share, addressing perceived undervaluation[5] - Currently, five tankers operate under time charter contracts with total daily rates ranging from $23,000 to $45,000, securing approximately $54 million in fixed revenue over their remaining charter periods[4] Tanker Market Update for the First Quarter of 2023 The Q1 2023 tanker market exhibited robust supply and demand, driven by moderate fleet growth and significant demand increases Q1 2023 Market Trends The Q1 2023 tanker market showed robust supply and demand, with moderate fleet supply growth and significant demand increases driven by Chinese imports and shifting trade patterns, alongside historically low newbuild orders and substantial year-over-year increases in secondhand vessel values and spot rates, indicating strong market fundamentals | Metric | Q1 2023 | QoQ Change | YoY Change | | :--- | :--- | :--- | :--- | | Supply Side | | | | | Tanker Fleet Supply (million DWT) | 681.2 | +0.8% (from 675.5) | +3.4% (from 658.7) | | Newbuild Tanker Contracting Volume (million DWT) | 4.5 | - | - | | Tanker Orderbook to Fleet Ratio | 4.0% | 28-year low | - | | Number of Tankers in Floating Storage (million DWT) | 19.0 | -21.0% (from 23.5) | -23.0% (from 23.4) | | Demand Side | | | | | Tanker Demand (billion ton-miles) | Expected 7.5% growth in 2023 | - | - | | Global Oil Consumption (million bpd) | 99.9 | +0.2% (from 99.7) | +1.4% (from 98.5) | | Global Oil Production (million bpd) | 101.3 | +0.1% (from 101.2) | +2.5% (from 98.7) | | OECD Commercial Inventories (million barrels) | 2,808 | +1.5% (from 2,766) | +7.8% (from 2,604) | | Market Prices & Utilization | | | | | Aframax Spot Rate (daily average) | $78,764 | -13.4% (from $90,991) | +144.1% (from $32,266) | | 10-Year Old Aframax Vessel Value (million USD) | $50.0 | +11.1% (from $45.0) | +81.8% (from $27.5) | | Crude Tanker Fleet Utilization | 87.3% | -1.0% (from 88.3%) | +13.4% (from 77.0%) | Market Outlook Disclaimer The company cautions that the market outlook is based on industry information, data, and estimates, offering no guarantee of future trend continuation or the realization of anticipated developments, as third-party information has not been independently verified, nor is the availability of updated information assured - The market outlook relies on information, data, and estimates from industry sources, with no guarantee of future trend continuation or the realization of anticipated developments[13] - The company has not independently verified any third-party information, nor has it verified the availability of updated information[13] Detailed Financial & Operational Data This section provides a comprehensive overview of Performance Shipping Inc.'s financial performance and operational metrics Summary of Selected Financial & Other Data This section provides a summary of key financial and fleet operational data for Q1 2023 and Q1 2022, including revenue, net income, EPS, fleet size, utilization, and average daily operating metrics | Metric | March 31, 2023 (Unaudited) | March 31, 2022 (Unaudited) | | :--- | :--- | :--- | | Operating Data (thousand USD) | | | | Revenue | $29,527 | $8,568 | | Voyage Expenses | $1,540 | $3,380 | | Vessel Operating Expenses | $5,143 | $3,327 | | Net Income / (Loss) | $15,695 | ($2,080) | | Net Income / (Loss) Attributable to Common Stockholders | $4,623 | ($11,478) | | Earnings / (Loss) Per Share, Basic | $0.68 | ($51.46) | | Earnings / (Loss) Per Share, Diluted | $0.55 | ($51.46) | | Fleet Data | | | | Average Number of Vessels | 8.0 | 5.0 | | Number of Vessels | 8.0 | 5.0 | | Ownership Days | 720 | 450 | | Available Days | 680 | 420 | | Operating Days (1) | 677 | 400 | | Fleet Utilization | 99.6% | 95.2% | | Average Daily Results | | | | Time Charter Equivalent (TCE) Rate (2) | $41,157 | $12,352 | | Daily Vessel Operating Expenses (3) | $7,143 | $7,393 | UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS This income statement details the company's revenue, expenses, operating income/loss, other income/expenses, and ultimate net income/loss for Q1 2023 and Q1 2022, along with net income attributable to common stockholders and earnings per share | Metric (thousand USD) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Revenue: | | | | Revenue | $29,527 | $8,568 | | Expenses: | | | | Voyage Expenses | $1,540 | $3,380 | | Vessel Operating Expenses | $5,143 | $3,327 | | Depreciation and Amortization of Deferred Charges | $3,688 | $2,013 | | General and Administrative Expenses | $1,662 | $1,508 | | Provision for Credit Losses and Write-Offs | ($16) | $22 | | Foreign Exchange Gain / (Loss) | $30 | ($46) | | Operating Income / (Loss) | $17,480 | ($1,636) | | Other Income / (Expenses): | | | | Interest and Finance Costs | ($3,085) | ($445) | | Interest Income | $348 | $1 | | Change in Fair Value of Warrant Liability | $952 | - | | Total Other Expenses, Net | ($1,785) | ($444) | | Net Income / (Loss) | $15,695 | ($2,080) | | Deemed Dividend on Series B Preferred Stock Due to Common Stock Conversion | - | ($9,271) | | Deemed Dividend on Series C Preferred Stock Due to Trigger of Down-Round Provision | ($9,809) | - | | Deemed Dividend on July and August 2022 Warrants Due to Trigger of Down-Round Provision | ($789) | - | | Preferred Stock Dividends | ($474) | ($127) | | Net Income / (Loss) Attributable to Common Stockholders | $4,623 | ($11,478) | | Earnings / (Loss) Per Share, Basic | $0.68 | ($51.46) | | Earnings / (Loss) Per Share, Diluted | $0.55 | ($51.46) | | Weighted Average Common Shares Outstanding, Basic | 6,815,828 | 223,044 | | Weighted Average Common Shares Outstanding, Diluted | 8,763,703 | 223,044 | UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME / (LOSS) This comprehensive income statement indicates that the company's comprehensive income/loss for Q1 2023 and Q1 2022 aligns with net income/loss, with no other comprehensive income items included | Metric (thousand USD) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net Income / (Loss) | $15,695 | ($2,080) | | Comprehensive Income / (Loss) | $15,695 | ($2,080) | CONDENSED CONSOLIDATED BALANCE SHEET DATA This balance sheet provides condensed data on the company's assets, liabilities, and stockholders' equity as of March 31, 2023, and December 31, 2022, showing significant growth in cash and cash equivalents and total stockholders' equity | Metric (thousand USD) | March 31, 2023 (Unaudited) | December 31, 2022 (Audited) | | :--- | :--- | :--- | | Assets | | | | Cash, Cash Equivalents, and Restricted Cash | $66,206 | $39,726 | | Advances for Vessel Acquisitions and Other Vessel Costs | $5 | - | | Vessels, Net | $234,026 | $236,607 | | Other Fixed Assets, Net | $65 | $72 | | Other Assets | $13,701 | $16,574 | | Total Assets | $314,003 | $292,979 | | Liabilities and Stockholders' Equity | | | | Long-Term Bank Debt, Net of Unamortized Deferred Financing Costs | $123,490 | $127,675 | | Other Liabilities | $8,381 | $9,599 | | Total Stockholders' Equity | $182,132 | $155,705 | | Total Liabilities and Stockholders' Equity | $314,003 | $292,979 | OTHER FINANCIAL DATA (Cash Flow Summary) This section summarizes the company's cash flow situation for Q1 2023 and Q1 2022, indicating a shift from negative to positive cash flow from operating activities and a significant increase in cash flow from financing activities | Metric (thousand USD) | Three Months Ended March 31, 2023 (Unaudited) | Three Months Ended March 31, 2022 (Unaudited) | | :--- | :--- | :--- | | Net Cash Provided by / (Used in) Operating Activities | $18,679 | ($3,863) | | Net Cash Used in Investing Activities | ($378) | ($1,161) | | Net Cash Provided by Financing Activities | $8,179 | $3,636 | Fleet Employment Profile (As of June 21, 2023) This section details Performance Shipping Inc.'s fleet composition and employment status as of June 21, 2023 Current Fleet Details As of June 21, 2023, Performance Shipping Inc.'s fleet comprises 8 Aframax tankers, with 5 operating under time charter contracts and 3 under pool arrangements, covering both crude oil and product transportation | | Vessel | Year Built | Deadweight Tons (DWT) | Builder | Vessel Type | Charter Type | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Aframax Tankers | | | | | | | | 1 | BLUE MOON | 2011 | 104,623 | Sumitomo Heavy Industries Marine & Engineering Co., LTD. | Crude Oil | Time Charter | | 2 | BRIOLETTE | 2011 | 104,588 | Sumitomo Heavy Industries Marine & Engineering Co., LTD. | Crude Oil | Time Charter | | 3 | P. KIKUMA | 2007 | 115,915 | Samsung Heavy Industries Co Ltd. | Crude Oil | Pool Arrangement | | 4 | P. YANBU | 2011 | 105,391 | Sumitomo Heavy Industries Marine & Engineering Co., LTD. | Crude Oil | Time Charter | | 5 | P. SOPHIA | 2009 | 105,071 | Hyundai Heavy Industries Co., LTD | Crude Oil | Pool Arrangement | | 6 | P. ALIKI | 2010 | 105,304 | Hyundai Heavy Industries Co., LTD | Product | Time Charter | | 7 | P. MONTEREY | 2011 | 105,525 | Hyundai Heavy Industries Co., LTD | Crude Oil | Time Charter | | 8 | P. LONG BEACH | 2013 | 105,408 | Hyundai Heavy Industries Co., LTD | Product | Pool Arrangement | Company Information & Legal Disclosures This section provides essential company information and legal disclaimers concerning forward-looking statements About the Company Performance Shipping Inc. is a global shipping transportation service provider primarily operating through the ownership of tanker vessels, deploying its fleet via various arrangements including spot voyages, pool arrangements, and time charter contracts - Performance Shipping Inc. is a global shipping transportation service provider, focusing on the ownership and operation of tanker vessels[19] - The company deploys its fleet through various arrangements, including spot voyages, pool arrangements, and time charter contracts[19] Cautionary Statement Regarding Forward-Looking Statements This section provides a legal cautionary statement regarding forward-looking statements, explaining their definition, identification, underlying assumptions, and various risk factors that could cause actual results to differ materially from expectations, including economic conditions, market fluctuations, operating costs, regulatory changes, and geopolitical events - Forward-looking statements include, but are not limited to, declarations about plans, objectives, strategies, future events, or performance, intended to encourage companies to provide forward-looking business information[20] - These statements are based on various assumptions that inherently involve significant uncertainties and contingencies, are difficult to predict, and are beyond the company's control, thus offering no guarantee of achieving these expectations[22] - Risk factors that could cause actual results to differ materially from forward-looking statements include global economic strength, currency and interest rate fluctuations, market conditions (such as charter rates and vessel values), supply and demand changes, oil and gas production and consumption changes, operating expenses, financing availability, government regulations, litigation, geopolitical conditions (e.g., Ukraine conflict, sanctions, trade wars), terrorism, piracy, shipping route disruptions, and vessel breakdowns[23]