United Maritime Corp. Q2 FY2023 earnings call

• In the second quarter, sold the last remaining product tanker vessel for $37.5 million, resulting in a return on equity of over 400% on that ship. Over 12 months, combined profit from four tanker purchases and sales was ~$48 million net of expenses, a 302% return on ~$16 million equity.
• Used proceeds from tanker sales to invest $144 million in the dry bulk segment across seven vessels. In the second quarter of 2023, another dividend of $0.075 per share was approved, with total dividends declared/paid over 12 months being $1.23 per share or $9.4 million. Completed share repurchases of $200,000 at an average price of $2.90 per share, and over 12 months repurchased 3.4 million shares at an average price of $1.80.
• In April, chartered in a 2015 built Japanese Panamax vessel (Synthesis) with a 12-month bareboat charter and purchase option. In April, took delivery of the Currency, a 2009 build Japanese Kamsarmax vessel with an index-linked time charter until April 2024. In June, agreed to acquire a 2011 build Panamax vessel (Exelixsea) for $17.8 million, delivery expected end-August/beginning of September 2023. In May, sold remaining LR2 tanker for $37.5 million, with $12 million accounting profit recorded in Q3 when delivered. Upon completion of planned transactions, will operate 8 ships: 5 Panamax/Kamsarmax and 3 Capesize.
• $55 million equity portion of $144 million investments in 7 vessels since年初 funded entirely by tanker sales proceeds and operational cash, no dilutive capital raisings.

For the second quarter of 2023, net revenue was $10 million, adjusted EBITDA was $2 million, and adjusted net loss was $2.1 million. In the six-month period, revenues were $12.8 million, adjusted EBITDA was $521,000, and adjusted net loss was $5.7 million. The Time Charter Equivalent rate for United in the second quarter was $16,072, an improvement from $10,300 in the first quarter. However, the drydocking of the Tradership impacted operational results, reducing fleet utilization for the quarter to 93%. For the six-month period, fleet utilization was approximately 89%. Revenue contribution details weren't explicitly broken down by product segment in terms of percentage, but the focus was on dry bulk segment investments.

• Optimistic that as vessel ton-miles continue to grow, the dry bulk market will turn positive again. Will continue to focus on the dry bulk segment as per current plans,推进收购和租入交易. Confident in financing upcoming obligations for acquisitions and charters as the purchase options can be funded by debt at the time of exercise and current financing is structured without shareholder dilution.

• 2023 has been volatile with reduced vessel congestion increasing fleet efficiency and significant release of Panamax and Kamsarmax vessels from Black Sea grain corridor increasing effective vessel supply, putting pressure on certain rates. - Port congestion and idle vessels at historical lows but uncertainties remain. - Order book for new vessels at multi-decade lows, market dynamics can change rapidly.

Q: You mentioned in the press release your second investment cycle focusing on the dry-bulk ships. Do you think this will last through based on the delivery schedules and the bareboat options at the end of the Bareboat charter in acquisition through 2024? And might you shift to another sector eventually as well too, please?

A: I don't think so. Right now, we will stick to what we have agreed. So, we will play in the larger categories of the dry bulk segment. So Panamax comes Exelixsea and potentially capes, older capes we'll say. So, this is what we believe is the best value proposition right now as an entry point across the mainstream shipping sectors. I don't think we'll be seeking anything in the tankers anytime soon, because the values are overinflated. Other segments I don't really think that we would be looking at right now. So most likely we're going to stick to what we have already done since the beginning of the year.

Q: Stavros, you may have mentioned the funding are -- is the funding that you mentioned for the Bareboat charter in acquisitions, can you fund those acquisitions with debt before exercising the option?

A: Yes. The way the Bareboat High -- the way the bareboat agreements have been structured is that basically, the purchase option is a percentage of the value of the ship that we feel comfortable that we can cover purely by raising debt at the time of the exercise of the purchase option. Otherwise, everything is dually funded. We have some maturities coming up early next year on which we are already working, but we are relatively confident that we would not face any issues whatsoever in financing our upcoming obligations.

Q: And then the purchases that you've made in the dry bulk market so far, have they been from different sellers or mostly from Japanese ship owners?

A: It’s a combination. So, I would say 50% from Japanese sellers or a little bit more, and some from European sellers. So, we like to do business with repetitive deals with the same people. We like doing good quality business with Japan, and we likely continue doing so in the future.