Performance Shipping Inc. Reports Financial Results for the Fourth Quarter and Year Ended December 31, 2023
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Insights
The financial results of Performance Shipping Inc. indicate a mixed performance, with a year-on-year increase in net income but a decrease in quarterly revenue. The company's ability to generate higher net income despite lower revenues suggests improved operational efficiency or cost management. However, the drop in revenue is primarily due to a decrease in Time-Charter Equivalent (TCE) rates, which is a key metric in the shipping industry representing the average daily revenue performance of a vessel.
Considering the share buyback program and the construction of new LNG-ready tankers, the company is signaling confidence in its future and a commitment to shareholder value. Share buybacks can indicate that the company believes its shares are undervalued. The investment in new, environmentally compliant vessels positions the company to take advantage of stricter emission regulations in the future. Investors should note the company's strategic moves, such as fleet renewal and share buybacks, as they may impact the company's long-term growth trajectory and financial health.
The financial results show a significant increase in annual net income and a strong year-end cash balance, which is a positive signal for the company's financial stability. The company's cash balance exceeding its outstanding bank debt by 1.2 times is an indicator of solid liquidity and may provide a cushion against market volatility. Additionally, the conservative leverage, at only 18% of the estimated fleet market value, suggests a low risk of financial distress, which could be attractive to risk-averse investors.
However, the decline in daily spot charter rates for Aframax tankers and the decrease in revenue from the previous year's quarter could raise concerns about the company's ability to maintain its income levels if the market does not improve. Investors should monitor the fluctuating TCE rates and global economic indicators that could affect the shipping industry's demand and supply dynamics.
The shipping industry is closely tied to global oil production and consumption, which affects tanker demand. Performance Shipping Inc.'s focus on Aframax tankers, which are mid-sized oil tankers, makes it sensitive to changes in the oil market. The tanker market update provided suggests an increase in global oil consumption and production, which could lead to increased demand for oil transportation and potentially higher charter rates.
The company's decision to invest in LNG-ready, scrubber-fitted tankers is strategic, given the industry's shift towards cleaner energy and stricter emission standards. These new vessels are likely to be more competitive in an environment where fuel efficiency and environmental compliance are becoming increasingly important. This forward-looking approach could provide the company with a competitive edge as the industry evolves.
ATHENS, Greece, March 07, 2024 (GLOBE NEWSWIRE) -- Performance Shipping Inc. (NASDAQ: PSHG) (“we” or the “Company”), a global shipping company specializing in the ownership of tanker vessels, today reported net income of
Revenue was
Net income for the years ended December 31, 2023, and December 31, 2022, amounted to
Commenting on the results of the fourth quarter of 2023, Andreas Michalopoulos, the Company’s Chief Executive Officer, stated:
“During the fourth quarter of 2023, the tanker market continued to strengthen as it did throughout the year. We successfully achieved a fleetwide average time charter equivalent rate of
“As previously announced, in August 2023, the Company’s board of directors approved a
“Our impressive revenue generation of approximately
“Looking ahead, we are optimistic that our most recent corporate developments will enable us to fortify our market position. As previously announced, in 2023, we entered into shipbuilding contracts for the construction of three LNG-ready, scrubber fitted, LR2 Aframax tankers. These vessels, equipped with the latest high-specification engines and designed to meet stringent emission requirements, are expected to be delivered between late 2025 and early 2026. Our decision to acquire these identical “sister” vessels, along with the recent sale of our oldest Aframax tanker, the M/T P. Kikuma, reflect our confidence in sustainable market fundamentals. We believe that our strong financial position, our year-end cash balance representing 1.2x our outstanding bank debt, and our conservative leverage, which corresponds to a mere
Corporate Developments
Share Repurchase Plan
As previously announced on August 21, 2023, the Company’s board of directors approved a share repurchase plan (the “August Plan”) pursuant to which the Company may repurchase up to
Update on Outstanding Shares and Warrants
As of March 6, 2024, the Company had outstanding 12,279,676 common shares. In addition, the following common share purchase warrants were outstanding as of such date:
- Class A Warrants to purchase up to 567,366 common shares at an exercise price of
$15.75 per common share; - Warrants issued July 19, 2022, to purchase up to 1,033,333 common shares at an exercise price of
$1.65 per common share; - Warrants issued August 16, 2022, to purchase up to 2,122,222 common shares at an exercise price of
$1.65 per common share; - Series A Warrants issued March 3, 2023, which are exchangeable for up to 14,300 common shares; and
- Series B Warrants issued March 3, 2023, to purchase up to 4,167,000 common shares at an exercise price of
$2.25 per common share.
Finally, the Company had 50,726 shares of its Series B Convertible Cumulative Perpetual Preferred Stock and 1,428,372 shares of its Series C Convertible Cumulative Redeemable Perpetual Preferred Stock outstanding.
Tanker Market Update for the Fourth Quarter of 2023:
• Tanker fleet supply was 689.3 million dwt, up
• Tanker demand in billion ton-miles is projected to increase by
• Tanker fleet supply in deadweight terms is estimated to grow by just
• Crude oil tanker fleet utilization was estimated at
• Newbuilding tanker contracting was just 6.2 million dwt in the fourth quarter, resulting in a tanker orderbook-to-fleet ratio of
• Daily spot charter rates for Aframax tankers averaged
• The value of a 10-year-old Aframax tanker at the end of the fourth quarter was
• The number of tankers used for floating storage (excluding dedicated storage) was 106 (14.7 million dwt), down
• Global oil consumption was 101.8 million bpd, up
• Global oil production was 102.8 million bpd, up
• OECD commercial inventories were 2,783 million barrels, down
The above market outlook update is based on information, data, and estimates derived from industry sources. There can be no assurances that such trends will continue or that anticipated developments in tanker demand, fleet supply or other market indicators will materialize. While we believe the market and industry information included in this release to be generally reliable, we have not independently verified any third-party information or verified that more recent information is not available.
| Summary of Selected Financial & Other Data | |||||||||||||
| (in thousands of US Dollars, except per share data, fleet data and average daily results) | For the three months ended December 31, | For the years ended December 31, | |||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||
| (unaudited) | (unaudited) | (unaudited) | |||||||||||
| STATEMENT OF OPERATIONS DATA: | |||||||||||||
| Revenue | $ | 23,840 | $ | 27,767 | $ | 108,938 | $ | 75,173 | |||||
| Voyage expenses | 1,124 | 2,838 | 4,358 | 14,861 | |||||||||
| Vessel operating expenses | 6,011 | 4,241 | 21,866 | 13,828 | |||||||||
| Net income | 24,962 | 23,837 | 69,413 | 36,300 | |||||||||
| Net income attributable to common stockholders | 24,500 | 9,412 | 56,924 | 12,003 | |||||||||
| Earnings per common share, basic | 2.03 | 2.31 | 5.43 | 6.49 | |||||||||
| Earnings per common share, diluted | 0.63 | 1.18 | 1.91 | 3.02 | |||||||||
| FLEET DATA | |||||||||||||
| Average number of vessels | 7.8 | 6.7 | 7.9 | 5.7 | |||||||||
| Number of vessels | 7.0 | 8.0 | 7.0 | 8.0 | |||||||||
| Ownership days | 717 | 616 | 2,901 | 2,069 | |||||||||
| Available days | 686 | 616 | 2,830 | 2,039 | |||||||||
| Operating days (1) | 673 | 590 | 2,793 | 1,974 | |||||||||
| Fleet utilization | 98.1 | % | 95.8 | % | 98.7 | % | 96.8 | % | |||||
| AVERAGE DAILY RESULTS | |||||||||||||
| Time charter equivalent (TCE) rate (2) | $ | 33,114 | $ | 40,469 | $ | 36,954 | $ | 29,579 | |||||
| Daily vessel operating expenses (3) | $ | 8,384 | $ | 6,885 | $ | 7,537 | $ | 6,683 | |||||
_________
| (1) | Operating days are the number of available days in a period less the aggregate number of days that our vessels are off-hire. The specific calculation counts as on-hire the days of the ballast leg of the spot voyages, as long as a charter party is in place. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues. | |
| (2) | Time charter equivalent rates, or TCE rates, are defined as revenue (voyage, time charter and pool revenue), less voyage expenses during a period divided by the number of our available days during the period, which is consistent with industry standards. Voyage expenses include port charges, bunker (fuel) expenses, canal charges and commissions. TCE is a non-GAAP measure. TCE rate is a standard shipping industry performance measure used primarily to compare daily earnings generated by vessels despite changes in the mix of charter types (i.e., voyage (spot) charters, time charters and bareboat charters). | |
| (3) | Daily vessel operating expenses, which include crew wages and related costs, the cost of insurance and vessel registry, expenses relating to repairs and maintenance, the costs of spares and consumable stores, lubricant costs, tonnage taxes, regulatory fees, environmental costs, lay-up expenses and other miscellaneous expenses, are calculated by dividing vessel operating expenses by ownership days for the relevant period. | |
| Fleet Employment Profile (As of March 7, 2024) | ||||||
| Performance Shipping Inc.’s fleet is employed as follows: | ||||||
| Vessel | Year of Build | Capacity | Builder | Vessel Type | Charter Type | |
| Aframax Tanker Vessels | ||||||
| 1 | BLUE MOON | 2011 | 104,623 DWT | Sumitomo Heavy Industries Marine & Engineering Co., LTD. | Crude | Time-Charter |
| 2 | BRIOLETTE | 2011 | 104,588 DWT | Sumitomo Heavy Industries Marine & Engineering Co., LTD. | Crude | Time-Charter |
| 3 | P. YANBU | 2011 | 105,391 DWT | Sumitomo Heavy Industries Marine & Engineering Co., LTD. | Crude | Time-Charter |
| 4 | P. SOPHIA | 2009 | 105,071 DWT | Hyundai Heavy Industries Co., LTD | Crude | Pool |
| 5 | P. ALIKI | 2010 | 105,304 DWT | Hyundai Heavy Industries Co., LTD | Product | Pool |
| 6 | P. MONTEREY | 2011 | 105,525 DWT | Hyundai Heavy Industries Co., LTD | Crude | Time-Charter |
| 7 | P. LONG BEACH | 2013 | 105,408 DWT | Hyundai Heavy Industries Co., LTD | Product | Time-Charter |
About the Company
Performance Shipping Inc. is a global provider of shipping transportation services through its ownership of tanker vessels. The Company employs its fleet on spot voyages, through pool arrangements and on time charters.
Cautionary Statement Regarding Forward-Looking Statements
Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include, but are not limited to, statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts, including with respect to future market conditions, the conduct of our share repurchase program and the delivery of the vessels we have agreed to acquire.
The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect," "pending," and similar expressions, terms or phrases may identify forward-looking statements.
The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.
In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include, but are not limited to: the strength of world economies, fluctuations in currencies and interest rates, general market conditions, including fluctuations in charter rates and vessel values, changes in demand in the tanker shipping industry, changes in the supply of vessels, changes in worldwide oil production and consumption and storage, changes in our operating expenses, including bunker prices, crew costs, dry-docking and insurance costs, our future operating or financial results, availability of financing and refinancing, including with respect to vessels we agree to acquire, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, the length and severity of epidemics and pandemics, including COVID-19, and their impact on the demand for seaborne transportation of petroleum and other types of products, changes in governmental rules and regulations or actions taken by regulatory authorities, general domestic and international political conditions or events, including “trade wars”, armed conflicts including the war in Ukraine and the war between Israel and Hamas, the imposition of new international sanctions, acts by terrorists or acts of piracy on ocean-going vessels, potential disruption of shipping routes due to accidents, labor disputes or political events, vessel breakdowns and instances of off-hires and other important factors. Please see our filings with the U.S. Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties.
(See financial tables attached)
| PERFORMANCE SHIPPING INC. | |||||||||||||
| FINANCIAL TABLES | |||||||||||||
| Expressed in thousands of U.S. Dollars, except for share and per share data | |||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
| For the three months ended December 31, | For the years ended December 31, | ||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||
| REVENUE: | (unaudited) | (unaudited) | (unaudited) | ||||||||||
| Revenue | $ | 23,840 | $ | 27,767 | $ | 108,938 | $ | 75,173 | |||||
| EXPENSES: | |||||||||||||
| Voyage expenses | 1,124 | 2,838 | 4,358 | 14,861 | |||||||||
| Vessel operating expenses | 6,011 | 4,241 | 21,866 | 13,828 | |||||||||
| Depreciation and amortization of deferred charges | 3,517 | 2,715 | 14,793 | 9,281 | |||||||||
| General and administrative expenses | 2,646 | 2,046 | 8,042 | 6,751 | |||||||||
| Gain on vessels' sale | (15,683 | ) | (9,543 | ) | (15,683 | ) | (9,543 | ) | |||||
| (Reversal) / Provision for credit losses and write offs | (16 | ) | 15 | (37 | ) | 33 | |||||||
| Foreign currency losses / (gains) | 31 | 31 | 64 | (20 | ) | ||||||||
| Operating income | $ | 26,210 | $ | 25,424 | $ | 75,535 | $ | 39,982 | |||||
| OTHER INCOME / (EXPENSES): | |||||||||||||
| Interest and finance costs | (1,955 | ) | (1,758 | ) | (9,598 | ) | (3,966 | ) | |||||
| Loss from debt extinguishment | (387 | ) | - | (387 | ) | - | |||||||
| Interest income | 1,098 | 171 | 3,302 | 284 | |||||||||
| Changes in fair value of warrants' liability | (4 | ) | - | 561 | - | ||||||||
| Total other expenses, net | $ | (1,248 | ) | $ | (1,587 | ) | $ | (6,122 | ) | $ | (3,682 | ) | |
| Net income | $ | 24,962 | $ | 23,837 | $ | 69,413 | $ | 36,300 | |||||
| Income allocated to participating securities | (1 | ) | (2 | ) | (2 | ) | (6 | ) | |||||
| Deemed dividend on Series B preferred stock upon exchange of common stock | - | - | - | (9,271 | ) | ||||||||
| Deemed dividend on Series C preferred stock upon exchange of Series B preferred stock and re-acquisition of loan due to a related party | - | (6,944 | ) | - | (6,944 | ) | |||||||
| Deemed dividend to the Series C preferred stockholders due to triggering of a down-round feature | - | (5,930 | ) | (9,809 | ) | (5,930 | ) | ||||||
| Deemed dividend to the July 2022 and August 2022 warrants holders due to triggering of a down-round feature | - | (1,094 | ) | (789 | ) | (1,116 | ) | ||||||
| Dividends on preferred stock | (461 | ) | (455 | ) | (1,889 | ) | (1,030 | ) | |||||
| Net income attributable to common stockholders | $ | 24,500 | $ | 9,412 | $ | 56,924 | $ | 12,003 | |||||
| Earnings per common share, basic | $ | 2.03 | $ | 2.31 | $ | 5.43 | $ | 6.49 | |||||
| Earnings per common share, diluted | $ | 0.63 | $ | 1.18 | $ | 1.91 | $ | 3.02 | |||||
| Weighted average number of common shares, basic | 12,095,795 | 4,065,977 | 10,491,316 | 1,850,072 | |||||||||
| Weighted average number of common shares, diluted | 39,389,481 | 13,385,425 | 35,539,671 | 6,447,710 | |||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||
| For the three months ended December 31, | For the years ended December 31, | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| (unaudited) | (unaudited) | (unaudited) | ||||||||||
| Net income | $ | 24,962 | $ | 23,837 | $ | 69,413 | $ | 36,300 | ||||
| Other comprehensive income/ (loss) (Actuarial gain/ (loss)) | (17 | ) | 68 | (17 | ) | 68 | ||||||
| Comprehensive income | $ | 24,945 | $ | 23,905 | $ | 69,396 | $ | 36,368 | ||||
| CONDENSED CONSOLIDATED BALANCE SHEET DATA | ||||||
| (Expressed in thousands of US Dollars) | ||||||
| December 31, 2023 | December 31, 2022* | |||||
| ASSETS | (unaudited) | |||||
| Cash, cash equivalents and restricted cash | $ | 68,267 | $ | 39,726 | ||
| Advances for vessels under construction and other vessels' costs | 11,303 | - | ||||
| Vessels, net | 202,108 | 236,607 | ||||
| Other fixed assets, net | 44 | 72 | ||||
| Other assets | 14,544 | 16,574 | ||||
| Total assets | $ | 296,266 | $ | 292,979 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Long-term bank debt, net of unamortized deferred financing costs | $ | 54,886 | $ | 127,675 | ||
| Other liabilities | 8,196 | 9,599 | ||||
| Total stockholders' equity | 233,184 | 155,705 | ||||
| Total liabilities and stockholders' equity | $ | 296,266 | $ | 292,979 | ||
| * The balance sheet data as of December 31, 2022 has been derived from the audited consolidated financial statements at that date. | ||||||
| OTHER FINANCIAL DATA | ||||||||||||
| For the three months ended December 31, | For the years ended December 31, | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| (unaudited) | (unaudited) | (unaudited) | ||||||||||
| Net Cash provided by Operating Activities | $ | 9,263 | $ | 23,680 | $ | 67,955 | $ | 33,847 | ||||
| Net Cash provided by / (used in) Investing Activities | $ | 37,429 | $ | (78,121 | ) | $ | 25,721 | $ | (112,950 | ) | ||
| Net Cash provided by / (used in) Financing Activities | $ | (63,821 | ) | $ | 58,705 | $ | (65,135 | ) | $ | 109,255 | ||
FAQ
What was Performance Shipping Inc.'s net income for Q4 2023?
How did the earnings per share compare between Q4 2023 and Q4 2022?
What was the revenue for Performance Shipping Inc. in 2023?
What was the reason behind the decrease in revenue for Q4 2023 compared to Q4 2022?
What strategic initiatives did Performance Shipping Inc. mention in the press release?
