Performance Shipping Inc. Reports Solid Financial Results for the First Quarter Ended March 31, 2024
Performance Shipping (NASDAQ: PSHG) reported a net income of $11.4 million for Q1 2024, with $11.0 million attributable to common stockholders, down from $15.7 million in Q1 2023. Earnings per share were $0.89 basic and $0.29 diluted, compared to $0.68 and $0.55, respectively, in Q1 2023. Revenue fell to $22.4 million, largely due to lower TCE rates and the sale of a vessel. Average fleetwide TCE rates were $33,857, down from $41,157. Net cash from operations was $17.3 million.
The company secured a $38.5 million revenue backlog through time-charter contracts. Future plans include expanding the fleet with LNG-ready tankers, supporting a $208.3 million revenue backlog. The tanker market saw a 4.1% increase in demand, with supply growth expected in 2024 and 2025.
Outstanding shares were 12.3 million, alongside multiple warrants and preferred stocks. The tanker fleet supply and demand metrics showed modest growth.
- Net income attributable to common stockholders increased to $11.0 million, up 137% from Q1 2023.
- Secured revenue backlog of $38.5 million from time-charter contracts.
- Future fleet expansion includes LNG-ready tankers to be delivered between late 2025 and early 2027.
- Strong quarter-end cash balance of $60.8 million, representing 1.1x outstanding bank debt.
- Projected gross revenues of $169.8 million from newbuilding contracts.
- Net income decreased to $11.4 million from $15.7 million in Q1 2023.
- Revenue dropped to $22.4 million from $29.5 million in Q1 2023.
- Average fleetwide TCE rate decreased to $33,857 from $41,157 in Q1 2023.
- Net cash provided by operating activities declined to $17.3 million from $18.7 million in Q1 2023.
- Daily spot charter rates for Aframax tankers were down 28.5% from Q1 2023.
Insights
Performance Shipping Inc. reported a notable financial performance for Q1 2024 despite a decrease in revenue from last year. Their
The earnings per share (EPS) figures are interesting, showing
The
In the broader context, the company’s announcement of new LNG-ready tanker builds indicates a strategic move to modernize its fleet and comply with stricter environmental standards. This could potentially bring long-term benefits by reducing operational costs and meeting future regulatory requirements.
For investors, the notable increase in net income attributable to common stockholders and high basic EPS are positive indicators. However, the revenue decline and lower diluted EPS warrant cautious optimism.
The Q1 2024 results show how Performance Shipping Inc. is navigating the current market dynamics. The decrease in revenue is largely due to a reduction in time-charter equivalent rates and fewer ownership days following the sale of a vessel. However, the tanker market remains strong, supported by shifts in trade patterns due to disruptions like the ongoing issues in the Red Sea and Russian oil trades.
The company's strategy to balance short- and medium-term charters with spot market exposure appears prudent. With five of their tankers on time-charter contracts ensuring a fixed revenue backlog of
The newly announced shipbuilding contracts for LNG-ready LR2 Aframax and LR1 chemical/product oil tankers are also strategically sound. These new vessels, scheduled for delivery between late 2025 and early 2027, will meet stringent emission requirements and feature advanced fuel-efficient engines. This aligns well with the global shift towards greener shipping practices and offers a competitive edge in the market.
For retail investors, the strategic deployment and fleet expansion plans signal confidence in future market conditions. However, it's essential to monitor market disruptions and regulatory changes that could impact these forecasts.
ATHENS, Greece, May 30, 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
Commenting on the results of the first quarter of 2024, Andreas Michalopoulos, the Company’s Chief Executive Officer, stated:
“During the first quarter of 2024, the tanker market remained solid supported by the ongoing shift in trade patterns arising from the Russian oil trade and Red Sea disruptions and resulting in longer haul tanker voyages. The increased ton-mile demand, in conjunction with limited supply growth, continues to sustain tanker charter rates at firm levels. This enabled our Company to achieve a fleetwide average time charter equivalent rate of
“Going forward, we believe that the solid tanker market environment will be sustainable, prompting our continued focus on a fleet deployment strategy that emphasizes balanced exposure to short- and medium-term time charter contracts and the spot market. Specifically, five of our Aframax tankers are currently operating under time charter contracts with first-class charterers, securing a fixed revenue backlog of approximately
“Looking ahead, we believe our fleet expansion and renewal strategy is consistent with our view of continuing favorable market fundamentals. As previously announced, we have entered into shipbuilding contracts for the construction of three LNG-ready LR2 Aframax tankers and one LR1 chemical/product oil tanker, expected to be delivered to our Company between late 2025 and early 2027. These vessels, which will be equipped with scrubbers and water ballast treatment systems, will feature the latest high-specification engines and comply with stringent emission requirements. Our decision to acquire these three identical LR2 Aframax “sister” vessels, along with our first LR1 chemical/product oil tanker, reflects our focus on fuel efficiency and our commitment to participate in the energy transition. Our newbuilding commitments are supported by the recently announced 5-year time charter employment contracts for our three newbuilding LR2 Aframax tankers, which will generate gross revenues of
Corporate Developments
Update on Outstanding Shares and Warrants
As of May 29, 2024, the Company had outstanding 12,310,930 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 1,426,692 shares of its Series C Convertible Cumulative Redeemable Perpetual Preferred Stock outstanding.
Tanker Market Update for the First Quarter of 2024:
- Tanker fleet supply was 691.4 million dwt, up
0.3% from 689.4 million dwt from the previous quarter and up1.4% from Q1 2023 levels of 681.9 million dwt. - Tanker demand in billion ton-miles is projected to increase by
4.1% in 2024, supported by notable growth in global crude oil trade volumes coupled with solid demand observed in the Atlantic – Asia trade. Furthermore, trade flow shifts arising from the ongoing disruptions in the Red Sea area, increase average distance traveled and further support ton-mile demand growth. - Tanker fleet supply in deadweight terms is estimated to grow by just
0.8% in 2024 and by a moderate2.0% in 2025. - Crude oil tanker fleet utilization is expected to average
85.5% over the next three years, as compared to an average of84.6% in 2023. - Newbuilding tanker contracting was 15.9 million dwt in the first quarter, resulting in a tanker orderbook-to-fleet ratio of
9.4% . - Daily spot charter rates for Aframax tankers averaged
$56,338 , down8.1% from the previous quarter average of$61,277 and down28.5% from the Q1 2023 average of$78,764. - The value of a 10-year-old Aframax tanker at the end of the first quarter was
$58.0 million , up5.5% from$55.0 million in the previous quarter, and up16.0% from$50.0 million in Q1 2023. - The number of tankers used for floating storage (excluding dedicated storage) stood at 114 (14.1 million dwt) on March 29,2024 up
28.1% from 89 (10.7 million dwt) at the end of the previous quarter and down25.0% from 152 (20.8 million dwt) on March 31, 2023. - Global oil consumption was 102.1 million bpd, down
0.3% from the previous quarter level of 102.4 million bpd, and up1.2% from Q1 2023 levels of 100.9 million bpd. - Global oil production was 102.2 million bpd, down
0.5% from the previous quarter level of 102.7 million bpd and up1.3% from Q1 2023 levels of 101.0 million bpd. - OECD commercial inventories were 2,734 million barrels, down
1.4% from the previous quarter level of 2,773 million barrels, and down0.4% from Q1 2023 levels of 2,746 million barrels.
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 March 31, | |||||||
| 2024 | 2023 | |||||||
| (unaudited) | (unaudited) | |||||||
| STATEMENT OF OPERATIONS DATA: | ||||||||
| Revenue | $ | 22,371 | $ | 29,527 | ||||
| Voyage expenses | 804 | 1,540 | ||||||
| Vessel operating expenses | 4,874 | 5,143 | ||||||
| Net income | 11,431 | 15,695 | ||||||
| Net income attributable to common stockholders | 10,972 | 4,623 | ||||||
| Earnings per common share, basic | 0.89 | 0.68 | ||||||
| Earnings per common share, diluted | 0.29 | 0.55 | ||||||
| FLEET DATA | ||||||||
| Average number of vessels | 7.0 | 8.0 | ||||||
| Number of vessels | 7.0 | 8.0 | ||||||
| Ownership days | 637 | 720 | ||||||
| Available days | 637 | 680 | ||||||
| Operating days (1) | 624 | 677 | ||||||
| Fleet utilization | 98.0 | % | 99.6 | % | ||||
| AVERAGE DAILY RESULTS | ||||||||
| Time charter equivalent (TCE) rate (2) | $ | 33,857 | $ | 41,157 | ||||
| Daily vessel operating expenses (3) | $ | 7,651 | $ | 7,143 | ||||
__________
| (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 May 30, 2024) | |||||||
| Performance Shipping Inc.’s fleet is employed as follows: | |||||||
| Vessel | Year of Build | Capacity | Builder | Vessel Type | Charter Type | Notes | |
| Operating 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 | |
| Newbuilding LR1 and LR2 Tanker Vessels | |||||||
| 8 | HULL 1515 | - | 114,000 DWT | China Shipbuilding Trading Company Limited and Shanghai Waigaoqiao Shipbuilding Company Limited | Product | Time-Charter | 1 |
| 9 | HULL 1596 | - | 114,000 DWT | China Shipbuilding Trading Co. Ltd. (“CSTC”) and Shanghai Waigaoqiao Shipbuilding Co. Ltd. | Product | Time-Charter | 1 |
| 10 | HULL 1597 | - | 114,000 DWT | China Shipbuilding Trading Co. Ltd. (“CSTC”) and Shanghai Waigaoqiao Shipbuilding Co. Ltd. | Product | Time-Charter | 1 |
| 11 | HULL 1624 | - | 75,000 DWT | Jiangsu Yangzijiang Shipbuilding Group Co., Ltd. | Chemical/ Product | - | |
| 1 | As previously announced, the Company has secured five-year time charter contracts for three of its newbuilding vessels, with employment to commence upon delivery of the vessels in the fourth quarter of 2025, and first and second quarter of 2026. | ||||||
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, 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 | ||||||||
| UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| For the three months ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| REVENUE: | ||||||||
| Revenue | $ | 22,371 | $ | 29,527 | ||||
| EXPENSES: | ||||||||
| Voyage expenses | 804 | 1,540 | ||||||
| Vessel operating expenses | 4,874 | 5,143 | ||||||
| Depreciation and amortization of deferred charges | 3,300 | 3,688 | ||||||
| General and administrative expenses | 2,124 | 1,662 | ||||||
| Reversal for credit losses | - | (16 | ) | |||||
| Foreign currency losses | 11 | 30 | ||||||
| Operating income | $ | 11,258 | $ | 17,480 | ||||
| OTHER INCOME / (EXPENSES): | ||||||||
| Interest and finance costs | (665 | ) | (3,085 | ) | ||||
| Interest income | 833 | 348 | ||||||
| Changes in fair value of warrants' liability | 5 | 952 | ||||||
| Total other income / (expenses), net | $ | 173 | $ | (1,785 | ) | |||
| Net income | $ | 11,431 | $ | 15,695 | ||||
| Deemed dividend to the Series C preferred stockholders due to triggering of a down-round feature | - | (9,809 | ) | |||||
| Deemed dividend to the July 2022 and August 2022 warrants holders due to triggering of a down-round feature | - | (789 | ) | |||||
| Dividends on preferred stock | (459 | ) | (474 | ) | ||||
| Net income attributable to common stockholders | $ | 10,972 | $ | 4,623 | ||||
| Earnings per common share, basic | $ | 0.89 | $ | 0.68 | ||||
| Earnings per common share, diluted | $ | 0.29 | $ | 0.55 | ||||
| Weighted average number of common shares, basic | 12,279,676 | 6,815,828 | ||||||
| Weighted average number of common shares, diluted | 39,080,005 | 8,763,703 | ||||||
| UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||
| For the three months ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Net income | $ | 11,431 | $ | 15,695 | ||||
| Comprehensive income | $ | 11,431 | $ | 15,695 | ||||
| CONDENSED CONSOLIDATED BALANCE SHEET DATA | |||||||
| (Expressed in thousands of US Dollars) | |||||||
| March 31, 2024 | December 31, 2023* | ||||||
| ASSETS | (unaudited) | ||||||
| Cash, cash equivalents and restricted cash | $ | 60,750 | $ | 68,267 | |||
| Advances for vessels under construction and other vessels' costs | 33,812 | 11,303 | |||||
| Vessels, net | 198,937 | 202,108 | |||||
| Other fixed assets, net | 41 | 44 | |||||
| Other assets | 9,726 | 14,544 | |||||
| Total assets | $ | 303,266 | $ | 296,266 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Long-term bank debt, net of unamortized deferred financing costs | $ | 53,030 | $ | 54,886 | |||
| Other liabilities | 6,080 | 8,196 | |||||
| Total stockholders' equity | 244,156 | 233,184 | |||||
| Total liabilities and stockholders' equity | $ | 303,266 | $ | 296,266 | |||
| * The balance sheet data as of December 31, 2023 has been derived from the audited consolidated financial statements at that date. | |||||||
| OTHER FINANCIAL DATA | |||||||
| For the three months ended March 31, | |||||||
| 2024 | 2023 | ||||||
| (unaudited) | (unaudited) | ||||||
| Net Cash provided by Operating Activities | $ | 17,340 | $ | 18,679 | |||
| Net Cash used in Investing Activities | $ | (22,515 | ) | $ | (378 | ) | |
| Net Cash (used in) / provided by Financing Activities | $ | (2,342 | ) | $ | 8,179 | ||
FAQ
What were Performance Shipping's net income and EPS for Q1 2024?
How did Performance Shipping's revenue for Q1 2024 compare to Q1 2023?
What is the average TCE rate reported by Performance Shipping for Q1 2024?
What is Performance Shipping's revenue backlog as of Q1 2024?
What are Performance Shipping's plans for fleet expansion?
