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 $25.0 million and net income attributable to common stockholders of $24.5 million for the fourth quarter of 2023. The 2023 fourth quarter results compared to a net income of $23.8 million and net income attributable to common stockholders of $9.4 million for the same period in 2022. Earnings per share, basic and diluted, for the fourth quarter of 2023 were $2.03 and $0.63, respectively.
Revenue was $23.8 million ($22.7 million net of voyage expenses) for the fourth quarter of 2023, compared to $27.8 million ($25.0 million net of voyage expenses) for the same period in 2022. This decrease was attributable to the decrease in time-charter equivalent rates (“TCE rates”) realized during the quarter, partially offset by an increase in ownership days. Fleetwide, the average TCE rate for the fourth quarter of 2023 was $33,114, compared with an average rate of $40,469 for the same period in 2022. During the fourth quarter of 2023, net cash provided by operating activities was $9.3 million, compared with net cash provided by operating activities of $23.7 million for the fourth quarter of 2022.
Net income for the years ended December 31, 2023, and December 31, 2022, amounted to $69.4 million and $36.3 million, respectively. Net income attributable to common stockholders for the year ended December 31, 2023 amounted to $56.9 million, and resulted in earnings per share, basic and diluted, of $5.43 and $1.91, respectively. Net income attributable to common stockholders for the year ended December 31, 2022 amounted to $12.0 million, and resulted in earnings per common share, basic and diluted, of $6.49 and $3.02, respectively. The difference between net income and net income attributable to common stockholders for each of the years ended December 31, 2023, and December 31, 2022, mainly reflects aggregate non-cash items of $10.6 million and $23.3 million, respectively, as per US GAAP accounting standards, which do not affect the Company’s operating cash flows.
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 $33,114 per day and $36,954 per day during the three and twelve-month periods ended December 31, 2023, respectively. As a result, during the fiscal year ended December 31, 2023, we generated revenues of $109.0 million and net income attributable to common stockholders of $56.9 million, representing increases of 45% and 374%, respectively, compared to the corresponding period in 2022. Our cash balance at the end of 2023 was approximately $68.3 million, reflecting a 72% increase from the 2022 year-end cash balance.
“As previously announced, in August 2023, the Company’s board of directors approved a $2 million share buyback program. Pursuant to this initiative, we repurchased 293,767 shares of common stock during the fourth quarter of 2023, totaling approximately $0.7 million. We firmly believe that this program is in the best interests of both our Company and our shareholders, and we intend to continue our share buybacks, depending on prevailing market conditions.
“Our impressive revenue generation of approximately $109 million during the last fiscal year is indicative of our ability to capitalize on the firm freight rate environment through the efficient operation of our fleet. We believe that the solid tanker market environment will be sustainable through 2024, prompting our continued focus on a fleet deployment strategy that emphasizes balanced exposure to short to medium-term time charter contracts, and the spot market. Specifically, five of our Aframax tankers currently operate under short- and medium-term time charter contracts with first-class charterers, securing a fixed revenue backlog of approximately $52.7 million as of the beginning of 2024. Our remaining two Aframax tankers operate under pool arrangements with exposure to the prevailing robust Aframax spot rates.
“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 18% of our estimated fleet market value, enhance our ability to pursue our fleet expansion and renewal strategy.”
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 $2 million of its outstanding common shares. During the fourth quarter of 2023, 293,767 common shares were repurchased for a total amount of approximately $0.7 million under the August Plan.
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 0.2% from 688.1 million dwt from the previous quarter and up 1.9% from Q4 2022 levels of 676.1 million dwt.
• Tanker demand in billion ton-miles is projected to increase by 5.0% in 2024, supported by solid growth in global crude oil trade volumes coupled with a very constrained tanker fleet growth. Furthermore, trade flow shifts have started to materialize as a result of the ongoing disruptions in the Red Sea area, increasing average distance traveled and bolstering ton-mile demand.
• Tanker fleet supply in deadweight terms is estimated to grow by just 0.6% in 2024 and by a moderate 1.4% in 2025.
• Crude oil tanker fleet utilization was estimated at 84.4%, up from 83.3% in the previous quarter and down from 88.3% in Q4 2022.
• Newbuilding tanker contracting was just 6.2 million dwt in the fourth quarter, resulting in a tanker orderbook-to-fleet ratio of 7.1%.
• Daily spot charter rates for Aframax tankers averaged $61,277, up 123.6% from the previous quarter average of $27,409 and down 32.7% from the Q4 2022 average of $90,991.
• The value of a 10-year-old Aframax tanker at the end of the fourth quarter was $55.0 million, up 7.8% from $51.0 million in the previous quarter, and up 22.2% from $45.0 million in Q4 2022.
• The number of tankers used for floating storage (excluding dedicated storage) was 106 (14.7 million dwt), down 15.2% from 125 (16.8 million dwt) in the previous quarter and down 27.4% from Q4 2022 levels of 146 (22.6 million dwt).
• Global oil consumption was 101.8 million bpd, up 0.5% from the previous quarter level of 101.3 million bpd, and up 2.3% from Q4 2022 levels of 99.5 million bpd.
• Global oil production was 102.8 million bpd, up 1.0% from the previous quarter level of 101.8 million bpd and up 1.6% from Q4 2022 levels of 101.2 million bpd.
• OECD commercial inventories were 2,783 million barrels, down 1.1% from the previous quarter level of 2,815 million barrels, and up 0.6% from Q4 2022 levels of 2,767 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 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: