Imperial Petroleum Inc./Marshall Islands (IMPPP) Q1 2026 earnings call transcript

Good morning everyone, and thank you all for joining us for our first quarter 26 conference call of Ip. I'm Harry Vafes, the CEO of Ip. Joining me on the call today is Ms. Zakelari, who will be discussing our financial performance. Before we commence our discussion, we would like all to read the Safe Harbor disclaimer on slide 2. In essence, it is made clear that this presentation may contain some forward-looking statements, as defined by the Private Securities Litigation Act. We raise the attention of our investors the fact that such forward-looking statements are based upon the kind beliefs and expectations of Ipetroleum and are subject to risk and uncertainty which could cause future results to differ materially from these forward-looking statements.

In addition, we would like to clarify that during this call we will quote monetary amounts unless explicitly stated otherwise all in U. S. dollars. In slide 3, we summarize our key operational and financial highlights for Q1 26. The year 26 commenced in an extremely favorable way for Ipilio Petroleum. Our enhanced fleet of tankers and dry bulk ships fully capitalized upon the firm rates prevailing throughout the period. This quarter, with revenues of $61.7 million and a net income of $28 million, we marked our second best quarterly performance in our history. Review results as a solid proof that our strategic decision to expand our fleet was sound, as As a larger fleet allows us to leverage for favorable market conditions and general material results.

The tension in the Middle East, which commenced close to the end of February 26, brought upon a global turbulence and heavily affected seaborn trade. The closing of the search of Hormuz tightened the tanker market, causing tanker rates to boom. It's worth to mention that our daily net revenue from tankers dramatically increased in Q1 26 to about 43,000 a day compared to 27,000 a day in Q4 25. Dry bulk market also remained firm. Our daily net revenue from our dry bulk ships increased in Q126 to about 16,000. Looking briefly at our operational highlights, our fleet operational utilization came in at 88.7%, a bit lower than in Q425, due to increased ballasting activity of our vessels traveling to their next employment.

Looking at our fleet sub-segments, operational utilization for Q126 was 87.8 for our tankers and 89.5 for our dry vessels. About 59% of the total fleet calendar days in Q126 were dedicated to time-charter activity, while the remaining approximately 40% of spot activity. Following the delivery of our dryback vessel, the post-Marvel, in the beginning of January 26, In April 26, we took delivery of a handy-sized dry bulk ship, the Eco Crossfire, increasing our fleet on the water to 21 vessels. Providing more call on our financial performance, our revenues of $61.7 million were 21% higher than in Q425, and about 92% higher compared to the same period of 25. The increase of our operating income was impressive. In Q126, income from operations came in at 26.5 million, marking a 12.8 million increase, or 94%, against Q425, and an 18.7 million rise, or 240%, compared to Q125.

As already mentioned, our net income of $28 million was our second best performance of all times. The basic earnings per share generated in one single quarter was in the order of $0.60, which based on current share price, levels gives us, and earnings yields for the quarter in excess of 12%. Our profitable operations continue to fuel our liquidity. As of March 31-26, our cash and cash equivalents, including time deposits, were about $213 million Versus 179 million as of end of year 25. Our activity on the share buyback scheme has been robust. As to date the company has repurchased up to May 21st a total of 855 common shares for an aggregate amount of about 3 million On slide four we are providing a summary of our current fleet deployment About 48 of the fleet is currently under time charter We employ six MR product anchors and two SwissMax vessels in the spot market capitalizing on the prevailing strong market environment and achieving average daily rates of about 29 per day for MR ships and close to 95 per day for SwissMaxes In addition, one MR product tanker is employed under a period charter through September 27.

As customarily, the majority of dry bulk ships are on short-term time charters. The commercial strategy we currently follow for our dry bulk vessels provides healthy cash flow while minimizing idle time and voyage costs. On slide 5, we are discussing the evolution of market rates for both tankers and bulkers. In Q126, market rates surged for tankers and strengthened further for dry bulk ships. Even before the U. S. -Iran-Israel conflict outbreak towards the end of February, tanker rates were strong at the back of added OPEC supply. The return of Venezuelan cargoes and long-haul trades for product tankers from the Atlantic to the Pacific, such as to meet shortage supply in Asia. The blockage of the search of Hormuz led to oil trade disruptions, longer-haul voyages, oil supply shortages, and increase of risk premiums, leading to a spike in tanker rates.

Indeed, at the end of Q1 26, rates for suites markets were in excess of 250,000 a day, while rates for product tankers were close to 60,000 a day. For the dry bulk ships, the positive trend witnessed in Q4 25 continued throughout the first quarter of 26. Global shipment growth momentum was reported in Q1 by the uncertain microcommonomic environment, the congestion of the Panama Canal, recently a rise in coal demand. It's interesting to note that as of the end of Q1, the BDI Supra MaxTC index was up 40.3% year-on-year, while the BDI Handy Size index was up 36.7%. Touching briefly upon the current levels of market rates, tanker rates are still firm but have undergone a degree of normalization, particularly during the ceasefire period in April, which is for a brief period the bottleneck of vessels at the Strait of Hormuz.

Following April 20, though rates for tankers picked up as hostilities in the area resumed. For the dry bulk ships, rates have picked up further and are now close to $20,000 per day, mostly due to gas supply shortages which have increased market demand for coal. Market update on 6. In Q1 26, the disruption in the Middle East was a key focal point of the shipping industry, heavily affecting all shipping segments, but especially tankers. The blockage of the Strait of Hormuz has caused major trade disruptions. About 10% of the compliant tanker fleet was stranded in the Middle East in Q1, causing vessel shortage, output supply shortages and oil prices to surge. In this environment, the International Energy Agency took the decision at the beginning of March to release 400 million barrels of oil and refined products.

For the crewed tankers, markets were firm even before the Middle East conflict at the back of strong cargo supply from rising Middle East Gulf output and increased Chinese The Iran-US-Israel conflict brought upon a collapse in Hormuz exports and Middle East Gulf production shuttins. This caused significant repositioning of vessels from the Pacific and an increase of Atlantic exports to Asian buyers. The product anchor market essentially picked up after the outbreak of the Middle East conflict. The closing of the Strait of Hormuz has shut off the Middle East CPP exports, creating a shortage of good feedstock to Asian refineries, This led to an increase in global product prices, particularly in the Pacific for jet oil and arbitrage opportunities, especially between the Atlantic and the Pacific.

Looking ahead the potential ceasefire leading to the reopening of the Straits of Hormuz prospects of increased demand for inventory rebuilding Middle Eastern producer will commence production above pre levels while we may see sanctions lifted on Iras thus adding more balance to the market In terms of tanker market fundamentals total order book for Suisse Max Vessel stands at 25.6%, with 16% of the fleet above 20 years of age. For the Imars, total order book stands at 15.8%, while close to 20% of the fleet is above 20 years of age. On slide 7, discussing the dry bulk market, Q1 had a strong start in both volumes and rates, in spite of the seasonal factors such as the Chinese New Year, which typically causes a market slowdown.

Global shipment volumes increased year on year, both by vessel and commodity types. Coal trade marked a marginal increase in the first month of 26, particularly due to reduced imports from China and India, offset by the rise of imports from Korea, Following the outbreak of the U. S. -Iran-Israel conflict, Asian countries are boosting coal-fired generation respond to the disruptions to oil and gas supplies as the countries need to replace lost Middle East energy cargoes. This increased resilience in coal is expected to continue in the future, supporting a rebound in coal trade in Q2 26. Iron ore departures to China were up in Q1 by about 4%, while Gini and Buxet exports to China stood strong, marking an 18% year-on-year increase.

Weet trade surged by 18% year on year, supported by elevated prices, and looking ahead, there's a concern about the impact of the Iran conflict on the global economy, which might have an adverse impact on the dryback demand. The global dryback fleet continues to expand, growing 3% in 2025 and a further 1% in 2026. However, reducing building orders marked most importantly an aging fleet. Close to 16% of the fleet is currently above 20 years of age. In conjunction with low demolition could bring upon a future supply in ballast as older vessels retire without sufficient replacement. A vessel supply shortage is expected to support market rates. I will now pass the floor to Mrs. Akelari in order to summarize the financial performance.

Thank you Harry and good morning to all. In Q1 26 Imperial Petroleum marked the record performance. This quarter we generated the second highest profitability of all times. Market conditions were favorable as rates, particularly for tankers, peaked. Dryback rates were firm during the whole quarter, so we managed to capitalize upon the sizeable dryback fleet we operate. Looking at our income statement for Q126 on slide 8, revenues came in at 61.7 million in Q126, marking a 92% increase compared to revenues generated in the same period of 2025. This increase is mainly due to a noticeable increase in market base for both products and Swiss Max tankers, along with the increase of a 3x8 vessels. As on the end of Q125, rates for product tankers were close to 26,000 per day, while daily rates for Swiss Max tankers were close to 47,000.

As at the end of Q126, though, following the outbreak of the Middle East conflict, daily rates for product tankers climbed to about 56,000, The price of the Sures Max tankers was in excess of 260,000. Voyage costs amounted to 12.8 million, 2.3 million higher than in Q125. This increase is attributed to a higher number of spot days by about 25% in conjunction with increased port expenses due to a higher number of transits through the Suez Canal mainly for the Sures Max tankers. Our net revenues for the quarter came in at about 49 million, compared to 21.6 million in Q125. This is equivalent to a 127% increase. Our net revenue generation peaked in around March following the Middle East conflict outbreak.

Indicatively, our monthly net revenues generated in March 2026 were about 50% higher than our net revenue generation within February 26. Running costs amounted to 11.3 million, increased by 4.1 million due to the increase of our fleet by an average of eight vessels between the two periods. EBITDA for the first quarter of 2026 came in at 34 million while net income at 28 million corresponding to a basic earnings per share of 60 cents versus 11 million corresponding to an EPS of 32 cents in Q1 25 Moving on to slide 9, let us take a look at our balances for first quarter of 26. As of March 31st, 2026, our free cash including time deposit was 213 million.

Our cash to date is in the region of 2221 million. We have the capital commitments for seven vessels, two recently delivered and the remaining five to be delivered, up to Q326, which total about $130 million. Of this amount, about $52 million is expected to be paid through the end of Q326, while the remaining $78 million is due by the end of 2026 or early 27. This staggered payment profile provides ample time to further enhance our cash position through our ongoing cash flow generation from our core operations. Our liquidity generation remains robust, as in Q126 we generated an operating cash flow of 36.5 million. At this stage we would like to point out that basis management estimate, most recent market values and basis our Q126 financials, a number of shares are standing as at the end of Q126, we computed that our net asset value per share is close to $13.

Our current share price is about $5, hence we traded the discount in excess of 60%, while being highly profitable, debt-free, and while the average price to net asset value discount of industry-peak companies is about 20%. In other words, Ip. Petroleum is heavily undervalued despite the more robust balancing. Proceeding to slide 10, we provide a summary of our liquidity, profitability, and market considerations going forward. We have a significant cash base which which is enhanced every quarter through our profitable operations. We remain debt free, but yet we have expanded our fleet significantly. Our profitability remains strong, as in Q1 26 our net income margin climbed to 45%. In Q1 26 our average time charter equivalent per fleet voyage day was close to 43,000 for our tankers and about 16,000 for our drive-back fleet.

This compares favorably to our cash flow breakeven levels estimated at 8,500 per day for tankers and 6,500 per day for dry bulk vessels. In terms of market considerations, the focal point is the U. S. -Iran-Israel conflict which appears to have a longer than expected duration. It still remains an unknown how the market, particularly the tanker market, will react when the Straits of Hormuz reopened for trade, and what will happen to the dark fleet in the event that the Russian-Ukraine conflict comes to an end. Concluding our presentation, we repeat Jens once more that we are extremely pleased with our results, our proven consistency in generating profits, and most importantly, our support to our share price to our active share buyback program, and hope that this dynamic will soon correct our share price levels.

At this stage, our CEO, Mr. Harivathias, will summarize and conclude the remarks for the period examined. We are extremely pleased with our first quarter 26 results. As with a net income of 28 million corresponding to a basic EPS of 60 cents, we generated the second best quarterly profitability in our company's history. Geopolitical tensions persist, creating turbulence globally and in the supermarkets. The effect particularly from the Middle East Gulf conflict was tanking markets to peak while market rates for the drive back The Imperial Petroleum is a firm. In this environment, we successfully capitalized upon our sizable fleet. We see that our expansion strategy is paying off, and hope that through our active share repurchase scheme, we will assist our share price to correct itself so as to reflect the true value of the company of 21 vessels on the water and five more to be delivered soon.

Current liquidity in excess of $220 million being continuously profitable and most importantly, debt-free. We'd like to thank you all for joining us at our call today and for interest and trust in our company, and we look forward to having you with us again at our next call for Q2 26 results. Thank you.