Imperial Petroleum Inc./Marshall Islands (IMPPP) Q2 2026 earnings call transcript

Good morning everyone, and thank you all for joining us for our Q2 and 6 months, 2026 conference call of Ip. P. I'm Harry Vafias, the CEO of the company, and joining me on the call today is Ms. Sekulari, who will be discussing our financial performance. Before we commence our discussion, we would like you all to read the Safe Harbor disclaimer on slide 2. In short, today's presentation includes forward-looking statements under the Private Securities Litigation Reform Act. These statements reflect Ip. Petroleum's current expectations and beliefs. However, they are naturally subject to risks and uncertainties, meaning our actual future results could differ materially from what we discussed today. We would also like to clarify that all monetary values referenced on the call are U. S. dollars except were explicitly noted.

On slide 3, we summarize The second quarter of 2026 was yet another milestone for our company, characterized by record financial results in terms of revenue, strategic fleet optimization, and a commitment to a commercial strategy that continues to drive company value. Indeed, we are extremely pleased to report an all-time high quarterly revenue of $87.1 million for Q2, representing a remarkable 41.2% sequential growth from Q126 and an impressive 140% increase year-over-year. This revenue improvement brought upon our vigorous fleet expansion, along with strong markets for both tankers and bulkers, fueled the second best quarterly net income in our history, We have a total net profitability for the entire 12 months of 2025, i. e. $50 million. In addition, our earnings per share for the six months is solid and about a quarter of our current share price.

The opportunity directly enhanced our liquidity, driving cash and cash deposits up to $245.2 million as of June 30. However, our current cash base has increased further and is now around $260 million. We strive to utilize our fleet as efficiently as possible. Operational utilization for the second quarter stood at 73.5%. While lower than previous quarters, this temporary utilization decline was a strategic choice. Technical off-hire accounted for 10.7% of the total fleet calendar days, as we successfully managed a concentrated schedule of six dry dockings. The completion of these dry dockings now ensures our fleet operates at maximum efficiency and safety moving forward. We have another seven dry dockings to complete up until the end of the year.

Moreover, we have been also very active on fleet management from a commercial perspective. We continued on our already announced fleet expansion. On April the 3rd, we took delivery of the dry bulk carrier, the Eiko Crossfire. In the beginning of August, we completed the sale of the 2007-built tanker Suez Enchanted for a profit in excess of 30 million. Not bad for a nearly 20-year-old ship. And in addition, on August 21st, we took delivery of the handy-sized bulker Outrider. Our fleet now counts 21 vessels, and we have four additional vessels, three honey-sized bulkers, and one product tanker to be delivered until the end of the year. Thus, in a short period of time, we will be operating a sizable fleet of 25 vessels.

On slide four, we are providing a summary of our current fleet deployment About 57 of our fleet is currently under time charter As customarily the majority of our dry bulk vessels are on short time charters The commercial strategy we can follow for our dry bulk vessels provides healthy cash flow while minimizing idle time and voyage costs Rates for the dry sector have been firm throughout the second quarter, allowing us to enjoy solid returns from our chartering strategy. In terms of tankers, we employ five product tankers and one Suezmax tanker in the spot market, while two of our product tankers are under time-chartered employment, ranging from short to medium term. On slide 5, we are discussing the evolution of market rates for both tankers and dry bulk vessels.

In Q2, market rates remain firm for both tankers and bulkers. Rates for MR tankers peaked in April and eased by the end of May as the Atlantic arbitrage window narrowed. Currently, AMR rates are reasonably firm, fueled also by the ongoing geopolitical tension in the Middle East. Rates for Suezmaxes remain strong throughout the quarter, both globally and in the Middle East. We did witness a retreat of rates in May due to the peace negotiation attempts. Following the end of the ceasefire period in July and the Hove embargo in Saudi Arabia, which disrupted trade in the Red Sea, Suezmax rates began to climb and have been at times in excess of 200,000 a day. Today, in Q2 26, the rates for the drive-out ships were higher than Q2 25 and Q1 26.

Longer-haul voyages, partially due to the Strait of Hormuz, disruption along with the improvement of fundamental data from China, profitability increase of steel mills, increased bauxite exports from Guinea, and rebound of coal trade boosted both freight rates and asset values. On slide 6, we are reviewing the tanker market. Q2 was firm for both Suez Max's and product tankers. Both vessel types were affected throughout the second quarter by the geopolitical tensions in the Middle East. For Suez Max tankers, a partial reopening of the Strait of Hormuz in the beginning of the quarter brought more ships to the Middle East instead of the Atlantic. Following the end of the ceasefire period in July, we did witness a significant rise in U. S. crude exports due to the very high SPR blowdowns.

This was translated to an increased number of Atlantic to Asia voyages, which assisted to sustain toned miles and routes. For product tankers, lost output from the Middle East increased the U. S. Gulf Far East CPP cargoes. As an effect, Atlantic rates improved. We did witness a weaker activity east of Suez as the region refineries were in shortage of Middle East crude, hence had less CPP to export. Long-term prospects for both Suezmax and product tankers mostly The trade will be short of cargoes and raids might suffer. In addition, various and hoovi attacks in the Red Sea have caused further structural changes in trade patterns. A potential reopening of the Strait of Hormuz will affect restocking volumes, which is anticipated to sustain a strong tanker market for a period in excess of 12 months.

In terms of tanker market fundamentals, total order book for Suezmax vessels stands at 30.8%, with 31% of the fleet above 20 years of age. For the MR tankers, total order book stands at 16%, while 26% of the fleet is above 20 years of age. As evident, we do have an aging fleet for both Suezmaxes and product tankers, but rate hikes in recent years have facilitated the operation of old returnage instead of recycling. In addition, new orders for all sizes of tankers are being placed every single week. On slide 7, we are discussing the dry bulk market. Q2 was a strong quarter for the dry bulk sector. Indeed, the BDI average for Q2 was close to 2,750, which is the best quarter since the fourth quarter of 2021.

Overall the dry bulk sector unlike the tanker market has remained rather insulated from the Middle East conflict but has greatly benefited from longer routings At this point we need to mention that Ipial Petroleum has won dryback vessels stranded in the state of Hormuz since the end of May 26 Commodity fundamentals, although mixed, also support longer routes. Iron ore departures to China increased in Q2 by 3% year-on-year, driven mostly by a rise in port-side inventories and weak domestic mining output. Guinean backseat exports to China rose 12% year on year, as the government imposed an export cap which is close to 150 million tons. This will mostly affect long-term trade for cap-sized vessels, and any replacement volume required will now be imported from shorter routes, which is a benefit for smaller dry bulk ships.

Coal trade, especially thermal coal, marks a strong rebound in Q2. Thermal coal demand increased so as to compensate for the lost Middle East The call was sustained against firmer demand stemming from India. Since April, Chinese coal demand rebounded ahead of the summer, as news around El Niño added pressure on power demand. Smaller and mid-sized bulkers were supported by grains and minor bulk demand, as Brazilian soya bean exports were up 10% compared to 2025.

Looking ahead, the Middle East conflict assists dry black vessels on longer-haul voyages and increased thermal coal trading. However, high oil prices and freights add pressure to the oil supply. I will now pass the floor to Ms. Akelari to summarize her financial performance.

Thank you, Harriet. Good morning to all. In Q226, Ipia Petroleum marked a record performance in terms of quarterly revenues and the second best performance of all times in terms of profitability. Geopolitical tensions around the globe persist, thus creating volatility in the shipping markets, affecting trading routes and freight rates. In Q226, rates for both tankers and dribble carriers were strong, leading to a spike in our revenues. Looking at our IECA statement for Q226 on slide 8, revenues came in at 87.1 million in Q226, marking a 140% increase compared to revenues generated in the same period of 25. Indeed, our daily fleet revenue in Q266 was in excess of 50,000, compared to 29,000 daily revenue in Q225.

This increase is mainly due to a noticeable increase in market rates for both products and Swiss-mastankers, I will now turn the call over to management for the Imperial Pets. Voyage costs amounted to $22.1 million, a $14.4 million higher than in Q225. This increase is attributed to higher number of spot days by about 58% in conjunction with increased banker prices. Indeed, the average Brent crude oil price per barrel for Q226 was about $97, while for Q225 the average Brent crude oil price per barrel was about $67. In addition to this, in Q2 26 we had somewhat increased ballasting activity, particularly for the vessels that underwent within the quarter of the scheduled dry docking. Our net revenues for the quarter came in at about 65 million marking a 154 increase between the two periods Running costs amounted to 14 million increased by 6 million due to the increase of our fleet by an average of 6 vessels between the two periods Dry docking costs were quite high in the order of 7 million as in Q2 26 we underwent 6 dry dockings As we have already mentioned we have another 7 dry dockings to complete up to the end of 26 The EBITDA for the second quarter of 26 came in at 41.2 million, while NET income at 34.8 million, corresponding to a base in earnings per share of 75 cents versus 12.8 million, corresponding to an EPS of 36 cents in Q2 25.

For 6 months 26, net income came in at 62.8 million, corresponding to an EPS of 1.34, with EPS for the last 12 months being close to 2, which is an outstanding yield, especially when compared to our share price levels.

Moving on to slide 9, let us take a look at our balances for 6 months 26. As of June 30, 26, our free cash, including time deposits, was 245 million. Our cash to date is in the region of 260 million. As mentioned, our existing liquidity must be important cash flow generation remains robust as in six months, 26, we generated an operating cash flow of 78 million. Our recent and upcoming investment deliveries continue to enhance our fleet book value. We maintain a flexible capital structure as we are debt free, thus face zero interest rate and finance pressures, and highly liquid, pleasant and advantageous position against our peers, particularly in the event of softer market conditions. Proceeding to slide 10, we provide the summary of our liquidity, profitability and market considerations going forward.

As mentioned, we are highly liquid, maintain a solid balance sheet and continue to translate our strategic fleet expansion into profitability and growth. Yet, we still remain undervalued when looking at our share price levels. In Q2 26, our average time chart equivalent per fleet voyage day was close to 71,500 for our tankers and about 15,100 for our drive-out fleet. This compares favorable 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 US-Iran-Israel conflict which appears to fall in a stable course and seems that we'll have a longer than expected duration. Recent Houthi attacks in the Red Sea add-on to the geopolitical uncertainty that distorts the market.

In this environment, it's not yet visible how tanker and dry bulk market will be affected in the medium term. In any event, Ipial Petroleum is shielded from all angles to navigate any market conditions that may arise.

At this stage, our CEO, Mr. Hariv Vathias, will summarize our concluding remarks for the period examined. Our exceptional second quarter and first half of 26 demonstrate the power of our commercial strategy and disciplined execution. By securing record revenues of $87.1 million for Q2, expanding our fleet toward a 25-vessel target while remaining debt-free, we have driven net income for the first six months to a remarkable $62.9 million, already surpassing our total profitability for the entirety of 2025. Backed by a solid balance sheet with cash to date in the order of approximately 260 million and a fit value anticipated to increase with our upcoming vessel additions. We are well equipped to navigate shifting geopolitical landscapes, and Ip.

Petroleum is in a prime position to produce strong results while holding a flawless balance sheet and a track record of creating value through the company's growth in strategic asset management. We'd like to thank you all for joining us at our call today and for your interest and trust in our company, and we look forward to having you again with us at our next call for our Q3 26 results. Thank you.