United Maritime Corporation (ticker: UMC) announced its financial results for the second quarter and first half of the year ending June 30, 2024. The company reported Q2 net income of $0.7 million and net revenues of $12.4 million, with a fleet average time charter equivalent rate of $17,143.
Despite a net loss of $0.8 million in the first six months due to Q1 hedging activities, United Maritime declared a Q2 dividend of 7.5 cents per share. The company is focusing on expanding its fleet, including the acquisition of the Nisea and the delivery of the Oasea, and is seeking further acquisitions in the drybulk sector. They also invested in an energy construction vessel and joined a time charter for an Aframax crude tanker, signaling a strategic entry into the offshore sector.
Key Takeaways
- United Maritime reported Q2 net income of $0.7 million and net revenues of $12.4 million.
- A Q2 dividend of 7.5 cents per share was declared.
- The company experienced a net loss of $0.8 million over the first six months due to Q1 hedging activities.
- United Maritime expanded its fleet with the acquisition of the Nisea and delivery of the Oasea.
- The company is entering the offshore sector with an investment in an energy construction vessel.
- Low fleet growth and strong drybulk market conditions, including increased demand for capesize vessels, grain, and coal, are expected to contribute to a positive market balance.
Company Outlook
- United Maritime expects future growth and profitability, with a focus on rewarding investors through dividends and share buybacks.
- They anticipate stable global steel production and increased exports of West African bauxite and Canadian iron ore.
- The company's cash position stood at $7.7 million, with outstanding debt at $91.7 million.
- Recent sale and leaseback agreements and loan facilities have been concluded for vessel financing.
Bearish Highlights
- United Maritime recorded a net loss of $0.8 million in the first half of the year, attributed to Q1 hedging activities.
Bullish Highlights
- Net revenues increased by 24% in Q2 compared to the previous year.
- The drybulk market is currently strong, supporting the company's expansion plans.
Misses
- There were no specific misses mentioned in the earnings call summary.
Q&A highlights
- Stavros Gyftakis discussed the company's decision to enter the offshore sector due to increasing demand and limited supply of ships capable of serving both the Oil and Gas industry and renewable projects.
- United's share in the new energy construction vessel is about 22% to 25%, with the vessel's total cost around $100 million.
- Financing for this vessel comes from a Taiwanese lender with whom United has previously worked.
- The dry docking of four vessels has been completed, which is anticipated to improve cash flow in the second half of the year.
InvestingPro Insights
United Maritime Corporation (UMC) has exhibited a mix of financial indicators that provide a deeper understanding of its current economic standing and future prospects. According to InvestingPro, UMC operates with a significant debt burden and may face challenges in meeting its interest payments. However, analysts remain optimistic about the company's future, predicting both sales growth and net income growth for the current year.
InvestingPro Data highlights a market capitalization of $21.81 million, underscoring the company's relatively small size in the industry. Despite the challenges, UMC is trading at a low Price / Book multiple of 0.34, which could indicate that the company's assets are potentially undervalued in the market. Moreover, the company's revenue growth is impressive, with a quarterly increase of 275.68% in Q1 2024, reflecting strong recent performance.
An InvestingPro Tip to consider is that UMC is trading at a low earnings multiple, with a P/E Ratio of 7.9, which might appeal to value investors looking for potentially undervalued stocks. Additionally, the company pays a significant dividend to shareholders, with a notable dividend yield of 12.4%, which is attractive for income-seeking investors.
For those interested in a more comprehensive analysis, InvestingPro offers additional tips on UMC's financial health and investment potential. Currently, there are 10 more InvestingPro Tips available, providing valuable insights for investors considering UMC as part of their portfolio.
To summarize, while United Maritime Corporation faces debt-related challenges, the company's growth in net income and sales, coupled with its low valuation multiples and high dividend yield, present a nuanced investment opportunity. For a more detailed analysis, investors can explore the full range of InvestingPro Tips.
Full transcript - United Maritime Corp (USEA) Q2 2024:
Operator: Thank you for standing by ladies and gentlemen. And welcome to the United Maritime Corporation Conference Call on the Second Quarter and Six Months Ended the 30th of June 2024, Financial Results. We have with us Mr. Stamatios Tsantanis, Chairman and CEO; and Mr. Stavros Gyftakis, Chief Financial Officer of United Maritime Corporation. At this time, all participants are in a listen-only mode. There will be a question-and-answer session. [Operator Instructions] Please be advised that this conference call is being recorded today Tuesday, the 6th of August 2024. The archived webcast of the conference call will soon be made available on the United Maritime website, www.unitedmaritime.gr under the Investors section. Many of the remarks today contain forward-looking statements based on current expectations. Actual results may differ materially from the results projected from those forward-looking statements. Additional information concerning factors that can cause the actual results to differ materially from those in the forward-looking statement is contained in the second quarter and six months ended the 30th of June 2024 earnings release, which is available on the United Maritime website again, www.unitedmaritime.gr. I would now like to turn the conference over to one of your speakers today, the Chairman and CEO of the company, Mr. Stamatios Tsantanis. Please go ahead, sir.
Stamatios Tsantanis: Good afternoon. Welcome to United Maritime's conference call to discuss our due to and first half of 2024 financial results and recent corporate developments. United Maritime returned to profitability in Q2 with a net income of $0.7 million and net revenues of $12.4 million. The fleet’ average time charter equivalent rate was $17,143. Thanks to a strong capesize market. For the first six months, net revenues were $23 million, but we had a net loss of $0.8 million due to Q1 hedging activities. Stavros will provide more details on this. The strong drybulk market since Q4 2023 validates our sector investments and we are optimistic about high returns. We are declaring a dividend of 7.5 cents per share of cash dividend for Q2 yielding about 13% and have paid over $1.50 in dividends, cash dividends positive since January 2023. Fleet updates. We delivered the Oasea a 2010 e Kamsarmax new owners with profits recognized in Q3. It will be replaced by the Nisea a 2016 Kamsarmax arriving in October. We continue to seek acquisitions in the drybulk sector meeting our commercial and capital return criteria. The appreciating market value of our bulkers position us well to reward our shareholders further. New investments. Offshore sector. We acquired the minority stake in a company designing and energy construction vessel for $8.5 million completing by 2027. This vessel is designed to operate across all major subsea subsegments against a growing demand backdrop will serve renewable and oil and gas sectors benefiting from increased offshore demand. Aframax time charter. We joined a time charter on an Aframax crew tanker committing above $300,000 in working capital for up to nine months. This has been made in partnership with a very prominent Aframax pool operator. Commercial developments. Panamax vessels. The Exelixsea extended its charter from August 15 for about 11 to 14 months. The Synthesea extended its charter from October for work for about 11 to 14 months, the same charters. Capesize vessels. The Goodship charter extends from July until July 2024 until late 2025 and the Gloriuship a new 70 to 80 day charter in August in continuation with existing one at $22,500 a day. For Q3 2024, we estimate a daily times charter equivalent of approximately 18,000 for the blended fleet with 65% of the days already fixed. Industrial review. The drybulk market is strong, driven by capesize demand and increase the grain and coal demand, as well. China's iron ore imports rose 6% with Brazilian exports also up by 6%. Sttable Chinese steel market driven by manufacturing and infrastructure is expected to prevail globally in the next years. Global steel production is expected to remain stable in 2024 and 2025. West African bauxite exports up for 14% in the first half with further increases expected in the future. Canada’s iron ore exports rise 15% expected in the second half of the year. Long-term trends in aluminum and steel consumption are sustainable, driven by energy transition and infrastructure demands. Several mining expansion projects are expected to ensure steady capesize demand. Coal and grain cargo growth provides stability for smaller vessels with increased inefficiencies reducing effective vessel supply. The drybulk order book is at historically low levels with net fleet growth expected to be below 2% annually for the next two years favoring at positive market balance. This concludes my initial summary. I will now hand over the call to Stavros for a detailed financial update. Stavros, please go ahead.
Stavros Gyftakis: Thanks, Stamatios. Welcome everyone to our earnings call. Let us start by reviewing the main highlights of the financial statements for the second quarter and the six months period that ended on June 30, 2024. Our overall performance saw significant improvement compared to 2023, which I must remind you while the transitory year for United. In the second quarter, our net revenues reached $12.4 million, marking a 24% increase from the same period last year. This growth was driven by expanded fleet, improved freight rates and operating leverage. Our adjusted EBITDA for the second quarter was $6.3 million and we recorded a net income of $0.7 million. In comparison this figures for 2023 were $2 million and a net loss of $3 million respectively. For the six months period, net revenue totaled $23 million, while adjusted EBITDA rose to $10 million compared to $12.8 million and $0.6 million respectively last year. Despite improved cost of build in the second quarter, we recorded a net loss of $0.8 million for the six month period ended June 30, 2024. Moving on to our balance sheet. Our cash position at the end of June 2024, was $7.7 million reflecting the significant CapEx program undertaken during the first six months for the drydocking of four of our vessels and the advance payment for our new Kamsarmax vessel, Nisea which is expected to be delivered within the year. All our vessels have returned to service since the beginning of the second half. CapEx is now behind us while we have also delivered the Oasea to her buyers and therefore our liquidity position has improved significantly as of today. Outstanding debt, which includes liabilities from our bareboating transaction stood at $91.7 million. This translates to a loan to value for the fleet of approximately 50% including the bareboating liabilities. Regarding our debt, we recently concluded a new $18 million sale and leaseback agreement to fund the $17.1 million purchase option of the Synthesea. The financing bears an interest rate of 2.7% over three months term so far and amortizes over a seven year term through monthly installments of approximately -$100,000. We have continuous options to repurchase the vessel at pre-determined prices following the second anniversary of the bareboat charter and a final purchase option of $6.5 million at the end of the bareboat period, which we expect to exercise. Additionally, we recently entered into a $16.5 million loan facility with a prominent lender in Taiwan to finance the exercise of the $12.4 million purchase option for the Chrisea. The principal will amortize with a 5 year term through quarterly installments of $0.4 million and the final balloon payment of $8.5 million. The facility is priced at 2.6% over three months term so far. Our financing terms keep improving and we expect this to reflect positively in our future profitability. Regarding our investments and divestments activities that Stamatios mentioned previously, we expect to record an accounting profit of approximately $1.5 million in the third quarter from the sale of the Oasea concerning our investment in the offshore sector, we have committed to participate with an amount of up to $8.5 million, which will be called based on certain milestones and conditions in five separate installments over a period of 33 months. This schedule aligns with the construction of the ECV unit allowing for minimum impact on our liquidity. Lastly, concerning our participation in the P&L of the Aframax time charter, we have committed a quarter of a million for the vessel’s working capital. Finally, I would like to express our optimism about future growth and the implementation of diversified strategy. We anticipate further improvements in our profitability and are committed to rewarding our investors with dividends and share buybacks as appropriate. I would now turn the call back to Stamatios for his concluding remarks. Stamati? Stamatios Tsantanis Thanks, Stavros. Following our successful tanker investment cycle in Q3 2023, which delivered strong returns for our shareholders, we have expanded our fleet to eight drybulk vessels without dilutive capital raisings. Since November 2022, we have declared total cash dividends of over $1.50 per share, cash dividends of course a significant portion of our current share price. Additionally, we aggressively retained capital with $6.7 million in common share buybacks at an average price of $1.87 per share. United Maritime is well-positioned to benefit from positive drybulk market trends due to, index-linked time charter that provide direct exposure to Capesize and Panamax market fluctuations. A strong balance sheet that allows for leverage exposure to the sector and the potential for higher returns on capital. A proven commitment to rewarding shareholders through substantial capital returns resulting in high dividend yield. Lastly, I am confident in our recent offshore sector investment, which I believe will also generate higher returns for our company. That completes our call. And I would like to turn the call over to the operator for any questions you may have. Operator, please take over. Thank you.
Operator: [Operator Instructions] Thank you. [Operator Instructions] And now we're going to take our first question and it comes from the line of Tate Sullivan from Maxim Group. Your line is open. Please ask your question.
Tate Sullivan: Great. Hey, hi, thank you for having the call and see and talk to you again. On the energy construction vessel, Stamatios, can you talk about, what how you start looking at that market? Has this been a long-term evaluation of that market? And have you done business with a Norwegian partner before?
Stamatios Tsantanis: Good one, Tate and nice to hear from you again. I believe it's a great diversification opportunity and it's nothing super substantial. I think it's a good entry point. But Stavros sitting next to me is going to give you more color on how we have decided to proceed with that. So Stavros if you want to?
Stavros Gyftakis: Thanks, Stamatios. Yeah, take - we have been - we have started to look at the sector since early this year. Things have changed, I wouldn't say dramatically, but gradually there in terms of the demand. Demand has been increasing. There is very limited supply and most of the ships have been built more than a decade ago. So there is actually demand for good performance in terms of energy. These type of ships they can serve both the Oil and Gas industry and renewable projects. So, we think that the demand will be very robust for the ships going forward. The supply is very limited. Half of the fleet is older than 15 years and there are actually only a couple of ships that are being actually built right now. So we identified the specific needs as a good entry point for United for the offshore. And as you know, I mean we have decent connections in the market also in Norway. So this project was presented to us. We showed it to our Board and we all decided to consensually that this would be a good opportunity for United to enter the sector.
Tate Sullivan: Okay. Great. Thank you for that. And then $8.5 million is your share not the total cost of the vessel correct?
Stavros Gyftakis: No, no, no. The total cost of the vessel is around $100 million, around $96 million, around $60 million will be financed by debt. So our participation results in a share of around 22% to 25% of the vessel.
Tate Sullivan: Okay. Okay. Great. Okay. Thank you. And then, the comments about the dry docking of the four vessels in the first half of the year. Will that what portion of those drydockings was in 2Q versus, well, they are all complete. Now there is no cost that will be extended into 3Q, I guess, my takeaway.
Stavros Gyftakis: Yes, we have almost nothing for the third and fourth quarter. So, we will have very good operating fleet for the second half of the year, which I believe is going to improve our cash flow quite significantly. And so, we do not anticipate all the ships that underwent - drybulks went also an upgrading processes or the ships are running much better than before. So I believe that we're going to have for all of our fleet running very smoothly and very efficiently in the second half of the year with very limited downtime.
Tate Sullivan: Okay. The time when you do that the first time [Inaudible] to fund?
Stavros Gyftakis: Sorry, Tate, can you please repeat the question because you're breaking up?
Tate Sullivan: I apologize, was that the first time you had a lender based in Taiwan?
Stamatios Tsantanis: Hi Tate, we had a similar - we had experience with this lender in synergy. This - the related with previous part of United. So basically as you know, I mean the synergies on the management side between the two companies. And we have worked quite well with this lender. So he is expressing the risk to finance also United now that the company is maturing is in a more mature statge.
Tate Sullivan: So, yes, we proceeded with this financing with a known party to us.
Tate Sullivan: Yes. Thank you both.
Stavros Gyftakis: Thank you, Tate. Have a great day.
Operator: Thank you. Dear speakers and all for the questions for today. This concludes today's conference call. Thank you for participating. You may now all disconnect. The speakers please stand by.
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