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United Maritime Corporation (NASDAQ: USEA) has announced its financial outcomes for the fourth quarter and the entire year of 2023, marking a significant transition to a dry bulk-centric business model. The shift comes after the company sold its tanker vessel and expanded its fleet by acquiring seven new ships. This strategic move has increased the fleet’s value to $144 million. Despite the transition, the company managed to generate a net income of $0.2 million and adjusted EBITDA of $18.9 million. Shareholders benefited from cash dividends and share repurchases, with the company expressing a positive outlook on the dry bulk market and its prospects.
Key Takeaways
- United Maritime Corporation transitioned to a dry bulk company, increasing fleet value to $144 million.
- The company reported adjusted EBITDA of $18.9 million and a net income of $0.2 million.
- Shareholders were rewarded with cash dividends totaling $1.38 per share and share buybacks.
- Optimism surrounds the dry bulk market with strong demand anticipated for various commodities.
- Refinancing of three vessels was completed, and a deal for a KAMSAR Tug vessel is underway.
- The company plans to maintain General and Administrative (G&A) expenses between $2.5 to $3 million.
Company Outlook
- Expectation of strong demand in the dry bulk market for iron ore, coal, grains, and bauxite.
- Plans to execute purchase options for bareboat charters and maintain G&A expenses at $2.5 to $3 million.
Bearish Highlights
- Net income reported at a modest $0.2 million.
Bullish Highlights
- Expansion of the fleet with seven new vessels and a threefold increase in fleet value.
- Positive market outlook and strategic moves to strengthen the company’s position in the dry bulk sector.
Misses
- No specific misses were highlighted in the earnings call summary provided.
Q&A Highlights
- No questions were asked during the earnings call, indicating potential satisfaction or lack of concerns from investors.
United Maritime Corporation has successfully navigated a major transition period, focusing on the dry bulk sector and capitalizing on its growth potential. The company’s financial results reflect a strategic approach to expansion and shareholder value enhancement, evidenced by its fleet growth and the financial rewards extended to its shareholders. The positive outlook on the dry bulk market and the company’s forward-looking strategies, such as the refinancing of assets and the potential acquisition of a KAMSAR Tug vessel, suggest a proactive approach to leveraging market opportunities. With a clear plan to manage expenses and a forward freight strategy, United Maritime Corporation is positioning itself for future growth, even as it prepares for potential new ship deliveries in the latter half of 2027.
InvestingPro Insights
As United Maritime Corporation pivots towards a dry bulk-centric business model, it’s important to consider the company’s financial health and shareholder returns. According to InvestingPro data, the company boasts a notably high dividend yield of 11.54%, which is a significant return on investment for shareholders. This is particularly relevant as the company has already demonstrated its commitment to shareholder returns through cash dividends and share repurchases.
InvestingPro Tips also highlight a concern regarding the company’s weak gross profit margins. This is a critical aspect for investors to monitor, as it may impact the company’s profitability and long-term financial stability. Despite this, the company’s low P/E ratio of 0.59 suggests that the stock may be undervalued, presenting a potential opportunity for investors seeking to capitalize on the company’s strategic shift.
InvestingPro users can find additional insights and tips for United Maritime Corporation, which may further inform investment decisions. There are 7 additional InvestingPro Tips available, which can be accessed by visiting the dedicated page at https://www.biedexmarkets.com/pro/USEA. For those interested in a comprehensive analysis, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
InvestingPro Data Metrics:
- Dividend Yield (2024): 11.54%
- Price, Previous Close: $2.85 USD
The provided data and tips offer a snapshot of United Maritime Corporation’s current financial status and can be used to assess the potential risks and rewards associated with investing in the company as it ventures further into the dry bulk market.
Full transcript – United Maritime (USEA) Q4 2023:
Operator: Thank you for standing by ladies and gentlemen. And welcome to the United Maritime Corporation Conference Call on the Fourth Quarter Year Ended December 31, 2023, Financial Results. We have with us Mr. Stamatios Tsantanis, Chairman and CEO; and Mrs. 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, February 20, 2024. The archived webcast of the conference call will soon be made available on the United Maritime website, www.unitedmaritime.gr under the investor 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 fourth quarter and year ended December 31, 2023 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 regarding our financial results for the fourth quarter and full year period of 2023 as well as our recent corporate developments. Following the profitable sale of our last tanker vessel in the third quarter of 2023, the fourth quarter marked our first period operating purely as a dry bulk company. On this note, we are pleased with the timing of our transition towards larger gearless bulkers as we are recently witnessing the strongest first quarter for the dry bulk market of the past decade. Even though 2023 served as a transitional year for our company, we marked a threefold increase of the bulk value of our fleet by investing $144 million to acquire seven ships including the implied value of the bare boat team vessels with purchase options, all this was accomplished organically and avoiding any equity offering dilution for our shareholders. We also marked another profitable year generating adjusted EBITDA of $18.9 million and net income of $0.2 million. At the same time, we are fully consistent with our commitment to reward our shareholders both through cash dividends as well as share buybacks. Since November 2022, we have declared approximately $10.7 million or $1.38 per share in cash dividends, including the cash dividend of $0.75 approved for the fourth quarter of 2023. This represents approximately 45% of our market catalyzation. Additionally, on our share buyback plan, since the beginning of Q4, we have repurchased 84,813 common shares at an average price of $2.4 per share. We always evaluate the best way to return capital to our shareholders in conjunction with the company’s liquidity needs and our aim is to continue to engage in share buybacks by means of stabilizing the share price. Regarding our investment activity, we have been actively evaluating opportunities to grow our fleet and in this manner we have acquired a high-quality Kamsarmax dry bulk vessel built in 2016 in Japan through an 18-month bare boat charter with a purchase option at the end of the charter period. Commenting on the commercial performance of our fleet, all our vessels operate on index-linked time charters providing direct exposure to the positive fundamentals of the dry bulk market. For the first quarter of 2024, we exercised our options to fixed daily earnings under these time charters on about half of our operating days at an average gross rate of about $14,300. It appears that our hedging was a bit premature, but we aim to provide downside protection against the seasonal weakness of the dry bulk market in the first quarter of the year. Based on the current FFA values, we expect to achieve a total net time charter equivalent of about $14,200 across our fleet. Given the recent strength in freight futures, we have started to fix some of our second quarter operating days at considerably higher levels. As a brief commercial guidance for 2024, since the start of the fourth quarter we have experienced a robust dry bulk market conditions given by healthy commodity demand and limited fleet supply. For the Panamax market, low water levels in the Panama Canal and increased congestion at Brazil loading ports played an important role in reducing effective vessel supply, while the Red Sea tensions since December have introduced further inefficiencies in the world trading fleet. In the Cape Side segment, we have witnessed high demand for iron ore and bauxite imports coinciding with increased Brazilian iron ore exports that contributed to high Atlantic basin activity, therefore leading to a very strong market both in Q4 2023 as well as in the first quarter of 2024. Looking ahead into the next two years, net dry bulk fleet growth is expected to be lower than 2% per year, which we believe forms a sound basis for market conditions going forward. We are very encouraged by the strong demand for iron ore, coal, grains and bauxite, which have not shown any signs of slowing down in the first months of 2024. Given the strong demand for metals and energy, driven mainly by manufacturing and infrastructure investments globally, it is worth noting that we expect the seaborne volume of related cargos to continue to increase. Overall, reduced fleet deliveries, in combination with steady demand growth, should provide a very positive backdrop for the dry bulk market over the next years. In its current form, I am confident that United Maritime presents investors with a very potent platform to benefit from the positive fundamentals of the dry bulk market, continuing to deliver a profitable performance with high capital returns and significant shareholder rewards. That concludes my summary of the Q4 updates and I pass the floor to Stavros for a more detailed update on the financials of our company. Stavros, please go ahead.
Stavros Gyftakis: Thank you, Stamatios. A warm welcome also from my side. Let me start by reviewing the main highlights of the financial statements for the Q4 and the 12-month period that ended on December 31, 2023. Starting with the Q4, net revenue was $11.6 million based on a time-shared equivalent of 15,900. The corresponding figures for the same period last year were $14.9 million and 32,200 respectively. The figures for 2022 are largely driven by the earnings of the tanker vessels through a very strong tanker market. Our adjusted EBITDA in the fourth quarter was $4.6 million while a net loss of $0.7 million was recorded. The respective figures in 2022 were $42.3 million and a net income of $36.5 million, primarily attributed to the sale of three of our previously owned tankers. For the 12-month period, net revenue reached $36.1 million based on a time-shared equivalent of 15,400 while adjusted EBITDA and net income for the full year 2023 were equal to $18.9 million and 200,000 respectively. Profitability in the year was impacted by low freight rates in the dry bulk space in the first nine months of the year and the gradual deliveries of the seven dry bulk vessels through the year, resulting in reduced operating date and additional one-off expenses related to the takeover of these vessels. With the market having already rebounded and the rather optimistic outlook for the period ahead, as discussed by Stamatios, we expect profitability to improve in the coming quarters following the full deployment of our dry bulk fleet. Yet, it is important to note that we have decided to hedge some of our freight exposure in the first quarter of 2024 early by fixing about half of our ownership days at an average peak rate of 14,300. On the expense side, we have managed to reduce our daily operating expenses and daily cash G&As on a per vessel basis and expect further optimization going forward as United will be navigating its second full 12-month period of operations. Now, moving on to our balance sheet, our cash position at the end of 2023 was $14.5 million. During the year, we increased our fleet with seven new vessels, leading to a fleet book value of $153 million versus a book value of $50 million at the end of the previous year without resulting to any dilutive equity offerings. At the same time, outstanding debt, which includes liabilities under our Bear Boating transaction, stood at $96 million, translating to a loan-to-value of approximately 60%, including the Bear Boating liabilities. Debt and the proceeds from our tanker sales have been the financing sources for our investment strategy during 2023. This year, we are focusing on improving our overall financing profile, given the fact that United has now, two years after its inception, enhanced its position within the global shipping financing spectrum. In that vein, during the fourth quarter, we concluded the refinancing of our three capes as vessels with a reputable state-owned Chinese Lesor. Specifically, we entered into three separate and identical $10 million sale and leaseback agreements for three of our capes. The proceeds have been utilized to refinance the outstanding indebtedness of the respective vessels under the previous loan facility, enhancing as well our liquidity position by around $7 million. Each financing amortizes through 36 consecutive monthly installments of approximately 140,000 and bears an interest rate of 3 months term SOFR plus 3.3% per annum. Considering the forward SOFR curve, the transaction is expected to reduce our interest expense in the following quarters. Meanwhile, the company has continuous options to repurchase the vessels at predetermined prices, starting six months after the commencement date. At the end of each bear-boat period, United has the obligation to repurchase its vessel for $5 million. In addition, over the past few days, we have reached an agreement which is currently subject to definitive documentation with a third party in Japan for the refinancing of [ph]Xelixin through a sale and leaseback structure. As discussed briefly previously by Stamatios, we have recently agreed to acquire a high-quality KAMSAR Tug vessel built in 2016 in Japan through an 18-month bear-boat chartering agreement with a purchase option at the end of the charter period. Regarding the specific details of the deal, which remains subject to definitive documentation, it includes an initial pay-down of $7.5 million, a daily chartering rate of 8,000 and a purchase option for $16.6 million. Finally, before turning the call back to Stamatios, I would like to remind once more that all the significant flip growth last year was achieved without any dilution of our investors while being consistent on our dividend distributions and our share buyback program. I would now turn the call back to Stamatios for his concluding remarks. Stamatios?
Stamatios Tsantanis: Thank you, Stavros. After successfully completing our tanker investment cycle in the third quarter of 2023, which delivered very strong returns for our shareholders, we have re-grown our fleet to eight dry-bulk vessels by investing $144 million to acquire seven ships without having to engage in dilutive capital raisings. So far, we have declared total cash dividends of $1.38 per share, or $10.7 million, since November 2022, representing approximately 45% of United’s maritime capitalization. United Maritime has a strong balance sheet with high-quality index-linked fleet and proven commitment to shareholder rewards. I am confident that we are very well placed to navigate a strong dry-bulk market environment and offer robust total returns throughout the next shipping cycles. At this point, I would like to turn the call over to the operator-and-answer any questions you may have. Operator, please take the call. Thank you.
Operator: Thank you. [Operator instructions] We are now going to proceed with our first question. And the questions come from the line of Tate Sullivan from Maxim Group. Please ask your question. Your line is opened.
Tate Sullivan: Great. Thank you. Good to hear from you again. How are you, both of you? Thank you. Hello, Tate. Good morning. We’re all well. Thank you. Good. Thank you. Is this, just looking back at the historic growth of UC’s fleet, is this the second bareboat charter in the fleet, the one you’re undergoing finalization of the terms with the Japanese counterparty?
Stamatios Tsantanis: The one we just announced now is going to be the third one.
Tate Sullivan: Third. The third one. Okay. And then all those, Stamatios, can you go in a little bit? What will make you decide to exercise the purchase option or not at the end of those charters?
Stamatios Tsantanis: Well, for us, it’s a given that we’re going to exercise the purchase option. So for us, it’s pretty much more like an obligation, even though it’s set as an option. So we expect in all cases to exercise the purchase option, which in any case, all deals, and we expect the third one as well, are considered to be upon the date of the exercise to be excellent deals for the company.
Tate Sullivan: And is this the first, or the other two with the Japanese counterparty as well?
Stamatios Tsantanis: Yes. All three with Japanese counterparts. Correct.
Tate Sullivan: And then for the G&A in the quarter declined sequentially to about $2.2 million to $2.7 million. Was that, I mean, is that the run rate going forward or what was the G&A in the prior quarter attributed to? Or is that change in stock-based comp mostly?
Stavros Gyftakis: I think, Tate, that the levels that you’ve seen for the fourth quarter is the levels that we’re targeting going forward, around $2.5 million to $3 million. And we’re confident that we’re going to achieve such levels. Now, in some cases, when there is, as you know, the equity incentive plan is front-loaded and it’s usually issued in the beginning of the year. So, usually in the first quarters of the year, you will see some additional non-CAS expenses burdening the G&As.But otherwise, in terms of CAS expenses, we don’t expect increases. And given that the fleet size of the company increased, the G&A on a per vessel per day basis, we’re going to be using steadily going forward.
Tate Sullivan: Great. And then, do you still have the warrants that you have outstanding? Is it still about, if you mind sharing, about $7 million? And does the exercise price adjust lower with each dividend you pay? Or is it just the dollar special dividend?
Stavros Gyftakis: No, these warrants do not have any adjustment provisions for regular dividends. They adjust only with one of dividends. So, the quarterly dividends that we’re now paying are not affecting the price of the warrants, which remains at $2.25 million. And we have currently around $6.9 million of those outstanding.
Tate Sullivan: And then, with the forge freight strategy, so going forward, we’re expecting less of a percent of the days after 2Q to be fixed. Is that just, can you reiterate your comments there, please?
Stamatios Tsantanis: Yes, that’s correct. I mean, back in December and November, we decided to fix forward in order to cover the Q1, which is traditionally the quickest quarter of the year. Of course, when we saw levels at 14,000 for Q1, when the same thing was in single digits a few months ago, of course, that was an opportunity that we had to take in order to reduce our exposure and minimize loss for the company. So, it was a risk control. Of course, we didn’t know at the time that Q1 of 2024 would be the strongest Q1 of the last 10, 15 years. So, we did cut the losses and we, of course, did a very good risk control. But at the same time, we have kind of cut the profits of the company for Q1. However, Q2 and going forward, we are now examining our options. And if we decide to proceed, it’s going to be at substantially higher levels to fix the rates going forward.
Tate Sullivan: And one last one. Is it correct for the timeline if you would decide to order a new drybulk ship, whether a Cape or Cams or Panamaxis? Would it be, I mean, at this point, based on other company announcements, second half of ’27, the earliest delivery? Or have you seen opportunities to order before that timeline?
Stamatios Tsantanis: That’s pretty accurate, Nate, yes. For Cape sizes, we’re talking well into 2027. For Cams or Marxis, there might be some scattered slots here and there, even in 2026. But we’re talking about minimal, you know, opportunities here. But the Cape size, which is the most significant, we’re talking about well into 2027. So, that’s a very accurate statement.
Operator: We have no further questions at this time. I will now hand back to you for closing remarks.
Stamatios Tsantanis: Excellent. Thank you very much, Operator. And thanks, everyone, for participating in our Q4 and full year 2023 results. Thank you very much. You now may disconnect your phones.
Operator: Thank you. This concludes today’s conference call. Thank you for participating. You may now disconnect. Speakers, please stand by. Thank you.
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