Good day, and thank you for standing by. Welcome to the Q1 2026 Imperial Petroleum Results Conference Call. At this time, all participants are in a listen-only mode. Please be advised that this conference is being recorded. I would now like to hand the conference over to your speaker today, Imperial Petroleum CEO, Mr. Harry N. Vafias. Please go ahead.
Good morning, everyone, and thank you all for joining us for our first quarter 2026 Conference Call of Imperial Petroleum. I am Harry Vafias, the CEO of Imperial Petroleum, and joining me on the call today is Mrs. Sakellari, who will be discussing our financial performance. Before we commence our discussion, I 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 Reform Act. We would like to raise the attention of our investors to the fact that such forward-looking statements are based upon the timely beliefs and expectations of Imperial Petroleum and are subject to risks and uncertainties, 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 US dollars. In Slide 3, we summarize our key operational and financial highlights for Q1 2026. The year 2026 commenced in an extremely favorable way for Imperial 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. We view our results as solid proof that our strategic decision to expand our fleet was sound, as a larger fleet enables us to leverage favorable market conditions and generate material results. The tension in the Middle East, which commenced close to February 2026, brought upon global turbulence and heavily affected seaborne trade. The closing of the Strait of Hormuz tightened the tanker market, causing tanker rates to boom. It is worth mentioning that our daily net revenue from tankers dramatically increased in Q1 2026 to about $43 thousand a day compared to $27 thousand a day in Q4 2025. Average net revenue from our dry bulk ships increased in Q1 2026 to about $16 thousand. Looking briefly at our operational highlights, our fleet operational utilization came in at 88.7%, a bit lower than in Q4 2025 due to increased ballasting activity of our vessels traveling to their next employment. Looking at our fleet subsegments, operational utilization for Q1 2026 was 87.8% for our tankers, and 89.5% for our dry vessels. About 59% of the total fleet calendar days in Q1 2026 were dedicated to time charter activity, while the remaining approximately 40% to spot activity. Following the delivery of our dry bulk vessel to Postmarvel in January 2026, in April 2026 we took delivery of a handysize dry bulk ship, the Crossfire, increasing our fleet on the water to 21 vessels. Providing more color on our financial performance, our revenues of $61.7 million were 21% higher than in Q4 2025, and about 92% higher compared to the same period of 2025. The increase of our operating income was impressive. In Q1 2026, income from operations came in at $26.5 million, marking a $12.8 million increase, or 94%, against Q4 2025 and an $18.7 million rise, or 240%, compared to Q1 2025. As already mentioned, our net income of $28 million was our second-best performance of all time. The basic earnings per share generated in a single quarter was in the order of $0.60. Based on our current share price levels, this gives us an earnings yield for the quarter in excess of 12%. Our profitable operations continue to fuel our liquidity. As of March 31, 2026, our cash and cash equivalents, including time deposits, were about $213 million versus $179 million as of end of year 2025. Our activity on the share buyback scheme has been robust; to date the company has repurchased, up to May 21, a total of 856 thousand common shares for an aggregate amount of about $3.8 million. On Slide 4, 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 tankers and two Suezmax vessels in the spot market, capitalizing on the prevailing strong market environment and achieving average daily rates of about $29 thousand per day for MR ships and close to $95 thousand per day for Suezmaxes. In addition, one MR product tanker is employed under a period charter through September 2027. As customarily, the majority of the 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 cost. On Slide 5, we are discussing the evolution of market rates for both tankers and bulkers. In Q1 2026, market rates surged for tankers and strengthened further for dry bulk ships, even before the US-Iran-Israel conflict outbreak towards the end of February 2026. Tanker rates were strong at the back of added OPEC output, the return of Venezuelan cargoes, and long-haul trades for product tankers from the Atlantic to the Pacific to meet shortages in supply in Asia. The blockage of the Strait of Hormuz led to oil trade disruptions, longer-haul voyages, oil supply shortages, and an increase of risk premiums leading to a spike in tanker rates. Indeed, at the end of Q1 2026, rates for Suezmaxes were in excess of $200 thousand a day, while rates for product tankers were close to $60 thousand a day. For the dry bulk ships, the positive trend witnessed in Q4 2025 continued throughout the first quarter of 2026. Global shipment growth momentum was supported in Q1 by the uncertain macroeconomic environment, the congestion of the Panama Canal and recently arising coal demand. It is interesting to know that as of the end of Q1 2026, the BPI Supramax TC index was up 40.3% year on year, while the BDI Handysize 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 eased for a brief period the bottleneck of vessels at the Strait of Hormuz. Following April 20, outages for tankers picked up as an uptick in hostilities in the area resumed. For the dry bulk ships, rates have picked up further and are now close to $20 thousand per day, mostly due to gas supply shortages which have increased market demand for coal. Market update on Slide 6. In Q1 2026, 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 shortages, 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 crude 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 demand. The Iran-US-Israel conflict brought upon a collapse in Hormuz exports and Middle East gas production shut-ins. This caused significant repositioning of vessels from the Pacific and an increase of Atlantic exports to Asian buyers. Product tanker market essentially picked up after the outbreak of the Middle East conflict. The closing of the Strait of Hormuz shut off Middle East CPP exports, creating a shortage of feedstock to Asian refineries. This led to an increase in global product prices, particularly in the Pacific for jet fuel, and arbitrage opportunities, especially between the Atlantic and the Pacific. Looking ahead, a potential ceasefire leading to the reopening of the Strait of Hormuz, prospects of increased demand for inventory building, Middle Eastern producers commencing production above pre-war levels, and the possibility of sanctions being lifted on Iran could add more balance to the market. In terms of tanker market fundamentals, the total order book for Suezmaxes stands at 25.6% with 16% of the fleet above 20 years of age. For the MRs, the 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 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 2026, particularly due to reduced imports from China and India, offset by the rise of imports from Korea. Following the outbreak of the US-Iran-Israel conflict, countries are boosting coal-fired generation to respond to the disruptions to oil and gas supplies as they need to replace lost Middle East LNG cargoes. This increased reliance on coal is expected to continue in the future, supporting a rebound in coal trade in Q2 2026. Iron ore departures to China were up in Q1 by about 4%, while Guinea bauxite exports to China stood strong, marking an 18% year-on-year increase. Wheat trade rose by 18% year on year supported by elevated prices. Looking ahead, there is a concern about the economic impact of the Iran conflict on the global economy, which might have an adverse effect on global demand. The global dry bulk fleet continues to expand, growing 3% in 2025 and a further 1% in 2026. However, reduced shipbuilding orders and, most importantly, an aging fleet—close to 16% of the fleet is currently above 20 years of age—together with low demolition could bring about a future supply imbalance 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. Sakellari to summarize the financial performance.
Thank you, Harry, and good morning to all. In Q1 2026, Imperial Petroleum marked a record performance. This quarter, we generated the second-highest profitability of all time. Market conditions were favorable as rates, particularly for tankers, peaked. Dry bulk rates were firm during the whole quarter, so we managed to capitalize upon the sizable dry bulk fleet we operate. Looking at our income statement for Q1 2026 on Slide 8, revenues came in at $61.7 million in Q1 2026, 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 rates for both product and Suezmax tankers along with the increase of our fleet by eight vessels. As of the end of Q1 2025, rates for product tankers were close to $26 thousand per day, while daily rates for Suezmax tankers were close to $47 thousand. As of the end of Q1 2026, though, following the outbreak of the Middle East conflict, daily rates for product tankers climbed to about $56 thousand while daily rates for Suezmax tankers surged in excess of $260 thousand. Voyage costs amounted to $12.8 million, higher than in Q1 2025. 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 of the Suez Canal, mainly for the Suezmax tankers. Our net revenues for the quarter came in at about $49 million compared to $21.6 million in Q1 2025. 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 in February 2026. 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 $34.4 million while net income was $28 million corresponding to a basic earnings per share of $0.60 versus $11.3 million corresponding to an EPS of $0.32 in Q1 2025. Moving on to Slide 9, let us take a look at our balance sheet for the first quarter of 2026. As of March 31, 2026, our cash and cash equivalents, including time deposits, was $213 million. Our cash to date is in the region of $221 million. We have a capital commitment for seven vessels, two recently delivered and the remaining five to be delivered up to Q3 2026, which total about $130 million. Of this amount, about $52 million is expected to be paid through the end of Q3 2026, while the remaining $78 million is due by the end of 2026 or early 2027. This staggered payment profile provides ample time to further enhance our cash position through our ongoing cash flow generation from our core operations. Liquidity generation remains robust. In Q1 2026, we generated an operating cash flow of $38.7 million. At this stage, we would like to point out that, based on management's estimate of most recent fleet market values and based on our Q1 2026 financials and number of shares outstanding as of the end of Q1 2026, we concluded that our net asset value per share is close to $13. Our current share price is about $5; hence, we trade at a discount in excess of 60% while being highly profitable, debt-free, and while the average price-to-net-asset-value discount of industry peer companies is about 20%. In other words, Imperial Petroleum is heavily undervalued despite the more robust balance sheet. Proceeding to Slide 10, we provide a summary of our liquidity, profitability, and market considerations going forward. We have a significant cash base, which is enhanced every quarter through our profitable operations. We remain debt-free, yet we have expanded our fleet significantly. Our profitability remains strong: in Q1 2026, our net income margin climbed to 45%. In Q1 2026, our average time charter equivalent per fleet voyage day was close to $43 thousand for our tankers and about $16 thousand for our dry bulk fleet. This compares favorably to our cash flow breakeven levels estimated at $88.5 thousand per day for tankers and at $6.5 thousand per day for dry bulk vessels. In terms of market considerations, the focal point is the US-Iran-Israel conflict, which appears to have a longer-than-expected duration. It still remains unknown how the market, particularly the tanker market, will react when the Strait of Hormuz is 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 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 through our active share buyback program and hope that these dynamics will soon correct our share price levels. At this stage, our CEO, Mr. Harry Vafias, will summarize and conclude his remarks for the period examined.
We are extremely pleased with our first quarter 2026 results. With a net income of $28 million corresponding to a basic EPS of $0.60, we generated the second-best quarterly profitability in our company's history. Geopolitical tensions persist, creating turbulence globally and in the markets. The effect, particularly from the Middle East Gulf conflict, caused tanker markets to peak while market rates for the dry bulk segment firmed. 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 is continuously profitable, and most importantly, we are debt-free. We would like to thank you all for joining us on our call today and for your interest and trust in our company, and we look forward to having you with us again at our next call for Q2 2026 results. Thank you.
This concludes today's conference call. Thank you for participating. You may now disconnect.