C3is Inc. Q3 FY2025 Earnings Call

Good morning, everyone, and welcome to our C3is Third Quarter of 2025 Earnings Conference Call and Webcast. This is Dr. Diamantis Andriotis, CEO of the company. Joining me on the call today is our CFO, Nina Pyndiah. Before we commence our presentation, I would like to remind you that we will be discussing forward-looking statements, which reflect current views with respect to future events and financial performance and are based on current expectations and assumptions which by nature are inherently uncertain and outside of company's control. At this stage, if you could all take a moment to read our disclaimer on Slide 2 of this presentation. I would also like to point out that all amounts quoted, unless otherwise clarified, are implicitly stated in U.S. dollars. We have today released our earnings results for the third quarter of 2025, so let's proceed to discuss these results and update you on the company's strategy and the market in general. Please turn to Slide 3, where we summarize and highlight the company's performances, starting with our financial highlights. For the first 9 months of 2025, we achieved a net income of $5.26 million compared to a net loss of $3 million for the same period in 2024, an increase of 281%. Our voyage revenues decreased by 24% compared to the same period in 2024 due to the drydocking of our Aframax tanker, resulting in a loss of revenue from our highest earning vessel over a period of 74 days. Our TCE rate was also impacted with a drop of 40%. In April 2025, we settled the final outstanding balance of $14.6 million due on our latest addition, the Eco Spitfire. We reported an EBITDA of $10 million compared to $3 million for 2024, an increase of 245%. Slide 4 shows the dry bulk trade for the first 9 months of 2025, the recent U.S.-China trade truce, while fragile should support Q4 rates via more U.S. exports. The iron ore and markets remained resilient, and 2026 could see faster expansion than 2025, driven by South and omni iron box volumes. The market was also supported by strong iron ore volumes to China. Dwindling Chinese iron ore and bauxite mine output will create scope for imports; departures from Guinea to China showed the usual Q3 rainy season weakness. Much of the relatively strong demand has been driven by inventory building and dwindling Chinese mining output rather than rapid growth in demand. Chinese demand is not growing rapidly, but its inventory is hard. Q3 was a much stronger period for seaborne coal trades than the first half of 2025, overall levels remained slightly down against '24 levels. Come 2026, a moderate rebound in coal trade is expected as trade tensions in La Nina remain key risks. The grain trade boomed in Q3, primarily driven by bumper grain volumes in China, but enormous volumes to Brazilian soybeans far later in the year than usual, as it avoided U.S. soybeans as part of the wider trade dispute between the two nations, resulting in U.S. exports falling 35% by the end of Q3. There were also strong grain and soy meal volumes from Argentina, thanks to government cuts in export levies and strong harvests. Camp26, firmer EU production, moderate black seat growth, and strong ECS volumes support a modest rebound in grain flows, a much more vigorous rebound will be from China's return to the market in Q4 with demand expanding well. Minor demand remains resilient as steady manufacturing and construction underpin minor bulk imports. Slide 5 shows the Handysize market fundamentals and the fleet ages and growth. The market outlook shows that from January to September 2025, global exports of all dry bulk commodities loaded on handy super tonnage reached 1.3 to 8 million tons into excess marine vessel tracking data, exports loaded were coal. This was largely due to a slowdown in coal mine output in China. Indian appetite for coal imports was down significantly in Q3, in line with typical seasonal trends. India's demand was also hampered by strong domestic mining. Moving on to the handy fleet in growth, the global Handysize fleet now stands at 3,202 vessels. Of these, 569 vessels are over 20 years of age, accounting for 17.8% of the total number of vessels. With the starting tally of 3,117 vessels, the current fleet represented a change of 2.73% in invested numbers over the year so far. The global Handysize order book now stands at 226 vessels. Of these, 37 vessels are scheduled for delivery within 2025. Currently, the order book to fleet ratio stands at 7.2%, while in comparison, 10.5% of the fleet is over 25 years of age; an average of 7.3% is between 20 and 24 years of age. The average age of the C3Is fleet was 15.2 years by the end of 2025. Slide 6 shows the Aframax LR2 fleet size and as of the end of Q3 2025, the Aframax in service comprised 1,191 vessels with a total deadweight capacity of 131.35 million deadweight, reflecting a year-to-date growth of 3.3%. Deliveries in 2025 reached 47 vessels, demolitions totaled 9 vessels, with 2 vessels removed during Q3. The current order book stands at 197 vessels; the fleet as 20 years totals 252 vessels, representing 21% of the total fleet. The highest number of vessels is in the 15 to 20 years category. The age of our Aframax tanker was 15.2 years by the end of Q3 2025. Slide 7 summarizes the current tanker market fundamentals. Global oil consumption rose only modestly in Q3 and speculations are now growing over an oil supply surplus next year. Chinese crude oil imports were down 0.4% on Q2, but up 5% year-on-year. Chinese oil demand sludges, increasing purchases are cost opportunistic and testing to build up inventories as domestic demand is flatlined. There is only another 2% of total growth in oil demand expected until 2030. War and global uncertainty will keep causing market disruptions, typically boosting earnings; refinery attacks in Russia are just the latest example. Global growth has proven stronger than anticipated in the face of trade tariffs. However, part of this resilience was masked by front-loaded exports. China remains on track to meet this 5% growth target, an outcome that was expected earlier this year. The real test will come next year; even if Chinese exports remain strong, next exports are unlikely to grow as much as in 2025. China-U.S. relations have seen a one-year truce agreed, but some tariffs remain without a comprehensive long-term deal, uncertainty will persist. The recent U.S. tariff reduction on Chinese goods is marginal, now 47%, down from 57% and China-U.S. trade is expected to keep declining. Geopolitical uncertainty continues to dominate, especially the U.S.-China trade situation. Late October saw a one-year truce agreed with U.S. tariffs on China reduced to 47% and other measures delayed. Early Q4 saw the Israel-Hamas situation which is holding for now. Ships still avoid the Red Sea despite the gas and ongoing conflict, this continues to mask oversupply. It will take time for the route to be deemed safe. There was little land inside to crane work, but the U.S. is now talking tougher on sanctions with implications for oil and tanker markets. Q3 was all about waiting for the IMO vote on net-zero measures in October. The vote was eventually delayed until next year after U.S. lobbying against the rules. Should the rules pass, they would have effectively introduced a carbon tax on burning fuel oil. Slide 8 shows the current fleet of C3Is. C3Is owns and operates a fleet of 300 drybulk carriers and one Aframax oil tanker. In May 2024, the company took delivery of the 33,000 deadweight dry bulk carrier Veeco Speedfire, bringing the total fleet capacity to 213,000 deadweight, with an average age of 14.8 years at the end of Q3. All vessels have had their ballast water systems installed. The successful dry dock was completed in August 2025, and the next one is scheduled for August 2028. All the vessels are unencumbered and currently employed on short to medium-term period charters and spot voyages. None of the vessels were built in China and are not affected by the newly postponed tariffs. Slide 9 shows examples of the international charters with whom the management company has developed strategic relationships and has experienced repeat business. Repeat business highlights the confidence our customers have in our operations and the satisfaction with the services we provide. The key to maintaining these relationships with these companies is the high standards of safety and reliability of service. I will now turn over the call to Nina Pyndiah for our financial performance.

Thank you, Diamantis, and good morning to everyone. Please turn to Slide 10, and I will go through our financial performance for the first 9 months of 2025. We reported voyage revenues of $24.2 million for the first 9 months of 2025 compared to $32.9 million in 2024, a reduction of 26%, primarily due to the dry docking of our Aframax tanker, which resulted in 74 non-revenue days. The time charter equivalent rates of our vessels were also impacted with a decrease of 40% compared to the same period of 2024. Voyage costs for the first 9 months of 2025 were $9.4 million compared to $10.4 million in 2024; this decrease was attributed to the decrease in voyage days due to the dry docking of the Aframax tanker. Voyage costs for the 9 months ended September 30, 2025, mainly included bunker costs of $4.7 million, corresponding to 49% of total voyage expenses, and port expenses of $3.8 million, corresponding to 40% of total voyage expenses. Operating expenses for the 9 months ended September 30, 2025, were $7 million and mainly included crew expenses of $3.5 million, corresponding to 50% of total operating expenses, spares and consumables costs of $1.6 million, and maintenance expenses of $1 million representing works and repairs on the vessels. The dry docking costs were $1.7 million. General and administrative costs for the 9 months ended September 30, 2025, were $2 million compared to $2.5 million in 2024; the $0.5 million decrease was primarily related to expenses incurred in the 9 months ended September 2024 relating to the two public offerings. September 30, 2025, saw general and administrative costs at $4.9 million, a $300,000 increase from $4.6 million for the same period of last year due to the increase in the average number of our vessels. Interest and finance costs for the 9 months ended September 30, 2025, and 2024, were $400,000 and $2.1 million, respectively. The $1.7 million decrease is related to the accrued interest expense related party in connection with $53.3 million, part of the acquisition price of our tanker, which was completely repaid in July 2024, and our bulk carrier, which was completely paid in April 2025. The gain on warrants for the 9 months ended September 30, 2025, was $6.7 million as compared with a loss on warrants of $10.4 million for the same period and mainly related to the net fair value changes on our Class B1 and Class B2 warrants and C1 and C2, as these were classified as liabilities. For the first 9 months of 2025, the company reported a net income of $5.3 million and an EPS of 3.34%. Turning to Slide 11 for the balance sheet, we had a cash balance of $6.6 million compared to $12.6 million at the end of 2024, a decrease of 48% due to the full settlement of 90% of the purchase price of the Eco Spitfire in Q2 2025. Other current assets mainly include charges receivable of $3.5 million compared to $2.8 million in December 2024, as well as inventories of $600,000 compared to $900,000 in December 2024. The vessels net value was $79 million for the four vessels, less depreciation. Trade accounts payable of $1.8 million are balances due to suppliers and brokers. Payable to related party of $4.3 million represents the balance due to the management company, Race Maritime. Warrant liability of $3.9 million was recorded, a drop of 63% from the year-end balance in 2024 when it was $10.4 million. Concluding the presentation on Slide 12, we outline the key variables that will assist us progress with our company's growth. Earning a high-quality fleet reduces operating costs, improves safety, and provides a competitive advantage in securing favorable charters. We maintain the quality of the vessels by carrying out regular inspections, both while in port and at sea, and adopting a comprehensive maintenance program for each vessel. None of our vessels were built from Chinese shipyards, hence, the ongoing tariff debates by the U.S. to China will be of no consequence to our fleet. The company's strategy is to follow disciplined growth within depth technical and conditional assessment review. Equity issuances will continue as management is continuously seeking a timely and selective acquisition of quality non-Chinese built vessels, with the current focus on short to medium-term charters and spot voyages. We always charter to high-quality charters, such as commodity traders, industrial companies, and oil producers and refineries. Despite having increased our fleet by 234% since inception, the company has no bank debt. New interests were charged by the affiliated sellers on the purchase prices of the EcoSpitfire. From July 2023 to date, we have repaid all of our CapEx obligations totaling $59.2 million without resorting to bank loans. At this stage, our CEO, Dr. Diamantis Andriotis, will summarize the concluding remarks for the period examined.

For the first 9 months of 2025, we reported voyage revenues of $24.2 million and EBITDA of $10.3 million, an increase of 245%, and net income of $5.3 million, an increase of 281%, with an EPS of 3.5%. In April 2025, we paid off the remaining balance of $14.6 million due on our bulk carrier, the Eco Speed fire. In August 2025, we successfully completed the dry docking of our Aframax tanker; we are fully deleveraged, thus significantly enhancing our financial flexibility. As the world goes through an uncertain volatile period, turbulences in the shipping market are unavoidable. The market remains as uncertain as they have ever been due to this geopolitical environment. But despite all this uncertainty, major economies are still growing and trade volumes are still rising across sectors. In the midst of these dynamics, C3Is performance remained solid, and we have proven that we have built resilient and organic foundations adaptable to this changing environment. We will, therefore, continue with our strategy with our debt-free balance sheet of enhancing our fundamental ability to both further develop existing core businesses as well as explore potential new growth businesses. We would like to thank you for joining us today and look forward to having you with us again at our next call for the results of the fourth quarter of 2025.

This concludes today's call. Thank you for participating. You may now all disconnect. Have a nice day.