Performance Shipping posts strong Q4 financial results

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Performance Shipping reported a record quarterly net income from continuing and discontinued operations of $23.8 million and net income from continuing and discontinued operations attributable to common stockholders of $9.4 million for the fourth quarter of 2022. This compared to a net loss from continuing and discontinued operations and net loss from continuing and discontinued operations attributable to common stockholders of $2.1 million for the same period in 2021. Earnings per share, basic and diluted, for the fourth quarter of 2022 was $2.31 and $1.18, respectively, while loss per share for the fourth quarter of 2021 was $6.11.

Revenue from continuing and discontinued operations was $27.8 million ($25.0 million net of voyage expenses) for the fourth quarter of 2022, compared to $9.6 million ($5.4 million net of voyage expenses) for the same period in 2021. This increase was attributable to the increased time-charter equivalent rates (TCE rates) achieved during the quarter. Fleetwide, the average time charter equivalent rate for the fourth quarter of 2022 was $40,469, compared with an average rate of $13,370 for the same period in 2021. During the fourth quarter of 2022, net cash provided by operating activities of continuing and discontinued operations was $23.7 million, compared with net cash used in operating activities of $1.8 million for the fourth quarter of 2021.

Net income from continuing and discontinued operations for the year ended December 31, 2022 amounted to $36.3 million, compared to a net loss from continuing and discontinued operations of $9.7 million for the year ended December 31, 2021. Net income from continuing and discontinued operations attributable to common stockholders for the year ended December 31, 2022 amounted to $12.0 million, and resulted in earnings per share, basic and diluted, of $6.49 and $3.02, respectively. Net loss from continuing and discontinued operations attributable to common stockholders for the year ended December 31, 2021 amounted to $9.7 million and resulted in a loss per common share of $28.97.

During the fourth quarter of 2022, the Company issued and sold 140,379 shares of its common stock under its ATM Agreement with Virtu Americas LLC, with an average price per share of $3.59, raising gross proceeds of approximately $0.5 million. As of December 31, 2022, the Company had 4,187,588 common shares issued and outstanding.

Commenting on the results of the fourth quarter of 2022, Andreas Michalopoulos, the Company’s Chief Executive Officer, stated:

“During the fourth quarter of 2022, tanker market fundamentals continued to improve, supported by new trade patterns emerging in response to continuing sanctions on Russian crude oil exports and shifts in the location of new refinery capacity leading to longer haul tanker voyages. We took advantage of the firm tanker charter rate environment, resulting in fleetwide average time charter equivalent rates of $40,469 and $29,579 per day during the fourth quarter and twelve months of 2022, respectively. As a result, we generated annual revenues of $75.2 million and annual net income from continuing operations of $36.3 million, a 106% and a 474% increase from the previous fiscal year, respectively. Our net income from continuing operations during the fourth quarter alone was $23.8 million, indicating the tightening tanker market conditions during the fourth quarter. Our cash balance at the end of the year was approximately $40 million representing 3.2x our current market capitalization. Our basic earnings per share for the last fiscal year compared to our current share price represent a price-to-earnings ratio of approximately 0.4x.

“We believe that the tanker market developments since the beginning of 2022 are sustainable through 2023 and beyond. During 2022 we expanded and renewed our fleet with timely acquisitions at values significantly below current levels and now own eight younger high-specification Aframax tankers with an average age of 12.1 years. Five of our tankers currently operate under time charter contracts with first-class charterers, earning gross charter rates ranging from $23,000 to $45,000 per day. Our secured revenue backlog of approximately $85 million is supplemented by the operation of our remaining vessels under pool arrangements with reputable counterparties earning healthy voyage charter rates, indicative of the solid freight rate environment.”

Tanker Market Update for the fourth quarter of 2022:

Tanker fleet supply was 675.3 million dwt, up 0.7% from 670.8 million dwt from the previous quarter and up 3.5% from Q4 2021 levels of 652.6 million dwt.

Tanker demand in billion tonne-miles is projected to increase by a firm 7.6% in 2023, supported by new trade patterns established as a result of European sanctions on Russian crude oil. As Europe uses alternative sources of crude oil and Russia sells to alternative buyers, longer-haul trade routes are emerging, boosting tonne-mile demand.

Tanker fleet supply in deadweight terms is estimated to grow by a moderate 1.4% in 2023.

Crude oil tanker fleet utilization was estimated at 80.0%, up from 79.5% in the previous quarter and up from 79.0% in Q4 2021.

Newbuilding tanker contracting was just 3.0 million dwt in the fourth quarter, resulting in a tanker orderbook-to-fleet ratio of 4.3%, the lowest level of the past 27 years.

Daily spot charter rates for Aframax tankers averaged $90,991, up 73.0% from the previous quarter average of $52,610 and up 720.3% from the Q4 2021 average of $11,093.

The value of a 10-year-old Aframax tanker at the end of the fourth quarter was $45.0 million, up 7.1% from $42.0 million in the previous quarter, and up 66.7% from $27.0 million in Q4 2021.

The number of tankers used for floating storage (excluding dedicated storage) was 148 (23.6 million dwt), down 17.8% from 180 (26.1 million dwt) in the previous quarter and down 15.4% from Q4 2021 levels of 175 (27.4 million dwt).

Global oil consumption was 99.7 million bpd, down 0.7% from the previous quarter level of 100.4 million bpd, and up 0.4% from Q4 2021 levels of 99.3 million bpd.

Global oil production was 101.4 million bpd, up 0.6% from the previous quarter level of 100.8 million bpd and up 3.1% from Q4 2021 levels of 98.3 million bpd.

OECD commercial inventories were 2,782.7 million barrels, up 1.7% from the previous quarter level of 2,735.2 million barrels, and up 5.4% from Q4 2021 levels of 2,640.2 million barrels.

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