Performance Shipping Reports Q1 Financial Results

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Performance Shipping reported a net loss from continuing and discontinued operations of $2.1 million and net loss from continuing and discontinued operations attributable to common stockholders of $11.5 million for the first quarter of 2022, compared to a net loss from continuing and discontinued operations and net loss from continuing and discontinued operations attributable to common stockholders of $2.9 million for the same period in 2021.

Net loss from continuing and discontinued operations attributable to common stockholders for the three-month period ended March 31, 2022 included a one-time non-cash deemed dividend of $9.3 million, stemming from the exchange of shares of certain holders of our common stock for shares of Series B preferred stock at the closing of the tender offer in January 2022.

Revenue from continuing and discontinued operations was $8.6 million ($5.2 million net of voyage expenses) for the first quarter of 2022, compared to $8.4 million ($3.5 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 first quarter of 2022 was $12,352, compared with an average rate of $7,691 for the same period in 2021. During the first quarter of 2022, net cash used in operating activities of continuing and discontinued operations was $3.9 million, compared with net cash used in operating activities of continuing and discontinued operations of $1.4 million for the first quarter of 2021.

As of March 31, 2022, the Company’s number of common shares issued and outstanding was 2,592,421. As of the date hereof, the number of common shares issued and outstanding is 10,395,030. During the first quarter of 2022 and up to the date hereof, the Company sold in its previously announced at-the-market offering an aggregate of 526,916 common shares at a weighted average sales price of $2.94, for total proceeds of approximately $1.5 million, net of commissions and other expenses. In addition, in the second quarter of 2022, the Company sold in an underwritten public offering 7,620,000 units at a price of $1.05 per unit, with each unit consisting of one common share and one warrant to purchase one common share, for total proceeds of approximately $7.4 million, net of underwriters’ fees and commissions.

On June 21, 2022, the Company announced its agreement to acquire its sixth Aframax tanker with expected delivery on or about July 5, 2022. The acquisition cost of approximately $27.6 million will be financed with cash on hand and the incurrence of debt through a new senior secured facility that the Company anticipates it will enter into prior to delivery of the vessel.

Commenting on the results of the first quarter of 2022 and subsequent developments, Andreas Michalopoulos, the Company’s Chief Executive Officer, stated:

“The first two months of 2022 saw a continuation of the very soft charter rates that prevailed throughout 2021. In March 2022, we saw a marked improvement in rates due to the unfortunate Russian invasion of Ukraine, which resulted in higher volumes of crude oil being transported over longer distances to meet increasing global crude oil demand. We gradually took advantage of the improved spot charter market as we undertook positioning voyages, resulting in fleetwide average time charter equivalent rates of $12,352 per day during the first quarter and in a net loss of $2.1 million from our fleet operations. The one-time non-cash deemed dividend from our exchange offer has no impact on our results from operations or the cash position of the Company. So far, during the second quarter of 2022, our fleetwide average time charter rates are significantly above those of the first quarter of 2022.

“We believe that the encouraging freight rate developments experienced during the latter part of the first quarter of 2022, and continuing into the current quarter, point toward a sustainable charter rate recovery in the medium term that we now expect to take advantage of with our expanded fleet of six Aframax tankers. Positive crude oil demand prospects and the urgent need for global crude oil inventory restocking are resulting in increased crude oil production. We expect the rising demand for seaborne transportation coupled with low expected fleet growth and emission-related supply constraints to support higher charter rates for our vessels.

“During the first quarter of 2022, we completed the special survey and the installation of the ballast water treatment system (BWTS) on the M/T Blue Moon, and we intend to complete the same works on our M/T P. Kikuma during the fourth quarter of this year. Based on this plan, having 100% of our existing fleet BWTS fitted by the end of this year and no scheduled special surveys for 2023 will allow full utilization of our vessels.

“As a result of our financial results, and in accordance with our dividend policy, we will not declare a dividend for our Q1 2022 results from operations.”

Tanker Market Update for the first quarter of 2022:

  • Tanker fleet supply was 658.2 million dwt, up 0.9% from 652.3 million dwt from the previous quarter and up 1.7% from Q1 2021 levels of 647.5 million dwt.
  • Tanker demand in billion tonne-miles is projected to increase by a firm 7.6% in 2022, supported by the continued easing of OPEC crude oil production cuts along with a shift in trading patterns to longer-haul distances emerging due to the Russia-Ukraine war.
  • Tanker fleet supply in deadweight terms is estimated to grow by a moderate 2.4% in 2022.
  • Crude oil tanker fleet utilization was estimated at 78.0%, slightly down from 79.0% in the previous quarter and at the same levels of 78.0% in Q1 2021.
  • Newbuilding tanker contracting was just 0.6 million dwt in the first quarter, resulting in a tanker orderbook to fleet ratio of 6.1%, the lowest level seen since 1996.
  • Daily spot charter rates for Aframax tankers averaged $32,266, up 190.9% from the previous quarter average of $11,093 and up 206.5% from the Q1 2021 average of $10,527.
  • The value of a 10-year-old Aframax tanker at the end of the first quarter was $27.5 million, up 1.9% from $27.0 million in the previous quarter, and up 17.0% from $23.5 million in Q1 2021.
  • The number of tankers used for floating storage (excluding dedicated storage) was 146 (21.3 million dwt), down 13.6% from 169 (25.6 million dwt) from the previous quarter and down 12.6% from Q1 2021 levels of 167 (26.4 million dwt).
  • Global oil consumption was 98.9 million bpd, down 1.6% from the previous quarter level of 100.4 million bpd, and up 4.9% from Q1 2021 levels of 94.2 million bpd.
  • Global oil production was 98.8 million bpd, up 0.6% from the previous quarter level of 98.3 million bpd and up 6.8% from Q1 2021 levels of 92.5 million bpd.
  • OECD commercial inventories were 2,623.8 million barrels, down 3.0% from the previous quarter level of 2,704.2 million barrels, and down 11.5% from Q1 2021 levels of 2,965.9 million barrels.
  • During the global gradual recovery from COVID-19, we continue to take proactive measures to ensure the health and wellness of our crew and onshore employees while endeavoring to maintain effective business continuity and uninterrupted service to our customers. While the situation is improving, we continue to incur increased costs as a result of the restrictions imposed in various jurisdictions creating delays and additional complexities with respect to port calls and crew rotations.

The above market outlook update is based on information, data, and estimates derived from industry sources. There can be no assurances that such trends will continue or that anticipated developments in tanker demand, fleet supply or other market indicators will materialize. While we believe the market and industry information included in this release to be generally reliable, we have not independently verified any third-party information or verified that more recent information is not available.

Summary of Selected Financial & Other Data (Continuing and Discontinued Operations1 )
For the three months ended March 31,
2022 2021
(unaudited) (unaudited)
STATEMENT OF OPERATIONS DATA (in thousands of US Dollars):
Revenue $ 8,568 $ 8,397
Voyage expenses 3,380 4,936
Vessel operating expenses 3,327 2,878
Net loss (2,080 ) (2,853 )
Net loss attributable to common stockholders (11,478 ) (2,853 )
Loss per common share, basic and diluted (3.43 ) (0.57 )
FLEET DATA
Average number of vessels 5.0 5.0
Number of vessels 5.0 5.0
Ownership days 450 450
Available days 420 450
Operating days (2) 400 373
Fleet utilization 95.2 % 82.9 %
AVERAGE DAILY RESULTS
Time charter equivalent (TCE) rate (3) $ 12,352 $ 7,691
Daily vessel operating expenses (4) $ 7,393 $ 6,396

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(1) Discontinued Operations refer to our container vessels segment that we disposed of in 2020.

(2) Operating days are the number of available days in a period less the aggregate number of days that our vessels are off-hire. The specific calculation counts as on-hire the days of the ballast leg of the spot voyages, as long as a charter party is in place. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.

(3) Time charter equivalent rates, or TCE rates, are defined as revenue (voyage, time charter and pool revenue), less voyage expenses during a period divided by the number of our available days during the period, which is consistent with industry standards. Voyage expenses include port charges, bunker (fuel) expenses, canal charges and commissions. TCE is a non-GAAP measure. TCE rate is a standard shipping industry performance measure used primarily to compare daily earnings generated by vessels despite changes in the mix of charter types.

(4) Daily vessel operating expenses, which include crew wages and related costs, the cost of insurance and vessel registry, expenses relating to repairs and maintenance, the costs of spares and consumable stores, lubricant costs, tonnage taxes, regulatory fees, environmental costs, lay-up expenses and other miscellaneous expenses, are calculated by dividing vessel operating expenses by ownership days for the relevant period.

Fleet Employment Profile (As of June 29, 2022)
Performance Shipping Inc.’s fleet is employed as follows:
Vessel Year of Build Capacity Builder Charter Type
Aframax Tanker Vessels
1 BLUE MOON 2011 104,623 DWT Sumitomo Heavy Industries Marine & Engineering Co., LTD. Spot
2 BRIOLETTE 2011 104,588 DWT Sumitomo Heavy Industries Marine & Engineering Co., LTD. Pool
3 P. FOS 2007 115,577 DWT Sasebo Heavy Industries Co. Ltd Pool
4 P. KIKUMA 2007 115,915 DWT Samsung Heavy Industries Co Ltd. Spot
5 P. YANBU 2011 105,391 DWT Sumitomo Heavy Industries Marine & Engineering Co., LTD. Pool

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