Performance Shipping Inc., a global shipping company specializing in the ownership of tanker vessels, reported a record net income from continuing and discontinued operations of $10.7 million and net income from continuing and discontinued operations attributable to common stockholders of $10.4 million for the third 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 $2.2 million for the same period in 2021. Earnings per share, basic and diluted, for the third quarter of 2022 was $0.26 and $0.10, respectively, while loss per share for the third quarter of 2021 was $0.43.
Revenue from continuing and discontinued operations was $22.1 million ($18.8 million net of voyage expenses) for the third quarter of 2022, compared to $9.3 million ($4.3 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 third quarter of 2022 was $34,411, compared with an average rate of $9,335 for the same period in 2021. During the third quarter of 2022, net cash provided by operating activities of continuing and discontinued operations was $11.8 million, compared with $0.2 million for the third quarter of 2021.
Net income from continuing and discontinued operations for the nine months ended September 30, 2022 amounted to $12.5 million, compared to a net loss from continuing and discontinued operations of $7.7 million for the nine months ended September 30, 2021. Net income from continuing and discontinued operations attributable to common stockholders for the nine months ended September 30, 2022 amounted to $2.6 million, and resulted in earnings per share, basic and diluted, of $0.16 and $0.04, respectively. Net loss from continuing and discontinued operations attributable to common stockholders for the nine months ended September 30, 2021 amounted to $7.7 million, and resulted in a loss per common share of $1.52.
Separately, the Company today announced that its Board of Directors has determined to effect a reverse stock split of the Company’s common shares, par value $0.01 per share, at a ratio of one-for-fifteen. The Company’s shareholders authorized the Company’s Board of Directors to implement the reverse stock split at the Company’s Special Meeting of Shareholders held on November 7, 2022. The reverse stock split is intended to bring the Company into compliance with the minimum $1.00 per share bid price requirement for maintaining its listing on the Nasdaq Capital Market.
The reverse stock split is expected to take effect, and the Company’s common shares to begin trading on a split-adjusted basis on the Nasdaq Capital Market under the existing trading symbol “PSHG,” as of the opening of trading on November 15, 2022. For additional information, please see “Results of Special Meeting of Shareholders and Reverse Stock Split” below.
Commenting on the results of the third quarter of 2022, Andreas Michalopoulos, the Company’s Chief Executive Officer, stated:
“During the third quarter of 2022, tanker market fundamentals improved, supported by changes in trading patterns as a result of sanctions on Russian crude oil exports and shifts in refinery locations leading to long haul tanker voyages. We took advantage of the improved tanker charter rate environment, resulting in fleetwide average time charter equivalent rates of $34,411 per day during the third quarter of 2022. As a result, we generated revenues of $22.1 million and our highest-ever quarterly net income of $10.4 million, a 32% and a 184% increase from the previous quarter respectively. Our free cash balance at the end of the quarter was approximately $26 million representing 1.4x our current market capitalization. Our basic earnings per share for the quarter annualized and compared to our current share price represent a price to earnings ratio of approximately 0.3.
“We believe that the encouraging tanker market developments experienced during the last few months and continuing into the current quarter, indicate a promising trend towards a sustainably high charter rate environment. The three recent acquisitions of younger tankers with higher specifications, two of which have already been delivered to the Company and the third expected to be delivered by early December, and the concurrent sale of the oldest vessel in our fleet, positions us to capture the strong prevailing market conditions and generate significant cash flow with the efficient operations of our expanding and renewed fleet. Within December, four of our tankers will be operating under time charter contracts with first-class charterers and earning lucrative gross charter rates ranging from $23,000 to $45,000 per day, showcasing our ability to secure fixed revenue at high charter rates, while establishing solid partnerships with reputable counterparties. Our current intention is that our remaining vessels will continue to operate in the spot market, where voyage charter rates for Aframax tankers are at historically high levels, currently in excess of $40,000 per day.
“Despite what we see as sustainably strong fundamental conditions in the charter market that should continue, we perceive the market valuation of our common shares to be extremely low, not just in relation to our outsized earnings this quarter, but also in relation to the value of our assets, as our current market capitalization represents only 12% of our current estimated net asset value.”
Tanker Market Update for the third quarter of 2022:
Tanker fleet supply was 669.8 million dwt, up 0.8% from 664.3 million dwt from the previous quarter and up 2.7% from Q3 2021 levels of 652.3 million dwt.
Tanker demand in billion tonne-miles is projected to increase by a firm 4.5% in 2022, supported by new trading developments benefiting longer-haul routes and resulting from, among other things, the ongoing Russia-Ukraine war and from European sanctions on Russian exports expected to come into force in December.
Tanker fleet supply in deadweight terms is estimated to grow by a moderate 3.2% in 2022.
Crude oil tanker fleet utilization was estimated at 79.5%, up from 79.0% in the previous quarter and up from 76.9% in Q3 2021.
Newbuilding tanker contracting was just 2.0 million dwt in the third quarter, resulting in a tanker orderbook to fleet ratio of 4.5%, the lowest level seen in the past 27 years.
Daily spot charter rates for Aframax tankers averaged $52,610, up 13.3% from the previous quarter average of $46,438 and up 1,412.3% from the Q3 2021 average of $3,479.
The value of a 10-year-old Aframax tanker at the end of the third quarter was $42.0 million, up 20.0% from $35.0 million in the previous quarter, and up 61.5% from $26.0 million in Q3 2021.
The number of tankers used for floating storage (excluding dedicated storage) was 174 (25.5 million dwt), down 0.6% from 175 (26.0 million dwt) in the previous quarter and up 3.0% from Q3 2021 levels of 169 (25.9 million dwt).
Global oil consumption was 99.5 million bpd, up 0.8% from the previous quarter level of 98.8 million bpd, and up 1.2% from Q3 2021 levels of 98.4 million bpd.
Global oil production was 101.2 million bpd, up 2.6% from the previous quarter level of 98.6 million bpd and up 4.6% from Q3 2021 levels of 96.8 million bpd.
OECD commercial inventories were 2,750.7 million barrels, up 3.8% from the previous quarter level of 2,650.8 million barrels, and down 0.2% from Q3 2021 levels of 2,755 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.
Source: Performance Shipping Inc.