Performance Shipping Inc. a global shipping company specializing in the ownership of tanker vessels, reported net income of $15.7 million and net income attributable to common stockholders of $4.6 million for the first quarter of 2023. Net income attributable to common stockholders for the three-month period ended March 31, 2023, has been adjusted by aggregate non-cash items of $10.6 million, as per US GAAP accounting standards, which do not affect the Company's operating cash flows, EBITDA or performance overall. The 2023 first quarter results compared to a net loss of $2.1 million and net loss attributable to common stockholders of $11.5 million for the same period in 2022. Earnings per share, basic and diluted, for the first quarter of 2023 were $0.68 and $0.55, respectively, while loss per share for the first quarter of 2022 was $51.46.
Revenue was $29.5 million ($28.0 million net of voyage expenses) for the first quarter of 2023, compared to $8.6 million ($5.2 million net of voyage expenses) for the same period in 2022. 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 2023 was $41,157, compared with an average rate of $12,352 for the same period in 2022. During the first quarter of 2023, net cash provided by operating activities was $18.7 million, compared with net cash used in operating activities of $3.9 million for the first quarter of 2022.
Commenting on the results of the first quarter of 2023, Andreas Michalopoulos, the Company’s Chief Executive Officer, stated:
“During the first quarter of 2023, tanker market fundamentals remained strong, supported by the ongoing shifts in trade patterns resulting from sanctions on Russian crude oil exports, thus benefiting longer haul tanker voyages. Improved ton-mile demand, coupled with limited supply growth and recovering demand from China, created a solid tanker charter rate environment, enabling our Company to achieve a fleetwide average time charter equivalent rate of $41,157 per day during the first quarter of 2023. As a result, we generated revenues of $29.5 million and net income of $15.7 million during this quarter, representing increases of 245% and 855%, respectively, from the first quarter of the previous fiscal year. Our cash balance at the end of the quarter was approximately $66 million corresponding to a 67% increase on a quarterly basis and representing 8.0x 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 0.3x.
“We believe that the overall positive developments in the tanker market and the firm freight rate environment will be sustainable through 2023 and beyond. During 2022, we took several steps towards our stated goal of fleet expansion and renewal. This included four timely acquisitions of younger Aframax tankers with high specifications that were completed at values significantly below current levels, as well as the disposal of an older vessel. In the first quarter of 2023, we entered into a contract for the purchase of a newbuild LNG-ready LR2 Aframax tanker with a 2025 delivery date. This decision is consistent with our view of sustainable market fundamentals and higher asset values going forward. With these recent developments, our Company is well positioned to capture the prevailing strong market conditions and generate significant cash flow. Currently, five of our tankers operate under time charter contracts with first-class charterers, earning gross charter rates ranging from $23,000 to $45,000 per day and resulting in aggregate fixed revenues of approximately $54.0 million for the remaining charter periods. Our remaining vessels operate under pool arrangements with reputable counterparties, earning healthy voyage charter rates which further supplement our secured revenue backlog.
“Despite what we consider to be sustainably strong fundamentals for our sector, we believe the value of our common shares is extremely low when compared with our quarterly earnings and cash on hand. In light of that, we commenced a $2.0 million share buyback program in April, which we believe is in the best interests of both our Company and our shareholders. Pursuant to this program, we have repurchased 1,518,113 shares of our common stock to date at an average price of $0.84 per share.”
Tanker Market Update for the First Quarter of 2023:
Tanker fleet supply was 681.2 million dwt, up 0.8% from 675.5 million dwt from the previous quarter and up 3.4% from Q1 2022 levels of 658.7 million dwt.
Tanker demand in billion tonne-miles is projected to increase by a firm 7.5% in 2023, supported by the increased Chinese demand for crude oil imports as well as by the ongoing trade pattern shifts being established as a result of the European sanctions imposed on Russian crude oil, which benefit longer-haul distances.
Tanker fleet supply in deadweight terms is estimated to grow by a moderate 2.1% in 2023.
Crude oil tanker fleet utilization averaged 87.3%, down from 88.3% in the previous quarter and up from 77.0% in Q1 2022.
Newbuilding tanker contracting was just 4.5 million dwt in the first quarter, resulting in a tanker orderbook-to-fleet ratio of 4.0%, the lowest level of the past 28 years.
Daily spot charter rates for Aframax tankers averaged $78,764, down 13.4% from the previous quarter average of $90,991 and up 144.1% from the Q1 2022 average of $32,266.
The value of a 10-year-old Aframax tanker at the end of the first quarter was $50.0 million, up 11.1% from $45.0 million in the previous quarter, and up 81.8% from $27.5 million in Q1 2022.
The number of tankers used for floating storage (excluding dedicated storage) was 117 (19.0 million dwt), down 21.0% from 148 (23.5 million dwt) in the previous quarter and down 23.0% from Q1 2022 levels of 152 (23.4 million dwt).
Global oil consumption was 99.9 million bpd, up 0.2% from the previous quarter level of 99.7 million bpd, and up 1.4% from Q1 2022 levels of 98.5 million bpd.
Global oil production was 101.3 million bpd, up 0.1% from the previous quarter level of 101.2 million bpd and up 2.5% from Q1 2022 levels of 98.7 million bpd.
OECD commercial inventories were 2,808 million barrels, up 1.5% from the previous quarter level of 2,766 million barrels, and up 7.8% from Q1 2022 levels of 2,604 million barrels.
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.
