Earnings call transcript: United Maritime Q4 2024 misses EPS forecast

United Maritime Corporation reported disappointing financial results for Q4 2024, with earnings per share (EPS) falling short of expectations. The company posted an EPS of -$0.41, below the forecasted -$0.31, alongside a revenue of $9.5 million, which also missed the anticipated $10.4 million. Following the earnings announcement, United Maritime’s stock dropped 12.77% in pre-market trading, reflecting investor concerns over the company’s performance. According to InvestingPro data, the company maintains impressive gross profit margins of 51.27%, despite operating with a significant debt burden of $101.11 million. For detailed analysis and 8 additional key insights about United Maritime, subscribers can access the comprehensive Pro Research Report.

Key Takeaways

• United Maritime’s Q4 2024 EPS of -$0.41 missed the forecast by $0.10.
• Revenue for the quarter was $9.5 million, falling short of the $10.4 million forecast.
• The company’s stock price fell by 12.77%, closing at $1.64.
• Full-year 2024 net revenue increased significantly, despite a net loss.
• The company remains optimistic about long-term market fundamentals.

Company Performance

United Maritime’s overall performance in Q4 2024 was marked by a decline in quarterly net revenue to $10.8 million from $11.6 million in the same period the previous year. However, the company reported a significant increase in full-year 2024 net revenue, reaching $45.4 million. Despite this growth, United Maritime recorded a net loss of $3.4 million for the year, contrasting with a $200,000 profit in 2023.

Financial Highlights

• Q4 2024 Revenue: $9.5 million (forecast: $10.4 million)
• Full Year 2024 Net Revenue: $45.4 million (up from previous year)
• Q4 2024 Adjusted EBITDA: $5.1 million (up 11% from 2023)
• Net Loss for 2024: $3.4 million (compared to $200,000 profit in 2023)

Earnings vs. Forecast

United Maritime’s Q4 2024 earnings per share of -$0.41 were below the forecasted -$0.31, marking a significant miss. The revenue of $9.5 million also fell short of the $10.4 million forecast, indicating challenges in meeting market expectations. This performance represents a deviation from the company’s historical trend of beating or meeting estimates.

Market Reaction

Following the earnings release, United Maritime’s stock experienced a sharp decline of 12.77%, closing at $1.64. This drop reflects investor disappointment with the earnings miss and concerns over the company’s ability to meet future targets. The stock’s performance contrasts with its 52-week high of $2.98, indicating a challenging period for the company.

Outlook & Guidance

Despite the current setbacks, United Maritime remains optimistic about the drybulk market’s long-term fundamentals. The company has projected higher Time Charter Equivalent (TCE) rates in the upcoming quarters of 2025. Additionally, United Maritime has secured significant debt financing and completed sale and leaseback agreements, which are expected to bolster its financial position. InvestingPro subscribers have access to detailed financial health scores and comprehensive analysis of the company’s debt structure, helping investors make more informed decisions. The platform’s Pro Research Report covers critical metrics and expert insights for over 1,400 US stocks, including United Maritime.

Executive Commentary

Stamatis Santanis, CEO of United Maritime, stated, "United in its short three-year history has created a strong track record of well-timed shipping investments." He added, "We remain very optimistic about Capesize markets’ long-term fundamentals." CFO Stavros Givtakis emphasized the company’s strategic fleet optimization, noting, "We continue to optimize our fleet on the back of very well-timed sale purchase activities."

Risks and Challenges

• Seasonal slowdown in the drybulk market.
• High inventory levels in China’s dry bulk imports.
• Potential disruptions in the Red Sea trade.
• Uncertainty surrounding the reopening of the grain corridor in Ukraine.
• Macroeconomic pressures affecting global trade dynamics.

By addressing these challenges and leveraging its strategic initiatives, United Maritime aims to navigate the current market environment and capitalize on future growth opportunities.

Full transcript - United Maritime Corp (USEA) Q4 2024:

Conference Operator: Thank you for standing by, ladies and gentlemen, and welcome to the United Maritime Corporation Conference Call on the Fourth Quarter and Year End 12/31/2024 Financial Results. We have with us Mr. Stamatis Santanis, Chairman and CEO and Mr. Stavros Givtakis, Chief Financial Officer of United Maritime Corporation. At this time, all participants are in a listen only mode.

There will be a question and answer session. Please be advised that this conference call is being recorded today, Tuesday, 03/18/2025. The archived webcast of this conference call will soon be made available on the United Maritime website, www.unitedmaritime.gr under the Investors section. Many of the remarks today contain forward looking statements based on current expectations. Actual results may differ materially from the results projected from those forward looking statements.

Additional information concerning factors that can cause the actual results to differ materially from those in the forward looking statements is contained in the fourth quarter and year end 12/31/2024, earnings release, which is available on the United Maritime website, again, www.unitedmaritime.gr. I would now like to turn the conference over to one of your speakers today, the Chairman and CEO of the company, Mr. Stamatis Santanes. Please go ahead, sir.

Stamatis Santanis, Chairman and CEO, United Maritime Corporation: Good afternoon. Welcome to United Maritime’s conference call to discuss our Q4 and full year 2024 financial results. During 2024, we made significant progress in executing our strategic plan to build and operate a high quality drybulk fleet, reflecting our confidence on the sector, particularly in the larger vessel segment. After building up our drybulk fleet in 2023, primarily through bareboat in structures with favorable purchase options and other bridge financing structures, this year our focus shifted towards securing long term financing agreements and seamlessly integrating the new vessels into United’s fleet and operational framework. I would like to remind to everyone in this call that United has completed this second investment cycle without diluting its shareholders.

Through our financing initiatives, we have successfully addressed all upcoming debt maturities until the fourth quarter of twenty twenty six, reinforcing our capital position and our ability to generate attractive returns on capital for our shareholders. Following on our commitment to capital returns, United declared a total of $0.235 of dividends per share for 2024, while also repurchased about 2% of the outstanding common shares. However, considering the performance of the Panamax CamSarmax market in the recent months, our Board has approved a reduced dividend of $0.01 per share for the fourth quarter of twenty twenty four. That being said, since 2023, we have paid approximately $1.6 per share in dividends, a figure not far from our current share price, while we have also repurchased about 450,000 shares, representing approximately 5% of our outstanding common shares. At the same time, due to the current undervaluation of our shares, we have extended our share repurchase program by twelve months.

Of the initial $3,000,000 authorized, $1,900,000 remains available, representing approximately an additional 11% of our outstanding shares based on the closing price as of 03/14/2025. Looking ahead, despite the volatile dry bulk market conditions, we remain optimistic in the market’s long term fundamentals and our ability to create shareholder value. Turning to fourth quarter results, our performance was impacted by a temporary slowdown in coal and iron ore exports, which we view as a natural seasonal adjustment following the elevated export levels in the first three quarters of the year. As a result, our net revenue for the fourth quarter of twenty twenty four came in at $10,800,000 dollars down from $11,600,000 in the same quarter of 2023, with a daily time charter equivalent of $14,250 compared to $15,874 the previous year. As Tabros will discuss in more detail, we are comfortable with our leverage levels and balance sheet health and we expect to be in good position to execute on our business strategy.

Turning to our strategic fleet developments, we continue to optimize our portfolio of assets in 2024. During the year, we sold the OAC, a Kamsarmax built in 2010 in China and reinvested in the 2016 built Japanese Kamsarmax Ni Sea, which was delivered in September and has since been employed on a profitable fixed rate charter. Additionally, we recently announced the sale of the Capesize Glory Ship, a 2,004 build ship and the oldest vessel in our fleet. We will continue operating the Glory Ship until its anticipated delivery to its new owners in the second quarter of twenty twenty five. We’re pleased with our fleet composition, which consists of exclusively high quality Japanese built vessels.

Our ongoing investments ensure that our fleet remains compliant with the evolving environmental regulations and possibly the evolving tariff regulations, while maintaining their commercial competitiveness. As regards our fleet’s commercial utilization, two of our Panamax vessels remain fixed rate shutters until June and July respectively at an average daily rate of about $14,200 while the Glory Ship will earn a daily TCE of approximately $18,000 until its expected delivery to its new owners in the third quarter. Additionally, one of our Capesize vessels will run a daily time charter of about $22,000 for the second and third quarters before reverting to index linked daily earnings. The rest of our fleet currently operates on index linked charters. While we’re comfortable with our market exposure, we remain open to securing fixed rates for select vessels at attractive levels.

For our first quarter twenty twenty five TC guidance, we expect to be approximately at $10,300 based on prevailing FFA rates with 94% of our operating days already invoiced. We are encouraged to see the drybulk market rebounding from its seasonal slowdown and we expect to see higher TCE rates for the following three quarters of twenty twenty five. Additionally, I would like to take time to discuss our recent entry into the offshore market. In the third quarter of twenty twenty four, we acquired an equity stake in an energy construction vessel, newbuilding, with the project having an expected completion in 2027. We’re pleased to see this go as planned and the company is actively exploring employment opportunities for the vessel, which is designed to serve all major subsea market segments, including renewables and oil and gas.

Benefiting from a limited vessel order book, strong demand for offshore infrastructure are positive. We are confident that the vessel will find compelling charter opportunities. Industry overview. On a brief overview of the drybulk market, CapEx size and Panamax charter rates softened as we entered the first quarter of twenty twenty five in line with the regular seasonality around the Chinese New Year. Additionally, dry bulk imports by China in the first nine months of twenty twenty four led to high inventory levels and reduced the urgency of new imports towards the end of the year.

Decline was most pronounced in the CapEx segment, while Panamax rates were pressured by three key factors: a slowdown in China grain imports and slower pace of Latin America grain exports due to floodings, lower coal imports volumes as China’s high activity in the first nine months of twenty twenty four resulted in fuller inventories and the winding of congestion that led to higher vessel availability. In the KXIS market, rates came under pressure as weaker market conditions in the Panamax sector made it more economical to split large Cape cargos into smaller Panamax shipments. This was particularly evident in the rising share of coal cargos carried on Panamax ships. Furthermore, slower Australian, Brazilian and Colombian Capesize exports in the first quarter of twenty twenty five reduced vessel demand as increased rainfall and cyclones affected cargo output. Encouragingly, as weather conditions improved and cargo activity resumed, Capesize rates rebounded swiftly to profitable levels.

Looking ahead, we remain very optimistic about Capesize markets long term fundamentals. Economic trends in China indicate an emerging recovery in steel production, while iron ore producers are committed to supply with high quality iron ore volumes. Production originating in the Atlantic Basin is projected to rise by about 170,000,000 tons over the next two years, mainly in West Africa and Brazil, which paints a positive picture for Capesized tonn demand. Additionally, West African bauxite volumes are surging as January and February exports rose by an impressive 41% compared to the first two months of 2024. Bauxite share of total Capesize cargos is almost as high as coal, which has traditionally been the second largest source of Cape demand after iron ore.

The current Capesize order book remains at historical low levels. As a rough indication, it is estimated that the total Cape order book is insufficient to service the planned expansion of Atlantic based iron ore exports alone, even before factoring in the replacement needs of aging vessels amid tightening environmental regulations. As regards to Panamaxes, Latin American grain exports look very encouraging for the current year, especially as congestion rises back again to levels more consistent with historical averages. As inventory cycle turns, we expect to see higher volume of seaborne coal trading. In addition, coal fired power plants under construction in China points to a 30% rise from existing levels, while global coal consumption is not showing any signs of slowdown.

Longer term, large portion of the existing fleet is above twenty years old and likely to see a restricted trading over the next years as environmental regulations make it harder for inefficient ships compete. Lastly, based on the latest developments, we’re pleased to see that the ceasefire in Ukraine seems increasingly likely. Apart from the obvious humanitarian aspect that is of primary importance, of course, such a development could also have a positive impact on cargo demand for all Sub Cape sectors, including Panamaxes. More broadly, when looking beyond the direct effects in terms of increased grain and iron ore exports, we would expect that holding hostilities would have several macroeconomic benefits that would ultimately prove to be positive for the vessel demand. As a result, we believe that the drybulk market should remain on a positive trend over the next years and United is very well positioned to capitalize on these opportunities.

I would now like to pass the call to Stavros, who will fill you in with our financial information for quarter and the full year, as well as discussing our balance sheet and debt refinancings. Stavros, please go ahead. Thank you, Samadhi. Welcome everyone to our earnings call. Let us start by reviewing the main highlights of financial statements for the fourth quarter and the full year ending 12/31/2024.

Our net revenue in the fourth quarter reached $10,800,000 slightly below the prior year, primarily due to the weaker earnings environment in the Panamax market. However, our adjusted EBITDA for the fourth quarter was $5,100,000 an 11% increase compared to 2023, reflecting our continuous efforts to improve our operating leverage. At the same time, we recorded a net loss of $1,800,000 compared to net loss of $700,000 last year. On a full year basis, our net revenues was $45,400,000 significantly higher than last year, reflecting both increase in operating days and our improved average time charter equivalent rate. Our adjusted EBITDA also grew to $20,300,000 compared to $18,900,000 last year.

Net income for the year was a loss of $3,400,000 versus a net profit of $200,000 in 2023, noting however that the bottom line of the previous year included $11,800,000 profits from vessel sales versus only $1,400,000 in 2024. On the expense side, we successfully reduced daily operating expense per vessel to $6,600 as well as keeping in check our total general and administrative expenses despite inflationary pressures. Overall, while our profitability was impacted this year by the softer Panamax market, we continue to optimize our fleet on the back of very well timed sale purchase activities. As Thomas reiterated earlier, we remain confident in our outlook both for drybulk and our offshore investments. Turning to our balance sheet, our cash position at year end stood at $6,800,000 reflecting the significant CapEx program undertaking throughout 2024, particularly in the first half, as well as the payments towards our participation in the offshore project.

In the fourth quarter, we agreed to sell our oldest vessel, the Glory Ship for a net sale price of $15,000,000 This is expected to have a minimal impact on our P and L at the time of delivery to the buyers, which is estimated towards the end of the second quarter of twenty twenty five. That being said, the cash flow effect will be positive, enhancing our cash position by approximately $7,000,000 for the year. Our total assets at the end of twenty twenty four reached $153,000,000 dollars while stockholder equity stood at $60,100,000 Outstanding debt, which includes liabilities from our bareboat in transactions stood at $99,400,000 implying a loan to fleet value ratio of approximately 60%. During the year, we successfully secured $48,300,000 in debt financings. Briefly, I would like to remind you that we completed two sale and leaseback agreements of $31,800,000 in aggregate.

The proceeds from these agreements were utilized for the exercise of the purchase option of the Synthesy and the refinancing of previous indebtedness over the Exelixy on overall improved terms. Additionally, we secured a $16,500,000 loan facility with a prominent Taiwanese lender to finance the 12,400,000 purchase option for Hixin. As a result, we entered 2025 with a solid capital structure and no immediate debt maturities. In terms of our investment in the offshore sector, United has already deployed approximately $3,500,000 with another $4,500,000 committed and expected to be called in two separate installments within 2025. This schedule aligns with the vessels construction milestones.

Now before returning the call to Samartis, I would like to reiterate our optimism about the company’s future profitability. United in its short three year history has created a strong track record of well timed shipping investments and remain true in its commitment to prioritize shareholder rewards in any market environment. I will now turn the call back to Samati for his concluding remarks. Samati? Thank you, Savro.

Following our successful tanker investment cycle that was concluded in Q3 twenty twenty three, which delivered strong returns for our shareholders, we now operate an exclusively Japanese built tribal fleet. We’re very proud of our progress so far being successful in building a quality fleet with strong prospects without resorting in any dilution of the shareholders that have supported us at our last and only capital raising years ago. On top of that, since 2023, we have paid total cash dividends of about $1.6 per share, representing a very significant portion of our current share price. Additionally, we have engaged in extensive share repurchases amounting to $7,100,000 at an average price of $1.9 United Maritime is well positioned to benefit from positive drybulk market trends due to index linked time charters that provide direct exposure to Capesize and Panamax market upside potential A healthy balance sheet that allows for leveraged exposure to the sector and the potential for high returns on capital. A proven commitment to rewarding our shareholders through substantial capital returns resulting in a high dividend yield.

Lastly, I’m confident in our recent offshore sector investment, which I believe will also generate higher returns for our company and shareholders. On that note, I would like to pass the call back to the operator and respond to any questions you may have. So operator, please take the call. Thank you.

Conference Operator: Thank

Stamatis Santanis, Chairman and CEO, United Maritime Corporation: you.

Conference Operator: Thank you. We’ll now take our first question. This is from Tate Sullivan from Maxim Group. Please go ahead.

Tate Sullivan, Analyst, Maxim Group: Thank you and good day. Great to hear from you. And to start with you ended your comments talking about the offshore market. Can you review when is the scheduled delivery of the offshore vessel and what are the remaining capital commitments on that investment please?

Stavros Givtakis, Chief Financial Officer, United Maritime Corporation: Yes. The scheduled delivery is in the first quarter of twenty twenty seven, although there are discussions that might bring the vessel a bit forward like the fourth quarter of twenty twenty six. But for the time being, in the first quarter of twenty twenty seven, From United’s part, which is around 24% of the total project, there is a $3,500,000 have been already paid and there’s another 4,500,000.0 committed and that will be called in two separate tranches in within 2025. After that, we are done with the equity installments and then there is also debt which has been negotiated, but has not been finalized as of now. So but the equity commitment for the project is two more installments of $4,500,000 in total due within this year.

Tate Sullivan, Analyst, Maxim Group: Okay. Thank you. And then Stamanis, you mentioned, can you review your comments on The U. S. Missile strikes on the Houthi?

What is the potential link to the drybulk market, Zu? Well, the

Stamatis Santanis, Chairman and CEO, United Maritime Corporation: Red Sea remains closed and I don’t see the Red Sea opening reopening anytime soon. I believe there will be continuous disruption on that trade route. One of the positive things that I want to mention is that assuming there’s going to be some sort of a ceasefire in Ukraine and Russia that could reopen the grain corridor and could have more ships waiting to load cargos back and forth to the Ukrainian ports. So that could be super positive for the Panamax Kamsarmax segment, but that remains to be seen. I don’t really believe that anything is going to happen within Q2 of twenty twenty five, but the positive effects will likely take place from the second half of the year.

Tate Sullivan, Analyst, Maxim Group: Thank you. And one more for me on the Capesize sale. Did you mention a $15,000,000 sales price just to make sure I have it right with us. Does it imply a gain on that sale of $7,000,000 based on the increase in cash or is that incorrect?

Stavros Givtakis, Chief Financial Officer, United Maritime Corporation: Sorry, Tate, can you repeat? You said?

Tate Sullivan, Analyst, Maxim Group: You said it will the sale of the Capesize, the older Capesize ship will enhance cash by $7,000,000 So is that the gain on the sale?

Stavros Givtakis, Chief Financial Officer, United Maritime Corporation: Yes. The outstanding loan is around $7,500,000 and as you know, United is paying 1% of its sale price to Synergy based on the management agreements between the two companies. So basically the net amount after the sale for United on a free cash flow base will be around million.

Tate Sullivan, Analyst, Maxim Group: Great. Thank you very much. Great to hear from you.

Stamatis Santanis, Chairman and CEO, United Maritime Corporation: Excellent, Tate. Have a great day. Thank you.

Tate Sullivan, Analyst, Maxim Group: You too. Bye.

Conference Operator: Thank you. This concludes today’s conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.

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