CTRM Castor Maritime Inc

 

Limassol, Cyprus, August 8, 2023 – Castor Maritime Inc. (NASDAQ: CTRM) (“Castor” or the “Company”), a diversified global shipping company, today announced its results for the three months and six months ended June 30, 2023.

 

Earnings Highlights of the Second Quarter Ended June 30, 2023:

 

 

Highlights of the Six Months Ended June 30, 2023:

 

 

 

(1) EBITDA and Adjusted EBITDA are not recognized measures under United States generally accepted accounting principles (“U.S. GAAP”). Please refer to Appendix B for the definition and reconciliation of these measures to Net income, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.

 

Management Commentary Second Quarter 2023:

 

Second Quarter ended June 30, 2023, and 2022 Results

 

Total vessel revenues from continuing operations for the three months ended June 30, 2023, decreased to $25.3 million from $41.7 million in the same period of 2022. This variation was mainly driven by the decrease in prevailing charter rates of dry bulk vessels. The decrease has been partly offset by the increase in our Available Days (defined below) from 1,786 days in the three months ended June 30, 2022, to 1,904 days in the three months ended June 30, 2023, following the acquisition of two containerships that were delivered to the Company in November 2022, both of which are employed under fixed rate time charter contracts.

 

The increase in voyage expenses from continuing operations to $1.4 million in the three months ended June 30, 2023, from $0.4 million in the same period of 2022, is mainly associated with the decrease of gain on bunkers by $1.7 million partly offset by: (i) decreased bunkers consumption and (ii) decreased brokerage commission expenses, corresponding to the decrease in vessel revenues discussed above.

 

The decrease in vessel operating expenses from continuing operations by $0.4 million, to $10.4 million in the three months ended June 30, 2023, from $10.8 million in the same period of 2022, mainly reflects the decrease in repairs, spares and maintenance costs for a number of our dry bulk vessels.

 

Management fees from continuing operations in the three months ended June 30, 2023, amounted to $1.8 million, whereas in the same period of 2022, management fees totaled $1.5 million. This increase in management fees is mainly due to the increase in our Ownership Days for which our managers charge us a daily management fee, stemming from the expansion of our fleet with the acquisition of the two containerships and the amendments to our management agreements with Castor Ships noted below.

The increase in vessels’ depreciation and amortization costs by $1.2 million, to $5.5 million in the three months ended June 30, 2023, from $4.3 million in the same period of 2022, mainly reflect the increase in our Ownership Days following the acquisition of the two containerships.

 

General and administrative expenses from continuing operations in the three months ended June 30, 2023, amounted to $1.7 million, whereas, in the same period of 2022 general and administrative expenses totaled $1.1 million. This increase stemmed from a higher fee paid to Castor Ships, our manager, following entry into an amended and restated master management agreement with Castor Ships with effect from July 1, 2022.

 

Gain on sale of vessel from continuing operations in the three months ended June 30, 2023, amounted to $3.1 million following the sale of M/V Magic Rainbow on April 18, 2023.

During the three months ended June 30, 2023, we incurred net interest costs and finance costs from continuing operations amounting to $2.4 million compared to $1.5 million during the same period in 2022. The increase is due to our higher weighted average interest rate as a result of the increase in the variable benchmark rates during the three months ended June 30, 2023, as compared with the same period of 2022, partly offset by an increase in interest we earned from time deposits due to increased interest rates.

 

Other income / (expenses), net from continuing operations in the three months ended June 30, 2023, amounted to $3.0 million, which mainly includes the unrealized gain of $2.6 million from revaluing our investments in listed equity securities (investment in Eagle Bulk Shipping Inc.) at period end market rates. We did not hold any investment in equity securities during the three months period ended June 30, 2022.

 

 

At-the-market (“ATM”) common stock offering program

 

On May 23, 2023, we entered into an equity distribution agreement, for an at-the-market offering, with Maxim Group LLC acting as a sales agent, under which we may sell an aggregate offering price of up to $30.0 million (the “ATM Program”). No warrants, derivatives, or other share classes were associated with this transaction. As of June 30, 2023, we had received gross proceeds of $0.8 million under the ATM Program by issuing 1,879,888 common shares. The net proceeds under the ATM Program, after deducting sales commissions and other transaction fees and expenses (advisory and legal fees), amounted to $0.7 million. As of August 7, 2023, we had 96,623,876 common shares issued and outstanding.

New Series D Preferred shares

 

On August 7, 2023, we agreed to issue 50,000 Series D Preferred shares (“Pref D shares”) of $1,000 each to Toro Corp (“Toro"), for a total consideration of $50 million in cash. The distribution rate of the Pref D shares is 5%, paid quarterly, and they are convertible to common shares of Castor from the first anniversary of the issue date at the lower of (i) $0.70 and (ii) the 5 day value weighted average price immediately preceding the conversion, subject to a minimum conversion price. The distribution rate is set to increase by a factor of 1.3 times per annum from year 7 with a maximum rate of 20%. This transaction and its terms were approved by the independent members of the board of directors of each of Castor and Toro at the recommendation of their respective independent committees who negotiated the transaction.

Investment in listed equity securities

 

On June 30, 2023, we filed a Schedule 13G, reporting that we hold 1,391,500 shares of common stock of Eagle Bulk Shipping Inc. (“Eagle”), representing 14.99% of the issued and outstanding shares of common stock of Eagle as of June 23, 2023.

 Liquidity/ Financing/ Cash flow update

Our consolidated cash position (including our restricted cash) from continuing operations as of June 30, 2023 decreased by $71.5 million to $38.3 million, as compared to our cash position on December 31, 2022 which amounted to $109.9 million. The decrease was mainly the result of: (i) $8.5 million of net operating cash flows received during the six months ended June 30, 2023, (ii) $72 million of net cash outflow from the purchase and sale of equity securities, offset by dividends received of $0.4 million,  (iii) $11.4 million of net proceeds from the sale of M/V Magic Rainbow to an unaffiliated third-party buyer, offset by $0.2 million used for other capital expenditures relating to our fleet, (iv) $0.2 million of dividend received from our investment in Toro, (v) $23.1 million for scheduled principal repayments and early prepayments due to sale of vessel, on our debt, (vi) $2.7 million cash reimbursement from Toro related to the Spin-Off expenses incurred by us on Toro’s behalf during 2022 and up to the completion of the Spin-Off and (vii) $0.7 million of net proceeds under the ATM Program.

 

As of June 30, 2023, our total debt (including the debt related to assets held for sale) from continuing operations, gross of unamortized deferred loan fees, was $117.3 million of which $31.7 million is repayable within one year, as compared to $140.5 million of gross total debt as of December 31, 2022.

 

Sale of vessels

 

On April 18, 2023, the M/V Magic Rainbow was delivered to its new owners. The Company recorded during the second quarter of 2023 a net gain on the sale of the M/V Magic Rainbow of approximately $3.1 million.

 

On June 2, 2023, we entered into an agreement with a third party for the sale of the M/V Magic Twilight, a 2010-built Kamsarmax, at a price of $17.5 million. On July 20, 2023, the M/V Magic Twilight was delivered to its new third party owners. The Company expects to record during the third quarter of 2023 a net gain on the sale of the M/V Magic Twilight of approximately $4.0 million, excluding any transaction related costs.

 

 

Nasdaq Capital Market Minimum Bid Price Notice

 

 On April 20, 2023, the Company received written notification from the Nasdaq Stock Market that it was not in compliance with the minimum $1.00 per share bid price requirement for continued listing on the Nasdaq Capital Market and was provided with 180 calendar days, or until October 17, 2023, to regain compliance with this requirement. The Company intends to monitor the closing bid price of its common stock during the compliance period and is considering its options to regain compliance with the Nasdaq Capital Market minimum bid price requirement. The Company can cure this deficiency if the closing bid price of its common stock is $1.00 per share or higher for at least ten consecutive business days during the grace period. In the event the Company does not regain compliance within the grace period and meets all other listing standards and requirements, the Company may be eligible for an additional 180-day grace period. The Company intends to cure the deficiency within the prescribed grace periods. During this time, the Company's common stock will continue to be listed and trade on the Nasdaq Capital Market. The Company's business operations are not affected by the receipt of the notification.

 

Fleet Employment Status (as of August 7, 2023) During the three months ended June 30, 2023, we operated on average 21.2 vessels earning a Daily TCE Rate⁽²⁾ of $12,530 as compared to an average of 20.0 vessels earning a Daily TCE Rate⁽²⁾ of $23,137 during the same period in 2022.

 

Our current employment profile is presented immediately below.

 

 

 

Financial Results Overview of Continuing Operations:

 

Set forth below are selected financial data of our dry bulk and containerships fleets (continuing operations) for each of the three and six months ended June 30, 2023, and 2022, respectively:

 

 

⁽¹⁾        EBITDA and Adjusted EBITDA are not recognized measures under U.S. GAAP. Please refer to Appendix B of this release for the definition and reconciliation of these measures to Net income, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.

 

Consolidated Fleet Selected Financial and Operational Data:

 

Set forth below are selected financial and operational data of our dry bulk and containership fleets (continuing operations) for each of the three and six months ended June 30, 2023, and 2022, respectively, that we believe are useful in analyzing trends in our results of operations.

 

 

 

 

 

 

 

 

APPENDIX A

 

CASTOR MARITIME INC.

 

Unaudited Interim Condensed Consolidated Statements of Comprehensive Income

 

(Expressed in U.S. Dollars—except for number of share data)

 

CASTOR MARITIME INC.

Unaudited Condensed Consolidated Balance Sheets

(Expressed in U.S. Dollars—except for number of share data)

CASTOR MARITIME INC.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

 

APPENDIX B

 

Non-GAAP Financial Information

 

Daily Time Charter (“TCE”) Rate. The Daily Time Charter Equivalent Rate (“Daily TCE Rate”) is a measure of the average daily revenue performance of a vessel. The Daily TCE Rate is not a measure of financial performance under U.S. GAAP (non-GAAP measure) and should not be considered as an alternative to any measure of financial performance presented in accordance with U.S. GAAP. We calculate Daily TCE Rate by dividing total revenues (time charter and/or voyage charter revenues, and/or pool revenues, net of charterers’ commissions), less voyage expenses, by the number of Available Days during that period. Under a time charter, the charterer pays substantially all the vessel voyage related expenses. However, we may incur voyage related expenses when positioning or repositioning vessels before or after the period of a time or other charter, during periods of commercial waiting time or while off-hire during dry-docking or due to other unforeseen circumstances. Under voyage charters, the majority of voyage expenses are generally borne by us whereas for vessels in a pool, such expenses are borne by the pool operator. The Daily TCE Rate is a standard shipping industry performance measure used primarily to compare period-to-period changes in a company’s performance and, management believes that the Daily TCE Rate provides meaningful information to our investors since it compares daily net earnings generated by our vessels irrespective of the mix of charter types (i.e., time charter, voyage charter, or other) under which our vessels are employed between the periods while it further assists our management in making decisions regarding the deployment and use of our vessels and in evaluating our financial performance. Our calculation of the Daily TCE Rates may not be comparable to that reported by other companies.

The following table reconciles the calculation of the Daily TCE Rate for our dry bulk and containership fleet (continuing operations) to Total vessel revenues (from continuing operations) for the periods presented (amounts in U.S. dollars, except for Available Days):

EBITDA. EBITDA and Adjusted EBITDA are not measures of financial performance under U.S. GAAP, do not represent and should not be considered as an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance presented in accordance with U.S. GAAP. We define EBITDA as earnings before interest and finance costs (if any), net of interest income, taxes (when incurred), depreciation and amortization of deferred dry-docking costs.Adjusted EBITDA represents EBITDA adjusted to exclude unrealized gain/loss on equity securities, which the Company believes are not indicative of the ongoing performance of its core operations, EBITDA and Adjusted EBITDA are used as supplemental financial measure by management and external users of financial statements to assess our operating performance. We believe that EBITDA and Adjusted EBITDA assists our management by providing useful information that increases the comparability of our operating performance from period to period and against the operating performance of other companies in our industry that provide EBITDA information. This increased comparability is achieved by excluding the potentially disparate effects between periods or companies of interest, other financial items, depreciation and amortization and taxes for EBITDA, and further excluding unrealized gains/ loss on securities for Adjusted EBITDA, which items are affected by various and possibly changing financing methods, capital structure and historical cost basis and which items may significantly affect net income between periods. We believe that including EBITDA and Adjusted EBITDA as measures of operating performance benefits investors in (a) selecting between investing in us and other investment alternatives and (b) monitoring our ongoing financial and operational strength. EBITDA and Adjusted EBITDA as presented below may not be comparable to similarly titled measures of other companies.

The following table reconciles EBITDA and Adjusted EBITDA to Net income from continuing operations, the most directly comparable U.S. GAAP financial measure, for the periods presented:

 

Matters discussed in this press release may constitute forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. We are including this cautionary statement in connection with this safe harbor legislation. The words “believe”, “anticipate”, “intend”, “estimate”, “forecast”, “project”, “plan”, “potential”, “will”, “may”, “should”, “expect”, “pending” and similar expressions identify forward-looking statements. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these forward-looking statements, including these expectations, beliefs or projections. In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward‐looking statements include the effects of the spin-off of our tanker business, our business strategy, shipping markets conditions and trends, the rapid growth of our fleet, our relationships with our current and future service providers and customers, our ability to borrow under existing or future debt agreements or to refinance our debt on favorable terms and our ability to comply with the covenants contained therein, our continued ability to enter into time or voyage charters with existing and new customers and to re-charter our vessels upon the expiry of the existing charters, changes in our operating and capitalized expenses, our ability to fund future capital expenditures and investments in the acquisition and refurbishment of our vessels, instances of off-hire, future sales of our securities in the public market and our ability to maintain compliance with applicable listing standards, volatility in our share price, potential conflicts of interest involving members of our board of directors, senior management and certain of our service providers that are related parties, general domestic and international political conditions or events (including “trade wars”, global public health threats and major outbreaks of disease), changes in seaborne and other transportation, changes in governmental rules and regulations or actions taken by regulatory authorities, and the impact of adverse weather and natural disasters. The information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this communication, except to the extent required by applicable law. New factors emerge from time to time, and it is not possible for us to predict all or any of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement. Please see our filings with the Securities and Exchange Commission for a more complete discussion of these foregoing and other risks and uncertainties. These factors and the other risk factors described in this press release are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements.

CONTACT DETAILS

For further information please contact:

Petros Panagiotidis

Chief Executive Officer & Chief Financial Officer

Castor Maritime Inc.

Email: ir@castormaritime.com

Media Contact:

Kevin Karlis

Capital Link

Email: castormaritime@capitallink.com

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