Castor Maritime Inc. Reports Net Income of $8.2 Million for the Three Months Ended June 30, 2023 and Net income of $19 Million for the Six Months Ended June 30, 2023

LIMASSOL, Cyprus, Aug. 08, 2023 (GLOBE NEWSWIRE) -- Castor Maritime Inc. ( 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:

• Total Vessel Revenues from continuing operations: $25.3 million for the three months ended June 30, 2023, as compared to $41.7 million for the three months ended June 30, 2022, or a 39.3% decrease;
• Net income of $8.2 million for the three months ended June 30, 2023, as compared to $27.8 million for the three months ended June 30, 2022, or a 70.5% decrease;
• Net income from continuing operations: $8.2 million for the three months ended June 30, 2023, as compared to $22 million for the three months ended June 30, 2022, or a 62.7% decrease;
• Earnings (basic and diluted) per common share from continuing operations: $0.09 per share for the three months ended June 30, 2023, as compared to $0.23 per share for the three months ended June 30, 2022;
• EBITDA from continuing operations⁽¹⁾: $16.1 million for the three months ended June 30, 2023, as compared to $27.9 million for the three months ended June 30, 2022;
• Adjusted EBITDA from continuing operations⁽¹⁾: $13.5 million for the three months ended June 30, 2023, as compared to $27.9 million for the three months ended June 30, 2022;
• Cash and restricted cash of $38.3 million as of June 30, 2023, as compared to $109.9 million as of December 31, 2022.
  

Highlights of the Six Months Ended June 30, 2023:

• Total Vessel Revenues from continuing operations: $49.7 million for the six months ended June 30, 2023, as compared to $79.5 million for the six months ended June 30, 2022, or a 37.5% decrease;
• Net income of $19 million for the six months ended June 30, 2023, as compared to $47.7 million for the six months ended June 30, 2022, or a 60.2% decrease;
• Net income from continuing operations: $1.7 million for the six months ended June 30, 2023, as compared to $40.4 million for the six months ended June 30, 2022, or a 95.8% decrease;
• Earnings (basic and diluted) per common share from continuing operations: $0.02 per share for the six months ended June 30, 2023, as compared to $0.43 per share for the six months ended June 30, 2022;
• EBITDA from continuing operations⁽¹⁾: $17.7 million for the six months ended June 30, 2023, as compared to $52.2 million for the six months ended June 30, 2022;
• Adjusted EBITDA from continuing operations⁽¹⁾: $22.8 million for the six months ended June 30, 2023, as compared to $52.2 million for the six months ended June 30, 2022;
• The spin-off (the “Spin-Off”) of our Aframax/LR2 and Handysize tanker segments to a new Nasdaq listed company, Toro Corp., was completed on March 7, 2023; and
• Discontinued operations: Following the Spin-Off, the results of the tanker business are reported as discontinued operations for all periods presented.

^{(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:

Mr. Petros Panagiotidis, Chairman, Chief Executive Officer and Chief Financial Officer of Castor commented:

“In the second quarter of 2023 we continued to observe a softness in the dry cargo market compared to the second quarter a year ago, which affected our revenues and cash flows. We believe that the dry bulk fundamentals remain healthy given the historically low order book and the expected recovery for the Chinese economy.

We enjoy a strong balance sheet and we remain committed to our growth trajectory by seeking further opportunities in the shipping space.”

Earnings Commentary:

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.

Recent Financial Developments Commentary:

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.

Recent Business Developments Commentary:

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.

Recent Other Developments Commentary:

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.

^{(2) Daily TCE Rate is not a recognized measure under U.S. GAAP. Please refer to Appendix B for the definition and reconciliation of this measure to Total vessel revenues, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.}

_{⁽¹⁾ TC stands for time charter.
⁽²⁾ The benchmark vessel used in the calculation of the average of the Baltic Capesize Index 5TC routes (“BCI5TC”) is a non-scrubber fitted 180,000mt dwt vessel (Capesize) with specific age, speed – consumption, and design characteristics.
⁽³⁾ The benchmark vessel used in the calculation of the average of the Baltic Panamax Index 5TC routes (“BPI5TC”) is a non-scrubber fitted 82,000mt dwt vessel (Kamsarmax) with specific age, speed–consumption, and design characteristics.
⁽⁴⁾ The vessel’s daily gross charter rate is equal to 98% of BPI5TC. In accordance with the prevailing charter party, on April 5, 2023, the owners converted the index-linked rate to fixed from April 7, 2023, until September 30, 2023, at a rate of $18,000 per day. Upon completion of this period, the rate will be converted back to index‑linked.
⁽⁵⁾ The benchmark vessel used in the calculation of the average of the Baltic Panamax Index 4TC routes (“BPI4TC”) is a non-scrubber fitted 74,000mt dwt vessel (Panamax) with specific age, speed – consumption, and design characteristics.
⁽⁶⁾ The vessel’s daily gross charter rate is equal to 96% of BPI4TC. In accordance with the prevailing charter party, on January 16, 2023, the owners converted the index-linked rate to fixed from February 1, 2023, until September 30, 2023, at a rate of $13,100 per day. Upon completion of this period, the rate will be converted back to index‑linked.
⁽⁷⁾ The earliest redelivery under the prevailing charter party is 8 months after delivery. Thereafter both Owners and Charterers have the option to terminate the charter by providing 3 months written notice to the other party.
⁽⁸⁾ On July 19, 2023, the vessel was fixed under a trip time charter contract, with expected delivery on about 10/08/2023, with a rate of $13,000 / Day plus $300,000 as a one-off Gross Ballast Bonus, and estimated duration of around 65 days, in accordance with the governing charter party.
⁽⁹⁾ On October 2, 2023, the vessel will be delivered under a new charter with a daily gross charter rate equal to 102% BPI4TC for a minimum period of 7 months after delivery. Thereafter, in accordance with the prevailing charter party, both Owners and Charterers have the option to terminate the charter by providing 3 months written notice to the other party.
⁽¹⁰⁾ On September 19, 2023, the vessel will be delivered under a new charter with a daily gross charter rate equal to 101% BPI4TC for a minimum period of 7 months after delivery. Thereafter, in accordance with the prevailing charter party, both Owners and Charterers have the option to terminate the charter by providing 3 months written notice to the other party.
⁽¹¹⁾ On October 12, 2023, the vessel will be delivered under a new charter with a daily gross charter rate equal to 96% BPI4TC for a minimum period of 7 months after delivery. Thereafter, in accordance with the prevailing charter party, both Owners and Charterers have the option to terminate the charter by providing 3 months written notice to the other party.
⁽¹²⁾ On November 3, 2023, the vessel will be delivered under a new charter with a daily gross charter rate equal to 98% BPI5TC for a minimum period of 7 months after delivery. Thereafter, in accordance with the prevailing charter party, both Owners and Charterers have the option to terminate the charter by providing 3 months written notice to the other party.
⁽¹³⁾ The vessel is still employed under its existing charter party. As of June 30, 2023, the vessel is classified as held for sale and is expected to be delivered to its new owners during the third quarter of 2023.}

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: