C3is (CISS) Q1 2026 Earnings Call Transcript

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DATE

Monday, May 18, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Diamantis Andriotis
• Chief Financial Officer — Nina Pyndiah

TAKEAWAYS

• Adjusted Net Income -- $5.5 million, up 358% with the increase driven by higher voyage revenues.
• Voyage Revenues -- $11.6 million, an increase of 34% linked to greater fleet activity.
• Adjusted EBITDA -- $6.9 million, rising 130% due to improved charter rates and lower voyage costs.
• Cash Balance -- $27 million, an 82% increase even after a $15.1 million payment for Eco Spitfire.
• Fleet Capacity -- Increased 387% since inception, with acquisition of two product tankers expanding total capacity to 311,000 deadweight tons.
• TCE Rate (Aframax Tanker) -- $77,500 per day, up 106%, reflecting higher spot market performance.
• Fleet TCE Rate -- $32,000 per day, an increase of 98.6% reflecting rising market rates.
• No Bank Debt -- The company stated it has no bank debt after recent acquisitions and fleet growth.
• Product Tanker Expansion -- Clean Fury delivered in Q2 2026; a second product tanker expected in Q3 2026.
• Upcoming CapEx -- $39.7 million due in January 2027 for the two product tankers.
• Operational Utilization -- 85% across the fleet for the quarter, as reported.
• Warrant-Related Loss -- $2.3 million noncash loss from fair value change in warrants, reversing a $6.9 million gain from the prior year.
• Debt Revenues -- $10.4 million, up 78% versus the prior period.
• Voyage Cost Decrease -- Decreased by 67% due to more spot charters shifting bunker cost burden.
• All Vessels Unencumbered -- Management noted none of its vessels are subject to encumbrances or Chinese tariffs.

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RISKS

• CEO Andriotis said, "the downside will be the rise in input costs resulting from the Middle East war."
• Management noted persistent disruption at the Strait Of Hormuz and increasing bunker costs as "The primary immediate impact from the conflict of the on the dry bulk market has been surging bunker costs and tightening prompt Banker suppliers."
• Grain shipments to the Persian Gulf have not occurred since February 28, which "could become a serious issue for Iran if this does not change over the coming weeks," potentially impacting trade flows.
• Upcoming $39.7 million CapEx obligation in January 2027 on product tankers represents a sizable future cash requirement.

SUMMARY

C3is (NASDAQ:CISS) detailed a quarterly performance marked by significant growth across profitability and cash metrics, including a sharp rise in adjusted net income, adjusted EBITDA, and cash balances. The addition of two product tankers is intended to diversify fleet exposure and position the company within higher-growth tanker markets, as explicitly stated by management. Substantial improvement in both Aframax and fleetwide TCE rates alongside elevated operational utilization reflected strong pricing dynamics. Management described the fleet as unencumbered by both debt and Chinese-related tariffs, with all recent acquisitions structured on an all-equity basis. The call underscored looming risk factors tied to surging bunker costs, ongoing Middle East conflict disruptions, and a large near-term capital expenditure tied to further fleet expansion.

• Management stated, "Equity issuances will continue as management is continuously seeking a timely and selective acquisition of quality non Chinese built vessels with current focus on short to medium charters and spot voyages."
• Nina Pyndiah detailed, "Voyage cost decreased by 67% from last year and was due to the decrease in bunker cost and port expenses."
• CEO Andriotis explained, "C3IS financial landscape is seeing dynamic shifts following its current expansion efforts. This will be critical building future competitive resilience as adding product tankers to the fleet enhance operational diversity, thus exposing the company to the growing tanker market, a sector ripe with potential."

INDUSTRY GLOSSARY

• TCE (Time Charter Equivalent) Rate: The average daily revenue vessel owners receive from chartering, standardizing voyage and time charters for comparison.
• Aframax: A medium-sized crude oil tanker with a deadweight capacity typically between 80,000 and 120,000 tons.
• MR2 (Medium Range 2) Product Tanker: A product tanker with a deadweight between roughly 45,000 and 54,999 tons, used for refined petroleum products.

Full Conference Call Transcript

Diamantis Andriotis: Good morning, everyone, and welcome to the C3IS First Quarter of 26 Earnings Conference Call and Webcast. This is Doctor. Diamantis Andriotis, CEO of the company. Joining me on the call today is our CFO, Nina Pyndiah. Before we commence our presentation, I would like to remind you that we will be discussing forward looking statements which reflect current views with respect to future events and financial performance and are based on current expectations and assumptions which by nature are inherently uncertain and outside of the company's control. At this stage, we could all take a moment to read our disclaimer on slide 2 of this presentation.

I would also like to point out that all amounts quoted, unless otherwise clarified, are implicitly stated in US dollars. We have today released our earnings results for 2026. So let's proceed to discuss these results and update you on the company's strategy and the market in general. Please turn to Slide 3, where we summarize and highlight the company's performance starting with our financial highlights. For the 2026, we reported an adjusted net income of $5.5 million compared to $1 million in 2025. An increase of 358%. Our voyage revenues came in at $11.6 million compared to $8.7 million, an increase of 34%.

Our vessel's net book value was 76 million in first quarter 26 compared to a market value of $75.5 million. These values exclude the 2 new product tankers as by the end of Q1 26 no deliveries have been made yet. We had a cash balance of 27 million in first quarter 26 compared to $14.9 million at year end 2025. An increase of 82%. Our adjusted EBITDA was $6.9 million compared to $3 million for the same period of 2025. An increase of 130%. The TCE rate of our Aframax tanker for Q1 26 increased by 106% from Q1 25 to 77 thousand 5 hundred.

The TCE rate of our fleet increased by 98.6% from first quarter 25 to 32 thousand. The first of the 2 newly acquired product tankers was the Clean Fury delivered to us in Q2 2026, the second 1 is expected in Q3 2020. Our fleet capacity has increased by 387% since inception. Slide 4 shows the handysize demand and the time charter average rates both of which have been heavily impacted by the Middle East conflict. As the war persists, the Strait Of Hormuz enters yet another week of disruption.

While a handful of vessels have managed to transit the strait, and several nations are actively seeking diplomatic resolution with Iran, the overall impact of the dry bulk market is growing. Ongoing geopolitical tensions are influencing trade flows input costs, and ton mile demand shaping the outlook for the sector. We expect a seasonal boost in iron ore trade However, the downside will be the rise in input costs resulting from the Middle East war. Coal prices remain elevated a strong incentive for miners to export more. Plus, on the consumption side, coal maintains its competitive edge over gas for power generation. While we expect to see increased volumes for higher grade coal at this as this trend persists.

It remains unclear how quickly producers can ramp up production to meet the demand. We have not seen the vessel carrying grains passing to the present Gulf since February 28. This could become a serious issue for Iran if this does not change over the coming weeks. Imports from Russia across the Caspian Sea are increasing, However, this is unlikely to be enough. The US Department of Agriculture for forecast iron's grain consumption at 42 million tons this year of which half will be imported, primarily seaborne. The livestock sector is reported to typically hold a few weeks of stocks So over the coming weeks, we could begin to see disruption in food supply with Iran.

The primary immediate impact from the conflict of the on the dry bulk market has been surging bunker costs and tightening prompt Banker suppliers have been advising clients secure at least 10 days in advance across multiple banking hubs. A range of factors has helped drive up the handysize time charter average which has increased from $9.4 thousand for the period January to April 2025 to $12.7 thousand for the same period in 2026, an increase of 35%. Various rounds of US China trade tensions prompted China to buy more grains from Brazil, and Russia's invasion of Ukraine saw significant Russia Europe trade being replaced by long haul Russian trade to Asia.

More recently, the Houthis attacks in the Red Sea leading ships to reroute the long way around the Cape Of Good Hope and the conflict in the Middle East with the closure of the Strait Of Hormuz have had the direct impact on ton mile growth rather than volume growth. Slide 5 shows the handysize fleet values and dates. Newbuilding activity declined in first quarter 26 compared to fourth quarter 25. The total number of vessels ordered in the previous quarter amounted to 185 vessels compared to 110 vessels this quarter.

This, in part could be explained by The US trade representative's plan to impose heavy port coal fees on Chinese built or Chinese operated vessels, which caused global ship owners to pull back sharply on ordering new dry bulk ships from Chinese yards through much of the year. Moreover, uncertainty swirling around president Trump's tariffs and foreign policy also deterred owners from heading to the shipyards. After a strong backlash from the shipping industry, retaliatory measures from China, by November 2025 the port fees have been effectively suspended. Yet the temporary policy brief but significant, disrupted vessel ordering decisions midyear while high nominal new building prices also had an impact.

Long lead times for delivery of vessels due to shipyards being at full capacity has also discouraged new building activity. On the fleet size, 33% of the fleet is above 15 years of age. The average age of the C3IS hand fleet is 15.13 years as at the end of first quarter 26. The order book of the handysize category stands at 265 vessels until 2028. This represents an order book to fleet ratio of 8.8%. On slide 6, we present the Aframax LR2 spot rates and age. Aframax rates strengthened across the quarter. In the Atlantic, US Gulf route continued to rise and push to higher levels.

While the Mediterranean also firmed on steady activity in the short position list. The segment exhibited strong upward momentum across key routes. The highest average rate was in the North Sea Continent route at almost $120 thousand. The highest percentage increase in average rate was on the Carriage-USG route surging by 209% to an average of almost $110 thousand per day. The highest daily rate recorded was on the Carriage USG route at $325 thousand per day. With the market remaining tight in both basins, owners were supported throughout the period with the rate development reflecting tighter positioning and steady cargo flow. The Aframax LR2 global fleet stood at 1.22 thousand vessels by 2026.

Of these, 292 vessels are over 20 years accounting for 24% of the total number of vessels. The highest number of vessels was in the 15, 20 years category, accounting for 28% of the total. The age of our Aframax tanker as of 03/31/2026 was 15.7 years. The fleet increased by 23 vessels during first quarter 26, reflecting the change of 2% Deliveries totaled 24 vessels, representing 2% of the starting fleet all of which were delivered in the first quarter. Demolition remained limited with 1 vessel scrapped, equivalent to 0.1% of the fleet. The current order book comprises 215 vessels, accounting for 17.6% of the existing fleet.

Of these, 61 vessels, or 5% of the fleet, are scheduled for delivery later in 2026. Slide 7 shows the MR2 product tanker rate profile and fleet growth. Demolition activity is expected to remain strong in the MR2 category. More vessels were built in the year in the early 2000s compared to 1.99 thousands. 9% of the trading fleet is over 20, 27% is between 15 to 19 years old, 21% is between 10 and 14 years old. 18% is 5 to 9 years old, while 14% was less than 5 years. The order book to trading ratio is 15.7% in deadweight terms. Net MR2 fleet growth in 2025 was 4.7% year-on-year.

The net fleet growth is expected to continue at around 6.5% in 2026 and then around 4.7% in 2027. The fleet growth forecast for 2026-2028 is based on the current order book after assuming slippage and expected demolition. Slide 8 shows the fleet of C3IS. At 2026, C3IS owned and operated a fleet of 3 handysize dry bulk carriers and 1 Aframax tanker. As previously announced, the company has acquired 2 product tankers, 1 of which, the Clean Fury, was delivered in 2026 and the second 1 is due in Q3 2020. With these additions, the fleet will increase its capacity to 311 thousand deadweight, an increase of 387% from inception.

All vessels have had their ballast weather systems already installed. All the vessels are unencumbered running currently employed on short to medium term period charters and spot voyages. None of the vessels were Chinese built, hence, not affected by the ongoing threat on tariffs and are of superior quality. Slide 9 shows a sample of the international charter with whom the management company has developed strategic relationships and has experienced repeat business. Repeat business highlights the confidence our customers have for our operations and the satisfaction of the service we provide. The key to maintaining our relationships with these companies are high standards of safety and reliability of service.

I will now turn over the call to Nina Pyndiah for our financial performance.

Nina Pyndiah: Thank you, Diamantis, and good morning to everyone. Please turn to Slide 10, and I will go through our financial performance for the first 3 months of 2026. We reported Voyage revenues of 11.6 million for the 2026 compared to 8.7 million in Q1 25. An increase of 34%. Our debt revenues were $10.4 million compared to $5.8 million in 2025. An increase of 78%. The time charter equivalent rates of our vessels were also positively impacted with an increase of 99% for the fleet and 106% for our Aframax tanker. Compared to Q1 25. Voyage cost decreased by 67% from last year and was due to the decrease in bunker cost and port expenses.

The bunker cost decrease was a result of more time and spot charges, where the charterer pays the fuel cost. Voyage expenses for the 3 months ended 03/31/2026 included bunker costs and port expenses of $500 thousand and $300 thousand respectively, corresponding to 42%, 25% of total voyage expenses. Since the vessel Afrapearl operated in the spot market. Operating expenses for the 3 months ended March 31, 2026, mainly included crew expenses of $1.2 million, corresponding to 48% of total operating expenses; spares and consumable costs of $600 thousand corresponding to 24% of total vessel operating expenses; and maintenance expenses of $300 thousand representing works on and repairs on the vessel corresponding to 12% of total vessel operating expenses.

We reported $211 thousand as interest income, an increase of 41% from last year due to a higher balance of funds placed on the time deposits. Loss from warrants for the 3 months ended March 31, 2026 was $2.3 million. Whereas there was a gain on the warrants for the 3 months ended March 31, 2025 of $6.9 million. This change related to the net fair value losses on our warrant and were classified as liabilities. This is a noncash item and does not reflect our operational performance. Our adjusted EBITDA came in at 6.9 million for Q1 26 compared to 2.9 million for Q1 25, an increase of 130%.

We reported a net income of $3.2 million and an adjusted net income of $5.5 million The latter represents an increase of 358% from Q1 25. We achieved a fleet operational utilization of 85% in Q1 2026. Turning to Slide 11 for the balance sheet. We had a cash balance of €27 million, an increase of 82% from year end 2025 in spite of the full payment of the 90% of the purchase price of the Eco Spitfire of $15.1 million in 02/02/2025. Other current assets consisted mainly of receivables of $2 million and inventories of $900 thousand. The vessel's net value of $76 million of the 4 vessels less depreciation. Vessels market values were $75.5 million.

Trade accounts payable of $1.9 million, all balances due to suppliers and brokers. $1.2 million from this balance has currently been paid off. Payable to related party of $790 thousand represents the balance due to the management company, Brave Maritime. The warrant liability of $1.7 million relates to the net fair value difference on nonexercise warrants as of 03/31/2026. This is a noncash item. Our shareholders' equity is at a robust $102 million as of Q1 26 compared to $9.04 95.1 million as of year-end 25. Concluding the presentation on Slide 12, we outlined the key variables that will assist us progress with our company's growth.

Owning a high quality fleet reduces operating cost, improves safety, and provides a competitive advantage in securing favorable charters. We maintain the quality of the vessel by carrying out regular inspections, both while in port and at sea, adopting a comprehensive maintenance program for each vessel. None of our vessels were built from Chinese shipyards, Therefore, any potential US tariffs on Chinese built ships are not expected to have any impact on our fleet. The company's strategy is to follow a disciplined growth with in-depth technical and condition assessment review.

Equity issuances will continue as management is continuously seeking a timely and selective acquisition of quality non Chinese built vessels with current focus on short to medium charters and spot voyages. Following on with this strategy, the company has added 2 product tankers to the fleet, 1 of which was delivered at the start of Q2 2026 and the second 1 expected in Q3 2020. We always charter to high quality charterers. such as commodity traders, industrial companies, and oil producers and refineries. Despite having increased our fleet by 387% since inception, the company has no bank debt.

No interest were charged by the affiliated sellers on the purchase prices of the Afrapearl II the Eco Spitfire, and the 2 recently acquired product tankers. Our upcoming CapEx obligations will be $39.7 million due on the 2 product tankers payable in January 2027. At this stage, our CEO, doctor Diamantis Andriotis, will summarize the concluding remarks for the period examined.

Diamantis Andriotis: For the first 3 months of 2026, we reported an adjusted net income of 5.5 million. An increase of 358% from 2025. And adjusted EBITDA of 6.9 million an increase of 130% and a cash balance of 27 million. An increase of 82% from year-end 2025 despite paying off the remaining balance of 15.1 million that was due on the Eco Spitfire in Q2 25. At the start of Q2 26, we took delivery of the first of the 2 product tankers recently acquired with the second 1 expected in Q3 26. We are fully delivered, thus significantly enhancing our financial flexibility. C3IS financial landscape is seeing dynamic shifts following its current expansion efforts.

This will be critical building future competitive resilience as adding product tankers to the fleet enhance operational diversity, thus exposing the company to the growing tanker market, a sector ripe with potential. This will allow the company to capitalize on booming charter rates leading to a possible surge in revenues. We would like to thank you for joining us today and look forward to having you with us again at our next call for the results of the 2026. Thank you.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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