On Friday, Imperial Ptrl (NASDAQ:IMPP) discussed first-quarter financial results during its earnings call. The full transcript is provided below.

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The full earnings call is available at https://www.imperialpetro.com/index.php/investor-relations/webcasts-and-presentations

Summary

Imperial Petroleum Inc reported Q1 26 revenues of $61.7 million, a 92% increase year-over-year, and a net income of $28 million, marking the second-best quarterly performance in its history.

The company's strategic fleet expansion allowed it to capitalize on favorable market conditions, particularly with tanker rates booming due to tensions in the Middle East.

Operational utilization was slightly lower at 88.7% due to increased ballasting activity, but the fleet expanded with the addition of a new vessel, increasing to 21 vessels.

Cash and cash equivalents increased to $213 million, supporting robust liquidity and a debt-free balance sheet, with a significant share buyback program underway.

Management emphasized the undervaluation of the company's share price, trading at a discount to net asset value, and expressed optimism in correcting this through continued profitability and share repurchases.

Full Transcript

Harry Vajis (Chief Executive Officer)

Good morning everyone and thank you all for joining us for our first quarter 26 conference call of Imperial Petroleum. I'm Harry Vajis, the CEO of Imperial Petroleum, and joining me on the call today is Mr. Kelari who will be discussing our financial performance. Before we commence our discussion, we'd like all to read the safe harbor disclaimer on slide 2. In essence, it's made clear that this presentation may contain some forward looking statements as defined by the Private Securities Litigation act where it is the attention of our investors the fact that such forward looking statements are based upon the current beliefs and expectations of Imperial Petroleum and are subject to risks and uncertainties which could cause future results to differ materially from these forward looking statements. In addition, we'd like to clarify that during this call we will quote monetary amounts unless explicitly stated Otherwise, all in US dollars. In Slide 3, we summarize our key operational and financial highlights for Q1 26. The year 26 commenced in an extremely favorable way for Imperial Petroleum. Our enhanced fleet of tankers and dry bulk ships fully capitalized upon the firm rates prevailing throughout the period. This border with revenues of 61.7 million and a net income of 28 million, marking our second best quarterly performance in our history. We view our results as a solid proof that our strategic decision to expand our fleet was sound as a larger fleet enables us to leverage favorable market conditions and general material results. The tension in the Middle east which commenced close to the end of February 26, brought upon a global turbulence and heavily affected seaborne trade. The closing of the search of the Straits of Hormuz tightened the tanker market, causing tanker rates to boom. It's worth to mention that our daily net revenue from tankers dramatically increased in Q1 26 to about 43,000 a day compared to 27,000 a day in Q4. 25. Dry Bulk market also remained firm or daily net revenue from our dry bulk ships increased in Q1 26 to about 16,000. Looking briefly at our operational highlights, our fleet operational utilization came in at 88.7%, a bit lower than in Q4 2025 due to increased ballasting activity of our vessels traveling to their next employment. Looking at our fleet subsegments, operational utilization for Q126 was 87.8 for our tankers and 89.5 for our dry vessels. About 59% of the total fleet calendar days in Q1 26 were dedicated to time charter activity, while the remaining approximately 40% to spot activity following the delivery of our dry bulk vessel to post marvel in the beginning of January 26th. In April 26th we took delivery of a handy sized dryback ship, the Echo Crossfire, increasing our fleet on the water to 21 vessels, providing more color on our financial performance. Our revenues of 61.7 million were 21% higher than in Q4 2025 and bite 92% higher compared to the same period of 2025. The increase of our operating income was impressive. In Q1 26, income from operations came in at 26.5 million, marking a 12.8 million increase or 94% against Q4 25 and 18.7 million rise or 240% compared to Q1 25. As already mentioned, our net income of 28 million was our second best performance of all times. The basic earnings per share generally generated in one single quarter was in the order of $0.60 which based on current share price levels gives us an earnings yields for the quarter in excess of 12%. Our profitable operations continue to fuel our liquidity. As of 3-31-26, our cash and cash equivalents including time deposits were about 213 million versus 179 million as of end of year 25. Our activity on the share buyback scheme has been robust as to date, the company has repurchased up to May 21st a total of 855,769 common shares for an aggregate amount of about 3.8 million. On slide 4 we are providing a summary of our current fleet deployment. About 48% of the fleet is currently under time charter. We employ six Mr. Product anchors and two Suezmax Vestas in the spot market, capitalizing on the prevailing strong market environment and achieving average daily rates of of about 29,000 per day for Mr. Ships and close to 95,000 per day for Suezmaxs. In addition, one Mr. Product tanker is employed under a period chartered through September 27th. As customarily the majority of our dry bulk ships are on short term time charters. The commercial strategy we currently follow for our dry bulk vessels provides healthy cash flow while minimizing idle time and voyage costs. On slide 5, we are discussing the evolution of market rates for both tankers and Bulkers. In Q1 26, market rates surged for tankers and strengthened further for dry bulk ships. Even before the U. S Iran Israel conflict outbreak towards the end of February, tanker rates were strong at the back of added OPEC supply, the return of Venezuelan cargoes and long haul trades for product tankers from the Atlantic to the Pacific so as to meet shortage supply in Asia. The blockage of the Straits of Hormuz led to oil trade disruptions, longer haul voyages, oil supply shortages and increase of risk premiums leading to a spike in tanker rates. Indeed, at the end of Q1 26 rates for Suez Maxes were in excess of 250,000 a day while rates for product anchors were close to 60,000 a day. For the dry bulk ships, the positive Trend witnessed in Q4 25 continued throughout 1Q26. Global shipment growth momentum was supported in Q1 by the uncertain microeconomic environment, the congestion of the Panama Canal recently, a rise in coal demand. It's interesting to note that as of the end of Q1 the BDI Supramax DC Index was up 40.3% year on year while the BDI Handysize Index was up 36.7%. Touching briefly upon the current levels of market rates, tanker rates are still firm but have undergone a degree of normalization, particularly during the ceasefire period in April which eased for a brief period the bottleneck of vessels at the Straits of Hormuz. Following April 20, though, rates for tankers picked up as hostilities in the area resume. For the dry bulk ships, rates have picked up further and are now close to $20,000 per day, mostly due to gas supply shortages which have increased market demand for coal market. Update on 6 in Q1 26 the disruption in the Middle east was a key focal point of the shipp, heavily affecting all shipping segments but especially tankers. The blockage of the Straits of Hormuz has caused major trade disruptions. About 10% of the compliant tanker fleet was stranded in the Middle east in Q1, causing vessel shortage, output supply shortages and oil prices to surge. In this environment, the International Energy Agency took the decision at the beginning of March to release 400 million barrels of oil and refined products for the crude tankers. Markets were firm even before the Middle east conflict at the back of strong cargo supply from rising Middle East Gulf output and increased Chinese demand. The Iran U S Israel conflict brought upon a collapse in Hormuz exports and Middle east gas production shut ins. This caused significant positioning of vessels from the Pacific and an increase of Atlantic exports to Asian buyers. Product anchor market essentially picked up after the outbreak of the Middle east conflict. The closing of the Straits of Hormuz have shut off the Middle East LPG exports creating a shortage of crude feedstock to Asian refineries and this led to an increase in global product, particularly in the Pacific for jet oil and arbitrage opportunities, especially between the Atlantic and the Pacific. Looking ahead, the potential ceasefire leading to the reopening of the Straits of Hormuz, prospects of increased demand for inventory rebuilding. Middle Eastern producers will commence production above pre war levels. While we may see sanctions lifted on Iran, thus adding more balance to the market in terms of tank and market fundamentals. Total order book for Suez Max vessel stands at 25.6% with 16% of the fleet above 20 years of age. For DMRs, total order book stands at 15.8% while close to 20% of the fleet is above 20 years of age. On slide 7 discussing the dry bulk market, Q1 had a strong start in both volumes and rates in spite of the seasonal factors such as the Chinese New Year, which typically causes a market slowdown. Global shipment volumes increased year on year both by vessel and commodity types. Coal trademarked a marginal increase in the first month of 26 partly due to reduced imports from China and India, offset by the rise of imports from Korea following the outbreak of the U.S.-Iran-Israel conflict. ASEAN countries are boosting coal fired generation respond to the disruptions to oil and gas supplies as the countries need to replace lost Middle East LNG cargoes. This increased resilience in coal is expected to continue in the future, supporting a rebound in coal trade. In Q2 26, iron ore departures to China were up in Q1 by about 4%, while guinea and bauxite exports to China stood Strong, marking an 18% year on year increase. Wheat trade surged by 18% year on year, supported by elevated prices and looking ahead, there's a concern about the impact of the Iran conflict on the global economy, which might have an adverse impact on the dryback demand. The global dry bulk fleet continues to expand, growing 3% in 25 and a further 1% in 26. However, reduced new building orders marked most upon an aging fleet. Close to 16% of the fleet is currently above 20 years of age in conjunction with low demolition could bring upon a future supply imbalance as older vessels retire without sufficient replacement. A vessel supply shortage is expected to support market rates. I will now pass the floor to Ms. Sacellari in order to summarize the financial performance.

Mr. Kelari

Thank you Harry and good morning to all. In Q1 26, Imperial Petroleum marked a record performance this quarter. We generated the second highest profitability of all times. Market conditions were favorable as rates, particularly for tankers, peaked. Dryback rates were firm during the whole quarter, so we managed to capitalize upon the sizeable dry bulk fleet we operate. Looking at our income statement for Q1 26 on slide 8, revenues came in at $61.7 million in Q1.26, marking a 92% increase compared to revenues generated in the same period of 2025. This increase is mainly due to a noticeable increase in market base for both products and Swiss Max tankers along with the increase of our fleet by eight vessels. As at the end of Q1.25, rates for product tankers were close to 26,000 per day while dairy rates for Swiss Max tankers was close to 47,000. As at the end of Q1.26 though following the outbreak of the Middle East conflict, daily rates for product tankers climbed to about 56,000 while daily rates for Suezmax tankers surged in excess of 260,000. Voyage costs amounted to 12.8 million, 2.3 million higher than in Q1.25. This increase is attributed to higher number of spot days by about 25% in conjunction with increased port expenses due to higher number of transits through the Suez Canal mainly for the Swiss Max tankers. Our net revenues for the quarter came in at about 49 million compared to 21.6 million in Q1.25. This is equivalent to 127% increase. Our net revenue generation peaked in around March following the Middle East conflict outbreak. Indicatively, our monthly net revenues generated in March 26 were about 50% higher than our net revenue generation within February 26th. Running costs amounted to $11.3 million, increased by $4.1 million due to the increase of our fleet by an average of eight vessels between the two periods. EBITDA for the first quarter of 2026 came in at $34.4 million while net income at $28 million corresponding to a basic earnings per share of $0.60 versus $11.3 million corresponding to an EPS of $0.32 in Q1.25. Moving on to Slide 9, let us take a look at our balance sheet for first quarter of 26. As of March 31, 2026, our free cash including time deposit was 213 million. Our cash to date is in the region of 221 million. We have a capital commitment for seven vessels, two recently delivered and the remaining five to be delivered up to Q3.26 which total about 130 million. Of this amount, about 52 million is expected to be paid through the end of Q3.26 while the remaining 78 million is due by the end of 202026 or early 27. This TIGER payment profile provides ample time to further enhance our cash position through our ongoing cash flow generation from our core operations, our liquidity generation remains robust. As in Q1 26, we generated an operating cash flow of 26.5 million. At this stage, we would like to point out that basis management estimate, most recent fleet market values and basis are Q1 26 financials and number of shares outstanding. As at the end of Q1 26, we computed that our net asset value per share is close to $13. Our current share price about $5. Hence, we traded the discount in excess of 60% while being highly profitable debt free and while the average price to net asset value discount of industry peer companies is about 20%. In other words, Imperial Petroleum is heavily undervalued. Despite the more robust balance sheet proceeding to Slide 10, we provide a summary of our liquidity, profitability and market considerations going forward, we have a significant cash base which is enhanced every quarter through our profitable operations. We remain debt free, but yet we have expanded our fleet significantly. Our profitability remains strong. Thus, in Q1 26 our net income margin climbed to 45%. In Q1 26, our average time charter equivalent per fleet voyage day was close to 43,000 for our tankers and about 16,000 for our dry bulk fleet. This compares favorably to our cash flow breakeven levels and estimated at 8,500 per day for tankers and 6,500 per day for dryback vessels. In terms of market considerations, the focal point is the U S Iran Israel conflict which appears to have a longer than expected duration. It still remains unknown how the market, particularly the tanker market, will react when the Straits of Hormuz reopen for trade. And what will happen to the dark fleet in the event that the Russia Ukraine conflict comes to an end. Concluding our presentation, we repeat Jens once more that we are extremely pleased with our results, our proven consistency in generating profits and most importantly our support to our share price to our active share buyback program and hope that this dynamic will soon correct our share price levels. At this stage, our CEO Mr. Harry Varges will summarize and conclude the remarks for the period examined.

Harry Vajis (Chief Executive Officer)

We are extremely pleased with our first quarter 26 results. As with a net income of 28 million corresponding to a basic EPS of $0.60, we generated the second best quarterly profitability in our company's history. Geopolitical tensions persist, creating turbulence globally and in the shipping markets. The effect, particularly from the Middle East Gulf conflict was tanker markets to peak while market rates for the dry bulk segment to firm. In this environment, we successfully capitalized upon our sizable fleet. We see that our expansion strategy is paying off. And hope that through our active share repurchase scheme, we will assist our share price to correct itself so as to reflect the true value of the company. Of 21 vessels in operation and five more to be delivered soon. Current liquidity in excess of 220 million, being continuously profitable and most importantly, debt free. We like to thank you all for joining us at our call today and for interest in trust in our company. And we look forward to having you with us again at our next call for Q2 26 results. Thank you.

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