Pyxis Tankers Inc.

Hello, everyone, and thank you for joining our call. For the results of the three months ended September 30, 2024, the disruption in global seaborne trade from the Russia-Ukraine war and the expanding conflict in the Middle East continues.

Global economic activity remains resilient despite the restrictive monetary policies by many central banks. Encouragingly, inflationary pressures are easing, and we anticipate further interest rate cuts in the near term, which should support broader economic growth.

The fundamental outlook for our core sectors, product tankers and dry bulk carriers, remains supportive with relatively firm asset values despite the recent softening of the chartering environment. Market conditions remain highly dynamic and can be significantly influenced by macroeconomic and geopolitical events, which are beyond our control.

Before commenting on our operating and financial results for the most recent period, please let me draw your attention to some important legal notifications on slide two that we recommend you read, including our presentation today, which will include forward-looking statements. Thank you.

Turning to slide three, our most recent quarterly results reflected solid financial performance with strong revenues and profitability driven by supportive market conditions and our successful expansion into the dry bulk sector. Following the acquisition of the 2015-built Camtamax in late June, we entered the third quarter with a fleet of six modern midsized Eco vessels consisting of three MR2 product tankers, one Ultamax, and two larger Casamax Pan carriers.

In the quarter ended September 30, 2024, we generated consolidated time charter equivalent revenues (TCE) of $11.7 million, marking an increase of over 25% from the same period in 2023. Our daily TCE for our fleet in Q3 2024 was approximately $22,000, with the MRs averaging almost $30,000, while our midsized bulkers earned slightly less than $14,000 per day.

For the most recent period, we reported net income of $3.5 million or $0.54 basic EPS, representing a $0.05 per share improvement compared to Q3 2023. Additionally, our adjusted EBITDA in the most recent period rose to $6.7 million.

The product tanker chartering environment remained strong until the latter part of the third quarter. Activity, especially in China, was met with the worldwide impact from continued regional armed hostilities and tight inventories of refined petroleum products in a number of locations.

Trade dislocation persisted with moderating demand growth. Global refinery activity was supported in spite of lower crack spreads and slowing consumption, especially during the seasonal softer third quarter.

We are guardedly optimistic as we move further into the last quarter of the year, which is typically firmer due to the end of refinery maintenance and stronger seasonal petroleum product demand in the Northern Hemisphere. As of November 20, 69% of available days in Q4 2024 were booked at an average estimated TCE rate of $24,630 per day.

Still a healthy rate, but about $5,000 lower than the rate reported for the three-month period ended September 30, 2024. One of our MRs is employed under a short-term time charter, and two are operating in the spot market.

The supply-demand fundamentals for the dry bulk sector seem to be relatively balanced for the remainder of 2024 and into next year. As of November 20, our three modern bulk carriers were booked for 65% of available days in Q4 at an average estimated TCE of $13,190 per day, which is almost 5% lower than what we reported in the third quarter of 2024.

All of our bulk carriers are employed under short-term time charters. Considering the constructive long-term prospects for both sectors and our existing capital resources combined with established lending relationships, we remain committed to pursuing value-enhancing accretive investment opportunities.

However, we have yet to find compelling acquisition opportunities for modern MRs given current prices, which are still near ten-year historical highs. While values for older bulkers have recently softened, we have grown more selective in pursuing acquisitions in this sector.

In the meantime, we expect to strengthen our balance sheet by amortizing scheduled debt and repurchasing additional common shares. Please flip to slide four for information on our existing fleet and employment activities.

We continue to prudently maintain our mixed chartering strategy of time and spot charters with a focus on diversification by customer and duration. As you can see, three of our vessels are under staggered short-term time charters, providing us with attractive fixed revenues over defined periods of time while optimizing working capital.

Notably, the average age of the vessels in our fleet is materially below the averages, with our MRs at ten years and nine years for our bulkers. The next special surveys are scheduled for two of our bulk carriers in the first half of next year.

Please turn to slide six to review several macroeconomic and global oil market considerations which support fundamental product tanker demand. Market conditions, especially for refined petroleum products, continue to be relatively healthy and support a positive outlook throughout 2025.

Over the longer term, we expect demand for the product tanker sector to benefit from refinery additions, particularly in the Middle East and Asia. According to Drury, 3.7 million barrels per day of net new refinery capacity is scheduled to come online this year through 2028.

Much of the incremental refining capacity will be export-driven, which should lead to further expansion of tonnage. As you can see on slide seven, the impact of the ongoing Russia-Ukraine war and the Middle East conflict have continued to sustain elevated charter rates, lengthened sailing distances, and expanded ton miles.

According to Clarksons, contract tanker tonnage increased 6% during the first nine months of 2024 versus the comparable period in 2023. For next year, we expect demand growth.

The uncertain part of these armed conflicts can dramatically affect the oil markets, adding more volatility to the product tanker sector. Let's move on to slide eight.

Strong chartering conditions since early 2022, coupled with continued positive outlook among owners, have resulted in a significant increase in orders for the construction of new product tankers. Since the beginning of 2023, the pace of orders for the construction of new MR2s has picked up substantially, according to Arrow Shipbroking.

As of November 1, the MR2 order book stood at 307 vessels, representing 16.5% of the global fleet. By the end of 2025, 105 models are scheduled for delivery.

But the rate of delivery remains slow, with only 30 delivered during the first ten months of this year, and slippage is likely to affect the actual number of deliveries. Due to significant backlogs, many Asian yards do not have available construction slots for months, with delivery dates rolling into the first half of 2027.

It is important to note that 13.7% of the global MR2 fleet, or 254 tankers, are 20 years of age or older. Even with this large number combined with declining economics of operating older vessels, major scrappings should occur over the next five years.

However, with a relatively solid market, demolition activity has yet to pick up. Overall, we continue to estimate the net fleet growth for MR2s to be 2% this year, very low by historical standards, with an expected increase of approximately 5% in 2025.

Turning to slide nine, we see the strong chartering conditions have led to substantial increases in MR2 prices across the board. Asset values for secondhand tonnage remain well above ten-year averages, with S&P activity occurring at a rapid pace.

The majority of tanker sales continue to be concentrated in older tonnage. Meanwhile, construction contracts for new buildings in South Korea remain close to $52 million, excluding yard supervision and add-ons.

Prices for young acquisition MR2 vessels, which are our preference, are very expensive, making viable acquisition candidates difficult to identify, in our opinion. Now I would like to provide some updates for the dry bulk sector, so please flip to slide eleven.

Overall, the supply-demand fundamentals for this sector look reasonably balanced for the remainder of 2024 and 2025. Considering a moderate correlation with global GDP growth of 3.2% through 2025, demand for dry bulk commodities should remain positive.

According to Artech Securities, timber dry bulk volumes are forecast to grow by 2.2% in 2025, with ton miles increasing by 3%. Over the long term, Drury is currently forecasting total dry bulk demand to increase at a compound annual growth rate of 2.4% through 2029.

To a fair extent, the supply picture for dry bulk carriers looks manageable in the near term. Arrow Shipbroking currently estimates the order book for the dry bulk sector at 11.7% of the worldwide fleet, with 9.8% of tonnage at 20 years old or more.

For the Panama segment, which includes Camtamax class vessels, the order book is currently 362 vessels, or 14.3% of the global fleet. However, a higher percentage of this class, 16.7%, is 20 years of age or more, which should eventually lead to more scrapping.

As of November 1, the Ultra Max order book stood at 478 units, or 30.7% of the global fleet of this highly versatile, relatively young vessel class. According to Allied chartering, net fleet growth of about 3% in 2025 is a reasonable forecast for our two vessel segments.

As you see on slide twelve, prices for dry bulkers have also substantially appreciated. The price of a five-year-old Utamax approximates the cost of a new build.

However, asset prices for older tonnage have recently softened but still remain at historical high levels, continuing to support equity values. At this point, I would like to turn over the call to Henry Williams, our Chief Financial Officer, who will discuss our financial results in greater detail.

Thanks, Eddie. On slide fourteen, let's review our unaudited results for the three months ended September 30, 2024.

Our time charter equivalent revenues for Q3 2024, which we define as revenues net of voyage-related costs and commissions, rose to $11.7 million, an increase of almost 24% as we benefited from high demurrage income from spot charters, favorable market conditions, and an increase in operating days due to the addition of the dry bulk vessels to our fleet. Solid chartering rates were reflected in our MRs, which achieved a 6% improvement in daily TCE, reaching $29,826 for Q3 2024.

Our dry bulk carriers reported an average daily TCE of $13,841 for the same period. However, the third quarter was sequentially lower than Q2 in both segments due to softer charter rates and seasonal factors.

During the most recent quarter, the overall fleet generated a respectable average TCE of $22,060 per vessel through a mix of short-term time and spot charters. Moving to slide fifteen, we generated net income to common shareholders of $3.6 million for the three months ended September 30, 2024, or $0.34 basic and $0.31 diluted EPS, compared to a net income of $3.1 million or $0.29 basic and $0.26 diluted income per share for the same period in 2023.

Please note that for accounting purposes, the fully diluted earnings calculation assumes the potential conversion of all the outstanding Series A 7.75% convertible preferred stock into common shares and the elimination of the associated dividend. In Q3 2024, the increase in TCE revenues of $2.2 million was partially offset by a $1.1 million increase in operating expenses, leading to a $1.2 million improvement in adjusted EBITDA to $6.7 million.

Now flip to slide sixteen to review our capitalization as of September 30, 2024. At quarter close, our consolidated leverage ratio of net funded debt stood at 22% of total capitalization.

Our weighted average interest rate was approximately 7.8% for the most recent quarter, and our next bank loan maturity is in about two years. I should point out that at the end of September 2024, our total cash position aggregated $43.7 million.

Most of our excess cash is invested in short-term money market investments, which currently earn 4.85%. As previously disclosed, with the payment of approximately $7.6 million in late October, we had redeemed all remaining outstanding Series A convertible preferred stock.

Since the start of our common share buyback program in June 2023, we have acquired 578,000 Pyxus shares in the open market for a cost of about $2.4 million. The redemption of the preferred stock in full has eliminated potential dilution of 1.8 million shares.

In aggregate, we have avoided dilution of almost 2.4 million shares, further enhancing earnings and net asset value per share. Currently, we have approximately 10.6 million common shares outstanding, of which 4.5 million shares are broadly held in the public float.

With that, I'd like to turn the call back over to Eddie to conclude our presentation.

Thanks, Henry. We are guardedly optimistic about the challenging environment for product tankers and dry bulk carriers for the near term.

Most global demand growth for seaborne cargoes across the board, the range of refined petroleum products and dry bulk commodities is expected to continue with the expected order book remaining relatively manageable. Longer-term supply and demand fundamentals remain constructive, especially given the fleet age profiles of both sectors.

Even though inflation is decelerating with the possibility of further interest rate cuts and continued moderate global economic growth, the uncertainty surrounding macroeconomic conditions and unfolding global events necessitate continued prudent risk management. Beyond the expected uptick in demand for the winter season, the product tanker sector may benefit from the prospect of greater restrictions against certain sanctioned countries, which may help offset the effects of the possible de-escalation of armed conflict.

However, the potential expansion of tariffs amongst major trading partners is likely to lead to further market dislocation and volatility. Looking ahead, we expect to utilize our solid financial position and extensive industry relationships to selectively pursue additional investment opportunities that maximize shareholder value, including potential vessel acquisitions.

Also, we aim to continue our common share repurchase program and repay debt as scheduled, all while maintaining the strength of our balance sheet. We appreciate your interest and thank you for joining our call.

We look forward to reporting on future progress at Pyxus Tankers.