Imperial Petroleum Inc. (NASDAQ: IMPP) Q1 2025 Earnings: Strong Cash | May 23, 2025

Imperial Petroleum Inc. (NASDAQ: IMPP) held its Q1 2025 earnings conference call on May 23, 2025, with CEO Harry Vafias and CFO Fenia Sakelaris presenting the results. Despite a volatile market influenced by geopolitical factors and sanctions, the company reported its twelfth consecutive profitable quarter.

Q1 2025 Financial and Operational Highlights

The first quarter of 2025 was marked by geopolitical events like U.S. tariffs, sanctions on Russian oil tankers, and proposed U.S. port fees on Chinese-built vessels. These factors, alongside the ongoing Russian-Ukraine war, introduced volatility to tanker rates, which started soft but strengthened by March. Imperial Petroleum's performance mirrored this, with a weaker start but a strong finish to the quarter.

• Revenue: $32.1 million, a 22% increase compared to Q4 2024, but a 22% decline compared to Q1 2024 due to lower average spot rates.
• Net Income: $11.3 million, a significant 190% increase from Q4 2024.
• EBITDA: $14.7 million.
• Cash Position: Ended Q1 2025 with a robust cash balance of nearly $227 million, which is approximately three times its current market capitalization. The company remains debt-free.
• Voyage Costs: Decreased by $3.1 million to $10.5 million, attributed to increased time charter activity (16% fewer spot days), leading to lower bunker consumption and port expenses.
• Running Costs: Increased by $1.1 million to $7 million due to the addition of two vessels to the fleet on average between the periods.
• Time Charter Coverage: Seven of the 13 ships are currently under time charter employment, including three handy-sized dry bulk carriers and four product tankers with expiration dates between May 2025 and August 2027.
• Daily TC Earnings: $20,500 per fleet voyage day, significantly higher than the daily cash flow breakeven of $9,000 per vessel.

Market Outlook and Fleet Expansion

The tanker market was heavily influenced by the prevailing uncertainty. OFAC sanctions on Russian business positively impacted dirty tanker rates by tightening capacity. However, trade tariffs between the U.S. and its trading partners caused uncertainty, although a temporary rollback of tariffs between the U.S. and China brought some relief. The announced U.S. port fees for Chinese-built ships would benefit Imperial Petroleum, as none of its vessels are Chinese-built. OPEC+'s decision to unwind production cuts (500,000 barrels per day between April and May) is also expected to positively boost tanker rates.

For clean product tankers, the market remained weak, and a potential ceasefire in the Red Sea/Gulf of Aden could negatively impact rates by easing shipping routes.

Fleet Fundamentals: Both Suezmax and product tanker segments show promising fundamentals with aging fleets outweighing current order books, suggesting positive long-term prospects.

Strategic Fleet Additions: Imperial Petroleum is actively diversifying its fleet. By early Q3, the company will add seven dry bulk carriers (five Supramaxes and two Kamsarmaxes).

• This expansion will increase the fleet size by 60%, bringing the total to 19 ships (10 bulk carriers and 9 tankers) with a combined capacity of 1.2 million deadweight.
• These additions provide diversification, as dry bulk carriers typically have less volatile market cycles and lower daily operational costs than tankers.
• The total capital commitment for these vessels is approximately $129 million, with sufficient cash on hand (current cash at $190 million after April 2025 repayments).