Release Date: August 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MPC Container Ships ASA (MPZZF, Financial) reported strong financial results with top-line revenue of $131 million and EBITDA of $78 million.
- The company secured 17 vessel charters with an average duration of two years, adding approximately $300 million to the contracted revenue backlog.
- Fleet optimization efforts included selling older vessels and acquiring larger, younger tonnage, enhancing the fleet's overall value.
- The company declared a quarterly dividend of $0.10, marking the 11th consecutive dividend and bringing total distributions to $890 million over less than three years.
- MPC Container Ships ASA (MPZZF) maintained a high fleet utilization rate of approximately 98% for the quarter.
Negative Points
- The long-term market outlook remains uncertain due to supply-side dynamics, despite current strong performance.
- Financial figures showed a slight decreasing trend due to the legacy backlog running off.
- Operational expenses were slightly inflated at $7,500 per day for Q2 2024 due to one-off items.
- The company expects fleet utilization to be slightly lower in Q3 and Q4 due to a large number of upcoming dry dockings.
- The market for smaller feeder vessels has shown some downward corrections, with charter rates for vessels below 1,700 TEU experiencing a decline.
Q & A Highlights
Q: Do you have any plan for an event-driven dividend in the second quarter of '24?
A: We have sold roughly $70 million worth of ships this year, but only three of the five vessels have been handed over to buyers. We have also acquired new vessels, reallocating capital from older ships to slightly younger ones with attractive backlogs. Once the remaining sales are recorded in Q4 '24, we will discuss with the Board about potential event-driven distributions. (Moritz Fuhrmann, CFO)
Q: What is the long-term strategy for managing share price fluctuations?
A: We believe we are well on track with our development and share price strategy. We will continue our clear capital allocation strategy, focusing on building the company operationally and maintaining a reliable distribution policy. Despite market volatility, our shares have performed well year-to-date, up 60% with a close to 30% dividend yield. (Constantin Baack, CEO)
Q: Contracted forward TEU rates are decreasing until '26. Will revenues and earnings continue to decrease?
A: The decrease is due to legacy contracts fixed at unprecedented rates. However, the market has improved significantly year-to-date, and we have been active in securing new charters at healthy levels. While we can't guarantee the trend will reverse, we have added significant backlog and visibility into '25 and '26. (Moritz Fuhrmann, CFO)
Q: What is your position on share buybacks?
A: Share buybacks are part of our capital allocation considerations, alongside reliable dividends and event-driven distributions. We balance these modes of returning capital to investors while maintaining low leverage and pursuing market opportunities. (Constantin Baack, CEO)
Q: Do you think the Gemini alliance has the necessary feeder fleet to service its hub-spoke strategy?
A: We believe the Gemini alliance will create new demand for intra-regional trades and feeder services, positively impacting the utilization of smaller ships. This will likely increase the need for feeder vessels, benefiting our operations. (Constantin Baack, CEO)
Q: What can we expect from MPC Container Ships for the rest of the year and into '25?
A: For '24, we have almost complete coverage from a chartering perspective. We expect to continue securing charters at favorable rates and durations into '25 and '26. Our visibility for '25 has significantly improved, enhancing our operational and financial outlook. (Moritz Fuhrmann, CFO)
Q: Will you stick to methanol as a preferred fuel for future fleet optimization?
A: While we have methanol vessels on order, we remain agnostic about future fuels. Our investments are driven by what best serves our customers and manages our risks. We will continue to explore alternatives and invest in our existing vessels through retrofit programs. (Constantin Baack, CEO)
Q: How do you plan to manage the risk associated with future fuel choices?
A: We develop designs and strategies in collaboration with our chartering partners, ensuring that our investments are derisked through secured EBITDA. We will continue to be flexible and rational in our approach to future fuels, balancing risk and opportunity. (Constantin Baack, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
