Castor Maritime Inc. Reports Net Income of $10.8 Million for the Three Months Ended March 31, 2023; Spin-Off of Tanker Business Completed on March 7, 2023

Castor Maritime Inc., a diversified global shipping company, today announced its results for the three months ended March 31, 2023.

Highlights of the First Quarter Ended March 31, 2023:

• Total Vessel Revenues from continuing operations: $24.5 million for the three months ended March 31, 2023, as compared to $37.8 million for the three months ended March 31, 2022, or a 35.2% decrease;
• Net income of $10.8 million for the three months ended March 31, 2023, as compared to $20.0 million for the three months ended March 31, 2022, or a 46% decrease;
• Net (loss) / income from continuing operations: $(6.5) million for the three months ended March 31, 2023, as compared to $18.5 million for the three months ended March 31, 2022, or a 135% decrease;
• (Loss) / Earnings (basic and diluted) per common share from continuing operations: $(0.07) per share for the three months ended March 31, 2023, as compared to $0.20 per share for the three months ended March 31, 2022;
• EBITDA from continuing operations(1): $1.6 million for the three months ended March 31, 2023, as compared to $24.2 million for the three months ended March 31, 2022;
  Adjusted EBITDA from continuing operations(1): $9.3 million for the three months ended March 31, 2023, as compared to $24.2 million for the three months ended March 31, 2022;
• Cash and restricted cash of $72.5 million as of March 31, 2023, as compared to $109.9 million as of December 31, 2022; and
• The spin-off (the “Spin-Off”) of our Aframax/LR2 and Handysize tanker segments to a new Nasdaq-listed company, Toro Corp. (“Toro”) was completed on March 7, 2023;
  Discontinued Operations: Following the Spin-Off, the results of the tanker business are reported as discontinued operations for all periods presented.

Management Commentary First Quarter 2023:

Mr. Petros Panagiotidis, Chairman, Chief Executive Officer and Chief Financial Officer of Castor commented:

“In the first quarter of 2023 we completed the previously announced spin-off of our Aframax/LR2 and Handysize tanker segments through the distribution of all of the common shares of Toro Corp. to our shareholders of record as of February 22, 2023. We believe this spin-off represented a substantial payment by Castor to its shareholders.

The weakness in the dry cargo market during the first quarter affected our revenues and cash flows, however this can be explained mostly by seasonal factors. We believe that the dry bulk fundamentals remain healthy given the historically low order book and the improved outlook for the Chinese economy.

During this quarter we agreed to sell two of our older dry vessels at significant capital gains, which we expect to recognize in the subsequent reporting periods.”

Earnings Commentary:

First Quarter ended March 31, 2023, and 2022 Results

Total vessel revenues from continuing operations for the three months ended March 31, 2023, decreased to $24.5 million from $37.8 million in the same period of 2022. This variation was mainly driven by the decrease in prevailing charter rates of dry bulk vessels. The decrease has been partly offset by the increase in our Available Days (defined below) from 1,796 days in the three months ended March 31, 2022, to 1,980 days in the three months ended March 31, 2023, following the acquisition of two containerships that were delivered to the Company in November 2022, both of which are employed under fixed rate time charter contracts.

The increase in voyage expenses from continuing operations to $1.3 million in the three months ended March 31, 2023, from $1.0 million in the same period of 2022, is mainly associated with the decrease of gain on bunkers partly offset by: (i) decreased bunkers consumption and (ii) decreased brokerage commission expenses, corresponding to the decrease in vessel revenues discussed above.

The increase in vessel operating expenses from continuing operations by $1.2 million, to $11.3 million in the three months ended March 31, 2023, from $10.1 million in the same period of 2022, as well as the increase in vessels’ depreciation and amortization costs by $1.5 million, to $5.8 million in the three months ended March 31, 2023, from $4.3 million in the same period of 2022, mainly reflect the increase in our Ownership Days following the acquisition of the two containerships.

General and administrative expenses from continuing operations in the three months ended March 31, 2023, amounted to $1.1 million, whereas, in the same period of 2022 general and administrative expenses totaled $0.9 million. This increase stemmed from a higher fee paid to Castor Ships, our manager, following entry into an amended and restated master management agreement with Castor Ships with effect from July 1, 2022.

Management fees from continuing operations in the three months ended March 31, 2023, amounted to $1.8 million, whereas in the same period of 2022, management fees totaled $1.5 million. This increase in management fees is mainly due to the increase in our Ownership Days for which our managers charge us a daily management fee, stemming from the expansion of our fleet with the acquisition of two containerships and to the aforementioned amendments to our management agreements with Castor Ships.

During the three months ended March 31, 2023, we incurred net interest costs and finance costs from continuing operations amounting to $2.3 million compared to $1.4 million during the same period in 2022. The increase is due to our higher weighted average interest rate as a result of the increase in the variable benchmark rates during the three months ended March 31, 2023, as compared with the same period of 2022, partly offset by an increase in interest we earned from time deposits due to increased interest rates. Moreover, our weighted average indebtedness increased from $133.2 million in the three months ended March 31, 2022, to $134.8 million in the three months ended March 31, 2023.

Other expenses, net from continuing operations in the three months ended March 31, 2023, amounted to $7.3 million, which mainly includes the unrealized loss of $7.7 million from revaluing our investments in listed equity securities at period end market rates. We did not hold any investment in equity securities during the three months period ended March 31, 2022.

Recent Financial Developments Commentary:

Equity update

From January 1, 2023, to date, no issuances of common shares have taken place. As of May 22, 2023, we had 94,610,088 common shares issued and outstanding.

Liquidity/ Financing/ Cash flow update

Our consolidated cash position (including our restricted cash) from continuing operations as of March 31, 2023 decreased by $37.3 million to $72.5 million, as compared to our cash position on December 31, 2022 amounted to $109.8 million. During the period ended March 31, 2023, our cash position decreased mainly as a result of: (i) $22,942 of net operating cash flows used, (ii) $31.5 million of net expenditures from the purchase and sale of equity securities, offset by dividends received amounted to $0.3 million and (iii) $8.4 million for scheduled principal repayments on our debt. During the period ended March 31, 2023, we received $2.6 million cash reimbursement from Toro related to the Spin-Off expenses incurred by us on Toro’s behalf during 2022 and up to the completion of the Spin-Off and we used $0.2 million for other capital expenditures relating to our fleet.

As of March 31, 2023, our total debt (including the debt related to assets held for sale) from continuing operations, gross of unamortized deferred loan fees, was $132.0 million of which $34.7 million is repayable within one year, as compared to $140.5 million of gross total debt as of December 31, 2022.

Recent Business Developments Commentary:

Completion of the tanker business Spin-Off

On March 7, 2023, we completed the previously announced Spin-Off of our tanker fleet comprising one Aframax, five Aframax/LR2 and two Handysize tankers. In the Spin-Off distribution, Castor shareholders received one common share of Toro for every ten Castor common shares held at the close of business on February 22, 2023. As part of the Spin-Off, among other things, Castor received 140,000 Series A fixed rate cumulative perpetual convertible preferred shares of Toro, having a stated amount of $1,000 and a par value of $0.001 per share.

Additional information about Toro and the Spin-Off transaction can be found in Amendment No. 4 to the Toro registration statement with respect to the Spin-Off filed on Form 20-F on February 2, 2023, which is available at www.sec.gov.

Sale of vessels

On March 13, 2023, we entered into an agreement with a third party for the sale of the M/V Magic Rainbow, a 2007-built Panamax, at a price of $12.6 million. On April 18, 2023, the M/V Magic Rainbow was delivered to its new owners. The Company expects to record during the second quarter of 2023 a net gain on the sale of the M/V Magic Rainbow of approximately $3.8 million, excluding any transaction related costs.

On March 23, 2023, we entered into an agreement with a third party for the sale of the M/V Magic Moon, a 2005-built Panamax, at a price of $13.95 million. The conclusion of the sale agreement is subject to the execution of definitive documentation customary for this type of transaction. The vessel is expected to be delivered to its new owner during the third quarter of 2023. The Company expects to record during the third quarter of 2023 a net gain on the sale of the M/V Magic Moon of approximately $4.6 million, excluding any transaction related costs.

Nasdaq Capital Market Minimum Bid Price Notice

On April 20, 2023, the Company received written notification from the Nasdaq Stock Market that it was not in compliance with the minimum $1.00 per share bid price requirement for continued listing on the Nasdaq Capital Market and was provided with 180 calendar days, or until October 17, 2023, to regain compliance with this requirement. The Company intends to monitor the closing bid price of its common stock during the compliance period and is considering its options to regain compliance with the Nasdaq Capital Market minimum bid price requirement. The Company can cure this deficiency if the closing bid price of its common stock is $1.00 per share or higher for at least ten consecutive business days during the grace period. In the event the Company does not regain compliance within the grace period and meets all other listing standards and requirements, the Company may be eligible for an additional 180-day grace period. The Company intends to cure the deficiency within the prescribed grace periods. During this time, the Company’s common stock will continue to be listed and trade on the Nasdaq Capital Market. The Company’s business operations are not affected by the receipt of the notification.

Fleet Employment Status (as of May 22, 2023) During the three months ended March 31, 2023, we operated on average 22.0 vessels earning a Daily TCE Rate(2) of $11,713 as compared to an average of 20.0 vessels earning a Daily TCE Rate(2) of $20,502 during the same period in 2022.
Source: Castor Maritime Inc.