Should You Buy Castor Maritime?

 

Castor Maritime Inc. (NASDAQ: CTRM), a diversified global shipping company, today announced its results for the three months and year ended December 31, 2020.

Highlights of the Fourth Quarter Ended December 31, 2020:
— Revenues, net: $4.4 million for the three months ended December 31, 2020,
as compared to $2.8 million for the three months ended December 31, 2019,
or a 57% period to period increase;

— Net loss/income: Net loss of $0.8 million for the three months ended
December 31, 2020, as compared to net income of $0.5 million for the
three months ended December 31, 2019;

— Loss/Earnings per common share: $0.01 loss per share for the three months
ended December 31, 2020, as compared to earnings per share of $0.20 for
the three months ended December 31, 2019;

— EBITDA(1): $0.3 million for the three months ended December 31, 2020, as
compared to $1.1 million for the three months ended December 31, 2019, or
a 73% period to period decrease;

— Average fleet time charter equivalent (“TCE”)(1) rate of $10,257 per day
for the three months ended December 31, 2020, as compared to $10,789 for
the three months ended December 31, 2019, or a 5% period to period
decrease;

— Cash and restricted cash of $9.4 million as of December 31, 2020, as
compared to $5.1 million as of December 31, 2019, or a 84% period to
period increase; and

— On October 9, 2020 and October 15, 2020, took successful deliveries of
the M/V Magic Horizon and the M/V Magic Nova, respectively.
Earnings Highlights of the Year Ended December 31, 2020:
— Revenues, net: $12.5 million for the year ended December 31, 2020, as
compared to $6.0 million for the year ended December 31, 2019, or a 108%
period to period increase;

— Net loss/income: Net loss of $1.8 million for the year ended December 31,
2020 which includes one off non-cash interest expenses of $1.1 million,
as compared to net income of $1.1 million for the year ended December 31,
2019;

— Loss/Earnings per common share: $0.03 loss per share for the year ended
December 31, 2020, as compared to earnings per share of $0.31 for the
year ended December 31, 2019;

— EBITDA(1): $2.3 million for year ended December 31, 2020, as compared to
$2.2 million for the year ended December 31, 2019, respectively, or a 5%
period to period increase; and

— Average fleet time charter equivalent (“TCE”)(1) rate of $9,765 per day
for the year ended December 31, 2020, as compared to $10,471 for the year
ended December 31, 2019, or a 7% period to period decrease;
(1) EBITDA and TCE rates are not recognized measures under United States generally accepted accounting principles (“U.S. GAAP”). Please refer to Appendix B of this press release for the definition and reconciliation of these measures to the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.

Management Commentary:

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

“2020 was a very challenging year, with significant disruptions in global trade flows, and in the working environment which we are still experiencing as we strive to ensure the timely and safe repatriation of our seafarers. Despite these challenges, we progressed on our growth strategy and decisively executed on our plans. This success is a testament to our dedication and the strength of our business.

“In 2020 we doubled our fleet size, growing from three vessels to six vessels by year’s end; this growth has continued in 2021 with the addition, once all deliveries are completed, of another eight vessels, increasing the size of our fleet to fourteen vessels. Two of these vessels, our Aframax LR2 tankers, mark our initial foray into the tanker market and allow us to diversify across shipping sectors.

“Finally, the dry bulk shipping market is steadily improving, and market participants expect a robust rate environment throughout 2021, which, if it materializes, is expected to drive our revenues higher.”

Earnings Commentary:

Fourth Quarter ended December 31, 2020 and 2019 Results

Time charter revenues, net of charterers’ commissions, for the three months ended December 31, 2020, increased to $4.4 million from $2.8 million in the same period of 2019, or a 57% increase. This increase reflects (i) the operation for a full quarter in 2020 of the M/V Magic Moon that was added to our fleet on October 20, 2019 and (ii) increased ownership days in the fourth quarter of 2020 following the deliveries of the M/V Magic Rainbow on August 8, 2020, the M/V Magic Horizon on October 9, 2020 and the M/V Magic Nova on October 15, 2020. These additions correspondingly increased our Available days (defined below) from 249 for the three months ended December 31, 2019 to 434 for the three months ended December 31, 2020, thus generating incremental revenues in the latter period. The daily TCE rate of our fleet for the fourth quarter of 2020 stood at $10,257, as compared to a daily TCE rate of $10,789 earned during the same period ended December 31, 2019, or an approximate 5% decrease, reflecting the lower average charter hire rates earned by certain of our vessels in the three months ended December 31, 2020 compared to those earned in the same period of 2019, which we primarily attribute to the adverse market conditions caused by the ongoing COVID-19 pandemic.

The increase in operating expenses by $1.8 million, from $1.3 million in the fourth quarter of 2019 to $3.1 million in the fourth quarter of 2020, as well as the increased depreciation costs by $0.4 million, from $0.3 million in the fourth quarter of 2019 to $0.7 million in the fourth quarter of 2020 reflect, as discussed above, the increase in our Ownership days (defined below) from 257 in 2019 to 529 in 2020. Daily vessel operating expenses for the period increased by $598, or 12%, to $5,818 from $5,220 in the respective period of 2019. Contributing to this increase were principally (i) the increased spares maintenance costs incurred on the M/V Magic Sun, the M/V Magic Rainbow and the M/V Magic Moon, as well as (ii) elevated crew costs for the vast majority of our fleet resulting from difficulties and delays in embarking and disembarking crew on our vessels amid the ongoing COVID-19 pandemic.

Management fees in the fourth quarter of 2020 amounted to approximately $0.5 million, whereas, in the same period of 2019 management fees totaled approximately $0.1 million. The increase by $0.4 million, or 400%, in management fees reflects (i) our incremental Ownership days for which our managers charge us with a daily management fee, following the acquisitions discussed above, (ii) the increase, effective September 1, 2020, in our daily management fees for the technical management of our fleet from $500 to $600 per vessel and (iii) the $250 per day per vessel for the provision of the relevant services by our commercial and administration manager.

Daily company administration expenses were $1,133 in the quarter ended December 31, 2020, compared to $651 in the corresponding period of 2019, with the daily increase of $482, or 74%, stemming from the flat fee we pay our commercial and administration manager with effect from September 1, 2020.

During the fourth quarter of 2020, we incurred net interest costs and finance costs mostly in connection with our outstanding debt amounting to $261,709 and had average outstanding indebtedness of $18.8 million. During the same period in 2019, we had average outstanding indebtedness of $12.7 million, which explains the lower interest and finance costs of $192,314 incurred during that period.

EBITDA for the three months ended December 31, 2020 was $0.3 million compared to $1.1 million in the same period of 2019, with the variation mainly attributable to the above discussed increase in operating and company administration expenses versus the compared period.

Recent Business and Financial Developments Commentary:

Update on COVID-19 Impact

The COVID-19 pandemic continues to cause turbulence in the shipping industry, particularly in the tanker and dry bulk sectors. Although the dry bulk charter market has shown signs of recovery from the low rates seen in the first half of 2020, the tanker charter market remains depressed. We assess that the tanker charter rates are likely to continue to be exposed to volatility in the near term. We further believe that the ongoing COVID-19 pandemic has caused an impact on our vessel revenues earned during 2020, since, certain vessels in our fleet which came up for charter renewal in 2020 were employed at comparably less favorable charter rates than those achieved during 2019 and those anticipated before the COVID-19 pandemic.

Further, containment measures and quarantine restrictions adopted, and still mandated, by many countries worldwide have caused significant impact on our ability to embark and disembark crew members and on our seafarers themselves. As a result, during 2020 and up to the date of this press release, we have encountered certain instances of prolonged delays in embarking and disembarking crew onto our ships associated with deviation time for quarantine checks, waiting time in various ports where crew changes were effected and positioning our vessels to countries in which we can rotate crew in compliance with such measures. These delays and deviations have resulted in increased operating expenses for our vessels, as well as bunker fuel consumption increasing our voyage expenses. The significant hurdles faced with crew changes and repatriation of seafarers has further led to a growing humanitarian crisis as well as significant concerns for the safety of seafarers and shipping.

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