UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of February 2025
Commission File Number 001-41676
Himalaya Shipping Ltd.
(Exact name of Registrant as specified in its charter)
Not applicable
(Translation of Registrant’s name into English)
S. E. Pearman Building
2nd floor, 9 Par-la-Ville Road
Hamilton HM 11
Bermuda
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F o
Exhibits.
| | | | | | | | |
| Exhibit | | Description |
| | Himalaya Shipping Ltd. Earnings Release for the Fourth Quarter of 2024 |
| | Himalaya Shipping Ltd. Interim Financial Information for the Fourth Quarter of 2024 |
| | Himalaya Shipping Ltd. Results Presentation for the Fourth Quarter of 2024 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | Himalaya Shipping Ltd. |
| | | | |
| | By: | | /s/ Herman Billung |
| | Name: | | Herman Billung |
| | Title: | | Chief Executive Officer |
| Date: February 20, 2025 | | | | |
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Himalaya Shipping Ltd. (HSHP) Announces its Preliminary Results for the Three and Twelve Months Ended December 31, 2024
Hamilton, Bermuda, February 20, 2025
Himalaya Shipping Ltd. (“Himalaya,” “Himalaya Shipping” or the “Company”) announces preliminary unaudited results for the three and twelve months ended December 31, 2024.
Highlights for the Fourth Quarter of 2024
•Total operating revenues of $29.6 million, which is an average time charter equivalent (“TCE”) earnings of approximately $27,800 per day, gross1. Average Baltic 5TC Capesize Index was $18,301 per day.
•Net income of $1.0 million and Adjusted EBITDA2 of $21.3 million for the fourth quarter of 2024.
•Declaration of cash distributions for September, October and November 2024 of $0.10, $0.04 and $0.01 per common share, respectively.
Subsequent Events
•Declaration of cash distributions of $0.005 per common share for each of December 2024 and January 2025.
•Entered into a new time charter agreement for Mount Norefjell for 14 to 38 months. The vessel will earn an index-linked rate, reflecting a premium to the Baltic 5TC index that is higher than the average premium on our current charters.
Contracted CEO, Herman Billung commented:
“The average Baltic Capesize Index (BCI) for 2024 concluded at $22,593 per day. After nine months of relative stability, the BCI experienced a decline, averaging $18,301 per day in the fourth quarter of 2024. The first three quarters of 2024 saw growth in ton miles: a 6.7% increase in iron ore, a 13.7% increase in bauxite, but a 4.6% decrease in coal, leading to an overall increase of 5.5%. However in the fourth quarter of 2024, ton miles declined by 0.8%, primarily driven by an 8.6% decrease in coal. This decrease can be attributed to the splitting of Capesize coal cargoes into smaller sizes for transportation by Panamax vessels, as evidenced by the 4.2% increase in ton miles in the fourth quarter.
As we enter the first quarter of 2025, the Capesize market continues to face challenges, with BCI rates averaging $8,807 per day. This decline is partly seasonal, but the ongoing cannibalization of the coal trade in favor of smaller ships remains a negative factor.
Despite the short-term pressures, we maintain a positive long-term outlook for large dry bulk ships. The current order book of new Capesize vessels stands at a historic low of only 7.2% of the existing fleet, and yard capacity is down 50% from its peak. Additionally, 20% of the entire fleet will be 20 years old by 2028, which is the earliest opportunity for meaningful fleet expansion. Furthermore, 23% of the total Capesize fleet will require drydocking in 2025 due to 5, 10, 15 and 20-year Special Surveys compared to only 13.6% in 2024.
The Company remains optimistic about significant growth in ton miles, driven by increased iron ore production capacity in the Atlantic from Guinea (120 MT) and Brazil (50 MT), both producers of high-quality iron ore. Should these volumes replace domestically produced iron ore in China, we anticipate a need for an additional 232 Capesize vessels, which is nearly 60% higher than the current order book. Additionally, we expect continued growth in bauxite exports out of Guinea, further fuelling the demand for ton miles.
1 The Company uses certain financial information calculated on a basis other than in accordance with accounting principles generally accepted in the United States (US GAAP) including average TCE earnings, gross and Adjusted EBITDA. Average TCE earnings, gross, as presented above, represents time charter revenues and voyage charter revenues adding back address commissions and divided by fleet operational days. Please refer to the appendix of this release for a reconciliation of this non-GAAP measure to the most directly comparable financial measures prepared in accordance with US GAAP.
2 Adjusted EBITDA as presented above represents our net income (loss) plus depreciation of vessels and equipment; any loss from equity method investment; total financial expenses, net; and income tax expense. Please refer to the appendix of this report for a reconciliation of Adjusted EBITDA to net income.
In the long-term, we expect rising global population and industrialization, coupled with the growing distance between raw material production and end consumers, to lead to sustained demand for large dry bulk vessels. Historically, ton mile demand for Capesize vessels has increased by 5.9% since 2002.
All of our 12 vessels are employed on index-linked charters, earning on average a premium of 42.5% over the Baltic 5TC index, with profit sharing of any economic benefit derived from operating the vessel's scrubber or running on LNG. As a result of our long-term financing, our breakeven point is approximately $16,000 per day on a Capesize index equivalent basis. Most of the excess cash-flow above this threshold is expected to be returned to shareholders through monthly dividends.”
Management discussion and analysis
See below a discussion of the preliminary unaudited results for the fourth quarter of 2024 compared to the unaudited results of the third quarter of 2024:
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| (in $ thousands) | Three months ended December 31, 2024 | Three months ended September 30, 2024 | Change ($) | Change (%) |
Total operating revenues | 29,598 | | 39,199 | | (9,601) | | (24) | % |
Vessel operating expenses | (6,805) | | (6,502) | | (303) | | 5 | % |
| Voyage expenses | (491) | | (436) | | (55) | | 13 | % |
General and administrative expenses | (1,011) | | (1,287) | | 276 | | (21) | % |
Depreciation and amortization | (7,296) | | (7,279) | | (17) | | — | % |
| Total operating expenses | (15,603) | | (15,504) | | (99) | | 1 | % |
| Operating income | 13,995 | | 23,695 | | (9,700) | | (41) | % |
| Loss from equity method investment | (10) | | (1) | | (9) | | 100 | % |
| Total financial expenses, net | (12,958) | | (13,021) | | 63 | | — | % |
Net income | 1,020 | | 10,669 | | (9,649) | | (90) | % |
Adjusted EBITDA | 21,291 | | 30,974 | | (9,683) | | (31) | % |
| | | | | | | | | | | | | | |
(in $ thousands) | December 31, 2024 | September 30, 2024 | Change ($) | Change (%) |
| Cash and cash equivalents | 19,369 | | 21,513 | | (2,144) | | (10) | % |
| Vessels and Equipment | 852,979 | | 860,275 | | (7,296) | | (1) | % |
| | | | |
| Total Debt | 713,887 | | 719,721 | | (5,834) | | (1) | % |
| Total Equity | 154,719 | | 160,159 | | (5,440) | | (3) | % |
Total operating revenues for the fourth quarter of 2024 were $29.6 million, a $9.6 million decrease compared to the third quarter of 2024. The decrease is a result of the decrease in Average Baltic 5TC Capesize Index from $24,909 per day in the third quarter of 2024 to $18,301 per day in the fourth quarter of 2024, with 11 of our vessels trading on index-linked time charters in the fourth quarter of 2024 (Q3 2024: 7 vessels on index-linked charters for the full quarter). Average TCE earnings, gross decreased from $36,800/day in the third quarter of 2024 to $27,800/day in the fourth quarter of 2024.
Total operating expenses for the fourth quarter of 2024 of $15.6 million remained generally in line with the third quarter of 2024.
Total financial expenses for the fourth quarter of 2024 of $13.0 million remained generally in line with the third quarter of 2024.
Vessels and equipment as of December 31, 2024 was $853.0 million, a $7.3 million decrease compared to $860.3 million as of September 30, 2024. The decrease is primarily due to vessel depreciation during the quarter.
Total debt as of December 31, 2024 was $713.9 million, a $5.8 million decrease compared to $719.7 million as of September 30, 2024. The overall decrease is primarily due to the repayments of principal of $6.5 million on the sale and leaseback arrangements, offset by amortization of deferred finance costs of $0.7 million.
Cash Flows for the Fourth Quarter of 2024
Net cash provided by operating activities was $10.5 million, compared to $16.5 million in the third quarter of 2024. The decrease is primarily due to the decrease in the charter hire received from charterers as a result of the reduction in time charter revenue in the fourth quarter of 2024.
Net cash used in financing activities was $12.6 million, primarily consisting of repayments on the sale and leaseback financings of $6.5 million and payments of cash distributions of $6.1 million.
Liquidity and Financing
As of December 31, 2024, the Company had cash and cash equivalents of $19.4 million and $10.0 million available to drawdown under the revolving credit facility with Drew Holdings Ltd (the “Drew Facility”). In 2025, we drew down $2.0 million under the Drew Facility.
After 180 days following the delivery of each newbuilding, each subsidiary under the sale and leaseback arrangements with CCB Financial Leasing Company Limited (“CCBFL”) and Jiangsu Financial Leasing Co. Ltd (“Jiangsu”) is required to maintain a minimum cash balance equivalent to the bareboat hire payable within the following three months which amounts to approximately $1.5 million per vessel. As of December 31, 2024, cash and cash equivalents include $12.3 million which the Company is required to maintain as minimum cash balance for all eight vessels under the sale and leaseback arrangements with CCBFL and Jiangsu. There are no requirements to increase the minimum cash upon reaching this threshold.
All of our vessels have been financed by Chinese leasing houses at a fixed bareboat rate with a maturity of seven years from the delivery of each vessel. This gives the Company a fixed financing cost for our vessels until the maturity of their respective leases.
Repayments on the financing for the installation of the scrubbers on the first four vessels is expected to conclude by the first quarter of 2026. After repayment of this financing, the cash break-even will be reduced by approximately $800 per day.
On October 31, 2024, the Company entered into an addendum with Drew in relation to the Drew Facility to: (i) include a commitment fee of 1% per annum on any undrawn amount from January 1, 2025 to the end of the availability period, (ii) extend the timeframe to drawdown from the facility to December 31, 2025 and the latest repayment date to December 31, 2026, and (iii) change the margin on the Term Secured Overnight Financing Rate (“SOFR”) from 8% to 6.5% per annum.
Commercial Update
In the fourth quarter of 2024, the Company achieved average TCE earnings, gross of approximately $27,800 per day, including average daily scrubber and LNG benefits of approximately $2,300 per day. This is equivalent to a 52% premium to the Capesize index.
In addition, in the fourth quarter of 2024, the Company’s vessels trading on index-linked time charters earned approximately $27,600 per day, gross, including average daily scrubber and LNG benefits. The Company’s vessels trading on fixed rate time charters earned approximately $30,100 per day, gross.
The Baltic 5TC Capesize Index averaged $18,301 per day in the fourth quarter of 2024.
Fleet Status
The table below sets forth information about our fleet and charters.
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| Vessel name | Built | Type | 2025 | 2026 | 2027 | 2028 |
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 |
| Mount Norefjell | 2023 | DF Newcastlemax | 1 | Index | |
| Mount Ita | 2023 | DF Newcastlemax | Index | | |
Mount Etna2 | 2023 | DF Newcastlemax | Index2 | |
| Mount Blanc | 2023 | DF Newcastlemax | Index2 | |
| Mount Matterhorn | 2023 | DF Newcastlemax | Index | | |
| Mont Neblina | 2023 | DF Newcastlemax | Index2 | |
| Mount Bandeira | 2024 | DF Newcastlemax | Index2 | |
| Mount Hua | 2024 | DF Newcastlemax | Index2 | |
| Mount Elbrus | 2024 | DF Newcastlemax | Index | | |
| Mount Denali | 2024 | DF Newcastlemax | Index2 | |
| Mount Aconcagua | 2024 | DF Newcastlemax | Index | | |
| Mount Emai | 2024 | DF Newcastlemax | Index | | |
1 $30,000 fixed rate per day
2 Evergreen structure
Market Commentary
The Baltic 5TC Capesize index as of February 19, 2024 stands at $7,187 having averaged $8,807 year to date, a decrease from $20,028 during the same period in 2024.
Following strong Capesize demand (measured in ton miles) for coal, iron ore and bauxite in the first three quarters of 2024, we saw a correction in the fourth quarter with a decrease in the Capesize demand in the quarter, especially for Capesize coal demand. Overall, total Capesize demand 2024 increased by 3.1% year-on-year.
Iron ore imports to China continued with solid volumes throughout the year, increasing by 8 MT in the fourth quarter year-on-year, and a 4 MT increase in iron ore shipments to the rest of the world. The overall Capesize shipments to China increased by 10 MT or 1.1% year-on-year in the fourth quarter of 2024 compared to the same period last year.
Growth in vessel supply for large bulk carriers is still anticipated to be moderate in the coming years with expected Capesize deliveries of 7.8 million dwt in 2025 (approximately 2.2% of the existing fleet), 10.4 million dwt (approximately 2.6% of the existing fleet) for 2026 and 13 million dwt (approximately 3.3% of the existing fleet) after 2026.
Following the existing orders of Newcastlemax vessels, available newbuilding berths with delivery before the second half of 2028 are expected to be limited. Current newbuilding costs for a dual-fuel Newcastlemax in China are believed to be approximately $95 million.
We continue to see potential upside to the future development in the Capesize market from current levels in the event of continued strong exports of iron ore and bauxite from Brazil and West Africa. The Simandou project in
Guinea is reported to be advancing at a good pace, with the first shipment being expected in 2025 with an expected 24-month ramp-up to 60 million tons per annum for phase 1, and an additional 60 million tons per annum for phase 2. In addition, Vale is targeting a 50 million tons per annum increase in capacity by 2026 from Vargem Grande, Capanema and the S11D mine.
Key downside risks to the Capesize market include a potential continued economic slowdown in China, as well as heightened geopolitical tensions. A Suez Canal reopening could potentially lead to shorter duration on certain trades, although the Capesize trade is less affected than other segments due to trading routes. The physical market in terms of volumes transported, has increased throughout the year, and to date we have not seen a slowdown in the Chinese demand. A weak Panamax market has proven challenging for the coal transport on Capesize and Newcastlemax vessels in the fourth quarter of 2024, and we are monitoring key Panamax markets to identify when the coal cargo splits will yet again emerge on Capesize and Newcastlemax vessels on a larger scale. A potential cease fire and resumption of cargo volumes from Ukraine and Russia is expected to have a positive impact on ton-mile demand, driven by increase in coal imports to Ukraine and iron ore exports from Ukraine.
Capesize Fleet Development
The global Capesize fleet stands at 400 million dwt as of January 2025, up from 394 million dwt in January 2024. The current order book for Capesize dry bulk vessels currently stands at 7.2% of the existing fleet, up from 6.5% in January 2024.
14.2 million dwt was ordered in 2024, compared to 11.4 million dwt ordered in 2023, and 0.84 million dwt was scrapped in 2024, compared to 1 million dwt in 2023.
Operational Update
In the fourth quarter of 2024, our fleet had 1,104 operational days, and a utilization rate of 99.0% of our vessels.
Outlook
Only about 146 large bulk carriers are due for delivery prior to 2028 and we expect a significant number of vessels to be due for dry docking in the next couple of years. About 23% of the total Capesize fleet, ranging from 159k dwt to 211k dwt, are due for dry dock or Special Surveys in 2025 compared to 13.6% in 2024. Based on the order book, the fleet is only scheduled to have a growth of about 2.2% in 2025, adjusting for the upcoming dry dock schedule. Approximately 100 Capesize vessels are 20 years old or older as of January 2025, and the average fleet age is increasing.
Ton mile intensive trades of raw materials sourced in the Atlantic basin with demand in the Far East is expected to continue. Iron ore from Brazil and Guinea, typically have three times longer sailing distance relative to the Pacific basin supply. To put this in context, the potential 170 MT per year incremental iron ore supply from Guinea and Brazil could result in a demand for approximately 250 incremental Capesize equivalent ships.
Himalaya Shipping has the most modern Newcastlemax fleet owned by a listed company in the industry. With no planned reinvestment needs in the fleet, and a strong focus on capital discipline, we expect that cash flows generated above cash breakeven to be returned to shareholders through monthly dividends.
The dual fuel LNG capability of our vessels means that, when a vessel is running on LNG, the CO2 emissions are reduced to more than half compared to a standard Capesize index ship. It is estimated that approximately 200 MTPA, equivalent to a 40% increase in new LNG liquefaction capacity is coming by 2028. We expect this to lead to lower LNG prices, and potentially give us an additional fuel benefit vs running ships on VLSFO or HFO. This should provide benefits to the environment, charterer and owner.
Forward looking statements
This press release and any related discussions contain forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements that do not reflect historical facts and may be identified by words such as “aim”, “believe,” “assuming,” “anticipate,” “could”, “expect”, “intend,” “estimate,” “forecast,” “project,” “likely to,” “due to,” “plan,” “potential,” “will,” “may,” “should,” or other similar expressions and include statements about plans, objectives, goals, strategies, future events or performance, including outlook, prospects, statements about the benefits of our vessels, including reduced emissions when running on LNG, the terms of our charters and chartering activity including the information under “Fleet status”, dry bulk industry trends and market outlook, including market conditions and activity levels in the industry, expected demand for vessels and expected drivers of demand including projects, including expected shipping capacity required for projects such as those in Guinea and Brazil and underlying assumptions, developments in trading routes, utilization of the global fleet and our fleet, expected trends in the global fleet including vessel orders and orderbook, expected supply of new vessels in the coming years and expected cost of newbuilds, yard capacity, statements about our capital strategy, dividend objectives and plans, statements made in the sections above entitled “Subsequent events,” “Market commentary,” and “Outlook,” including expected trends in vessel supply and trends in the global fleet, including expected drydocking, statements in this document under the heading “Going Concern” in Note 1 of the Unaudited Condensed Consolidated Financial Statements for the three and twelve months ended December 31, 2024 included herein, and other non-historical statements. These forward-looking statements are not statements of historical fact and are based upon current estimates, expectations, beliefs, and various assumptions, many of which are based, in turn, upon further assumptions, and a number of such assumptions are beyond our control and are difficult to predict. These statements involve significant risks, uncertainties, contingencies and factors that are difficult or impossible to predict and are beyond our control, and that may cause our actual results, performance or achievements to be materially different from what is expressed, implied or forecasted in such forward-looking statements including:
•general economic, political and business conditions;
•general dry bulk market conditions, including fluctuations in charter hire rates and vessel values;
•our ability to achieve charter rates above our break-even rate;
•our ability to meet the conditions and covenants in our financing agreements;
•changes in demand in the dry bulk shipping industry, including the market for our vessels;
•changes in the supply of dry bulk vessels;
•our ability to successfully re-employ our dry bulk vessels at the end of their current charters and the terms of future charters;
•changes in our operating expenses, including fuel or bunker prices, dry docking and insurance costs;
•changes in governmental regulation, tax and trade matters and actions taken by regulatory authorities;
•compliance with, and our liabilities under, governmental, tax, environmental and safety laws and regulations;
•potential disruption of shipping routes due to accidents, hostilities or political events;
•our ability to refinance our debt as it falls due;
•fluctuations in foreign currency exchange rates;
•potential conflicts of interest involving members of our board and management and our significant shareholder;
•our ability to pay dividends and the amount of dividends we ultimately pay;
•risks related to climate change, including climate-change or greenhouse gas related legislation or regulations and the impact on our business from climate-change related physical changes or changes in weather patterns, and the potential impact of new regulations relating to climate change, as well as the impact of the foregoing on the performance of our vessels;
•other factors that may affect our financial condition, liquidity and results of operations; and
•other risks described under "Item 3. Key Information - D. Risk Factors" in our Annual Report on Form 20-F for the year ended December 31, 2023 filed with the U.S. Securities and Exchange Commission on March 27, 2024.
You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Himalaya Shipping undertakes no and expressly disclaims any obligation to update publicly any forward-looking statements after the date of this press release whether as a result of new information, future events or otherwise, except as required by law.
About Himalaya Shipping Ltd.
Himalaya Shipping Ltd. is an independent bulk carrier company, incorporated in Bermuda. Himalaya Shipping has twelve vessels in operation.
February 20, 2025
The Board of Directors
Himalaya Shipping Ltd.
Hamilton, Bermuda
Bjorn Isaksen (Chairman of the Board)
Carl Erik Steen (Director)
Georgina Sousa (Director)
Jehan Mawjee (Director)
Mi Hong Yoon (Director)
Questions should be directed to:
Herman Billung: Contracted CEO, +47 9183 1590
APPENDIX
UNAUDITED NON GAAP MEASURES AND RECONCILIATIONS
Average TCE earnings, gross is a non-U.S. GAAP measure of the average daily revenue performance of a vessel. We believe average TCE revenues provide additional meaningful information for investors to analyze our fleets’ daily income performance.Set forth below is a reconciliation of average TCE earnings, gross to total operating revenues for the periods presented.
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| In $ thousands, except per day and number of days | Three months ended | Twelve months ended | |
| December 31, 2024 | September 30, 2024 | December 31, 2024 | |
| Total operating revenues | 29,598 | | 39,199 | | 123,580 | | |
| Add: Address commissions | 1,057 | | 1,453 | | 4,483 | | |
| Total operating revenues, gross | 30,655 | | 40,652 | | 128,063 | | |
| Fleet operational days | 1,104 | | 1,104 | | 3,941 | | |
| Average TCE earnings, gross | 27,800 | 36,800 | | 32,500 | | |
We present Adjusted EBITDA because we believe this measure increases comparability of total business performance from period to period and against the performance of other companies by removing the impact of depreciation and amortization, total financial expenses, net, loss from equity method investments and income tax. Set forth below is a reconciliation of Adjusted EBITDA to net income for the periods presented.
| | | | | | | | | | | |
| Three months ended | Twelve months ended |
| In $ thousands | December 31, 2024 | September 30, 2024 | December 31, 2024 |
| Net income | 1,020 | | 10,669 | | 21,044 | |
| Depreciation and amortization | 7,296 | | 7,279 | | 26,474 | |
| Loss from equity method investment | 10 | | 1 | | 11 | |
| Total financial expenses, net | 12,958 | | 13,021 | | 45,557 | |
| Income tax | 7 | | 4 | | 11 | |
| Adjusted EBITDA | 21,291 | | 30,974 | | 93,097 | |
Non-GAAP financial measures may not be comparable to similarly titled measures of other companies and have limitations and should not be considered in isolation or as a substitute for analysis of our operating results as reported under U.S. GAAP.
INTERIM FINANCIAL INFORMATION
FOURTH QUARTER 2024
Himalaya Shipping Ltd.
Unaudited Consolidated Statements of Operations
(In $ thousands except share and per share data)
| | | | | | | | | | | | | | | | | | |
| Notes | Three months ended December 31, 2024 | Three months ended December 31, 2023 | Twelve months ended December 31, 2024 | Twelve months ended December 31, 2023 | |
Operating revenues | | | | | | |
Time charter revenues | 8 | 29,598 | | 18,321 | | 123,580 | | 36,736 | | |
| | | | | | |
| | | | | | |
Total operating revenues | | 29,598 | | 18,321 | | 123,580 | | 36,736 | | |
| | | | | | |
Operating expenses | | | | | | |
Vessel operating expenses | | (6,805) | | (3,585) | | (23,845) | | (8,597) | | |
Voyage expenses and commissions | | (491) | | (234) | | (1,607) | | (549) | | |
General and administrative expenses | | (1,011) | | (1,078) | | (5,031) | | (3,846) | | |
Depreciation and amortization | 12 | (7,296) | | (3,580) | | (26,474) | | (9,118) | | |
Total operating expenses | | (15,603) | | (8,477) | | (56,957) | | (22,110) | | |
| | | | | | |
| Operating income | | 13,995 | | 9,844 | | 66,623 | | 14,626 | | |
| | | | | | |
| Loss from equity method investment | 10 | (10) | | — | | (11) | | — | | |
| | | | | | |
Financial income (expenses), net | | | | | | |
Interest income | | 226 | | 425 | | 1,071 | | 830 | | |
Interest expense, net of amounts capitalized | 7 | (13,190) | | (5,665) | | (46,636) | | (13,601) | | |
Other financial income (expenses), net | | 6 | | 2 | | 8 | | (341) | | |
Total financial expenses, net | | (12,958) | | (5,238) | | (45,557) | | (13,112) | | |
| | | | | | |
Net income before income tax | | 1,027 | | 4,606 | | 21,055 | | 1,514 | | |
Income tax expense | 5 | (7) | | — | | (11) | | — | | |
Net income attributable to shareholders of Himalaya Shipping Ltd. | | 1,020 | | 4,606 | | 21,044 | | 1,514 | | |
Total comprehensive income attributable to shareholders of Himalaya Shipping Ltd. | | 1,020 | | 4,606 | | 21,044 | | 1,514 | | |
| | | | | | |
Basic and diluted earnings per share | 6 | 0.02 | | 0.11 | | 0.48 | | 0.04 | | |
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Himalaya Shipping Ltd.
Unaudited Consolidated Balance Sheets
(In $ thousands except share and per share data)
| | | | | | | | | | | | |
| Notes | December 31, 2024 | December 31, 2023 | |
ASSETS | | | | |
Current assets | | | | |
Cash and cash equivalents | | 19,369 | | 25,553 | | |
| | | | |
Trade receivables | | 1,249 | | 811 | | |
| | | | |
| | | | |
Prepaid expenses and other current assets | 9 | 6,180 | | 6,443 | | |
Total current assets | | 26,798 | | 32,807 | | |
| | | | |
Non-current assets | | | | |
| Equity method investments | 10 | 324 | | — | | |
Newbuildings | 11 | — | | 132,646 | | |
Vessels and equipment, net | 12 | 852,979 | | 428,617 | | |
| | | | |
Other non-current assets | 11 | — | | 5,136 | | |
Total non-current assets | | 853,303 | | 566,399 | | |
Total assets | | 880,101 | | 599,206 | | |
| | | | |
LIABILITIES AND SHAREHOLDER’S EQUITY | | | | |
Current liabilities | | | | |
| Current portion of long-term debt | 14 | 24,304 | | 19,795 | | |
Trade payables | | 821 | | 1,693 | | |
Accrued expenses | 13 | 7,229 | | 2,531 | | |
| | | | |
Other current liabilities | | 3,445 | | 1,281 | | |
Total current liabilities | | 35,799 | | 25,300 | | |
| | | | |
Non-current liabilities | | | | |
Long-term debt | 14 | 689,583 | | 419,701 | | |
| | | | |
| | | | |
Total non-current liabilities | | 689,583 | | 419,701 | | |
Total liabilities | | 725,382 | | 445,001 | | |
| | | | |
| | | | |
Shareholders’ Equity | | | | |
Common shares of par value $1.00 per share: authorized 140,010,000 (2023: 140,010,000) shares, issued and outstanding 43,900,000 (2023: 43,900,000) shares | 18 | 43,900 | | 43,900 | | |
| Additional paid-in capital | 18 | 14,454 | | 111,788 | | |
| Contributed surplus | 18 | 76,804 | | — | | |
Retained earnings (Accumulated deficit) | | 19,561 | | (1,483) | | |
Total shareholders’ equity | | 154,719 | | 154,205 | | |
| Total liabilities and shareholders’ equity | | 880,101 | | 599,206 | | |
Himalaya Shipping Ltd.
Unaudited Consolidated Statements of Cash Flows
(In $ thousands except share and per share data)
| | | | | | | | | | | | | | | | | | | |
| Note | Three months ended December 31, 2024 | Three months ended December 31, 2023 | Twelve months ended December 31, 2024 | Twelve months ended December 31, 2023 | | |
| Cash Flows from Operating Activities | | | | | | | |
Net income | | 1,020 | | 4,606 | | 21,044 | | 1,514 | | | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | |
| Non-cash compensation expense related to stock options | | 103 | | 111 | | 512 | | 474 | | | |
| Depreciation of vessels | 12 | 7,296 | | 3,580 | | 26,474 | | 9,118 | | | |
| Amortization of deferred finance charges | | 666 | | 366 | | 2,423 | | 1,378 | | | |
| Equity in net loss on equity method investment | 10 | 10 | | — | | 11 | | — | | | |
| | | | | | | |
| Change in assets and liabilities: | | | | | | | |
| Accounts receivable | | 29 | | (391) | | (438) | | (811) | | | |
| Amounts due to/from related parties | | — | | — | | — | | (2,696) | | | |
| Accounts payable | | (274) | | 365 | | (872) | | 485 | | | |
| Accrued expenses | | (399) | | (266) | | 4,259 | | 1,028 | | | |
| Other current and non-current assets | | 765 | | (271) | | 263 | | (5,036) | | | |
| Other current liabilities | | 1,286 | | 307 | | 2,164 | | 1,020 | | | |
Net cash provided by operating activities | | 10,502 | | 8,407 | | 55,840 | | 6,474 | | | |
| | | | | | | |
| Cash Flows from Investing Activities | | | | | | | |
Additions to newbuildings | | — | | (28,916) | | (313,054) | | (413,055) | | | |
| Acquisition of equity method investments | | — | | — | | (305) | | — | | | |
Net cash used in investing activities | | — | | (28,916) | | (313,359) | | (413,055) | | | |
| | | | | | | |
| Cash Flows from Financing Activities | | | | | | | |
| Proceeds from issuance of common shares, net of paid issuance costs | | — | | 15,998 | | — | | 62,193 | | | |
| Proceeds from issuance of long-term and short-term debt (net of deferred finance charges paid to lender) | | — | | 20,675 | | 295,500 | | 391,415 | | | |
| Other deferred finance charges paid | | — | | (27) | | (2,314) | | (3,952) | | | |
| | | | | | | |
Proceeds from issuance of long-term debt from related party | 17 | — | | — | | — | | 1,020 | | | |
| Repayment of long-term debt from related party | 17 | — | | — | | — | | (2,020) | | | |
| Repayment of long-term and short-term debt | | (6,500) | | (3,372) | | (21,218) | | (16,785) | | | |
Payment of cash distributions | 18 | (6,146) | | — | | (20,633) | | — | | | |
Net cash provided by (used in) financing activities | | (12,646) | | 33,274 | | 251,335 | | 431,871 | | | |
| | | | | | | |
Net (decrease) increase in cash, cash equivalents and restricted cash | | (2,144) | | 12,765 | | (6,184) | | 25,290 | | | |
Cash, cash equivalents and restricted cash at the beginning of the period | | 21,513 | | 12,788 | | 25,553 | | 263 | | | |
Cash, cash equivalents and restricted cash at the end of the period | | 19,369 | | 25,553 | | 19,369 | | 25,553 | | | |
| | | | | | | | | | | | | | | | | | | |
Supplementary disclosure of cash flow information | | Three months ended December 31, 2024 | Three months ended December 31, 2023 | Twelve months ended December 31, 2024 | Twelve months ended December 31, 2023 | | |
| | | | | | | |
| | | | | | | |
| Interest paid, net of capitalized interest | | (12,473) | | (5,274) | | (40,287) | | (12,992) | | | |
Himalaya Shipping Ltd.
Unaudited Consolidated Statements of Changes in Shareholders' Equity
(In $ thousands except share and per share data)
| | | | | | | | | | | | | | | | | | | | |
| Number of outstanding shares | Common shares | Additional paid in capital | Contributed surplus | Accumulated deficit | Total equity |
| Balance as of December 31, 2022 | 32,152,857 | | 32,153 | | 61,171 | | — | | (2,997) | | 90,327 | |
| Issuance of common shares | 11,747,143 | | 11,747 | | 55,894 | | — | | — | | 67,641 | |
| Equity issuance costs | — | | — | | (5,751) | | — | | — | | (5,751) | |
| Share based compensation | — | | — | | 474 | | — | | — | | 474 | |
| Total comprehensive income | — | | — | | — | | — | | 1,514 | | 1,514 | |
| Balance as of December 31, 2023 | 43,900,000 | | 43,900 | | 111,788 | | — | | (1,483) | | 154,205 | |
| | | | | | |
| Number of outstanding shares | Common shares | Additional paid in capital | Contributed surplus | Retained earnings/(Accumulated deficit) | Total equity |
| Balance as of December 31, 2023 | 43,900,000 | | 43,900 | | 111,788 | | — | | (1,483) | | 154,205 | |
| Transfer to contributed surplus | — | | — | | (97,876) | | 97,876 | | — | | — | |
| Share based compensation | — | | — | | 542 | | — | | — | | 542 | |
Cash distributions to shareholders | — | | — | | — | | (21,072) | | — | | (21,072) | |
Total comprehensive income | — | | — | | — | | — | | 21,044 | | 21,044 | |
| Balance as of December 31, 2024 | 43,900,000 | | 43,900 | | 14,454 | | 76,804 | | 19,561 | | 154,719 | |
Himalaya Shipping Ltd.
Condensed Notes to the Unaudited Consolidated Financial Statements
Note 1 - General Information
Himalaya Shipping Ltd. was incorporated in Bermuda on March 17, 2021. We are listed on the New York Stock Exchange under the ticker HSHP and the Euronext Expand, operated by the Oslo Stock Exchange, under the ticker HSHP. Himalaya Shipping Ltd. was founded for the purpose of owning high-quality Newcastlemax dry bulk vessels, each with capacity in the range of 210,000 dead weight tons (“dwt”) which are equipped with the latest generation dual fuel LNG technology. As of December 31, 2024, we have a total of twelve vessels in operation. The Company has entered into sale and leaseback financing arrangements for its vessels which are described in Note 14.
As used herein, and unless otherwise required by the context, the term “Himalaya Shipping” refers to Himalaya Shipping Ltd. and the terms “Company”, “we”, “Group”, “our” and words of similar import refer to Himalaya Shipping and its consolidated companies. The use herein of such terms as “group”, “organization”, “we”, “us”, “our” and “its” or references to specific entities, is not intended to be a precise description of corporate relationships.
Going Concern
The unaudited consolidated financial statements have been prepared on a going concern basis.
As of December 31, 2024, the Company has cash and cash equivalents of $19.4 million. In addition, the Company had $10.0 million available to drawdown under the Drew revolving credit facility.
We believe that we will have sufficient resources to satisfy our obligations in the ordinary course of business for the 12-month period from the date these unaudited consolidated financial statements were issued. We have performed stress testing with respect to our forecasted cash positions under various scenarios, and accordingly we believe we will meet our obligations as and when they fall due.
Note 2 - Basis of Preparation and Accounting Policies
Basis of preparation
The unaudited consolidated financial statements are stated in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The unaudited consolidated financial statements do not include all of the disclosures required under U.S. GAAP in the annual consolidated financial statements and should be read in conjunction with our audited annual financial statements for the year ended December 31, 2023, which are included in our Annual Report on Form 20-F, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 27, 2024. The Unaudited Consolidated Balance Sheet data for December 31, 2023 was derived from our audited annual financial statements. The amounts are presented in thousands of United States dollars ("U.S. dollar" or "$"), unless otherwise stated. The financial statements have been prepared on a going concern basis and in management's opinion, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of December 31, 2024, and its results of operations and cash flows for the three and twelve months ended December 31, 2024 and 2023.
Significant accounting policies
The accounting policies adopted in the preparation of the Unaudited Consolidated Financial Statements for the twelve months ended December 31, 2024 are consistent with those followed in preparation of our annual audited consolidated financial statements for the year ended December 31, 2023.
The following policy was adopted as a result of the acquisition of 40% of the shares of 2020 Bulkers Management AS (“2020 Bulkers Management”) in August 2024.
Equity method investments
Investments in entities over which we have significant influence, but do not meet the criteria for consolidation, are accounted for by the equity method of accounting. Under this method, we record our investment at cost and adjust the carrying amount for our share of the income or losses from these equity method investments subsequent to the date of the investment and report the recognized earnings or losses in the consolidated statements of operations. Dividends received from an equity method investment reduce the carrying amount of the investment. We allocate the excess, if any, of the purchase price of the investment acquired over our proportionate share of the carrying value of the underlying net assets, or basis difference, across the assets and liabilities of the investee. The basis difference assigned to amortizable net assets will then be amortized through our consolidated statements of operations as part of the “Net income/(losses) from equity method investments.”
We periodically assess if impairment indicators exist at our equity method investments. Where determined to be other-than-temporary impairment, an impairment loss in the period will be recognized in the line item “Net income/(losses) from equity method investments” in the consolidated statements of operations.
Note 3 - Recently Issued Accounting Standards
Adoption of new accounting standards
In November 2023, the FASB issued ASU 2023-07 (Topic 280 Segment Reporting): Improvements to Reportable Segment Disclosures requiring disclosure of incremental segment information for all public entities to enable investors to develop more decision-useful financial analyses, such as:
1.On an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM);
2.On an annual and interim basis, other segment items by reportable segment with a description of its composition;
3.All annual disclosures about a reportable segment’s profit or loss and assets required by Topic 280 in interim periods;
4.One or more additional measures of segment profit if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and making decisions on how to allocate resources. However, the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements should be at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed);
5.The title and position of the CODM and how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and making decisions about how to allocate resources;
6.For an entity with a single reportable segment, all the disclosures required by the amendments and all existing segment disclosures under Topic 280.
ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments in this update are required to be applied retrospectively to all periods presented in the financial statements, unless it is impracticable. We did not early adopt the amendments in our unaudited interim consolidated financial statements and there is no material impact on our related disclosures as presented in this interim set of accounts for the three and twelve months ended December 31, 2024. We expect the impact of the adoption of ASU 2023-07 to be limited to additional segment disclosures in our annual financial statements in 2024 and in our interim financial statements in 2025.
Accounting pronouncements that have been issued but not yet adopted
The following table provides a brief description of other recent accounting standards that have been issued but not yet adopted as of December 31, 2024:
| | | | | | | | | | | |
| Standard | Description | Date of adoption | Expected Effect on our Consolidated Financial Statements or Other Significant Matters |
| | | |
ASU 2023-6 Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative | The amendments represent changes to clarify or improve disclosure and presentation requirements of a variety of Topics. Amendments allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the SEC’s requirements. Also, the amendments align the requirements in the Codification with the SEC’s regulations. | The date on which SEC removes related disclosure or two years later | Under evaluation |
| | | |
ASU 2023-9 Income Taxes (Topic 740) - Improvements to Income Tax Disclosures | The amendments improve the transparency of income tax disclosures by requiring annual disclosure of (1) specific categories in the rate reconciliation; and (2) additional information for reconciling items if the effect of those reconciling items is equal to or greater than 5% .of the resulting amount by multiplying pretax income (or loss) by the applicable statutory income tax rate. An entity is also required to provide the nature, effect and underlying causes of the reconciling items, and the judgment used in categorizing them, if not otherwise evident.
The amendments also improve the comparability and effectiveness of disclosures by (1) adding disclosures of pretax income (or loss) and income tax expense (or benefit) to be consistent with SEC Regulation S-X 210.4-08(h), Rules of General Application—General Notes to Financial Statements: Income Tax Expense, and (2) removing disclosures that are no longer considered relevant or cost beneficial. | January 1, 2025 | Under evaluation |
ASU 2024-02 Codification Improvements - Amendments to Remove References to the Concepts Statements.
| The amendments remove references to various Concepts Statements that were either (i) extraneous and not required to understand or apply the guidance, or (ii) used in prior statements to provide guidance in certain topics. | January 1, 2025 | Under evaluation |
| ASU 2024-03 Income Statement - Reporting comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses | The amendments require disclosure of the amounts of below 5 categories included in each relevant expense caption:
(a) purchase of inventory;
(b) employee compensation;
(c) depreciation;
(d) intangible asset amortization; and
(e) depreciation, depletion, and amortization recognized as part of oil and gas producing activities.
A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations.
The amendment also requires disclosure of the qualitative description of the amounts remaining in the relevant expense captions that are not separately disaggregated quantitatively. In addition, disclosure of the entity’s definition of selling expenses and its total amount are required. | January 1, 2027 | Under evaluation |
The FASB have issued further updates not included above as we do not believe that these are applicable to the Company.
Note 4 - Segment
Our chief operating decision maker, or the CODM, being our Board of Directors, measures performance based on our overall return to shareholders based on consolidated net income. The CODM does not review a measure of operating result at a lower level than the consolidated Group and we only have one reportable segment.
Note 5 - Income Taxes
Bermuda
Himalaya Shipping Ltd. is incorporated in Bermuda. Under current Bermuda law, the Company is not required to pay taxes in Bermuda on either income or capital gains. Himalaya Shipping Ltd. has received written assurance from the Minister of Finance in Bermuda that, in the event of any such taxes being imposed, the Company will be exempted from taxation until March 31, 2035.
On December 27, 2023, Bermuda enacted the Corporate Income Tax Act (the “CIT Act”). Entities subject to tax under the CIT Act are the Bermuda constituent entities of multi-national groups. A multi-national group is defined under the CIT Act as a group with entities in more than one jurisdiction with consolidated revenues of at least €750 million for two out of the last four fiscal years. If Bermuda constituent entities of a multi-national group are subject to tax under the CIT Act, for taxable years beginning on or after January 1, 2025, Bermuda will impose a 15% corporate income tax, as determined in accordance with and subject to the adjustments set out in the CIT Act (including in respect of foreign tax credits applicable to the Bermuda constituent entities).
While we have a tax-exempt status in Bermuda until March 31, 2035, Bermuda specifically provided that the CIT Act applies notwithstanding any assurance given pursuant to the Exempted Undertakings Tax Protection Act 1966 (the “EUTP Act”). Based on a number of operational, economic and regulatory assumptions, we do not expect to have consolidated revenue sufficient for us to fall within scope of the CIT Act in the near future. We will monitor the developments on the Bermuda internal regulations with regards to the CIT Act implementation. To the extent our consolidated revenue is sufficient for us to be within the CIT Act thresholds, we may be subject to taxation in Bermuda.
Liberia
The vessel owning companies are not subject to tax on international shipping income.
United Kingdom
Taxable income in the United Kingdom is generated by our UK subsidiary. The statutory tax rate in the United Kingdom as of December 31, 2024 was 25%.
Note 6 - Earnings Per Share
The computation of basic earnings per share (“EPS”) is based on the weighted average number of shares outstanding during the period. Diluted EPS excludes the potential effect of the assumed conversion of 620,000 share options outstanding as at December 31, 2023 as these were anti-dilutive. The dilutive impact of the assumed conversion of potentially dilutive instruments which are 800,000 share options outstanding as at December 31, 2024 is shown as follows:
| | | | | | | | | | | | | | | | |
| (in $ thousands except share and per share data) | Three months ended December 31, 2024 | Three months ended December 31, 2023 | Twelve months ended December 31, 2024 | Twelve months ended December 31, 2023 | | |
| Basic earnings (loss) per share | 0.02 | | 0.11 | | 0.48 | | 0.04 | | | |
| Diluted earnings (loss) per share | 0.02 | | 0.11 | | 0.48 | | 0.04 | | | |
| | | | | | |
| Net income (loss) | 1,020 | | 4,606 | | 21,044 | | 1,514 | | | |
| | | | | | |
| Issued common shares at the end of the period | 43,900,000 | | 43,900,000 | | 43,900,000 | | 43,900,000 | | | |
| Weighted average number of shares outstanding for the period, basic | 43,900,000 | | 41,392,733 | | 43,900,000 | | 38,644,250 | | | |
| | | | | | |
| Dilutive impact of share options | — | | — | | 8,667 | | — | | | |
| Weighted average number of shares outstanding for the period, diluted | 43,900,000 | | 41,392,733 | | 43,908,667 | | 38,644,250 | | | |
Note 7 - Interest Expense
| | | | | | | | | | | | | | | | |
| (in $ thousands ) | Three months ended December 31, 2024 | Three months ended December 31, 2023 | Twelve months ended December 31, 2024 | Twelve months ended December 31, 2023 | | |
| | | | | | |
| Interest expense, gross | 13,190 | | 7,736 | | 48,592 | | 21,406 | | | |
| Capitalized interest on newbuildings | — | | (2,071) | | (1,956) | | (7,805) | | | |
| Interest expense, net | 13,190 | | 5,665 | | 46,636 | | 13,601 | | | |
Note 8 - Operating Leases
Rental income
The components of operating lease income are as follows:
| | | | | | | | | | | | | | | | |
| (in $ thousands ) | Three months ended December 31, 2024 | Three months ended December 31, 2023 | Twelve months ended December 31, 2024 | Twelve months ended December 31, 2023 | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Time charter revenues | 29,598 | | 18,321 | | 123,580 | | 36,736 | | | |
Time charter revenues on our index-linked charters were $26.9 million and $77.4 million in the three and twelve months ended December 31, 2024, respectively, and $10.3 million and $22.6 million in the three and twelve months ended December 31, 2023, respectively.
Note 9 - Prepaid expenses and other current assets
| | | | | | | | | | |
| December 31, 2024 | December 31, 2023 | | |
| (in $ thousands) | | | | |
Prepaid interest(1) | 2,286 | | 2,410 | | | |
Other prepaid expenses(2) | 1,329 | | 997 | | | |
| Inventory | 1,505 | | 634 | | | |
Other current assets(3) | 1,060 | | 2,402 | | | |
| Total | 6,180 | | 6,443 | | | |
(1) Prepaid interest pertains to interest paid in advance for “Mount Norefjell”, “Mount Ita”, “Mount Etna” and “Mount Blanc”. Bareboat payments on the lease for these vessels were paid in advance.
(2) Other prepaid expenses are comprised primarily of prepaid operating expenses, prepaid insurance and cash advance to crew for delivered vessels.
(3) Other current assets mainly relate to funding advanced to vessel managers.
Note 10 - Equity method investment
The table below sets forth the carrying value of our equity method investment:
| | | | | | | |
| | | |
| December 31, 2024 | | |
| (in $ thousands) | | | |
| Opening balance | — | | | |
Additions (1) | 305 | | | |
Share options expense to employees of acquiree (2) | 30 | | | |
| Equity in net earnings | (11) | | | |
| Closing balance | 324 | | | |
(1) In August 2024, we acquired 12,000 shares in 2020 Bulkers Management AS for a total consideration of $0.3 million (NOK 3.2 million). The acquisition amount represents 40% of the issued shares of 2020 Bulkers Management. As the Company has the ability to exercise significant influence, we have accounted for our investment in 2020 Bulkers Management as an equity method investment.
(2) This pertains to the increase in the Company’s relative ownership for share options granted by the Company to employees of 2020 Bulkers Management.
Note 11 - Newbuildings
The table below sets forth the carrying value of our newbuildings:
| | | | | | | | | |
| | | |
| December 31, 2024 | December 31, 2023 | |
| (in $ thousands) | | | |
| Opening balance | 132,646 | | 176,145 | | |
Installment payments (1) | 310,773 | | 378,305 | | |
| Capitalized interest | 1,956 | | 7,805 | | |
Other capitalized costs (2) | 5,461 | | 8,126 | | |
Reclassification to Vessels and equipment (3) | (450,836) | | (437,735) | | |
| Total | — | | 132,646 | | |
(1) Installment payments in the twelve months ended December 31, 2024 include $310.8 million for the fifth and sixth installments net of address commissions to New Times Shipyard for newbuildings “Mount Bandeira”, “Mount Hua”, “Mount Elbrus”, “Mount Denali”, “Mount Aconcagua” and “Mount Emai”. Of this amount, $5.1 million relating to the sixth installments for “Mount Bandeira” and “Mount Hua” was paid in December 2023 in advance of their deliveries in January 2024 and was presented as “Other non-current assets” on the consolidated balance sheet as of December 31, 2023.
During the twelve months ended December 31, 2024, the Company drew down $295.5 million on the sale and leaseback financing to fund these installments and the installment payments were made by CCBFL and Jiangsu (as these terms are defined in Note 14) on behalf of the Company.
(2) Other capitalized costs include direct costs associated with the supervision of our newbuilding program.
(3) “Mount Bandeira”, “Mount Hua”, “Mount Elbrus”, “Mount Denali”, “Mount Aconcagua” and “Mount Emai” were delivered in the twelve months ended December 31, 2024 and their corresponding costs were reclassified to Vessels and equipment (see Note 12 - Vessels and Equipment, net).
Note 12 - Vessels and Equipment, net
| | | | | |
| Vessels and Equipment |
| (in $ thousands) | |
| Cost | |
| As of January 1, 2024 | 437,735 | |
| Reclassification from Newbuildings | 450,836 | |
| As of December 31, 2024 | 888,571 | |
| |
| | | | | |
| Vessel and Equipment |
| (in $ thousands) | |
| Depreciation | |
| As of January 1, 2024 | (9,118) | |
| Charge for the period | (26,474) | |
| As of December 31, 2024 | (35,592) | |
| |
| | | | | |
| Net book value as of December 31, 2024 | 852,979 | |
The table below presents the dates the vessels were delivered to the Company:
| | | | | |
| Vessel | Delivery Date |
| Mount Norefjell | March 2, 2023 |
| Mount Ita | March 9, 2023 |
| Mount Etna | April 13, 2023 |
| Mount Blanc | May 31, 2023 |
| Mount Matterhorn | July 13, 2023 |
| Mount Neblina | August 29, 2023 |
| Mount Bandeira | January 5, 2024 |
| Mount Hua | January 8, 2024 |
| Mount Elbrus | January 11, 2024 |
| Mount Denali | April 19, 2024 |
| Mount Aconcagua | June 6, 2024 |
| Mount Emai | June 13, 2024 |
During the twelve months ended December 31, 2024, we considered whether indicators of impairment existed that could indicate that the carrying amounts of our vessels may not be recoverable as of December 31, 2024 and concluded that no such indicators existed. We will continue to monitor developments in the markets in which we operate for indications that the carrying values of our long-lived assets are not recoverable.
Note 13 - Accrued expenses
Accrued expenses comprise of:
| | | | | | | | | | |
| December 31, 2024 | December 31, 2023 | | |
| (in $ thousands) | | | | |
Accrued interest(1) | 5,411 | | 1,318 | | | |
| Accrued operating expenses | 764 | | 724 | | | |
Dividend payable(2) | 439 | | — | | | |
Other accrued expenses(3) | 615 | | 489 | | | |
| | | | |
| Total | 7,229 | | 2,531 | | | |
(1) Accrued interest pertains to unpaid interest on the sale and leaseback facilities for “Mount Bandeira”, “Mount Elbrus”, “Mount Hua”, “Mount Matterhorn”, “Mount Neblina”, “Mount Denali”, “Mount Aconcagua” and “Mount Emai”. Bareboat payments on the leases for these vessels are paid in arrears. Six vessels were delivered in the twelve months ended December 31, 2024 which contributed to the increase in accrued interest at December 31, 2024.
(2) In December 2024, the Board approved a cash distribution of $0.01 per share for November 2024 which was paid in January 2025.
(3) Other accrued expenses include accruals for commissions, audit fees, legal fees and management fees.
Note 14 - Debt
| | | | | | | | | |
| December 31, 2024 | December 31, 2023 | |
| (in $ thousands) | | | |
| | | |
| Total debt, net of deferred finance charges | 713,887 | | 439,496 | | |
| Less: Current portion of long-term debt, net of deferred finance charges | (24,304) | | (19,795) | | |
| Long-term debt, net of deferred finance charges | 689,583 | | 419,701 | | |
| | | | | | | | | |
| December 31, 2024 | December 31, 2023 | |
| (in $ thousands) | | | |
| | | |
| Vessel financing (Mount Norefjell) | 58,810 | | 61,297 | | |
| Vessel financing (Mount Ita) | 58,814 | | 61,302 | | |
| Vessel financing (Mount Etna) | 59,346 | | 61,812 | | |
| Vessel financing (Mount Blanc) | 59,253 | | 61,681 | | |
| Vessel financing (Mount Matterhorn) | 60,495 | | 62,509 | | |
| Vessel financing (Mount Neblina) | 60,494 | | 62,509 | | |
| Vessel financing (Mount Bandeira) | 61,535 | | 13,683 | | |
| Vessel financing (Mount Hua) | 61,535 | | 13,683 | | |
| Vessel financing (Mount Elbrus) | 61,535 | | 13,783 | | |
| Vessel financing (Mount Denali) | 62,025 | | 13,783 | | |
| Vessel financing (Mount Aconcagua) | 62,024 | | 13,783 | | |
| Vessel financing (Mount Emai) | 62,024 | | 13,783 | | |
| Total debt, gross | 727,890 | | 453,608 | | |
| Less: Deferred finance charges | (14,003) | | (14,112) | | |
| Total debt, net of deferred finance charges | 713,887 | | 439,496 | | |
The outstanding debt, gross of deferred finance charges, as of December 31, 2024, is repayable as follows:
| | | | | |
| Year ending December 31 | |
| (in $ thousands) | |
| 2025 | 26,913 | |
| 2026 | 26,064 | |
| 2027 | 27,539 | |
| 2028 | 29,563 | |
| 2029 | 31,525 | |
| Thereafter | 586,286 | |
| Total | 727,890 | |
| Deferred finance charges | (14,003) | |
| Total debt, net of deferred finance charges | 713,887 | |
AVIC International Leasing Co., Ltd. (“AVIC”) – Sale and leaseback financing arrangements
The Company has entered into sale and leaseback arrangements accounted for as financing transactions. In February 2022, the Company entered into sale and leaseback arrangements with AVIC for its first four newbuildings “Mount Norefjell”, “Mount Ita”, “Mount Etna”, and “Mount Blanc” which have been delivered from New Times Shipyard. Pursuant to the lease financing, Himalaya Shipping received pre-delivery financing at a fixed interest rate of 5% per annum for the third and fourth pre-delivery installments ($6.8 million paid for each of the third and fourth installments). As security for the pre-delivery financing, the Company entered into an agreement to assign in favor of AVIC the first four newbuilding contracts and the related refund guarantees, as well as giving a parent company guarantee from the Company, share pledges over the related subsidiaries, and account pledges over the related subsidiaries’ bank accounts. Upon delivery of the relevant vessels from New Times Shipyard, the vessels were sold to companies owned and designated by AVIC. The vessels were delivered in 2023 and chartered back on seven-year bareboat charters which include purchase options each year from year 3 until the end of the bareboat period. The first purchase option in year 3 is at a price of $56.9 million and then declines to $47.2 million after year 7.
In February 2023, the sale and leaseback agreements for the first four newbuildings were amended whereby AVIC agreed to finance 90% of the sixth installments on the newbuilding contracts or $2.2 million for each vessel relating to the cost of installing scrubbers on each vessel. This is repayable in advance in 12 quarterly installments of $180,000 for each vessel, together with interest calculated as: a) LIBOR plus a margin of 4.5% for the period until June 30, 2023; and b) Overnight SOFR plus a margin of 4.5% and credit adjustment spread of 0.26161% from July 1, 2023.
Under the relevant financing agreements, payment of dividends and making other distributions from each relevant subsidiary to the Company will only be allowed if immediately following such payment or distribution there will be maintained in the bank account an amount no less than the higher of (a) $3.6 million and (b) the aggregate of the bareboat rate under the facility and the operating expenses for the vessels that are payable within the next six months.
The fixed price purchase options and a cash penalty of $25.0 million per vessel for not exercising any of the purchase options under the sale and leaseback transaction results in a failed sale and leaseback and the transaction is accounted for as a financing transaction.
In the year ended December 31, 2023, the Company drew down $200.0 million on the financing to pay scheduled delivery installments for the first four newbuildings. The carrying value of Vessels and equipment financed by AVIC is $272.4 million and $282.1 million as of December 31, 2024 and December 31, 2023, respectively. The amount outstanding under the facility was $236.2 million and $246.1 million as of December 31, 2024 and December 31, 2023, respectively.
CCB Financial Leasing Co., Ltd. (“CCBFL”) – Sale and leaseback financing arrangements
In April 2022, the Company entered into sale and leaseback arrangements with CCBFL for newbuildings “Mount Matterhorn”, “Mount Neblina”, “Mount Bandeira”, “Mount Hua”, “Mount Elbrus”, “Mount Denali”, “Mount Aconcagua” and “Mount Emai” to be delivered from New Times Shipyard. Pursuant to the lease financing, CCBFL provided pre-delivery financing at a fixed interest rate of 5% per annum for the third and fourth pre-delivery installments ($6.8 million and $6.9 million, respectively) for each of the third and fourth installment for newbuildings “Mount Matterhorn”, “Mount Neblina”, “Mount Bandeira”, “Mount Hua” and “Mount Elbrus”, “Mount Denali”, “Mount Aconcagua” and “Mount Emai”. As security for the pre-delivery financing, the Company entered into an agreement to assign in favor of CCBFL the relevant newbuilding contracts and the related refund guarantees, as well as giving a parent company guarantee from the Company, share pledges over the related subsidiaries, and account pledges over the related subsidiaries’ bank accounts. Upon delivery of the relevant vessels from New Times Shipyard, the vessels were sold to companies owned and designated by CCBFL. The financing amount for each of the vessels is the lower of 90% of the newbuilding contract price and $63.0 million. The vessels were chartered back on seven-year bareboat charters which include purchase options each year from year 3 until the end of the bareboat period. The first purchase option in year 3 is $56.0 million declining to $46.0 million after year 7.
The fixed price purchase options under the sale and leaseback transaction results in a failed sale and leaseback and the transaction is accounted for as a financing transaction.
During the twelve months ended December 31, 2024, the Company drew $196.9 million (year ended December 31, 2023: $160.6 million) on the financing to pay scheduled delivery installments. The amount outstanding under the facility was $368.6 million and $180.2 million as of December 31, 2024 and December 31, 2023, respectively. The carrying value of vessels and equipment financed by CCBFL was $436.0 million and $146.5 million as of December 31, 2024 and December 31, 2023, respectively. The carrying value of newbuildings financed by CCBFL was $87.7 million as of December 31, 2023.
After 180 days of the delivery of each newbuilding, each subsidiary under the CCBFL sale and leaseback arrangement is required to maintain a minimum cash balance equivalent to the bareboat hire payable within the following three months which amounts to approximately $1.5 million per vessel. As of December 31, 2024, the Company is required to maintain a total minimum cash balance of $9.3 million in the subsidiaries that lease “Mount Matterhorn”, “Mount Neblina”, “Mount Elbrus”, “Mount Denali”, “Mount Aconcagua” and “Mount Emai”, which are included in cash and cash equivalents on the Unaudited Consolidated Balance Sheet as of December 31, 2024 as there are no legal restrictions on the bank account.
Jiangsu Financial Leasing Co. Ltd (“Jiangsu”) – Sale and leaseback financing
In December 2022, the Company, CCBFL and Jiangsu entered into novation and assignment agreements to transfer and assign all of CCBFL’s rights and obligations to Jiangsu under the corresponding sale and leaseback arrangements for newbuildings “Mount Bandeira” and “Mount Hua”. The novation was accounted for as a debt extinguishment. The transfer was effective in March 2023. The terms under the sale and leaseback arrangements remain unchanged. Upon delivery of the relevant vessels from New Times Shipyard in January 2024, the vessels were sold to companies owned and designated by Jiangsu and chartered back on seven-year bareboat charters, which include purchase options each year from year 3 until the end of the bareboat period. The first purchase option in year 3 is $56.0 million and declines to $46.0 million after year 7.
The fixed price purchase options under the sale and leaseback transaction results in a failed sale and leaseback and the transaction is accounted for as a financing transaction.
The Company drew down $98.6 million from Jiangsu for delivery installments on the “Mount Hua” and “Mount Bandeira” during the twelve months ended December 31, 2024 (year ended December 31, 2023: $27.4 million). The amount outstanding under the facility was $123.1 million and $27.4 million as of December 31, 2024 and December 31, 2023, respectively. The carrying value of vessels and equipment financed by Jiangsu was $144.5 million as of December 31, 2024.
After 180 days of the delivery of each newbuilding, each subsidiary under the Jiangsu sale and leaseback arrangement is required to maintain a minimum cash balance equivalent to the bareboat hire payable within the following three months which amounts to approximately $1.5 million per vessel. As of December 31, 2024, the Company is required to maintain a total minimum cash balance of $3.0 million in the subsidiaries that lease “Mount Bandeira”, and “Mount Hua”, which are included in cash and cash equivalents on the Unaudited Consolidated Balance Sheet as of December 31, 2024 as there are no legal restrictions on the bank account.
The bareboat rate per day under the sale and leaseback arrangements is fixed for the bareboat period and the average bareboat rate per day for the sale and leaseback arrangements with AVIC, CCBFL and Jiangsu is $16,567. Bareboat payments are paid quarterly in advance under the arrangement with AVIC and quarterly in arrears under the arrangements with CCBFL and Jiangsu. The Company has classified the estimated amortization of the bareboat payments due within twelve months from December 31, 2024 as “Current portion of long-term debt” on the Unaudited Consolidated Balance Sheet.
Drew Holdings Limited. (“Drew”) – Revolving Credit Facility
The Company has a $10.0 million Revolving Credit Facility agreement with Drew, who is a significant shareholder in the Company. Refer to Note 17 - Related Party Transactions for details on the terms of the agreement with Drew.
Note 15 - Financial Instruments
We recognize our fair value estimates using a fair value hierarchy based on the inputs used to measure fair value. The fair value hierarchy has three levels based on reliability of inputs used to determine fair values as follows:
Level 1: Quoted market prices in active markets for identical assets and liabilities.
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
The carrying value and estimated fair value of our financial instruments as of December 31, 2024 and December 31, 2023 were as follows:
| | | | | | | | | | | | | | | | | | | |
| | December 31, 2024 | December 31, 2023 | |
| (in $ thousands) | Hierarchy | Fair Value | Carrying Value | Fair Value | Carrying Value | | |
| Assets | | | | | | | |
Cash and cash equivalents (1) | Level 1 | 19,369 | | 19,369 | | 25,553 | | 25,553 | | | |
| | | | | | | |
| Liabilities | | | | | | | |
| | | | | | | |
Current portion of long-term debt (2)(3) | Level 2 | 26,913 | | 26,913 | | 21,234 | | 21,234 | | | |
| | | | | | | |
Long-term debt (2)(3) | Level 2 | 730,659 | | 700,977 | | 429,037 | | 432,374 | | | |
| | | | | | | |
| | | | | | | |
(1) All demand and time deposits and highly liquid, low risk investments with original maturities of three months or less at the date of purchase are considered equivalent to cash. Thus, carrying value is a reasonable estimate of fair value.
(2) Fair value of current portion of long-term debt and long-term debt have been corroborated using discounted cash flow model and market interest rate as of December 31, 2024.
(3) Our debt obligations are recorded at amortized cost in the Unaudited Consolidated Balance Sheets. The amounts presented in the table are gross of deferred finance charges amounting to $14.0 million and $14.1 million as of December 31, 2024 and December 31, 2023, respectively.
The carrying amounts of accounts receivable, funding to vessel managers, accounts payable and accrued expenses approximated their fair values as of December 31, 2024 and December 31, 2023 because of their near term maturity and are classified as Level 1 within the fair value hierarchy.
There have been no transfers between different levels in the fair value hierarchy during the periods presented.
Note 16 - Commitments and Contingencies
| | | | | | | | | | |
| Assets pledged | | | | |
| December 31, 2024 | December 31, 2023 | | |
| (in $ thousands) | | | | |
| Book value of vessels secured against long-term loans | 852,979 | | 428,617 | | | |
| Book value of newbuildings secured against long-term loans | — | | 132,646 | | | |
| Total | 852,979 | | 561,263 | | | |
Contingencies
We may, from time to time, be involved in legal proceedings and claims that arise in the ordinary course of business. A contingent liability will be recognized in the consolidated financial statements only where we believe that a liability will be probable and for which the amounts are reasonably estimable, based upon the facts known prior to the issuance of the financial statements.
Note 17 - Related Party Transactions
Drew and Magni Partners (Bermuda) Ltd.(“Magni”)
Drew is considered a related party due to its significant ownership in the Company and Magni is considered a related party as a result of being an affiliate of Drew. As of December 31, 2024, Drew holds 30.4% of the Company’s outstanding common shares.
In March 2022, the Company entered into a $15.0 million revolving credit facility with Magni. The facility was unsecured and interest-bearing at a rate of LIBOR for the applicable interest periods under the facility, plus a margin of 8% p.a. The Magni revolving credit facility was available to the Company until December 31, 2023 and was to be repaid latest on December 31, 2024. In December 2022, the revolving credit facility was canceled and a new revolving credit facility with Drew was entered into on the same terms.
Effective December 18, 2023, an addendum to the Drew revolving credit facility was executed, decreasing the maximum amount available under the facility from $15.0 million to $10.0 million, and extending the maturity of the facility from December 31, 2024 to December 31, 2025. In addition, the addendum extended the drawdown window to December 31, 2024 and aligned the interest rate with the Term SOFR. The amended facility bears interest for the applicable interest periods under the facility, at a rate of SOFR plus a margin of 8% p.a.
On October 31, 2024, the Company entered into an addendum with Drew in relation to the revolving credit facility to: (i) include a commitment fee of 1% per annum on any undrawn amount from January 1, 2025 to the end of the availability period, (ii) extend the timeframe to drawdown from the facility to December 31, 2025 and the latest repayment date to December 31, 2026, and (iii) change the margin on the Term Secured Overnight Financing Rate (“SOFR”) from 8% to 6.5% per annum.
As of December 31, 2024, the Company has $10.0 million available to draw down from this facility. Refer to Note 19 - Subsequent Events for details on the draw down subsequent to December 31, 2024.
Corporate support agreement
The Company’s incorporator and initial, sole shareholder, Magni was the key initiator of the Himalaya project and provided corporate and financial assistance throughout the process, including extensive assistance in connection with obtaining the financing for the installments as well as the private placements. The Company entered into a corporate support agreement with Magni whereby Magni was compensated for its services to the Group since the inception of the Company, and for its key role in identifying and pursuing business opportunities for the Group (the “Corporate Support Agreement”). As Magni indirectly held a controlling interest at the time the Corporate Support Agreement was entered into, the Company has treated the Corporate Support Agreement as a related party agreement. Pursuant to the Corporate Support Agreement, Magni continued to support the Company’s business development through assisting with the pre-financing and post-financing of the Company’s newbuilding program, in finding employment for the vessels, in recruiting suitable individuals to the Company’s organization and with general high-level administrative support. The parties agreed in 2021 that compensation in the amount of $2.7 million was to be paid by the Company to Magni in four equal tranches.
The tranches were split equally on each of the first four newbuildings delivered from New Times Shipyard in 2023, so that $0.67 million was payable on each such delivery. Such amount equals the address commission received on the first four vessels, which was agreed with the yard before the project opened to external investors.
Following the delivery of the first four vessels in 2023, the total fee of $2.7 million was paid in 2023.
2020 Bulkers Management
In February 2023, the Company signed an agreement with 2020 Bulkers Management, replacing a similar management agreement entered into in October 2021. Pursuant to the management agreement, 2020 Bulkers Management provides us with certain operational, commercial and management services. The Company shall pay 2020 Bulkers Management a management fee subject to annual estimates and calculated, based on, among other things, expected activity level of the Company and the expected scope of services to be provided by 2020 Bulkers Management in relation to the Company in the year, and payable quarterly, in four equal tranches. Such management fee shall equal certain marked-up costs, based on the sum of (i) the direct payroll costs allocated to the performance of the services under the management agreement and (ii) certain shared costs corresponding to infrastructure costs in such year related to the performance of such services, such sum to be marked-up by a margin of 13%. The management fee will be adjusted annually to account for the difference between estimated and actual costs incurred in such year. The management agreement has an indefinite term and can be terminated by either party upon one month’s notice.
Following the acquisition of 40% of the issued shares in 2020 Bulkers Management, 2020 Bulkers Management became a related party from August 29, 2024. Management fees from 2020 Bulkers Management of $0.3 million and $0.4 million were recognized in the three months ended and the period from August 29, 2024 to December 31, 2024, respectively.
As of December 31, 2024, the Company has $0.3 million payable to 2020 Bulkers Management presented under “Trade payables” in the unaudited consolidated balance sheet.
Note 18 - Equity
The authorized share capital of the Company as of December 31, 2024 and December 31, 2023 is $140,010,000 represented by 140,010,000 authorized common shares of par value $1.00 each.
In January 2024, the shareholders, at a Special General Meeting, approved the transfer of $97.9 million to the Company’s Contributed Surplus Account from the Company's Share Premium account (Additional paid-in capital in the Company’s Consolidated Statement of Changes in Shareholder’s Equity).
In February 2024, the Board approved a grant of 115,000 share options to key human resources and one director. The share options granted have a five-year term and cliff vest three years from the grant date. The exercise price is $8.00 per share and will be reduced by any dividends and cash distributions paid.
In September 2024, the Board approved a grant of 65,000 share options to a key human resource. The share options granted have a five-year term and cliff vest three years from the grant date. The exercise price is $10.00 per share and will be reduced by any dividends and cash distributions paid.
The following cash distributions were declared in the twelve months ended December 31, 2024:
| | | | | | | | |
| Declaration date | Amount per share (in $) | Payment date |
| February 2024 | 0.01 | March 2024 |
| March 2024 | 0.03 | April 2024 |
| April 2024 | 0.03 | May 2024 |
| May 2024 | 0.04 | June 2024 |
| June 2024 | 0.04 | July 2024 |
| July 2024 | 0.05 | July 2024 |
| August 2024 | 0.06 | August 2024 |
| September 2024 | 0.07 | September 2024 |
| October 2024 | 0.10 | October 2024 |
| November 2024 | 0.04 | November 2024 |
| December 2024 | 0.01 | January 2025 |
The above cash distributions were made from the Company's Contributed Surplus account.
Note 19 - Subsequent Events
On January 7, 2025, the Board approved a cash distribution of $0.005 per share for shareholders of record as of January 21, 2025.
On January 7, 2025, the Company drew down $2.0 million from the revolving credit facility with Drew.
On February 10, 2025, the Board approved a cash distribution of $0.005 per share for shareholders of record as of February 21, 2025.
1 Himalaya Shipping – Q4 2024 Investor Presentation February 2025
2 Forward looking statements This results presentation and any related discussions, including any related written or oral statements made by us, contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 that involve risks and uncertainties. Forward-looking statements are statements that do not reflect historical facts and may be identified by words such as “aim”, “believe,” “assuming,” “anticipate,” “could”, “expect”, “intend,” “estimate,” “forecast,” “project,” “likely to,” “due to,” “plan,” “potential,” “will,” “may,” “should,” "indicative," "illustrative," "potential" or other similar expressions and include statements about plans, objectives, goals, strategies, future events or performance, including outlook, prospects, financing agreements associated with our vessels and expected cash break-even, illustrative free cash flow per share and earnings potential based on different scenarios and assumptions, statements about the benefits of our vessels, including the reduced emissions when running on LNG, the terms of our charters and chartering activity, dry bulk industry trends and market outlook, including market conditions and activity levels in the industry, expected demand for vessels and expected drivers of demand including projects and underlying assumptions, utilization of the global fleet and our fleet, including expected average rates and the information under “Chartering position” and “The supply situation,” fleet growth, vessel orders and order book, expected trends regarding iron ore demand, mandatory dry docking trends and impacts on expected supply of dry bulk vessels and yard capacity, including the information under “Mandatory dry docking to increase in 2025,” replacement needs, statements about our dividend objective and plans,, expectations on demand, and other non-historical statements. These forward-looking statements are not statements of historical fact and are based upon current estimates, expectations, beliefs, and various assumptions, many of which are based, in turn, upon further assumptions, and a number of such assumptions are beyond our control and are difficult to predict. These statements involve significant risks, uncertainties, contingencies and factors that are difficult or impossible to predict and are beyond our control, and that may cause our actual results, performance or achievements to be materially different from what is expressed, implied or forecasted in such forward-looking statements. Numerous factors, risks and uncertainties that could cause our actual results, level of activity, performance or achievements to differ materially from those expressed, implied or forecasted in the forward-looking statements include but are not limited to: general economic, political and business conditions; general dry bulk market conditions, including fluctuations in charter hire rates and vessel values; our ability to achieve charter rates above our break-even rate; our ability to meet the conditions and covenants in our financing agreements; changes in demand in the dry bulk shipping industry, including the market for our vessels; changes in the supply of dry bulk vessels; our ability to successfully re-employ our dry bulk vessels at the end of their current charters and the terms of future charters; changes in our operating expenses, including fuel or bunker prices, dry docking and insurance costs; changes in governmental regulation, tax and trade matters and actions taken by regulatory authorities; compliance with, and our liabilities under governmental, tax, environmental and safety laws and regulations; potential disruption of shipping routes due to accidents or political events; our ability to refinance our debt as it falls due; fluctuations in foreign currency exchange rates; potential conflicts of interest involving members of our board and management and our significant shareholder; our ability to pay dividends and the amount of dividends we ultimately pay; risks related to climate change, including climate-change or greenhouse gas related legislation or regulations and the impact on our business from climate-change related physical changes or changes in weather patterns, and the potential impact of new regulations relating to climate change, as well as the performance of our vessels; other factors that may affect our financial condition, liquidity and results of operations; and other risks described under “Item 3. Key Information — D. Risk Factors” in our Annual Report on Form 20-F for the year ended December 31, 2023 filed with the U.S. Securities and Exchange Commission on March 27, 2024. The foregoing factors that could cause our actual results to differ materially from those contemplated in any forward-looking statement included in this report should not be construed as exhaustive. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this investor presentation. Except as required by law, Himalaya Shipping undertakes no obligation to update publicly any forward-looking statements after the date of this investor presentation, whether as a result of new information, future events or otherwise. Non-GAAP Financial Measures This presentation contains certain selected financial measures on a basis other than U.S. generally accepted accounting principles (“GAAP”), including Adjusted EBITDA, average TCE earnings, gross, and illustrative free cash flow. Adjusted EBITDA represents our net income plus depreciation of vessels and equipment; total financial expenses, net; and income tax expense. Adjusted EBITDA is presented here because the Company believes this measure increases comparability of total business performance from period to period and against the performance of other companies. Average TCE earnings, gross, as presented here, represents time charter revenues and voyage charter revenues adding back address commissions and divided by operational days. Average TCE earnings, gross, is presented here because the Company believes this measure provides additional meaningful information for investors to analyse our fleets’ daily income performance. For a reconciliation of Adjusted EBITDA and average TCE earnings, gross, to the most directly comparable financial measures prepared in accordance with US GAAP, please see the section of our preliminary results for the quarter ended December 31, 2024, Appendix entitled “Unaudited Non-GAAP Measures And Reconciliations”. For a discussion of illustrative free cash flow, see slide 12 including the footnotes thereto. We are unable to prepare a reconciliation of illustrative free cash flow without unreasonable efforts.
3 Highlights Q4 2024 Highlights: • All delivered vessels generated total operating revenues of $29.6 million, an average time charter equivalent earnings of approximately US$27,800/day, gross. • Net income of $1.0 million and Adjusted EBITDA of $21.3 million for the quarter ended December 31, 2024. • Declaration of cash distributions for September, October and November 2024 of $0.10, $0.04 and $0.01 per common share, respectively. Subsequent Events: • Declaration of cash distributions of $0.005 per common share for each of December 2024 and January 2025. • Entered into a new time charter agreement for Mount Norefjell for 14 to 38 months. The vessel will earn an index linked rate, reflecting a premium to the Baltic 5TC index that is higher than the average premium on our current charters.
4 Financial Update
5 Key Financials Q4 2024 Income statement Comments • Operating revenues of $29.6 million in Q4 2024, a decrease of $9.6 million in comparison to the prior quarter. Decrease mainly due to the decrease in BCI rates in Q4 2024. Average TCE, gross of approximately US$27,800 per day in Q4 2024 versus US$36,800 per day in Q3 2024. • Cash break-even TCE estimated to be approximately $24,600 per day. • Total operating expenses of $15.6 million in Q4 2024 remained materially consistent with the prior quarter. • Operating profit of $14.0 million in Q4 2024, a decrease of $9.7 million in comparison to the prior quarter. • Interest expense of $13.2 million in Q4 2024, a decrease of $0.1 million in comparison to the prior quarter. Decrease is a result of a decrease in loan principal outstanding due to quarterly loan repayments. . • Net income of $1.0 million in Q4 2024, a decrease of $9.7 million in comparison to the prior quarter. • Adjusted EBITDA of $21.3 million in Q4 2024, a decrease of $9.7 million in comparison to the prior quarter.
6 Key Financials Q4 2024 Balance Sheet Summary Comments • Net cash generated by operating activities in Q4 2024 was $10.5 million. • Net cash used in financing activities in Q4 2024 was $12.6 million consisting of loan repayments of $6.5 million and cash distributions paid of $6.1 million; • Minimum cash balance required under the sale and leaseback arrangements of $12.3 million presented as part of cash and cash equivalents as of December 31, 2024. • Decrease in vessels and equipment primarily due to depreciation of $7.3 million recognized during Q4 2024. • Decrease in short-term and long-term debt of $5.8 million primarily due to loan repayments of $6.5 million, offset by deferred finance cost amortisation of $0.7 million. • $8 million available to draw down under the RCF with Drew Holdings Ltd. following the $2 million drawn down in 2025.
7 Key Financials YTD Q 2024 Income statement Comments • Operating revenues of $123.6 million on all delivered vessels. Average time charter equivalent earnings of approx. US$32,500/day, gross. • Vessel operating expenses of $23.8 million. Average vessel operating expenses of approx. $6,100/day per vessel. • General and administrative expenses of $5.0 million, including $0.5 million in share-based compensation, $1.6 million in management fees, $0.7 million of D&O insurance, $0.7 million of employee related costs and directors’ fees, and $0.7 million in legal, audit and accounting fees. • Interest expense of $46.6 million on the sale & leaseback financing net of interest capitalized. • Operating profit of $66.6 million • Net income of $21.0 million • Adjusted EBITDA of $93.1 million
8 Company update
9 Source: Company Data Fleet status report – Current Chartering position Mount Norefjell 2023 DF Newcastlemax Mount Ita 2023 DF Newcastlemax Mount Etna 2023 DF Newcastlemax Mount Blanc 2023 DF Newcastlemax Mount Matterhorn 2023 DF Newcastlemax Mont Neblina 2023 DF Newcastlemax Mount Bandeira 2024 DF Newcastlemax Mount Hua 2024 DF Newcastlemax Mount Elbrus 2024 DF Newcastlemax Mount Denali 2024 DF Newcastlemax Mount Acancagua 2024 DF Newcastlemax Mount Emai 2024 DF Newcastlemax Index Index Index Index Index Index Index Index Index Index Q3 Q4 Dual Fuel Newcastlemax 30,000 Index Index Q1 Q2 Q3 Q4 Q1 Q2Q4 Q1 Q2 Q3 Q4 2027 Himalaya Shipping Fleet Status Report Vessel Name Built Type 2024 2025 2026 OptionAvailable Evergreen * + Scrubber
10 Proven Outperformance through Large and Modern Tonnage HSHP – DPS in % of EPS ratio HSHP TCE vs Peers and Index Source: Fearnleys, Company Data, Shipping Intelligence Peers: GOGL, SBLK, SHIP, GNK, 2020 (reported Cape/Newcastlemax TCE) 10,000 15,000 20,000 25,000 30,000 35,000 40,000 2q23 3q23 4q23 1q24 2q24 3q24 U SD P er D ay Baltic 5TC average Average Peer HSHP HSHP avg. premium vs. index ~47% HSHP avg. Premium vs. Peers ~25%123% 83% 95% 102% 0% 20% 40% 60% 80% 100% 120% 140% 1q24 2q24 3q24 FY24
11 4.77 9.00 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 63 92 Current Broker Qoute Ordered at the right time – financed the right way The value case The financing case *Assumed current best case financing cost **After full repayment of scrubber financing by Q1 2026 NAV/Broker Qoutes from Fearnleys HSHP Newbuild Value of ship (average purchase price) $m 71.6 95 Financing (average debt financing) " 62.5 85.5 Loan to purchase price % 87% 90% Fixed bareboat day-rate $/day ~16 600** -28 300 Estimated Opex " ~6 400 -6 400 Estimated SG&A " ~732 -732 Estimated cash break-even " ~23 700 ~35 400 Capesize equivalent cash break- even rate ~15 700 ~23 600 $23.6k/day BCI = 21% yield in HSHP 9% interest 18y profile annuity loan* N AV $ /s ha re EV pr ship
12 Solid dividend capacity Illustrative FCF $ per share based on Capesize index rate 1. This information has been prepared for illustrative purposes only and does not represent the Company’s forecast. It is based, among other things, on industry data, internal data and estimates of the Company and is inherently subject to risk and uncertainties. Actual results may differ materially from the assumptions and circumstances reflected in the above illustrative financial information. 2. Assumes BCI5 Index rates + 42% premium (less 5%) commission) + $2,200 in scrubber benefit less $24,540/d in cash breakeven x 12 ships, divided on 43,900,000 shares outstanding 0.0 0.5 1.2 1.9 2.6 3.2 3.9 4.6 5.3 16,300 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000
13 Capital discipline Full alignment between shareholders and management – board and sponsors own ~1/3 of the equity No reinvestment plans – youngest fleet in the industry means limited capital needs Cash flow from operation targets to be distributed in monthly dividends 12 consecutive monthly dividends - $0.15c for Q4 2024 Cash-break even of ~$16k/day on Capesize index equivalent vs BCI average 22k last four years
14 Market update
15 900 950 1000 1050 1100 1150 1200 1250 1300 1350 1400 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 2022 2023 2024 2024 total growth healthy – Capesize market correction in q4 Capesize Daily Billion Tonne-mile Development (30dms*) Capesize ton-miles grew 3.1% from 2023 *30-day moving sum Source: Arrow Tonne-mile Growth Q1 Q2 Q3 Q4 Y/Y Capesize +8.7% +4.9% +3.4% -4.3% -100 0 100 200 300 400 500 Iron ore Bauxite Manganese ore Other Coal billion ton-miles Q1-Q3 FY24 +5.5% +3.1%
16 Average start to the year, strong seasonality ahead Baltic 5TC Index Tonnage balance at seasonal low Source: Clarksons Shipping Intelligence Index 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 J F M A M J J A S O N D US D p er D ay 2015-24 max-min range 2015-24 average 2024 2023 2025 45% 47% 49% 51% 53% 55% 57% 59% 61% 1 11 21 31 41 51 % o f C ap e fle et la de n Week 2015-24 max-min range 2015-24 average 2023 2024 2025
17 Bauxite market continue to flourish - Increasingly important for Capesize Capesize Fleet Carrying Coal/Bauxite (% of fleet)China Imported Bauxite Port Inventories (Mt) vs. Prices China Bauxite Imports (Mt/week) Source: Arrow, Bloomberg 0.0 1.0 2.0 3.0 4.0 M ill io ns 0% 2% 4% 6% 8% 10% 12% 14% 16% 01/01/2015 01/07/2016 01/01/2018 01/07/2019 01/01/2021 01/07/2022 01/01/2024 Coal Bauxite 0 10 20 30 40 18/12/2020 18/12/2021 18/12/2022 18/12/2023 18/12/2024 Po rt In ve nt or ie s (M t)
18 Significant iron ore volumes coming – driving tonne-mile demand Addition iron ore volumes in Atlantic basin (MT/y) – 3x longer than from Australia Source: Clarksons, Rio Tinto, Vale, Himalaya Shipping. 1) Assumed 170MT pr year carried on 210k DWT Newcastlemaxes (95% fully loaded). Each ship able to do 3.65 round voyages pr year Required # ships > orderbook1 Simandou project – Guinea Start-up 2025 – full volumes 2028 Vale capacity increases by 2026 232 146 # of Ships for these volumes Current Capesize+ Orderbook
19 China import dependency rising China Iron Ore import dependency China Coal fired power plant capacity Source: Arrow, Bloomberg, DNB China Coal import dependency 0 200 400 600 800 1000 1200 1400 1600 China Operational Coal Capacity Approved & under Construction G W +30% Imports Domestic production China imports share of demand 2015: 69% 2024: 75% China imports share of demand 2015: 5% 2024: 13%
20 0 50 100 150 200 250 300 350 400 450 2000 2003 2006 2009 2012 2015 2018 2021 2024 Capesize fleet mDWT Capesize orderbook mDWT Limited supply of new ships 25-year low orderbook Highly supportive OB/Fleet Ratio Source: Clarksons Shipping Intelligence Network (https://sin.clarksons.net/) Orderbook 7.2% of fleet 54% 41% 32% 22% 20% 12% 10% 9% 7.2%
21 0 50 100 150 200 250 300 350 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 Delivered Newbuildings The supply situation Capesize+ fleet by delivery year in # ships Source: Clarksons Shipping Intelligence Network (https://sin.clarksons.net/) 60% of the fleet >20 years by 2033 Year # ships turning 20 years % of fleet >20 years 2025 47 7% 2026 58 10% 2027 56 13% 2028 45 15% 2029 110 21% 2030 212 31% 2031 251 44% 2032 214 55% 2033 103 60% Vessels built before 20093 Vessels built between 2009 and 20153 Vessels built post-2016 unaffected by 20303 305 ships – 14% 1,072 ships – 50% 780 ships – 36% Unlikely to be able to build significant capacity before 2028
22 Mandatory dry docking to increase in 2025 Capesize average age Supply constraints Source: Clarksons, Maritime Analytics Fleet age development includes current Orderbook, assumes no scrapping Off hire due to increase from docking schedule % off hire • ~50% y/y increase in estimated offshire days due to DD in ’25 • 2010 was a big delivery year - hence over 10% of the fleet will engage in 15 year SS in 2025 (23% of the cape fleet will need dry dock in total) • With an aging fleet forced to drydock or be scrapped, this will be an additional positive impact on cape/newc freight rates • The large number of dry dockings in 2025 may lead to yard congestion 0% 5% 10% 15% 20% 25% 30% 35% 0 2 4 6 8 10 12 14 16 18 1993 2002 2011 2020 2029 % o f F le et C ap es iz e Fl ee t A ge % of fleet >20yrs old Avg. Age (Years) 0.6 % 0.9 % 1.3 % 1.4 % 2023 2024 2025e 2026e
23 Thank you
Himalaya Shipping (NYSE:HSHP)
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