CBL's Q2 2025 Earnings Call: Contradictions Emerge on Sales Volume Growth, Non-Container Liner Sales, Gross Margin Strategy, Network Expansion, and Operational Efficiency

The above is the analysis of the conflicting points in this earnings call

Date of Call: September 16, 2025

Financials Results

• Revenue: $265M, down 4.4% YOY (vs $277M in 1H24)
• Gross Margin: 1.02%, up 4 bps YOY (from 0.98% in 1H24)

Business Commentary:

* Growth and Expansion in Marine Fuel Logistics: - CBL International Limited expanded its service network from 36 ports at its NASDAQ IPO in 2023 to 65 ports by June 2025, marking an increase of 81%. - This growth was driven by strategic global expansions, with a focus on high-demand ports in Asia Pacific, Europe, and other regions, enhancing CBL's presence in key maritime regions.

• Sales Volume and Revenue Performance:
• CBL achieved a 9.8% increase in sales volume in the first half of 2025, despite a revenue decrease of 4.4% to $255.2 million.

• The revenue decrease was mainly due to a decline in marine fuel prices, partially offset by increased sales volume driven by network expansion and new customer acquisition.

• Operational Efficiency Improvements:

• CBL's operating expenses decreased by 17% from $4.12 million to $3.42 million in the first half of 2025.

• This improvement was attributable to cost-saving initiatives and operational streamlining efforts, including investments in port network expansion and biofuel operations.

• Biofuel Adoption and Growth:

• Biofuel sales witnessed an impressive 154.7% year-on-year increase in the first half of 2025, with volume growth reaching 189.5%.
• CBL's leadership in the sustainable fuel market and increased customer adoption of biofuels drove this growth, supported by regulatory compliance and customer demand for sustainable options.

Sentiment Analysis:

• Management highlighted 9.8% sales volume growth, gross margin improvement to 1.02% (up 4 bps), and a 38.8% reduction in net loss to $0.99M. Port coverage expanded to 65 ports, biofuel sales rose 154.7% YOY (volume up 189.5%), and OpEx fell 17% (from $4.12M to $3.42M). Team emphasized strong liquidity (current ratio 1.54) and ability to capture demand from rerouted trade flows.

Q&A:

• Question from [indiscernible] (Southwest Securities): Among growth areas, what was the most significant achievement, how was it produced, and how were challenges overcome?
  Response: Rapid expansion of the global port network to 65 ports and diversification into bulk/tanker segments drove volume growth despite geopolitical and price headwinds.

• Question from Ryan Chen ([indiscernible] Financial): What drove the 38.8% reduction in net loss and how sustainable are these improvements?
  Response: Prior investments expanded network and customers, biofuel growth lifted mix, and streamlined operations cut OpEx by 17%; management expects these measures to be sustainable.

• Question from Marcus Wong (Hang Seng Bank): How is CBL positioned to capture demand from rerouted Euro-Asia and intra-Asia trade flows?
  Response: Its extensive Asia Pacific and European network targeted alternative routes, lifting volumes and enabling efficient supply along new corridors.

• Question from Pauline Lau (Citibank): How will CBL maintain or improve the 1.02% gross margin while expanding?
  Response: Increase volumes via network/customer growth, mix shift to non-container and biofuels, explore methanol/LNG, and benefit from a cost-plus model as oil prices ease.

• Question from Alvin Cheung (Prudential Brokerage Limited): How will you further grow non-container liner sales while maintaining strong container-liner relationships?
  Response: Leverage expanded network to serve bulk/tankers with flexible supply while continuing to serve 9 of top 12 liners; diversification reduced top-5 concentration.

• Question from Alan Wu (Phillip Securities): What drove the 17% OpEx decrease and how does this reflect long-term expense strategy?
  Response: Nonrecurring setup costs rolled off and operations were streamlined using automation/IT and resource rationalization to embed ongoing efficiency.

• Question from Nelson Lee (ICBCI): Any 2H25 expansion plans and 5-year/2030 business model evolution?
  Response: Continue strengthening network, grow volume, secure financing, pursue integrations, and scale sustainable fuels to become a full-fledged bunkering facilitator.

• Question from Alan Lau (Jefferies): What global industry trends do you see and how are you preparing to capitalize?
  Response: Expect resilient container capacity, trade realignment, and faster decarbonization; CBL is expanding ports, deepening biofuel partnerships/certifications, and upgrading tech/risk systems.

• Question from Tony Fei (BOCI): Impact of new U.S. reciprocal tariffs effective August 7 on CBL and bunkering industry?
  Response: Direct impact is minimal as CBL has no U.S. port operations; trade shifts are boosting demand in intra-Asia/Euro-Asia, which CBL is capturing via its network.