Q4 2021 Euroseas Ltd Earnings Call
Yeah.
[music].
Thank you for standing by ladies and gentlemen, and welcome to the years He's conference call on the fourth quarter 2021 financial results, we have with US Mr. Aristides VITAS.
VITAS, Chairman and Chief Executive Officer, and Mr. Tulsa facilities, Chief Financial Officer of the company at this time all participants are in listen only mode. There will be a presentation followed by a question that answer session at which time if you wish to ask a question. Please press star one on your telephone keypad and wait for the automated messages.
Your line is open I must advise you that this conference is being recorded today.
Please be reminded that the company announced their results with a press release that has been publicly distributed before passing the floor to Mr. Beat Us I would like to remind everyone that in today's presentation, we'll be making forward looking statements. These statements are within the meaning of the federal securities laws.
As discussed may be forward looking statements, which are based on current management expectations that involve risks and uncertainties that may result in such expectations not being realized.
They draw your attention to slide number two of the webcast presentation, which has the full forward looking statement and the same statement was also included in the press release. Please take a moment to go through the whole statement and read it and now I would like to pass the floor to Mr. <unk>. Please go ahead Sir.
Good morning, ladies and gentlemen, and thank you all for joining us today for that was scheduled to go through school.
Together with me status as <unk> Chief Financial Officer.
The purpose of today's call is to discuss our financial results for the quarter ended.
Full year December 31, 2021 .
Let us turn to slide 15.
Oh the income statement highlights are shown here.
The first quarter of 2021 was a seminal one for universities.
Really this is the highest net income level in our history.
So the first quarter 2021, we reported total net revenues of $38 $3 million and net income attributable to common shareholders of $22 $7 million.
Adjusted net income doubled to Goldman seven holders or the easier to spin to four 9 million or three points $18, let's say.
$317, <unk> basic and diluted respectively.
Adjusted EBITDA for the period stood at $26 $1 million.
Yeah.
So fully for the full year of 2021 .
Revenue was $93 9 million and net income attributable to common shareholders was $42 3 million.
Adjusted net income attributable to common shareholders for the period was $42 million was $6, one two cents and $6.01 per share basic and diluted respectively.
Adjusted EBITDA for the period stood at $52.7 million.
Notably net revenues for the quarter and full year as well as adjusted EBITDA were higher than the previous years by multiple measures of magnitude as can be seen in the slide.
Our CFO <unk> <unk>, who will go over the financial highlights in more detail later on in the presentation.
Please turn to slide four where I would discuss our recent south putting into operation with developers.
One of the vessels monarch with a V was both with the charter.
Approximately 36 to 42 months at $42000 per day.
Yeah must avia was fixed for a minimum period of about 36 to 58 months at $65000 per day for the first year, followed by $50000 per day for the second year and then after the fixed a $20000 per day for the remaining period.
Every leaky G. It was extended for a minimum period of 36 to 58 months at $40000 a day.
The amcor food was fixed at 436% to 35 to 40 days at $5125 per day.
Positioning to leap to each of the day the destination and is therefore thereafter fixed for 36 58 months at 40000 per day as well.
So the move Jonathan B was bought with itself that attach for a minimum period of 35 to 37 months at $27000 a day.
As soon as it keep loon had absorption declared by the south of it for the books currently eight to 12 months is $14000 per day was the synergy Oakland was fixed for about 48 to 51 months four years at $42000 per day.
The vessels to be delivered by April 15, 2022.
The previous charter the vessels kind of joke limit of 200002.
$2 per day exceeded its maximum duration by about 25 days due to both delays.
Payment of the Hyatt.
As to the Companys continuing during the extension.
However, the extension resulted in the loss of the subsequent sort themselves out of $130000 per day that supposed to be the phone before the full year itself.
Would kick in.
The vessel.
After this Nigel Dave about 15 days was tested for single voyage.
$160000 a day.
The completion of which it will commence the full year.
The new charter arrangements will result in about the same I visited states in total revenues as the original living suites.
Furthermore, two of our vessels incurred the beds and we are involved in special surveys with dry docks in the fourth quarter.
If you might this be for about 49 days between September and October 2021.
And DM called food since 29th of December till about snow.
No vessels that are idle.
All commercially off hire during the fourth quarter.
Please turn to slide five where we will review our recent sale and purchase highlights.
Two vessels were delivered during the fourth quarter of 2021, Jonathan feed the 17th.
700, Teu container ship was delivered in October and my voice V. This 6300 Teu container ship was delivered in December 2021.
Also as previously announced on January 28, 2022, we signed the contract for the construction of two eco design fuel efficient container ships.
Two the ones so in June 2021.
The vessels will have a carrying capacity of 2850, you each and will be built at Hyundai <unk> dockyards in South Korea.
The two new buildings are scheduled to be delivered during the fourth quarter of 2023 and first quarter of 2020 focus basically.
The total consideration for each of these two new building conflicts is approximately 40 43 15 million lives and will be financed with a combination of debt and equity.
This brings a new building or get them to full vessels and solidifies our market presence in the larger feed this.
Sector.
Both vessels adhere to the garden to greenhouse gas emissions.
And the other requirements and significantly improve our fleet profile, both this consumes age and echo characteristics.
He has looked with noteworthy that the new vessels will consume about 30% less fuel than previous innovation non eco ships.
Please turn to slide six where you can see how current fleet profile.
You don't see as Garden fleet is comprised of 16 vessels on the water, including 10 feet. The container ships six intermediate campaign, that's got abuse.
You'll see 16 container ships have a coker capacity.
60000, Teu in the Netherlands age of about 17 years.
After the delivery of the full feeder container ship new building, some 2023 and the first half 'twenty 'twenty four you lose this fleet will consist of 20 vessels with a total carrying capacity of close to 62000 Teu.
Slide seven shows our vessel employment stuff.
As you may see we have tested almost more than 92% of our available capacity in 2022.
About 62% of our available capacity in 2023.
About 40% of our available days in 2024, taking into account the new buildings as well as they can.
Tracked at EBITDA level of about $115 million for 2022 and $92 million for 2023.
Our contract with average time charter rate for 2022 stands at about $31250 per day for 2020 to be in 'twenty to 'twenty four it's higher estimated at 31 at $33000 per day and 33.
$500 per day, respectively.
Let's now turn to slide nine to review, how the time charter market in general has fared over the period.
You can see six to 12 month time charter rates continue to push through new case, despite the show to leave that as a REIT and contain the rates that we witnessed during November and December of 2021.
Please turn to slide 10 to go over the overall market highlights.
As we said time charter rates across all segments Skype located over the past 12 months.
Each to all time highs at.
Additionally, during the fourth quarter, the Avalon second hand price index rose by about 16%.
In Q4 over Q3.
Price increases at the close of different age groups with the elder vessels scheduling can you just well in excess of a 100% in 2021.
During the fourth go up that new building prices also increased by approximately 3% due to steel prices being on that is in high demand for new buildings on the back of the Zen containership market days.
The idle containership fleet as of the beginning of 2022 stands at only about 130000 Teu <unk>, 5% of the fleet the lowest level level. These are vessels that will probably never be reactivated anyway.
The percentage of container ships get up to date has dropped dramatically to approximately 12000 Teu again, the lowest point ever.
Yeah.
This is of course, despite the fact that prices have increased to over $615 per lightweight ton due to the high demand for steel.
Overall, the fleet grew by about three 9% in 2021.
Of course accounting for the idea that the Activations.
The order book is significantly increased mainly through loves the vessels with the current book to fleet ratio called building around 24% comp.
Compared to just 10% a year ago.
Please turn to slide 11.
Yeah, I am I am myths, a revised outlook is largely led by growth Mark the Mark Downs in the two largest economies the U S and signed.
According to the January 2022, <unk> for global Global growth is expected to decrease from 549% in 2021 to four 4% in 2022.
Half a percentage point lower since the previous projections in October .
However, the 0.5% growth the IMF expects will likely be gained in 2020 city with folk that's up from three 3% in October 2021 to three 8% in January 2022.
Despite slowing down growth prospects for the emerging markets and developing economies are expected to go back to the pre pandemic trends by 2020.
Except for India, which is expected to be steady at around 9%.
Those forecasts remain promising for advanced economies, we can say.
Ban in DSM, five doing better than 2021, while the U S. Citing type of fed policy and then anticipate that holds 20 further stimulus spending based bloggers.
By Congress because of it used to growth focus for 2022 452 percentage points to 4%.
Chinese economic growth is projected to be only four 8% in 2022 before picking up again in 2023 as the central bank steadily ramps up fully seizing to avoid office up or down.
The lower growth rate under lines multiple headwinds facing the world's second largest economy.
Due to a property down to crack down on debt.
Our first pollution measures.
COVID-19 curves, which have hit consumption.
For 2022 and 2023.
And it is trade is expected to grow at healthy levels of three 6% and three 5% of space deeply.
Please turn to slide 12 to review the containership age profile and delivery schedule.
As you can see the containership age profile sites located on the left side of the slide we have a young fleet with EMEA at 8% of seats being above 20 years old.
However, the older vessels are mainly concentrated in the smaller classes without ships up with it.
The right side chart shows the delivery schedule of the Covenant contained the book the book, which is expressed as a percentage of the fleet.
Circle figures for 2022 to 2025 reflected the anticipated fleet growth before scrapping and slippage.
Currently the total containership both of the book stands at 24, 3% of the fleet, which is astonishing compare to a year ago. When it stood this immediately 10 books.
The majority of the deliveries are scheduled for the second half of 2023 onwards, and even then will be concentrated on the largest size of the business.
Please turn to slide 13, where we discuss our outlook summary.
As previously mentioned global recovery continues you get the new COVID-19 variants.
Using energy prices and elevated inflation still Wayne and May slow economic growth.
Container ship today remains positive with moderate supply growth in 2022 accelerating in 2023 and 2024.
Well its congestion has continued to significantly impact the container shipping markets, leading to excessive wait times and disrupting a pervasive schedules.
These logistical bottlenecks have resulted in new highs in container freight rates, which are expected to remain throughout 2022.
The short term outlook looks optimistic reinforced by logistical disruptions unfairly traded demand.
Additionally, limited supply growth in 2022 should provide some wage support before introduced new building deliveries in 2023.
In the medium to long term.
That is in 2023 and beyond.
The mentors are very complex with a range of factors likely to have an impact.
Firstly.
And certainly uncertainty Mick is if demand for vessel wanes once supply chain disruptions ease.
Secondly.
The real supply pressure from 'twenty to 'twenty three onwards may overtake the months ago due to increased deliveries.
But last and not least new environmental regulations will probably result in even slower steaming by 'twenty to 'twenty three 'twenty 'twenty four effectively removing capacity from the market.
The balance is very difficult.
Let's move to slide 14.
The left side of the slide shows the evolution of the one year time charter rates for containers of two and a half thousand Teu since 2000.
As discussed we are witnessing the highest charter rates in the last 20 years.
According to Clarksons last week, one year to daily time charter rates for two and a half thousand Teu container ships stood at $76000 per day.
The right hand side of the slide shows vessel values in the relation to historical prices since 2012.
As we can see Gavin container Supervalu stand.
<unk> $52 million and have significantly increased above median in average levels.
Now at the highest levels over the last decade.
There is no doubt that at some point, both prices and softer rates would need to Quebec.
But the big question is when will this happen and how far further will be heavily till then.
Because the only clear thing today is the lack of sufficient capacity to serve the world's needs of today.
In this uncertain environment, we have secured and continue to secure as much savings as possible and they are looking to utilize the vast amount of liquidity, we are creating in the optimal way.
<unk> strong balance sheet and grow the company in a manner that will continue to provide with total returns in the evolving global shipping environment for the benefit of our shareholders.
And with that I will now pass the floor to our CFO . That's just US lead this to go over our financial highlights in further detail.
Thank you very much dedicated.
Good morning for me as well, ladies and gentlemen.
I will now take you through the next five slides of our presentation.
Maybe give an overview of our financial highlights for the fourth quarter and full year 2020.
Your line.
In comparison with our results.
Thank you Ken.
Let's turn to slide 16.
For the fourth quarter of <unk>.
We reported total net revenues.
Okay.
3 million.
Presenting to Camden person today.
Total net revenues of $12 million during the fourth quarter of <unk>.
The increase was predominantly due to their prior Albert's, Brian charter rates our vessels during the fourth quarter.
Yes.
Prior to this.
Corresponding periods of strength.
For the fourth quarter of 2021, the company reported net income.
Income applicable to common shareholders was 20.
$2 7 million.
So our net income.
Thank you.
And the next day.
That might be available to common shareholders of <unk> for the year.
For the fourth quarter of 2000.
Right.
Is there another financing costs for the fourth quarter of 2021.
About.
Comparable.
8 million that we get for the same periods of strength.
Well, we also recorded a loss on extinguishment of debt.
Docker media.
Our adjusted EBITDA for the fourth quarter of 290.
One was $26 1 million compared to $2 1 million for the corresponding period.
Ed.
I was wondering.
72% grades.
The previous period.
Basic earnings per share.
Equivalent shareholdings.
The fourth quarter I was trying to January .
While diluted earnings per share were $3.13.
With respect to the one seven.
<unk> hundred $7 $24 million.
Basic and diluted.
Weighted average number of shares outstanding.
Compared to basic and diluted earnings per share.
Zero point of view.
For the fourth quarter of 2000.
Thank you, ladies and six point 15 million.
I think the diluted.
Weighted average number of shares outstanding.
Excluding the effect from the income attributable to common shareholders for the quarter.
Okay.
Great.
We had amortization of below market time charter.
Yes.
And the depreciation charge due to the increased while you go over the guidance.
Margaret Thanks, Jonathan.
Yes.
Earnings to common shareholders for the quarter ended.
And the 31st 2021.
Thank you.
Thank you.
It.
Compared to an adjusted loss of 16.
Basic and diluted.
In the quarter.
Quarter of 2000.
Usually I think secure Jonathan.
Alright, thanks, guys.
Earnings per share and that's why we're making again.
Thank you Ed.
Let's now move to the right.
This slide is this.
The same figures for the full year of 2021.
For the full year of 2021, the company reported total net.
Revenues for.
The $3 9 million.
Presenting next.
76%.
Total net revenues of $53 3 million during the 12 months of <unk>.
Sure.
The company reported net income for 2021 or $42 9 million.
Net income applicable to common stockholders of $42 3 million as compared.
Compared to a net income of $4 million.
Income attributable to common stockholders of $3 3 million for 2020.
Maybe there is another financing costs.
Months of guaranteed Jaguar amounted to $2 8 million compared to $4 1 million for Atlantic lenses.
Yes, we also recorded a loss in the extinguishment of debt Docker media and as I mentioned earlier.
The days of interest expenses.
Due to the lower level.
That said during 'twenty, one is going back to the previous year.
Our debt increased in the fourth quarter of 2021, when we partly financed with debt our latest two acquisitions.
Adjusted EBITDA for 2021.
$52 7 million compared to 11 8 million during the day you are incorrect.
Basic earnings per share.
But one to common shareholders for 2021 were $6 six and diluted earnings per share were $6.05.
Calculated on.
$6, 98, and $6 $99 million.
Basic and diluted weighted average number of shares outstanding.
Baird.
Basic and diluted earnings per share of <unk>.
<unk> $68 for 2020.
Again, excluding the effect on the income attributable to common stockholders for the for <unk>.
Realized gain on derivatives amortization.
One of the below market foreign charts or supply.
Depreciation.
Due to the increased value.
Over the vessels acquired below market charters in the net loss in the sale of progression.
The adjusted earnings.
Common stockholders for the year of 2021.
There have been $6 <unk> basic.
In one sense diluted.
Compared to a.
Lots of essentially zero dollars per basic and diluted.
Okay.
Let's now move to slide 17.
Thank you our fleet performance.
We'll start our review by looking first at our fleet utilization rates for the fourth quarter of 2021.
In comparison.
Same for <unk>.
2012.
As usual.
Good utilization rate is working down.
Sure.
During the fourth quarter of 2021.
Utilization rate.
While our personnel utilization rate was 98, 5%.
Compared to 98, 5% comparison.
96, 3% operational for the fourth quarter of 2010.
I should remind you here that our utilization rate calculation does not include vessels in drydock or schedule repairs.
Any such events.
Sure.
We're considering.
Well not beds.
15.01 vessels were owned and operated during the fourth quarter of 2021, and average time charter equivalent rate of $29994 per day.
Compared to $14 42.
The vessels.
And an upgrade to the same periods of the fourth quarter of <unk>.
<unk> of 2020.
You can average $10497 per day.
Our total daily operating expenses, including management fees again.
Ireland administrative expenses, but excluding dairy.
Of course.
7000 and.
Hey, Don this progression per day during the fourth quarter.
And compared to $7164 per vessel per day.
For the fourth quarter.
Our cash flow breakeven rate.
The fourth quarter of 2001.
One was about $11150 per vessel per day compared to $8216 per vessel per day.
Fourth quarter of 2020 reported gearing, we'd switch did not do any longer payments.
Let's now look.
As part of the slide.
The seven figures for the full year.
During 2021 are commenced in utilization rate.
Again, it sounded person.
Personnel utilization rate was 98, 5% compared to 97, 5% Comercio and 98% operational for 2010.
During 2021.
$14 75 vessels.
Owned and operated.
The average time charter equivalent rate of 19000.
Under $9 per day compared to $17 23 vessels during 2020.
Can you elaborate on that.
9000 programs in the $45 per day.
Our total operating expenses.
Again, including management fees, and G&A expenses, but excluding dry docking costs for 2021 amounted to 7000.
Good day.
<unk> $6431 per vessel per day.
The previous year.
Turning to trend.
Let's look again at the bottom of this table.
The cash flow breakeven rate.
For the year.
It depends.
So pretty bullish.
In 2020.
Compared to 8050 <unk>.
$7.
Okay.
Okay.
Let's move now to slide 18.
Pardon me.
Slide by now.
Slide the last.
Calls to provide our shareholders and investors.
To access the earnings potential of the power fleet in the coming quarters.
The table shown in the slides is two parts.
The first part of the status quo.
Alright.
I'm sorry.
The table shows the available days for hardwood.
Making assumptions for the segment guide Doggies.
The number of contracted days signature periods that we're doing as well as the key tenants of the tool.
We called the remaining open days of policy.
As you can see that.
Almost all of our vessel available days are contracted.
Randy to 92%.
62% of our fleet available days for 2023 are also on track.
For the contracted days, let's say.
So the average congrats to Jay.
Which allows you by making an assumption for the Opex and G&A expense per day to estimate the likely EBITDA contribution.
Well the remaining operating days.
Never usually this calculator needs to make an assumption about the daily rate to be aired.
Allows him or her to estimate.
EBITDA contribution of the open days.
We provide them and because of the calculation.
<unk> used the same way.
The blended conducted.
Alright.
One can see the effect on the <unk>.
Total EBITDA.
2022 and 2010.
This overall exercise is meant to provide.
<unk> already done.
Great. Thank you so even once.
Once they're expensive.
By young Kwon song assumptions about the rates for the open days.
No.
Go unnoticed.
<unk> 22, a year, that's more of a 9% of our fleet is.
Contracted power.
Rick.
The likely double.
By comparison.
Compared to <unk>, one and <unk> seen that this figure could even grow further in <unk>.
<unk> of course.
Great.
The table comes to them.
Let's now move to slide 19 to review our debt.
Fine.
On the top part of the slide.
You can see our schedules.
Payments over the next several years.
Our loan repayments scheduled for this year stands at 27 4 million.
With debt repayments.
It's going down over the next three years.
In addition to the regularly.
Light blue bars.
Second balloon payments.
Blended in the booking curve is.
Small balloon payment of one point.
I mean, we can't say $70.
7 million.
To be paid in 2023, and the father of $1 8 million balloon in 2010 o'clock.
In the past.
Can they find ourselves balloon payments at least the larger ones.
Okay.
We expect to be able to do so in the future.
Yourself.
To further points.
First.
Two vessels.
The unencumbered the Joanna.
Debates.
Second point that I would like to make is the chart. That's one thing.
That said, we expect to upstream.
They.
Financing the financing.
We are planning to take.
Finance also new buildings during 2023 and now into 2020 before.
Where are we building.
Typically make their initial payments with our own funds and draw a loan to finance the laws.
And the larger payment.
Yes.
The final final quick one.
On this slide on the cost of our debt.
As it relates to the loans outstanding.
Yeah.
The average margin on our debt is about 3% I'm assuming.
LIBOR rate of <unk>, 3% senior debt cost our current senior debt cost.
Three 3%.
One <unk>.
The cost of our interest rate swaps.
It's averaging three 4%.
We think that the bottom mortgage table, we can see our cash flow breakeven level of expectation for the next 12 months.
Per vessel per day.
You can see with our loan repayments, we just reviewed over the next 12 months.
<unk> 4200.
Thanks for your question.
Good day.
Contribution to our cash flow breakeven level.
You can make similar assumptions for the remaining components of our cash flow breakeven level.
Our admin expenses G&A expenses biggest payments in Canada, and Costa Rica.
Come up with a cash flow breakeven levels over the next 12 months well just around $14075 per vessel per day.
Let's now move to slide 20.
This slide provides some highlights from our balance sheet.
Adjusted to reflect the market back in the pharmacy.
As of December .
'twenty one.
Our book value basis.
And then our asset side, we fed cuts another assets for about $7 1 million.
And the book value of our vessels.
<unk> for the new buildings.
And the acquisition of the vessels.
The acquired vessels join US again tomorrow, because we are funding.
$3 4 million, giving us a total book value.
For our assets of about 210.
On the liability side, we capped an outstanding bank debt.
$19 million in other liabilities of $8 5 million.
Alright various site.
Started mentioning the market value of our fleet is much higher than its book value.
If adjusted for the negative value charges. The latter result.
Changing market and continuously increasing market.
Specifically, we estimate that our what.
Vessels Werewolf was again talk last year about 404 to 5 million.
The appreciation of the value of our new building contracts.
If we use that type of value for our vessels.
We.
We can calculate the net asset value of our fleet to be around 370 million or around $46 per share.
Recently, our SaaS they've been trading in the Haynesville frankly to $74 per center.
And so I won't be surprised reflected noteworthy since the beginning of the year.
It still represents a significant discount to our net asset value per said, thus offering with appreciation potential for our shareholders and good investment opportunities for other investors.
And what I would like to close my short presentation and pass the floor back to our speakers to continue our discussions.
Thank you Tassos.
Let me open up the floor to floor.
Any questions that we may have.
Yeah.
Thank you we will now begin the question and answer session. If you wish to ask a question. Please press star one on your telephone keypad and wait.
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We will now take our first question. Please go ahead. Your line is now open.
Well good day. This does that Tate Sullivan from Maxim Group, just starting just a couple of follow up questions with your comments about the order book.
Currently stand.
Compose the much larger vessels or 23.
Particularly for entrants into the market in 'twenty, three but can you remind us of the benefit.
The operating smaller ships in your fleet and taking delivery of smaller ships and maybe you can comment on the future composition of the containership fleet.
Yes.
Sure.
Obviously, there is always a cascading effect a win.
When are you have.
Container ships are they all carry the same kind of of cargo, which is container ships, but the smaller vessels gotta go into smaller boats were out of the bigger ones cannot.
And the bigger ones tend to go from.
He he into the bigger boats, where they decided to kind of go there and from the smaller ships pick up to kind of go out and take it the small smaller distances.
Towards the other smaller boats, so all type of vessels I need that.
Yeah.
The big ordering is happening on the big vessels are the ones that do the terms of Atlantic in the transpacific trade things mainly so.
You realize that we also need the seats that are smaller.
Not a lot.
Being built over that over those smaller ships.
And the ones that exist I also the elder vessels around so we think this is kind of a relatively niche market to be in and we have traditionally focused on that market.
Thank you and with I mean, most of your capacity is spoken for.
This year most of your days contracted days.
I mean is there any chance nubile additional newbuild capacity shipped capacity opens to build these new ships. The next year or is it really today. The earliest deliveries still for multiple years. So if you do decide to build above and beyond the four new Belgium.
We are considering.
She ability to build the new new vessels as well, we're still looking at that possibility.
The shipyards are quite full with the new orders, though so you cannot get them with prompt deliveries these days.
ER, which is to ease the drawback, but are we will see.
Yeah.
Okay. Thank you and just.
On a topic, we talked about before just targeted debt ratios going through through this cycle and if there is eventually a slowdown does that I mean, the capital ratio using net asset value do you look at 30% level or 40% level of debt to capital ratios are how do you look at that over the cycle.
Yes, I mean, we look at we look at it.
Gotcha.
Hello, I was about to say I believe the same thing.
Spike in saying that.
Yeah.
Sure I'm, sorry, that's around 25%.
Using soccer exactly the values we can.
Tend to finance, our new building, so by around 60% to 65% of their contract value. So even with that you've been expanding on our leverage ratio.
We'll be below <unk>.
75%.
So it's a modest leverage ratio had a selective won't be pointing to the fact that we are using these days.
Movement downward move in our recycling will remain very.
And low leverage.
Like I said, we're quite comfortable.
Your sex throughout the cycle.
Okay. Thank you and last for me just following up the Newbuild kind of if you did order a ship today just in terms of the update I know it can vary.
Is it 2000 middle 2020 for delivery at this point.
Yes, okay.
Okay. Thank you both have a great rest of the day.
Thank you.
Okay.
We will now take our next question. Please go ahead. Your line is now open.
Okay.
Yeah.
Hi, This is <unk> from noble capital markets. Good afternoon to both of you.
Just to follow up on the Newbuild question.
It looks like you know.
Between the time that you ordered the first two and then move forward in the second two.
I'm, just a little bit surprised that you were able to minimize the price increases.
Okay.
Price only went up for the new builds about 15%.
Can you just talk about whether you had options for the second two new builds or whether it dates we're just new negotiations with the shipyard and you're able to you know.
To minimize the cost increases.
They live in Union negotiations for.
New negotiations, we didn't we weren't able to get options. The shipyard, it's very difficult to give up some of these days. Unfortunately.
Because they know that there is.
It's tied to all the Newbuild vessels is quite a lot of inquiry and not too many shipyards to build ships.
So.
They have bother, giving powers of these days.
The reason is that the price increase was not that ties that are the delivery time is quite some time out I E. The deliveries out towards the end of 'twenty three and beginning of 'twenty. Four was the first two vessels have been delivered.
He is the beginning of 'twenty three first or second go through 'twenty three.
So.
It's not only that the price is more expensive not two months likely leave but it's also six months later deliveries as well.
Yeah, but that's commensurate with the.
Time between when you order the FERC technical isn't it.
True to it is it is it is but if we weren't able to get the nervously delivery it would be have been much more expensive.
Okay understood and so when you're looking at you.
I think we've talked about the earliest to get in.
Another two potentially new builds out there.
Would you be looking at a like increase in costs.
Sake.
Closer to $100 million for two instead of $86 million or sort of how do you.
I don't want to speculate too much.
When when the discussions might be going on but.
If there is something to announce we'll definitely announce it.
But I leave it at that right now Paul.
Okay I appreciate that.
Could you talk about I think in your last webcast webinar.
I thought I heard or maybe it was on the last quarterly conference call.
I thought I heard that there was interest in the first two new build as far as putting them under time charters can you update us on any.
Potential time charters that you might have secured or are in the potential or process. This is carrying on.
Be assured that if there is something to be announced there will be a press release announcing it. So so there is nothing announced.
At this point in time.
The people are showing some interest in fixing but still we are not actively.
Actively marketing the ships are full chapter we think it's something that might happen within the next few months, but we're not actively marketing them yet.
Okay, Great and then can you talk about the.
It's as somebody mentioned, it's just don't have that much availability this year as far as new time charters, but can you talk about.
The open days that you have either on the I cannot a bridge or.
Now I forget what the second one is it's closer.
Is there any change in the market that would lead us to believe that you wouldn't be able to get similar terms as far as time charter.
Blank and rates on those two open vessel.
The context in that just came out today as it comes you know twice a week all constituents.
Getting again, which means they were all up again a little bit.
So the market continues to strengthen so we think that the.
The more we wait the higher we can probably still fix.
Don't know if this will continue forever.
Sleep, but.
Couldn't see news.
So we'll see.
And would you be looking for more like Aerospace Award.
Given the current forward cover you have would you be more inclined to play more of the short term.
And keep some of those open are exposed to the spot market.
No.
It will depend on what the interest we see from our from our clients.
We are happy with the levels that we are seeing.
For long periods as well so you know if we see smoke.
Is we might do the three years or less.
I see.
For the bigger vessels.
We'll do anything from three to five years.
If the data for a single year was fantastic, we could consider that as well we will see we will see you.
Stay tuned.
And then can we just walk through sort of your.
Your philosophy on.
Potentially doing either stock buybacks or.
Dividends, whether it's a special dividend or a regular dividend.
If I did the math on the next two years, you know 2022 and 2023.
No I I come to the conclusion that you from an operating cash flow standpoint.
You'll generate more than $250 million based on what the current market and current forward coverage.
And you have from a cash perspective.
About 65 million.
Capex on the Newbuild program.
Assuming that you're going to finance, 60%.
The final delivery payments on the new builds and so you do your.
You'll generate.
A significant amount of excess cash if you will.
And unless you make additional acquisitions can you just talk about you know.
What.
Tensor plants, you might have for assessing what you do with the you know the.
Excess cash.
Yeah as you have seen our first priority has continued to be to use the liquidity that we generate are to grow the company into the new the fleet and position the company to be an even more so.
Significant player within the size segments that we are active. So this is a top priority. If we can find projects that make sense.
So the this is the you know the the most.
Interesting thing for us.
If we run out of our investment our ideas are.
Then we might consider.
Returning capital to shareholders.
However, the up to now we've been able to find the good opportunities to to invest and I think that every every investment that we've done up to now.
All the red the abuse is that it has been a good investment and he is an investment which is returning significant additional value to the shareholders. So up to now we've been able to find good investments.
I hope, we will continue to be able to do that.
If we feel that we can do it then obviously we will have to.
To do something with the liquidity that we will be making that will benefit our shareholders.
As I've said repeatedly.
Our families one of the major shareholders within the company and Oh priorities to optimize the results.
Okay, great and if I can just ask one last question about just the cadence of the capital that youre going to spend on the new builds.
You know you have $7 6 million so for the deposits on the first two new builds I assume there'll be 10% deposits on the second two new builds you know this coming quarter, maybe at the second quarter.
Can you.
My math brings me to about $34 million of Capex in 2022 for the new builds.
And then about.
98 million.
And the for the new builds in 2023.
Those numbers in the ballpark or can you give us an idea of how much capex you have for the Newbuild program in 'twenty, two and 'twenty three.
I think those numbers are in the ballpark.
I expect that we will make.
About six installments for the first thing that Vince.
Bye bye.
By the end of the year, we have made.
And we'll make another four I guess.
And then it would pay very manual.
Delivering 70% delivery.
And we will start making installments for the for the U S.
Buildings.
I would imagine that we'll do one.
The first 10%.
We have done that.
And I think the restaurant the rest of them will be in 2023.
Okay, great. Thank you from the last time in the fourth.
The four point, we've been doing.
Okay.
Kind of a fourth one.
Yes that does.
It'll bleed into the first quarter 'twenty four.
Okay, great. Thank you touched us that's right.
Thank you.
Okay guys.
Okay.
We have no further questions at this time.
Okay. Thank you very much for being with us during this call and we look forward to talking to you in three months' time. Thank you.
Thanks, everybody.
That concludes the conference for today, Thank you for.
Participation you may all disconnect.
Okay Bye.
This will be done shortly.
That's what the limits are levered.
Okay.
Okay.
Okay.
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