Q1 2022 Seanergy Maritime Holdings Corp Earnings Call
Ladies and gentlemen, thank you for standing by.
Speaker 1: Ladies and gentlemen, thank you for standing by and welcome to Synergy Emory TV holding
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Speaker 1: Europe First Quarter 2020 Dual Finance Circle. At this time all participants are in list and only mode.
Killed the fist quarter 2022 we'll find out so cool.
Are these time all participants are in at least in all the malls.
Speaker 1: After this bigger presentation there will be a question and answer session.
After the speaker presentation, there will be a question I don't know if that session.
Speaker 1: Many of the remarks today contain forward-looking spinspins based on current expectations.
Many of the remarks today contain forward looking statements based on current excitation.
These statements meals to fight with the word such as expects anticipates believes or similar indications of future expectations.
Speaker 1: These statements may often be identified with words such as expect, anticipate, believe or similar indications.
Speaker 1: Although such forward looking statements are considered to be reasonable by the company, I cannot show that any forward looking statement will prove to be correct.
Such forward looking statements are considered reasonable by the company cannot assure that any forward looking statements will prove to be correct.
Speaker 1: These forward-looking statements are subject to no and unknown risks and uncertain and other
These forward looking statements are subject to known and unknown risk uncertainties and other factors many of which are beyond the company ability to control or predict.
Speaker 1: many of which are beyond the company's ability to control or protect the company.
Speaker 1: Please refer to the company's annual report of Form 20F and order filling with the Securities and Exchange Commission.
I used to refer to the company's report on form 20-F and older filling we disagree with you at that changed Commission.
We can discuss.
Any of these risks and uncertainties.
Should one or more of these risks of arms, there to see materialize or should underlying assumptions or estimates prove to be incorrect actual results may vary materially from those the company expressed today.
Speaker 1: Should one or more of these risks of uncertainty materialize or should underlying assumptions or estimates prove to be incorrect, actual results may vary materially from those the company expresses.
Speaker 1: In light of uncertainty is in red in any forward Lucas team fence, listener are questioning to no place until your license on the
In light of uncertainties inherent in any forward looking statements listeners are cautioned to not place undue liberalizes. All these statements. The company undertakes no obligation to revise or update any forward looking statement, where does the results of new information or future events.
Speaker 1: the company undertakes no obligation to revise or update any formal looking statement, whereas the results of new information of future events.
You're the only closed today the company may refer to non G. A a beef I know some media such as a beta I just as a b P. D. A I just did nothing you'd called N D C E rate for it.
Speaker 1: In the end link call today the company may refer to non-GAAP financing measures such as ABTDA, Adjustus, ABTDA, Adjustus NetEcom and TCE.
Speaker 1: For further consideration of the non-GAAP measure to GAAP measures, please see the company's earnings survey posted in the news section of the website early.
If were to go see a show over the no G. A a P. Ms Zhu to G. A a P. Ms yours. Please see the company's earnings at least most of the news section of the website earlier today.
I will now like turn the conference audio speaker today. Some of these so nice. Please go ahead.
Speaker 1: I would now like to end the conference over your speaker today. Stan Matisse, Stan Matisse, please go ahead. Hello everyone.
Hello.
And welcome to our conference call.
Today, we are presenting the financial figures for the first quarter of 2022, and we're announcing a cash dividend for the second consecutive quarter.
Speaker 2: Today we are presenting the financial figures for the first quarter of 2022 and we are announcing a cash dividend for a second consecutive quarter.
Speaker 2: Following an impressive 2021 performance, Synergy achieved its strongest first-quarter results of its recent history despite the expected seasonal slowdown in the Cape size market.
Following an impressive 2021 performance synergy achieved its strongest first quarter results of its recent history. Despite the expected seasonal slowdown in the Capesize market.
This was attributable to the geopolitical uncertainties caused by the war in Ukraine, and the Covid related Lockdowns in China well.
Speaker 2: This was attributable to the geopolitical uncertainties caused by the war in Ukraine and the COVID-related lockdowns in China.
Speaker 2: Overall, our outlook for the Cape size market remains very optimistic, with strong expectations for the remainder of the year, with the underlying futures currently trading at levels exceeding $30,000 a day.
Overall, our outlook for the Capesize market remains very optimistic were strong expectations for the remainder of the year, but the underlying futures currently trading at levels exceeding $30000 a day.
Speaker 2: Moving on to the first quarter highlights, adjusted net income was significantly boosted year on year, reaching $7.7 million versus a marginally positive result in the first quarter of 2021.
Moving onto the first quarter highlights adjusted net income was significantly boosted the year on year, reaching seven 7 billion.
Some marginally positive result in the first quarter of 2021.
Despite the seasonal slack in the Capesize market, our fleet achieved a daily time charter equivalent of $19400, a day, which is 19% higher compared to Q1, 2021 and 31% higher than the average of the daily Baltic Capesize index in the same period, which was equal to or above.
Speaker 2: Despite the seasonal slack in the Kepsize market, our fleet achieved a daily time-saving equivalent of $19,400 a day, which is 19% higher compared to Q1 2021 and 31% higher than the average of the daily Baltic Kepsize index in the same period, which was equal to about $14,700.
14700.
Speaker 2: This is the highest first quarter Tc achieved by Synergy since 2009.
This is the highest first quarter TCE achieved by synergy since 2009.
Speaker 2: hedging activities over the past quarters were therefore successful in mitigating the negative effects of dry bulk seasonality.
Our hedging activities over the past quarters will therefore successful in mitigating the negative effects of dry bulk seasonality.
Speaker 2: Overall, I am pleased with our commercial performance and I am happy to see that the cape size market has since risen quite strongly.
Overall, I'm pleased with our commercial performance and I'm happy to see that the Capesize market has since it isn't quite strongly.
For the second quarter of 2022, we have fixed approximately 76% over three days at the Masterbated TCE of 22750 doors.
Speaker 2: For the second quarter of 2022, we have fixed approximately 76% of our fleet days at an estimated TC of $22,750.
Speaker 2: At the Canon FFA average for the remainder of the year, our full year EBITDA would exceed $101 million as our CFO will explain shortly.
As economists say average for the remainder of the year, our full year EBITDA would exceed $101 million as our CFO will explain shortly.
Speaker 2: All of our fleet operations period employment with some of the world's largest dry bulk charters and 15 of our 17 vessels are employed on time charters linked to the Baltic Cape Size Index.
All of our fleet operating period employment with some of the worlds largest dry bulk charters and 15 of our 17 vessels are employed on time charters linked to the Baltic Capesize index.
Speaker 2: This strategy ensures a very high fleet utilization with minimal working capital requirements, while it allows our performance to track the capes size index closely as shutter rates rise.
This strategy ensures a very high fleet utilization with minimal working capital requirements. While it allows our performance subtract the Capesize index closely charter rates rise.
Speaker 2: At the same time, our remaining two units are employed on fixed rate time shatters at daily levels exceeding $30,000 per day.
The same time.
The remaining two units are employed on fixed rate time charters, a day levels exceeding $50000 per day.
Finally, it is worth reminding.
Speaker 2: Finally, it is worth reminding that the majority of our agreements allow us to convert daily earnings from floating to fixed rates, which we have used numerous times to hedge our downside risk.
But the majority of our agreements allow us to convert daily earnings from floating to fixed rate, which would have us numerous times to hit our downside risk.
Meanwhile, with regards to our initiatives on the environmental and energy efficiency front. We also continued the relevant upgrades over vessels in many cases in cooperation with the charters.
Speaker 2: Meanwhile, with regards to our initiatives on the environmental and energy efficiency fronts, we also continued the relevant upgrades of our vessels, in many cases in cooperation with the Charter.
During this quarter, we completed the installation of ballast water treatment systems on all of our vessels, while we continued adding energy saving devices, they're not official intelligence monitoring systems.
Speaker 2: During this quarter, we completed installation of ballast water treatment systems on all of our vessels, while we continued adding energy-saving devices and artificial intelligence monitoring systems.
Speaker 2: This provides further future visibility as to the utilization of our vessels and ensures competitiveness of our fleet in the context of fast changing environmental regulation.
This provides further future visibility as to the utilization of our vessels ensures competitiveness of our fleet in the context of fast changing environmental regulations.
Speaker 2: We have also continued the testing of biofuels on our capesizes with two of our charters and the involvement of a major mining company.
We have also continued the testing of biofuel solar Cape sizes with two of our charters and the involvement of a major mining company.
Speaker 2: Regarding the finance front, in Q1 we continued with the optimization of our capital structure by refinancing a legacy bank facility.
Regarding the finance front in Q1, we continued with the optimization of our capital structure by refinancing a legacy bank facility.
Speaker 2: through a $21.3 million sale and leaseback transaction with a prominent Japanese bank.
Through at $21 3 million sale and leaseback transaction with a prominent Japanese bank.
Speaker 2: structure that is more cost efficient and provides also considerable financial flexibility.
The structure that is more cost efficient and provides also considerable financial flexibility.
Speaker 2: In addition, we continued our Shareholder Reward Program.
In addition, we continued our shareholder reward program.
We proceeded with 10 million of a $10 million of additional buybacks.
Speaker 2: We proceeded with 10 million of a $10 million of additional buybacks of the remaining convertible note in Q1 eliminating the potential dilution while reducing further financial leverage and interest costs.
Remaining convertible note in Q1, eliminating the potential dilution, while it abuse, even further our financial leverage and interest cost.
This was a continuation of our repurchase plan that was initiated in 2021 and the total repurchases of shares convertible notes and the warrants is amounted to $26 6 million within the last six months.
Speaker 2: This was a continuation of a repurchase plan that was initiated in 2021 and the total repurchases of shares, convertible notes and warrants has amounted to 26.6 million within the last 6 months.
Another important initiative is our dividend with another 2.5 payable in early July .
Speaker 2: Another important initiative is our dividend with another 2.5 cents payable in early July .
Upon this payment we will have rewarded our shareholders with a cash distribution of $7 five per share leading to an annualized yield of about 12, 5% based on the recent closing price of our shares.
Speaker 2: Upon this payment, we will have rewarded our shareholders with a cash distribution of 7.5 cents per share, leading to an annualized yield of about 12.5% based on the recent closing price of our share.
I am confident that such capital returns are sustainable and we will be able to continue rewarding our shareholders in the following quarters.
Speaker 2: I am confident that such capital returns are sustainable and we will be able to continue rewarding our shareholders in the following quarter.
Speaker 2: Our CFO , Stavros Giftakis, will offer more details on our financial performance and it is now time to pass the call to him. I will come back at the end of the call for the market update shortly. So Stavros please go ahead.
Our CFO <unk> <unk> will offer more details on our financial performance and it is now time to pass the call to him I.
I will come back at the end of the call for the market update shortly so stable. Please go ahead.
Thank you Samantha.
Speaker 2: Thank you, Samadhis. Let me first welcome everyone to our first quarter Edmics Call for 2022. We will start by reviewing the main highlights of our financial state.
Let me first welcome everyone to our first quarter earnings call for 2022, we will start by reviewing the main highlights of our financial statements.
Speaker 3: In the first quarter we saw the usual seasonal slowdown in the dry bulk and more specifically the cape size market affecting our results, but our performance was still much improved compared to the first quarter of the previous year.
In the first quarter, we saw the usual seasonal slowdown in the dry bulk and more specifically the capesize market affecting our results, but our performance was still much improved compared to the first quarter of the previous year net.
Speaker 3: Net vessel revenue was equal to 29.7 million, marking an increase of 46 percent from the fourth quarter of 2021.
Net vessel revenue was equal to $29 7 million, marking an increase of 46% from the fourth quarter of 2021.
Speaker 3: As mentioned by Stamatis earlier, our daily time charted equivalent for the quarter was $19,400, increased by 19% when compared to $16,200 for the first quarter of 2021.
As mentioned by Submarket Thirdly, our daily time charter equivalent for the quarter was $19400 increased by 19% when compared to 61000 and $200 for the first quarter of 2021.
Speaker 3: Our freight hedging strategy has indeed paid off as our first quarter TCE exceeded the average Baltic Cape size index by considerable margin.
Our freight hedging strategy has indeed paid off as well.
First quarter TCE exceeded the average Baltic Capesize index by considerable margin.
Adjusted EBITDA in the first quarter was approximately $16 8 million up from $7 9 million in the same quarter of 2021 and net income for the quarter was $3 7 million compared to a net loss of $1 3 million in the same quarter last year.
Speaker 3: A JACI DB DA in the first quarter was approximately 16.8 million up from 7.9 million in the same quarter of 2021 and net income for the quarter was 3.7 million compared to a net loss of 1.3 million in the same quarter last year.
Speaker 3: During the quarter, we recorded a one-time non-crash loss associated with the buyback of the convertible note and the refinancing of the Amsterdam Trade Bank facility.
During the quarter, we recorded a onetime noncash loss associated with the buyback of the convertible notes and the refinancing of the Amsterdam trade Bank facility.
Adjusted for this loss and other noncash expenses net income for the quarter was equal to $7 7 million, resulting in non-GAAP EPS of <unk> <unk>.
Speaker 3: Adjusting for this loss and other non-cash expenses, net income for the quarter was equal to 7.7 million resulting in non-cap EPS of 4 cents.
Speaker 3: The year-over-year percentage increase in atrocity be done of about 113% over a 19% increase in our TCE, illustrates once again our company's operating level.
The year over year percentage increase in adjusted EBITDA of about 113% over a 19% increase in RPC illustrates once again, our company's operating leverage at.
Speaker 3: At the current SFA curve for the remainder of the year, I would expect to see full year 2022 EBITDA of about 100 million and improvement of 28% compared to 2021.
At the current <unk> for the remainder of the year I would expect to see full year 2022, EBITDA of about $100 million, an improvement of 28% compared to 2021.
Speaker 3: Furthermore, the considerable reduction in finance expenses would result in an even larger percentage increase in our net income, although we are mindful of the increasing trend of the library.
Furthermore, the considerable reduction in finance expenses would result in an even larger percentage increase in our net income, although we are mindful of increasing trend over LIBOR.
Speaker 3: other daily operating expenses, excluding 3 delivery expenses were $6,444, a sequential improvement from $7,1884 in the fourth quarter of last year.
Average daily operating expenses, excluding pre delivery expenses were $6444.
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$84 in the fourth quarter of last year.
Speaker 3: While it is still too early in the year to offer an assessment on the direction of our daily operating expenses, they continue to be negatively affected by the COVID-19 pandemic, which affects both crew-related expenses and forwarding costs, and the rise in raw material prices. We are hopeful that in the current year operating costs can plateau at the level seen in 2021.
While it is still too early in the year to fit an assessment in the direction of our daily operating expenses continued to be negatively affected by the COVID-19, pandemic, which affect both crew related expenses and forwarding course and that is in the raw material prices. We are hopeful that in the current year operating cost control.
Back to the level seen in 2021.
Speaker 3: Moving on to our debt and financial expenses, we have managed to continue reducing this in the first quarter of 2022.
Moving on to our debt and financial expenses, we have managed to continue reducing these in the first quarter 'twenty to 'twenty two.
Speaker 3: Proximum the cashing their expense in the first quarter of the year the company incurred approximately 2.2 million of cashing Paris and finance costs. Their expected expense was 2.9 million last quarter and 2.7 million in the first quarter of 2021.
Focusing on the crushing this expense in the first quarter of the year the company incurred approximately $2 2 million of cash interest and finance costs. The respective expense was $2 9 million last quarter and $2 7 million during the first quarter for instance, we won.
Bringing to the picture the increase of our fleet vein.
Speaker 3: Bringing to the picture the increase of our fleet, the intersex plans were operating in the first quarter of 2022 declined to approximately 1,500 from 2000 last year and 2,900 in the first quarter of 2021. All these reflect our constant efforts to further improve our position at this front and we expect the positive effect to be even more apparent in the coming course.
This expense per operating day in the first quarter of 2020 to decline to approximately 1500 from 2000 last year in 2900 in the first quarter of 2021 obese reflect our constant efforts to further improve our position at this front and we expect the positive effect.
To be even more apparent in the coming quarters.
Speaker 3: Regarding the debt on our balance sheet, the total debt outstanding per vessel has been decreasing consistently over the past three years, a trend that continued in the first quarter of 2022.
Regarding the debt on our balance sheet. The total debt outstanding per vessel has been increasing consistently over the past three years a trend that continued in the first quarter of 2022.
Our loan to value has reached 43% more than having since the end of 'twenty.
Speaker 3: Our loan to value has reached 43%, more than having since the end of 2020.
The total debt outstanding including convertible notes was approximately 226 million as of the end of the first quarter on the fleet of 17 vessels with a total scrap value of approximately $275 million.
Speaker 3: The total debt outstanding, including convertible notes, was approximately 226 million as of the end of the first quarter on a fleet of 17 vessels with a total scrap value of approximately 275 million.
This compares with $173 million in the first quarter of the previous year on a fleet of just 11 vessels with a total scarp value of 177 million adjustable which for today's scrap prices.
Speaker 3: This compares with 173 million in the first quarter of the previous year on a fleet of just 11 vessels with a total scrap value of 177 million adjusted always for today's scrap price.
Overall total debt of ton per vessel was about $13 3 million as against over the first quarter of 'twenty to 'twenty, two compared to $15 7 million at the end of the first quarter of 2021.
Speaker 3: Overall, total data from the perversal was about 13.3 million as of the end of the first quarter of 2022, compared to 15.7 million at the end of the first quarter of 2021.
All junior debt has now been eliminated while as mentioned earlier 10 million by bulk of convertible notes was completed during this quarter.
Speaker 3: All junior debt has now been eliminated while I mentioned earlier 10 million buyback of convertible notes was completed during the squatter. Furthermore, senior jeans has cast and cast a queer balance of approximately 39 million at the end of the first quarter compared to about 47 million in the previous quarter. Very darksion in our cast balance was mainly due to the convertible notes' prepayment that took place within the quarter.
With more senior Z has cash and cash equivalents of approximately 39 million at the end of the first quarter compared to about 47 million in the previous quarter. The reduction cost balance was mainly due to the convertible notes prepayments that took place within the quarter.
Speaker 3: Now regarding the market value of our vessels, this has increased to approximately 730 million as of March 31st, 2022. On that basis, our corporate leverage is estimated at approximately 40%.
Now regarding the market value of our vessels discussed increased to approximately $730 million as of March 31st 2022.
Basis, our corporate leverage is estimated at approximately 40% total book value of shareholders' equity.
Speaker 3: Total book value of Fairholder Security has declined marginally to 211 million, compared to 244 million at the end of the fourth quarter of last year, which had decreased being mainly attributed to the adoption of a new accounting treatment on the company's remaining convertible note. It is encouraging to see the state-derived investment values despite the support market will at least be seen in the first quarter of 2022.
Declined marginally to $251 million.
244 million at the end of the fourth quarter of last year, We said decrease being mainly attribute it to the adoption of a new accounting treatment on the company's remaining convertible note. It is encouraging to see the steady rise in vessel values. Despite the spot market volatility we've seen in the first quarter of 2022.
Speaker 3: The expansion of our fleet over the past year has been accompanied by an improvement of leverage metrics across the board, which makes us confident about our ability to continue with a fairholder reward for you.
The expansion of our fleet over the past year has been accompanied by an improvement of leverage metrics across the board, which makes us confident about our ability to continue with our shareholder reward policies.
Speaker 3: Moving on to our recent financing transactions, we have now completed the strategic 21.3 million refinancing of a previous loan facility that was originally due in the fourth quarter of the year secured by the partners.
Moving on to our recent financing transactions, we have now completed the strategic $21 3 million refinancing of our previous loan facility that was originally due in the fourth quarter of the year secured by the partnership.
Speaker 3: Additionally, we also prepaid the last remaining junior indebtedness of 1.85 million.
Additionally, we also prepaid the last remaining junior indebtedness of $185 million.
The new financing provided by a prominent Japanese bank is priced more competitively and helped us expand our strong footing in the AGM cheap financing market.
Speaker 3: The new financing provided by prominent Japanese banks is priced more competitively and helped us expand our strong footing in the Asian ship financing market.
As regards now too to the $22 4 million balloon payment that view in December of 2022.
Speaker 3: As regards now to the 22.4 million balloon payment that is due in December of 2022, I remain more than confident that it will be refinanced in a seamless and timely manner. As a matter of fact, we are already in close discussions with existing and prospective secondary providers who are seeking to educate CSA and nightmare demands that.'
I remain more than confident that it will be refinanced in the seamless and timely manner as a matter of fact, we are already in close discussions with existing and prospective lenders quite keen on proceeding with this transaction.
Speaker 3: However, our attempt to optimize further a capital structure is not limited to his facility.
However, our attempt to optimize further our capital structure is not limited to this facility.
Speaker 3: We are continuously discussing with international financing providers opportunities that will allow us to reduce our industry expenses, expand the maturity of our facilities and provide the liquidity for a future in the world.
We are continuously discussing with international financing providers opportunities that will allow us to reduce our in this expenses expanded maturities for facilities and provide liquidity for our future in Davis.
Speaker 3: This concludes my review. I would now turn my call back to Samatis, who will discuss the market and the industrial fundamentals. Samatis?
This concludes my review I will now turn the call back to some parties, who will discuss the market and industry fundamentals.
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Thank you Gustavo.
I've mentioned in my opening remarks, the first quarter of 2022 went through its usual seasonal lows. The average level of the Baltic Capesize index for Q1 was approximately $14700 with rates, reaching a bottom of 5800 per day by late January before recovering.
Speaker 2: As mentioned in my opening remarks, the first quarter of 2022 went through its usual seasonal low.
Speaker 2: The average level of the Baltic Cape size index for Q1 was approximately $14,700, with rates reaching a bottom of 5,800 per day by late January , before recovering to about 23,400 on the European marks.
To about 23400 in March.
Speaker 2: The key drivers behind the weaker charter rates were the global instability of the war in Ukraine, the seasonal reduction in Brazilian iron ore trade and the slowdown in China from the new COVID lockdown.
The key drivers behind the weaker charter rates, where the global instability of the word in Ukraine, the seasonal reduction in Brazilian iron ore trade and the slowdown in China from the new Covid lockdowns despite the volatility.
Speaker 2: Despite the volatility, Q1 rates were much higher than the 10-year average of first-quarter performance which makes us optimistic about the rest of the year.
Volatility Q1 rates were much higher than the 10 year average of first quarter performance, which makes us optimistic about the rest of the year.
Speaker 2: In fact, according to Clarkson's research, for 2022 and 2023, we expect growth in dry-bought tonne-mile to be about 1.4% and 1.9% respectively against projected fleet growth that is unlikely to go above 2% until 2024.
In fact, according to Clarksons research for 2022, and 2023, we expect growth in dry bulk ton miles to be about one 4% and one 9% respectively against the projected fleet growth that is unlikely to go above 2% until 2024.
Speaker 2: We expect a slow vessel supply and new regulations starting in 2023 to continue to underpin a strong dry bulk market over the next year.
We expect the slow vessel supply and new regulations, starting in 2023 to continue to underpin strong dry bulk market over the next years.
More specifically in Q1 vial exported only 64 million tons of iron ore, just 19% to 20% of its annual target.
Speaker 2: More specifically, in Q1, VAL exported only 64 million tons of iron ore, just to 19-20% of its annual target.
This sets up a tremendous potential for the following quarters since viola has set its production target for 2022 at a range of 320 to 335 million tons and the required export grade for the rest of the year is going to generate considerably higher vessel demand.
Speaker 2: This is set up tremendous potential for the following quarters since Vale has set its production target for 2022 at a range of 323,5 million tons and the required export rate for the rest of the year is going to generate considerably higher vessel demand.
Speaker 2: In China, we are happy to see the beginning of the COVID restriction easing and the normalization in steel production since the lowest point in February .
In China, we are happy to see the beginning of the call with the restriction easing and then normalization in steel production since the lowest point in February .
Speaker 2: As the country reopens fully from the COVID-19-induced lockdowns, the decision of the local authorities to introduce a series of fresh infrastructure stimulus measures is expected to be particularly beneficial for iron ore and coal demand.
As the country reopens fully from the Covid induced lockdowns the decision of the local authorities to introduce a series of fresh infrastructure stimulus measures is expected to be particularly beneficial for iron ore and coal demand.
In addition, seaborne coal trade has also been very important in vessel demand. This year and we are optimistic that this continued support ton mile increases.
Speaker 2: In addition, Cibon Coal Trade has also been very important in vessel demand this year and where optimistic is continue to support tonnmile increases.
Speaker 2: According to Clarkson's research, 2022 cold-traved tonn miles are projected to rise by 3.1% at direct implication of the Ukraine and Russia.
According to Clarksons research 2010 to two coal trade ton miles are projected to rise by three 1% a direct implication of the Ukraine and Russia conflict before this conflict. The EU was importing approximately 15 million tons of coal annually from Russia.
Speaker 2: Before this conflict, the EU was importing approximately 50 million tons of coal annually from Russia.
These cargoes are being rerouted from sources of greater distance limiting the available tonnage at sea, which squeezes vessel supply further apart from Europe demand for both coking and thermal coal has been strong across the board in most regions of the world, which we see as an important factor in shaping demand in the Capesize.
Speaker 2: These cargoes are being rerouted from sources of greater distance, limiting the available tonnets at sea, which squeezes vessel supply further. Apart from Europe , demand for both cooking and thermal coal has been strong across the board in most regions of the world, which we see as an important factor in shaping demand in the capesized sector outside the regular, iron ore exports out of Brazil and Australia. Moving on to vessel supply, the picture continues to be very encouraging as well.
Actor outside the regular iron ore exports out of Brazil, and Australia moving onto vessel supply picture continues to be very encouraging as well.
Speaker 2: The limited ordering activity in the previous quarters has helped in trimming the Cape size fleet growth to just 1.8% in 2022, while the order book as percentage of active fleet continues being the lowest in more than 20 years.
Limited ordering activity in the previous quarters has helped in trimming the Capesize fleet growth to just one 8% in 2022, while the order book as a percentage of active fleet continues being the lowest in more than 20 years.
Speaker 2: Given the uncertainty surrounding compliance with future environmental restrictions and the lack of CPR capacity, I expect slow-fleet growth to be an enduring feature of the market in the next year.
Given the uncertainty surrounding compliance with future environmental restrictions and the lack of shipyard capacity I expect slow fleet growth to be an enduring feature of the market in the next years.
The healthy demand supply dynamics are reflected in the futures curve and we expect the market to follow an upward trajectory in the following quarters at rates, even better than 2021.
Speaker 2: The healthy demand supply dynamics are reflected in the futures curve and we expect the market to follow an upward trajectory in the following quarters at rates even better than 2021.
Speaker 2: Arifors to place synergy in a position to be able to benefit from the current super cycle and started to materialize since the previous year.
Our efforts to place synergy in a position to be able to benefit from the current Super cycle has started to materialize since the previous year.
Speaker 2: Finally, by continuing to invest in the energy efficiency improvement of our vessels and based on the strong relationship with our clients, we're leading charters. I am sure that synergy will continue to benefit from the remarkable uptrend of the dry bulk market in the coming quarter.
Finally by continuing to invest in the energy efficiency improvement of our vessels and based on the strong relationship with our clients world, leading charters I'm sure that synergy will continue to benefit from the remarkable uptrend of the dry bulk market in the coming quarters on that note I would like to turn the call over to the operator.
Speaker 2: On that note, I would like to turn the call over to the operator and answer any questions you may have. Operator, please take the call.
Peter and answer any questions you may have.
Later, please take the call.
Ladies and gentlemen, we'll now begin the question and answer session.
Speaker 1: Ladies and gentlemen, we now begin the question and answer session.
Speaker 1: If you wish to ask a question, please press star and 1 on your telephone.
If you wish to ask a question. Please press star one on your telephone.
Speaker 1: The first question is from magnifier from age when right. Please go ahead, your line is open.
The first question is from magnify from.
H Wainwright. Please go ahead your line is open.
Speaker 4: Yeah, thank you. Hello, Stomades and Stavros. Just, you know, you mentioned some positive developments in your key, some of your key markets, some in Brazilian iron ore export, as well as a pickup in China. Where do you see the biggest risk going forward as far as derailing the dry bulk market recovery will continue to strengthen the market?
Yeah. Thank you I love somebody in stop loss.
Just you mentioned some positive developments in your key.
Some of your key markets I mean, Brazilian iron ore exports as well as a pickup in China, where do you see the biggest risk going forward as far as derailing the dry bulk market.
Recovery will continued strength in the market.
Speaker 2: Hey, Magnus, good morning. Thanks for the question. Well, obviously there are risks. So when you have wars and conflicts and inflationary pressures and all that, there are risks that we have to take into consideration on a daily basis.
Hey, Michael Louis Good morning. Thanks.
Thanks for the question.
Well, obviously there are risks so when you have wars and conflicts and inflationary pressures and all that there are risks.
That we have to take into consideration on a daily basis, let's start with the conflict in Ukraine.
Speaker 2: Let's start with the conflict in Ukraine. It's tragic to say that every time there is some sort of a global conflict where the normalized routes are being disrupted, then products and raw materials tend to come from longer distances. So that has helped our trade a lot. And we expect the emergence of coal to be positive for dry bulk as well.
It's tragic to say that every time there is some sort of a global conflict, though where the normalized routes are being disrupted than products and raw materials tend to come from longer distances. So that has helped.
The law and we expect.
The emergence of coal to be positive for dry bulk as well.
I mean, if you ask me like a couple of months ago with the Covid restrictions in China, and all of that I would tell you that.
Speaker 2: I mean, if you asked me like a couple of months ago with the COVID restrictions in China and all that, I would tell you that a major Chinese slowdown would be the biggest risk.
Major Chinese slowdown would be are the biggest risks. However on the contrary, we see that China is going back to the old infrastructure playbook and they have funded the regional governments, a substantial amount of infrastructure investments.
Speaker 4: However, on the contrary, we see that China is going back to the old infrastructure playbook and they have funded the regional governments a substantial amount of infrastructure investments throughout the country.
The country, so that is positive as well.
Speaker 4: So that is positive as well. Aside from that, I cannot really think of anything that has not either been resolved or we have a clear outlook for the future within this year, past or how it's gonna play out.
Aside from that I cannot really think of anything that has not either been resolved or we have a clear outlook for the future.
And this year hostile how it's going to play out.
As far as I guess, the third one the Brazilian iron ore exports, it's been kind of nikolas heel here, but it looks like ball is picking up.
Speaker 5: As far as I guess the third one, the Brazilian Iron R exports has been kind of the Achilles heel here, but it looks like ball is picking up. Trying to reach their estimated, you know, guidance. What do you see in there now as far as a pickup during two Q.
Trying to reach their estimated guidance up.
What are you seeing there now as far as the pick up during <unk>.
Speaker 4: Well, we are seeing Valet more and more into the market. So it's slowly, slowly catching up. They have to start exporting about 20% more in the second half of the year, as compared to the first half of the year in order to meet their annual targets. I am confident that they will be meeting their lowest part of the range that have given us a guidance.
Well, we are seeing valla more and more into the market. So its slowly slowly catching up.
But to start exporting about 20% more in the second half of the year as compared to the first half of the year in order to meet their annual targets.
I am confident that they will be meeting their lower the lowest part of the range that has given us a guidance. So I'm optimistic that the volume was all catch up we see pretty.
Speaker 4: So I'm optimistic that the volume will cut up. We see a lot of it in the market on a daily basis. And that's again, that they play very, very well, trying to fix from two months ahead and backwards.
Pretty much in the market on a daily basis, and that's a game that they play very very well trying to fix for two months ahead and backwards. So we are seeing volumes picking up slowly slowly show there will be additional toll that's being absorbed in the Brazilian right.
Speaker 4: So we are seeing volumes picking up slowly slowly, so there will be additional tonnets being absorbed in the Brazilian trade.
Alright, very good so with all this volatility in the markets I mean, the capesize market was down quite a bit last week after recovering nicely.
Speaker 5: All right, very good. So with all this volatility in the market, I mean, the capesize market was down quite a bit last week after recovering nicely. What is synergy doing as far as your chartering strategy for the second half of the year? Well, you guys gonna stay spot or are there opportunities to fix vessels that...
What is what is synergy doing as far as your chartering strategy for the second half of the year are you guys gonna stay spot or.
Are there opportunities to fix up.
<unk> at attractive terms.
Speaker 4: Well, we have already started to fix some ships for June and the remainder of the year. So we are being active on that.
Well, we have already started to fix some ships out for June .
The remainder of the year. So we are being active on that.
Speaker 4: We know that the market can reach and exceed $50,000 a day sometime in Q3, but we don't want to take the risk of all the whole fleet. So we have been fixing ships.
Know that the market can reach and exceed $50000 a day sometime in Q3, but we don't want to take the risk for the whole fleet. So we have been fixing ships right now the average for the second half of the year is in let's say, 33% to $4000, which is massively profitable for us.
Speaker 4: Right now the average for the second half of the year is in let's say 33, 34,000 dollars which is massively profitable for us. We will be continuously fixing from floating to fixed some ships.
We will be continuously fixing from.
Floating to fixed some ships in the next few weeks or months. So we are on top of that.
Speaker 5: in the next few weeks or months. So we are on top of that. Great, that's all our heads. Thank you.
Okay, Great. That's all I had thank you.
Thank you Michael it's nice to hear from you.
Speaker 1: Thank you for your question. We have the next question from the Taliban from Maxim Group. Please go ahead. Yalan is right.
Thank you for your question well we have the next question from Tate Sullivan from Maxim Group. Please go ahead your line.
Hi.
Hi, Hi, Thank you in the prepared remarks, I think I heard you say a level of 100 million EBITDA for 2022 can cause it did I hear that right and can you review the rate outlook for that level of EBITDA.
Speaker 6: Hi, thank you. In the prepared remarks, I think I heard you say a level of 100 million EBITDA for 2022 can get that out here. That right. Can you review the rate outlook for that level of EBITDA?
Hi, Hi, Dave good to hear from you, yes, yes, and that was under the assumption that.
Speaker 3: Hi, hi, Tate, could you hear from you? Yes, yes. And that was under the assumption that the RATESCONG Forward would develop in line with the levels, the current levels of the FFA, which are around 32,000 for the remainder of the year.
The rates going forward, we will develop in line with the level. The current level. So we have to face which are around 32000 and for the remainder of the year.
Okay, great and on that point for the Q2 'twenty two TCE guidance is the level of 24569 based on if you converted at all to <unk>.
Speaker 6: Okay, great. And on that point for the 2222 TCE guidance is the level of 24,569 based on if you converted all to FFA's.
Speaker 3: today is that essentially what that is. No, this assumes first of all the existing conversions that we have, that we have, it assumes also the two vases that are running on fixed rates and it assumes that for the remaining ships for June , for days that have not been invoiced yet, they will average at around 32000
Is that essentially what that is.
No visa assumes first of all the existing collaborations that we have.
But we have it assumes also the two vessels that are running on fixed rates and it assumes that for the remaining ships for June .
Is that have not been invoiced, yet we would love it it is around.
The 32000.
Okay, great. Thank you.
Speaker 6: Thank you. And one more for me, please. Just can you review the, you mentioned a change in accounting in the, in the new convertible note accounting treatment and just specifically to diluted shares outstanding, the decrease from 205 million to 177 million. So with this new treatment, is that a, will that be a consistent level of diluted shares?
One more for me. Please just can you review the you mentioned the change in accounting and the new convertible note accounting treatment and just specifically the diluted shares outstanding decreased from $205 million to $177 million. So with this new treatment is data.
Will that be all assistant.
Diluted shares okay, because I was reading.
Speaker 3: The region of the Convertable has to do with the fact that part of the Convertable Note that was recorded under equity has moved under liabilities and that's why you would see
Thank you.
<unk> is one of the convert it all has to do with the fact that part of the convertible note that was recorded on the equity has moved under liabilities and Thats why you will see.
Speaker 3: slightly marginally higher liabilities on the convertible side and our equity, shareholder's equity, have been reduced marginally.
Slightly marginally higher liabilities on the convertible side.
Our equity shareholders equity.
Reduced marginally that basically we moved part of the convertible from the equity to the to the liability side now the fact that.
Speaker 3: part of the convertible from the equity to the liability side. Now the fact that the notes that are coming out of the convertible have not been included under the diluted number of shares is based on the account of the rule of the fact that
It notes that are coming out of the convertible have not been included in the diluted number of shares is based on the accounting rule on the fact that.
Based on the movement of the price of the shares vis vis have not been regarded as diluted bitumen, regardless they looted.
Speaker 2: based on the movement of the price of the shares, this have not been regarded as dilutive, then some have not been regarded as dilutive. Should the share price increase in on average be higher than the strike price of the convertible, then this will be included again in the calculation. Okay.
Should the share price increasing on average be higher than the strike price of the convertible then this will be included again in the calculation.
Okay great.
Great Alright, thank you very much.
Thank you.
Okay.
Speaker 1: Thank you for your question. We have the next question from Paul Fraud from Hollian's Global. Please go ahead.
Thank you for your question we have the next question from Paul <unk> from <unk> Global. Please go ahead.
Hi, good morning.
Speaker 7: Hi, good morning, my good morning, Stabros are actually afternoon for you guys. Can you talk about the second half of, you know, when you look at what's been fixed, you said that for the second half, you'd
Good morning, Starbucks Youre actually afternoon for you guys.
Can you talk about the second half of you know the when you look at whats been fixed you you said that.
The second half you have some.
Days fixed at 33 to 34000, a day can you just maybe put the other side of the equation and then and say how many of the second half days are fixed right now.
Speaker 7: days fixed at 33 to 34,000 a day. Can you just maybe put the other side of the equation on and say, you know, how many of the second half days are fixed right now? Yeah, well, basically.
Yeah, well basically we have fixed the four ships that is excluding the two that we already have on fixed time charter rates and that is a ranging between 28030 9000. So it's a big range, maybe you want to say on average around 34000 on these four ships that's how much.
Speaker 4: that is excluding the two that we already have on fixed time set of rates and that is arranging between 28,000 and 39,000.
Speaker 4: So it's a big range. If you want to say an average, around 34,000 on these four ships, that's pretty much it is. So these are the four ships we have converted from floating to fixed for the second half of the year, plus the other two that we're running on a fixed rate. We will continuously look into the market for opportunities to fix some more in the high 30s when this opportunity arises again.
So these are the four ships, we have converted from floating to fixed before the second half of the year plus the other two that are running on a fixed rate, we will continuously look going into the market for opportunities to pick some more in the high tech space when the cell opportunity arises again.
Okay.
And.
Speaker 7: And Stemades, I know the two respects with the Patriotship and the Worldship. Doesn't the Patriotship, I'm charter, expire at the end of this month?
The amount is I know that to expect what the Patriots and the world Chip.
Doesn't say Patriot chip.
I'm charter expire at the end of this month.
Well.
Speaker 4: Well, yes, it does, but we have an optional period. It doesn't mean this is the initial period of the ship. So we don't anticipate for that as it went prior to the end of the year. And in any case, we are in discussions with all of our partners for whatever is expanding throughout the year to renew at the same or better terms.
Yes, it does but we have adoption out period.
This is the initial period of the ship. So we don't anticipate a photo that the shipping dwang prior.
Prior to the end of the year and in any case, we are in discussions with all of our charters for whatever is expiring throughout the year to renew at the same or better terms. So like we have done very successfully on the fellowship, which were renewed for another two years with Anglo and we have improved it.
Speaker 4: So, like we have done very successfully on the fellowship, which we're in youth for another two years with Anglo, and we have improved its BCI rating by two and a half percent as a benefit. So we are working with our cutters to fix the ships that are being inspiring this year, and we anticipate to have better numbers on these renewals.
CRA rating by two 5%.
Other benefits. So we are working with our charters to fix the ships without being expiring this year.
And we anticipate to have a better.
The numbers are visiting yours.
Speaker 7: Okay, great. Thank you. And I want to thank you for adding at least the summary cash flow statement that's included in the press release. I really appreciate that.
Okay, great. Thank you.
And I wanted to thank you for adding at least the summary cash flow statement.
Included in the press release I really appreciate that.
Speaker 7: Can we just talk about your fleet profile right now and sort of what's driving you and going forward? There were some, I believe some broker reports out there that tie an acquisition to you. Can you just talk about what's going on with the F&P front?
Can we just talked about.
Fleet profile right now when it's sort of what the strategy is going forward.
There were some I believe some broker reports out there that.
Tidy and acquisition to you.
Could you just talk about what's going on with the S&P front.
Speaker 4: Well, the company will continue to have a balanced deployment of its capital. First and foremost, it's our shareholders awards like our convertible debt repurchase that we have executed since the beginning of the year are dividend payments. And if the opportunity comes across that we believe it's going to be a creative for shareholders without diluting our shareholders, we will be looking into a creative acquisition opportunity.
Well the company will continue to have a balanced deployment of it.
Capital.
First and foremost, it's our shareholder rewards like.
Our convertible.
Debt repurchases that we have executed since the beginning of the year, our dividend payment and if the opportunity comes across that we believe it's going to be accretive for our shareholders.
Without diluting our shareholders, we will be looking into accretive acquisition opportunities. So all three things are for us represent a balanced.
Speaker 4: So all three things are for us, represent the balanced capital deployment strategy. So we will continue on this plan. We cannot let's take on firm any room or right now. We will announce when and if there is a certain deal that is going to take place. But again, I'm just assured that we will continue our fully balanced capital deployment plan.
Our capital deployment strategy. So we will continue on this plot we cannot.
Let's say confirm any more right now we will announce when and if there is a certain deal that is going to take place, but again that is to assure that we will continue our fully balanced.
Capital deployment.
Speaker 7: Great, thank you. And then just on the converts, you have about 10 million of the converts. Mind-or-standing those either mature or you expect to retire those by the end of this year, is that a good, you know, is that a good working assumption?
Great. Thank you and then just on the converts you have about $10 million of the converts.
My understanding those either mature or you expect to retire those by the end of this year or is that a good is that.
A good working assumption.
Speaker 4: Probably we have not had any discussions with the holder of the notes. We might have to repayment by the end of the year, or we might extend their tenure for a little bit more. So depending on the customer, we will revisit the matter end of Q3, beginning of Q4. It's a bit premature to have this discussion now, but whatever the outcome is surely going to be beneficial for us.
Probably we have not had any discussions with the holder of the note we might have to repayment by the end of the year or we might extend their tenure for that a little bit more so dependent on the cash flow. We will revisit the matter end of Q3, beginning of Q4, it's a bit premature.
Having this discussion now, but whatever the outcome is surely going to be beneficial for our shareholders.
Okay, and then on the Opex side do you expect any change from the first quarter Opex looking out over the rest of the year.
Speaker 7: Okay, and then on the OpEx side, do you expect any change from the first quarter OpEx, you know, looking at over the rest of the year?
Well.
Speaker 4: Well, I think increases in op-ex, operating expenses are pretty dominant throughout all the reporting companies.
I think I think increases in Opex are.
Operating expenses are pretty dominant throughout.
Oh, the reporting companies there is always looked.
Speaker 4: The reason is multifaceted. One is...
Multifaceted one is because all these years of Covid, we have had a accumulation of a number of expenses that now are materializing.
Speaker 4: because all these years of COVID we have had a accumulation of a number of expenses that now are materializing.
Speaker 4: And basically we have the crew change costs that become more and more difficult, not just because of COVID, but because of the Ukrainian, the Russian invasion in Ukraine.
And basically we have a crew.
Change costs, so that become more and more difficult not just because of COVID-19, but because of the Ukrainian they're asking envisioning you Craig. So we have all these factors together our I believe it was going to be stable at these levels that we announced in Q1.
Speaker 4: So we have all these factors together. I believe that we're going to be stable at these levels that we announced in Q1. So there's not going to be a material increase. And we also had a lot of expenses associated with dry ducks and all the other stuff that we went through the last few months.
So theres not going to be a material increase.
And we also had a lot of expenses associated with our Drydocks and all the other stuff that we went through the last few months. So I would say that the guidance of Q1, I mean the levels of Q1.
Speaker 7: So I would say that the guidance of Q1, I mean the levels of Q1 are numbers that you can pretty much depend on. Great, thanks for your time.
Or is that you can pretty much dependent.
Great. Thanks for your time.
Thank you Dave nice to carefully.
Oh that was called.
Speaker 1: Sorry, sorry, sorry, sorry, nice hearing you, apologies. Thank you for your question. We have another question from Lionel Tate, Sullivan from Maxine Group. Please go ahead.
Oh, sorry, sorry, Paul Choi Netscape apologist.
Thank you for your question.
We have another question from the line of paid Sullivan from Maxim Group. Please go ahead.
Speaker 6: Hi, it's the month of following up on your comments on volley production. So it sounds like you've already seen them selling some of their production into the market post the first quarter. I mean, they do have to play catch up with their guidance. I mean, is that a meaningful risk? Let's say they fall short of their guidance and historically, how much of an impact on rates can that have, excluding an impact like a flooding event for a person.
Hi, it's about just following up on your comments on Vale production. So it sounds like you've already seen them selling some of their production into the market post the first quarter I mean, they do have to play catch up with our guidance.
Is that a meaningful risk, let's say they fall short of our guidance and historically, how much of a impact on rates and that half excluding that impact like a flooding event or so forth.
Speaker 4: Okay, so let's think of a worst case scenario. The worst case scenario is pretty much what we have been experiencing so far. The first five months of the year. So the market year-to-date has been in the region of our what? 17,000 dollars a day, 18,000 dollars a day. And that is with Vale really exporting its lowest volumes of the last five or more days.
Okay. So let's think of it worst case scenario is the worst case scenario is pretty much what we have been experiencing so far.
The first five months of the year. So the market year to date has been in the region of a little what 17000 Boes a day 18000 Boes a day and that is with wireless.
Really exporting its lowest volumes over the last five or more years. So that's the absolute worst case scenario that we see because coal trade is.
Speaker 4: So that's the absolute worst case scenario that we see because coal trade is pretty strong and we expect that to pick up a lot.
Strong and we expect I expect that to pick up a lot so assuming because that valet remains surface.
Speaker 4: So assuming that Valarimem is a piece
Speaker 4: super low levels and they miss the guidance by let's say 10% because this is what we're talking about now or 25% then that means that the market is going to have a floor at a current level
Super low levels and they missed their guidance by let's say, 70% because this is what we're talking about now are 25% then that means that the market is going to have a floor at the current levels.
Speaker 2: which in my opinion is a very, very unlikely scenario. If it starts to catch up, then the market only has upside from now whether that upside for the remaining of the year is gonna be 50 or 60,000 or it's gonna be 30,000 or even 25,000, we're very happy with all these scenarios. So, in any case, we're way above-the-civen and we're way profitable in the meantime.
Which in my opinion is very big.
If it starts to catch up in the market. The only has upside from now whether that upside for the remaining of the year, it's going to be $50 $60000 is gonna be 30000 are already.
Or even 25000, we're very happy with all this scenario. So you know in any case, we're way above breakeven and we're way profitable in any case.
Great. Thank you and then.
Speaker 6: Thank you. And then what a different topic on the cold trade. I mean, as your percentage of cargo increased meaningfully, meaningfully with cold versus iron ore and was at the beginning of the first quarter, I imagine.
Different topic on the coal trade.
As your percentage of cargo increased meaningfully meaningfully with with coal versus iron ore first quarter I imagine.
Speaker 2: Yes, yes, it has changed substantially. We see European imports of coal increase a lot from longer distances. As I mentioned previously in my script, Europe is importing 50 million tons of coal from Russia. And now this has started to be developed from much longer distance.
Yes, yes, it kind of thing substantially we see European imports of coal increased a lot from longer distances as I mentioned.
Previously in my in my script.
Europe is importing 50 million tons of coal.
From Russia, and now this historic there'll be no benefit for a much longer distances at the same time.
Speaker 4: At the same time, Eras is exporting.
Russia is exporting these.
Speaker 4: these lost cargos to further distances like China. So that's a self-tunnel al-Au.
Last category.
Federer dispensers like China. So that has helped a lot we are not seeing the full effect of that yet because the local inventories get them there.
Speaker 4: We are not seeing the full effect of that yet because there are a lot of inventories here and there in Europe . Not so much in India and in other places where they're dangerously low. But we expect that to accumulate and pick up in the next few months.
In Europe .
Not so much in India, and other places where they are dangerously low.
But we expect that to accumulate and pick up in the next few months. So we expect coal.
Speaker 2: So we expect cold as we turn into the second half of the year in order to procure for the winter of 22-23 to pick up a lot.
Turning to the second half of the year in order to procure for the winter of 'twenty two 'twenty three.
To pick up a lot.
Thank you Samantha.
Youre welcome. Thank you.
Thank you for the question.
No further question.
On back of the content in these times.
Well, thanks, very much for attending our call today.
Speaker 1: Well, thanks very much for attending our call today. Roberto, thank you for being a great operator. You may disconnect your lines. Thank you. Let's conclude the conference for today. Thank you for participating. You will hold this.
Q4, being a great operator, you may disconnect your lines. Thank you.
Conclude the conference for today. Thank you for participating you may hold disconnect.
Okay.
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