Q2 2022 EuroDry Ltd Earnings Call
[music].
Thank you for standing by ladies and gentlemen, and welcome to the Euro dry conference call on the second quarter 2022 financial results, we have with US today, Mr. Aristides, <unk>, Chairman and Chief Executive Officer, and Mr. Tacos athlete as Chief Financial Officer.
The company.
At this time all participants are in a listen only mode.
There will be a presentation followed by a question and 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 message advising your line is open.
I must advise you that this conference is being recorded today.
Please be reminded that the company announced its results with a press release that has been publicly distributed.
Before passing the floor to Mr. Peter I would like to remind everyone that in todays presentation and conference call. Your old drive will be making forward looking statements. These statements are within the meaning of the federal securities laws.
Matters 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.
I kindly draw your attention to slide 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 you go through the whole statement and read it.
And now I would like to pass the floor over to Mr. Peterson. Thank you Sir Please go ahead.
Hello, ladies and gentlemen, good morning.
Thank you for joining us for the schedule.
But in school.
With metastasis, Lindsay So chief financial Officer.
The purpose of today's call is to discuss our financial results for the six months period ended June 30 of <unk>.
Me too.
Please turn to slide three.
Income statement highlights assumed here.
For the second quarter of 2022, we reported total net revenues of 21 million and net income of $10 $6 million or 361.
Douglas.
Sure.
Adjusted net income attributable to common shareholders was $9 $9 million with three points $58 per diluted share.
Adjusted EBITDA for the period was $15 $7 million.
With positive earnings in the dry bulk market that is still anticipated to remain full for the second half of the year. We believe our stock should be trading at much higher levels, given the net asset value for the company as well.
We believe these factors COVID-19 captivating opportunities food and therefore, the company's board of directors approved the share repurchase program.
After a total of $10 million of the company's common stock to be used at management's discretion.
The Board will review the program after a period of 12 months.
Share repurchases will be made from time to time for gas in open market transactions at prevailing market prices all in privately negotiated transactions.
The timing and the amount of purchases under the program will be determined by management based upon market conditions and other factors.
The program does not require the company to purchase any specific number of an amount of shares and may be suspended or reinstated attending today at the company's discretion without notice.
Our CFO <unk> <unk> will go over our financial highlights in more detail later on in the presentation.
Please turn to slide four foot out operational highlights.
One of the vessels, we kept the range.
It was extended for a minimum period in February 2023 to a maximum period until April 22023 at 155% of the aggregates biopic comes to Mikes index.
While sister vessel the motor vessel extraneous.
He was also extended for a minimum period until March 1st 2024 to a maximum period until May 15th 2054 also losing 5% of the average but it comes with mixed index.
Motor vessel Iranian was fixed for three to the folks at least 20 to 30 days and $14000 per day and upon completion of the strip will undertake its scheduled dry dock.
Motor vessel bless lack of speaks for the people who are approximately 20 to 25 days as well as $15750 per day.
Completing its drydock for approximately 53 days during the second quarter.
Furthermore, motor vessel, Santa Cruz was fixed again for a small strip of about 15 to 25 days is delivered in the $5000 per day and motor vessel from the lease for $3 55 to 65 days at $13000 a day.
Our motor vessel Alexa in Davinci was faced with a peak of about 55% to 65 days at $28000. A day earlier in the quota, which was followed by a scheduled dry dock from well it's sale yesterday.
Vessel is no fixed will be preempted, we learn at a minimum of $15000 per day for 65 days.
Finally, multiple vessels dashes was fixed for about 80 to 100 days at $2600 per day and is also currently undergoing scheduled dry book.
Regarding commercial loss, Kyle motivation and deletion that lessons with speed variety for two two and three nine days respectively. During the quarter.
We're just waiting to commence the mixed employment due to complications that tables.
From the dealing with the Covid.
Issues.
We are very pleased to announce that we have completed our 2021 sustainability report, which is available on our website.
Our commitment towards all aspects of ESG is steadfast.
Please turn to slide five to review our current fleet.
Our current fleet consists of 11 vessels, including six Panamaxes two <unk> suite of Super amongst them to come to the mixes with the Netherlands Asia 13 in the five years and the carrying capacity of approximately 800000 deadweight tons.
Turning on to slide six to review the current vessel employment schedule as you can see fixed rate coverage for the remaining quarters of 2022 status around 31%.
This figure excludes the three seems to Olympic stuff. This wechat open to market fluctuations, but have secured employment.
Moving to slide seven we will go move with the market highlights for the quarter ended June 30 of <unk>.
Two and desert current status.
The market continues to be driven by a safety supply and demand balance which is reflected in the rates trending lower in recent weeks due to the ongoing geopolitical conflicts and volatility surrounding the COVID-19 economy.
This is high commodity prices and inflation.
I've seen here the average spot market rates for Panamaxes was approximately $55400 a day in the second quarter.
<unk> the price drifted low to about $21500 per day independently stands at around $17000 per day.
Similarly, the one year time charter rate for putting the mixes was about $26000 per day.
Hoping to $20250 per day by July 1st.
Currently stands at $16750 per day.
Despite the drop the PPI index today is still relatively strong, especially considering it comes against a fairly muted David no market, which has seen flat cargo volumes on the back of mortgage rates, a new steel production, enabling all of the month.
Please turn to slide may.
The global GDP growth forecast have been further reduced for 2022 by the IMF.
Its latest report as several additional events that hit the world economy already we completely pandemic.
The ongoing geopolitical conflict between Russia, and Ukraine added to existing inflationary pressures that has already started mounting due to economic stimuli provided during the pandemic with strict data financial policies, including a series of aggressive interest rate hikes in order for that asset.
With elevated energy prices, mainly due to the last show Canadian coal fleet and lingering supply chain issues as well as additional slowdowns in China due to regional COVID-19, Lockdowns and the bulk of the sector location. Let me further say it needs to go.
<unk> has lowered its global GDP estimate from three 6% in April to three 2%.
<unk>.
229% for 2012.
GDP growth for the United States was revised down to two 3% for 2022.
The one four percentage points lower from May forecast.
Due to lower growth in type of amendment 30 policies.
Similarly European growth has dropped to 6%, resulting from the last show getting conflicting data monetary policies.
Two major global Spillovers Colo space values regional issues, China as growth was revised down to three 3% for 2022 and one one percentage point difference from a principal focus.
Growth in the emerging markets and developing economies is also expected to sell.
<unk>.
Indias focused has been revised down seven 4% for 'twenty two.
And 61% for 2023.
The only country with better focus in this quarter it seems to be Brazil, with remainder dissipated to growth of one 7% in 2022.
8% previously due a robust recovery in Latin America.
From the developed economies, Japan, and the Asian five.
Also have been revised downwards.
<unk> 32 in 2033 due to concerns about slowing economies following the U S interest rate hike and ongoing inflation.
Looking at the dry bulk trade an equivalent clarksons adhesives demand growth is expected to decrease to just one 2% in 2022 compared to three 8% from the previous year.
For 2023, Drybulk trade is expected to grow by two 1%.
Raytheon growth projections are being continuously by as the effects of the geopolitical tensions between the vessel in Ukraine and move to growth in paid are being continuously assess.
Please turn to slide 10.
Lack of new building orders in recent years base, a favorable big Super the dry bulk sector.
The order book remains at just seven 2% of the existing fleet, which has mostly been unchanged over the past 18 months, despite the strongest in more than a decade.
<unk>.
Now please turn to slide 11 for the dry bulk fleet overview.
Clarksons expects new deliveries of about three 5% of the current fleet to be delivered in 2022 and three 2% in 2023.
A fleet growth of around two 4% in 2022 and below 1% in 2023 as the older look to fleet ratio remains at a record low and contracting is subdued.
Please turn to slide 12, where we summarize how we look in the Drybulk market.
Bulk of market remains firm with earning still above historical averages despite demand side concerns around the house show trade conflict and macroeconomic headwinds.
So we import congestion continues to provide major disrupt some upside with the softer market outlook is still positive in anticipation of the traditional second half market seasonality.
Beyond the overall risk to the global economy final demand in the bulk sector is likely to be impacted by a complex mix of upsides and downsides.
Increasing commodity prices inflation and interest of ace, putting a strain on businesses and consumers.
The shift in trading patterns and slowest speeding due to environmental concerns could decrease additive saving distances.
Congestion remains an issue and so far this year most seats have consistently been start for longer than in 2021.
This naturally asset in efficiency to the supply chain and the abuses effective supply, thereby tightening the supply demand balance in favor of a vote.
Right.
Demolition slowed significantly 51 is high freight rates and curves continue trading and we expect it to remain at about the same level throughout the year.
A huge capex in the Capesize sector have only materialize yet.
Ordering of new ships are 50, 50, 352004 deliveries are expected to be non existent due to lack of available slots in shipyards.
In addition, the lack of clarity for the fuel of the future remains an unknown something that makes placing a new risk.
It is secured.
On the other hand annualized normalization of trade routes and congestion easing will probably increase effective supply.
Overall, the direction of the market will be determined by the outcome of the world between the vessel Okay.
Efforts of the global economy to fight inflation with a light at least possible negative consequences of the vote.
Mr Slide 13.
The left side of the slide shows the evolution of one year time charter rates of Panamax dry bulk vessels since <unk>.
As of August 5th the one year time charter rate for Panamax ships with capacity of 75000 deadweight tons.
At $16750 per day greatly reduced.
Three months earlier, but still significantly higher than immediate levers.
On the other hand.
Side of the slide you can see the historical price raise for a 10 year old Panamax vessel.
The current price of around $36 5 million doses.
Over the past year dry bulk prices from casually billing casing exceeding the historical meet new and additive levels and approach to the highest levels of the decade.
It is considerably lower than the peaks of 2008.
Whilst we are overall quite bullish that in the medium term the dry bulk market remained strong and perhaps strengthened further.
Political problems that result.
The current vessel prices, we are reluctant to make further acquisitions.
We will be monitoring the market, though for any opportunities that may arise.
As our strong balance sheet provides us with plenty of firepower.
And with that let me now pass the floor over to our CFO .
Please go over the various financial highlights in more detail.
Thank you very much good morning from me as well, ladies and gentlemen.
Over the next five slides I will give you an overview of our financial highlights.
The second quarter and first half of 2022 in comparison to the same periods of last year.
With that let's turn to slide 15.
For the second quarter of 2022, the company reported total net revenues of $21 million.
Presenting a 48, 8% increase over total net revenues of $14 1 million during the second quarter of 2001 and that was the result on the one caveat there slightly higher time charter rates our vessels earned during the second quarter of this year compared to last year, but.
Mainly because of the increase in the average number of vessels will be owned and operated.
In the second quarter of 2022.
Compared to the same through the second quarter of last year.
It's worth noting with compared to the second quarter 2021, our fleet in the second quarter of this year is about 45% larger.
The company reported net income and net income attributable to common shareholders for the second quarter of this year of $10 6 million as compared to net income of $2 2 million and net income attributable to common shareholders of $1 95 million for the same period the second quarter.
2021.
Interest and other financing costs, including interest Peter and.
And loss on debt extinguishment for the second quarter of 2022 amounted to.
<unk> 8 million compared to <unk> 5 million for the same period of 2021.
Most including $1 7 million short term.
Englishman that we reported last year.
Interest expense for the second quarter of 2022 was higher mainly due to the increased amount of debt that we had during the period as compared to the same periods of last year.
The higher underlying LIBOR costs.
Adjusted EBITDA for the second quarter of 2022 was $13 7 million compared to $9 2 million achieved during the second quarter of 2021.
Basic and diluted earnings per share I think so.
Common shareholders for the second quarter of 2022.
$3 66, basic and $3 61 diluted calculated on about $2 9 million weighted average number of shares outstanding compared to 83 basic and <unk> 81 diluted calculated number.
Two 4 million weighted average number, especially our spending for the second quarter 2021.
Excluding the effect on the income attributable to common shareholders of the unrealized gain on derivatives.
The adjusted earnings attributable to common shareholders for the second quarter of this year would have been $3, 43% and $3 and 38% basic and diluted respectively.
For the second quarter of last year, excluding again, the unrealized loss in this case in derivatives.
The loss on debt extinguishment, the adjusted earnings attributable to common shareholders would have been $2 81 and two.
$2 76 basic and diluted respectively.
Usually security analysts do not include the above items in their published estimates of earnings per share.
Let us now look at the numbers for the corresponding six months periods ended June 30 for 2022 and 2021.
In the first half of this year the company reported total net revenues of $9 3 million.
Presenting a 73, 1% increase over total net revenues of $22 7 million during the first half of 'twenty three in Guam.
Was the result of both.
Hi, good time charter rates, our vessels term during the first half of this year.
The increased average number of vessels, we own and operate.
We reported net income and net income attributable to common shareholders for the first six months of $21 1 million as compared to net income of $3 1 million and net income attributable to common shareholders of $2 4 million for the first half of last year.
You gave us another financing of course included interest income for the first half of 2022 amounted to $1 4 million compared to $1 1 million for the same period of 2021, non inclusive again of the $1 7 million.
Charge on debt extinguishment, we suffer.
I'd just like to hear.
This increase is mainly due again to the increased amount of debt in the current period as compared to the same period of 2021 and the underlying LIBOR of cost increase.
Again.
The adjusted EBITDA for 2022 for the first half of 2022 was 20.
$26 4 million compared to $13 2 million achieved during the first half 2021.
Basic and diluted earnings per share.
Incredible to common shareholders for the first half of 2022 were $7 35.
Basic and $7 and 25% and 25 diluted.
Insulated on $2 9 million weighted average number of shares outstanding.
Back to 1.0, $3 basic and two one points year $1 diluted.
For the same period of last year calculated on $2 3 million and $2 4 million weighted average number of shares outstanding respectively.
Excluding the effect attributable com, including the effect on the earnings attributable to common shareholders for the first half of this year the unrealized gain on derivatives.
Adjusted earnings for the six months period.
<unk> been $6, 77% basic and $6 68.
Diluted.
Diluted.
For the six months period ended June 32021, again, excluding the unrealized loss on derivatives and the loss of debt extinguishment. The adjusted earnings attributable to common shareholders would have been $3.
<unk> 47, basic and $3 33 diluted.
Let's now turn to slide 16 to review our fleet performance.
As usual, we will start our review by looking first at our fleet utilization rate.
First for the second quarter of 2022 and 2021.
And we do all the time, our utilization rate is broken down to commercial and operational.
During the second quarter 2022, our commercial utilization rate was 99, 4%, while our fashion utilization rate was 99% compared to a 100% commercial.
Nine 4% of our fashionable.
For the second quarter of last year.
Our overall utilization rate was 98, 3% in the second quarter of 2022 compared to 99, 4% for the second quarter of last year.
On average.
Our owned and operated 10 79 vessels in the second quarter of this year and you can average time charter equivalent rate was $23490 per vessel per day.
They compared to seven point 37 vessels in the same period of 2021, and <unk> 2000 $2613 per day.
As I mentioned earlier, our average fleet during the second quarter of this year was up about 45% compared to the second quarter of 2021.
Our total operating expenses, including management fees general and administrative expenses.
The total.
Cost of Drydocking was 6562.
Going less per vessel per day in the second quarter of this year compared to $6467 per vessel per day for the.
The second quarter of 2021.
Moving farther down in this table, we can see the cash flow breakeven rate for the second quarter 2022, which also takes into account guidebook expenses interest expenses and loan repayments.
Preferred dividends to be paid in cash, it's only excludes any balloon payments.
Thus during the second quarter of 2020 to our daily cash flow breakeven rate was $11986 per vessel per day compared to $10313 per vessel per day for the same period of last year.
It is mainly due to the higher end loan repayments that we did during the second quarter of 2022.
Let's now go over our utilization rate in the remaining figures for the first half of this year in comparison to the first half.
Of 2021.
During the first half of.
Slide 22, our commercial utilization rate was 90 999, 7% operational utilization rate was 99, 3% compared to a 100% commercial and 99, 7% operational utilization rate for the same period of last year.
On Margaret's.
10 points of 18 vessels were owned and operated during.
During the first half of this year, adding an average time charter equivalent rate.
$24025 per vessel per day, compared to 719 vessels owned and operated in the safety.
Six months.
And on average 18008 tons and $79 per vessel per day.
Our total operating expenses again, including management fees G&A expenses.
<unk> cost were $6584 per vessel per day in the first half of this year compared to $6518 per vessels per day for the <unk>.
2021.
Looking at the bottom of this table, we can see again, the cash flow breakeven rate for the first half of 'twenty to 'twenty two we've spaced our problem answer drydocking expenses interest expense and loan repayments and preferred dividend.
Many of.
And were paid in cash.
In the first half of 2020 to our daily cash flow breakeven net income was $12693 per vessel per day compared to 10000 to $88.
Vessel per day for the same period of last year, there isn't again being that we get higher longer things this year.
Let's now move to slide 17.
The backlog for later.
As we noted in previous earnings presentations, we used this slide with the calculation to depend neighbors, our surf, 1% investor or SaaS earnings potential of our fleet in the current year.
Under the current environment.
So allows them also to make their own assumptions and assess the impact of them to offer for February .
As you can see here from the table.
Our contract cover.
Got it.
Fixed rate contracts.
About.
47% in the third.
For the third quarter of this year declining to about 13% in the fourth quarter of this year.
Our first laser here indicative you sold in the second part of the table, the Super Max and Panamax Baltic Borgwarner trades as of August 1st.
We've seen fixed level get translated to offer an exchange to an average blended rate for our ships.
Based on these assumptions and assumptions for Opex, and G&A cost and assuming a 5% commission rate one can estimate.
EBITDA contribution.
The vessel based upon our fleet yet to be fixed.
The user of his calculator as I mentioned earlier can make his or her own assumptions about the average earnings with our open days might earn during the third to fourth quarter and assess our EBITDA for the remaining quarters and full year 2022.
Let's now move to slide 18 to review our debt profile.
As of June 32022, we take an outstanding bank debt of about 78 million.
Looking at the chart, we can see that our debt repayments over the next three years range between 10 million and about $14 million.
They are here and then drop to $2 8 million and $3 6 million.
<unk> 25 in three phases.
Our next balloon payment is towards the end of 2023 or balloon of about $11 3 million or around the power comes from our questions.
We expect to be able to refinance these payment if we do so as we can.
We have done in similar situations in the past.
A quick note here.
The cost of our debt.
The average margin of our debt is about two 7%.
Assuming in LIBOR of about two 8% before Covid, we can estimate the total cost of our senior debt.
At the end of the second quarter to be about.
Five 7%.
At the bottom of this slide you can also see the projected cash flow breakeven rate for the next 12 months broken down into its components.
We can see here that our expected cash flow breakeven for the next 12 months is about $13100 per vessel per day.
Let's now move to slide 19, we can see some highlights from our balance sheet and a simplified way.
This slide shows a snapshot of our assets and our <unk>.
<unk>.
Our office assets conceit.
Of our cash and other short term market and of course, if our vessels.
30 of 2022.
Net cash and other assets of our balance sheet I'm seeing here.
And the book value of our vessels was approximately $160 million.
In total book value of assets of about 10% and $7 7 million.
On the liability side.
Our debt as of June 30, as I mentioned was about $71 8 million, representing about 45% of the book value for our assets.
Other liabilities amounted to $2 9 million or about one 6% of our total assets.
The resulting in sacral this equity of about the funding and $2 5 million translating to approximately $30.
Of net book value per share.
However, based on our own estimation of market transactions.
At the end of June the market Viropharma vessels was around $235 million to $536 million or about 48% higher than their respective book value.
Desking and a deeper set in excess of $59 per share.
With our share price recently trading.
<unk>.
Close yesterday, just below $18 per se.
He has to be a sizable gap to our navy.
Testing significant appreciation potential.
Shareholders and investors.
And with that I'd like to turn the floor back to address disease to continue the call.
Thank you May I now open up the floor for any questions that you may have.
Thank you if you'd like to ask a question. Please signal by pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment again press star one to ask a question.
I'll pause briefly to allow everyone to signal for questions.
And we do take our first question from Tate Sullivan of Maxim Group. Please go ahead.
Hi, Thank you good day.
Some of our repurchase plan how did you decide on the site.
You'll find the repurchase plan of $10 million, but theyre looking at what you recently generated free cash flow every quarter.
Start there please.
Okay.
I think we won't we mostly and decided.
On the size and looking at our current liquidity.
One thing to put in a new shoe size or need to we will see how things develop and we can and Italian make it bigger if we want a smaller or whatever we told them. It was just a reasonable amount to start with a property or to the size of the company as well.
Okay.
Then.
Was this can you sort of view is that.
In your history with public shipping companies and shipping sectors I mean is that.
First Street purchase plan in 15 years for your car ever can you just review the repurchase history.
Thanks, Rick.
Okay.
Yes, we had never done that in the past.
But looking at how low our share prices.
Felt compelled to do something to help.
So both the price.
And may.
Good day Philadelphia shareholders.
At this time to buy a new vessel.
Is quite expensive as asset prices.
Extremely high compared to where we havent trading so it makes more sense to buy back stock rather than to buy a new vessel.
ACTH, 70%.
5% of <unk> exactly because of that.
And that was related to that is related to one of my other question you've mentioned reluctant to make more acquisitions in this environment. Even though you are positive for the medium term is that mainly because asset prices are still high.
Yes.
Are still high and we've seen that correction decided today, so we think that.
Is this seasonal lull.
But things are definitely uncertain and at least prices are we don't want to be making a new investment, but that 13% of the price, which is with our stock price is trading it becomes interesting.
Great and then can you just the refinancing Tassos you mentioned that the uptake.
I mean can you just.
<unk> is due this year and when do you usually wait till three months when it matures and what is the maturity on that facility and will it probably be at a higher interest rate or maybe even a lower astellas stood at five years ago or so.
I think this year, we have not proceeded maturing the balloon I mentioned goes over for one of our refresh our Max vessels I think at the Heaney the vessel.
So at least in alone was a five year loan is it.
Expires immature scene.
Fourth quarter I believe.
23.
We believe we can refinance the balloon.
<unk> routinely.
As we did in the past. In addition, we have two vessels currently.
The unencumbered.
So we have the option to lever those vessels as well.
Thank you. Thank you.
Yes.
Next we move on to the line of <unk> with Alliance Global Partners. Please go ahead.
Yes, good morning, good morning Tassos.
Good mood seems like on the stock buyback program.
Quick question on it how quickly can you become active on program.
And we cannot give as soon as we want but we are set up and we can be we can.
I think over the next couple of days, we'll be ready to use.
Okay.
And then.
Looking at the.
It looks like an increase necessary.
Over the second quarter, and then you know what.
Looking at cash flow statement. It looks like you might have issued a little bit of equity under our ATM.
The average price that I calculate with a little bit over 40 Bucks.
Probably done in late April can you just confirm those numbers or just give me an idea of what happened under the ATM in the second quarter.
Yes.
Those are quite right we have used already.
P M.
Early in the second quarter when our share price was above 40 saw in Easter we saw the news the stock.
Reflected in the in the country and the increased share count for this quarter.
At Cigna.
Significantly higher price than where the stock trades today.
Much closer to AAV.
That time I think he was very low if any.
Yep understood and then.
The.
EQECAT and Randy as you know as you mentioned is April of 'twenty three it looks like.
Outstanding balance I think its what $12 million or kind of be about 12 million at that point in time.
Would you.
No.
Look at doing a more comprehensive refinancing an encumbering. The two other vessels or can you just sort of talk about your a little more.
On finite term sort of what your refinancing plan is at that point in time because after the.
E <unk>.
Looking at what I have here the next.
Trying to that would be the blackbird lock in April 24.
And everything else would be termed out into it.
Pretty much 26 or 27 or beyond.
I think we're going to wait.
Decide whether to extend or in refining balloon as we approach.
The time it gives you I think.
It is.
We're looking to potentially put some debt on some of our unencumbered vessels again by trying to find competitive.
Priced competitively priced debt assembly to carefully Peter.
Higher war Chesting occasion opportunity appears.
And we need more immediate liquidity.
We cannot without waiting for a bank to provide the long term. So we are.
[laughter] pretty flexible in our financing plans, we are looking to increase our cash balance a bit but we're not in a hurry to do it.
B here.
All encompassing refinancing at this stage.
Okay.
Apologize.
I would probably not paying as much attention to that when you talked about operating expenses.
Other companies in the Drybulk sector had higher operating costs, whether it's travel expenses of your crude changes or.
Other things can you talk about your Opex, a little bit more looking at the next 12 months.
I think we expect to see we've seen some as you can see in our numbers a little bit of an increase but not a dramatic increase in our operating expenses I think compared to our 2022 budgets. We are I believe an iPhone bucket, maybe slightly below budget.
We've seen a little bit higher crude costs and higher travel costs as you correctly pointed out new brief answer it'd be higher because.
The cost of the.
The oil and related products is higher but I don't think we've seen any dramatic shift on our cost structure at this point I mean, the marginal increases amounting to roughly two up to 5% at least budget wise come back to the <unk>.
So as of last year.
Okay, Great and you highlighted the three dry dockings. This quarter can you just talk about ended the fourth quarter Drydock activity.
Maybe lay out plans for 2023.
I think we don't have anything for Q4 this year.
But and there's not too much.
Next year.
It's very seldom that we have with call. It three dry docks today with <unk>.
10 ships, one would anticipate that to have one dry dock, a quota or not but it is so this is going to be a favorite quote on.
On dry docks.
By coincidence it not so much by planning, it's linked with the period, where south of eight five would be reduced so the impact is not that significant so it kind of helps us that we're doing the dry it looks right now that we've seen the reduction in the charter rates as we can.
We believe that in Q4, it would be better than it will be good to have.
The newly Drydocks pasta vessels out of the Drydock in 2023, we have I believe.
About three or four drydocks or it might be that might be within the year. The next one expand Dennis I believe.
First of all the first point is for 2021 'twenty three 'twenty, maybe first go to the page.
As I say normally it's about one dry look a quarter give or take yes.
Okay, great Yeah, that's still about mining I guess.
Brand access.
Well, we're opportunity cost.
Eric Thank you touch us.
Thank you Paul and thanks for the question.
Again, ladies and gentlemen, if you do have a question or comment. Please signal at this time by pressing star one on your telephone keypad and we return to the line of Tate Sullivan with Maxim group for additional follow up.
Alright, Thank you taking the follow up.
And Kelly is going to dry dock in <unk> 'twenty three and then also you mentioned some repositioning days for the ship in the second quarter and I think some other dry bulk companies in other shipping company than other sectors.
And repositioning is this is this due mostly to the congestion that's still taking place.
It's in China.
Can you tell us.
Sure.
The condition, but also more importantly, due to the COVID-19 related issues because of the various sports in order to be able to go to the board.
You know take on new <unk>.
That stuff you have to wait to buy us a COVID-19 test and all of that and all of that stuff. So the delays are mainly due to the COVID-19 related issues of the congestion.
And then you mentioned in the market commentary on the congestion consideration.
<unk> eases in China is that mainly the positive supply side dynamic that can offset that in the medium term.
Congestion easing will mean more of a supply of shoes, so its not a positive.
The congestion easing.
Right, but in terms of no additional limited number of Newbuild that generic like are there other offsets to the congestion easing, perhaps sir exactly exactly very limited very limited.
All of the ring.
Delivery is doing in the next couple of years, plus we will see some further slow steaming.
Especially as of next year.
New regulations. So these are these are positive of course.
Great.
Thank you.
Okay.
Thanks, Dave.
At this time there are no further signals will return to Mr. Peterson for closing remarks.
Thank you all for.
Listening to us today.
We will be with you again.
And with the next quarters results.
Enjoy the rest of the summer goodbye, everybody and goodbye.
Thank you. This concludes today's teleconference. We thank you for your participation you may disconnect. Your lines at this time have a great day.
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