EuroDry Ltd. Q1 2023 Earnings Call
[music].
Thank you for standing by ladies and gentlemen, and welcome to the Euro dry conference call on the first quarter 2023 financial results, we have with US today, Mr. Aristides Peter.
Armen and cheap.
That Kid of officer and Mr. Tao Li Chief Financial Officer of 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 your name to be announced I must advise you that this conference is being recorded today. Please go ahead.
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. You've already tried we'll 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.
We draw your attention to slide number two of the webcast presentation, which has the full forward looking statement and the same statement was also included in the press release.
Please take a moment to go through the whole statement and read it.
And now I would like to.
And now I would like to pass the floor to Mr. Peter. Please go ahead Sir.
Good morning, ladies and gentlemen, and thank you all for joining us today for our scheduled concludes call together with me is Mr process, just leadership Chief Financial Officer.
The purpose of today's call is to discuss the financial results for the three months period ended March 31st 2020, Please turn to slide three of the presentation of our financial.
Financial highlights are presented here.
For the first quarter of 2023, we reported total net revenues of $11 $3 million and the net loss of $1 $5 million or 65 cents loss per basic and diluted shares.
Adjusted net income attributable to common shareholders was $44 million well call it deep sense.
The basic and diluted share respectively.
The main difference to our net income was the unrealized portion of the change of value will now deliver korlym coverage.
Adjusted EBITDA for the period was $2 $4 million.
Conciliation of adjusted net income attributable to common shareholders and adjusted EBITDA is presented in the press release.
As of May 15, 2020, we said.
Defense was 188731 says about Goldman spoke in the open market.
Around 7%.
Spoke with about $3 million.
And then on Saturday purchase plan of up to $10 million announced enormous discipline.
We will continue to execute the share repurchase, but I'll give him a tremendous wounds.
Yeah.
That's just going to go live on financial highlights in more detail makes it only in the presentation.
Please turn to slide four foot out of operational highlights.
On the chartering side with new tractors with Nathan's last vessels the majority of the CTO of employment.
Those two.
Two vessels less luck unveiling at peak with fixed for period of six to nine months.
You'll see the specifics of the various charters with fixed can be a company presentation.
I remind you that two of our vessels.
For a minimum of 13 to 24 months, respectively or index linked charters Huntington five 5% over the algorithms come so amongst survey.
Additionally, at the end of the first three once the market started to recover we sold the 90 days or with a fake one pitch, we brilinta one panamax vessel in the second and widening go through 'twenty could be at 65000 downloads and 16250.
Joining us for the day.
In March we also sold another 90 day at $17700 per day and $17500 per day for Q2 for the corresponding book was up Q2 and Q3.
Thus, we practically covered another tool one of the best.
Sue.
It is a full dimensions right.
Regarding dry dips into the motor vessel Santa Cruz, you'll note that this is victor Iranian but when dry bulk.
The formula for almost 24 days and the laggard for 17 days.
Please note that most of the listeners boot crowd is undergoing minded advancing Smith certainly in Texas and it's currently expected to leave by the end of the week.
Please turn to slide five.
The company has a fleet of 10 vessels.
Including price Panamax too much to come from the two months, but I mentioned dry bulk diabetes with a total carrying capacity of 750000 deadweight tons of folks with me and then that looking at the age of approximately 51 to five years.
Moving on to slide six provides a graphical updates on our fleet employment.
As you can see fixed rate coverage for 2023 stands at around 46%. If we include both interface and fixed justice.
This figure excludes ships with music style business, which are open to market fluctuations, but have secured employment.
So let me go to slide seven we go over the market highlights for the quarter ended March 31st 2020 to be up and been less crazy.
Yeah, I wouldn't speculate for Panamax is Keith kicked off the first school students intrinsic real no no no.
$10200, a day, having such a low of $6200 a day in mid February .
By March 31st the sportsman Ace had increased to approximately $13000 per day.
Yeah.
Time charter rates for Panamax is was about $14000 per day during the quarter, increasing to 6000 and $16000 they'd buy much to close.
Currently standing at $14675 per day.
Consequently, both with BPI and <unk>.
After a rocky start hitting their lowest levels by mid February but because of the machines.
In early March the dry bulk market look upbeat driven by exciting news video opening ongoing demand for valuable more limited supply growth.
However, during the last two months, we have seen the market to lose steam but rates continue to fall comfortably in five figure at profitable levels.
Please now turn to slide nine.
And the latest update in May 2023, the IMF slightly lowered its global GDP growth estimate to two 8% for this year before settling to 3% in 2024.
Due to the effects of high inflation tight monetary policy slow economic activity as well as as well as the ongoing war between the household with Covid and growing geopolitical tensions.
However, the U S.
You seem quite resilient despite the recent economic shocks.
I didn't mean the financial sector.
Also quite noticeably China seems to be on track to achieve an estimated growth rate of five 2% for this year.
Followed by a moderate.
Gross a form of hospice sensitivities before.
Growth in the emerging and developing countries is expected to be quite can be low loan book.
In 2023 and 2024.
And then low living growth projections more than previously expected.
India is poised to grow by 549% in 2023, and six 3% in 2020 school, which is below its trend.
But I suppose economic growth on the other hand was revised higher for 2023, 7%.
FIFA sales, giving them the last I am Miss.
However, the launch of the mouse Luke Wilson from two 1% to one 3% compared to 54.
Despite the slightly slower global growth expectations. According to the latest Clarksons estimates Drybulk trade demand is expected to return to steady growth of 2.5%, both this year and into <unk>.
He couldn't before.
Please turn to slide 10.
The open books.
Good news too few and positive market sentiment.
The maintenance the lowest historical levels.
The order book as a percentage of total fleet as of May 2020 to be stance, just below 7% at $6 88 per cent.
So this minimal fleet growth over the next two to three years.
Likely leading to higher rates in 2020 to be is the rate increases even if the just historically advocates neighborhoods.
Additionally, environmental regulations could further influenced supply growth is driven by forcing some vessels to retire or reducing their operational speed.
Turning to slide 11, let's now look into supply fundamentals and the bit more these days.
According to Clarksons latest people new deliveries as a percentage of total fleet and expected to be $3, 9% I looked at the start of the year in 'twenty.
<unk>.
Putting 7% in 2024, and one 2% in 2025.
The actual fleet growth is of course expected to be lower than the afore mentioned figures due to scrapping and slippage.
80% of the fleet.
<unk> hundred 20 years, one of the candidates for scrapping, especially if the market will not be sold.
Please turn to slide 12, where we summarize our outlook on the dry bulk market.
The dry bulk market was under significant pressure in the beginning of the year as a whole of the fed.
OLED, mostly to the traditional seasonality before the Chinese new year.
As of mid February and always did say immediately opening post COVID-19, we have seen a significant rebound, especially in the smaller sizes up to come soon.
I will illustrate a and H food stood at $8 $5000 per day. It goes in January and February 2023.
Before picking up in the mid March to $13900 per day, the highest level since December .
During this time, we were fortunate enough to have eight of our vessels employed on short term charters and were therefore able to employ these vessels with higher rates.
Even the two vessels under index linked charters at open to market conditions, and we were able to benefit from distribution into market.
One of the things could change.
Over the past few months, we have observed lower age in the absence of high congestion and slower than expected economic growth with continued weakness in mainland China ASEAN misstate sector.
We continue to believe in the improvement in banking revenues through 2020 to be as the market moves fast these typical seasonal weak foot sculptor.
Of course, the market heavily dependent on the recovery of China's real estate sector and the ease of global macroeconomic headwinds.
The other hand, the newly introduced emission regulations, the exciting <unk> yeah yeah.
Currently have a positive contribution to the Mississippian slow steaming they will and huge.
Also on the supply side, the persistent up the building of new ships could create the supply comes in the next few years.
So in terms of available slots currently and should begin in 2026.
Been a lack of clarity for the fuel of the future.
Consequently, due to the conflicting forces at play today and certainty remains of the tightening of the scale of the pension market improvements. Although it can be argued that the fundamentals are encouraging.
Finally, let's turn to slide 15.
Chart shows the evolution of one year time charter rates of Panamax dry bulk vessels since 2002.
As of May 12, 2023, the one year time charter rate for Panamax ships with the capacity of $75000 deadweight tons stood at $14375 per day, which is very close to the historical median.
The right chart, you can see the historical price range for a 10 year old Panamax vessel, which has a carbon price of about $75 million.
This is lower than the highest price levels seen in the last 12, and 20 plus years, respectively, but higher than historical level or its a medium prices.
So eloquently current vessel prices are not justified by carbon chocolate beach.
The medium to longer term, if the prices will need to fall well short of age to increase.
We believe that's.
Due to the fundamentals of this guide and the referral of global inflation, most probably charter rates will eventually have to rise.
We are closely monitoring the situation to decide when to invest in further acquisitions as during the last couple of years, we have deleveraged the company and build significantly.
In the meantime, we will continue on our course, a stock repurchase program, which will consist of an excellent investment because we are trading at around 35% of our market investment then movie.
Let me now pass the floor over to our CFO that will suddenly this go over badger's financial highlights in more detail.
<unk> the floor is yours.
Very good.
For me as well, ladies and gentlemen.
We used the next four slides.
In order for our financial highlights for the first quarter 15 to 20 feet.
Favorable results to the same period last year.
Let's turn to slide 15.
Well the first quarter of 2020 kidney compound we reported total net to add any coughing 11 $34 million.
<unk>.
Well the total limit their initial phases.
<unk> achieved during the first quarter of last year.
Basketball, Venezuela, and lower time charter rates of our vessels.
In the first quarter this year.
Which was partly offset by the increased number of vessels.
Not related.
We won't get sharper Avenue, recognizing with respect pro forma for our vessels.
The company reported net loss for the period.
One four.
<unk> 1 million.
To a net income of $10.
<unk> for the same theater complaint in 'twenty two.
In another.
Another financing cost for the first quarter of 2023 increased to one 7 million as compared to <unk> 65 media for the same period of last year.
At the same time goal, we hit during the first quarter of this year interest income of about <unk>.
<unk> you Michelle.
Close to very meaningful interest income for the same periods of 2022.
Adjusted EBITDA for the first quarter of this year.
$36 million as compared to $12 7 million.
During the first quarter.
'twenty two.
Basic and diluted loss per share for the first quarter of clinical efficacy.
55, <unk> calculated when about $2 8 million basic and diluted weighted average number of shares outstanding.
Compared to basic and diluted earnings per share of $3 69, and $3 64 borrowers.
<unk> for the first quarter of 2020.
<unk> calculated approach to <unk> and $2 9 million.
Worried about both the number of shares outstanding.
Excluding the effect on EBITDA range for the quarter.
Hey, guys.
Washington, any mortgage REIT.
Adjusted earnings for the quarter ended March 31st 2020, which has been <unk>.
Basic and diluted.
<unk> adjusted earnings of $3 34.
$2 four <unk> percent per share basic and diluted respectively.
Same quarter last year.
Typically the security analyst not include verbal Barclays.
Sure.
Their published estimates of earnings per share.
Let's now turn to slide 16.
You our fleet performance.
Firepower view by looking at art fairs coupon utilization rate.
We expect the first quarter of leasing last year.
It's always our utilization our fleet utilization rate is broken down to commercial operation.
During the first quarter of 2023, our commercial utilization rate was 99, 8% operational utilization rate was 90, 799, 7% compared to 100% commercial and 99, 6% operational.
For the first quarter 2020.
Navios <unk>.
Vessels were owned and operated during the first quarter of 2023 and longer expand carefully who's there Andre.
Don't see travel were $74 per day compared to $9 54 vessels owned.
Owned and operated during the first quarter of last year from August 24, borrowers UMC chairman of FERC to ship tons per day.
Our total daily operating expenses.
Management fees G&A expenses.
The Delta.
Of course, our bench $6956 per vessel per day during the first quarter of <unk> compared to 6000 to seven and $10 per vessel per day for the.
The first quarter of last year.
New fiber borrowings table, we can see the cash flow breakeven rate.
During the first quarter this year, which takes into a problem. In addition to gamble Drydocking expenses.
Direct expenses and loan repayments.
For the first quarter of 'twenty and between our sulfur.
Daily personal breakeven rate will stay tuned.
Following one finally made the $6 per vessel per day as compared to $4815 per vessel per day for the first quarter velocity.
Let's move now to slide 17.
Our debt profile.
So March 31st 2023, we had outstanding bank debt of about 67 in the year.
Looking at the chart on the top part of the slide we can see the power of <unk> payments, excluding balloon repayments over the next year or between $11 million.
And then growth to between five and $6 million.
Five in 2026.
So march 31st to entertain BC on fixed term debt repayments, including balloon repayments over the next 12 months.
Amounted to about $8 5 million.
Hey, good luck here above the cost of our debt.
Average margin of our debt is about.
68% and procurement LIBOR Haynesville filed form Centrify.
On the top of that.
During the course of the portion of our debt covenants by our interest rate swap contracts.
We estimate.
Total cost of our senior debt and saw him in a rush for them to.
BRL seven point.
7%.
And the bottom August eight we can see and projected cash flow breakeven rate for the next 12 months broken down into its various components.
On the corporate basis, we can see that we expect to catch your cash flow breakeven rate of around $12495 per vessel per day.
The same Jonathan you can also see our EBITDA breakeven rate.
Okay.
Which includes operating expenses G&A expense in diagnosing course, which estimated to be around several phone right.
Dollars per vessel per day.
It's Martin.
The next slide to conclude our presentation moving to slide 18.
We can see some highlights from our borrowing from our balance sheet simplified way.
These slides also is the snapshot of our off system might be.
Actual march 31st transparency, perhaps another assets EBITDA.
About 74 coordinating.
Volume foreign vessels was approximately $846 five new resulting total book value of our assets.
One program as one thing.
I think the slide.
Our debt as of March 31st Tim. Thank you finish I mentioned was about 67 $66 nine.
When I think about 7% of the book value for us.
We kept other liabilities.
<unk>.
<unk>, we're just below 2% of the book value of our assets.
Hum.
Shareholders' equity of about $111 7 million, which translates to a book value per share.
First in line brands and Cheekbones, however, based on our own estimates.
And market contraction, we estimated the market environment for our vessels.
Global book value maximum stood around seven to 9 million thus, suggesting.
It may hit ourselves to be Nexus for $50.
Sure parking spaces are $15.
Yes.
The significant discount to our Navy.
Testing with our ships are still offers a significant appreciation potential amount of potential for us.
Her focus on investors.
Therefore, I would like to turn the floor back to activities to continue with the call.
Thank you, Tom and let US now open up the floor for any questions you may have.
Thank you well now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Press Star two if he'd like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the star one moment, please while I call for questions.
Thank you. Our first question is from Tate Sullivan with Maxim Group. Please proceed with your question.
Hello, Thank you good day.
Starting on your comments.
Slower than expected economic growth in China in the real estate.
Market really not picking up what could be catalysts for the drybulk market in the near term in terms of data points from China that we might see here or do you think it just might settle around the crime rates.
Going forward please.
Yeah, Thanks, Hi, Hello, I think COVID-19.
There are two aspects one is China, which is a as we all know the most significant.
Dry bulk a scheme you lose that one can have and.
And especially its idle no requirements, which of course drives.
Namely the capesize sector, but.
Also the smaller sizes to an extent.
So what happens with the real estate sector of China.
The growth is real.
Among the importance here.
So this is the one thing, but China is not alone in this world the leases.
Our globe has mainly mainly constituents and what is happening in the rest of the world is also extremely important so global growth generally and sign the especially the two things to watch.
Can you provide you commented on the Newbuild market and hesitant great place Newbuild orders is arent shifts the limited number of new builds coming out dry bulks, new builds coming out of the yards do they already have contracts do you see any opportunities to purchase ships currently under construction or would you.
And the new builds.
I think there's very few ships are coming out of.
The shipyards are at this point.
<unk> doesn't have a.
Fixed charge. This this is a very few that are been with capacity to run on LNG or net new logos, which I'm, making the headlines and which are done in combination with choices, but the big big majority of distribution, but being built.
Coming out without Charleston, and the owners will have to face the market.
Of course, they are very economical ships. So they should have an advantage over as those vessels.
But.
We will see.
I don't see currently any did you live there.
We are looking at we are generally looking at the market and when they could.
Decisions, probably within the summer period.
And then I.
Hey, guys. If I missed the comment on the repurchase plan and possibly can you remind me when the current plan expires.
And I believe you still have.
About $7 million of capacity remaining under the plan.
Correct.
I think we approved.
Okay.
Late last year, and so we can't really before I think a good two quarters now so we cannot be for another two quarters before our board usually decline okay.
11, we believed it was appropriate for that one.
Sure.
It means kind of capacity you should be more than what we give you.
We spent $10 million you were taken care of seven 1 million.
Hum.
Okay. Thank.
Thank you thank you Bob.
Thanks, Dave.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
I presume there are no more.
Since.
Yes.
Yes, there are no more questions at this time I'd like to hand, the floor back over to Mr. <unk> for any closing comments.
Well, thank you very much for standing by for the conference call today.
We will be back to you in the quarters starting to discuss the latest developments.
Thank you everybody.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.