Q2 2023 Euroseas Ltd Earnings Call
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Thank you for joining this morning's teleconference, you call will begin shortly.
You you for joining us today and your conference will be beginning shortly.
Yeah.
[music].
Yeah.
Thank you for standing by ladies and gentlemen, and welcome to the Euro six conference call on the second quarter 2023 financial results.
We have with US Mr. Aristides, Peters, Chairman and Chief Executive Officer, and Mr. Tassos, I, Swedish Chief Financial Officer of the company.
At this time, all participants are in listen only mode.
There'll 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 be reminded that the company announced their results with a press release that has been publicly this publicly distributed.
Before passing the Florida, Mr. Peter I would like to remind everyone that in todays presentation and conference call Euro six 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 and involve risks and uncertainties that may result in such expectations not being realized.
I kindly draw your attention to slide number two of the webcast presentation, which has the full forward looking statement.
And the same statement was also included in the press release.
Please take a moment to go through the whole statement and read it.
And now I would like to pass the floor to Mr. Peter <unk>. Please go ahead Sir.
Okay.
Good morning, ladies and gentlemen, and thank you all for joining us today for our scheduled cultured in school.
Together with me statutes first levy.
Steve Finance law suit.
The purpose of today's call is to discuss our financial results for the six months be abused and of course that ended June 30th 2023.
Let's turn to slide three of the presentation to go a little bit of income statement highlights.
We are very pleased with our results for the second of course, that's Crazy 20 City, which are one of the best results. We have ever had since you've just seen and became a container focused public company in 2018.
So the second quarter of 2023, we reported total net revenues.
$47.7 million and the net income was 28 $9 million or for the total lives and 15 cents per diluted share.
Adjusted net income was $29 million.
O $4.17 per diluted share.
Adjusted EBITDA for the quarter was $36 million.
Please refer to the press at least for the conciliation between the adjusted net loss and adjusted EBITDA.
Yeah.
As part of the company's common stock dividend plan, our board of directors declared a quarterly dividend of 50 cents per common share for the second go to 'twenty to 'twenty three we should it be payable on or about September 16 to the stakeholders of the bank of the September nice. Thank you.
Pete.
The annualized dividend yield based on the current share price is above 90%.
This is the sixth consecutive quarters over the company paying meaningful dividends.
We remain committed to continue to pay significant dividends to shareholders.
Yeah.
The original said, it's been just a little bit of a 20 million lives approved by the board in May 2022 has been extended for another year.
As of August nine.
Both just funds within the 96000 of our common stock in the open market for a total of about $8 $1 million.
This represents close to 6% of a subtle shifts.
That's so she'll go over the financial highlights in more detail later that I'll need to presentation.
I'm also pleased to announce also.
Third the annual sustainability report, which covers a 2022 environmental social and governance focus.
In achieving our sustainability goals, our commitment to responsible business practices and their associated with them.
New in this new in this year's report is out of materiality metrics, which includes input from all our stakeholders.
The report is based as usual on the sustainability accounting standards Board standards.
<unk> B.
But additionally, we can ideally you have been conceded such as the global reporting initiative G III and the NASDAQ <unk> gz, posting guidelines last the United Nations Sustainable development.
The ESG report is available under the quota for the sustainability section of the company's website.
Yeah.
Please turn to slide four where I will discuss our recent acquisitions jobs putting into operational developments.
As previously announced in July 620 tends to be the company took delivery of a second new building vessels most of the vessels that keep our nickel 2850, you feed the container ships from the C&I meet with don't kill it in South Korea.
The vessel is E D I phase III complying and equipped with the tier three engine into other sustainability linked features including installation debate M D.
Could you maybe talk about it.
The acquisition was financed with a combination of own funds and the sustainability linked loan provided by the National Bank of Greece.
Well, let me just leave it he motto vessel commenced the 36 to 40 months starting with the Seattle lies at the gross rate of $48000 a day.
Continuing on to chart the Sun the conflict for motor vessel.
It was extended for a period of six to eight months on the daily rate of $15900 per day.
We also reached a mutual agreement we've seen definitely the cartoon softer for most of the vessels that ended up being the Madden will be while concurrently fixing the vessels the new charters for periods of 20 to 24 months at $21000 per vessel per day.
These new chapters I'd expect it to compete contribute $2 million to $4 million in extra venues over the same period.
During the second quarter of 'twenty 'twenty activity, there were no dry docks or vessels off hire.
Please turn to slide five where you can see all kind of in fleet profile.
Yeah. This is Scott on fleet is comprised of 19 vessels on the water, which includes 12 feeder container ships and seven intermediate contained a guy that is with a total carrying capacity of about 59000, Teu and they'll never as Jay suggested low 60, yes.
Turning to slide six we show our vessels under construction, which Scott will consist of seven they were not enough to busy recently.
But new Echo Peter's container ships.
The seven new buildings are expected to be delivered in 2024 and have a total carrying capacity of 16006 comes with T U.
With a carrying capacity of 2008 tons with you each and three with a carrying capacity of 1800 Teu each.
After the delivery of the seven feed the containership new buildings in 2024 universities fleet will consist of 26 vessels and the total carrying capacity in excess of 75000 Teu.
Let's now turn to slide seven for the graphic of you All's asbestos employment escapes.
As you may see with a very strong charter coverage throughout the next two years with about 93% of our fleet being fixed for 2020.
<unk> 64 per cent for 'twenty 'twenty four.
This very sites out of the cause of it it's quite profitable rates for the remainder of the years that goes through the 'twenty 'twenty four.
Just that we should continue with registering highly profitable caused this quote with us regardless of chocolate Ace development.
Let's now turn to slide nine to review.
You have the six to 12 month time charter rates have developed over the last 10 years.
One year time charter rates were up during the first half of the second quarter.
The declines are gained by about 15 per se that compares to their highest in me.
And about 75% lower than the level a year ago.
Is it the.
Were still significantly higher than the prepaid debit lenses.
As of August 4th the six to 12 month time charter rate for two and a half thousand Teu. They loosen stood at $14750 per day.
Which is higher than the median of eight of the $9250 for the day, but lower than the 10 year average of $818000 per day.
Comparatively the age for the 4400 Teu container ships stood at $22000 a day, which is much higher than the 10 years, a median of eight of $10750 a day, but still lower than the 10 year average of 875, which of course was.
Lewis basics.
Basically high rates that we've had the benefit of 21.
Moving on to Slide 10, we go out with some further market highlights.
During the second quarter with 23, one decides to visa as previously said.
Slightly improved but seems to have market, leading could he used to be about 15%.
Yeah, I believe it was of age during the second quarter of 'twenty to 'twenty, three but up by 19% compared to the previous quote is so new that they do.
By and large there was a resilience in the market during the second quota and even some upward momentum in the first half of the quota.
In view of these rates across the size sectors have experienced some support and meet in the past that I think in line with doughnuts demand.
And then with the short term lack of charter the vessel to be lumpy.
Only lately are we seeing further conviction.
Yeah, I've got a second has the price index increased by about 1% quoted on a quote but has come down a bit since then in line with the charter market decline.
Secondhand prices remain high Nevertheless.
The new building vaccine Dick's increases by about 3% in the second quarter compared to the previous quota.
New building prices generally remained high and mid cost inflation and extended yoghurt forward cover.
The idle containership fleet as of July 17, stupid about one 1% of the fleet.
The idle fleet peaked in February 'twenty, 'twenty 3.8 million Teu, because been trending downwards purposes.
The recycling activity edged higher during the second quarter with 59 vessels accounting for 74000, Teus, having being scrapped.
The bullish and that remains fairly subdued amid some short term improvements and faith in softer markets, which meant that some vessels circulated for the sac email instead sold for further trading.
Recycling is anticipate to continue for the remainder of 2023 and 'twenty 'twenty four.
And I think prices have also incrementally soft into doing the second go up to about $560 per lightweight ton.
Which still leaves about 40% above the 2019 that boots.
Overall, the containership fleet has grown by approximately four 2% year to date without accounting for items vessels of activation.
Please turn to slide 11.
With this latest update in July 2023 the eye Everest's latest forecast is modestly higher than its previous convictions.
With Dixons in April of 2023, however, still weak by historical standards.
Local good oil is projected to fall from an estimated to be in the hospice since in 2020, 223% in both <unk> and 'twenty four.
Three English prediction of two 8%.
And 3% in 'twenty could be foot.
Mark slowdown in global activities. Therefore are anticipated in the second half of 'twenty three and in the first half of 224.
We will look for a gradual stabilization in the second half of 2024.
<unk> supported by rate cuts in many areas around the world and the expectation that inflation has continued to fall.
Scientists have your opening appears to be uneven and volatile even stalled some might say.
I think new softness in the housing market growing concerns of local government financial abuse, and then uncertain external environment for the export sector weigh on the economy's near term growth plan.
This growth forecast of five 2% and 50000 feet and four are in the hospital setting 50 plentiful.
Some changed it why is the growth in either the emerging and developing countries he's projected to defy the overall global economy.
Global economic slowdown.
There is strong demand from India, which delivered with the biggest upside surprise. So far this year with its high GDP growth in Q1 that fun existed.
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This was driven by strong government cut backs instead of just as exports.
Despite the Zen little global slowed down the U S economy spoke us to modestly moderately grow by one 8%.
Which compares to the feverish I M. F goes focused of one 6%.
To suggest that the U S can potentially avoid a social can sales in the second half of the suite.
However, the I M F seems to have low skilled.
It's excellent for the U S in 'twenty 'twenty four to just 1%.
Just 1.1.
Focus.
On the other side of the world literally yeah. That's suddenly going to me is fairing better than expected with the revised estimate of one 5% of that growth with visibility suite up.
Four 7% in the previous calls too.
Despite the effect of the sanctions with western financial markets and many export markets for vessel companies and commodity disclose.
According to the latest clock Suzanna can this continue we will continue to experience subdued demand for the remainder of the year due to the challenging market conditions with wage growth expected at just 1%.
For 'twenty 'twenty food demand is expected to return to positive trade growth level of about three 4%.
Please turn to slide 12, where you can see the total fleet age profile and Containership order book.
The containership fleet is relatively young with most of this was under 15 years old and only 10% of the fleet over 20 years old.
The largest percentage of which lies within feed divestitures, suggesting high potentially recycling for these type of ships.
This is the size and which were mostly operated.
You owe them because the percentage of total fleet status of 28, 3% as of August 22.
Hey.
Clarksons expects new deliveries of about 94% of the current fleet to be delivered within this year and 46% next year and six 4% from 2025.
With the majority of the delivery scheduled to start from the second half of fiscal 'twenty three.
Through the first half of 255.
Spending on Slide 15, we also go over the fleet age profile and order book for ships in the 1000 to 3000 Teu range.
As these sizes are the backbone of our operations are the primary focus of our new building program.
Yoga bookies stands at just 11% as of August 2023.
According to Clarksons new deliveries within this year is estimated at nine 4%.
Fight this 0.6% in 'twenty, four and one 2% in fiscal 'twenty five.
Additionally, 50% of the fleet Hospital fleet is over 15 years old.
Clearly the dynamics are very favorable for this sector of the market as we can expect a decline with the size of the fleet in the next few years.
Yeah.
Let's move to slide 14, where we discuss I've always look some of it for the containership market.
Daily Si H full size vessels have declined since last year's highs following a pronounced correction in the second half of 'twenty two.
There are new little size that the previously ceded containership charter market is now being affected by decreasing by the decreasing demand for wholesome fade.
Additionally, there has been a noticeable accumulation of available tonnage and smaller feature sizes, leading to a larger decline in chat that age for these basis.
Although the container freight index initially rebounded in April 'twenty 'twenty to be decently for each age soften again and further declines are anticipated as our railcar deliveries continued to be incorporated by the market. These days.
Presently the index seats at the level that is 80% lower than it speak in general gets into 'twenty two.
Turning to the prequel with 10 year average.
Container volumes fell by two 2% year on year, but still remain at above repo daily lenses.
For the remainder of 2023.
Till considerable challenge as a kid.
Gentlemen, there was downward pressure.
He is expected to it he moves his supply growth accelerates and then increasing number of south of vessels that are dilutive.
On the other hand, however fleet growth could be somewhat mitigated by environmental regulations that will pose some vessels to either reduce their speeds what stopped hazy.
But it remains to be seen how economic developments will develop.
Especially starting from 'twenty to 'twenty four.
This we believe will essentially determine future shipping volumes and overall demand and thus the evolution of charter rates.
The energy transition continues to gain traction and will play an important role in the evolution of the vessels of the future, but also on the trading patterns within the industry.
Why you didn't say evidence that the shift is taking place the long term outlook has seem to get them to.
Dave action speed and metrics of the fill season.
Yet to be fully determined.
One of the things, though that he's becoming our views is that the spread.
Between charter rates achieved by eco vessels over conventional ones is expected for photo they didn't get east.
Also the smaller sized vessels from 1000 6000 Teu are expected to recover faster from any downturn due to the healthy a supply situation.
As we said menu overage ships that will be scrapped and Louisville.
Without a doubt, though cascading of larger vessels trades. Currently served by these size fleet could be mitigated to an extent any differences.
Let's move to slide 15.
The left chart shows the evolution of one year time charter rate two containers with a capacity of two and a half thousand teus since 2010.
One year time charter rates are far below that heavily 2022 peak, but they are above historical levels.
As previously mentioned the current one year time charter stands at $14750 per day, which is a much higher and profitable level than the historical median.
At the same time, the right hand chart shows the historical range for new building and 10 year old containers with.
With a capacity of two and a half thousand Teu.
That's the charter rates across the companion market have remained relatively buoyant in the past several months values in the secondhand market have been equally resilient and stubbornly high.
We believe that we are well protected against market volatility without how at HEICO in fact, there've been new covenants throughout 2023, and 'twenty 'twenty four.
Very healthy rates.
Our liquidity buildup will allow us to comfortably take delivery of the remaining seven new building vessels, whilst keeping leverage low at around 60%.
It will also allow us to continue being a significant dividend and executing when I spoke to but it's a program. That's about price continues to cover at levels below 50% of the Navy.
At the same time, we will continue to evaluate investment opportunities with low risk it will incrementally increase our revenues and growth potential.
And with that I will pass the floor to our CFO task assistant lease to go over our financial highlights in further detail.
Thank you very much and good morning from me as well, ladies and gentlemen.
Well for the next four slides I will give you an overview of our financial highlights for the second quarter and first half of 'twenty to 'twenty three.
<unk> for the same period from last year.
With that let's turn to slide 17.
Well go to a full quarter of 'twenty to 'twenty three the Kona brand.
We reported total net revenues of 47 7 million.
I think in one 6% decrease over total net revenues were $48 5 million during the second quarter of last year.
The case reports as a result of the lower time charter rates are question Shaun.
Great quarter. Thanks, Thank you Felipe.
That's compared to the same theatres were for last year.
Oh sure.
By being case, the average number of restaurants, we own and operate it.
The second quarter of this year.
The company reported net income for the period.
$28 9 million as.
Compared to a net income effect.
2.7 million for the same theory of 'twenty to 'twenty two.
Interest and other financing costs for the second quarter of 2023 amounted to one point to me.
Which is very strong.
One 4 million of feedbacks from finding of course paid for.
For auto loans.
Oh <expletive> right $1 2 million of imputed interest income.
We financed the construction of our new buildings before this either.
Compared to $1 1 million for the same period last year during which we can't ignore imputed in person.
You shouldn't grease on the first page farm loans, you used to be and keep them on that.
Yeah.
The increase in the weighted average LIBOR and short rates that we paid in the current period.
That's compared to the same theory.
Yeah.
Additionally, it should be noted.
Second quarter of 2020 free interest income for both the private and 65000 compared to almost zero.
During the same period.
'twenty two.
Exactly.
Second quarter of 293 was 56 million compared to $54 2 million achieved during the same period second quarter strength.
Cool.
Basic and diluted earnings per share for the second quarter of this year.
$4 from Savannah keen sense.
We're bullish and 15 cents respectively.
Welcome Nathan on about $6 9 million basic and about 7 million diluted weighted average number of shares outstanding compared to basic and diluted earnings per share or four 126, and four point $24 four of last year, respectively.
Excluding the effect on the income of the unrealized Muslim beauty.
Amortization of below market time charter right.
Depreciation on the Porsche.
Question days from investments acquired with below market charters allocate into the regional market charges. The adjusted earnings for the second quarter of 2020 feet, what's gonna be $4 19 per share basic and $4 17, shacks diluted compared to adjusted earnings of $4 10.
And $4 eight channel base.
Basic and diluted respectively for the same quarter of last year.
They can put up quarters seem a lot of attachments.
Usually security analysts do not include the airport by finishing their published estimates.
That's why we're making these transactions.
Let's now look at the numbers for the corresponding six month period ended June 32 far from 23, this year and compare it to last year.
Well the first half of this year.
Company reported total net revenues of $89 6 million.
Anything of four 5% decrease.
Total net David Mitchell from 93 nine.
<unk> me here.
During the same period of 2022.
The company reported net income for the period were $57 6 million as compared to a net income of $60 7 million for the first half with Lucky.
Yeah.
Financing costs for the first half of 'twenty to 'twenty three.
Amounted to two point wanted to you, which is the result of $4 4 million morphine. There you can find out of course for our long standing offset by $2 3 million or compute 15th came from as I mentioned as we show five months of construction.
Our new buildings before they begin their comp.
Compared to 241 million in financing cost paid during the same period of last year during which again would you not give any.
Uh huh.
Again this year.
Over the six month period, we had an interest.
There you go.
Oh for about five friends and followers compared to almost zero in Paris during the same period of last.
Yes.
Adjusted EBITDA for the first half of 2023 was $56 6 million compared to $65 3 million achieved during the first half of last year.
Basic and diluted earnings per share for.
For the first half of 'twenty, three bush $8 or 28 cents.
At $8.25, respectively calculated on the borrowed 7 million weighted average number of shares outstanding in fact compared to basic and diluted earnings per share of eight point.
$4 $836, respectively for the same theory to flat year.
Making similar adjustments to our net income for the first half, which I described earlier.
We did for the second quarter.
Adjusted earnings per share for the six months period ended June 32020.
I mean, what's your being $7 or 29 cents.
And then secondarily, <unk> 26, basic and diluted respectively compared to adjusted earnings.
$7 81 shares basic and $7.07 diluted for the same period.
F 'twenty to 'twenty two.
Let's now move to slide 18 to review our fleet performance.
We'll start our review by looking at our fleet utilization rate for the second quarter of 2023 'twenty to 'twenty two.
Our fleet utilization rate he's broken down.
I'm actually I'm Gonna Paresh components.
During the second quarter of 2023, our commercial utilization rate once you come to a person, while our utilization rate or a bathroom utilization was 99, 8% compared to 100% commercial and 90.
Nine 7% up as you know for the second quarter of last year.
Well nothing is 17 95 vessels were owned and operated during the second quarter of this year everything and not very much time charter equivalent rate of 35% kind of a.
$33 a day.
As compared to $16 six that shows that we own and operate it in the second quarter of like year on.
On average.
Fair to $3714 per person per day.
Yeah.
Our vision, our Investor day link, Okay expenditures, including my husband piece.
7001 time gain of $14.
Vessel per day for the second quarter of this year compared to $7080 per vessel per day during the same period.
G&A expenses amounted to $715 and children and she's coming in at $50.
Vascular per day, respectively for the two gauge.
If we move further down on this thing.
We can see the cash flow breakeven rate for the second quarter of each year, which also takes into account that those expenses interest costs and loan repayments.
Gosh for the second quarter of 2023, our cash flow cash flow breakeven rate, what's kind of 3807.
$7 per vessel per day, compared to 13562, Oh lunch motor vessel per day during the second quarter of 2022.
Pardon me.
Hum.
You can see the common dividend paid expressed in dollars per day per vessel.
In the second quarter of fiscal 'twenty, three we paid the equivalent of 2200 minister granting dollars.
Sure, Hey, dividends compared to 2000 and $414 for the same period last year.
It does not go over the same figures for the six months period of 2023 and compare them to the same mark in the same period of last year.
During the first half of 'twenty to 'twenty three our commercial utilization rate was 99, 1% and our passionate 98, 7% compared to 99.8, Comercio and 99.6 operational for the same theater you took last year.
On average we owned and operated 17 52 vessels during the first half of this year and you cannot expand charter equivalent rate.
290000, I'm, sorry, but I found it in at $5 a day.
While for the same period of 'twenty to 'twenty two the company owned and operated 16 point thing to see vaccines.
And now very true 33008, crammed down Unfortunately dollar friendly.
Our vascular merit expenses again, he was the management fees were $7215 per vessel per day.
First half of this year compared to $6867 per vessel per day.
Same theater to flag here.
G&A expense for the period amounted to $727 and she's coming in at $67.
Again looking at the bottom of a stable we can see the cash flow breakeven rate for the first half 2023.
Which takes into our partners I mentioned that I, Don think interest question on repayments and that I've had $13993 per vessel per day.
First half of this year.
And that compares to 17000.
$805 per person per day for the same theory stuff last year.
Okay Fine a line we saw they give you didn't say it's expressed in dollars per day.
During the first half of this year, but my mom's among a wash.
And then one kind of a $94 per vessel per day, and that's going back to $2207 five last year.
Sounds being due to the fact that we started paying dividends in the second quarter of last year.
Let's move on and go to slide 19 to review our debt profile and our forward cash flow breakeven levels.
Our total debt as of June 32023.
It's about 150 248.
Although some of the slides you can see a snapshot of our current debt.
For fighting over the next several years.
We can hold our domain, two and 715 million of non or payments or 'twenty.
'twenty three and then the remaining part of the year, we are to make another $14 8 million of who owns the maintenance as well as we're due to pay by Luna amounting to 10 seven meeting.
There's a lot that we are at the threshold or finance.
34, and 25 are along their payments through.
Toy box set a few on the median of 35 million respectively.
<unk> balloon payments, which we should be able to finance to refinance if we choose to do so.
The average margin for Gautam Khanna.
That's just about two points to 54%.
Assuming yourself raised of about $5 or 36%, our senior our coastal far senior debt amounts to about seven 9%.
That figure will go up to six to seven point, 60%. We are counting for the portion of our debt for a week.
Underlying <unk> sulfur right he has been here.
I should state that we plan to spark you find us.
Our remaining new buildings with debt that's over 'twenty 'twenty four I would expect us to assume an additional about 65 million of debt.
Cover about 65, San Jose I shouldn't say new building vessels.
I would like to draw your attention to the bottom of the slide nine where we present the landfill in components of our expected cash breakeven level for the next 12 months.
We expect to occur over the next 12 months and EBITDA breakeven level for about $8851 per vessel per day.
In total, including in Paris, Milan or payments if possible.
Cash flow breakeven level with about $14682 per vessel per day.
Let's sum up our presentation by moving to slide 22 presents some highlights from our bonds.
Actual June 32000, I'm trying to see our assets included cost and other content assets amounting to about $51 2 million.
They also are assets included advances that we paid for our new building program.
So I think it's about 93 point here and find out.
Okay.
The book value of our vessels, which was.
I'm going to turn before falling asleep media is that I'm thinking of the total book value former wash it off our own 694 point in front of me.
On the liability side, our debt as of June 30 was 23 in D C and factory because you mentioned.
That's a $2 8 million.
Anything about three 7% of the book value for our assets.
The fair value of our below market charters acquired is about 27.3 media economy for another about 7% for Russia and other liabilities just about now it's about 10 million accounted for another two and a half there Sean.
Total book value for us.
However, it should be noted here the chocolate market.
Mark will provide you with our fleet.
Much higher than its book value.
Based on our own analysis and using.
Market construction, sorry, that's the advisory board for a new building contract we estimate the value of our fleet chart that back up again to be approximately 200.
$69 6 million.
Which translates to a net asset value for our company with about 672 million or about $56 per se.
Recently, our says Oh, sorry, I shouldn't be trading around claims now almost for sure.
I think I've got four of them net asset value and back up to the present.
Hey, good appreciation potential for our shareholders and investors.
With that I would like to turn the floor back to understand the sequencing of the call.
Thank you guys. So let me open up for Florida.
Any questions we might have.
Thank you.
Well now be conducting a question and answer session.
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Once again Thats star one to ask a question.
Thank you.
Our first question is from Tate Sullivan with Maxim Group. Please proceed with your question.
Well good day, how are you hi.
Hello, Good on slide 13.
Nine are probably a little more than 9% fleet growth. This year for Teu vessels less than 3000 is that and is that indicating what you're indicating year to date that roughly half. The vessels have entered the fleet. So far this year with another half and do you have approximate numbers the sentry.
Country this year.
Thanks.
Yes half of the vessels that we're supposed to but a little bit less than five so the vessels that are supposed to enter the fleet. This year have actually enter adulthood, yes.
And then have you bought it you observe in terms in parts of the apartment.
Yeah.
Sorry, I didn't get you.
What have you observed there in terms of chartering activity.
For those new builds entering the market in terms of securing contracts and the like the time securing contracts ahead of delivery.
There was quite a few ships that are quite large that had already secured.
Employment.
You, even smaller seats had already secured employment.
For example, Oh, they've had dyed T that was delivered in July we've had secured employment it seems last year.
And it was obviously its verified AIDS.
A similar vessels that are open the dog.
That was deliberate.
To somebody else and it was not chopped it was able to be fixed at around $25000 a day for the year.
So.
The the ships that are being delivered out of being fixed today, but it is slightly but at lower rates than what was achievable Ah last year.
Okay.
For the previous announcement, you announced it on July 24.
Or the new contracts for the arena P and Emmanuel key and I think you mentioned that was the exam.
Can you can you mentioned a part of how the negotiations went for that.
When I first read the headline I was expecting lower contracts right for a year.
For yourselves, but you would get extended for longer terms at higher rates than the previous contract. So can you get more of the situation behind most contract negotiations.
So I have to be very very clear to us. So that we don't give any at all mean finish and we have no obligation.
To to cancel that side of things that we've had with eczema there was no such request.
We were told that if we if we wanted the vessel is free.
We could take them and sign them elsewhere, we looked in the markets. We saw that we can get something a little bit better than what the and for longer than what we had in Zimmer chapters and very amicably, we agreed with the zoom that we would.
The cancel that child is doing with them and we would fix with Oh, yeah. So what we did so everything was done very I'm incomplete without any display.
Distress.
Great example of do you think that kind of example will occur in the containership market for them for the rest of the year. I mean is there continue to be counterparty risk with longer term contracts and how do you manage that.
I think that the main counterparties are.
All very candomble, oh, but as those of seats. So they will stick.
Due to the child has and will perform.
I don't expect us to see nonperforming loans is everything that will be done if there is some the arrangement because some lines you want to reduce.
Due to reduce or others want to increase our the number of ships on the child that everything will be done.
You know amicably and commercially and.
Without dispute.
Okay. Great example, on the contract with those contracts with all its yep. Thank you.
Thank you very much state.
Our next question is coming from the line of Christopher <unk> with Arctic Securities. Please proceed with your questions.
Hello, how are you.
Hi, Christopher.
Congrats on a great quarter.
I was just wondering if you can share some details on how you are progressing on.
On the seven year Oh.
In terms of empower.
Employment, but also.
On the almost hard I think it's hard I mean.
How much is now.
And Capex are.
And how much do you expect it to see if I'm correct.
Senior debt.
On the employment side, we haven't changed anything yet so we are in contact with our values childhoods.
But I think it's too early to to fix those ships yet so we will see it closer to the delivery dates how how we fix them on the financial side of it. That's just couldn't believe you're a little bit more we have a range or better.
Close to arranging the financing over the first see that too.
And then again on the first shift that will be delivered in 'twenty three 'twenty four.
I didnt discussions without the Finland. She is in the.
Got it thank goodness I feel very comfortable about it but it does show you can and can't figure as soon as we hear about a 280 million of Oh vessel.
I wish to make.
And the value of investments and work to deliver in the barcode.
What kind of in a comedian and kept made there about 60 million advanced payments against that through equity.
Yeah, we we have the equity already.
Built in in our numbers that we'd be able to cover with our own cash flow generation as I mentioned earlier, we expect to assume incremental debt to fire on the front end of $65 million give or take to finance.
The vessels.
So 65 million that she can keep about 60, we made and we are when I put another 60 million of faculty to cover and then another 40 million effect with you to cover the rent payments.
As a hunter and I think the problem and then remaining cash.
Oh man.
That's correct okay great.
And with that.
And.
And it's quite a comfortable.
<unk> level on.
It will definitely be a lot of cash coming.
Call me quarter saw any months in your.
Our presentation.
It's not true.
Hum.
You are building out significant war chest in order to pursue investment opportunities I just wondering if you can.
Can you elaborate what you mean about that then are you starting to see any opportunities out there in the markets on the secondhand transactions that might be.
Might be a interesting.
Sure.
As I said in the presentation, all cash flow build up be sufficient do easily financed the the new building program that we have it is sufficient for us to continue paying dividends in the foreseeable future.
That is significant that are close to the 10%.
And of course to continue.
I think on our stock repurchase plan, but then in addition to all that the liquidity. We are we are building as we got into we have I think I've got about $50 million.
There is sufficient to also look at potentially new potential new acquisitions.
At this stage, we would not buy something.
Literally we would only invest if we can find a deal that is backed by a child.
That will bring the residual value over the vessel at the end of the child at extremely low levels. So that is the strategy and.
Really comfortable about the implementation.
Yeah.
Right.
Thank you that's it for me.
Thank you Chris.
Our next question is from the line of climate Rollins with value Investor's edge. Please proceed with your questions.
Good morning, Thank you for taking my questions.
I wanted to start by asking about the Aegean Express could you provide an update on how the arbitration against the previous charter you're building.
Yes, as we said in our in our previews a call in the previous calls we have assumed that we will literally nothing.
Nothing from that that would be duration.
And unfortunately, it probably seems that are we are moving along that line right now.
The charter has disappeared.
He's.
We think he says he's winding down the business we call. It it's fine game that we can locate the assets, but we steep we continue trying to do that.
So hopefully we will find something but as we said Oh.
Projections suggest that this will be a loss that we will have that we have been covered already.
So if if there is any surprise it will be it can only be a positive surprise because we've planned for the worse.
Sounds good.
You've pursued a very balanced approach to capital allocation by ordering newbuild distributing dividends and repurchasing shares.
<unk> that the market is still valuing the company at a significant discount to NAV. So share repurchases continued to make a lot of sense.
Our tender offer is something the board has or would consider.
Or do you prefer to stick with share repurchase in the open market.
I think that sandy purchasing in the open market is the way that we want to continue.
These you know attentive ultimately usually has to be made that the higher price and we think that are you know by implementing gradually the stat that you with destocking, but just as we are doing it more economically.
Makes sense that's all for me. Thank you for taking my questions and congratulations for the quarter.
Thank you very much bye.
Thank you at this time, we have reached the end of our question and answer session I'll turn the call over to <unk> for closing remarks.
Thank you all for participating in this call and we will be back with you in three months time, hopefully with a quite good.
Good results again.
Thanks, everybody.
This will conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.
Yeah.