EuroDry Ltd. (EDRY) Q3 2021 Earnings Report, Transcript and Summary

Thank you for standing by, ladies and gentlemen, and welcome to the EuroDry Conference Call on the Third Quarter 2021 Financial Results. We have with us today Mr. Aristides Pittas, Chairman and Chief Executive Officer; and Mr. Tasos Aslidis, Chief Financial Officer of the company. [Operator Instructions] 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. Pittas, I would like to remind everyone that in today's presentation and conference call, EuroDry 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 2 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. I would now like to pass the floor over to Mr. Pittas. Thank you, sir. Please go ahead.

Good morning, ladies and gentlemen, and thank you all for joining us today for our scheduled conference call. Together with Anastasios Aslidis, Financial Officer. The purpose of today's call is to discuss our financial results for the third quarter and 9 months period ended September 30, 2021. Please turn to Slide 3. Our income statement highlights are shown here. For the third quarter of 2021, reported total net revenues of $19.5 million, the net income of $11.8 million. Adjusted net income attributable to common shareholders was $10.1 million or $3.77 share diluted. Adjusted EBITDA for the quarter, $13 million. For the 9-month period, our net revenues were $42.1 million, and our adjusted net income $18 million or $7.29 per share diluted. These results are starred compared to our Q2 results of last year, when the initial impact of the pandemic was first felt in our business. Our CFO, Tasos Aslidis, will go open our financial highlights in more detail later on in the presentation. Please turn to Slide 4 for our operational highlights. As previously announced on September 22, 2021, the company acquired Motor Vessel Good Heart for 63,614 [indiscernible] $24.5 million. The Vessel was financed partly by own funds and partly by a bank loan of $22 million, collateralized by this new acquisition and our Motor Vessel Starlight. There were no dry dockings or major repairs during the third quarter of 2021. To assist us in acquiring the Good Heart, the company raised $9.2 million of net proceeds by issuing about 316,000 shares through our ATM up to September 30, 2021. On the chartering front, our Motor Vessel Alexandros P was fixed for the trip of about 80 to 90 days at $25,250 per day for the first 65 days to $31,000 per day thereafter. Following the delivery of Motor Vessel Good Heart, it was fixed for the first trip period of approximately 40 to 50 days at $32,750 per day for the first 47 days and $42,000 per day thereafter. After the conclusion of this employment, it was fixed for a small 16 to 18 days trip at $33,000 a day. The M/V Pantelis is fixed for the trip of about -- for the time charter of about 5 to 7 months at the $30,250 per day. And the M/V Tasos was fixed for a trip of about 80 to 90 days at $28,500 per day. And lastly, Motor Vessel Starlight was extended at 98.5% of the BPI index for a minimum period until October 2022. During the third quarter of 2021, the company settled the 90 days of previously sold forward freight agreements, the equivalent of one Panamax vessel, which was originally sold at a rate of $12,550 per day with a loss of $1.7 million. In October, we sold 90 days in Q1 2022 of FFAs, the equivalent of one Panamax vessel at $31,500 per day, and a few weeks later, closed that position at $23,200 per day, realizing a gain of about $700,000. As of September 30, the remaining 90 days previously sold at $12,550 per day for Q4 2021 had a negative valuation of about $2.7 million. Last Q3 was a very profitable quarter. Our Board had decided during the third November meeting to redeem within Q4 all its outstanding Series B preferred sales with par using approximately $13.6 million from its funds. Thus, going forward, the company's balance sheet will be very simple, consisting only of straight equity and chief banks debt which [indiscernible] the spread of about 3.8% of our LIBOR or nearly half of this we have applied a LIBOR hedge at about 1%. Please turn to Slide 5 for the summary of EuroDry's current fleet. With the acquisition of Motor Vessel Good Heart, Eurodry's fleet has increased to 9 units, further complementing our cluster of own-built newbuildings vessels, newbuilding vessels. Along with our merger rates, Japanese-built Panamax cluster, our current fleet has an average age of 12.4 years and the current carrying capacity of around 670,000 deadweight tons. Slide 6 shows the current lucky employment strategy. As you can see, the effective coverage for the fourth quarter of 2021 stands at about 56% in Current Fleet fix rate contract and about 10% coverage in 2022. This figure, of course, excludes ships on index charters that have secured employment that are open to market movements. One can usually conclude that our performance will depend a lot on the market developments during the ensuing months. We feel happy with our current provisioning of forward cargos and we remain optimistic about the market fundamentals that I will discuss a bit further down the presentation. Now let's turn to Slide 7, where we go over the market highlights for the quarter ended in September 30, 2021. During the third quarter, dry dock rates continue to climb throughout September that reversed quite strongly in October. As seen here, the average spot market rate for Panamax ships were $31,700 a day in the third quarter, and by September 30, the price has increased to around $34,200 per day. Meanwhile, the average spot rates adjusted rates of Panamax ships were $27,230 per day in Q3 and $29,250 by the last day of the quarter. By last week, though, 1-year time charter rates have dropped to around $31,500 per day. According to Clarksons, during Q3, secondhand bulk carrier pricing [Technical Difficulty]

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Hello, excuse us, we were cut off. We are continuing from where we were cut off. We were at Slide 7, we were going over the market highlights for this quarter, and we had reached the point to say that after a strong Q3, we have seen in the last month a significant drop in the charter market, where Panamax vessels have dropped to about $21,500 per day. On the second-hand market, according to Clarksons, during Q3, secondhand bulk carrier prices increased by 17% while newbuilding prices increased to more than $37 million and $34 million for Kamsarmax and Ultramax vessels, respectively. And year-to-date, the fleet has grown by 3.4%. Please now turn to Slide 9. Global recovery continues, albeit a bit weakened compared to the previous -- to IMF's previous forecast in July. According to the October IMF report, growth forecast has been revised slightly downwards, hosting global growth projections for 2021 at 5.9% compared to 6% in July, while 2022 has been kept unchanged at 4.9%. Beyond 2022, the IMS continues to forecast a moderate global growth level of 3.3%. For 2021, this modest headline revision reflects more difficult near-term prospects for the advanced economy group due to supply disruptions driven by higher commodity prices as inflation expectations continue. Prospects for emerging markets and developing economies have also been noted down to 2021, especially for emerging Asia. Particularly, the U.S. is expected to grow 6% for 2021, which involves July quarter at 7%. The downward revision reflects a slowdown in economic activity resulting from the rise in COVID-19 cases and delayed production caused by supply shortages and the resulting acceleration of inflation. China's expense economy is expected to grow 8% in 2021, slightly less than the July forecast due to scaling back of public spending and the difficulties we see with the energy issues. While India's growth forecast are still retained at 9.5% for the year of 2021. Looking at the Drybulk trade growth and based on Clarksons projections for 2021, we see demand growth expectations continue to be on an upward trajectory of 4.6% for this year. For 2022 and 2023, the dry bulk trade is expected by Clarksons to grow at a moderate pace of 2.3% and 2.5%, respectively. Please turn to Slide 10. We also look at the percentage of total fleet up until November 21, stands at 6.8%, which is still around the lowest levels we've seen in the last 25-plus years. With the current order book and continuing demand trends for the coming years, we expect the fundamentally supported and continued rebound in the Drybulk market for the next couple of years achieved. Please turn to Slide 11 for our Drybulk fleet overview. According to Clarksons, net fleet growth is projected to 2.6% in 2021. Based on the current level of the overall bulk fleet growth will expect the low levels in 2021 and 2022. The evolution in 2021 and 2022 is expected to be more or less on par with this year's very low level. And the effect from higher trade and fairly low bunker prices, limit the incentives for scrapping all the [indiscernible]. Importantly, the 2023 orderbook is increasingly set and deliveries are likely to again be half of normal levels. So please turn to Slide 12 to have a summarize our outlook of the Drybulk market. Global recovery continues, as we said before, at a solid pace despite the use of transferability of the Delta variant of COVID-19 and despite the backdrop of significant commodity and energy price increases which have started to reduce the pace of economic growth and threaten the creation of an inflation of environment. The Drybulk market has been a strong trajectory on the back of highly supportive conditions in the commodity markets, having reached 11-year heights in Q3 2021. In the last month, we have seen a slowdown in growth, especially in steel demand in China, which has affected the whole market. This has been mainly the logistic issues in our view, due to the pandemic, that we feel the Chinese government has the power and the needs to stabilize, and therefore, we expect revenues to remain volatile at high levels at the short and medium-term outlook. And the short and medium-term outlook is generally positive and supported by one of the lowest orderbooks ever. Furthermore, ordering of new ships in the future for 2023 deliveries is expected to be minimal due to lack of available slots in shipyards. In addition, the lack of clarity for the fuel of the future, as not knowing the optimal ship for even 5 years out, makes the placing of any new order, an uncertain proposition. Overall, a steady recovery in Drybulk volumes alongside limited supply growth and positive global economic sentiment should translate to firm improvements into 2022 and likely beyond. However, market conditions could remain volatile as the number of risks remain around iron ore and coal trade and the eventual cost from the COVID pandemic. Congestion ease timing and the implementation of the new iron ore environmental regulations for January 2023 onwards will be key elements in the direction of the market. Interesting times, as always, loom ahead. Let's turn to Slide 14. The left side of the slide shows the evolution of 1-year time charter rates and pandemic's Drybulk vessels since 2020. As of November 5, the 1-year time charter rate for Panamax vessel with capacity of 75,000 deadweight ounce stood at around $21,500, still a very firm and profitable level despite the current 30% production. As you can see on the right-hand side of the slide, the carbon price of the 10-year old Panamax vessel is around $25 million. Over the past year, Drybulk prices have casually been increasing, exceeding the historical medium and average levels, but still significantly lower than prices seen in 2010. In addition, partly, we have, of course, capitalizing on the strong market by posting significant revenues and generally strengthening our balances. As the liquidity increases significantly from next quarter onwards, we are evaluating how best to use it for the benefit of our shareholders. This can be in the form of further debt reduction, share buybacks and institution of dividends or even acquisitions secured by strong charters which would bring residual risks down to a minimum of contribution. Most probably, it will be a combination of some of the above. We remain positive and excited about the prospects of EuroDry within its framework and continue to evaluate opportunities for investment or any other form of operation, exploiting a public listed and operating platform. Let me now pass the flow over to our CFO, Tasos Aslidis, to go over our value financial highlights in more detail. Thank you, Tasos.

Thank you, Aristides, thank you very much. Good morning from me as well, ladies and gentlemen. I will now take you through our financial highlights for the third quarter and 9-month period ended on September 30, 2021, and compare it to the same period of last year. So that, let's turn to Slide 15. For the fourth quarter of 2021, the company reported total net revenues of $19.5 million, representing 186% increase of total net revenues of $6.8 million during the third quarter of 2020, and that increase was primarily the result of the higher time charter rates our vessels churn in the third quarter of this year as compared to the third quarter of last year, but also on the increased number of vessels we operated during this quarter. The company reported a net income of -- for the period of $12.1 million and the net income attributable to common shareholders of $11.8 million as compared to a net income of $0.5 million and net income attributable to common shareholders of $0.1 million for the same period for third quarter 2020. Interest and other financing costs for the third quarter of 2021 remains roughly unchanged compared to last year at $0.6 million since the increase in the other outstanding debt in retail during the period was offset by the decreased LIBOR rates for our loss. Adjusted EBITDA for the third quarter of 2021 was $13 million compared to $2.8 million during the third quarter of 2020, representing a 362% increase. Basic earnings per share attributable to common shareholders for the third quarter of 2021 were $4.47 calculated from 2.6 million basic shares outstanding and dilute earnings were $4.39 calculated from approximately $2.7 million diluted weight published number of sales outstanding compared to basic diluted earnings per share of $0.06 for the third quarter of 2020, calculated on approximately $2.3 million shares basic and diluted. Excluding the effect on the income attributable to common shareholders for the quarter of the unrealized gain on derivatives, the adjusted earnings attributable to common shareholders for the quarter ended September 30, 2021, which has been $3.84 per share basic and $3.77 diluted, respectively, compared to adjusted earnings per share of $0.05 both basic and diluted for the third quarter of 2020. Usually, security analysts do not include the above items in their published estimates of earnings per share. Let's now move on the second half of the slide to discuss the 9-month results for the year -- of the year. For the first 9 months of 2021, the company reported total net revenues of $42.1 million, representing a 165% increase of our total net revenues of $15.9 million during the first 9 months of 2020, which then was the result of the increased number of vessels we operated and the higher other charter rates our vessels earned during the 9-month period compared to the same period of last year. We reported a net income for the period of $15.1 million, and the net income attributable to common shareholders of $14.2 million as compared to a net loss of $5.6 million and net loss attributable to common shareholders of $6.7 million during the first 9 months of 2020. EBITDA and other financing costs for the 9-month period of 2021 amounted to $1.7 million compared to $1.9 million for the same period of 2020. This decrease is mainly due to the decreased LIBOR rates over long term in the current year compared to the last. Also in 2021, we recorded a noncash expense of about $1.7 million as a loss on debt extinguishment upon the conversion of certain of our debt into equity. Adjusted EBITDA for the 9 months of 2021 was $26.3 million, compared to $1.8 million achieved during the first 9 months of 2020, representing the 1,326% increase. Basic earnings per share attributable to common shareholders for the first 9 months of the year were $5.84 calculated from $2.4 million, approximately $2.4 million sales outstanding and diluted earnings per share were $5.73 calculated on approximately 2.5 million weighted average numbers of shares outstanding, compared to basic diluted loss per share of $2.97 for the first 9 months of 2020. Again, excluding the effect on the income attributable to common shareholders for the 9 months of the unrealized loss and derivatives and the loss on debt extinguishment for last year's results, the adjusted earnings per share attributable to common shareholders for the first 9 months of this year, which has been $7.42 basic and $7.29 diluted, respectively, compared to a loss of $2.7 per share basic and diluted for the same period of 2020. Again, as previously mentioned, usually secured and not include the unrealized and extraordinary items to the public estimates of earnings mentioned. Let's now turn to Slide 16 to review our fleet performance. We could start our review by looking toward our utilization rates for the third quarter 2021 and compared it with the change to the same period of 2020. As usual, our utilization rate is broken down into commercial and operations. During the third quarter of this year, our commercial utilization rate was 100%, while our operational utilization rate was 99.4% compared to a 100% commercial and 98.9% operational for last year. An average of 8.1 vessels were owned and operated during the third quarter of 2021, earnings and other time charter equivalent rate of $28,103 per vessel per day compared to 7 vessels that we owned and operated in the same period of 2020 and, on average, $11,873 per day. Our total daily vessel operating expenses included management fees, general and mutual expenses but excluding guidance and costs average about $6,495 per vessel per day during the third quarter of 2021 compared to $6,397 per vessel per day for the third quarter of last year. If we move further down in this page, we can see the cash flow breakeven rate that we set during the third quarter of this year which takes into account also drydocking expenses, interest expenses, loan repayment and our preferred dividend payment is paid in cash. That's for the first quarter 2021, our daily capital breakeven rate was about $9,991 per vessel per day compared to $9,974 per vessel per day for the comparable period for third quarter of 2020. Let's now look on the right part -- right part of the slide to review our 9-month figures. During the 9-month period of 2021, the first 9 months, our commercial utilization rate was 100%, and our operational depreciation rate was 99.6%, similar to the levels for the same period of last year. An average of 7.49 vessels were owned and operated during the first 9 months of 2020. Earnings and other expense charter rate equivalent of $22,232 per vessel per day compared to $7 that we owned and operated in the same period of 2020. [indiscernible] numbers, potential equivalent rate of $8,927 per day. Our total daily operating expenses, again, including management fees, G&A expenses, but excluding drivers and costs for the 9-month period and end September 30 of this year amounted to $6,510 per vessel per day compared to $6,195 per vessel per day for the same period of 2020. Let us look again at the bottom of this table to see our cash flow breakeven level for the 9-month period, which amounted to $10,451 per vessel per day this year compared to $11,209 for the same period, the first 9 months of 2020. Let's move now to Slide 17. If you view the slide for the last 2 earnings calls to provide our shareholders and investors the tool to assess the earning potential of our fleet over the next 2 to 3 quarters. The statement shown in this slide is 2 components. The top part refers to our fixed rate contracts. It is noteworthy that the small percentage of our available days is under fixed trade contracts, especially in the first and second quarter of 2022. We'll consider these futuristic opportunities as the market is performing very well despite titration drops , as I previously mentioned, producing -- being expected to produce significant earnings for us. The rest of our vessels are employed in contracts linked to the relevant to their size value index. Our calculator indicative results the Supramax and Panamax in bulk forward rates as of November 30, 2021 in [indiscernible] result how this index level can be translated to rates for our ships. We're actually displaying a stable -- the final blended rate for the open days of our fleet, which we can see right below the Supramax and Panamax shown already in the table, in which, as you can see, turns out it is very similar to the index levels. Based on these assumptions and by further assuming for simplicity, $6,500 per vessel per day operating expenses and G&A costs, and the 5% commission rate, one can estimate the contribution to our EBITDA. The final results for the fourth quarter of 2021 is additionally adapted for an FFA contract for 90 days for the quarter that we had. This overall exercise is meant to provide, as I mentioned in the previous calls, a tool to calculate EBITDA for the upcoming quarters, in this page here, for the fourth quarter 2021 and the first half of 2022. Obviously, one can mend or make his own assumptions about the rate to do that calculation. The growth observing based on the objective based FFA rates, which are approximately equal to the present rate that our fleet is earning, as I previous -- previously mentioned, are 30% lower than what they were 2 weeks ago. We expect normalized EBITDA contribution -- for 2022, that is above that of 2021. Let's now move to Slide 18 to review our debt repayment profile. On the top part of the slide, we see our loan and volume payments of our bank debt. As of September 30, 2021, with an outstanding debt of about $73.9 million. By looking at the chart, we can see that over the next 3 years, because -- another annual repayment rate of about $12 million a year, which translates to about $1.2 million per vessel or roughly about $4,000 per vessel per day. Our next balloon payment is towards the end of 2023 and for about $11.3 million, and that refers to one of our giant vessels, Kamsarmax, which by the time will be 5 years old, and we expect -- the value we expect to be able to finance as a matter of course, as we have done in the previous occasions. A quick match here on the cost of funding. The annualized margin of our debt, as you can see from the column on the right part -- for the look in the right part of the slide, is about 2.8%. Assuming a LIBOR rate of about 0.3% on the top of it, we can estimate the cost of our senior debt to be a little more than 3%, 3.1% a share. Regarding our preferred tactic, as I previously mentioned, our Board of Directors decided in November to do some of the earnings we accrue to redeem all of our pending series B precursors at par and thus reduce our funding costs. This redemption will increase the earnings per share of our common shareholders by $4.8 in 2022 by about [indiscernible] a year [indiscernible] were perpetual and from the beginning of 2023 were to repay the [indiscernible]. At the bottom of this slide, you can also see a projection of our cash flow breakeven level over the next 12 months as well as the breakdown of it, which is -- and that cost flow breakeven level is expected to be around $12,678 per vessel per day. Let me now move to Slide 19, where we can see some highlights from our balance sheet. This slide gives you a snapshot of our access and liabilities in a simplified way. On our asset side, first, we can see that we have cash and other assets as of September 30, 2021, of about $26.1 million. Again, on our asset side, the book value of our vessels is about $130.6 million, bringing the total book value of our assets to $156.7 million. On the liability side, our debt as of September 30, 2021 stood at $73.9 million, which approximately represents 47% of the book value of our assets. Our preferred equity as of September 30 stood at $13.6 million, which accounts for another 8.6% of our assets, while our remaining liabilities approximately were $7.5 million or roughly 4.8% of our book assets. That leaves us with a net book value of $61.7 million which translates to $22.3 per share. However, the market value of our fleet is significantly higher than its book value, and we need to make such an adjustment to get a better estimate of the value of the company. We estimated that as of the end of September 2021, the market value of our 9 vessels was 50% higher than their respective book value, suggesting an NAV per share of around $47. And although our share price has recently increased or traded in the range of between $25 and $32 per share, it's still significantly below that level, and therefore, investing into our company represents an opportunity with significant upside potential. And with that, I would like to turn the floor back to Aristides to continue the call.

Hello. And we open up the floor now for any questions and answers you may have -- any questions you may have.

[Operator Instructions] We will now take our first question. Please go ahead. Your line is now open.

This is Tate Sullivan from Maxim Group, and just a little macro to start. I mean, it seems like shares for a lot of the drybulk companies are following what the indices have done recently coming down from peaks and your comments earlier about steel demand in China flagging recently, but I've heard various comments from dry bulk companies on that. Can you give a little more about how that might be just a temporary factor and the seasonal considerations as well, please?

Sure. the levels of iron ore inventories of steel in China have been significantly depleted, so the prices have also dropped. China is very -- decideful itself when they buy and sell iron ore, so I think that when they realize that the prices are low enough and they want to move the economy, they have the capacity to start ordering iron ore again. We've seen that happen time and time again, and when they do that, we will see again a significant increase in the volumes of iron ore that will be said. So I think that -- And you've seen it in the Capesize vessels trade rate how they vary over the year [Audio Gap] to this kind of movements.

Great. And I apologize, it broke up a little bit there, but I see how -- when it had happened time and time again in previous cycles, is it usually a time line that this -- top 4 to 5 months, I think the rates -- the freight seems to baking that in for the first 6 months of 2022.

Yes, it is breaking up a little bit, but [indiscernible] this unabated rates again within the first half of 2022. Definitely, we think we will. I mean, it might have.

Tasos. And Tasos, on the preferred equity redemption, a great move and lower cost of funding as well. Can you just refresh on the accounting for that in 4Q, redeeming those at par at 13.6% versus the last carrying value of $13.1 million, will that be a loss in 4Q? And can you just -- was the conversion price on that preferred --

[indiscernible] I will think [indiscernible] share that we had initiated 7 years ago gave the company the option after 5 years to redeem them at their [Audio Gap] and given the fact that we pay 8% of that piece of funding and which will become 14% in 14 months, we decided that it was a good use of our revenues to pay down, to resume the whole amount of the preferred equity and keep the dividends returns for other holders.

Go ahead. Your line is now open.

Charles Fratt, NOBLE Capital Markets. Can you hear me?

Yes, we can hear you [indiscernible]

Okay. I hate to do this, so since you broke up a lot on your last answer, so can you highlight what you're going to redeem, how much cash you're going to use to redeem the preferred in this fourth analyst quarter?

I think we're going to use $13.6 million, which is exactly the outstanding amount of preferred equity at par. And so we will pay that plus the any accrued dividends. I believe, by the time we're going to do the retail, the redemption, there will be something like 400,000 accrued dividends, the majority of which is already in our results for Q3, so we would pay them that. So I estimate that there will be about $3 million of cash needed to repay the sales part of the accrued dividends.

Okay. And then can you -- it looks like you've traded the first quarter 2022 FFA market. Can you just highlight whether your thoughts behind that and whether you expect to put any FFAs in place for the first half of the year or even the full year for 2022?

So we don't use FFA's speculative, we only use FFAs to hedge our position. So because we have all our ships in the spot market, rather than fixing the time charter, we decided to fix at the beginning of October FFA contracts for Q1, essentially covering one vessel for Q1 at the level which was $31,000 something, which we deemed very satisfactory at time. So it was done as a head against one of our open vessels, and as the market moves down, we felt the move was very abrupt. And we thought that it would correct sooner than what it is proven to have been corrected. So we closed that position at that point, took the profit of $700,000 and the [indiscernible] has, again, our ship open and exposed in Q1 this coming year. You will never see us doing the offer. You will never see us buying FFAs when we have ships that are open in the market because that would increase our exposure in the market, which we don't want to do. We only want to use FFAs to cover our position. And of course, if at some point, we think that we have overcovered, we might close some positions to reduce the cover or take some profit.

Okay. And has the -- does the FFA market moved back up to where you would be potentially looking at selling again and creating cover or some hedges for the first half of the year or [indiscernible]

It hasn't moved up that much yet. It's around the level that we closed our position, maybe even a little bit lower than the levels that we closed our position at this point. So it's not at $30,000, it's again at around low 20s, very low 20s. Yes, not the level that we think that we would like to take additional cover. We do believe in the market that we should see higher rates happening and transpiring, so we are not ready to fix our vessels out at $20,000 less [indiscernible]

Yes, I see the [indiscernible] -- Sorry.

Yes. We'd rather keep them a little bit, we'd rather keep them short. If we do see them approaching $30,000 again, we will take some additional cover though either by fixing them on time charter or through FFA, you will see.

Yes. Maybe today is a pretty abrupt day, but I see the FFAs for Panamax is down in the first quarter, down under 20 or closer to 19. That's helpful. With -- Tasos, can you talk about the drydocking activity? It looks like drydocking expenses are going up for the next 12 months, and they've potentially totaled close to $4 million. Can you just highlight how much downtime or idle base would be associated with those products?

Yes. I think that in front of me is the exact drydocking schedule of the vessels. Last -- the first 9 months of the year, we had very little drydocking, now almost no drydocking is a thing, that's why you saw a significant drop in the drydocking expenses. I believe we might have 1 or 2 drydockings next year. I'll be happy to provide you. Typically, it takes about 20 days with about 25 days for the off market for the drydock, and if you [indiscernible] of our [indiscernible], we budget between $500,000 and $700,000 per drydock and a little closer to $1 million for the Panamaxes. So I can get a little more specific offline if you want, that's what I recall on top of my head.

Yes. That would be helpful. And then Aristides, can you talk about the S&P market and just what you're seeing there and sort of your stance right now on additional moves to either enhance the fleet or expand the fleet?

I think we need to first seeing how this settle down after this vibrant move in the market. I mean, the very strong improvement in charter rates that we saw in September and the subsequent drop in October from how that affects values. And if we do see the market correcting as far as values are concerned, we haven't seen that yet and it doesn't really happen unless the market is low for quite some time or relatively for quite some time. So we want to see how things develop us before we decide on a particular move in acquiring maybe another ship or even selling an older one replacement with a younger one, which is something that is also a thought that we have had, but we are not ready to implement any of these options at this point. We are more on a way to see situation at this current moment.

Great. That's helpful. And I'd be remiss if I didn't say it looks like the Europe seas acquisition this morning looks pretty interesting. Congratulations on that.

Yes, that's a very good move, but that's different companies have.

We have no further questions I will now hand back to Mr. Pittas for closing remarks.

Thank you, everybody, for participating in today's call, and we'll be back with you next year with the end of the year results, which you all know will be great. We will take it from there. Let's see what 2022 will bring. Bye-bye.

Thank you. That concludes the conference for today. Thank you for participating. You may now disconnect.