Thank you for standing by, ladies and gentlemen, and welcome to the EuroDry Conference Call on the First Quarter 2022 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 over 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 the current management's expectation that involves risks and uncertainties that may result in such expectations not being realized. I can redraw your attention to Slide 2 of the webcast presentation, which has the full forward-looking statements 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 I would now like to pass the floor over to Mr. Pittas. Thank you. Please go ahead, sir.

Good morning, ladies and gentlemen. Thank you all for joining us today for our scheduled conference call. Together with me is, Mr. Tasos Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the three month period ended March 31, 2022. Please turn to Slide 3. Our income statement highlights are shown here. For the first quarter of 2022, we reported total net revenues of $18.3 million and the net income of $10.5 million. Adjusted net income attributable to the common shareholders was $9.5 million or $3.3 per share. Adjusted EBITDA for the period stood at $12.7 million. Our CFO, Tasos Aslidis, will go over the financial highlights in more detail later on in the presentation. Please turn to Slide 4 for our operational highlights. Motor vessel Ekaterini charter has been extended until February 2023 at 105% of the average bulk comes from Baltic Kamsarmax Index. While motor vessel Xenia charter has also been extended until March '24 at again 105% of the average Baltic Kamsarmax Index. Motor vessel Alexandros has been fixed for a trip of about 20 to 25 days at $29,000 a day during the quarter. Then it was fixed at $26,250 per day for the next 20 to 25 days, and thereafter, it was fixed for about 55 to 65 days at $28,000 a day. Motor Vessel Pantelis was fixed also from approximately 20, 25 days trip at $18,250 per day, and thereafter, it was fixed from 80 to 100 days at $20,500 per day. The Motor Vessel Tasos was fixed for 57 days at $18,750 per day, and thereafter, it was fixed for about 90 days at $20,600 per day. The Motor Vessel Molyvos Luck, which was delivered to the company on February 11, 2022, was fixed at…

Thank you very much, Aristides. Good morning from me as well, ladies and gentlemen. Over the next 5 slides, I will give you an overview of our financial highlights for the first quarter of 2022 and compare them to the same period of last year. For that, let's turn to Slide 15. In the first quarter of 2022, the company reported total net revenues of $18.3 million, representing a 113% increase. The total net revenues of $8.6 million during the first quarter of 2021, and that was the result of both higher charter time to operate our vessels during the first quarter of this year and the increased number of vessels we owned and operated compared to the first quarter of 2021. The company reported net income and net income attributable to common shareholders for the period of $10.5 million as compared to a net income attributable to common shareholders of $0.9 million and $0.4 million, respectively, for the first quarter of last year. Interest and other financing costs for the first quarter of 2022 amounted to about $0.65 million, slightly increased as compared to $0.6 million for the same period of 2021. Interest expenses during the first quarter of this year were higher due primarily to the increased LIBOR rates on our loans to pay as compared again to the first quarter of 2021. Adjusted EBITDA for the first quarter of this year was $12.7 million compared to $4 million achieved during the first quarter of 2021, representing a 217% increase. Basic and diluted earnings per share attributable to common shareholders for the first quarter of 2022 were $3.69 and $3.64, respectively, calculated on 2.85 million basic and 2.88 million diluted weighted average number of shares outstanding compared basic diluted earnings per share of $0.19 for the first quarter…

Thank you, Tasos. Let me open up the floor for any questions that you may have.

Thank you. [Operator Instructions] We will now take the first question, the line is now open. Please go ahead and ask your question.

Yes. It's Tate Sullivan from Maxim Group. Good day. If I may, just starting on newbuilds and Aristides can you review some of your conversations with shipyards? Last week, we saw a newbuild announcement for delivery at first half '24 in the drybulk industry. And I've heard that maybe now the conversations are focusing on '25 delivery. Is that the case? And why it's such a long timeline?

Yes. Tate, you are right. The good shipyards are mostly full for 2024. So it is difficult to place orders within 2024. So most likely, you will be looking for a delivery in 2025, these days. Of course, for smaller drybulk vessels, I think that in China, you can still have 2024 deliveries, but the best shipyards really are quite full.

Can you comment -- and historically, and then -- I mean, two to three years to get delivery of a new ship, is there any conversation in the industry about expanding shipyard capacity? Or is that -- what are the barriers to doing?

If you remember, this was done back in 2005 when, again, the markets were going through a boom and suddenly people wanted ships. And we saw, especially in China, new shipyards being open. It takes time to build the shipyard, it's a couple of years. And most of them by the time they were open, the market has corrected, and there was no need for them. So there was a lot of suffering by people that try to build new shipyards. And I don't see any movement right now to increase the shipyard capacity significantly at all.

Okay. Shifting to the future overhang, if that's the right way to put of a potential environment to regulations. Are you starting -- are clients starting to request newer ships, cleaner ships that they've been doing so? I mean what's the kind of potential enforcement of future environmental regulations? Are you already seeing customers demand for newer ownership?

I think that everybody would like to use newer ships and whatever is available, which is more efficient. But one has to live with what exists and everybody is having to live with what vessels exist, and it will be quite some time until we see much more fuel-efficient vessels being built. So I anticipate that whilst we all want to do what we can to help the environment, the practicalities of the day as such, so that we will continue with the conventional ships that we have for quite some time.

Great. Thank you very much, Aristides.

Thanks Tate.

Thank you. And we will now take the next question. The line is now open. Please go ahead and ask your question.

Hi, it's Poe Fratt from Alliance Global Partners. Aristides, if you could talk about the other side of the equation on newbuilds. You talked about delivery times being extended potentially into '24 and '25. What would drive you to order a newbuild? There's no visibility in the market. Contracts is still fairly short. Would you consider building something on spec without any confidence that you might see longer-term contracts develop over the next couple of years?

Well, I think you hit the nail there. We are seeing newbuilding orders in container ships where people can get long-term charters at higher rates and therefore, can justify the investment. In drybulk, we do not have charters taking ships for longer periods, and that's why you see that not only us, but everybody is reluctant to order drybulk vessels today at prices which are 25%, 30% higher than what they were a couple of years ago. So I think this is the main reason that you see this discrepancy between container ordering and drybulk ordering.

Great. That's helpful. And then can you -- you talked about environmental regulations. Can you be a little more specific on your fleet and what you're doing between now and 2023 to prepare for the new regulations?

Well, obviously, we are going to fully comply with the new regulations. Even existing ships will be able to comply with new regulations with various initiatives to paying the house so that there is less resistance. But at the end, the most important thing that will help comply with the regulations will be to reduce the speed of the vessel, and indeed, this is what everybody will be doing in this market. They will reduce the maximum speed of the ships, which, of course, is a good thing for the market as a whole because effectively, it reduces supply of vessels. So small things are being done in optimizing the routes, in trying to make the engines a little bit more efficient, but these are small numbers. They are not very significant improvements. The biggest improvement comes when you drydock your ship and you paint it nicely and you reduce significantly the resistance, and of course, when you cut your speed.

Okay. And then if I calculate correctly in the Tasos on the first quarter, your OpEx was roughly in the $6,600 range per day, and your -- for the next 12 months guiding to about $6,938 a day. Can you walk us through a little bit more clearly the drivers on that? Is it higher bunker fuel prices? And also, should we see sort of the gradual increase? Or will there be a step change in the first -- in the second quarter?

I think it's an increased part of the inflation, obviously. Partly depends on exchange rate, and that works for us for the time being because we pay management fees in euros and is getting cheaper. And also certain things become more expensive like the lubricants and the like. So I think we expect the increase to safety pretty much in the right now over the next quarter and to see overall higher levels compared to 2021. Crewing costs continue to be a challenge, both in getting crew and positioning them. I think there are increases across the board, primarily coming from the [indiscernible] overall inflation and tightness in the market that we see.

Okay. And then if we could broadly talk about capital allocation in the context. You continue to find some opportunities for second-hand assets, but arguably, you're paying close to NAV for those assets and your stock is trading at a fairly reasonable discount or wide discount to what you said your NAV might be. Can you walk us through whether at some point in time you'd consider implementing the share buyback program or potentially, like other companies, returning from cash to shareholders in the form of a dividend? Or can you just talk about broadly what we might expect over the next 12 months from a capital allocation standpoint?

So that's a very good question, and this is what we are discussing continuously in our Board -- at the Board level. There is this -- as you say, we are trading at a big discount to our NAV. So one would say that you could buy back your stock and thus, that would be a good investment. Our problem is that we are a very small company, especially for the capital markets because as an operating company, I think the size that we have is sufficient to have the same operating costs as companies that are much bigger and also be more efficient and then. So I think that -- but for -- from a capital markets perspective, becoming smaller, which is what essentially we would do if we were to buy back our stock, would reduce the size of the company and the liquidity on the stock. And we are discussing and hoping that we will be able to increase the share price of -- our share price towards NAV with a better marketing of who we are and what we're doing and what the prospects of the company are. So this is the reason we have yet to follow such policy of paying dividends or doing share buybacks, but this is always under review.

Yes. Understood. Just your stock is so volatile, even a small share buyback might set a higher floor than what we've seen over the last couple of quarters. It just seems like every once in a while, there's an air pocket. And if the stock buyback were in place, maybe that would help minimize or maybe dampen that sharp drawdown? Just some thoughts.

Appreciate it.

Thank you. And we have a follow-up question from Tate Sullivan. [Operator Instructions].

Hi, thank you for taking my follow-up. Tasos, on the drydocking costs that you're forecasting, you made an -- what you reported this quarter and the first quarter rather. I mean they do see higher. Is that related to painting the halls that Aristides mentioned earlier? Are there other things you can do when the ships are in the drydock to make them more fuel pushing? And should we expect drydocking costs to increase in the next couple of years as well?

I think, probably, it's fair to say that the other drybulk cost, especially for our older vessels, will increase over the next 12 months or three years to pass this deal with issues like that. Part of the deal and with the fact that the ships are aging and if they have to go through a drydock at a later age, they cost a little more.

But also the unit cost in all the shipyards have increased significantly. So a replacement of the ton of steel has increased 50%. So every unit cost in shipyard has been increasing over the last year, every component.

Every component.

Okay. Great. And then following up the capital allocation question. With the ship purchases in the last quarter, you purchased the ship mostly with almost all of cash and reduce debt. Are you expecting to finance or add financing secured financing stewardship and the ship you're buying this quarter?

We are considering this thing we are looking to -- we have the leisure to put to market and look what bank to talk about the best terms. But we are considering to finance both of our last acquisitions, which were bought with own funds. So we have some embedded funding capacity that we can use, if we need to find financial and other vessels.

Okay. And then just addressing some potential for you. I mean buying ships -- second-hand ships in this market, Aristides can you just talk about how you stress test the current rates and get comfortable with paying higher prices than you have your recent acquisitions for ships in this period.

Sure. We always -- and that's why we have not been buying very modern ships. I mean the last ship we bought was a fairly old vessel, but with a one year time charter that could be agreed at the time, we brought the value down to a reasonable level by the end of the one year charter. So these kind of thoughts and assumptions go into our process of selecting ships to buy. We need to have some high charter, even if it's just a year, to make sure that we are able to reduce the price to a price which is close to the historical median price at the end of the charter.

And also, Tate, I think, a fundamental reason to be optimistic about the market is, when you look at Slide 10, the orderbook-to-fleet ratio, I would say, it's almost 4 times lows. It's not at all-time lows and that definitely provides a fair amount of comfort for the next couple of years to lever, the target below in -- good levels, so to say.

Thank you for taking my call.

Thank you.

Thank you. And no further questions as of the moment. I will now pass the floor over to Aristides Pittas. Please go ahead, sir.

Thank you all for taking the time to listen to our call. We'll be with you again in three months' time. Bye.

Thanks, everybody.

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