Euroseas Ltd. (ESEA) Q4 2020 Earnings Report, Transcript and Summary

Thank you for standing by, ladies and gentlemen, and welcome to the Euroseas Conference Call on the Fourth Quarter 2020 Financial Results. We have with us 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 their 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, Euroseas 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 number 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 minute to go through the whole statement and read it. And now I would pass the floor to Mr. Pittas. Please go ahead, sir.

Good afternoon, ladies and gentlemen, and welcome to our scheduled conference call for today. Together with me, Tasos Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the year-end and quarter ended December 31, 2020. Let us turn to Slide 3 to see our income statement highlights. For the full year of 2020, we reported total revenues of $53.3 million. Net income was $4 million, and net income attributable to common shareholders after the $0.7 million dividend on the Series B preferred shares was $3.3 million or $0.58 per share basic and diluted. Adjusted EBITDA was $11.8 million, and the adjusted net loss attributable to common shareholders for the year after adjusting mainly for vessels that were sold was $0.1 million or $0.02 per share basic and diluted. For the fourth quarter of 2020, we reported total net revenues of $12 million. Net income was $0.6 million, and net income attributable to common shareholders after the $0.2 million dividend and Series B preferred shares was $0.4 million or $0.07 earnings per share basic and diluted. Adjusted EBITDA was $2.1 million, and there was an adjusted net loss attributable to common shareholders for the period of $1 million or $0.16 per share basic and diluted. Tasos will review our financial highlights in more detail later on in the presentation. Please turn to Slide 4 to view in detail our recent chartering, operational and sale and purchase developments. The charter of motor vessel Synergy Busan declared a 4 to 6 months option as of February 2021 at $12,000 per day. Motor vessel Synergy Antwerp was extended for a period from September to December 2023 at $18,000 per day starting January -- retroactively from January 1, 2021. The EM -- motor vessel EM Astoria, was extended for up to February 2022 at $18,650 as from December 2020. Moreover, Evridiki G was fixed for up to December 2021 at $15,500 a day as from December 2020. The charterer of EM Spetses declared the 5 to 7 months option at $8,100 per day as from December 2020. Additionally, Aegean Express was fixed up to April 2022 at $11,500 per day as from December 2020 again. Finally, note that in early October, the EM ISRA was fixed for the period of 3 to 7 months at $7,200 per day. Today, the going rate will be close to $10,000 per day more. This shows how much the market has moved up in the last 4 to 5 months. We should mention here that the EM Corfu suffered damage on its tail shaft and was idle since early December 2020 for 2 months for repairs in dry dock and resumed operations on February 10. All the costs of the repair will be covered by insurance. There were no dry docking expenses for the fourth quarter. On the S&P front, as we had previously reported, we sold motor vessel EM Athens to its current charterer, and this sale was completed in November 2020 for a total of approximately $4.9 million of net proceeds, of which $3.75 million was used to repay the outstanding loan of the vessel. Please turn to Slide 5, where you can see our current fleet profile. Euroseas fleet currently consists of 14 vessels, including 9 feeders and 5 intermediate container carriers with approximately 540,000 deadweight tonnes and 42,000 TEU capacity. The weighted average age of the fleet is 15.8 years in TEU terms. Slide 6 shows our vessel employment chart. As you can see, as of February 22, we have about 62% coverage for the remainder of 2021 based on maximum charter durations. Naturally, with the continuing rise in rates, charterers are expected to keep the vessels at the fixed rate as much as possible. As you can see, we have 3 vessels opening up for recharter in Q2 and 5 vessels in Q3, which we hope to be able to fix at rates at least double their current rates if the market stays strong in them. Out of these 8 ships, only Synergy Oakland, which is fixed at an index base level, is -- are earning low rates. The Synergy Oakland, currently based on the index base level, is earning around $24,000 per day. So all in all, we expect that half of our fleet will be valued higher during the next 3 to 6 months. Please turn to Slide 8 to look at how the market fared during the quarter and beyond. As shown in the slide, time charter rates have increased significantly despite further concerns about the coronavirus pandemic, exceeding median levels and reaching 12-year highs for certain sizes, a development that we expect to continue in the near term. Please turn to Slide 9, where we give a birdseye view of the general container market over the fourth quarter. What a reversal of fortunes in just 3 months. According to Clarksons, 1,700 TEU geared vessel charter rates increased from an average of 7,000 per day in Q3 to $11,400 per day in Q4 and currently stand at around $15,000 per day. The 2,500 TEU geared vessel increased from an average of $8,500 per day in Q3 to $14,200 in Q4 and currently stands close to $20,000 per day. Similar type of changes have been seen on the larger sizes as well. The 4,250 TEU geared less vessel increased from an average of 12,600 in Q3 to $22,200 in Q4 and currently stand at around $31,000 per day. The 5,600 TEU geared less vessel increased from an average of $17,000 per day in Q3 to $26,000 in Q4 and currently stand at around $35,000 per day. Average secondhand prices for vessels between 5 to 20 years old rose significantly by between 40% to 70% and even 100% for good charter 3 larger vessels. During the fourth quarter, new building prices were stable. But since the beginning of the year, as steel prices have been on the rise and the container market has seen further increases, fresh interest for new buildings has emerged, leading to slightly firming prices. The inactive container ship fleet currently stands at about 1%, totaling approximately 250,000 TEU. This contrasts strongly with the peak less than 9 months ago in mid-May 2020, which was 2.7 million TEU. The ship capacity kept inactive for the scrubber retrofit reached its lowest level since mid-2019 and is now close to 0. The number of vessels scrapped decreased in Q4 to only 6 ships or 7,400 TEU. Despite scrap prices have increased to over $450 per light weight tonne due to the high demand for steel. On the whole, in 2020, the fleet grew by 2.9% without, of course, accounting for idle reactivations or idling, et cetera. Please turn to Slide 10. Given the recent global policy support and vaccine rollouts that have been -- that have rate holds of the turnaround in the pandemic later this year, the IMF has been gradually increasing GDP estimates. Among the developed and developing economies, China is the only country that managed to post a positive growth of 2.3% in 2020, having recovered faster from COVID-19. For 2021, the IMF projects that all significant countries should post positive growth. In fact, in the latest report in January, low GDP growth in 2021 has been revised further upwards from 5.2% in the previous quarter to 5.5% now. The U.S. economy is estimated to grow at 5.1%, while the Eurozone's GDP is set to rebound by 4.2% in 2021. Most important, economies are expected to see a slight growth after when compared to the previous quarter, except for India, which according to the IMF projection, will see a huge 3% further increase in its estimated growth, reaching a very impressive 11.8%. China is expected to grow at a very strong rate of 8.1%. For 2022 and 2023, global growth according to the IMF economic outlook will continue to see above-average increases at 4.2% and 3.8%, respectively. Most individual countries continue to grow above trend, except China, which, however, is also expected to be growing at a reasonable 5.6% to 5.7%. In terms of demand for containerized trade, which closely correlates to global GDP growth and is measured in TEU per mile, according to Clarkson's estimates, we expect to see a strong rebound in demand and 5.4% this year. Whilst for 2022 and 2023, the container rates are expected to hold up at reasonably high levels of 3.2% and 3.5%, respectively. Of course, all these forecasts should be taken with a pinch of salt as predicting the future is always difficult that may be even harder now due to the disruptions caused by COVID-19, which is changing established life patterns, has a yet unknown duration and interacts with an uncertainty of the geopolitical situation and especially possible trade between U.S. and China. Please turn to Slide 11 to review the containership age profile and order delivery schedule. As you can see, the containership age profile chart on the left side of the slide, overall, the containerized fleet is a young fleet with a mere 6% of ships being over 20 years old. However, the older vessels are mainly concentrated in the smaller size classes where our ships operate. Consequently, the growth of the fleet in these segments should be minimal and might even be negative in the next couple of years as no significant programs have been placed to date, and some of the older ships are more likely to be scrapped despite the strong market. The right-side chart shows the delivery schedule of the current container ship order book, which is expressed as a percentage of the fleet. The circled figures for 2021 to 2023 are from just the order book before any scrapping and fleet changes. Currently, the total container supporter book stands at 10.9% of the fleet, a figure which is of the lowest observed in more than 20 years. This low level of order book provides a source of optimism for the continuation, further strengthening of current market levels, if trade demand further recovers, given that the supply side will be at minimum levels. Please turn to Slide 12, where we discuss our outlook summary. The unknown duration of the pandemic and its financial consequences had made predictions about the future trade very difficult. However, if the distribution of vaccines can help with the containment of COVID-19 in the developed markets by the first half of 2021, as widely anticipated, then in the second half of 2021 and 2022 and without experienced catastrophic events, we can expect significant global demand growth. In any event, current logistical bottlenecks are expected to remain at least in some time in Q2. In 2021, overall demand is expected, therefore, to be significantly stronger than in 2020 and higher than the supply growth. This, of course, supports optimism for even stronger rates. However, we have already seen significant rate appreciation over the last 3 months surpassing the highest levels of the last decade, so a modest correction if and when logistical bottlenecks exceeds cannot be ruled out. Longer-term fundamentals are hard to predict and as always, will depend a lot on the vessel ordering rate and the rate of growth of demand for containerships. Deliveries from the existing order book scheduled for 2022 remained extremely small, even smaller than 2023, thus creating a positive environment, which is likely to lead to a continuation of the good markets and perhaps even further strengthening during 2022. For 2023 onwards, it's too early to try and make a call. New ordering has resumed in the last couple of months, especially for bigger vessels, But still, the order book remains at historically low levels. For vessels in the sub-5,000 TEU segments, it remains very small at about 4% of the fleet. Let's turn to Slide 15. The left side of the slide shows the evolution of the 1-year time charter rates for containers of 2,500 TEU since 2000. Since the financial crisis of 2008, rates stayed rather depressed with 3 spikes within the $5,500 to $15,000 per day rates. Currently, we are witnessing stronger charter rates that exceed even the rate levels of 2010 and 2011 and are lower only than the levels we previously experienced in the mid-2000s. The right-hand side of the slide shows vessel values in relation to historical prices since 2011. As you can see, current containership values over the past 2, 3 months have significantly increased above historical medium and average levels of the past 10 years that with further room to grow if the current market persists. Under the current market conditions, our strategy is to only acquire vessels in combination with securing medium to longer-term charters that would bring the vessels down to medium valuations by the end of the charters. At the same time, we are always open to growing the company, using our listed platform to potentially acquire vessels in exchange for sales, as we had also done in 2019 when we acquired 8 vessels. In any event, the improved markets will increase the company's free cash flow, and we will continue trying to optimize its use between further growth, strengthening the balance sheet and returning capital, having always our shareholders' best interest as our top priority. And with that, I will now pass the floor to our CFO, Tasos Aslidis, to go over our financial highlights in more detail.

Thank you very much, Aristides. Good morning from me as well, ladies and gentlemen. I will now take you through the next 4 slides to give you an overview of our financial results for the fourth quarter and full year of 2020 and compare them to the same results of 2019. For that, let's turn to Slide 15. For the fourth quarter of 2020, the company reported total net revenues of $12 million, representing a 9.6% decrease of total net revenues of $13.3 million during the fourth quarter of 2019, which was the result of the lower number of vessels operating during the quarter, partly offset by the higher time charter rates our vessels earned in the fourth quarter of 2020 as compared to the previous year. The company reported net income for the period, the fourth quarter of 2020, of $0.6 million and net income attributable to common shareholders of $0.4 million, as compared to a net loss of $0.8 million and a net loss attributable to common shareholders of $0.9 million for the fourth quarter of 2019. Interest and other financing costs for the fourth quarter of 2020 amounted to $0.8 million compared to $1.1 million for the same period of 2019 as a result of lower debt levels during the period. It should be noted that in the fourth quarter of 2020, we also recorded a loss on debt extinguishment of $0.5 million, due to the conversion of the loan to common stock as per the terms of the loan agreement in November 2020. Depreciation expense for the fourth quarter of 2020 was $1.6 million as compared to $1.5 million in the fourth quarter of 2019. Dry docking expenses amounted to $0.1 million during the fourth quarter of 2020, comprising of the cost of 1 vessel completing an intermediate survey in water. For the same period of 2019, dry docking expenses amounted to $1.5 million, due to the cost of 1 vessel completing a special survey with dry dock and 2 vessels completing the intermediate surveys in water. Adjusted EBITDA for the fourth quarter of 2020 was at $2.1 million compared to $1.2 million for the corresponding period of 2019, an increase of about 76%. Basic and diluted earnings per share attributable to common shareholders for the fourth quarter of 2020 were $0.07, calculated on 6.1 million basic and diluted weighted average number of shares outstanding, compared to a basic diluted loss per share of $0.18 for the fourth quarter of 2019, calculated on 5 million basic and diluted weighted average number of shares outstanding. Excluding the effect on the income attributable to common shareholders for the quarter of the unrealized gain on derivatives, the amortization of below market time charters acquired and the gain on the sale of a vessel, the adjusted loss attributable to common shareholders for the quarter ended December 31, 2020, would have been $0.16 per share basic and diluted. If we further adjust this number for the loss on debt extinguishment, the adjusted loss per share is reduced to $0.08 per share basic diluted for the fourth quarter of 2020 compared to an adjusted loss of $0.32 per share basic diluted for the quarter -- for the fourth quarter of 2019. Usually, as we stated in the past, secured channels do not include the above items in the published estimates of earnings per share. Let's now look on the right part of the slide to our figures for the 12 months for the full year of 2020. For that period, the full year, the company reported total net revenues of $53.3 million, representing a 33.2% increase over total net revenues of $40 million during the 12 months of 2019. That is due both to the higher other numbers under a vessel so we operated and the higher earnings were during the period. The company reported net income for the year of $4 million, and net income attributable to common shareholders of $3.3 million, as compared to a net loss of $1.7 million and a net loss attributable to common shareholders of $3.5 million for the 12 months of 2019. Interest and other financing costs for the 12 months of 2020 amounted to $3.6 million compared to $3.4 million for the same -- for 2019. Again, this increase is due to increased amount of debt in 2020 as compared to the previous year. Also for 2020, I should mention that, as we said in the fourth quarter, the results for the year include a $0.5 million loss on debt extinguishment, the debt that we repaid -- that was converted to common stock in November 2020. Depreciation expense for the 12 months of 2020 was $6.6 million as compared to $4.2 million for 2019, due to the increased number of vessels in our fleet during the year. Adjusted EBITDA in 2020 was $11.8 million compared to $5.3 million during 2019, an increase of 124%. Basic diluted earnings per share attributable to common shareholders for 2020 were $0.58 calculated on 5.8 million shares basic and diluted as compared to a loss of [$1.31] per share for the 12 months of 2019, calculated from 2.9 million basic diluted weighted average number of shares outstanding. Excluding the effect from the income attributable to common shareholders for the year, the unrealized loss on derivatives, the amortization of the below-market time charters acquired and the net gain on sale of vessels and the loss on write-down of vessels held for sale, the adjusted loss attributable to common shareholders for the year ended December 31, 2020, was $0.02 per share. And if we further adjust this for the loss on debt extinguishment, the year's contribution becomes a $0.06 gain per share as compared to adjusted loss of $1.52 per share basic and diluted in 2019. Again, as previously mentioned, secure channels do not include these adjustments in the public statements. Let's now to Slide 16 to review our fleet performance in a little bit more detail for margin that Aristides discussed earlier. As usual, we will start our review by looking first at our fleet utilization rates for the fourth quarter and full year of 2020 and compare them to 2019. Our fleet utilization rate is broken down into commercial and operational. During the fourth quarter of 2020, our commercial utilization rate was 98.5%, while our operational utilization rate was 96.3% compared to 100% commercial and 99.7% operational for the fourth quarter of 2019. Our utilization rate calculation does not include vessels in scheduled repairs or dry docks, if any of those event happen during the period. On average, 14.4 vessels were known and operated during the fourth quarter of 2020, earning an average time charter equivalent rate of $10,497 per vessel per day compared to 16.84 vessels owned and operated in the same period of 2019, earnings another expense equivalent rate of $9,086 per vessel per day. Our total daily vessel operating expenses, including management fees, general and administrative expenses, but excluding directing costs, averaged $7,164 per vessel per day in the fourth quarter of 2020, compared to $6,182 per vessel per day during the same period of 2019. Let's now look at the bottom of the table to our daily cash flow breakeven levels presented here on a per vessel, per day basis. For the fourth quarter of 2020, our cash flow breakeven level was $8,215 per vessel per day, compared to $9,237 per vessel per day during the same period of 2019. Let's look now at the right part of the slide to review the same figures for the 12-month period, the full year of 2020, and compare them again to 2019. For the full year, in 2020, we reported a 97.5% commercial utilization rate with a 98% operational utilization rate, compared to 99.2% commercial and 99.9% operational utilization rates for 2019. During the 12 months of 2020, 70 vessels were owned and operated, earning another time charter equivalent rate of $9,445 per vessel per day compared to 13.1 vessels operated during 2019, earning on average $8,782 per vessel per day. Our total daily operating expenses, again, including management fees, general and administrative expenses, but without dry docking costs, averaged for the year $6,431 per vessel per day compared to $6,294 per vessel per day during 2019. Looking again at the bottom of the table, we can see that our cash flow breakeven levels for the 12 months of 2020 was $8,357 per vessel per day compared to $9,071 per vessel per day during 2019. Let's now move to Slide 17 to review our debt profile. This slide shows in the bottom graph our cash flow breakeven level expectation for the next 12 months. And on the top part of the slide, we can see our scheduled debt repayments over the next several years. As we can see, our loan repayments during 2021 are steady to be $8.7 million. We can see this in the dark stated part of the slide, and they are scheduled to decline over the next couple of years in 2022, 2023. In 2021, we had balloon payments of about $12 million collateralized by 4 of our vessels. Also, we are scheduled to repay a loan, an affiliate loan of $2.5 million at the end of the first quarter. In 2022, there is a smaller balloon payment of $1.9 million to be made, collateralized by none of our vessels. And finally, in 2023, we have balloon payments of about $33 million that is collateralized by remaining 4 of our vessels. We will seek to refinance all of the above balloon payments when they come due. I would like to make -- to state here that in January 2021, we made a voluntary redemption of EUR 2 million of our preferred equity, reducing the balance to a little more than $6 million. An additional benefit for us of this voluntary payment was that our preferred shareholders agreed to keep the dividend rate for our preferred stock to 8% if paid in cash or 9% if paid in time at the option of the company. This dividend rate was set to become 14% in January 2021 and will remain at the above set levels of 8% or 9% for another 2 years. Let me now make a quick note on the cost of our funding before we move to reviewing our cash flow breakeven levels. As we pay an average margin of our bank debt of about 3.4% and assuming a LIBOR rate of 0.3%, our senior debt cost averages about 3.7%. If we take into account at least at the end of last year of our affiliate loan and the cost of our preferred equity, our average cost of our non equity funding as of December 31, 2020, was about 4.5%. Let's now look at the bottom of this table, where we can see our cash flow breakeven level expectation over the next 12 months in dollars per vessel per day. Our loan repayments that we discussed previously are to make $1,711 contribution to our breakeven -- to our cash flow breakeven level. If we make similar assumptions for the remaining components of our cash flow breakeven, that is operating expenses, G&A expenses, interest, dry docking costs and cash payments for our preferred stock dividend, we come up with a cash flow breakeven level for the next 12 months of $9,561 per vessel per day. Let's now move to Slide 18. This slide provides highlights from our balance sheet, both on the basis of the book value of our vessels and is adjusted for the market value of the fleet. As of December 31, 2020, we had cash and other assets of about $12.2 million, while the book value of our vessels was about $98.5 million, giving us total book assets of $110.7 million. On the liability side, we had an outstanding bank debt of $69.8 million, preferred equity of $8.4 million, and other liabilities of about $5.2 million, thus leaving us with a net book value of $21.6 million. If we adjust the book value for our vessels with our charter-adjusted market values as of mid-February, we can calculate the net asset value of our fleet to be in the range of $80 million or about $12 per share. Recently, our shares have been trading in the range of $8 million to $10 million, $11 million -- $11 per share. We believe that trading at this price range represents a significant discount to our net asset value per share, thus offering good appreciation potential for our shareholders and good investment opportunities for other investors. And with that, let me conclude my remarks and turn the floor back to Aristides to manage the remaining of the call.

Thank you, Tasos. Let us now open the floor to any questions that we may have.

[Operator Instructions] Our first question for today is from Tate Sullivan from Maxim Group.

Can you just provide more detail on the core food damage, what is the usual timing of the insurance receipt of the insurance proceeds? And does this kind of circumstance usually extend the time charter? Is it still scheduled to expire in September?

Good question. The time for the proceeds we expect to get in this quarter the most of it, maybe some of it next quarter. The charter can be extended. It's their option to extend. And obviously, we expect them that they will extend it for the 2 months that the vessel was off higher. So that will mean that we will probably run for 2 additional months at the charter rate that we had in this current charter, which was 10,200, if I remember well.

Okay. Okay. And then how early with the backdrop of the positive market -- And I'm looking at your fleet profile with multiple ships with the time charter coming due this year, how early can you start to discuss with these customers, either extending or securing a new time charter contract? Is it a month before the current exploration? Or can that change, please?

The usual is about a month before the expiration. That is the usual. We can and we are thinking of approaching charter earlier. But if you approach them earlier, obviously, you have to be prepared to get a little bit of a lower rate. So we might talk on several vessels earlier than that, but we might go up to about a month before we deliver.

Okay. And last one for me. And you gave a lot of good macro backdrop for demand from urgency for the customers for container ships, and we've read a lot of examples of disruptions to the market. But from where your ships have been, can you just provide a specific example of, I mean, a port that has some disruption of no available ships or inventory building, if you have an example ready?

Yes. I can get you information on that. I don't have it on hand, but there have been delays on various ships because of concession. If you want I can get you some information. I will get back to you on this.

Our next question is from Poe Fratt from NOBLE Markets.

Yes. Just a follow-up on that first question about the insurance. What is the insurance amount that you're looking to recover Aristides?

About $1 million.

Okay...

This is above $1 million.

Okay. And then when you look at the conversation about the core 0 and the downtime and potentially extending it, does the current fleet profile use an assumption that will be extended for 2 months? Or is that 2 months in addition to time charters for September of 2021?

It should be 2 months in addition to the period indicated in our current chart. The charters have not exercised it yet, but I presume they will, of course.

Yes. I mean, considering it's a 10,200 and the current rates are well above that, you would assume. And I assume -- but I assume they'll wait probably to see how the market develops in the third quarter before doing that?

Yes, I would think so.

Okay. And then when you look at the upcoming renewals, are you looking to extend out 1 to 2 years, even 3 years? Or can you just sort of talk about your chartering strategy in the context of how many or how much of the fleet's already extended out into 2022?

Yes. As you see, what we have -- the 7 vessels that we have extended, they've all been between 1 to 3 years. And the intention is to do something similar, always keeping somehow staggered opening of our vessels, so that not all ships open up at the same time. But we are looking for minimum 1 year and going up to 3 years, and we will see how that will go depending on the rate of the charter as well. Yes.

And that's helpful. And then just to clarify on the Oakland, it is -- you're only one that's on an indexed rate. And in the presentation, you indicate that its current rate is roughly 24,918, and then you put minus 10%. I'm just trying to clarify is the fixed rate through April 21, 24,918? Or is that less 10%?

It's 24,918, less 10%. And this is the formula. We are getting the index rate minus 10%. And every 3 months, we look at what the index is. So next time we will look at it, is on the 24th of April. And whatever that rate will be, we will be getting 10% less from that.

Yes. I was going to say it was a good rate, but then I noticed that the current rates are 31,000. But that's [indiscernible]...

This would definitely happen. What's important for this particular city is what the rate will be on the 24th of April because that will set the rate for the upcoming 3 months.

Great. That's helpful. And then Tasos, you talked about the operating costs and the breakeven. In the fourth quarter, it looked like OpEx were about $6,600, but you're forecasting for the next 12 months about $6,050. Can you talk about what might have moved up the fourth quarter OpEx and what you're seeing looking into 2021 from an OpEx standpoint?

Yes. This was partly due to one-time costs or quarter second to be in the fourth quarter, some crew replacement, the majority of the increase has to do with crew replacement costs because we had due to the pandemic certain additional costs for that. And a couple of vessels were trading in areas that require more lubricants, more consumption, get more attention because of the difficulty of the trade, which we expect not to be the case in the coming year. And if you look at the annual results, the level of OpEx was very comparable to last year, to 2019, I mean, indicating that the fourth quarter was a statistical outlier.

Yes, more of an aberration. And then when you look at your cash management from a standpoint of how you're going to decide whether you pick the preferred dividend, can you just sort of walk us sort of how you're thinking on that, the 100 basis point higher dividend to ticket? And then also, in the context to Tasos, you talked about a net asset value and you think your stock is well under that. Does that mean that the ATM will be inactive over the course of -- until the stock moves up higher? Or can you just sort of talk about your cash management over the next couple of months?

The first regarding the cash management, we have the intention to pay the dividend on our preferred stock in cash, given that we have the liquidity, sufficient liquidity. We have the option to reserve to pay in kind if there is -- if the circumstances change. But our intention is to keep banking cash. I think even saving the 1% is significant. Plus, I believe, as Aristides mentioned, if things develop the way we expect them -- we hope them to develop and renew our vessels at higher rates, we will have the capacity to make significant reductions both in our preferred equity and our bank debt. Your other question was regarding the...

Yes, the ATM and store's activity, it looks like January, February still stuck at a little under $9. And if my math is correct, and I was just wondering sort of how you look at that relative to your comments about the stocks undervalued?

We want to stay as close to what we believe the net asset value of our fleet is. That's not the sole condition, the sole consideration. It depends on other needs for cash. But generally, we try not to dilute our shareholders, and that was our strategy and our objective all the past years, and we'll try to use fundraising in ways that increase the value of the share rather than the trade.

And then in the past couple of calls, you've highlighted that certain vessels are less encumbered than others and you had a certain amount of availability. Have you updated your current fleet toward what potentially you have as far as borrowing capacity?

I mean, if you look -- very simply, if you look at Slide 18, where we sort of put next to each other, the market value of the vessels, charter adjusted because, as Aristides mentioned, there are some of our charges below market now. And the bank debt, you can see we are, I think, even below 50% -- at or below 50%. I think we're at 45% leverage now. And again, the market values were even -- might be even below 40%. So we have -- I estimate that we have at least a $20 million even more lending capacity if we releverage -- we choose to relever our existing fleet.

There are no further questions. I'll hand back to the speakers for closing comments. Thank you.

Thank you all very much for participating in this call. We'll talk again in 3 months' time. Bye.

Thanks for attending.

Thank you, everyone, for joining. You may now disconnect.