0:04 Thank you for standing by, ladies and gentlemen, and welcome to the EuroDry Conference Call on the Fourth 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. At this time, all participants are in listen-only mode. There will be a presentation followed by a question-and-answer session [Operator Instructions]. 0:45 I must advise this conference is being recorded today. Please be reminded that the company announced results today 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. Those statements are within the meaning of the federal securities laws. 1:10 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 on 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. 1:51 I would now like to pass the floor over to Mr. Pittas. Thank you sir. Please go ahead.

1:58 Good morning, ladies and gentlemen, and thank you all for joining us today for our scheduled conference call. Together with me is Tasos Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the full year and quarter ended December 31, 2021. 2:20 Please turn to Slide 3. Our income statement highlights are shown here. This is by far the best quarter since the separation of EuroDry from Euroseas back in 2018. For the fourth quarter of 2021, we reported total net revenues of $22.3 million and a net income of $16 million. After adjusting for an approximate $2.9 million fair value gain in derivatives and $0.8 million of preferred and preferred deemed dividends. 2:59 Adjusted net income attributable to common shareholders was $12.3 million or $4.29 per share diluted. Adjusted EBITDA for the quarter stood at $16 million. For the full year 2021, our net revenue was $64.4 million, and net income was $31.2 million. Our adjusted net income was $30.3 million or $11.88 per share diluted after adjusting for an approximate $0.8 million change in fair value of derivatives, a $1.65 million loss on debt extinguishment and $1.75 million of preferred and preferred deemed dividends. 3:48 Adjusted EBITDA for the 12 months of 2021 stood at $42.3 million. Both the quarterly and the yearly changes of net revenues and adjusted EBITDA were higher than the previous years by multiple measures of magnitude as can be seen in the slide. Our CFO, Tasos Aslidis, will go over our financial highlights in more detail later on in the presentation. 4:18 Please turn to Slide 4 for our operational highlights. As previously announced in January 19, 2022, the company agreed to acquire Motor Vessel with Molyvos Luck, in 2014, built Supramax vessel for…

18:54 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 fourth quarter and full year of 2021 and compare them with our financial results in the equivalent periods of 2020. 19:19 For that, let's turn to Slide 15. For the fourth quarter of 2021, the company reported total net revenues of $22.3 million, representing a 248% increase over total net revenues of $6.4 million during the fourth quarter of 2020. This increase was the result of the increased average time charter equivalent rate and by our vessels and the higher number of vessels we operated in the fourth quarter of last year compared to the same period of 2020. 19:56 The company reported a net income for the period of $16 million and a net income attributable to common shareholders of $15.2 million as compared to a net loss of $0.3 million and a net loss attributable to common shareholders of $0.7 million for the same period of 2020. Interest and other financing costs for the fourth quarter of 2021 were $0.7 million as compared to $0.5 million for the same period of 2020. The increase mainly due to the higher average debt outstanding for the period. 20:40 Adjusted EBITDA for the fourth quarter of 2021 was $16 million compared to $1.8 million achieved during the fourth quarter of 2020, an increase of 773%. Basic earnings per share attributable to common shareholders for the fourth quarter of 2021 were $5.38, calculated on about 2.8 million weighted average number of shares outstanding, while fully diluted earnings per share were $5.32 calculated on about 2.9 million shares weighted average number of shares outstanding compared to basic and diluted loss per…

37:21 Thank you, Tasos. Let me open up the floor for any questions we may have.

37:46 Have a good day and Tasos and Aristides.

37:48 Hi.

37:51 Hi, starting on the – as I have in the past since you've introduced the EBITDA calculator. And Tasos, can you just go over a couple of changes. I apologize if I missed it on the indicative drydocking costs. I do not think you included those in the January presentation and also a slight increase in the OpEx and G&A vessel per day cost from $6,500 to $6,700. Can you just walk over why you decided to make those changes, please?

38:21 Regarding the drydocking costs, we always included them simply in 2021, we had a very -- almost no drydocking expenses. So that's why we have included them and absolutely, sorry we didn't have drydocking expenses in 2020, but almost no drydocking expenses in 2021. So it was -- it made a very small difference and perhaps didn't list them explicitly on the EBITDA calculator for 2022, it's something due that we should take into account, probably different from other presentations are always our EBITDA is net of drydocking expenses. And we increased the estimate for our OpEx engineering costs partly to be conservative and as we have seen some increases in the cost due to growing and other developments.

39:24 Okay. Great. And then for the Q1 EBITDA, does it on the same slide, does it include the gross ballast bonus for the Alexandros ship? Or how will your account for that?

39:39 It should include the ballast bonus.

39:44 Okay. Great. And then the acquisition of the Molyvos Luck, you announced it a little after January, $21.2 million is all of that cash coming out of your cash flow statement in this current quarter or was there -- maybe you finalized it a bit?

40:04 That's correct. We intend to finance about half of the acquisition costs with bank debt, but we'll do it after the acquisition will pay for the vessel with CAGR that we currently have in our balance sheet.

40:16 Yeah. Thank you. Aristides, I'd love to hear just more, you gave some comments before. I mean, in your career in shipping and increase the rapid increase in the cash on your balance sheet. Have you seen that before? And would you say you continue to evaluate balancing that between acquisitions, if you can still forecast a positive IRR going forward versus repurchases? Can you give an update on, putting missing context in your shipping career, please?

40:46 Sure. I mean, last time, we saw this significant increases was really back in 2006 and '07 and '08. So that was the last three years when we saw a very significant growth in our cash position, and that was the time where we managed to grow the company from seven vessels at the time to -- about 20 vessels by the end of that cycle. And Again, we are seeing it now. We think that it will give us an opportunity to continue growing the company. which is the primary task, but we have to always do it cautiously and conservatively because we know how shipping is and how things can change when nobody expects them to change. 41:55 We don't expect the change. We cannot foresee what could cause a correction. But you always have to be careful. So we have to maintain a strong balance sheet. Therefore keep enough liquidity and -- in hand and also keep leverage low, but at the same time, be able to grow the company. We did consider also instituting share buyback program in our last board meeting. We didn't -- we decided against it at the end because the share price started to gradually correct. It still is, we think, very low. But it's come off extreme lows that would warrant such a scheme to be implemented. It's still very low our share price, but we decided against it, growth of the company, we think is more important.

43:14 Thank you. And just a follow-up on that. Going, I mean, through this current cycle with leverage, I mean net debt to EBITDA a little below two times to end the year, and I forecast going at well below 1x with no acquisitions. I mean what debt ratios are you looking at? And what would you like to have through cycles, if you could put that in context, how you're looking at that?

43:37 In a good market – in the good market, we would want to see that going down to below 30% level because with the correction in the market and the prices dropping, it can easily go to above 50%, as prices drop based on real vessel prices. So we should be always below the 30% based on real prices.

44:17 Okay. Thank you both for your follow up questions.

44:22 Thank you.

44:23 Thank you.

44:24 Thank you. Your next question is from the line of Poe Fratt of NOBLE Capital Markets. Please go ahead. Your line is now open.

44:37 Good morning Aristides. Good morning Tasos. This is Poe Fratt from NOBLE Capital Markets.

44:44 Good morning.

44:43 HI.

44:44 You've done a good job of expanding the fleet and enhancing the fleet of just over the last couple of quarters. Can you talk about how the S&P market looks right now? And sort of what we should expect in activities. And as the fleet grows, does the potential to sell some of the oldest assets, come into view. Can you just talk about sort of fleet composition in the context of what the current S&P market looks like?

45:18 Yes. It's difficult to say because it's a very dynamic market Poe, it's something that we evaluate, both during the quarter and of course at our quarterly Board meetings. So it's difficult to say what has happened and what we have seen is we saw the market correct, as you said, as we've seen, as we've witnessed during the last quarter. It was a drop that we expected because seasonally, we do expect a correction in the market. Maybe it's been stronger the correction than what we all expected. We think that we will see a change going forward and the stronger market as we go into Q2, as historically seasonally happens. 46:24 So prices did correct a little bit, and we think we took advantage of that in buying this vessel that we did. We have to see how it develops within Q2 because things go in parallel, obviously. As the market strengthens, we will be making more money, and then we will be having more money available to grow, but prices will be higher. So always, it's a difficult balancing act. If this happens, we are also conscious as you rightly say that a couple of our vessels are over 20 years of age, and we will need to replace them. 47:12 So it's in our mind that we might need to swap maybe one or two of our elder vessels with a couple younger vessels, that's also greening the fleet a little bit. It's a possible action. But we don't have any particular decisions made yet. So I don't want to say more other than what I told you that we are considering all these options.

47:43 Great. And maybe you could just highlight the activity on the FFA front. What drove you to close out the FFA that you had in place for the first quarter of '22 in the fourth quarter? And then does this mean you don't have any FFAs in place right now? And then...

48:06 Correct. We have nothing in place right now. We use the FFAs only as a hedge. I mean we never take any FFA position on speculation. We take it only as a hedge. So only to fix against open days that we have on our ships. And that's what we did when we thought that at $30,000 we could fix Q1 for one of our ships. It seemed a good idea. It was a good idea. We did it. Then -- when - after two weeks of time when the markets have dropped that much, we said, well, let's get this nice profit of $750,000, and we closed that position and returned the vessel into the market. So in retrospect, it would have been better to have kept that position because we would have kept the cover on the ship, and it would have made more money. But we were happy at the time with that profit.

49:28 And then Aristides, with the larger fleet, does your view on hedging changed at all, meaning with more open days, do you think that you'll do more hedging in the future? Or do you ...

49:44 Yes, but the hedging can be done also by fixing on a time charter basis, right? So we will not only be doing it through FFAs. We are also doing it and can do it on fixing time charter. It's exactly the same result. So you see the Good Heart, we fixed that vessel for one year's charter at $25,000 a day during the last quarter. That is also hedging our position to an extent. We are not very much hedged. We are only, as you saw 19% covered for 2022, which is not a lot. We still think we want to be quite open. But you can expect that you will see us within Q2, which is traditionally quite a strong month to increase that coverage, either through FFAs or through time charters.

50:53 Understood. And then Tasos, it looks like you're aiming to finance about 50% of the latest acquisition. You typically -- when you line up an acquisition, it seems like you have the terms pretty well if not fixed, at least preliminary terms. Would you be able to share any preliminary terms on the new debt that you might be looking at?

51:22 I think we're -- I mean, we don't have fixed terms this time around because we have enough cash to buy the vessel outright and finance after the acquisition, as I mentioned. But we expect to see a LIBOR margin to be around between 2% and 2.5%. We're looking to finance about 50% of the vessel.

51:43 And do you think you can get 5-year term? Or sort of what should we be thinking about sort of...

51:51 I'm sure we'll get four to five-year term for the loan and the profile up to the age of 16, 17.

52:01 Great. Thanks for your time.

52:06 Thank you guys.

52:07 Thank you.

52:01 Thank you. There are no further questions at this time. So may I hand the meeting back to Mr. Aristides Pittas for any closing remarks.

52:21 Thank you all for being with us for our quarterly call, and we'll be with you during our next quarter to discuss Q1 results. Thank you.

52:35 Thanks, everybody.

52:39 That concludes the presentation. Thank you for participating. You may disconnect.