Thank you for standing by, ladies and gentlemen, and welcome to the Euroseas Conference Call on the Second Quarter 2021 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. Forward-looking statements. 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 #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. And now I would like to pass the floor to Mr. Pittas. Please go ahead, sir.

Good morning, ladies and gentlemen, and welcome to our scheduled conference call for today. Together with me is Tasos Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the 3 and 6-month periods ended June 30, 2021. Let us turn to Slide 3. Our income statement highlights are shown here. For the second quarter of 2021, we reported total net revenues of $18.3 million and net income of $7.9 million. Adjusted net income attributable to common shareholders for the period was $7.6 million or $1.12 per share basic and diluted. Adjusted EBITDA for the period stood at $10.3 million. Tasos will go over our financial highlights in more detail later on in the presentation. Please turn to Slide 4, where we discuss our recent operating developments. As previously announced, on June 30, we placed orders for 2 new building vessels of 2,800 TEU at the South Korean yard, Hyundai Mipo, at approximately $38 million each, to be financed with about 60%, 65% at the time of delivery. The 2 new buildings are scheduled to be delivered during the first and second quarter of 2023, respectively. It is worth noting that these vessels are 30% more fuel efficient than our ships of the same type. We expect to be able to charter them in about a year's time. During the second quarter of 2021, the shareholders of the company Series B preferred shares converted all the remaining Series B shares into shares of common stock at the conversion price of $14.05 per share. As a result of the conversion, Euroseas issued 453,044 common sales to the holders of the Series B preferred sales. Following the conversion of the Series B sales into common stock, the company's Director, Mr. Christian Donohue, originally appointed to…

Thank you very much, Aristides. Good morning from me as well, ladies and gentlemen. I will now take you through the next 5 slides, to give you an overview of our financial results for the second quarter and first half of 2021 and compare them to the same periods of last year. For that, let's turn to Slide 15. For the second quarter of 2021, the company reported total net revenues of $18.3 million, representing a 35.4% increase over total net revenues of $13.5 million during the second quarter of 2020, which was the result, primarily of the increased market charter rates or vessel churn in the second quarter of this year. On others, 14 vessels were owned and operated during the second quarter of 2021 compared to 19 vessels operated in the same quarter of last year. The company reported a net income for the period of $7.9 million and a net income attributable to common shareholders of $7.6 million as compared to a net income of $1.3 million and the net income attributable to common shareholders of $1.1 million, respectively, for the same period of 2020. Interest and other financing costs for the second quarter of this year amounted to $0.7 million compared to $1.1 million for the same period of last year. This decrease is due to the decreased amount of debt we carry and the decrease to some extent in the weighted average LIBOR rate in the current period compared to last years. Depreciation expenses for the second quarter of 2021 amounted to $1.6 million compared to $1.7 million for the same period of last year and adjusted EBITDA for the second quarter of 2021 was $10.3 million, a significant increase over the $4.4 million we recorded during the second quarter of 2020. Basic and diluted…

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

[Operator Instructions] Your first question today comes from the line of Tate Sullivan from Maxim Group.

If I can start with the newbuilds and you announced the newbuilds on June 30, and you gave some additional information today, but will -- based on the -- will you have a deposit for those newbuilds in the current quarter?

Yes, we will provide a 10% deposit within the current quarter.

Okay. And Tasos, can you talk a little bit about the targeted debt-to-capital or targeted debt ratios post the newbuild acquisitions in 1Q and 2Q? I mean, it still seems like with all the current rates in your EBITDA projection and the EBITDA current forward rates, you'll still be -- maybe a little bit below where you are currently. But can you talk a little bit of targeted debt ratios, please?

We are -- the newbuildings we are assuming, we haven't started any inquires with banks, but we're assuming that we're going to finance the acquisition price by about 2/3, 65% debt, which will draw on delivery. So we expect to make all the initial deposits and payments using our -- funds from our balance sheet. Right now, our leverage ratio is very low. If you use the adjusted market values, we are just about 20% loan-to-value ratio. Even if we have the 65% that we intend to finance the newbuild vessels, I don't think that our loan-to-value ratio will go above 35%.

And you mentioned the contracts for the newbuilds may be secured in about a year, do you base that statement on the current market or your experience historically when you like to secure the contracts before receiving delivery. Can you talk about that timing, please?

Yes. I mean deliveries in about what 20 months, we would need if we wanted to fix them now, we would fix a lower rate than the going rates today. So our intention is to wait and maybe around this time next year to fix the ships out. But we will see. I mean, we will play the market. This is one additional item where we can play the market and decide to fix when we think is the optimal time.

Okay. Last one for me before I turn it over. If you order -- did over -- decide to order additional boats now, would I -- do you have -- well, you can talk about ongoing just -- when would that be into 2024 for delivery? Or maybe just can you talk about the general sector delivery timelines currently, please?

I think generally for Feeder ships the deliveries could still be found within 2023, but second half of 2023. And if you talk about a little bit larger ships, I think you're probably in 2024.

Your next question comes from the line of Poe Fratt from NOBLE Capital Markets.

I had a couple of questions. The first, which is you talked about the charter potentially getting secured a year out on the newbuilds. Do you have a target capital recovery over the initial term of that charter? Can you just sort of talk about what you might be looking for as far as terms on that charter?

I don't think so, Poe. I don't think I'd like to make any predictions now about where the market will be in a year's time. I am hopeful, but I don't want to make any calls.

But would you look to recover, say, 40% to 50% of the capital cost over the initial term irrespective of what the rate would be? Or are you thinking along those lines? Or is it just you have so much...

Not really, not really. I'm thinking that I will have 20 to 25 years of life from the project to recover the project. If I can make it in 3, 4, 5, 6 years, whatever it is, we will be tremendously happy. So -- but I don't know what it will be, and I don't want to say something.

Okay. Sounds good. And you went through sort of your focus and your strategic sort of goals over the next couple of quarters or maybe a year. Can you talk about the expansion potential and what potentially are the hurdles to seeing consolidation right now? Is the bid ask -- seller expectations have to move up. Can you just give us an idea of sort of how you're thinking about consolidation right now?

This can happen in 2 ways, right? One, we use our liquidity to buy new vessels. Of course, we would have to pay more to buy the ships, but we would be able to charter the loss at a higher price. And we are looking into such projects continuously and even now as we speak. That is one way to grow. The other way to grow is by leveraging on the stock price and buying ships using our stock price as a currency, that we also feel is still quite low compared to what our NAV is or our EBIT to EBITDA would result in. So I think we're not ready yet to move on that line. But we are certainly looking at vessels where we think that we can find charter coverage to support buying at these elevated prices of today.

Okay. And then when you look at your fleet, like you've been very successful in locking up longer-term charters on -- the latest one is the Diamantis, that's a 1998 vessel, with 3 -- more than 3 years of charter coverage right now, would you think about monetizing that to reinvest into newer assets? Or is that something that you might consider?

Well, obviously, and as you saw by the newbuild order that we placed, we are looking to gradually take this opportunity and make the age of the fleet younger. However, we have, for quite some time, being same during the last couple of years that we have a length of fleet to it's -- is however, technically very well maintained and can trade everywhere. And that represented an option value in the company. We've been lucky that this option value has been realized as the Diamantis case shows us. So indeed, I think that a few of our vessels that will open up in the next 6 months will also be chartered at extremely high levels.

And how do you weigh the trade-offs of doing longer term versus playing the near-term market and having the upside if rates continue to move. Can you just talk about the process that you'll be looking at like, say, the Oakland and then the 3 other Feeders that are coming up over the next 6 months?

Yes. That is always a consideration that we have to make. Do we want to go for 1 year or 3 years or 4 or 5 years out in the charter. Obviously, the longer period, the lower the rate, but still rates are so high that overall, we have decided to go for longer durations between 2 and 3 years, avoiding the extreme 4 or 5, but not even at 1 year. And I think we will continue somehow like that. You should expect to see us doing deals 2 to 3 years.

Okay. Great. And then you highlighted potentially reinstating the dividend or potentially buying stock. Can you prioritize that as we sit right here. And today, what would be more attractive for you?

Right now, we still feel very confident on the market development, and we are targeting growth more than thinking that this will give a better return to our shareholders than reinstating the dividend today or maybe even the next quarter. But this is something that we consider every quarter, we evaluate and we decide what to do. So if we decide to pay dividend, I think we will want to have a dividend that continues over time, as we have done in the past. But up to now, we are mainly still looking into growing the company further. We think the prospects are quite good to utilize our earnings in this way.

Okay. Great. And then Tasos, if I could just talk to you about the outlook for OpEx. You said you put out the next 12 months. Is that -- are you -- do you think there's any potential for additional cost -- operating cost inflation over the next couple of quarters? Or are you comfortable with the number -- with where you stand right now as far as being able to control OpEx?

I think this is -- the OpEx estimate is based on our budget for the rest of the year, a reasonable increase of expenses for the first 6 months of next year. So I don't have any basis to suggest that I would expect more higher OpEx. We do see that the insurance market being a bit tight and we have fully evaluated how the repercussions of the pandemic will affect growing another mobility cost et cetera, but that is the basis of the estimates put out there. Part of the OpEx are affected a little bit by where the vessels trade. And depending on where the vessels trade, we might see some influence, but it's hard to predict that.

Okay. Great. And then I'm coming up on your EBITDA calculator with just a little bit higher numbers for us as contract cover for 2022. And I was just wondering, do you -- given that the option on [ Aegean ] is well in the money. Is that something you have in full cover? Or if you still -- are you excluding that until it's the options exercised?

I think if it's well in the money, we should have included it or we have included into the coverage portion of the fleet. So I hope the numbers are close with what you estimate, but -- yes. Whatever rate below market is assumed to be exercised.

Okay. Yes. it's just a little bit higher, and I was thinking that might be the difference. Great. And we look forward to seeing what happens over the rest of the year.

One thing that will be significant, Poe, hopefully, will be the assumed rate for the open days, which we're trying to avoid making at least assumption, I just saw here the existing contracted rates as a reference point. But clearly, present market levels are almost twice as high. So that should provide significant higher upside.

Your next question comes from Tate Sullivan from Maxim Group.

Just a couple of follow-ups, if I may. Maybe what the current contracts that you've announced and with the cash build, at least in my forecast, you mentioned at the newbuild announcement potentially using both debt and equity. But is your intention to use cash in addition to the debt to buy the newbuilds?

Yes. I mean we target to finance, let's say, 60% to 65% of the acquisition price with debt. Typically, withdraw the debt at delivery of the vessel. So we have to make 3 payments before -- 3, 10% payments before delivery. And those will be done, will be covered by funds that we have in our balance sheet.

And then looking -- yes, and then looking at the ships, please go ahead -- looking at the remaining ships that have contracts expiring before the end of this year, specifically the core through just getting -- I mean, I apologize if I missed it. I think the core through already had a drydock period in the last year or do you expect some gap between the current contract end in September and a new contract?

In the core through situation drydock this year, not last year. I mean I need to double check that and get back to you. So it's this year.

Thank you. I will now hand the call back for closing remarks.

Thank you very much, everybody, for attending our conference call today. We will be with you again in 3 months' time. Thank you.

Thank you, everybody.

Thank you. That does conclude our conference call for today. Thank you for participating. You may all disconnect.