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. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [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 two 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'd now like to pass the floor over to Mr. Pittas. Thank you, sir, and please go ahead.

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 three-month period ended March 31st, 2022. Let's turn to slide three, our income statement highlights are shown here. For the first quarter of 2022, reported total net revenues of $45.4 million and a net income of $29.9 million. Adjusted net income attributable to common shareholders was $26.8 million, or $3.70 per share diluted. Adjusted EBITDA for the period stood at $31.1 million. Our CFO, Tasos Aslidis will go over the financial highlights in more detail later in the presentation. We are indeed very pleased with the company's increased profitability, which is, of course, the result of the extremely strong charter rates of vessels recorded during the first quarter of 2022. In this positive environment and with a robust earnings visibility well into 2024, we believe our stock should be trading at much higher levels, given the value of these contracted revenues and the net asset value of the company. We believe these factors combined create captivating opportunities for us. Therefore, the company's Board of Directors approved the share repurchase program for up to a total of $20 million of the company's common stock to be used at management's discretion. The Board will review the program after a period of 12 months. Share repurchases will be made from time-to-time from cash in open market transactions at prevailing market prices or in privately negotiated transactions. The timing and amount of purchases under the program will be determined by management based upon market conditions and other factors. The program does not require the company to purchase any specific number or amount of…

Thank you very much, Aristides. Good morning from me as well, ladies and gentlemen. As usual, I will now take you through the next five slides of our presentation and give you an overview of our financial highlights for the first quarter of 2022 and compare the results to the same period of last year. For that, let's turn to Slide 17. For the first quarter of 2022, Euroseas reported total net revenues of $45.4 million, representing a 217% increase over total net revenues of $14.3 million during the first quarter of last year. The company reported a net income and net income attributable to common shareholders for the period of $29.9 million as compared to a net income of $3.8 million and net income attributable to common shareholders of $3.6 million for the first quarter of 2021. Interest and other financing costs for the first quarter of 2022 amounted to about $1 million, compared to $0.7 million for the same period of last year. This increase is generally due to the increased amount of debt we’re carrying and the increase in the weighted average LIBOR rate that we pay in the current period compared to last year. Adjusted EBITDA for the first quarter of 2022 was $31.1 million, compared to $5.6 million for the same period in 2021, representing a 455% increase. Please see the press release we issued yesterday for the adjusted EBITDA reconciliation to our net income. Basic and diluted earnings per share for the first quarter of 2022 were $4.15 and $4.13, respectively, calculated on $7.2 million basic and $7.3 million diluted weighted average number of shares outstanding, compared to basic diluted earnings per share of $0.53 per share for the first quarter of 2021, calculated on about $6.7 million basic diluted weighted average number of…

Thank you, Tasos. Let me now open the floor for any questions.

Thank you, sir. Before we open the line for questions, this conference is for Euroseas' first quarter 2022 results. [Operator Instructions] And we take our first question, please go ahead. Your line is open.

Hi. Thank you. Good day. Tate Sullivan from Maxim Group. Can we start just -- can you provide more details on your newbuild chartering strategy after you booked the Rena and the Gregos well ahead of delivery. Do you hope to replicate those types of contracts, those levels with the next 220 under deliveries? And is setting the contract 10 months to 13 months, well ahead of delivery of a much longer time line than historically, please?

Sure. I -- it depends on the market if we are able to do it at similar levels, we think these are great levels. But the next couple of ships comes up a little bit later than the first two. So we'll have to wait for a few months before we are able to move on the other ships. These were the two prompter ships that we fixed. What will happen will really depend on the market, if we are able to do these things going on for later.

Thank you. And you mentioned preparing for a potential for an eventual correction rather. And I think before you've talked about maintaining a lower capital ratio than historical, maybe about 30% based on NAV. Is that still what you may be looking at or what other balance sheet approaches that you're taking through the cycle?

Sure. We are repaying debt continuously. We will keep leverage contained. We do currently have the visibility on our earnings and our constructed earnings, which gives us a great assurance that we are very well covered for the following three years. So we don't have any -- any fears for the next three years. And we want to take advantage of the opportunities that might appear to continue growing the company and rewarding the shareholders.

And just back on the newbuilding strategy, if I may. Might you take a staggered approach similar to what you have with your whole fleet before in terms of having a mix of shorter-term and longer-term contracts like the three-year contracts you recently…

It's possible. It's possible. We always try to take care not to have all the ships opening up at the same time. It might be a poor time in the future, if everything opens up at the same time. So we like the staggered more conservative approach.

Okay. Thank you. Have a great rest of the day.

Thanks.

Thank you. We will take our next question. Please go ahead. Your line is open.

Good morning, Aristides. Good morning, Tasos. This is Poe Fratt from Alliance Global Partners.

Hi, Poe.

Good morning. I had a couple of follow-up questions on just the newbuilds. Can you highlight how much you spent in the first quarter on the newbuild program? And how much you're going to spend for the rest of the year? And then if you have numbers available for 2023 and 2024 that would be helpful?

I think in the first quarter of the year, we made the 10% payments for the first two vessels we ordered. And I think we are still in the process of making these initial payments. I don't -- none of our vessels have started being built yet. So the second payment will be -- will be made when the vessels start being built.

I think for what -- we can send you afterwards the full schedule of payments so that you have a clear picture.

That would be really helpful. And then Aristides on the dividend, you reinstated the dividend at $0.50 a quarter. Is that something that we should expect as far as a level over the next several quarters, or how will you look at the setting the dividend, is it a set formula or set them out?

No, we don't have anything set other than that we will be consistent, and we will be paying dividends going forward. We were perhaps not one of the first companies to reinstate the dividend because we wanted to pay a dividend when we know that we can comfortably continue the whole process for the years to come. And we feel comfortable that with the next three years where we have visibility, we will be able to be paying a dividend. What -- if that stays the same, or increases is something that remains to be seen and decided on a case-by-case basis on the next Board meetings that we're going to have.

Okay. And then when you look at the buyback program, you sort of addressed the price sensitivity, it's very discretionary. Would you -- could you highlight, one, how quickly the stock buyback program could become active? And then secondly, could you highlight whether there will be any quarterly blackout periods on the buyback?

I don't think there will be any blackout periods on the buyback. And I think the program will be ready to run extremely soon. Now, if we are going to implement and be buying stock and how much we will do will really depend on the market circumstances.

Yes. Understood. And then Tasos, you talked about financing the new builds. Is there a target level like 40%, 50% that you'd be looking at financing the new builds as they -- to finance the delivery payment?

I think our main assumption is that the targeted to finance about 60% of the contract price. So, we -- it my vary depending on the circumstances, for example, the first two vessels that we have already booked long-term contracts. We might be able to increase that leverage. We haven't decided that yet, but we might be able to and depending on the situation that when the time comes to finance it may vary, but assuming a 60% average is the same assumption.

Okay, that's helpful. And then if we could talk about the -- you talked about planning for a potential downturn because of maybe uncertainty on the demand side, but more importantly, the expansion on the supply side. Your forward cover book is very high, but you do have like the Akinada Bridge coming up in 2022 in November, the Joanna in January of 2023, and then three other ones in sort of the middle of 2023. Can you talk about possibly great expectations at this point in time, whether you're in active discussions on those renewals? Just a flavor for whether you're seeing any of the potential weakness impacting discussions at this point in time?

We aren't really having any discussions currently, Poe. I think both owners like us and charters are having a little bit of a wait and see thinking at this point. And we are happy to wait a little bit more to see how things develop before doing something.

Okay. And it’d be interested that you added on the dual fuel capability or the LNG fuel capability to your newbuild program, the costs went up a little bit. But what drove that decision? Was it a customer-driven decision, or was it a corporate decision based on what you see the emission standards evolving?

It was mostly a defensive move, I would say, in case LNG does prove that it becomes the future -- the fuel of the short-term future, short-term, meaning about the next 20, 30 years. So we want to be able to transform the ships into real LNG vessels, if needed. So it's more of a defensive move at this point. It's not that we are aggressively thinking that LNG will be the fuel of the future, but it might be.

At the same time, the upgrade of the engine superior things [ph] also part of our commitment to our environmental ESG strategy.

Okay. And then would you…

Our ESG, we will always adhere by the laws and the environmental demands that are made on us, we believe in that, and we want to help in that way as much as we can.

And looking at other potential fuels, there's like green ammonia and other things; would you need to make additional modifications to the engines to run on those type of fuels, or is that something you're in the position to be able to assess at this point in time?

Yes, it would be very difficult to make changes to burn another fuel. But I can tell you that it will be one of these new fuels, ammonia, hydrogen, et cetera. But it is still many years away before it becomes commercially viable. LNG is commercially viable today. The other fuels are not.

Great. Thank you very much for your time.

Thanks Poe. Thanks a lot.

Thank you. And the next question. Your line is now open.

Is there a next question.

Hi, guys. This is Jay from UBS [ph].

Hi. How are you?

Hi, Aristides. How its going? So just a couple of quick ones for me. One is on the dividend policy. When did you decide on $2?

Right. Sorry?

What was the calculation to get to the $2 annual dividend?

We thought -- I mean, a $2 dividend is a yield, which is currently higher than most of the competition of more than 7% of where we were. We feel it's a decent level of dividend to give a nice round figure to.

Okay. Is that -- and so this is fixed dividend. This is not a variable dividend? Correct?

It's -- the dividend will be discussed on the board level at each quarter.

Okay. Understood…

Yes. It's going to be…

Okay. Understood. All right. Because if I look at -- I know you announced the dividend policy, it was close to 7%. And if I look at the comps right globally, not just in the US, you guys are right about the middle. And if I look at your contracted earnings and based on our projections, it looks like there is capacity for the dividend to go up on based off of free cash flow or just for operating cash flow. So when the book meets to discuss the dividend in the future, what are some things that -- what are some factors that could help the dividend increase for the coming quarter?

Look, the current dividend is less than 15% of earnings. So you are right to say that it's not a big percentage. The company is mainly a growth company. So the bigger part of its earnings is being used to fund the growth. But we want to reward shareholders with a decent dividend as well, and we will be doing that.

Right. Understood. And in terms of going back, I know we discussed this, but in terms of the newbuilds on order. I know that 2024 ones are a little far out, but -- can you kind of let us know your thinking or harder thinking of when you would look to charter some of these vessels? Would it be -- like, if you look at the two that have been delivered in the first quarter of 2024, do those discussions start in the third quarter, fourth quarter or even sooner?

No. I think that you probably will not hear any news until towards the end of this year for the remaining newbuilds.

Got you.

At the earliest.

And with your comments that, there could be some weakness further out beyond 2023, would it be fair to say that you will look for more multi-year charters for the vessels coming off charters in 2023?

Yes, probably. Probably. If they are around, probably, yes.

Okay.

But this business is so fluid, you always have to be on your toes to take decisions and change strategy, if you want to optimize the return to your shareholders.

Got you, okay. And one last question. So the order book, overall, looks manageable, but in the intermediate and the feeder, it's fairly high. Does that -- how well are you about the new ships that are going to be delivered? And do you feel that those will be more replacement vessels with older being -- kind of being scrapped, or do you really feel like this could be a net add to the fleet and that's to push down rates as we move beyond 2024?

Actually, on the sizes of vessels that we have, the order book is rather small. The order book is high on the bigger vessels. So, on our side, we have a relatively low order book and actually a quite old fleet. So a significant number of the elder vessels are small vessels. So there, I think the growth in the fleet is going to be minimal, which makes us quite optimistic that rates will hold. But, there are so many unknown factors that are playing around. So, it's very difficult to predict the future.

Got you. Okay. All right. That's all I have. Thank you.

Thank you.

Thank you, James.

Sir, I pass the floor back to our CEO, Aristides Pittas, for closing remarks.

Thank you everybody for listening in into our results of this quarter, and we'll be with you next quarter, hopefully, with equally good results.

Thanks, everybody.

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