EuroDry Ltd (EDRY) 2021 Q1 法說會逐字稿

Thank you for standing by, ladies and gentlemen, and welcome to the EuroDry Conference Call on the First Quarter 2021 Financial Results. We have with us today Mr. Pittas, Chairman and Chief Executive Officer; and Mr. 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 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 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 I would now like to pass the floor over to Mr. Pittas. Thank you, sir. 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 Anastasios Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the 3 months period ended March 31, 2021.

Please turn to Slide 3. Our income statement highlights are shown here. For the first quarter of 2021, we reported total net revenues of $8.6 million and a net income of $0.9 million. Adjusted net income attributable to the common shareholders was $1.3 million or $0.55 per share. Adjusted EBITDA for the period stood at $4 million.

With stark contrast to a year ago, it has been a very positive 2021 so far with drybulk rates rebounding significantly as a result of solid trade growth and limited supply growth. The drybulk market continues to impress with its strong trajectory since the onset of this year as during the past week, the Baltic Drybulk Index (sic) [Baltic Dry Index] reached its highest level since October 2010. Our CFO, Tasos Aslidis, will go over our financial highlights in more detail later on in the presentation.

Please turn to Slide 4 for our operational highlights. Motor vessel Pantelis was fixed for a trip of about 80 to 100 days at $10,450 per day that is scheduled to be concluded by the end of the month and is currently being negotiated for a 3- to 5-month charter at a level around $23,000 a day. The Tasos was fixed in January for about 60 days at $8,750 per day, and thereafter it was fixed for about 50 to 65 days at $19,750 per day. Lastly, the Ekaterini was extended at 106% of the Kamsarmax Index for a minimum period until March 2022.

Our hedges through FFAs, which were put in place in the last quarter of 2020 and January '21, naturally have been loss-making in such a strong market. In Q1, we settled 120 days with equivalent of 1.3 Panamax vessels, which were originally sold at a rate of $10,995 per day with a loss of $724,000. We have also sold 90 days per quarter, Q2, Q3 and Q4 of 2021, the equivalent of 1 Panamax vessel at $12,550 per day. During Q1, there were no drydockings or major repairs.

A few days ago, we agreed to acquire motor vessel Blessed Luck, a 76,000 deadweight drybulk vessel built in 2004 in Japan, for $12.12 million. The vessel is majority owned by a third party and has been managed by Eurobulk, also the manager of company's vessels. The vessel is expected to be delivered to the company upon completion of its current voyage within May 2021. The acquisition will be financed partly by a short-term seller's credit of $5 million and a 1-year bridge loan of $6 million provided by an entity affiliated with my family and the remaining funds will come from the companies -- from the company. Both the seller's credit and the short-term loan carry an annual interest rate of 8%.

In parallel, the company is in the process of arranging a bank loan with the acquired vessel as collateral, expected to be finalized within approximately 3 months. This will provide sufficient funds to repay the seller's credit in full and possibly part of the bridge loan. At the same time, the company entered into a charter agreement for the vessel for a period between the minimum of 11 months and a maximum 13.5 months at a gross rate of $19,500 per day, which will commence upon delivery of the vessel and contribute about $4 million of EBITDA during the minimum period of the charter.

The acquisition of the Blessed Luck will complement our cluster of medium-age Japanese-built Panamax-size vessels alongside our cluster of own-built newbuildings, increasing our fleet to 8 units, thus contributing to a proportional increase in our EBITDA.

Please turn to Slide 5 for a summary of EuroDry's current fleet. As you can see, it's comprised of 7 drybulk vessels with a fleet average age of 12.6 years and a cargo-carrying capacity of about 530,000 deadweight tons. As I mentioned before, following the delivery of the Blessed Luck, our fleet will increase to 8 vessels. Henceforth, the fleet average age will slightly increase to 13.1 years, and the cargo-carrying capacity will increase to approximately 605,000 deadweight.

Slide 6 shows the current vessel employment schedule. As you can see, the effective coverage for the remainder of 2021, without including the Blessed Luck, stood at about 7% in terms of minimum fixed rate contracts. If we include the vessel that is hedged through FFAs, our coverage increases to 21%. This figure, of course, excludes ships on index charters or in pools that have secured employment but are open to market explorations.

We are happy with our current positioning of little forward coverage as we are optimistic about the development of the market. Tasos will present you our EBITDA calculator later on, showing how strongly current FFA market predictions can boost our EBITDA and, consequently, earnings as well. This calculator will enable each one of you to easily use his own charter rate assumptions to determine our approximate expected EBITDA and make their own conclusions at where our stock should be trading at.

Now let's turn to Slide 7, where we'll go over the market highlights for the quarter ended in March 31, 2021. During the first quarter, drybulk index increased very strongly, driven by buoyant demand and operational bottlenecks. The trend after a short dip is continuing in Q2. The Capesize freight market, which was the last to react to the improving markets, raised levels not seen in the past decade prior to slightly correcting during the last few days. According to Clarksons, spot rates for Panamaxes averaged $16,100 a day in the first quarter. And by May 14, they had increased to around $24,700 per day. Meanwhile, 1-year time charter rates averaged at close to $18,000 per day in Q1, but by last week, they had increased to about $22,000 per day.

Please turn to Slide 9. As vaccine production is ramping up and rollouts are gathering pace around the world, a return to more normal levels of social and economic activity looks to be achievable by most developed economies, thus pointing to an improved outlook for global growth. Of course, the situation in developing and underdeveloped countries is still chaotic, with India affected the most. But overall, global demand seems to continue to rise.

In the beginning of April, the IMF-projected world GDP growth in 2021 was revised upwards from 5.5% in January to 6% now. Among the developed and developing economies, China and India were expected to grow the strongest in 2021. China's growth was revised upwards to 8.4% compared to 8.1% growth in the previous quarter. India was expected to grow by a very firm 12.5%. I would think that the current pandemic wave may dent this growth a bit but hopefully not too significantly.

Most important, economies are expected to see a further growth upturn for this year when compared to the previous quarter estimates. The U.S. economy is estimated to grow at 6.4%, while the Eurozone's GDP is set to rebound to 4.4%. Looking ahead, global growth for 2022, according to the IMF economic outlook, will continue to see above-average increases at 4.4% with most individual countries continuing to grow above trend, except China and India, which are expected to grow at a still very reasonable 5.6% and 6.9%, respectively.

Looking at the drybulk trade growth, and based on Clarksons projections for 2021, we expect demand to continue trading upwards at 3.4% for this year. For 2022 and 2023, the drybulk trade is expected to grow at a moderate pace of 2.6% and 2.5%, respectively.

Please turn to Slide 10. The order book as a percentage of total fleet up until May 2021 stands at 5.6%. This is the lowest level seen in the last 25-plus years. The main reason for the weak performance of drybulk shipping during the last decade has been the high number of deliveries, which easily outpaced the growth of the trade. With the current order book and continuing demand trends for the coming years, we expect a fundamentally supported and continuous rebound in the drybulk trade for the next couple of years, at least.

Please turn to Slide 11 to review the drybulk delivery stage. For 2021 deliveries, the order book is still dominated by the larger vessels. According to Clarksons, fleet growth in 2021 will be around 3.8%, taking into account scrapping and other fleet changes that have taken place to date, less than the demand growth and supporting the case for a strengthening market, which is further enhanced due to the logistical bottlenecks we are experiencing. For 2022 and beyond, the order book is currently around 3.4%, which could imply that through scrapping and slippage, we could see a minimum fleet growth until 2024 when probably new vessels will have to be ordered for. Otherwise, we could see rates and prices surpassing even the previous supercycle rates if demand holds up.

Please turn to Slide 12, where we summarize our outlook on the drybulk market. The unknown duration of the pandemic and its financial consequences render any type of modeling 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, we can expect significant global demand growth for drybulk commodities as the world economy will be transitioning towards, and countries are planning to spend billions in new infrastructure projects.

Furthermore, disruptions related to the pandemic create a favorable environment for ships as many COVID-19-related delays squeeze the available fleet. Ordering of new ships for 2023 and 2024 deliveries is expected to be contained due to the lack of clarity for the fuel of the future as not knowing the optimal ship for even 5 years out makes the placing of any new order very speculative and risky. Also, another supporting factor, as mentioned before, is the lack of open slots in 2024 as shipyards have filled their space with container and tanker orders. Therefore, 2021 and onwards indicate a couple of promising years amidst the low order book and even further demand rebound, expectations of further easing in trade tensions between China and the U.S., additional economic stimulus and most importantly, China and India.

China is expected to grow by 8.4%, according to the IMF. When China grew at such levels in the past 20 years, the drybulk market experienced extraordinary returns. India's projected growth at 12.5, if not substantially reduced due to the latest pandemic wave, is bound to increase its overall seaborne trade as well.

Let's turn to Slide 13. The left side of the slide shows the evolution of 1-year time charter rates of Panamax drybulk vessels since 2000. As of May 14, 2021, the 1-year time charter rate for Panamax with capacity of 75,000 deadweight tons stood at around $22,000 per day, the highest it has been during the last years and approaching the levels last seen in 2010. The demand/supply balance, the pace of increases and the prevailing sentiment all point to the possibility we will be seeing still higher values.

As you can see on the right side of the slide, the current price of a 10-year-old Panamax vessel is around $20 million. Kindly note that since January 2021, Clarksons has updated the anchored vessel to 82,000 deadweight from 75,000 deadweight previously.

Over the past year, drybulk prices have gradually been increasing, exceeding the historical median levels and reaching towards the historical average prices. With a continuous strengthening freight rate environment, we would expect to see asset values to increase even further. In this environment, we are, of course, capitalizing on the strong market to strengthen our balance sheet and increase of free liquidity.

As free liquidity increases from next quarter onwards, we will decide how best to use it for the benefit of our shareholders, be it a reduction in debt, further vessel purchases, shareholder -- share buybacks, reinstitution of dividends or most probably combination. We also continuously evaluate opportunities for possible combinations with other fleets, focusing especially on using our status as a public company, which can provide significant advantages and value.

Let me now pass the floor over to our CFO, Tasos Aslidis, to go over our various 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 our financial highlights for the first quarter of 2021 and compare to the same period of last year.

For that, let's turn to Slide 15. For the first quarter of 2021, the company reported total net revenues of $8.6 million, representing a 69.3% increase over total net revenues of $5.1 million during the first quarter of 2020, and that was a result of the higher time charter rates our vessels earned during the first quarter of this year.

The company reported net income for the period of $0.9 million and net income attributable to common shareholders of $0.4 million as compared to a net loss and a net loss attributable to common shareholders of $2.3 million and $2.6 million, respectively, for the same period of last year.

Interest and other financing costs for the first quarter of 2021 amounted to $0.6 million, slightly decreased as compared to $0.7 million for the same period of 2020. Depreciation expenses for the first quarter of this year were $1.7 million compared to $1.6 million for the same period of last year. Adjusted EBITDA for the first quarter of 2021 was $4 million compared to $0.6 million achieved during the first quarter of 2020. Basic and diluted earnings per share attributable to common shareholders for the first quarter of 2020 was $0.19 calculated on 2.3 million shares basic and 2.32 million shares diluted compared to basic diluted loss per share of 1.17 million for the first quarter of 2020, again, calculated on 2.27 million basic and diluted weighted average number of shares outstanding.

Excluding the effect of the earnings attributable to common shareholders for the quarter of the unrealized loss on derivatives, the adjusted earnings, again, attributable to common shareholders for the first quarter of 2021, which has been $0.55 per share basic and diluted compared to an adjusted loss of $0.91 per share basic and diluted for the first quarter of last year, in which the adjustment included also the loss on the write-down of inventory. Usually, security analysts do not include the above items in their published estimates of earnings per share.

Let's now turn to Slide 16 to review our fleet performance. We will start our review by looking first at our fleet utilization rates for the first quarter of 2021 and 2020. As usual, our utilization rate is broken down into commercial and operational. During the first quarter of 2021, both our commercial and operational utilization rates were 100%, the same levels that happened to be during the first quarter of last year. During both of those quarters, we owned and operated an average of 7 vessels. In the first quarter of 2021, our 7 vessels earned an average time charter equivalent rate of $14,924 per vessel per day compared to $7,855 per vessel per day earned during the first quarter of last year.

Our total daily vessel operating expenses, including management fees, general and administrative expenses, but excluding drybulking costs, averaged $6,571 per vessel per day during the first quarter of this year as compared to $6,055 per vessel per day during the same period of 2020.

If you look down on this table, we can see the cash flow breakeven level rate that we had during the first quarter of last year, which takes into account drydocking expenses, cash interest expenses, loan repayments and our preferred dividend is paid in cash. Thus, for the first quarter of 2021, our daily cash flow breakeven rate was about $10,589 per vessel per day as compared to $11,146 per vessel per day that we had during the first quarter of 2020.

Let's now move to Slide 17. This is a new slide, and we included it to provide our shareholders and investors a tool to assess the end potential of our fleet for the rest of 2021. The table shown in this slide has 2 components. The first refers to our fixed rate contracts and does include the contribution from the soon-to-be-acquired M/V Blessed Luck. It's noteworthy that except for the charter of Blessed Luck, only 2 of our vessels have fixed rate contracts for about 90 days in total during the second quarter. We consider this fortuitous as the market is performing very well, producing and being expected to produce significant earnings for us.

The rest of our vessels are (inaudible) linked is irrelevant to their size of Baltic Dry Index. Our calculator shown here indicatively shows the Supermax and Panamax Baltic forward rates as of May 17, 2021, and also shows how these index levels get translated to rates for our ships. We actually show the final blended rate for the open days of our fleet, which you can see right below the Supermax and Panamax forward rates in the table and which, as you can see, turns out to be very similar to the index levels.

Based on these assumptions, and by further assuming for simplicity, $6,500 per vessel per day operating and G&A expenses and a 5% commission rate, we can estimate the EBITDA contribution of our fleet. The final result, as you can see in the second-to-the-last line of the table, is adjusted for the FFA contract of 90 days per quarter for the rest of the year that we could benefit.

This overall exercise is meant to provide a tool to calculate our EBITDA for the remainder of 2021, as I mentioned. Obviously, (inaudible) their own assumptions about their rights to do that. However, it's hard not to observe that if the market rates for the rest of the year currently indicated by the FFA contracts materialize, our quarterly EBITDA will more than double in the rest of 2021. And also, please note this is the previous table a couple of days ago. The forward FFA rates have moved up by almost 10%.

Let's now move to the next slide, Slide 18, to provide some highlights -- Slide 19, I'm sorry, to review our debt profile. On this slide, on the top part, we can see our loan repayments as well as our balloon payments. And on the bottom of the slide, you can see a projection for our cash flow breakeven level over the following 12 months. As of March 31, 2021, we had an outstanding bank debt of about $56 million, and this does not include the debt we expect to assume for the acquisition of Blessed Luck, which, as explained earlier by Aristides, should amount to about $11 million.

The chart at the top of the slide shows the debt repayment profile, and in 2021, as you can see, we said we're going to make about a $5 million of debt repayment, and we had an $8 million balloon payment at the end of the year, which is collateralized by 3 of our Panamax vessels. This balloon payment in 2021 is below -- is well below the scrap price of the expected vessels collateralized. And we anticipate that we'll have no issues in refinancing it when you would choose to do so. Again, from this chart, we can see that we have a constant level of loan repayments, roughly constant level over the next 4 years, with another balloon payment coming due in 2023 of about $11.3 million, which is collateralized by our Kamsarmaxes.

As we are in this slide, I would like to make a quick note on our cost of funding. The average margin of our debt, as you can see on the right part of the slide in the note, is about 3%. Assuming a LIBOR rate of about 0.3% on the top of it, the cost of our senior debt is estimated to be around 3.2%. If we include the cost of the preferred equity that we have, the average blended cost for our loan equity funding would be around 4% as of the end of the last quarter.

Regarding our preferred equity, I would like to highlight that following a $3 million net redemption that we made during the first quarter of 2021, we have agreed to reduce the dividend rate on the preferred equity to 8% per annum if paid in cash and 9% if paid in kind, that's our option, until January 2023. It is important to note here that this dividend rate was expected to increase to 14% last January, and now that increase has been pushed out to 2023.

On the bottom chart of the slide, we can see our cash flow breakeven estimate for the next 12 months, which is expected to be around $10,573 per vessel per day. That doesn't include the Blessed Luck, and the addition of the Blessed Luck and its related loans is expected to increase the breakeven level by about $250 per day.

Let's now move to the next slide, Slide 20, where we can see some highlights from our balance sheet. This slide that's included in this presentation gives you a snapshot of our assets and liabilities in a compact way. On our asset side, first, we can see that we have cash and other assets of about $10.4 million, again, as of the end of March of 2021. Of course, we have -- on our asset side, we have our vessels, the book value of which amounts to $97.7 million, making our total book value to about $108.1 million.

On the liability side, our bank debt as of the end of the last quarter stood at $56 million, which approximately represents 52% of the book value of our assets. Our preferred equity stood at about $13.6 million, which represents another 12.6% of our booked assets. And other liability of about $3.9 million or 3.6% of our assets. That leaves us with a net book value of $34.6 million, which translates to $14.7 per share. However, the market value of our fleet is up ahead of its book value. We estimate that the market value of our vessels, the 7 vessels that we currently own, is about 20% higher than their book value, resulting in an estimate for our net asset value per share of about $22.

And although our share price has recently increased, we will still trade below that level, and we believe it represents an investment with significant appreciation opportunities. And with that, I would like to turn the floor back to Aristides.

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

(Operator Instructions) We will now take our first question.

Tate Sullivan from Maxim Group. Just starting on Slide 17 with the EBITDA calculator. Have you calculated or shown this table before in your company's history? And if not, just why did you think this was a good time to introduce it?

I think it's the first time we provide this, actually. I think it's -- what prompted us to provide that capability to our investors is the significant change we observed in the market and the expected improvement of our outlook. We wanted to highlight and give the investors the opportunity to understand and even [play] themselves with these assumptions to assess the potential for our company to have its profitability increase.

Yes. It's great. And I would just -- I mean just with that, a couple of questions on the table, too. Does it include the new contract you mentioned, the Pantelis contract? And can you review the details of that contract as well, please?

It does not include the contract, as Aristides mentioned, that Pantelis is negotiated.

This contract -- no, this is still on [subdrifts]. So it will probably conclude within today or tomorrow. But it's not 100% fixed. We think it will be fixed, but it's not 100% fixed.

But I think as you can see, that includes the 1-year contract that we booked on the vessel that we are acquiring.

Right. Okay. Okay. And then just on Slide 17, the EBITDA calculator as well. It implies that the EBITDA estimates are based on FFA rates you mentioned as of 10 days ago. Or what was the timing?

May 17, I think, it's mentioned in the slide as well.

Okay. Okay. Great. And before turning over, on the acquisition for about $12 million, can you give more background, if you can, just on what made you comfortable closing it at that level? And are there other comparative acquisitions that you can highlight? Any background that you can provide, please?

Sure. We saw the market rising, and so that we could fix this ship out at a very decent rate for at least a year, which we did and which makes us comfortable that within the first year, we will be able to essentially recover approximately $4 million of that total investment.

So even though we paid the price, which is higher than the historical average prices and the historical median prices for such vessels, after the passing of this year with this extra charter, we will have reduced the price to around $8 million, which is even below the median historical levels and forecasting a high market going forward. We think it's a very good addition to the company.

The problem the company has been facing, of course, is that our liquidity has not built up yet. We can see it building up as time goes by very significantly. We did this EBITDA calculator to help ourselves as well evaluate how much we will be increasing our returns and our liquidity to see how we can grow the company but very conservatively in this rising market.

We will now take our next question.

This is Poe Fratt from NOBLE Capital Markets. Tasos, I just wanted to double check on just your EBITDA calculator and just ask you, in the first quarter, you had the FFAs adjusted in Section A. Why didn't you do that to, for the sake of consistency, over the rest of the year with your contracted days just because the FFAs are already locked in?

You mean why it's included in the 4.0 EBITDA for (inaudible) on line C below, right? This is what you're asking?

Yes. That's what I'm asking as far as just for the sake of comparison, it would have been easier just to sort of look at it. Maybe it would depress the average TCE rate too much. But...

Yes. I mean the TCE rate, actually, it's net of the FFA that we've shown there, the $14,924. I debated in my mind where to put the FFA contribution. And I decided I wanted to separate the fixed from the future. So that's why I chose to put it in the line of what was supposed to include it in the lower part of the table where I suppose it's only the open rate and open information.

Yes. understood. No, I think it's very helpful. I mean it's -- there's always a little bit of art to it as opposed to science. But I think it's a helpful way to look at your operating leverage as we look through the rest of 2021.

And just to highlight the Pantelis, it's consistent -- the potential rate on the Pantelis is consistent with what the asset base were on May 17 in just general terms.

Yes. I think Aristides mentioned $23,500 -- $22,0 00 a day, which it is actually higher than what would have been the implied rate for Pantelis because Pantelis is remodeled. So that's contributing to the EBITDA.

Okay. And then when you're looking at the loan that you potentially are signing, winding up for the Blessed Luck, what should we be thinking about as far as just a leverage percentage? I can probably do the math a little bit. Your -- you got $11 million of either seller's credit or bridge loan. So how much of that will be covered? It didn't -- I couldn't really tell exactly how much you...

It will be around $8 million, Poe. it will be around $8 million.

We are in the process of signing out the term sheet with the bank for a loan of about $8 million. So that would allow us to repay the seller's credit and half of the other loan. And we would have our option, and we still we have $3 million left for short-term liquidity purposes.

Great. And I apologize, you might have mentioned it, but what -- could you give us sort of an outlook of -- for the Tasos beyond the end of June? Are you in discussions about potentially a follow-on charter for that? Or could you -- or can you just give us an idea of what the outlook that Tasos looks like?

Yes. We haven't started discussing a new charter for the Tasos presently. It's still quite a long time till then. Probably the older vessels, we will continue trading in [trip-time] charters or small-time charters. But we haven't had any discussions yet. We will take whatever the market is.

We want to have -- as you see, we have about 75% exposure to the market, I would say, a 70% exposure to the market, including the Blessed Luck. And we like that. We are optimistic about the prospects of the charter market going forward. So we like to be playing the market at this stage with a significant percentage of our fleet. That's why all the other vessels are in index-linked charters.

Okay. And then maybe just a follow-on, Aristides, about the Blessed Luck discussion. You mentioned just your net value is low enough where you think it's worth the risk. But you do highlight that there's uncertainty as far as upholstery systems going forward. You're buying an older asset. You're increasing your age profile. It seems to be counter to what a lot of other companies are doing there. Can you just maybe expand a little bit more than the comments you already made on how you looked at that transaction?

Sure. Obviously, a play in the Blessed Luck is not a play in the long term of the company. It's a short-term, I would say, rather opportunistic play, whereby this year, we're going to make $4 million on the ship. We think that next year will also be strong. And therefore, even in 2 years, we will have brought the vessel to a very low valuation below the scrap value of the ship.

So we think that we will have relatively old vessel. But all these vessels built between 2000 and 2013, they are not very different in the consumptions that they have. So it's really after 2013 that they started building more eco vessels, i.e., vessels consuming less fuel. And again, the differences are not huge. We do expect a very significant breakthrough sometime towards the end of this 10 years. But till that time, I think this vessel probably can live easily until it's 25 years of age. This is the average scrapping age of ships, and this is a very well-maintained ship. So technically, we think that this can live for more than the 2 years that is required to bring -- hopefully is required to bring it down to scrap and potentially can contribute further for a few more years.

That's helpful. I was going to ask you what you thought the remaining life was. It sounds like that's 9 to 10 years maybe outside...

Yes. As I said, 25 years is the average scrapping age for drybulk vessels currently. Maybe it's gone down by 1 year at most. This ship, it has to pass it to next vessel survey in, what is it, 4 years from today. We think it will be able to do that. But it will depend, of course, on the economic considerations at the time. If the market is good, the ship will live its life. It's 24 or 25.

Yes. And then Tasos, you may have talked about it, but if you would just -- I thought -- I got distracted during the middle of the call. But would you highlight just any drydocking activities that you have over the rest of the year? And then also just talk about any cost pressures you're seeing, whether the first quarter run rate as far as vessel OpEx is roughly $5,700, we should use for the rest of the year. Just any color on that would be helpful.

Yes. We don't have any drydock scheduled for this year, and that obviously helps our 2021 results. In terms of cost pressures, again, I don't see so far anything extraordinary that is worth mentioning. Obviously, the COVID situation has made certain operations in ports a bit more difficult due to congestion. I think, for example, we have a couple of vessels that are waiting to get into ports. Sometimes, there are some issues with crew replacement and the like, but nothing really that makes us to flag them as extraordinary risk factors with what we know to this point.

Great. And just to clarify, I think you said this, but the preferred dividend, did you pick in the first quarter? It looked like you did.

Actually, no. We didn't -- this is because we -- this is (inaudible) the following quarter. I think we're going to take the Q1 dividend in cash, but it will be a cash expense in Q2. We did pay the Q4 dividend in kind. That's why we don't have any dividend this quarter on the cash flow breakeven basis.

We will now take our next question.

A follow-up from me, Tate Sullivan at Maxim. Your comments with the EBITDA calculation and, let's say, I mean, $31 million of EBITDA on '21 and then your comments of potential buybacks, dividend or debt reduction. And then I'm just looking at your slide. You have $8 million of balloon payments due this year. What is your plan with that $8 million? Would you still extend that and then extend that maturity? Or can you just give context to what you might do there?

So I think this $8 million -- this balloon will be extended because it's relatively cheap money. If we decide to repay something, it will be the preferred and, of course, the short-term loan that we've currently given to the company. So the 8% money has priority to be repaid. The normal bank debt will be less than 4%.

So we need to decide, and we have to decide by next quarter what we will be doing with our increasing liquidity because, okay, this quarter, we didn't have too much. But by the end of next quarter, we will. And we always look at the situation at that point in time and decide what is the better use of our liquidity and what would benefit our shareholders most then.

There are no further questions at this time. I would now like to hand back to Mr. Pittas for closing remarks.

Thank you all for attending our conference call today under these nice market circumstances. We'll talk to you again in 3 months' time.

Thanks, everybody.

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