Euroseas Ltd (ESEA) 2023 Q3 法說會逐字稿

Thank you for standing by ladies and gentlemen, and welcome to the Euroseas conference call on the third-quarter 2023 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 the 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. The 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 two 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 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 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 and nine months period ended September 30, 2023.

Let's turn to slide 3 of the presentation to go over our income statement highlights. We are very pleased with our third-quarter results, having reported total net revenues of $50.7 million and the net income of $32.2 million or $4.65 per diluted share. Adjusted net income for the period was $28.2 million or $4.07 per diluted share. Adjusted EBITDA for the period was $34.5 million.

Please refer to the press release for the reconciliation of the adjusted net income and EBITDA.

As part of the company's common stock dividend plan, our Board of Directors declared a quarterly dividend of $0.50 per common share for the third quarter of 2023, which will be payable on or about December 16 to shareholders of record on December 9.

The annualized dividend yield based on the current share price is about 8%. This is the seventh consecutive quarter of paying substantial dividends since we arranged [citizens] paying them, and something that we believe will be able to continue for the quarters and years ahead.

As part of our share repurchase program of up to $20 million, which was announced in May 2022 and extended for another year, we have repurchased a total of 410,000 shares of our common stock in the open market for about $8.2 million. This represents about 6% of our total outstanding shares. Our CFO, Tasos, will go over the financial highlights in more detail later on the presentation.

Please now turn to slide 4, where we'll discuss our recent sale in both the chartering and operational developments. As previously announced, on July 6, 2023 we took delivery of our second newbuilding vessel, M/V Terataki, an Eco EEDI Phase 3, 2,800 TEU feeder containership newbuilding from Hyundai Mipo Dockyard in South Korea

On the chartering side motor vessel, Aegean Express, was fixed for a minimum of three to four months until December 2023 at $9,000 per day. Additionally, motor vessel, Synergy Antwerp, was fixed for approximately 40 to 60 days at $18,250 per day. And thereafter, there was an option which was declared to buy the charters for another 40 to 60 days until December 2023 with the same daily rate.

As previously announced also, the Emmanuel P and the Rena P commenced their new charters in August 2023 at a daily rate of $21,000 per day for a minimum of 20 to a maximum of 24 months, following the mutually agreed termination of the existing charters. We have no idle period or commercial off-hire vessels during this quarter.

Please turn to slide 5 for an update on our current fleet profile. Euroseas current fleet is comprised of 19 vessels in the water, which includes 12 feeder containerships and seven intermediate container carriers, with a total carrying capacity of just under 60,000 TEU and a TEU-adjusted average age of just below 16 years.

Turning to slide 6. After taking delivery of the first two of the nine new eco feeder containerships, we show our now seven vessels under construction with a total carrying capacity of 16,600 TEU and expect to be delivered within 2024. Four of these newbuildings have a carrying capacity of 2,800 TEU each. And three have a carrying capacity of 1,800 TEU each. After the delivery of the seven feeder containership newbuildings in 2024, our fleet will consist of 26 vessels and a total carrying capacity will be in excess of 75,000 TEU.

Let's now turn slide 7 for a graphic depiction of our vessels employments. As you may see, we have very strong charter coverage throughout the next two years. We have about 97.5% of our fleet being fixed for 2023, almost 65% for 2024, and more than 25% for 2025. This very high charter coverage at quite profitable rates for the remainder of the year, but also for 2024 suggests that we should continue recording profitable courses regardless of charter rate environment.

Let's turn to slide 9 now to review how the 6- to 12-month time charter rates have developed over the last 10 years. During the third quarter of 2023, containership markets were down across all segments compared to June 2023. For the sector we primarily operate in, charter rates are about 28% lower year to date. However, they are still significantly higher than the pre-pandemic levels.

As of November 3, the 6- to 12-month charter rate for the 2,500 TEU containership stood at $12,500 per day, which is higher than the historical median of $9,500 per day, but lower than the 10-year average rate of $15,500 per day. The comparisons to median and average rates are similar across the smaller and larger container sizes. The low charter rates are driven by a progressively larger number of deliveries, a reduction of inefficiencies caused during the pandemic, and the considerable drop in demand growth.

Moving on to slide 10. We'll go over some further market highlights. During the third quarter of 2023, one-year time charter rates showed declines across all segments and has further declined since by approximately 10% in November 2023 alone. Average rates during the third quarter was down by about 18% compared to the previous quarter, as shown in the table.

The average secondhand container shipping index has decreased in line with the market decline. Secondhand containership prices have been gradually dropping throughout the first 11 months of 2023, but are still high, nevertheless. The newbuilding price index remains roughly unchanged in the third quarter of 2023 over the previous quarter, while the newbuilding prices generally stayed at elevated levels due to cost inflation and extended yard forward cover. While newbuilding contracting has eased from the aggressive levels seen during COVID-19, it still remains fairly strong historically with a large line of operators continue to place orders for larger vessels, mainly equipped with dual fuel capability engines.

The idle containership fleet excluding vessels under repairs stood at about 1.6% of the fleet as of October 21 or 0.45 million TEU. The idle fleet peaked in February 2023 at 0.8 million TEU and was trending downwards until July but has increased again since September. Recycling activity edged higher during the third quarter with 68 vessels having been scrapped year to date accounting for about 130,000 TEU.

Demolition remains at low levels compared to historical standards, due to the stronger markets earlier in the year and the good charter coverage across the sectors. The figure is anticipated to increase for the remainder of this year and 2024, as it is driven by weaker markets and increasing environmental regulations.

Scrapping prices have softened during the third quarter to about $550 per lightweight tonne, which is still about 33% above the 2019 levels. Overall, the containership fleet has grown by approximately 6.5% year to date without accounting for idle vessels reactivations, which is quite a high number.

Please turn to slide 11. With its latest update in October 2023, the IMF forecasts show that the global economy is still slow and uneven the remaining well below the historic average of 3.8% growth between [2000] and 2019. Global GDP growth is estimated to slow from 3.5% in 2022 to 3% this year, and 2.9% in 2024. Global inflation is forecast to decline steadily starting from 2024 due to tighter monetary policy aided by lower international commodity prices.

Slow economic recovery has been dominated by post-pandemic geopolitical shocks, including the war in Ukraine, the latest Israeli-Hamas conflict, US-China relations, and the Chinese property sector crisis, as well as the effects of monetary policy tightening to reduce inflation. However, important [divergences over period]. The slowdown is more pronounced in advanced economies than the emerging markets and developing economies.

Among advanced economies, the US has been revised up due to resilient consumption and investment, while the Euro area has been revised down as tighter monetary policy and the energy crisis have taken a toll. [Divergent] is also evident among emerging markets and developing economies, with China facing growing headwinds and now expected to grow only by 4.2% in 2024; while Brazil, India, and Russia have been revised up recently by the IMF.

According to Clarksons' estimates, container trade will continue to experience subdued demand for the remainder of the year due to slow global economic growth, combined with the geopolitical events that are creating new challenges to a lot of fragile economic recovery. As such, container trade growth is expected to grow by a low 1.2%, which has been the revised upwards from the 0.9% growth predicted only a month ago. For 2024, demand is expected by Clarksons to return to a decent rate growth level of about 3.8%.

Now please turn to slide 12, where you can see the total fleet age profile and containership orderbook. The containership fleet is relatively young with most vessels under 15 years old and only 10% of the fleet over 20 years old. The largest percentage of which though lies within feeder vessels suggesting high potential recycling for this type of ships.

The orderbook, as a percentage of total fleet, stands at a high of 26.6% as of November 2023. We're also expecting deliveries of about 3% to be delivered for the remainder of 2023, 10.4% in 2024, and 12% in 2025.

Moving on to slide 13. We also go over the fleet age profile and orderbook for ships in the 1,000 to 3,000 TEU range, which is where our newbuilding program is focused. The orderbook here stands at 10.8% as of November 2023.

According to Clarksons new deliveries, including what has already been delivered for 2023 are estimated at 9.4%, 6.2% in 2024, and just 1.8% in 2025. Additionally, over 50% of the fleet is over 15 years old, indicating good fundamentals for this sector as we can expect a decline of the size of the fleet in the next few years.

Let's move to slide 14, where we discuss our outlook summary for the containership market based on the above discussed demand and supply matters. As we said, charter rates continue to face renewed pressure due to weak demand, leading to the 10% decrease in higher rates since the third quarter. The substantial accumulation of available tonnage and smaller feature sizes is not really contributing to the downward trend in the charter rates for the smaller vessels.

While the container freight index has seen some improvement since July, it remains significantly lower at 80% below its peak in January 2022. And has roughly returned to about the pre-COVID 10-year average. Container trade volumes grew by 6.6% year on year in September and they're still above pre-pandemic levels.

For the remainder of 2023, there are still considerable challenges ahead. Downward pressure tends to be immersed in the fourth quarter as supply growth accelerates, and the increasing number of charter vessels have been delivered. Slower speeds are expected to play a key role going forward in absorbing some of the excess tolerance. Economic developments amidst the true world it the very uncertain.

Therefore, 2024 will probably be quite a difficult year as well. Market conditions will remain challenging, as rates may decline even further towards the lowest point of the cycle, due to the second consecutive year of substantial fleet expansion. Market performance will remain sensitive to capacity management, vessel speed, and a range of other inefficiencies like congestion that could alleviate pressure to some extent. The energy transition also has continued to gain traction in the containership sector.

While it's evidence that the shift is taking place, the long-term outcome is still very uncertain. One thing is always though, that the spread between charter rates achieved by eco vessels compared to conventional ones is expected to further increase as charter has become even more sensitive to greener transport.

For 2025, supply and demand fundamentals seem to suggest that we could see a leveling off in the market and some stabilization. If enough scrapping materializes within the next two years, demand remains relatively resilient and new orders are disciplined, we could possibly see a turning point some time then.

Moving on to slide 15. The left chart shows the evolution of one-year time charter rate to containers with a capacity of 2,500 TEU since 2010. One-year time charter rates are far below the peak in 2022. And as I've previously mentioned, the current one-year time charter rate stands at $12,500 per day, which is still at the high enough unprofitable level higher than historical medium.

At the same time, the right-hand chart shows the historical range for newbuilding and 10-year-old containerships with the capacity of 2,500 TEU. Prices are still significantly higher than the 10-year medium despite the severe drought.

Despite our expectations for the global market next year as discussed above, we believe that we are largely insulated from developments in the chartered market during 2024 due to our contracted revenue backlog of more than $400 million, which we have developed during 2021 and 2022. Our liquidity buildup will allow us to take delivery of the seven remaining containership newbuildings, while keeping leverage low at around 6%. It will also allow us to continue paying a substantial dividend and executing on our stock repurchase program as oil price continues to hover at levels below 50% of NAV. At the same time, we will be left with ample free cash to acquire further vessels when we deem the timing appropriate.

And with that, I will pass the floor to Tasos to go over the financial highlights in further details.

Thank you very much, Aristides. And good morning from me as well, ladies and gentlemen. Over the next four slides, I will give you an overview of our financial highlights for the third quarter and nine months of 2023, and compare them to the same period of last year.

For that, let's turn to slide 17. For the third quarter of 2023, the company reported total net revenues of $50.7 million, representing a 10.3% increase over total net revenues of $46 million during the third quarter of last year, which was mainly the result of the higher average charter rates of our vessels shown in the third quarter of 2023 compared to last year.

The company reported a net income for the period of $32.2 million compared to net income of $25.2 million for the third quarter of 2022, a 27.7% increase. This quarter, there are two points I would like to make regarding entries that affect our financials. The first relates to termination of the charters of Emmanuel P and Rena P that were reported during the last earnings call that Aristides mentioned earlier.

Those charters came with investments when we bought them. And because of the time there were below market, we recorded the vessels we've increased book value corresponding to the below market value of the charters. And at the same time, we started recognizing that we know market charter value over the life of the charters as per US GAAP guidelines.

Since these charges were terminated, we should recognize the remaining unrecognized portion of them, thus, the $16 million gain and charter termination that you see in our income statement. Incidentally, these charters were terminated with mutual agreement with the charter and replaced by charters with higher rates.

The second point that I would like to make relates to recording an impairment charge for our vessel, MV Jonathan P. Based on our impairment test results, it was determined that the carrying amount was not recoverable. And consequently, we booked an impairment charge of $13.8 million to reduce the vessels book value of each market value.

I would like to start that the vessel has been a great contributor to our bottom line. Since we reported in October 2021, the vessels has been chartered in a highly profitable charter of $26,667 per day net of commissions for three years until September 2024.

And presumably contributed up to the end of last quarter, $14.4 million of EBITDA and the remaining European charter is expected to contribute about another $7 million of EBITDA. Thus, the impairment charge is a mere accounting requirements over rather than a commercial result.

In any event, both of the above items are not included in the adjusted earnings per share, I will refer to a little later in my presentation.

Interest and other financing costs for the third quarter of 2023 amounted to $1.8 million after deducting capitalized imputed interest of $0.9 million, which relates to the self financing of the pre-delivery cost of our newbuilding program for a total interest and other financing cost of $2.7 million, compared to $1.6 million for the same period of 2022, the period during which the imputed interest was only $0.2 million.

This increase is due to the increased amount of debt that we carry during the third quarter of this year. And increased benchmark rates, live or in short term that our loans get to pay compared to the same period of 2022.

Adjusted EBITDA for the third quarter of 2023 increased to $34.5 million, compared to $26.2 million achieved during the third quarter of last year, an increase of about 32%.

Basic and diluted earnings per share for the third quarter of 2023 were $4.67 and $4.65, respectively, calculated on about 6.9 million basic and diluted weighted average number of shares outstanding, compared to basic and diluted earnings per share of $3.50 for the third quarter of 2022, calculated about 7.2 million basic and diluted weighted average number of shares outstanding.

Excluding the effect on the income for the quarter for the unrealized gain on derivatives, the amortization of the fair value of below-market charters acquire the vessel depreciation on the portion of the consideration for the vessels acquired with attached type charters allocated to the below-market charters. The gain from the termination of the below-market charters in the impairment charge, the adjusted earnings attributable to common shareholders for the quarter ended September 30, 2023, which would be $4.08 basic and $4.07 diluted, compared to $2.90 basic and diluted for the same quarter of last year.

Security analysts do not include the above items in their published estimates of earnings per share that's why we're making the adjustments ourselves.

Let us now look to the right part of the slide and view of the numbers for the corresponding nine-month period ending September 30, 2023 and compared with the same period of last year. So for the first months, for the first nine months of this year, the company reported total net revenues of $140.3 million, representing a 0.4% increase over total net revenues of $139.8 million during the first nine months of 2022.

We reported a net income for the period of $89.8 million as compared to a net income of $85.9 million for the first nine months of last year, an increase of 4.6%. I will not repeat here the same point I made earlier regarding the shares that were in our income statement, but they apply for the nine-month period as well.

Interest and other financing costs for the first nine months of 2023 amounted to $3.9 million after deducting capitalized interest of $3.2 million related to the self-financing of the pre-delivery cost of our newbuilding program, resulting in a total interest and other financing costs, net of the imputed interest of $7.1 million compared to $3.8 million (sic - see press release, "$3.5 million") for the same period of 2022, after which -- during which, we had a capitalized interest of $0.2 million. Again, this increase is mainly due to the higher interest rate benchmark interest rate we paid in the current level of debt we can.

Adjusted EBITDA for the first nine months of 2023 was $91.1 million compared to $91.5 million for the first nine months of 2022. Basic and diluted earnings per share for the first nine months of 2023 were $12.95 basic and $12.90 diluted, calculated on 6.9 million and 7 million, respectively basic and diluted weighted average number of shares, compared to $11.91 basic and $11.86 diluted for the first nine months of 2022.

Again, excluding the effect from the income statement of the items I mentioned before, the adjusted income for the nine months ended September 30, 2023, which had been $11.37 basic and $11.33 diluted, compared to adjusted earnings of $10.71 basic and $10.67 diluted for the same nine-month period of last year.

Let's now turn to slide 18 to review our fleet performance. As usual, we will start our review by looking at our fleet utilization rates for the third quarter of 2023 and compare them to the same period for third quarter of 2022.

Our fleet utilization rate is broken down to commercial and operation. During the third quarter of 2023, our commercial utilization rate was 100% while our personal utilization rate was 99.2%, compared to 100% commercial and 99.5% operational for the third quarter of 2022. On average, we owned and operated 19 vessels during the third quarter, earning an average time charter equivalent rate of $30,074 per vessel per day, compared to owning and operating 18 vessels in the same period of last year, turning another time charter equivalent rate of $30,893 per vessel per day.

Our vessel daily operating expenses, including management fees, were $7,192 per vessel per day for the third quarter of this year, compared to $6,601 per day during the same period of 2022.

General and administrative expenses amounted to $500 during the third quarter of this year, compared to $579 for the same period of 2022.

If we move further down on this table, we can see the cash flow breakeven rate for the third quarter of this year, which also takes into account drydock expenses, interest costs, and loan repayments. Thus, for the first quarter of 2023, our cash flow breakeven rate was $13,594 per vessel per day, compared to $14,466 per vessel per day during the third quarter of 2022.

In the last line of this table, we can see the common dividend pay expressed in the vessel per day units. In the third quarter of 2023 the dividend we paid amounted to $2,012 per vessel per day, compared to $2,177 per vessel per day for the same period of last year.

Let's now look right part of this table and review the figures for the first nine months of 2023. During the first nine months of 2023, our commercial utilization rate was 99.4%, and our operational utilization rate was 98.9%, compared to 99.9% commercial and 99.6% operational for the same period the first nine months of last year.

On average, we owned and operated 18 vessels during the first nine months of 2023, turning another time charter equivalent rate of $29,843 per day, compared to 16.8 vessels in the same period of 2022, earning an average of $32,814 per day.

Our vessel operating expenses, again, excluding management fees $7,210 per vessel per day in the first nine months of this year, compared to $6,771 per vessel per day for the same period of last year.

General and administrative expenses for the two periods amounted to $648 and $635 respectively.

Let us again move further down on this table, where we can see the cash flow breakeven rate for the first nine months of this year, taking into account our working interest and loan repayments. Thus, for the first nine months of 2023, our cash flow breakeven rate was $13,852 as compared to $14,052 per vessel per day during the same nine-month period of 2022.

At the bottom of the table again we can see the contribution to the cash flow breakeven from our dividend payments and for the nine months of 2023 that amounted to $2,134 per vessel per day. And in the corresponding nine-month period, which includes first dividend payment less, and that amount contributed -- added $1,530 to a cash flow breakeven rate for the period.

Let's now move to slide 19 to review our debt profile and our forward cash flow breakeven level. As of September 30, 2023, our total debt stood at about $138.4 million. On the top of this slide, you can see a snapshot of our current debt repayment profile over the next several years.

We have already made $61.6 million of loan repayments in 2023. In the remaining of the year, we estimate another $7.4 million in loan repayments. For 2024 and 2025, our loan repayments drove to about $31 million and $35 million respectively, including balloon payments, which the market should be able to refinance if we choose to do so as we did in the past.

[The second item] that I mentioned earlier is on our fleet in the water. Aristides previously stated, we intend to partially finance the remaining of our newbuilding program with debt. And thus, we expect to assuming an additional approximately $165 million of debt over 2024 and early 2025.

A quick point on the cost of our debt. The average margin of our current debt stands at about 2.32%, in assuming a sharper rate of about 5.41%. The cost of our senior debt is approximately 7.73%. This figure, if we look in that figure, the cost of our interest rate swaps, it is broke down to about 7.44%, as about 15% of our product that is hedged at the soft rate of around 3.4%.

I would like to draw your attention now at the bottom of this slide, where we present the level and components of our expected cash flow breakeven for the next 12 months. We show a couple of levels of cash flow breakeven first for the -- our EBITDA breakeven level is around $9,260 per vessel per day. You can see that in the middle of the bonds.

And in total, including interest and loan repayments, our cash flow breakeven level over the next 12 months is expected to be around $15,100 per vessel per day. This level reflects the number of vessels planned to be drydocked next year and the work that is expected to be done in them.

To sum up our presentation, let's move to slide 20 to review our balance sheet. In this slide, we provide a simplified snapshot of our assets and liabilities. As of September 30, our assets include cash and other current assets amounting to about $69 million. Also, include advances that we paid for our newbuilding program amounting to about $67.8 million (sic - see press release, "$67.3 million") and the book value of our vessels, which is around $276.6 million (sic - see press release, "$272.6 million"), resulting in total book value for our assets of about $408.9 million.

On the liability side, our debt as of September 30, as previously mentioned, stood at about $138.4 million, representing -- amounting to about 33.8% of the book value of our assets. The fair value of our remaining below market charters acquired is about $8.4 million or about 2.1% of our assets. And other liabilities of about $9.3 million, amounting to about 2.3% of the book value for us.

However, it should be noted that the market value of our fleet is much higher than its book value. Based on our own internal valuations and comparable market transactions, if charter adjusted values for our fleet and newbuilding contracts are about $396 million, which translates to a net asset value for our company of about $385.3 million or a bit more than $55 per share.

Recently, our shares had been trading around $25 per share. Thus, in that level, it represents a significant discount to our net asset value and [see] that there is a good appreciation potential for our shareholders and investors.

With that, I would like to turn the floor back to our Aristides to continue the call.

Thank you, Tassos. Let's now open up the floor for any questions you may have.

(Operator Instructions) Tate Sullivan, Maxim Group.

Hello, good day. Thank you.

Tasos, can you start by -- just a little more detail on the impairment of the Jonathan P, was that impairment triggered based on the timing of the acquisition of Jonathan P and what might it imply for the rest of your vessels?

We continue to do a test to see whether the book value of the vessels is recoverable based on certain assumptions about the future rates. When we bought Jonathan P, we said the vessel was at the market -- the market was pretty healthy, but also we've got a very healthy charter rate attached to it.

We recognize significant profits over the last three years from the charter rate, but the book value has been depreciated down over the remaining of the life of the vessel. So it was depreciated much less than the earnings contribution that Jonathan provided to us.

And if you do the test using historical average rates for the period after the charter, you get an indication that the vessel needs to be impaired. As you know, these are really accounting requirements and the fundamental business valuation of the investment remains as it was when we decided to pursue it.

And did you say every quarter test all your vessels for impairments or periodically do so?

Every quarter we test all our vessels whenever they are need to be impaired or not.

Thank you. And then on the newbuilds. Can you comment on the newbuilds coming to market come into your fleet for next year? It appears all are on schedule with your previous timelines. Can you give an update on -- are you looking at other companies getting intermediate sized newbuilds delivered here in the near term that you're really looking at or what's the contract outlook for the 2024 deliveries at this point?

Our newbuilding program is going according to schedule. So we do expect to get the ships in 2024. Whereas the last few months, we haven't seen the new orders being placed, but there exists other orders that are being built right now. I think that the order book for the ships, between 1,000 to 3,000 TEU, that will be delivered next year is around 6%.

Of course, the average age of the fleet is extremely high with the 52%, 53% of the fleet being older than 15 years old. So we expect that if in 2024 the market is full, which is highly likely, we will see ships in that size that are being delivered by the charters at the end of the charter and will be scrapped. So that's why we say that overall, we think that in this size bracket, we will probably see a declining market -- declining number of vessels available within the next two to three years.

In fact, if I can add there, surely, the order book as a percent of the fleet for the feeder sector has come down for about 18% a year earlier, down to almost less than 11% now. So there is less new ordering in place for that segment as opposed to the overall fleet where the ordering continues.

And not to get too up top, but with the larger ships away from the feeders, the larger container ships and [masks] announcement in the last couple of weeks of cutting 10% of its workforce. Is there any -- I mean, is this more reflective of weakness in China that your feeder sector could benefit from working at smaller ports outside of China? Or is there any -- can you comment on the mask announcement too?

Well, I'll leave [Matt] to comment on their own announcements. But I think that the market generally, I believe that the next couple of years are going to be softer. Of course, let us not forget the huge profits that all these liners have been making during the last year. So they are all extremely wealthy companies. They are not worrying us at all about the status.

It's just that when the need was huge, they grew. Now, they need to downsize a little bit.

Thank you for commenting. And that's it for me. Thank you.

Thank you.

(Operator Instructions) [Christopher], Arctic Securities.

Hello, gentlemen. Congrats on another great quarter.

Thank you.

I was just wondering, can you comment a bit on how are negotiations are going for the [old] scheduled for delivery in '24? What levels are being discussed? Can I get some decent color on duration here? Are you seeing any interest from the liners? And yeah, thanks.

Yes. We are talking with the major liners who will say we like the seats. They are interesting. But let's discuss closer to the time of delivery about any opportunities to charter. Because the market right now is generally rather weak, we'd rather wait to discuss later.

If we had the ships today, we would probably be able to fix the 2,800 at the level of around, say, $17,000, $18,000 a day for a year. And the 1,800 at around the something between $11,000 and $13,000 for the year. But since the vessels are not scheduled for delivery for at least three months the first one, and five months the second one, people are waiting to see how the market develops before we have discussions.

We also don't want to press to press the liners for something today, because if they see somebody trying to cover them now for three or five months down the road, they will try to impose a much lower rate. So we are not pressing them to come up with a proposal until they feel comfortable about it.

Thank you. I appreciate it. In terms of capital allocation, I mean, publicity it runs -- you're still accumulating shares which is at a significant discount still to underlying values. But should you be able to contract these -- of investors levels that you're describing. How would you consider a capital allocation beyond that? Are you are you willing to increase the dividend compared to the buybacks? I mean, liquidity after a while will also be then an issue?

Well, liquidity we currently -- not an issue obviously. And we don't expect it to become an issue within the next, say, five, six quarters, at least based on our contracted revenues. But we estimate that we will have a big enough liquidity bucket to allow us to complete the seven acquisitions. We are -- (multiple speakers)

Sorry?

I didn't mean liquidity in terms of cash balance, just months there in terms of share and the liquidity in the stock -- sorry. Please go ahead.

Okay. The liquidity in the stock? Yes. The liquidity in the stock has been decreasing. You are right, I think, on that. As it has been decreasing for most shipping companies, we see that generally the interest in shipping has been to reduced during the last six months or so. If this is something, of course, we follow and may our buyback program and how aggressive we are with that because we do want to continue having high liquidity.

[The sizes] and the family control more than 50% of the company's stock right now. So that reduces liquidity, obviously, since nobody's a seller. But it's something that we monitor continuously. And all I can say is that we won't be very aggressive on the buyback, but it will continue to an extent.

Dividends will, of course, continue. And they will continue to be of significance. We want to pay giving a dividend yield, which is in the area of 7% to 8%, 9%. So these are the policy things that right now we are following.

Okay. Thank you very much. And again, congrats on the quarter.

Thank you.

(Operator Instructions) Tate Sullivan, Maxim.

Thank you for taking my follow up. In terms of below-market charters. And I think you gave some figures of $8.4 million of assets remaining and other liabilities of $9.3 million. Is it with the same event trigger a gain on those time charter agreement terminations, if you enter both agreements? (multiple speakers)

The third vessel, Marcos V, that was bought with a below-market charter -- but below-market charter volumes being amortized is being directed to our earnings during the duration of the charter. And the $8.4 million, I believe, that I mentioned in slide 20 refers to the remaining amortized below-market charter value related to Marcos V. The vessel is earning $34,000 in time charter. But of course, because of other work organized, the higher amount which we subtract out when we do our adjustment there.

Okay. All right. Thank you. That's it.

(Operator Instructions) We're not receiving any further questions at this time. I'll turn the floor back to Mr. Pittas for closing remarks.

Thanks to everybody for listening throughout today's call. We'll be back in three months' time. Bye.

Thanks, everybody. Thanks.

This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time.