Euroseas Ltd (ESEA) 2020 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 2020 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 statement: 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 number 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 afternoon, 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 three and nine months period ended September 30, 2020.

Let's turn to slide 3 to see our income statement highlights. For the third quarter, we reported total revenue net -- total revenue of $12.3 million. Net income was $0.2 million and net income attributable to common shareholders after the $0.2 million dividends on the Series B preferred shares was $30,000 or $0.01 gain per share basic and diluted.

Adjusted net loss attributable to common shareholders for the period was $1.5 million or $0.26 per share basic and diluted. After taking into account one-off sales proceeds and some below current market cycles. Adjusted EBITDA was $1.2 million. Tasos will review our financial highlights in more detail later on in the presentation.

Please turn to slide 4 to view in detail our recent chartering, operational, and sale and purchase developments. During the quarter, the M/V EM ship Hydra was chartered for a period of three to seven months at $7,200 per day. The charter of M/V Synergy Oakland declared the 8 to 12 months option, which is based on context, minus 10%. The vessel currently earns about $15,400 per day starting this past October. The M/V Evridiki G was fixed for a trip for a period of 40 to 70 days at $8,250 per day. There were no drydocking expenses for the third quarter.

With regards to idle and commercial off-hire, the M/V EM Evridiki was idle for about 30 days between charters, while the EM Hydra was idle for a couple of days between the charters. On the S&P front, in November 2020, we completed the sale of motor vessel EM Athens for a total of approximately $[4.9] million of net proceeds, of which $3.75 million was used to repay the outstanding loan of the vessel.

In addition to EM Athens, during Q3, we completed the sale of motor vessel, Ninos, our 30 year old vessel and eldest vessel in the fleet, for a total of approximately $2.3 million of net proceeds, of which $1 million was used to repay the outstanding loan of the vessel.

Please turn to Slide 5, where you can see our current fleet profile. Upon the completion of the above-mentioned sales, we now have 14 vessels, which include nine feeders and five intermediate container carriers, with approximately 539,000 deadweight tonnes and 42,300 TEU capacity. The weighted average age of the fleet by TEU is 15.5 years.

Let's turn to slide 6 for our vessel employment chart. As of October 30, we have about 93% coverage for the remainder of 2020 and about 40% for 2021 based on maximum charter durations. Naturally, we expect that, as the market rates increase, the current charterers will keep our vessels for the maximum duration possible.

Please turn to slide 7. Over the last five years, our operational fleet utilization has been in excess of 98.8%. Euroseas has an outstanding safety and environmental record. But at the same time, the company is managing to keep costs low despite running a lesser fleet than the other listed companies.

For the third quarter of 2020, our operational fleet utilization was 99.9%, while the commercial fleet utilization rate in the third quarter was 97.9%. The graph on the page compares daily costs, excluding drydocking, since 2011 with the average of our peers. Overall, our costs achieved are amongst the lowest of the public shipping companies.

Let's go to slide 9 to look at the time charter rates that we had in the market during the third quarter and beyond. Time charter rates during the third quarter increased across all containership sizes. The rates increased further significantly in October and November 2020 up till today with time charter rates for feeder and intermediate sized vessels reaching 2010, 2011 levels, the highest levels observed in the last decade.

Please turn to slide 10 where we show the general containership market highlights of the third quarter in more detail. According to Clarksons, 1,700 TEU geared vessel increased from an average of $6,300 per day in Q2 to $7,050 per day in Q3. And currently it stands at $11,115 (sic - see slide 10 - "$11,364") per day. The 2,500 TEU geared vessel increased from an average of $7,600 in Q2 to $8,500 in Q3 and currently stands at about $14,100 per day.

Similar type of changes we have on the larger sizes as well. The 4,250 TEU gearless vessel increased from an average of $8,500 in Q2 to $12,700 in Q3 and currently stands at $22,000. The 5,600 TEU gearless vessel fell from an average of $18,000 in Q1 to $13,000 in Q2, but currently stands at $26,500 (sic - see slide 10 - "$27,700").

Average second-hand prices for older than 20 year old vessels remained among their scrap prices in Q3, which however, were about 10% higher as compared to their levels during the second quarter. Lately, these prices have increased by about 25% as well.

With younger vessels of about 5 to 15 years old, there was a price increase of approximately 10% for the 3,500 TEU range, whereas smaller vessels remained flat. However, since October and following the increase in charter rates, prices and interests for acquisitions increased substantially.

During this time, the newbuilding prices with no scrubbers/China built was stable with some downward pressure. But the absence of transactions, except from a few larger vessels, indicates the lack of interest at current asking prices.

The inactive containership fleet currently stands at about 1.5% totaling 0.35 million TEU. This includes idle due to scrubbing and retrofitting. It should also be noted that these numbers are down from the 2.7 million TEU as of mid-May. And the ship capacity kept inactive for the scrubber retrofit reached its lowest level since mid-2019 and is now close to zero.

The number of vessels scrapped increased in Q3 as scrapping in Q1 and the first part of Q2 were restricted by the lockdowns in India, Pakistan, and Bangladesh that did not allow more ships to be scrapped during that period when the market was depressed. Overall, the fleet has grown by 2.4% in 2020 without, of course, accounting for the idle reactivations or idling, et cetera.

Please turn to slide 11. As a result of the pandemic, the economic and trade world environment has dramatically, negatively changed in 2020. The last two quarters have been negatively impacted. But the recovery seems to have come faster than IMF's initial estimates, which has revised upwards its GDP estimates.

The IMF projected world GDP growth in 2020 has been revised upwards from the minus 4.9% during the last quarter to minus 4.4% in October. The US economic growth is projected at minus 4.3%, while the Eurozone is expected to need a steeper road to recovery with GDP there growth expected for 2020 at minus 8.3%.

All remaining important economies are now expected to contract, as is clearly evident in the slide, yet at lower rates than those expected a quarter ago, except for India, where staggering contraction of 10.3% is expected.

In 2021 global growth, according to the IMF, is projected to return to growth, recovering from a decline in 2020 of minus 5.4% to a positive 5.2% growth rate. Naturally as a decline in 2020 is now projected to be smaller, the rebound in 2021 is also expected to be lower.

Specifically in 2020, the US is expected to grow by 3.1%, while Eurozone's growth is expected to be around 5.2%, and China's very strong 8.2%. Similarly, all other developed economies are projected to show a strong recovery.

In terms of demand for containerized trade, which closely correlates to global GDP growth and is measured in TEU per mile. According to Clarksons, it is now estimated at a negative 4.5% in 2020. However, most recent indications, taking into account the latest surge in trade, suggest that possibly trade growth will end up at around zero growth this year.

Notwithstanding this fact, a high growth rate of 5.9% is expected to return in 2021, indicating a strong improvement of the global economy. At this point, we should note that the trade and growth projections currently made will probably be revised as COVID-19 develops, but also due to the uncertainty of the geopolitical situation and especially trade between the US and China. Therefore, market development projections are harder than usual to make.

Please turn to slide 12 to review the containership age profile and orderbook delivery schedule. As you can see the containership age profile chart on the left side of the slide, overall the containerized fleet is a young fleet with a mere 6% of ships being over 20 years old.

However, the older vessels are mainly concentrated in the smaller size classes, where our six operate. Consequently, the growth of the fleet in these segments might even be negative in the next couple of years as the older ships are more likely to be scrapped.

The right-side chart shows the delivery schedule of the current containership orderbook, which is expressed as a percentage of the fleet. The circled figures for the years 2017 to 2019 show the actual fleet growth after taking into account scrapping, cancellations, and slippages.

The red circled figures for 2020 to 2022 show just the orderbook before any scrapping and slippages. Currently, the total containership orderbook stands at 7.8% of the fleet, a figure which is the lowest observed in more than 20 years. This low level of order book provides a source of optimism for the quick recovery of the rates if trade demand recovers as supply side vessels will be at minimum levels.

Please turn to slide 13, where we discuss our outlook summary. The unknown duration of the pandemic and its financial consequences had made predictions about the future trades very difficult. The coming of the vaccines, which now seem highly probable to the middle of 2021, gives rise to optimism that we will soon revert to a more normalized market where demand will continue to be affected by more classical drivers, such as politics and economics.

Recently revised projections by Howe Robinson estimate that the 2020 container headhaul demand will end up at around 0%. A dramatic improvement of previous forecasts would suggest a much better picture than what Clarkson's numbers still indicate as economies are reopening faster.

However, recent lockdowns in Europe might slow down this trend. Under these developments of a not as bad an overall market in 2020, it is probable that 2021 demand growth, whilst remaining strong, will not be as strong as indicated in the earlier slide.

However, ordering of new ships is expected to be contained in the midst of the still uncertain developments and, more importantly, the lack of clarity on the fuel of the future. As not knowing the optimal ship for even five years out makes the placing of any new order quite speculative and risky.

Therefore, for 2021 and 2022, the expected improvement in demand and the low orderbook could be a catalyst for the continuing booming market provided that all COVID-19-related negative disruptions will cease to exist and trade wars will not flare up again.

Let's turn to Slide 14. The left side of this slide shows the evolution of the one year time charter rates for containers of 2,500 TEU since 2000. Since the financial crisis of 2008, rates stayed rather depressed with three spikes within the $5,500 to $14,900 per day range. Currently, we see, again, strong charter rates flirting with the highs seen in 2010 to 2011. But of course, they are still lower than the super cycle levels witnessed in the mid-2000s.

The right-hand side of the slide shows vessel values in relation to historical prices since 2011. As we can see, containership values are still significantly below the median and average historical values. This indicates that purchases of ships at today's current values could prove very good investments.

And with that, I will now pass the floor to our CFO, Tasos Aslidis, to go over our 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 the next four slides to give you an overview of our financial results for the three and nine month periods ended September 30, 2020.

Let's first turn to slide 16. For the third quarter of 2020, the company reported total net revenues of $12.3 million, representing a 19.4% increase of our total net revenues of $10.3 million during the third quarter of last year, and which was a result of the increased number of vessels operated during this last quarter. And was partly offset by lower time charter rates our vessels earned as compared to the same period of last year.

The company reported net income for the period of $0.2 million and net income attributable to common shareholders of $0.03 million as compared to a net loss of $0.2 million and a net loss attributable to common shareholders of $0.3 million, respectively, for the third quarter of 2019.

The results of the third quarter of 2020 include a $0.3 million amortization of below market time charter contracts acquired, and [then] $1.3 million net gain on sale of vessels. Depreciation expense for the third quarter of 2020 was $1.6 million as compared to $1.1 million for the same period of last year due again to the increased number of vessels owned and operated by the company.

Adjusted EBITDA for the third quarter of 2020 was $1.2 million compared to $1.6 million achieved during the third quarter of 2019. Basic and diluted earnings per share attributable to common shareholders for the third quarter of 2020 was $[0.1], calculated on 5.7 million shares basic and diluted average number of shares outstanding, compared to basic and diluted loss per share of $0.10 for the third quarter of 2019 calculated on 3.3 million basic and diluted weighted average number of shares outstanding.

Excluding the effect on the loss attributable to common shareholders for the quarter of the amortization of the below market time charter contracts acquired, the net gain on sale of vessels in the area and the unrealized loss on derivatives, the adjusted loss attributable to common shareholders for the quarter ended September 30, 2020, would have been $0.26 per share basic and diluted compared to an adjusted loss of $0.15 per share basic and diluted for the same period of last year.

Usually, security analysts do not include the above items in their published estimates of earnings per share.

Let's now look to our figures for the first nine months of 2020. For that period, the company reported total net revenues of $41.3 million, representing a 54.5% increase over total net revenues of $26.7 million during the first nine months of 2019, again as a result of the increased average number of vessels combined in this case with the higher time charter rates our vessels earned during the period of this year compared to last.

The company reported net income for the period of $3.5 million and net income attributable to common shareholders of $2.9 million as compared to a net loss of $0.9 million and a net loss attributable to common shareholders of $2.5 million, respectively for the first nine months of 2019.

The results for the first nine months of 2020 include: a $1.3 million net gain on sale of vessels; a $1.5 million amortization for below market time charter contracts acquired; a 0.1 loss on write-down of vessels held for sale; and $0.6 million of unrealized loss on derivatives. Comparatively, the results for the first nine months of 2019 include $0.2 million amortization for below market time charters acquired, and a $0.04 million of unrealized gain on derivative.

Interest and other financing costs for the first nine months of 2020 amounted to $3.3 million compared to $2.3 million for the same period of last year. This increase is due to the increased amount of debt in the current period compared to the same period of 2019 and is partly offset by the decreased LIBOR rates of our bank loans during the nine month period of this year as compared to last.

Depreciation expense for the first nine months of 2020 was $5.0 million compared to $2.7 million during the same period of 2019 as a result of the higher number of vessels we own and operate. Adjusted EBITDA for the first nine months of 2020 was $9.7 million compared to $4.1 million during the first nine months of 2019. Again, the increase is due to the higher number of vessels.

Basic and diluted earnings per share attributable to common shareholders for the first nine months of 2020 was $0.52, calculated to a 5.6 million basic and diluted weighted average number of shares outstanding compared to a loss per share of $1.19 for the first nine months of 2019, calculated on 2.1 million shares outstanding.

Excluding the effect on the income attributable to common shareholders for the first nine months of 2020 of the unrealized loss on derivative, the net gain on sale of vessels, the loss on write-down of a vessel held for sale, and the amortization of the below market time charter contracts acquired, the adjusted earnings per share attributable to common shareholders for the nine months period ended September 30, 2020, would have been $0.15 compared to an adjusted loss per share of $1.3 for the same period of 2019.

As I mentioned earlier, security analysts do not include the above items in their published estimates of earnings per share.

Let's now turn to slide 17 to review our fleet performance in a little bit more detail than Aristides discussed earlier. Let's first look at our fleet utilization rates. And let's start with our third-quarter numbers on the left part of the slide as usual, which as usual, are broken down into commercial and operational.

As you can see in the slide, for the third quarter of 2020, we reported 97.9% commercial utilization rate and 99.9% operational utilization rate compared to 100% commercial and 99.9% operational for the third quarter of last year.

I would like to remind you here that our utilization rate calculation does not include vessels in any scheduled repairs or drydocks if any of those events happened during the period. On average, 16.5 vessels were owned and operated during the third quarter of 2020, earning an average time charter equivalent rate of $8,403 per vessel per day compared to $8,554 per vessel per day during the same period, the third quarter of 2019, a quarter during which we operated 17.5 vessels on average.

Our total daily vessel operating expenses, including management fees, general and administrative expenses, but excluding drydocking costs, averaged $6,759 per vessel per day during the third quarter of this year compared to $6,388 per vessel per day, [the average] during the same period of 2019.

Let's now look at the bottom of the table to our daily cash flow breakeven levels presented here on a per vessel per day basis. For the third quarter of 2020, our customer break-even level was $7,924 per vessel per day compared to $9,101 per vessel per day for the same period of 2019.

Let's now look at the right part of the slide to review the same figures for the nine month period. So for the nine month period, we reported a 97.2% commercial utilization rate and a 98.5% operational utilization rate during 2020 compared to 98.8% commercial and 100% operational for the same period of last year.

During the first nine months of this year, we operated 18.2 vessels on average with time charter equivalent rate of $9,171 per vessel per day compared to a time charter equivalent rate of $8,638 per vessel per day during the same period, the first nine months of 2019, a period though during which we operated 11.8 vessels on average.

Our total daily vessel operating expenses, again, including management fees, general and administrative expenses but without drydocking costs, averaged for the period $6,234 per vessel per day compared to $6,348 per vessel per day for the same period, first nine months of 2019.

Looking again, at the bottom of the table, we can see that our cash flow breakeven level for the first nine months of this year was $8,362 per vessel per day compared to $9,005 per vessel per day for the first nine months of 2019.

Let's now move to slide 18 to review our debt profile. This slide shows in the bottom graph, our cash flow breakeven level expectations for the next 12 months. And on the top of the slide, we can see our scheduled debt repayments over the next several years. As we can see in 2020, our loan repayments included $11.75 million of repayments due to the sale of the four vessels that we mentioned that we sold during the year, including the EM Athens that Aristides mentioned earlier that was sold in November.

Our loan repayments, as you can see, again, that's out of the -- in the shaded part of the bars of the chart over the next three years continue to decline. In terms of our balloon payments, in 2021, we have to repay about $12 million for a balloon payment that is covered with four of our vessels. In 2022, there is a small balloon payment of $1.9 million due, again covered by one of our vessels.

And finally, in 2023, we have balloon payments of about $33 million, representing loans collateralized by the remaining nine of our vessels. We believe that, as we did in the past, we'll be able to refinance all of our balloon payments when they come due.

Let me make a quick note on the cost of our funding before we move to reviewing our cash flow breakeven levels, which have an average margin on our bank debt of about 3.6%. And assuming the LIBOR rate of 0.3%, our senior debt cost would average about 3.9%. If we take into account the cost of a related party loan and the preferred equity dividends, our average cost of our loan equity funding as of September 30 was about 4.5%.

Let's now look at the bottom of this table where we can see our cash flow breakeven level expectation over the next 12 months in dollars per day. Our loan repayments, which we discussed previously, make a contribution of $1,300 to the cash flow breakeven level. If we make assumptions for the remaining components of our cash flow breakeven level, that is our operating expenses, G&A expenses, interest, drydocking costs, and then cash payment for our preferred stock dividend, we come up with a cash flow breakeven level for the next 12 months of about $8,860 per vessel per day.

As previously mentioned, we have agreed with the holders of our Series B preferred shares to have the option to pay the quarterly dividend in kind for the period to January 29, 2021, by issuing additional preferred shares.

Let's now turn to slide 19. This slide provides highlights from our balance sheet. As of September 30, 2020, we had cash and other assets of about $10 million. The book value of our vessels was about $103 million, giving us a total value of book assets of about $113 million.

On the liability side, we have an outstanding bank debt of $75.5 million, preferred equity of $8.4 million, and other liabilities for about $5.7 million, thus leaving us with a net book value of $23.6 million (sic - see slide 19 - "$23.5 million") or approximately $4 per share. If we adjust the book value of our vessels with our market values as of the end of October, we can calculate the net asset value of our fleet to be in the range of $32 million to $33 million or about $5.6 per share.

Recently, our shares have been trading around -- between $3 and $3.5, more recently a little above that level range. We believe that this trading rate represents a significant discount to both our book and net asset value per share, thus offering good appreciation potential for our shareholders and good investment opportunity for other investors. And with that, I would like to turn the floor back to Aristides to manage the remaining of the call.

Thank you, Tasos. I want to open up the floor to any questions you may have.

(Operator Instructions) Please go ahead, caller. Your line is open.

Thank you. Good day. Tate Sullivan, I'm from Maxim Group. Can you follow up with some comments on the Athens sale? And you noted market values for ships have increased recently as well. And then at that sale you avoided some drydocking expenses? Do you have a similar dynamic with other remaining ships in your fleet with contracts expiring this year that you may consider selling or how will you evaluate each situation?

Yes, Tate, hi. No, I think the Athens was the last vessel that we sold this year. We did sell it at a value of about $1 million, about the scrap value, indicating this improvement in the market that we have seen and confirming this improvement in the market that we have seen.

It was a vessel that was due for special surveys. So we would have needed to pay between $1 million and $1.5 million to pass the special survey and install the ballast water treatment plant. So we decided to sell that ship at the time. We don't have any intention to sell any other of our ships in the foreseeable future right now.

Thank you. And did you -- that $1 million figure that you mentioned related to Athens. Is that up -- will you recognize a gain on sale with that $4.9 million of net proceeds?

(multiple speakers) we will, Tasos.

Yes, the gain of Athens will be recognized next quarter. It was sold in November. But there will be a book gain on the vessel.

And then you referred to the November '19 purchase agreement and issuing a small amount of shares related to that. Are there additional shares in the next year related to that November 2019 acquisition? Or is it -- or any other -- or payment obligations in that (multiple speakers)?

No, that was an agreement with the seller of the vessels that if the container market a year down was strong, stronger than where it was last year, there would be an extra compensation of $125,000 per vessel on the four ships that we acquired, so paid in stock. So that was that. And there is no other warrants outstanding of any kind.

Great. And you mentioned avoiding -- the Athens avoiding the special survey in ballast water. Can you just review uses of cash in the near term? Are there other ships that require special surveys that you can talk about, please?

There is no imminent special survey in any of our ships within this quarter or the next quarter. I think the next special survey could be on the Evridiki in Q2 next year. But there, again, the inclination right now is to keep the vessel unemployed and pass it through its special survey.

We might have some ships. I think there are a couple of Synergy ships that might pass in water surveys in the first quarter. Nothing really dramatic in terms [of first].

Okay. Thank you for all that detail. Have a great rest of the day.

Thanks, Tate.

Thanks, Tate.

Your next question is coming now. Please go ahead. Your line is open.

Hi. It's Poe Fratt from NOBLE Capital Markets. Aristides, can you -- or I'm sorry, Tasos, can you just highlight again on the Athens? It sounds like you're going to book a gain of $1 million in the fourth quarter?

I don't have on top of my head what would be the gain we're going to book. But it will probably be around that level. I need to look at my depreciation schedule.

Okay, I just wasn't clear on that. And then the drydock expense that you avoided, could you quantify that?

Yes, I said it was between $1 million and $1.5 million. It involves the full special survey plus the installation of the ballast water treatment plant.

Great. Thank you so much. And then when you look at, Tasos, on your slide 18, you talked about the preferred dividends and you have $100 a day of preferred dividends. Just to clarify, is that assuming that you're going to pay the preferred dividend starting in January of 2021 in cash?

That's right.

Okay. And then when you look at -- the markets move significantly, you have 40% of your days booked in 2021. Do you have a rate that's associated with that forward cover?

I mean, I don't have the calculation with me. But we can -- the rate is -- the average of the rate shown in the chart on slide 6.

Okay.

I would say, it's just below [10,000].

There are three vessels, Poe, that will be fixed within this year in the next couple of weeks, which we expect to fix at high levels, and will affect this number. So in about a couple of weeks, we should have a better clarity as three vessels we are aiming to fix for at least a year.

And you anticipated my next question, Aristides, is just your ability to move your fleet up to market rates. And it sounds -- it looks like the two 2,600 TEU vessels, what is it, the Astoria and Evridiki?

That's the name of my grandmother, Evridiki.

And I apologize to her for mispronouncing it.

It is not easy.

Could you talk about -- is there any reason why those two vessels wouldn't move up into what you're showing as the market rate in the 14,000 range?

No, there is no reason they would not move up to that level.

Okay.

Evridiki has a slight complication because it will have to pass special survey. So there will be a special survey clause, which might affect a little bit the rate. But still rates we feel are even higher than the 14,000 that is shown in the graph at this stage.

Okay, that's helpful. And then the smaller one, the Aegean Express, any reason why that one moved up into the 11,000, 12,000 range?

Yes, I think it will be in that range that you mentioned, 11,000, 11,500, something like that.

And then as you look, it sounds like you were -- would there be any discount if you went out a year, Aristides, or would --?

Generally for the smaller vessels, it's not easy to get longer than a year. But today some charters are talking about that. But of course, there would be a discount involved. So we will see how we will decide to fix.

Yes, that's sort of the trade-off of getting cover versus the current rate. And any thoughts on moving more of your fleet to the indexed rates? When you look at the Oakland, that's been able to capture the near-term moving rates pretty well, but the rest of the fleet is more static, if you will. Any thoughts on moving more of the fleet to indexed rates?

Charterers generally do -- in container shipping don't do it as much. In the dry bulk side, we have many fixtures which are index-linked. But on the container side, there is very few charterers that want to proceed along that way. So that's why you don't see it that much. We like that.

Yes, a little more predictability.

Yes, it's not extremely predictable. But at least it guarantees full employment because you never know how the index will move. If there's more predictability, if you fix a year at a certain rate, you know exactly what you're going to make.

Yes, sorry, that's what I was alluding to as opposed to indexes can move around a lot. When -- Tasos, when you look at the balloon payment that's due next year, it's what, just a little bit over $12 million. When do you think you'll be able to talk about the potential pushing out of that? And what are you hoping for as far as sort of -- are you looking at two year or three year pushout? Or do you think you might be able to push the maturity out even further?

I think we can -- we'll be able to push it out for two years, at least and most likely we'll do three year financing. This is during December next year. So there is some time to see how the market develops and how much of the earnings and accumulation of cash flow has been. But the scrap value of the four vessels alone should be sufficient to cover the balloon. So I expect, judging from our past success in refinancing those payments, we would have no dramatic issue to refinance it.

Okay. And Aristides, you talked about the contingent payment on the acquisition that you issue shares. I think -- I'm not sure -- it might have been asked, but I'm not sure you addressed it. But can you talk about why you used the ATM program in August. And it wasn't -- is it going to be active going into the next couple of quarters? Is that something we should expect or just what happened in August that made you use the ATM?

So we saw an increase in the price of the stock that we felt warranted the use of the ATM in order to increase our liquidity. We think that with the current market and with the fixes that we have done and we will do, we will use the ATM only opportunistically if we do see sudden rises in the stock price, which we have seen in a few occasions through probably [moment to more] algorithmic trading that keeps these smaller stocks at some point.

Typically, we use it when the price that we can sell shares is above the NAV at the time. So we don't use it in any dilutive way.

Yes, so looking sort of that north of [$5.56] a share range. And two, Tasos, can you highlight just how much availability you have under the ATM? How many shares you can use, whether it's a dollar figure or a number of shares that you could issue under the ATM?

[It's in a year] between $2 million and $2.5 million?

In dollars?

In dollars, I'm sorry.

Okay, great. Thank you so much.

Thanks, Poe.

Thank you. I will now hand the call back to Mr. Aristides Pittas for closing remarks. Please go ahead, sir.

Well, I want to thank everybody for listening in to the results of Q3. And things look good and probably Q4 results should be better than Q3 still. So we'll talk again at the beginning of the year to discuss the whole year and how prospects are at the time. Thank you.

Thanks, everybody.

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