Navios Maritime Partners LP (NMM) 2023 Q1 法說會逐字稿

Thank you for joining us for Navios Maritime Partners First Quarter 2023 Earnings Conference Call. With us today from the company are Chairwoman and CEO; Ms. Angeliki Frangou; Chief Operating Officer, Mr. Efstratios Desypris; Chief Financial Officer, Ms. Eri Tsironi; and Vice Chairman, Mr. Ted Petrone. As a reminder, this conference call is being webcast. (Operator Instructions)

Now I will review the safe harbor statement. This conference call could contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Navios Partners. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are based upon the current beliefs and expectations of Navios Partners' management and are subject to risks and uncertainties, which could cause actual results to differ materially from the forward-looking statements. Such risks are more fully discussed in Navios Partners' filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks. Navios Partners does not assume any obligation to update the information contained in this conference call.

The agenda for today's call is as follows. First, Ms. Frangou will offer opening remarks. Next, Mr. Desypris will give an overview of Navios Partners' segment data. Next, Ms. Tsironi will give an overview of Navios Partners' financial results. Then Mr. Petrone will provide an industry overview. And lastly, we'll open the call to take questions.

Now I turn the call over to Navios Partners Chairwoman and CEO; Ms. Angeliki Frangou. Angeliki?

Good morning to all of you join us on today's call. I am pleased with the results for the first quarter of 2023, in which we reported revenue and net income of $309.5 million and $99.2 million, respectively. We are also pleased to report net earnings per common unit of $3.22 for the quarter. Navios Partners is a leading publicly listed shipping company, diversified in 15 asset classes in 3 sectors, with an average vessel age of about 9.6 years.

We have 173 vessels split roughly equally in 3 sectors based on a charter-adjusted value. In addition to diversification, we have been actively managing our portfolio to maintain a younger, more technologically advanced fleet as we believe the newer technologies are a competitive advantage, both in terms of operating efficiencies and also for fuel emissions.

We have rationalized our fleet by selling all vessels and acquiring new vessels. As I said last quarter, we are also focused on reducing leverage rates. Most recently, we reduced our net LTV to about 42% in the first quarter of 2023 from about 45% in the fourth quarter of 2022, measured for vessels in the water. Our stated goal is to continue to reduce leverage so that our net LTV falls within a range of 20% to 25%.

Please turn to Slide 7. We continue to finance our new building program on attractive terms. Since our last earnings, we secured $438.6 million of new financing at an average margin of 1.8%. The $343.6 million, of which financed 6 newbuilding vessels. We have also refinanced $95 million for 8 tanker vessels at the same average margin.

We have also taken advantage of market conditions to secure $161 million of long-term contracted revenue and to sell vessels generating $242.2 million in gross sales proceeds.

As to contracted revenue, we have secured $52.7 million for 2 tankers over 2.7 years and $107.8 million for 7 container ships over 2 years. For sales, we sold 8 vessels were $160.3 million in the first quarter of 2023 and expected to close on the sale of the remaining 5 versus for an additional $81.9 million in the second quarter of 2023. Our operating cash flow is strong. For the remaining 9 months of 2023, our revenue is expected to exceed total cash cost by $70.2 million with 15,469 open and index days, we would expect to generate significant additional cash in 2023.

Please turn to Slide 8. We implemented a diversified strategy in late 2020. Since then, we have made 3 significant acquisitions, a containership company with 29 vessels in the first quarter of 2021, a tanker company with 45 vessels in the third quarter of 2021 and a 36 vessel dry bulk fleet in the third quarter of 2022.

As a result of this transformation, our financial performance has strengthened materially, which this slide demonstrates by referring to adjusted EBITDA. $155.4 million of Q1 2023 adjusted EBITDA represents a 23.2% increase over the first quarter of 2022 and 361.1% increase over the first quarter of 2021. On 2022 adjusted EBITDA of $667.9 million represented a 56.6% increase compared to 2021 and at 569.2% increase compared to 2020.

I now turn the presentation over to Mr. Efstratios Desypris, Navios Partners' Chief Operating Officer. Stratos?

Thank you, Angeliki, and good morning, all. Please turn to Slide 9, which details our strong operating free cash flow potential for 2023. We fixed 63% of available days at an average rate of $27,688 net per day. Our contracted revenue exceed expected total cash expense for the remaining 9 months of 2023 by over $70 million. We have 15,469 open and index-linked days, but will provide additional profitability once fixed.

Slide 10 demonstrates the basic principles of our diversified platform in action. We aim to benefit from counter cyclicality, which creates the opportunity to deploy cash flows from well-performing segments into assets in underperforming segments. We believe a diversified asset base moves volatility on our financial statements. You can see this dynamic playing itself out in our asset base. As of Q1 2023, container values dropped by 4%, while dry bulk and tanker vessel values increased by 9% and 2%, respectively.

In sum, the net change to our fleet by using an increase of approximately 3%. Multiple segments also allows us to optimize chartering. In segments with attractive returns, we can enter into period charters. In other segments, we can be patient. As you can see from the chart on the bottom of the slide, we have fixed 86% of our 13,600 total available days for the second quarter of 2023 at a net average rate of $25,654 per day.

Our container ships are 100% fixed at $38,613 net per day, our targets 90% at $28,033 net per day, and our drybulk fleet is 79% fixed at $17,458 net per day.

On Slide 11, you can our fleet renewal activities. We are always renewing the fleet so that we maintain a young profile, benefiting from new technologies and more carbon efficient vessels.

We have $1.4 billion remaining investment in 21 newbuilding vessels that we deliver to our fleet through 2026.

In our containerships, we are acquiring 12 for a total of $860 million. We hedged our investment by entering into long-term creditworthy charters, generating about $1.1 billion in contracted revenue for about 6.5 years average duration of the related charters.

In the tanker space, we entered the LR2/Aframax subsector by ordering 6 vessels for a total price of approximately $380 million. These vessels have been chartered out for 5 years at an average net rate of $26,580 net per day, generating revenues of approximately $290 million. We have also ordered 2 high spec LR2 vessels for about $80 million.

Finally, on the drybulk fleet, we have 1 Capesize vessel on order that will be delivered in June 2023, which has been chartered out for 5 years at a net rate of almost $20,000 per day. We have been also very active and opportunistically selling all their vessels, tailored segment fundamentals.

Year-to-date, we have sold a total of 15 vessels with an average age of approximately 14.5 years for $242.2 million. We sold 7 tanker vessels for a total consideration of about $160 million, taking into advantage a strong tanker market and the corresponding increase in demand for secondhand tonnage. Also, we sold 6 drybulk vessels for a total price of $82.4 million.

Moving to Slide 12. We continue to secure long-term employment for our fleet. As Angeliki mentioned earlier, in Q4, we have created over $160 million additional contracted revenue. Approximately $110 million relates to 7 containerships charter for an average of 2 years at an average net rate of $21,296 net per day. Also, we have contracted 2 tanker vessels for an average duration of 2.7 years at a net rate of $27,089 per day, expected to generate over $50 million in revenue.

Our total contracted revenue amounts to $3.4 billion, $0.8 billion relates to our tanker fleet, $0.4 billion to our drybulk fleet, while $2.2 billion of our contracted revenue comes from our container ships with charters extending through 2056 with a diverse group of quality counterparties.

About 55% of this contracted revenue from containerships will be earned in the next 2.5 years.

I now pass the call to Eri Tsironi, our CFO, which will take you through the financial highlights. Eri?

Thank you, Stratos, and good morning all. I will briefly review our unaudited financial results for the first quarter of 2023. The financial information is included in the press release and is summarized in the slide presentation available on the company's website.

Moving to the earnings highlights on Slide 13. Total revenue for the first quarter of 2023 increased by 31% to $309.5 million compared to $236.6 million for the same period in 2022. Time charter revenue for the period is understated by $13 million because U.S. GAAP rules require the recognition of revenue for our charters with deescalating rates on a straight-line basis. Available days increased by 24% to $13,908 compared to $11,228 million the same quarter last year.

Our average time charter equivalent rate increased by 2% to $20,811 per day compared to $20,386 per day for the same period in 2022. In terms of sector performance, both tankers and containers enjoyed improved rates compared to the same period last year. TCE rates for our tankers increased by 86% and to $28,477 and for our containers by 29% to $34,987 million. In contrast, our dry fleet, TCE rate was 45% lower compared to the same period last year at $10,998 million.

EBITDA for Q1 '23 increased by 50% to $188.8 million compared to $126.1 million for the same period last year. Time charter and voyage expenses increased by $22.7 million as a result of higher bunker expenses as a number of our vessels were employed on freight voyages and higher bareboat and chartering high expenses following recent vessel acquisitions.

Operating expenses and general and administrative expenses increased mainly due to the expansion of our fleet. Net income for Q1 '23 increased by 16% to $99.2 million compared to $85.7 million in Q1 2022. Earnings per unit were $3.22. Net income was negatively affected by a $22.3 million increase in interest expense, mainly as a result of the increase on average interest rate cost from 3.7% in Q1 2022 to 7% in Q1 2023.

Turning to Slide 14, I will briefly discuss some key balance sheet data. As of March 31, 2023, cash and cash equivalents were $213.2 million. In Q1 2023, we paid $62.1 million of predelivery installments and other capitalized expenses under our newbuilding program and $51.3 million for vessel acquisitions and improvements. We sold 8 vessels for $157.7 million net, adding $100.8 million cash after the repayment of their respective debt. Our other current assets decreased mainly due to the decrease in accounts receivable from charters, which were set in post year-end. Our other current liabilities decreased following the payments made in accordance with the vessel management agreement.

Long-term borrowings, including the current portion, net of deferred fees, amounted to $1.87 billion. Net debt to book capitalization decreased to 38.4%.

Slide 15 highlights our debt profile. We continue to diversify our funding sources between bank debt and leasing structures, while 32% of our debt has fixed interest at an average rate of 5.6%. We also try to mitigate part of the increased interest rate costs having reduced the average margin for our floating debt by 50 basis points to 2.6% from 3.1% in Q1 2022.

Our maturity profile is target with no significant values due in any single year.

Slide 16 gives an update of the Q1 2023 debt developments. In terms of our newbuilding program, approximately 75% of our newbuilding debt is already concluded or 91% if we include those in documentation phase at an average margin of 1.8%. We have used the opportunity to expand our financing resources, adding new banks and lessors, while we have also included our first export credit agency backed facilities in China and South Korea.

Finally, we have arranged $95 million of new financings for existing vessels at an average margin of 1.8%, representing an improvement of 171 basis points from the previous financings.

Turning to Slide 17, you can see our ESG initiatives. We aspire to have net 0 emissions by 2050. In this process, we have been pioneering by investing in new energy efficient vessels and reducing emissions through energy-saving devices and efficient vessel operations.

Navios is a socially conscious group whose core values include diversity, inclusion and safety. We have a very strong corporate governance, a clear code of ethics. Our Board is composed by majority independent directors and independent committees that oversee our management and operations.

I'll now pass the call to Ted Petrone to take you through the industry section. Ted?

Thank you, Ari. Please turn to Slide 20 for the review of the tanker industry. World GDP is expected to grow at 2.8% in 2023 based on the IMF's April forecast and is forecast to be 3% in 2024. There's an 85% correlation of world oil demand to global GDP growth.

In spite of economic uncertainties in the Ukraine crisis, the IEA projected 2.2 million barrels per day or a 2.2% increase in world demand for 2023 to 102 million barrels per day, exceeding 2019 pre-pandemic levels. China, in particular, accounts for 60% of global oil demand growth in '23, rising 1.3 million barrels per day or 8.8% over 2022 to average an all-time high of 16 million barrels per day.

After a strong Q4, cross-sell asset classes firm tanker rates continued in 2023 on the back of strong supply and demand fundamentals, minimum fleet growth and shifting trading patterns resulting in longer haul trade routes, especially for Suez and Aframax. Recent declines in U.S. crude exports and OPEC cuts, although less than the headline numbers have put downward pressure on VLCC rates, particularly out of the NEG.

Turning to Slide 21. Tanker rates across the board remained strong due to previously mentioned supply and demand fundamentals combined with the invasion of Ukraine, which has shifted Russian crude and product exports to longer haul routes out to India and China. Additionally, European refineries are replacing Russian crude with products with supply from the U.S., Brazil and the Middle East, further increasing ton miles and trade inefficiencies.

Product tankers should also be aided by discounted Russian crude exported to the Indian Ocean and the Far East, returning to the Atlantic as clean product. This could add upward pressure on already strong rates. 2023 crude and product ton mile growth is expected to increase 5.6% and 10.9%, respectively, with continued ton mile growth in 2024.

Turning to Slide 22. VLCC net fleet growth is projected at 2.1% for 2023 and negative fleet growth of -- negative 1.5% for 2024. This decline can be partially attributed to owners hesitance to order expensive long-lived assets in light of macroeconomic uncertainty and engine technology concerns due to the CO2 restrictions enforced since the beginning of this year.

The current record low order book is only 1.4% of the fleet or only 13 vessels, the lowest in 30 years. 11 VLCCs were delivered during the balance of this year, none in '24 and none in 2025 and '26. Vessels over 20 years of age or 14% of the total fleet or 127 vessels, which is about 10x the order book.

Turning to Slide 23. Product tanker net fleet growth is projected at 1.6% for 2023 and only 0.3% for 2024. The current product tanker order book is 8% of the fleet or 188 vessels, one of the lowest on record, and it compares favorably with the 9.9% of the fleet or 358 vessels, which are 20 years of age or older.

Including the tanker sector review, tanker rates across the board continued at strong levels. The combination of below average global inventories, oil demand returning to pre-pandemic levels, new longer trade routes to both crude and products as well as the lowest order book in 3 decades and the IMO 2023 regulations should provide for healthy tanker earnings going forward.

Please turn to Slide 25 for the review of the drybulk industry. Normal seasonality in Q1 and slower-than-expected recovery in the Chinese economy, put downward pressure across all asset classes, particularly Capesize. The Baltic Dry Index, the BDI averaged only 1,011 a circa 50% reduction from the same period last year and the lowest quarterly average since Q2 of 2022. Overall, the Chinese reversal of a zero-COVID policy and the additional fiscal stimulus, combined with the weakening U.S. dollar, point to stronger demand during the second half as indicated by higher import numbers for iron ore, coal as well as higher futures on all asset classes. Overall, drybulk trade in 2023 is projected to increase by about 2%.

Going forward, long-term supply and demand fundamentals remain intact China's reopening economy, the historical order book, declining net fleet growth during the latter part of this year and into 2024, suffering U.S. dollar and tightening GHG emissions regulations remain positive factors.

Please turn to Slide 26. With regard to INR following the reopening of the Chinese economy, China's GDP grew by 4.5% in Q1 of this year. Further, China's fiscal stimulus focused on supporting the real estate sector should boost iron demand in the second half of '23. Overall, global iron ore trade is expected to increase by 0.6% in '23 with trade increasing by 8.1% in the second half of '23 over the first half of this year.

Concerning coal, global coal consumption reached a record 8.25 billion tons in 2022, and that figure is expected to be surpassed in 2023. The Ukraine crisis continues to impact global coal imports as European supply concerns persist. The EU ban on Russian coal will lead to shifting trading patterns toward longer-haul routes. Overall 2023 seaborne coal trade growth is expected to be supported by an estimated 4.4% growth in ton miles. Additionally, coal trade is expected to increase 5.4% in the second half of '23 over the first half of this year.

On the grain side, global seaborne trade volume is negatively impacted by the war in Ukraine, but is expected to increase by 3.2% this year. Trade route adjustments due to the war of shifting trading patterns towards longer haul routes. The global grain trade continues to be driven by heightened food security issues, driven initially by the pandemic. Ton-mile growth is expected to increase by 4% in 2023 due to the war and weather-related crop harvest issues.

Please turn to Slide 27. The current order book stands at 6.9% of the fleet, one of the lowest since the early 1980s. Net fleet growth for 2023 is expected at 2.4% and only 0.6% in 2024. As owners remove tonnage that has become uneconomic due to the IMO 2023 CO2 rules enforced since the beginning of this year. Vessels over 20 years of age are about 8.8% of the total fleet, which compares favorably with the historically low order book.

In concluding our drybulk sector review, continuing demand for natural resources, China's reopening, war and sanction-related longer haul trades combined with slowing pace of newbuilding deliveries, all support freight rates going forward.

Please turn to Slide 29 for a review of the container industry. After 3 consecutive quarters of falling rates to Shanghai Container Freight Index, SCFI may have found a floor, at least temporarily as the index bounced off a low of $907 in March and currently stands at $972, which is still higher above the historical pre-COVID averages. This is mainly due to China's reopening, it's 4.5% GDP growth in Q1 and increasing exports and in turn increasing box and time charter rates recently.

Global container trade is expected to remain under pressure in '23 from macroeconomic issues, including inflation, the war in Ukraine and elevated deliveries.

As you'll note in the graph on the lower right, the U.S. retail inventory to sales ratio is off to a recent low, but still well below the long-term average. The graph on the lower left shows the continuing growth in U.S. consumer purchases of goods, which is still above pre-pandemic levels. Imports to the U.S. have slowed using port takeaway, bottlenecks and port congestion. Containership rates have tightened recently surprising most analysts as imports continue and new deliveries are slow to hit the water.

Overall, 2023 container trade is projected to decrease by 1.1% in '23, but increased by 3.3% in 2024.

Turning to Slide 30. Net fleet growth is expected to be 6.9% for this year and 5.8% for 2024. The current order book stands at 28.4% against 11.4% of the fleet, 20 years of age or older. About 72% of the order book is for 10,000 TEU vessels or larger.

In concluding the container sector review, although supply and demand fundamentals remain challenged due to economic and geopolitical uncertainties and combination of China's reversal of its zero-COVID policy, additional fiscal stimulus and the IMF April revision to world GDP growth to 2.8% in '23 and 3.0% in '24, provide a counterpoint to a challenging '23.

This concludes our presentation. I'd like now to turn the call over to Angeliki for her final comments. Angeliki?

Thank you, Ted. This concludes our formal presentation. We'll open the call to questions.

(Operator Instructions) Our first question comes from Omar Nokta with Jefferies.

First, just wanted to maybe ask strategically about the business and obviously, the balance sheet. You've gotten the net LTV down to 42% from 45% last quarter. Your aim or target is to get it to that 20%, 25% threshold. It looks like you're on pace to get there perhaps over the next couple of years. I wanted to ask, is there something you're looking to do strategically when you get to that point versus not being able to do that now or is it just simply you're looking to delever to have that added flexibility down the line?

Good morning, Omar. I mean this is -- by the way, I think that you got it well. We are well positioned. We are generating the cash. I mean, the [Phase V] model is performing well, our $4.5 billion assets in the first quarter generated cash and brought our net LTV from 45% in Q4 to 42%.

And basically, you have now 3 sectors. The containers that were cautious. We saw that they are performing better than we thought. We did over $100 million of contracted revenue from 5 vessels over the 2 years. And we are seeing -- and this is actually performing much better than we thought on the tankers. The other sectors we are in, we see structural changes, strong ton mile demand on crude, strong ton mile demand on product, restricted supply and good cash flows. And on the drybulk, second half of the year can be because of China much healthier than the first half.

So with that background, and knowing that we cover all our expenses and we have $40 million above our expenses for the remaining 9 months, you know that we have 16,000 days. We do your own calculation of what the rates will be that every 10,000 will provide $160 million of free cash. And this is about -- at the end of the story about total returns.

We're bringing our net LTV down to 2025 and it's about our total returns. By doing -- we should be able to measure on this total return, and we have -- I think we have done well. And I put a slide on that, if you look since 2020, when we started this strategy -- this diversified strategy, and we hope that we will do well in the future. It's a presence, but also a very steady strategy we have articulated over the last quarter.

Yes, that's clear. And then just in general, in terms of how you are -- clearly, we had the portfolio approach, you're diversified across 3 segments. And each market is moving in its own direction, presenting its own opportunities and risks perhaps but just as I kind of think about where you're positioned now, you've sold some older ships.

You brought in some of that cash. Your new buildings, you've mostly locked in longer-term charters, so you derisked those. In terms of kind of how we think about Navios and strategically with its -- whether it's use of cash or just how it looks like leader manages it. Should we think Navios in the current environment is perhaps one, a seller of older ships and then also a harvester of cash flows; and then three, not going to be as acquisitive on the acquisition front as it has been. Is that fair to say, basically selling older ships, harvesting cash and not being acquisitive.

Yes, we are modernizing our fleet. That is a clear path, getting more efficient vessels, it makes sense. And your investment -- your return on your investment is quite significant. We are actually seeing that as we are there to do an acquisitions depending on the opportunity. So we are not -- it is not -- I think what we like about the diversified platform is that we can have -- we can be able to capture every opportunity that comes to us without being restricted one way or the other.

I mean, you remember when we were doing drybulk in 2021, when we did our containers early on, then we did -- we entered a new sector in the tanker, we expanded again on the tankers. So we can be very -- we will ship the best more attractive opportunity. Modernizing the fleet is something that will be always ongoing. I mean I think that creates on every aspect on the being more efficient -- fuel efficient is a driver in the market.

And maybe just 1 final one for me, just about the containers because clearly that's been a nice source of visibility, and you paid off a lot of those ships significantly. So it's really the free cash, it's fairly significant from that stream of the business. I just wanted to ask about what we're seeing in the market today.

Clearly, we went from a very quiet time charter market at the beginning of the year to one that's become much more active. And you've been able to put away some ships that are on the water today on medium-term charters. Just wanted to ask you do have a few vessels that roll off contract during the next several quarters, not a tremendous amount, but you do have some that roll off. What are those contract discussions look like? And then maybe are you able to give us a sense of how far in advance when those ships would be scheduled to roll off, would you be able to secure them on new contracts today?

Actually, Omar, this is very interesting. We were cautious about the sector, but we saw a very healthy levels. We have basically fixed everything and Stratos will take you through. But basically, we fixed everything at a very good and attractive rate. And what we see from the market is -- this is -- you can actually secure nice cash flows and visibility from that.

I mean Omar, on the fixing front, I mean, the latest transactions that we did, which generated over $100 million of contracted revenue for the next 2.7 years. And if you see also, you can see in our presentation, we have nothing left opening in 2023. So okay, we have a vessel that the delivery period is between, let's say, the end of the year and beginning of next year. But effectively, there's not -- so we have fully covered our position on this sector.

And I guess, say, for a vessel that's opening up in 6 or 7 months, is now the time that you're having dialogue? Or is it -- or has that become much more of like an August, September time period?

We have fixed the container sector, basically. We don't have anything open.

So yes, the ones that are coming next year, I think it's -- today, it's too early to start thinking about that. I think this is a question that we will have towards going to the end of the next quarter. At the later part of Q3, this is when we will start discussing on the market and seeing what's the availability.

Our next question comes from Chris Wetherbee with Citigroup.

This is [Rob] on for Chris. I guess just to piggyback on that last question with regard to the containership market. Could you give us a sense of what your expectations are for the back half of the year with regard to volume kind of across the broader industry. And it sounds like we're starting to see a little bit of seasonality return to the containership trade and how that kind of fits into your time charter approach. It'd be great to get a little bit of color there.

I think the good thing is that we are totally fixed for the container. We have only 1 vessel at the end of the year, but Ted will give you the container sector ideas.

You see the -- use the SCFI as a proxy, right? It's a box rate, but uses a proxy for the industry, and it's kind of bounced off the bottom. So maybe we found the bottom here. You see the -- you see the truck we have on one of the slides, the U.S. consumer continues to buy goods at a healthy level. There will be some pressure on the rates. But the good thing, obviously, we've already mentioned in the other question was, we were fixed out for the year. But for us, I think the market, the second half could show some pressure on the bigger rates. Remember, most of our ships are below 13,000 TEU and if you take the order book for the entire fleet, it's probably close to 30%, but for under 13%, it's probably around 13%, 14%. So that holds up well for our sector. And I think that's why you've seen us be able to put out ships forward for period at some higher rates.

Yes. No, that certainly has come across, and you've been able to secure the vessels over the past several quarters at very good rates that are adding to your contracted revenue as well as generating some nice free cash.

So I guess, as you look forward with regard to the vessels kind of looking out a year as some of those container ships come off charter. Are you -- how do you think about kind of the redeployment? Would you prefer to have those under long-term charters as well? Or if we're in a kind of a stronger demand environment, would you consider using some of those the way you're using your tanker fleet kind of more on shorter-term charters.

The model we have is to put out vessels on a medium- to longer-term charter according to where we are in the cycle. When we get to the end of the year if the cycle is different than we think, we may be putting out the ships on longer term. But what seeds then where the cycle is for each sector, especially the containers. Maybe it surprises us like it did in Q1.

No, it makes sense. And then you have clearly taken advantage of that with regard to some vessel sales. As this kind of tie a bow on the leverage question, how should we be thinking about kind of the deleveraging? Are there more -- are you hoping to kind of do additional vessel sales over the duration of 2023? Or should we think about this as more using the free cash flow that you're generating from your fleet to delever and get closer to your target leverage ratio?

We have -- I think we have done a fair sale of the vessels that we had on our -- is about 13 vessels that we already sold this year and was going to be already delivered in the Q1 and Q2. There may be a couple, but I think the majority of this has been completed. I think where we see the cash generation is in a very simple thing.

We have contracted revenue that exceeds our total expense by $70 million for the remaining 9 months. And we have about almost 16,000 open and index days. I mean if you see -- on Page 9, you have the actual type of vessels in the open days. If you calculate on that, whatever you assume rate, this is your strong cash flow generation every $10,000 is about -- over $150 million. So that's basically how you can delever quite significantly with the cash flows of the company.

Thank you. That concludes our question-and-answer session. I'll now turn the call back over to Angeliki for any additional or closing remarks.

Thank you. This completes our Q1 results. Thank you.

This concludes today's call. Thank you for your participation. You may disconnect at any time.