EuroDry Ltd. (EDRY) on Q2 2021 Results - Earnings Call Transcript
Operator: Thank you for standing by, ladies and gentlemen, and welcome to the EuroDry Conference Call on the Second Quarter 2021 Financial Results. We have with us today, Mr. Aristides Pittas, Chairman and Chief Executive Officer; and Mr. Tasos Aslidis, Chief Financial Officer of the company. At this time, all participants are in a listen-only mode. There will be a presentation followed by question-and-answer session. I must advice you that this conference is being recorded today. Please be reminded that the company announced its results with a press release that has been publicly distributed. Before passing the floor to Mr. Pittas, I would like to remind everyone that in today’s presentation and conference call, EuroDry will be making forward-looking statements. These statements are within the meaning of the federal securities laws. Matters discussed may be forward-looking statements, which are based on current management expectations that involve risks and uncertainties that may result in such expectations not being realized. I kindly draw your attention to slide two of the webcast presentation, which has the full forward-looking 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 I would now like to pass the floor over to Mr. Pittas. Thank you, sir. Please go ahead.
Aristides Pittas: 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 six months period and quarter ended June 30th, 2021. Please turn to slide three, our income statement highlights our story here. For the second quarter of 2021, we reported total net revenues of $14.1 million and a net income of $2.2 million. Adjusted net income attributable to the common shareholders was $6.6 million or $2.76 per share diluted. The main difference between net income and adjusted net income was the paper loss of about $3 million on our FSAs covering one vessel for Q3 and Q4 at $12,550 per day. Having taken this loss in Q2, our net income for Q3 and Q4 will not be affected by the low rate of that FSA. Adjusted EBITDA for the quarter stood at $9.2 million. Our CFO, Tasos Aslidis will go over our financial highlights in more detail later on in the presentation. Please turn slide four for our operational highlights. Motor vessel Pantelis was fixed for a trip of about 90 days to 130 days at $23,000 per day and if the trip extends further, the vessel will earn 95% of the DPI. The Blessed Luck was fixed for 11 to 13 months at $19,500 per day and lastly, the Alexandros P was fixed for a trip of about 65 days at $25,250 per day. During the second quarter, the company settled 90 days of previously sold forward trade agreements, the equivalent of one Panamax vessel, which was originally sold at the rate of $12,500 per day with the loss of $590,000. Simultaneously, we had also sold FFAs for 90 days per quarter for Q3 and Q4 of 2021, the equivalent of one Panamax vessel at $12,550 per day. With a valuation of Q3 and Q4 outstanding FFA contracts as of the end of June 2021 was negative $4.26 million as mentioned previously, $3.1 million of the loss incurred in this quarter. As previously announced in May 2021, the company acquired motor vessel Blessed Luck at 76,000 dry bulk vessel built in 2004 in Japan for $12.12 million. As of the day, company cash in hand was limited, the acquisition was initially partly financed by certain sellers credit of $5 million and one year bridge loan of $6 million provided by an entity affiliated with my family and approved by the independent members of our Board. Both the seller's credit and the short-term loan earned an annual interest rate of 8%. In July 2021, the company repaid the seller's credit and signed a term sheet with the bank to draw a loan of $8 million with motor vessel Blessed Luck as collateral, which is expected to be drawn in August. In addition, as disclosed in June 2021, an amount of $3.3 million of the bridge loan was converted into common stock as per the terms of the loan, leaving just $2.7 million outstanding. There will no drydockings or major repairs during the second quarter of 2021. Please turn to slide five for a summary of EuroDry's current fleet. As you can see, the acquisition of the Blessed Luck increased our fleet to eight units and further complemented our cluster of medium-age Japanese-built Panamax-sized vessels alongside our cluster of own build new buildings. Our current fleet has an average age of 13 years and the cargo carrying capacity of about 600,000 deadweight tons. Slide six shows the current vessel employment schedule. As you can see the effective coverage for the remainder of 2021 including the Blessed Luck stands at about 27% in terms of minimum fixed rate contracts. If we include the vessel that is hedged through FFA, our coverage increases to 40%. This figure, of course, excludes six charters that have secured employment, but are open to market movements. We are pleased with our current positioning of forward coverage as we remain optimistic about the development of the market. Tasos will present our EBITDA calculator later on showing how strongly current FFA market predictions can boost our EBITDA and consequently earnings as well. Risk calculator will enable each one of you to easily use your own charter rate assumptions to determine our approximate expected EBITDA, and draw your own conclusions as to what levels of stocks will be trading at. Now, let's turn to slide seven, where we'll go over the market highlights for the quarter ended in June 30th, 2021. During the second quarter, drybulk index continued its strong performance as rates remained firm supported by demand growth, soft rising drybulk commodity prices, and operational bottlenecks. Similarly, one year TCE rates remains robust. As seen here, the spot rates for Panamax is average $23,200 a day in the second quarter and by July 30, they had increased to around $27,200 per day after peaking at the end of June at around $30,400. Meanwhile, one year time charter rates for Panamax is average at close to $21,700 per day in Q2 reaching $26,900 by the last day of the quarter. Last week, one year time charter rates were around $24,000 per day. As the drybulk freight market has been trading strongly and reaching the high levels not seen in the past decade, vessel prices have also trended upwards. According to Clarksons, secondhand bulk carriers prices have had a sharp increase of 45%, while new building prices increase around 20% to more than $32.5 million and $30 million respectively for Kamsarmax and Ultramax vessels. During the first half of the year, the fleet has grown by 2%. Please turn -- Hello again and sorry for things that are soon. The line dropped off, but I continue, we are at slide nine. So, the global recovery continues at a solid pace, but now variants of COVID-19 may extend that uncertainty. The latest forecast indicates a downward revision in the Asia and developing economies and an increase for advanced economies, reflecting the diverse economic prospects across countries. On the one hand, we have the developed countries with improved health metrics and additional fiscal support that have access to vaccines and can look forward to more normalized economic activities, while developing countries are still lagging behind with a worsening pandemic dynamic and tighter financial conditions that may set back their recovery. According to the IMF, the global economy is projected to grow 6% in 2021 and 4.9 percentage rise in 2022. The 2021 global forecast isn't same from the April forecast, but with offsetting innovations. Prospects for emerging market and developing economies have been marked down for 2021, especially for emerging Asia. By contrast, the forecast for advanced economies is revised up. The revisions reflect pandemic developers and changes in policy support, including health, global growth for 2022 was upgraded by 0.5%. deriving largely from the focused upgrade for advanced economies, particularly the United States, which is expected to grow by 4.9%. China and India are expected to grow at a still very reasonable 5.7% and 8.5% respectively. For 2023. global growth is expected to be around 3.5%, a healthy level too. Looking at the drybulk freight growth and based on Clarksons' projections for 2021, we see -- sorry, we see that that demand growth expectations continue their upward trajectory to 4.3% for this year. For 2022 and 2023, the expected drybulk freight trade to grow at a moderate pace of 2.2% and 2.5% respectively, which I personally think is very conservative if global growth as expected by the IMF and other major institutions remains at elevated levels. Please turn to slide 10. The order book as a percentage of total fleet up until July 2021 stands at 6.1%. This is still around the lowest levels we've seen in the last 25 plus years. With the current order book and continuing demand trends for the coming years, we expect to fundamentally support and continuous bound in the drybulk market for the next couple of years at least. Please turn to slide 11 for our drybulk fleet overview. According to Clarksons', fleet growth in 2021 will be around 3.8%. Taking into account scrapping and other fleet changes, we got -- we come to this 3.8%. This is less than the demand growth and supporting the case for still strengthening market, which is further enhanced due to the logistical bottlenecks we are experiencing. The order book is currently around 6.1%, which could imply that through scrapping and sleepers, we could see a minimum in 2022 and 2023. For 2024, new vessels will have to be built at some point, as otherwise we can see rates and prices surpassing even the previous supercycle rates if demand . Please turn slide 12, where we summarize our outlook on the drybulk market. Global recovery continues at the solid pace. Despite the new values of COVID-19 emerging, which may delay, but will likely not stop economic growth. Furthermore, several infrastructural projects have been announced, but haven't yet been implemented. Drybulk market has a strong trajectory on the back of highly supported conditions in the commodity markets having reached 11-year highs in mid-June 2021. While earnings could hold firm or reach back from current heights because of the logistical issues, the short and medium term outlook looked positive, especially as the order book remains the lowest ever. Moreover, deliveries of new ships in 2022 and 2023 are expected to be minimal due to lack of available slots in shipyards. In addition, the lack of clarity for the fuel of the future, as not knowing the optimal ship or even five years out makes the placing of any new orders an uncertain proposition. Overall, steady recovery in drybulk volumes alongside limited supply growth and positive global economic sentiment should translate to further improvements into 2022 and likely beyond. However, market conditions could remain volatile as a number of risks remain around the events and cost of the COVID pandemic, and also about the cold rate. Let's turn slide 13. The left side of the slide shows the evolution of one year time charter rates of Panamex drybulk vessels since 2000. As of July 30th, the one year time rate for Panamex max with capacity of $75,000 deadweight tons stitches around $24,000 per day, the highest it has been during the last years and approaching the levels last seen in 2010. The drybulk market has been on a firm footing since the beginning of the year and we expect this trend to extend in the upcoming quarters, which are cyclically stronger than the first half of the year. As you can see on the right hand side of the slide, the current price of a 10 year old Panamax vessel is around $22 million. Over the past year, drybulk prices have gradually been increasing, exceeding the historical median and average levels, but still significantly lower than prices seen in 2010. With a continuing strengthening freight rate environment, we would expect to see us values increase even further. In this environment, we are, of course, capitalizing on the strong market by posting significant earnings, -- our cash offers and generally strengthening our balances. As free liquidity increases significantly from next quarter onwards, we are evaluating how best to use it for the benefit of our shareholders. This can be in the form of debt and preferred equity reduction, further investment purposes, share buybacks, reinstitution of the results, almost probably a combination of some of the above. We also continue to evaluate opportunities for possible combinations with other fleets, focusing especially on using of our status as a public company, which can provide significant advantages and value. Let me now pass the floor over to our CFO, Tasos Aslidis to go over our various financial highlights in more detail.
Anastasios Aslidis: Thank you very much, Aristides. Good morning from me as well ladies and gentlemen. I will now take you through our financial highlights for the second quarter and first half of 2021 and compare to the same period of last year. For that, let's turn to slide 15. For the second quarter of 2021, the company reported total net revenues of $14.1 million representing a 251% increase over total net revenues of $4 million during the second quarter of 2020. And this was the result of the higher time charter rates our vessels earned during the period and the additional vessel we acquired in the middle of the second quarter of this year. The company also reported net income for the period of $2.2 million and net income attributable to common shareholders of $1.9 million as compared to a net loss and net loss attributable to common shareholders for $3.8 million and $4.2 million respectively, for the same period of 2020. and other financial costs for the second quarter of 2021 amounted to $0.5 million compared to about $6 million for the same period of last year. Depreciation expenses for the second quarter of 2021 amounted to $1.8 million as compared to $1.6 million for the second quarter of last year. And again, this increase is due to the higher number of vessels we own during the second quarter of 2021. Adjusted EBITDA for the second quarter of 2021 was $9.2 million compared to a negative EBITDA level of minus $1.3 million reported during the same period of last year. Basic and diluted earnings per share attributable to common shareholders for the second quarter of 2021 was $0.83 basic and $0.81 diluted, compared to basic and diluted loss per share of $1.86 for the second quarter of 2020. Excluding the effect on the income attributable to common shareholders for the quarter of the unrealized loss on derivatives and the loss on debt extinguishment, the adjusted net income attributable to common shareholders was $6.6 million, compared to a loss of $3.9 million for the second quarter of last year and the adjusted earnings per share attributable to common shareholders for the quarter ended June 30, 2021 were $2.81 basic and $2.76 diluted for this year, compared to an adjusted loss per share of $1.73 basic and diluted for the same period of 2020. Usually, security analysts do not include the above items in their published estimates of earnings per share. Now, if we look at the numbers for the first half of 2021, for that period, the company reported total net revenues of $22.7 million, representing an 150% increase over total net revenue of $9.1 million during the first half of last year, which again was the result of both the higher time charter rates our vessels earned and the additional vessel we acquired and operated for part of the period. The company reported net income for the period of $3.1 million and net income attributable to common shareholders of $2.4 million, as compared to a net loss of $6.1 million and net loss attributable to common shareholders of $6.9 million for the first half of 2022. Interest and other financing costs for the first half of 2021 amounted to $1.1 million compared to $1.2 billion for the same period of last year. Depreciation expenses for the first half of 2021 were $3.4 million compared to $3.3 million for 2020, again, a bit higher due to the additional vessel we owned. Adjusted EBITDA for the first half of 2021 was $13.2 million, compared to a negative $1 million reported during the first half of 2020. Basic and diluted earnings per share attributable to common shareholders for the first half of 2021 were $1.03 and $1.01 respectively, compared to basic and diluted loss per share of $3.03 for the first half of 2020. Excluding the effect on the earnings attributable to common shareholders for the first part of this year of the unrealized loss of derivatives and the loss on debt extinguishment, the adjusted net income attributable to common shareholders was $7.9 million, compared to a loss of $6.2 million during the first half of last year. And the adjusted earnings per share attributable to common shareholders for the first half of this year were $3.40 basic and $3.33 diluted compared to a loss of $2.76 per share basic and diluted for the same period the first half of 2020. As I mentioned earlier, security analysts typically do not include these adjustments in their published estimates of earnings per share. Let's now turn to slide 16 to review our fleet performance. We will start our review by looking first at our fleet utilization rates for the second quarter of 2021 and compare it to the same period of last year. As usual, our utilization rate is broken down into commercial and operational. During the second quarter of both 2021 and 2020, our commercial utilization rate was 100%, our operational utilization rate for the second quarter of this year was 99.4% compared to 99.9% for the same period of 2020. On average, we operated 7.37 vessels during the second quarter of 2021, earning an average time charter equivalent rate of $22,614 per day. A daily earnings rate that is three times higher when compared to the average earnings of $7,297 per day of seven vessels average during the second quarter of last year. Our total daily vessel operating expenses, including management fees, general and administrative expenses, but excluding drydocking costs averaged about $6,467 per vessel per day during the second quarter of 2021, compared to $6,131 per vessel per day for the second quarter of 2020. If we move further down in this table, we can see the cash flow breakeven rate that we had during the second quarter of this year, which takes into account drydocking expenses, cash interest expense, loan repayments and our preferred dividend payments if paid in cash. Thus, for the second quarter of 2021, our daily cash flow breakeven rate was about $10,313 per vessel per day, compared to $11,800 per vessel per day for the same period of 2020, mainly because of lower drydocking expenses included. Let's now review our utilization rate and the remaining of the figures for the first half of this year. During the first half of 2021, our commercial utilization rate was 100% and the operational utilization rate was 99.7%, compared to 100% commercial and operational utilization rate for the same period of last year. An average in 2021, the first part of the year, we operated 7.19 vessels, earning an average time charter equivalent rate of $18,879 per day, compared to seven vessels that we operated last year earning $7,690 per day an average. Our total daily operating expenses, again, including management fees, G&A, but excluding drydocking costs for the six month period of this year, the first six months of this year amounted to $6,518 per vessel per day, compared to $6,093 per vessel per day for the first half of 2020. We look again at the bottom of this table to see our cash flow breakeven level, which for the first six months of this year amounted to $10,688 per vessel per day, compared to $11,489 for the same period the first half of last year. Let's now move to slide 17. This is a relatively new slide. We started using it in the previous earnings presentation. And we included it here to provide our shareholders and investors a tool to assess the earning potential of our fleet for the rest of 2021. The table shown in this slide, there's two components. The first refers to our fixed rate contracts. It is not worth it that except for the charter of our vessel Blessed Luck, our vessel saving fixed rate contracts are totaling about 114 days during the third quarter and about eight days in the fourth quarter over and above the charter of Blessed Luck. We consider this for two issues, if the market is performing very well and producing and being expected to produce significant earnings for us. The rest of our vessels are employed in contracts linked to the relevant to their size Baltic Dry Index. Our calculator here indicatively shows, the Supramax and Panamax Baltic forward rate as of August 3rd, 2021, and also showed how these index levels get translated to rates for our ships. We actually display the final blended rates for the open basis our fleet, which you can see right below the Supramax and Panamax forward rates in the table, and which as you can see turns out to be very similar to the index levels. Based on these assumptions, and by further assume for simplicity $65,000 per vessel per day, operating expenses in G&A and a 5% commission rate, one can estimate the EBITDA contribution of our fleet. The final result is additionally adjusted for the FFA contract of 90 days per quarter for the rest of the year that we have entered -- that we presented. This reflects Panamax vessels equivalent. This overall presentation is meant to provide as I mentioned a tool to calculate our EBITDA for the remaining quarters of 2021. Obviously, one can clear our own assumptions about the rate do that. However, it is hard not to observe that EBITDA market rates for the rest of the year, as they are currently indicated by the FFA contracts materialize, our total EBITDA will exceed what we reported in the second quarter by about 50% and result in the EBITDA contribution from the second half of 2021 to be about double of that of the first. Let's now move to slide 18. To review our debt repayment profile. On the top part of the slide, we see our loan repayments as well as our balloon payments of our bank debt as of June 30, 2021. The graph on the top does not include the seller's credit and the bridge loan for their position of blessed lack that I previously mentioned, but does include a bank loan we agreed to and plan to draw this money to finance the best. All in all, as of June 30, 2021, we had an outstanding debt of about $62 million and that figure includes the seller credits and the remaining bridge loan. As you can see from the graph, we're going to make about $4.2 million of debt repayments during the remainder of 2021 and we have an $8 million balloon payment at the end of the year, which is collateralized by three or four Panamax vessels. This balloon payment in 2021, is well below the scrap price of their vessels collateralized. And we anticipate that we have no issues refinancing. In fact, we're in the process of doing. Again, from this chart, we can see that we have a declining level of loan repayments over the next four years. Of course, assuming that the balloon payments are made as shown, with another balloon payment coming due in 2023 of about 11.3 million, which is collateralized by 2018 Kamsarmax vessels. Of course, when these balloon payments are financed, the revised loan profile will reflect that. I'd like to make also quick note here on the cost of funding. The average margin of our debt, as you can see from the common on the right part of the slide is about 3.3%, assuming the LIBOR rate of about point 3% on the top of it, the cost of our senior debt is estimated to be around 3.6%. If we include in this figure the cost of the preferred equity, the average blended cost of our non-equity funding would be around 4.4% as of the end of the last quarter. Regarding our preferred equity, I would like to highlight that following $3 million net redemption that we make in the first quarter of this year, we have agreed to reduce the dividend rates on the preferred equity to 8% per annum is paid in cash, until January 2023. At the bottom of the slide, we can see also a projection of our cash flow breakeven level over the following 12 months in the breakdown of it, which is expected to be around $11,231 per vessel per day. If we now move to the next slide, slide 19 where we can see some highlights from our balance sheet. This slide gives you a snapshot of our assets and liabilities in a simplified way. On our asset side. First, we can see that we have cash and other assets as of June 30, 2021 of about $19.9 million. Of course, on our assets, I will also give our vessels the book value of which amounts to about $108 million, making our total book value of about $127.9 million. On the liability side, our debt as of the end of the last quarters stood as I mentioned at $62 million, which approximately represents 48% of the book value of our assets. Our preferred equities stood at about $13.6 million, which represents another 10.7% of our assets. And we have remaining liabilities for about $8.4 million or 6.6% of our book assets. That leaves us with a net book value of $44.6 million, which translates to $16.9 per share. However, the market value of our fleet is significantly higher than its book value. And we need to make such an adjustment to get a better estimate for the value of the company. We estimate that this will be end of June 2021, the market value of each of the eight vessels we currently own to be in the range of $140 million to $145 million, that is 30% 35% higher in the book value, resulting in an estimate for our net asset value per share of about $29. And although our share price has recently increased, our stock currently trades below that level and we believe our company investing in our company represents an opportunity with significant appreciation potential. And with that, I would like to turn the floor back to Aristides.
Aristides Pittas: Thank you, Tasos. Let me now open up the floor for any questions you may have.
Operator: Thank you very much, sir. Our first question for today is from Tate Sullivan from Maxim Group. Please go ahead.
Tate Sullivan: Hi. Thank you. First from me reviewing one of your comments on the new build market, Aristides, I think it was on slide 11 that you were. What did you say about 2023? I think you mentioned that an urgent need to start building new vessels by 2023 based on that chart, but then those new vessels want to enter the market for at least a couple years or can you review the timing of that comment?
Aristides Pittas: Yeah. So Tate, I think that because the or the current orderbook for 2022 and 2023 is very low. If demand stays strong, remains quite strong, we will have a shortage of sales. So at some point, we have to start ordering new vessels that will come in in 2024 onwards, because we will have a lack of sales. So I think this we will see more vessels being ordered during the next 18 months.
Tate Sullivan: Okay. But the impact on the near term rates has not appeared yet or at least has that started to appearing and what you're seeing in FFA is available for 2022?
Aristides Pittas: Yeah. That is gradually increasing a lot fast enough. I think it will probably increase faster. But of course, it will depend on other things as well, the pandemic and logistical issues that we may be facing because of that and the global growth rate. So it's very difficult to project the future. What is relatively easy to see is that the order book for 2022 and 2023 deliver is extremely low.
Tate Sullivan: Yes. And then thank you for putting in the EBITDA calculator slide again with about 40 million of EBITDA on 2021. I was just interested in rolling forward to 2022. I mean, is the FSA market liquid enough for you to start locking in rates, the size of shifts you have on fixed contracts going into 2022 or it's still early to talk about the rates that you could start fixing for 2020?
Aristides Pittas: So the FSA is liquid them out for somebody who wants to play the FSA markets for 2022. You can find the coverage there. But there is two things one, we feel that that is still lower than what we will see later on in the year. So we are not inclined to take any protection of those levels today. Plus the FFAs have the significant issue that you have to post a lot of collateral in order to do an FFA trade. And if the -- if it moves against you have to be you have to be increasing that collateral. So it sure -- it takes up a lot of cash, an easier way to roll forward, perhaps is to fix, one year time charter rates, which does not consume this extra liquidity.
Tate Sullivan: Great. Thank you. And what one more for me, Tasos, for the use of cash in three in the current quarter and maybe I missed it. Maybe it was some netting out amounts to the blessed luck was a $12 million acquisition. But then the cost of the acquisition amount in terms of the cash outflows $7 million. Will there be another outflow in the 3Q based on the seller credit timing or how does that usually occur?
Anastasios Aslidis: The difference exactly the seller spread the date with we said the seller loan essentially which I think we paid in July this year. So the remaining $5 million will be seen in our in our cash flow statements next quarter.
Tate Sullivan: Okay. Perfect. Okay. Thank you very much.
Anastasios Aslidis: Thank you, Tate.
Operator: Thank you, Mr. Sullivan. The next question is from Poe Fratt from Noble Capital Markets. Please go ahead.
Poe Fratt: Good morning, Aristides. Good morning, Tasos.
Aristides Pittas: Hi, Poe.
Anastasios Aslidis: Hi, Poe.
Poe Fratt: Aristides, could you talk about what's happened recently, in the context of Panamax has been a little weaker than Ultramax and to sort of what's going on there? And then also, could you give us a view on sort of the next six months, in the context of whether we're going to see the typical seasonality in the market or sort of what you're anticipating in the fourth and first quarters coming up?
Aristides Pittas: Tough questions, tough questions, Poe. So it's not easy to talk about what has happened than what will happen in the next six months. Panamax is have been very strong during the first parts of the year, due to the extra grain shipments that we had seen up to June. And this was quiet went up a little bit in this last month. And I think that probably explains a little bit of the softening of the Panamax market as compared to the Ultramax market, which we haven't seen any softening yet. So, going forward, of course, Q3 and Q4 are historically as -- as I said, and you have visited seasonally stronger periods than the first half. It remains to be seen exactly what will happen that will happen. We have the huge bottlenecks that are created, because of the pandemic and the logistic issues. And the time it takes for bolts to discharge vessels and all that on one side. We have the proving demand from the western economies. On the other hand, it's very difficult to say exactly, how the next few months will pan out. But I would think that we would expect the strong rates to continue, if they will be much higher or much lower on same it's very difficult, a little bit higher or a little bit lower on the same. It's a little bit difficult to tell.
Poe Fratt: Great. Thanks. And can you talk about the decision or what happened with Alex P as far as exiting the GMax Pool, how you're viewing that? I mean, potentially are you going to continue to let it work in the spot marketers or view that you potentially would put that on the time charter?
Aristides Pittas: I think we decided to take it out after what was it's been a past years, because we feel that we can employ themselves a little bit better in the spot market at these high levels. So, that protection was not needed there. If at some point, we decide to fix it again, for a year or something like that, that remains to be seen. We haven't decided on such things yet. We are trading in spot. We fixed it for our first cargo into Brazil for the next two months, which is usually an area where you can get high charter rates. We'll see how it goes. But there is no intention right now to fix longer period. We may though if where we see Q3 strengthening get a little bit more cover on maybe fixing one or two more seats of our fleet for the year -- the yearly periods.
Poe Fratt: Okay, great. And then, Tasos, I know you're in discussions on the new loan, $12 million to take to refinance the balloon and add some extra. It looks like liquidity to $4 million can you talk about that decision? And then also, if the context of the extra liquidity, and then also, would you happen to have the terms yet, as far as the amortization in balloon payment that might be associated with a new $12 million loan?
Anastasios Aslidis: It's actually, of course, it is -- it is relatively straightforward. I think, with increase in values, we can actually finance the $8 million using only two or rather than vessels as collateral, and drawing a loan of about $9 million. So we will be able to repay, if we wanted the full loan and save your free ship unencumbered, who might end up doing is repaying the portion that is covered by those two ships, and extending the loan for the third one. You are right indicating that we might have a $4 million additional liquidity, which would be very useful as we are looking at possible investment opportunities in other uses of funds. I think they're long we're looking at the -- for four year term loan, with your normal amortization going down to about the cap value.
Poe Fratt: Okay. Great. And then Aristides, if you could just talk about, comment about potentially, with public security that you potentially would be -- looking for acquisition or opportunities to merge or require, for companies that are looking to exit, that might be private. Now, can you talk about, the strategy? Would it be more oriented towards renewing the fleet? Or would it be, adding, sort of looking at your current fleet, and saying, we were looking for like fleet? I mean, can you just help me understand sort of what you're strategically how the fleet might change over time?
Aristides Pittas: Yeah. It's difficult to say, what I can say, because we don't have any projects that we are looking at right now. So it's difficult to say, and, of course, we are there to look at every opportunity that, could make sense for our stakeholders. But practically, we are focusing on the size of the ships that we currently own from Supramax up to Kamsarmax that is the area we feel comfortable with. So, we're looking at projects there. We are open to look at all the vessels and the newer vessels. We would like the idea, if there is somebody who wants to contribute their vessel into EuroDry in exchange process and some cost to go ahead and add that vessel, as long as it fits this broad criteria that I just told you. And of course, it makes finances sense. So we are open to such deals. We have discussed things in the past. We are not currently in any discussion, though, with anybody about the contribution of one or a group of vessels into the company.
Poe Fratt: Great. That's very helpful. Thank you so much.
Aristides Pittas: Thank you, Poe.
Anastasios Aslidis: Thank you.
Operator: Thank you. There are no further questions at this time. I will now hand the call back for closing comments.
Aristides Pittas: Okay. Thank you, everybody for this discussion today, and we will be back with you in three months' time to discuss the Q3 results. Thank you and enjoy the summer.
Anastasios Aslidis: Thanks, everybody. Bye.
Operator: Thank you. Ladies and gentlemen, that does conclude the call. Thank you all for your participation. You may now disconnect.
