Euroseas Ltd. Q4 FY2023 Earnings Call

Thank you for standing by, ladies and gentlemen, and welcome to the Euroseas Conference Call on the Fourth Quarter 2023 Financial Results. We have with us, Mr. Aristides Pittas, Chairman and Chief Executive Officer; and Mr. Tasos Aslidis, Chief Financial Officer of the company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. I must advise you that this conference is being recorded today. Please be reminded that the company announced the 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 #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 morning, everyone, and thank you for being here today for our conference call. I’m joined by Tasos Aslidis, our Chief Financial Officer. Today’s discussion will focus on our financial results for the three and twelve-month period ending December 31, 2023. Let’s look at Slide 3 to review these results. We’re pleased to report another strong quarter with total net revenues of $49.1 million and a net income of $24.7 million, translating to $3.56 per share for the fourth quarter of 2023. The adjusted net income for the quarter was $25 million or $3.61 per diluted share, and the adjusted EBITDA was $32.4 million. For a full reconciliation of the adjusted net income and adjusted EBITDA to net income, please refer to the press release. Tasos will delve into our financial highlights later in the presentation. We are excited to announce that our Board of Directors has declared a quarterly dividend of $0.60 per common share for the fourth quarter of 2023, representing a 20% increase from the previous dividend of $0.50 per share. This dividend will be payable on or after March 11, 2024, to shareholders on record as of March 4, 2024, reinforcing our robust growth business model supported by strong cash generation and financial strength, and further showcasing our commitment to delivering returns to our shareholders. The annualized dividend yield, based on the current share price, is approximately 7%. This marks the eighth consecutive quarter of significant dividend payments. As of February 21, 2024, we have repurchased 400,000 shares on the open market for a total of around $8.2 million as part of our share repurchase plan of up to $20 million initiated in May 2022, which has been extended for an additional year. This represents about 5.5% of our outstanding shares that have been repurchased and retired. We will continue to utilize our share repurchase program as management sees fit, depending on our stock price, with the aim of enhancing our long-term shareholder value. Please proceed to Slide 4 for an overview of our recent sales, purchases, chartering, and operational developments. The delivery of the vessels from our nine-vessel newbuilding program occurred on February 6. The sold motor vessel is an Eco EEDI Phase 3 vessel, a 2,800 TEU feeder containership newbuilding from Hyundai Mipo Dockyard in South Korea, equipped with a Tier 3 engine and other sustainability features, including an alternative maritime power system. This vessel is financed through retained earnings and a sale and leaseback agreement with a Japanese owner and leasing house. After its delivery, the motor vessel commenced an eight to ten month charter at a rate of $17,000 per day. On the chartering front, our largest and smallest vessel, the Motor Vessel Aegean Express, secured a minimum charter period of 10 to a maximum of 15 days at $7,000 per day, which was later extended with the same charterers for an additional one to two months at the same $7,000 per day rate. The Motor Vessel Synergy Antwerp's charter was extended for about 40 to 60 days at $18,250 per day until February 2024 and subsequently fixed at a nominal $2 per day for the trip to the shipyard for a scheduled drydock. Additionally, during the quarter, we fixed the Motor Vessel Joanna’s charter for a minimum period from April 25 to a maximum period of May 25 at $10,250 per day. Regarding drydockings, Motor Vessel Synergy Busan went through its scheduled special survey for about 25 days in December, during which retrofits valued at approximately $1.6 million were completed, partially funded by the charterers. This led to a performance improvement of over 25% for the vessel. The Motor Vessel Synergy Oakland also underwent drydocking for approximately 18.5 days for its special survey, without any commercial downtime during the quarter. Next, let’s move to Slide 5 for an update on our current fleet profile. Our fleet currently includes 20 vessels in operation: 13 feeder container ships and 7 intermediate container carriers, with a total carrying capacity of just under 61,700 TEU and an average age of 16.1 years. Turning to Slide 6, we present our six remaining vessels under construction, which are expected to be delivered throughout 2024. These six newbuildings have a combined carrying capacity of 13,800 TEU, comprising three vessels each capable of carrying 2,800 TEU and three vessels with a capacity of 1,800 TEU each. Once fully delivered, our fleet will expand to 26 vessels with a total cargo capacity exceeding 75,000 TEU. Now, let’s proceed to Slide 7 for an update on vessel employment. We currently enjoy strong charter coverage for the next two years, with approximately 71% of our fleet fixed for 2024 and nearly 23% for 2025. This robust charter coverage at profitable rates for the remaining part of the year indicates potential for highly profitable quarters, further enhancing our fleet’s liquidity through 2024 and into 2025. The disruptions in trade patterns caused by attacks on vessels in the Red Sea have led to an increase in charter rates from the lows observed in December 2023. Some of our vessels whose charters expire during this period have capitalized on these disruptions, and we anticipate that our vessels coming open soon, along with our newbuildings, will likely benefit as well. Let’s turn to Slide 9 to analyze the development of six to twelve-month time charter rates over the past decade. In the fourth quarter of 2023, containership markets were down across all segments, but this trend has reversed since December, primarily due to disruptions in the Red Sea leading to vessel relocations. For the sectors we operate in, charter rates in February are approximately 30% to 35% higher than the lows seen at the end of 2023. As of February 16, the charter rate for a 2,500 TEU containership stood at about $15,500 per day, which is above the historical median of $9,200 per day and comparable to the ten-year average rate of $15,386 per day. The trends and comparisons with median and average rates are similar across vessels sized from 17,000 to 4,400 TEU. Moving on to Slide 10, we will discuss further market highlights. As previously mentioned, the fourth quarter of 2023 saw rates decline across all segments. The current recovery is mainly due to the crisis in the Red Sea, which is ongoing, and its complete impact is yet to be realized. However, it’s clear that these events will influence the development of charter rates, at least in the short term. The average rates per day during the fourth quarter of 2023 fell by 21% compared to the third quarter of 2023. The average secondhand price index decreased by around 7.7% in the fourth quarter of 2023 versus the third quarter; however, we have already observed a rebound in these trends during January and February. While prices still lag behind the peak levels of 2022, they exceed the average rates seen prior to the COVID-19 pandemic. The Newbuilding Price Index remained stable in the fourth quarter of 2023 compared to the third quarter. Newbuilding prices continue to stay high due to cost inflation from extended yard progress. Although there has been some easing in newbuild contracting from the exceptionally firm levels witnessed in 2022, it remains relatively robust, driven by ongoing interest from financially strong companies wanting to renew their fleets with a limited number of vessels. As of January 29, 2024, the idle fleet not including vessels under repair is at 0.23 million TEU, accounting for 0.8% of the total fleet, down from a peak of 0.8 million TEU just a year ago, reflecting a downward trend since then. In 2023, approximately 83 vessels totaling around 160,000 TEU were scrapped. The demolition activity remained moderate compared to historical standards in 2023 due to historically healthy charter rates. However, this is expected to increase significantly in the coming years due to weaker markets, supply growth, and environmental regulations exerting pressure. In the fourth quarter of 2023, scrapping prices softened slightly to about $535 per lightweight ton, although this remains about 30% higher than the average seen in 2019. Ultimately, the fleet expanded strongly by 8.1% in 2023, excluding any reintegrated idle vessels. Please now shift your attention to Slide 11. The IMF, in its most recent update from January 2024, raised its global growth forecast from 2.9% to 3.1% for 2024 and from 3.1% to 3.2% for 2025, driven by stronger-than-expected resilience in the United States and fiscal support in China. We anticipate seeing this recovery but also recognize risks related to wars and inflation. Risks surrounding COVID-19 have diminished in much of the world; however, the forecasts for 2024 and 2025 remain below the historical average of 3.8%, influenced by high central bank policy rates aimed at curbing inflation and the retraction of fiscal support amidst substantial debt. Furthermore, low productivity growth contributes to this continual slowdown. The analysis suggests that global growth is likely to rebound post-2025, benefiting from unwinding supply-side issues and anticipated interest rate cuts beginning in 2024. The IMF projects global inflation to gradually decline from 2024, enabled by tighter monetary policies alongside lower international commodity prices, expected to be between 4% and 5.8% in 2024 and 4.4% in 2025, with a downward revision noted for the 2025 quarter. However, new commodity price increases due to geopolitical shocks, such as ongoing attacks in the Red Sea and supply chain disruptions, could lead to persistent underlying inflation and impact long-term monetary conditions. China’s growth forecasts have been updated to 5.2% for 2024 and 4.6% for 2025, despite facing significant challenges due to low confidence and limited boosts to economic activity following its reopening amid persistent issues in its property sector. Similarly, growth in other emerging and developing nations, including India and those within Asia and France, is anticipated to remain robust over the next few years. India’s growth is projected at 6.5% for both 2024 and 2025. Containership trade demand is expected to see significant growth in 2024, as detailed in the January report, influenced by disruptions in the Red Sea, as well as constraints from the Suez and Panama Canals and slower speeds mandated by international environmental regulations and the introduction of the EU ETS. We foresee that Clarksons' apparent demand estimates will rise further in February as the effects of Red Sea near closure are proving more severe than initially projected. Please advance to Slide 12, which showcases the total fleet age profile and containership order book. The containership fleet is relatively young, with the majority of vessels being under 15 years old, and only 10% older than 20 years, chiefly among feeder vessels, hinting at high potential for recycling in this category. As of February 2024, the order book as a percentage of the total fleet is at 23.9%, down from nearly 30% six months prior. Next, let’s move to Slide 13, where we discuss the fleet age profile and order book for vessels in the 1000 to 3000 TEU range. These vessels are vital to our operations and are the main focus of our newbuilding program. The current order book stands at 8.9% as of February 2024, down from 50% a year ago. According to Clarksons, new deliveries are estimated to be 8% in 2024 and only 1.9% in 2025. Additionally, with over 50% of this fleet being over 15 years old, the fundamentals for this segment remain favorable. New environmental regulations aimed at reducing speeds and increasing recycling in this sector further support our positive outlook. Now, let’s move on to Slide 14 for our outlook summary on the container ship market. Container shipping is currently facing pressure from a significant influx of new capacity into the fleet, especially this year with deliveries anticipated to represent around 11% of the fleet measured in TEU. Nonetheless, recent occurrences, particularly in the Red Sea and the Panama Canal, along with the implementation of the EU ETS, have contributed to a doubling of shipping freight rates, reversing the previously declining charter rates. The context index has jumped by 33% since December 21, 2023. We expect substantial challenges early in 2024, but the equilibrium of supply and demand, influenced by conditions in the Suez Canal/Red Sea and Panama Canal, creates uncertainties regarding this unfavorable outlook. Following the recent attacks on vessels in the Red Sea and the Gulf of Aden, major containership operators have paused operations in this area. This rerouting via the Cape of Good Hope positively impacts supply and demand dynamics. If the situations in the Panama Canal and Red Sea improve, we could see further easing in container freight and charter markets driven by accelerated capacity growth. However, if vessel rerouting continues away from the Suez Canal, we might experience a rise in charter rates. In 2025, assuming the challenges in the Suez and Panama Canals are resolved, supply and demand factors could suggest continuance of market softening, making it difficult to predict market conditions while remaining sensitive to elements like geopolitical events, capacity management, vessel speeds, and other inefficiencies such as congestion. Nonetheless, if normal operations resume and both the Suez and Panama canals function efficiently, we could see considerable softening in 2025 due to the substantial expansion of the fleet. There is an ongoing momentum toward cleaner energy in the container ship industry, with tangible changes underway, but the long-term implications remain uncertain. The gap between charter rates for eco-friendly vessels is expected to grow as charterers prioritize environmentally sustainable shipping options. Next, on Slide 15, you will observe the evolution of the one-year time charter rates for containers with a capacity of 2,500 TEU since 2013. Although one-year time charter rates remain below their peak in early 2022, as previously stated, they have recovered to approximately $15,500 per day, aligning with historical averages and exceeding the historical median. The chart on the right shows the historical price ranges for newbuildings and ten-year-old secondhand container ships with a capacity of 2,500 TEU; values are rebounding from their end-of-year lows and are notably high compared to both historical averages and medians. Given these price levels, we hesitate to pursue further acquisitions unless they can be tied to charters that will mitigate residual values to levels beneath the historical median. We are well-positioned against market volatility with substantial contracted revenue coverage already securing 70% and 25% of our operating days for 2024 and 2025, respectively, at very favorable rates. Our solid balance sheet will enable us to take delivery of our remaining containership newbuildings while maintaining low leverage at around 60%. This positions us to increase our dividend and continue executing our stock repurchase program, rewarding our shareholders. Even after implementing these actions, our liquidity has the potential to grow further, prompting us to keep evaluating investment opportunities to enhance our revenue and growth prospects. With that, I will hand it over to Tasos Aslidis.

Thank you very much, Aristides. Good morning from me as well ladies and gentlemen. Over the next four slides, as usual, I will give you an overview of our financial highlights for the fourth quarter and full-year of 2023 and compare those to the same periods of last year. For that, let's turn to Slide 17. For the fourth quarter of 2023, the company reported total net revenues of $49.7 million representing a 15.8% increase over total net revenues of $42.9 million during the fourth quarter of 2022 and that was mainly a result of the increased average number of vessels we operated in the fourth quarter of 2023 compared to the corresponding period of the year before. The company reported a net income for the period of $25.3 million as compared to a net income of $20.3 million for the fourth quarter of 2022. Interest and other financing costs for the fourth quarter of 2023 amounted to $2.8 million before deducting capitalized interest income of $0.3 million and from the self-financing of the pre-delivery payments for our newbuilding program for a total net interest and financing costs of $2.5 million for the period compared to $1.6 million in the same period of 2022, after deducting capitalized included interest income for that period of $0.4 million. This increase in our interest expenses is due to the increased amount of debt we carried and the increased weighted average rate, soft rate that our bank loans paid in the most recent period compared to the period of the previous year. Adjusted EBITDA for the fourth quarter of 2023 increased to $33 million compared to $22.9 million for the corresponding period in the fourth quarter of 2022. Basic and diluted earnings per share for the fourth quarter of 2023 were $3.58 and $3.56 respectively calculated on about $6.9 million basic and diluted weighted average number of shares outstanding as compared to basic and diluted earnings per share of $2.87 and $2.86 respectively for the fourth quarter of 2022. Excluding the effect on the net income for the quarter of the unrealized loss on derivatives, the amortization of fair value of below market time charters acquired and the vessel depreciation on the portion of the consideration of vessels acquired with attached time charters allocated to the below market time charter part, the adjusted earnings for the quarter ended December 31, 2023 would have been $3.62 basic and $3.61 diluted as compared to adjusted earnings of $2.50 basic and diluted for the quarter ended December 31, 2022. Usually, security analysts do not include the above items in their published estimates of earnings per share. Let's now look to the right part of the slide and review the numbers for the corresponding 12 month period ending December 31, '23 and December 31, '22. For the full-year of 2023, the company reported total net revenues of $190 million representing a 4% increase over total net revenues of $182.7 million during 2022. Again mainly the result of the increased number of vessels we own and operated in 2023 compared to the year before. The company reported net income for the year of $115.2 million as compared to a net income of $106.2 million for 2022. Interest and other financing costs for 2023 amounted to $9.8 million, again before the capitalized imputed interest income of $3.4 million and as I mentioned earlier from self-financing the pre-delivery payments of our newbuilding program for a total interest and other financing costs of $6.4 million compared to $5.1 million for the same period of 2022, which was derived after deducting capitalized imputed interest income for 2022 of $0.5 million. Again, this increase is due to the increased amount of debt that we said and the higher software rates that our bank loans had to pay compared to the year before. Moving to the EBITDA figures. Adjusted EBITDA for the 12 months of 2023 were $124 million compared to $114.4 million during 2022 primarily the result of higher revenues as I mentioned earlier. Basic and diluted earnings per share for 2023 were $16.53 basic and $16.52 diluted calculated on about 6.9 million basic and diluted weighted average number of shares outstanding compared to basic and diluted earnings per share of $14.79 and $14.78 per share respectively for 2022. Excluding the effect on net income for the year of the unrealized loss on derivatives, impairment loss, amortization of the below market time charters acquired, the vessel depreciation attributed to the below market charters acquired and gain on time charter agreement termination as well as gain on sale of vessel. The adjusted earnings for the year ended December 31, 2023 would have been $14.99 basic and $14.98 diluted compared to earnings of $13.23 basic and $13.21 diluted for the year before. As I mentioned before, analysts do not include those adjustments that we subtracted in the estimates of earnings per share. That's why we're making the adjustments.

Let's now turn to Slide 18 to review our fleet performance. We'll start our review by looking at our utilization rates first for the fourth quarter and then the full-year of 2023 and compare it to the same period of 2022. Starting with the fourth quarter of 2023, our commercial utilization rate was 100% while our operational utilization rate was 99.5% compared to 100% commercial and 95.1% operational for the fourth quarter of 2022. On average, 19 vessels were owned and operated during the fourth quarter of 2023 earning an average time charter equivalent rate of $29,704 per day compared to 18 vessels in the same period of 2022 earning on average $29,399 per day. Total operating expenses including vessel running expenses, management fees and other G&A expenses, but excluding drydocking costs were $7,923 per vessel per day for the fourth quarter of 2023 compared to $7,937 for the same period of 2022. If we move further down on this table, we can see the cash flow breakeven rate which takes also into account drydocking expenses, interest expenses and loan repayments. Thus for the fourth quarter of 2023, our daily cash flow breakeven rate was $15,000 per vessel per day compared to $15,801 per vessel per day for the same period in the fourth quarter of 2022. Let's now look on the right part of the slide to review the same figures for the full-year. During the entire 2023, our commercial utilization rate was 99.6% while our operational utilization rate was 99.1% compared to 99.9% commercial and 98.4% operational for 2022. On average 18.25 vessels were owned and operated during 2023, earning an average time charter equivalent rate of $29,807 per day compared to 17.1 vessels owned and operated during 2022 earning on average $31,964 per vessel per day. Total operating expenses, again including vessel running expenses, management fees and other G&A expenses, but excluding drydocking costs were $7,906 for 2023 as compared to $7,548 per vessel per day for 2022. Again, looking at the bottom of this table, we can see the cash flow breakeven rate for the year, including drydocking expenses, interest expenses and loan repayments which for 2023 amounted to $14,186 per vessel per day compared to $14,508 per vessel per day for 2022. Finally, if we look at the very last line on this slide, we can see the common dividend that we paid expressed in dollars per day. For the fourth quarter of 2023 that amounted to about $2,015 per vessel per day, while for the full-year amounted to $2,104 per vessel per day.

Let's now move to Slide 19 to review our debt profile and our forward cash flow breakeven level. As of December 31, 2023, our total debt amounted to about $131 million. The chart shows our current debt repayment schedule for the next three years. In 2023, we made loan repayments totaling $68.98 million, a figure which includes a payment of $27 million that was refinanced and balloons totaling $13.3 million for five of our vessels, which remain unencumbered, raising the number of unencumbered vessels in our fleet to seven. In 2024 and 2025, our projected loan repayments decreased to around $31.2 million and $18.1 million respectively with balloons due in 2024 of $1.8 million and in 2025 of $18.3 million. The point here regarding the cost of our debt, which carries another margin of 2.31%. Assuming a soft rate of around 5.31%, the cost of our senior debt stands as of December 31st of 7.62%, but including the cost of certain interest rate swaps that we have, this figure gets reduced to about 7.32% on average as about 15% of our debt is hedged at the soft rate of around 3.4%. I'd like to draw your attention now at the bottom of this slide where we present the level and components of our expected cash flow breakeven for the next 12 months and we show the breakeven cash flow at various levels. First, our EBITDA breakeven level is $8,643 per vessel per day, a bar that you see somewhere in the middle of the slide. In total, including interest and loan repayments, our projected cash flow breakeven level of over the next 12 months is expected to be around $14,658 per vessel per day. To sum up our presentation, let's move to Slide 20 to review certain highlights from our balance sheet. As of December 31, 2023, our assets include cash and other current assets, which amount to about $71.7 million. Advances that we paid for our newbuilding program currently stand at about $85.4 million as of December 31, 2023. And the book value of our vessels was $267.7 million resulting in total book value of our assets of about $224.7 million. On the liability side, as I previously mentioned, we had debt standing at $131 million equivalent to about 31% of the book value of our assets. The fair value of below market charters acquired is approximately $7.6 million, representing about 1.2% of our assets and other liabilities stands at about $11 million accounting for another 2.6% of our total book value of our assets. Regarding shareholders' equity, I would like to highlight two points. First, as of December 31, 2023, our retained earnings turned positive reflecting the profitability of the last four years which erased the losses of the previous decade and this happened even after the payment of almost $25 million of dividends during 2022 and 2023. And second, that the market value for our fleet surpasses its book value significantly. Utilizing the charter adjusted values for both our fleet and our newbuilding contracts, our estimated value of our fleet is about $337 million thus about $70 million more than its book value. This translates to a net asset value of about $352.5 million for our company, which is equivalent to approximately $50.9 per share. Our share price yesterday closed at $34 which compared to our net asset value represents a substantial discount suggesting considerable appreciation potential for our shareholders and investors. And with those remarks, I would like to pass the floor back to Aristides to continue the call.

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

Thank you. We will now conduct a question-and-answer session. Our first question comes from Tate Sullivan with Maxim Group. Please proceed.

Hi, thank you. Good morning. First, regarding the 20% dividend increase and the 2023 payout ratio of about 12%, could you explain how you assessed the decision to raise the dividend by 20%? Did you consider the payout ratios across the shipping sector? What factors gave you confidence in your ability to secure contracts for your six upcoming newbuilds?

I think the primary concern was that we want to offer our shareholders significant dividend yields. So we want to satisfy our shareholders. We thought with the increase in the share price going down to 5%, 6% dividend yield was not at the level that we like to see. We know that our payout ratio even today is low. We are keeping the excess liquidity in order to find opportunities to invest when the time is right. But at the same time we really want our shareholders to be satisfied and to be getting more than they would be getting in conservative investments, bonds, stuff like that. So that was really the reason we did it. As we've said many times, we have ample liquidity that we are collecting through the charters that we have secured during the strong time of the markets and we are trying to make optimal use of that.

Great. Thanks, Pittas. It was great to see. And then on the Aegean Express and coupled with your comment of maybe holding off on acquisitions for now, where begun where asset values are particularly with the increase in rates due to the Red Sea situation. How are you evaluating Aegean Express the 7,000 rate versus breakeven EBITDA levels of about 8,600 scrapping versus future contract availability?

Well, last year in our model, we were assuming that we would be scrapping the Aegean Express at the completion of the charter, because we thought the market would be soft. But with this strengthening market, the 7,000 level which is just above breakeven for this particular vessel that has no debt assigned and low operating expenses. We felt it is best to keep it because really we don't know how this market will develop. So we want to have the option of earning significantly more than what we can earn by selling the vessel today at scrap value plus a little bit. So that's the reason we are keeping it. It has an option positive option value for us and it's contributing just a little bit because the 7,000 is above the breakeven.

Okay. Thank you. And last one for me, Tasios, is on the capital commitments for the newbuilds, including the ship delivered this current quarter. Can you give an update on the outflow for this current quarter, and then the total capital commitments for all the newbuilds, please, if you can?

I think the remaining six new buildings, I believe on the top of my head, some like $220 million that we need to total contract price, of which about 65 give or take has been already paid. And we expect to finance 60% of the contracted price, that's about a $130 million. So we have about I believe $30 million of additional equity contributions to make. I made this calculation on top of my head, trying to subtract the vessel we took delivery already.

Understood. Okay. Thank you for that. Okay. Thank you very much.

Thank you, Tate.

Thank you. Our next question comes from Kristoffer Skeie with Arctic Securities. Please proceed.

Hello. Congratulations on another strong quarter and a positive dividend increase. It's Kristoffer Barth Skeie. Could you provide more details on the chartering discussions, particularly concerning the vessels arriving now and the new builds? How long of a duration can you secure at this point, and how do you assess the duration in relation to the rate levels?

Yes, we are already discussing the charter of our first new building vessel to be delivered in April. Duration is between one and two years. We are looking at the various offers that we have and will decide depending on the level of if we go for one or two years' time. So there are discussions there. There are discussions about a couple of ships that open up within the next month or two months or so, for periods of up to a year. We will see. I mean there is interest in the vessels that are coming up within the next couple of months and we are focusing on these vessels for the time being, but nothing to report yet.

Okay, great. Regarding your comment in the report about potential investment opportunities, are you referring to asset transactions, company acquisitions, or mergers? What are you seeing in this area?

No, to be honest it's individual vessel acquisitions at this stage primarily that we are looking at. We are looking at quite a few things, but there is again nothing to report. We need to feel comfortable about the deal before advancing.

Okay. Thanks. That's all for me. Have a good day.

Thank you, Barth.

Thank you. Our next question comes from Clement Mullins with Value Investors Edge. Please proceed.

Good afternoon. Thank you for taking my questions. I wanted to start by asking about the upgrades on the Synergy Busan. You mentioned it will improve the vessel's performance by about 20%. And I was wondering, relative to the $1.6 million price tag of the upgrades, could you provide some further insight on the expected ROI?

We have completed the drydock for the ship, and we now have data from the first month following the delivery of the vessel after the retrofits. The indications show that we are seeing a 25% improvement in performance. According to our budgeted figures, we estimated that we would recover the entire investment within two years, and it may happen even sooner.

That's very helpful. Thank you. My second question is market related. No one knows when disruption in the Red Sea will be over. But I was wondering, should that happen, how fast do you think the market would readjust once again?

It takes a long time for markets to readjust on changes. So I think that even if things were to end tomorrow, it will take at least six months before we go back to normality. And I don't see it ending tomorrow. But generally it takes time for the markets to readjust.

Makes sense. That's all for me. Thank you for taking my questions.

Thank you.

Thank you. Our next question comes from Poe Fratt with Alliance Global Partners. Please proceed.

Yes. Hi, Aristide and Tasios. You've covered a lot of ground, but just I'm not sure you mentioned it, but could you just highlight whether on the dividend increase, will this be reviewed annually? Is that sort of something we should expect?

Dividends are typically reviewed quarterly by our Board, and our expectation when we announced it was that this would continue throughout the year. While I can't guarantee that it will happen, we are confident that we will be able to maintain it for at least another year.

Great. Thank you.

Thanks.

Thank you. We have a follow-up question from Tate Sullivan with Maxim Group. Please proceed.

Thank you for taking a follow-up. Maybe I apologize if I missed it earlier, but the Akinada bridge in the whole damage from last year is the $1.1 million expense this fourth quarter on higher insurance related to that? And do you still have outstanding insurance claims related to the whole damage for the Akinada?

Tasios, will you take that?

Yes. I think we have collected a good number of the outstanding claims on Akinada. That's why our receivables, other receivables, if you look at our balance sheet, they've come down significantly this quarter. There might be some small things, but by and large we have collected most of the insurance claims.

And was that $1.1 million charge tosses in 4Q for higher insurance related to the Akinada claims or is it something separate?

No, we indeed go ahead, Tasios.

No, I cannot relate to such a charge in Q4. The other operating income you see in Q4 relates to Aegean, specifically some recoveries from Aegean Express.

Okay, understood. Okay. Thank you very much.

On the Aegean Express, we received more than we had initially expected, which is why you see an increase. We aim to be conservative in our estimates regarding insurance payouts, and we did receive a bit more on the Aegean Express claims, which is reflected in our Q4 results for the year.

Yes, exactly. That's what I wanted to say. I think we got about $1 million more than what we thought we would get from the insurance proceeds, because as always, we are very conservative when we budget such things.

Thank you. At this time, I would like to turn the floor back over to the CEO, Mr. Pittas, for closing comments.

Thank you all for participating in today's conference call, and we will be back to you with our Q1 results in three months' time. Goodbye.

Thanks everybody. Thank you for your questions. Thanks.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.