Earnings Call Transcript - ESEA Q4 2024

Operator, Operator

Thank you for standing by, ladies and gentlemen, and welcome to the Euroseas Conference Call on the Fourth Quarter 2024 Financial Results. We have with us Mr. Aristides Pittas, Chairman and Chief Executive Officer; and Mr. Tasos Aslidis, Chief Financial Officer of the company. I must advise you that this conference is being recorded today. Please be reminded that the company announced their results with a press release that has been publicly distributed. Before passing the floor to Mr. Pittas, I would like to remind everyone that in today's presentation and conference call, Euroseas will be making forward-looking statements. These statements are within the meaning of the Federal Securities Laws. Matters discussed may be forward-looking statements, which are based on current management expectations that involve risks and uncertainties that may result in such expectations not being realized. I kindly draw your attention to Slide 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.

Aristides Pittas, CEO

Hello, everybody, and good morning. Thank you for joining us today for our scheduled conference call. Together with me is Tasos Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the three- and twelve-month period ended December 31, 2024. Let's turn to Slide 3 of the presentation to go over our income statement highlights. For the fourth quarter of 2024, we reported total net revenues of $53.3 million and a net income of $24.4 million or $3.49 diluted. Adjusted net income for the quarter was $23.3 million or $3.33 per diluted share. Adjusted EBITDA for the period was $32.8 million. Please refer to the press release for the reconciliation of adjusted net income and adjusted EBITDA. Our CFO, Tasos, will go over our financial highlights in more detail later on in the presentation. As part of the company's common stock dividend policy, our Board of Directors declared a quarterly dividend of $0.65 per common share for the fourth quarter of 2024, increasing by $0.05 the quarterly dividend given throughout last year. The dividend will be payable on or about March 18 to shareholders of record on March 11. The annualized dividend yield of our stock, given the current share price, is approximately 7.8%. Additionally, the company is dividend off to all of its shareholders the shares of Euroholdings Ltd., a subsidiary owning our three eldest vessels, which represents about 5% of our NAV. The shares will be distributed on March 17 to all shareholders of record on March 7. As of February 27, 2025, and since the initiation of our repurchase program in May 2022, which has been extended twice to May 2025, we have repurchased 425,000 of our common stock in the open market for a total consideration of about $9.25 million. We will continue to make measured use of the plan at management's discretion depending on the level of our stock price, aiming to enhance long-term shareholder value. Please turn to Slide 4, where we discuss our recent developments, including an update on our sales and purchase chartering and operational highlights. On January 7 and January 8, 2025, we took delivery of Motor Vessel Dear Panel and Motor Vessel Symeon P, respectively. These are two Eco EEDI Phase 3, 2,800 TEU feeder containership newbuildings that were built in Hyundai Mipo Dockyard in South Korea. The vessels were financed through a combination of bank debt and own funds as usual. Following their delivery, both vessels commenced charters with a duration of 36 months at a daily rate of $32,000 per day. Continuing on our chartering developments, Motor Vessel AEGEAN Express has been fixed for a minimum of 10 months and up to 12 months at a rate of $16,700 per day with the earliest delivery being in November 2025. Additionally, Motor vessel Synergy Keelung and Motor Vessel Synergy Antwerp have been fixed for 36 to 39 months at $35,500 per day. Finally, Motor Vessel EM Hydra secured a charter for 24 to 26 months at $19,000 per day, with the earliest delivery expected in May 2027. Throughout this period, the fleet experienced no idle periods or commercial off-hire except for Motor Vessel Diamantis P, which underwent necessary maintenance works for 23 days from December 16, 2024, to January 8, 2025, ensuring that the vessel can continue trading efficiently until the next dry docking date. Please turn to Slide 5. On January 3, 2025, we contributed our three older vessels, Motor Vessel Aegean Express, Motor Vessel Diamantis P and Motor Vessel Joanna into a separate company, Euroholdings Ltd, in exchange for 100% of the shares of Euroholdings. Subsequently, Euroholdings sold Motor Vessel Diamantis for net proceeds of about $13 million. Therefore, Euroholdings, as of the end of January had cash of about $13 million, plus owned Motor Vessel Aegean Express, which is on charter at $16,700 per day till minimum November '25 and Motor Vessel Joanna, which is on charter until minimum October 2026 at $16,500 per day. Euroholdings will dividend out the Euroholdings shares to its shareholders, providing every shareholder on record on March 7 with one Euroholdings share for every 2.5 Euroholdings shares in the Euroholdings shares. Distribution will occur upon effectiveness of the registration statement and is expected to occur on March 17. Simultaneously, the shares will start trading on the NASDAQ. Further details of the distribution will be provided in a subsequent press release. Whilst the regulatory clearance and listing processes are practically completed, there can be no assurance that the transaction will ultimately occur as if a material event occurs before the final implementation date, either the SEC or the NASDAQ may not finally sign off. Please turn to Slide 6 for an update on our current fleet profile. Our current fleet is comprised of 24 vessels in the water, including 17 feeder containerships and 7 intermediate container carriers with a total carrying capacity of just under 71,000 TEU and an average age of about 13.5 years. Following the contribution of the two vessels, MV Joanna and Aegean Express to Euroholdings, our fleet will be reduced to 22 vessels in the water with a carrying capacity of approximately 67,500 TEU and an average age of 12.8 years. Turning to Slide 7, you can also see the two vessels that are currently under construction, which are expected to be delivered in the fourth quarter of 2027. These are two 4,300 TEU vessels. Let's now turn to Slide 8 to see our full vessel employment chart. As you can see, the recent charters helped improve the visibility of our expected cash flows, and we have now secured strong charter coverage over the next two years with approximately 85% of our fleet fixed for 2025 and about 49% fixed for 2026. Let's move to Slide 10 for our broader market overview, focusing on the development of 6 to 12-month time charter rates over the past 10 years. In the fourth quarter of 2024, containership charter rates experienced a slight decline, except for the larger segments where they held their levels. As is seen from the graphs on the slide, as of February 21, 2025, the 6- to 12-month charter rate for 2,500 TEU containership reached approximately $32,500 per day, which is more than three times the $9,400 per day median rate. Notably, this fixture is also significantly higher than the 10-year average rate, which is approximately $16,500 per day. This positive trend is observed across all vessel sizes with the current rate significantly outpacing historical averages, highlighting the market's robust recovery and resilience. Moving on to Slide 11, we go over some further market highlights. As already shown during the last quarter of 2024, feeder vessel rates decreased by 9%, while the rates for Panamax and post-Panamax vessels rose. The Red Sea region continues to be a key factor in shaping the 2025 containership outlook. While the Gaza ceasefire has eased some tensions, the ongoing Houthi threat remains, and shipping lines may begin reducing via the Suez Canal. However, they will require clear evidence of a permanently reduced risk before making the shift. In the fourth quarter of 2024, average secondhand prices increased by approximately 7% compared to Q3 2024. While prices have risen significantly since the past COVID period, they still are about 50% below the peak levels they had reached during the pandemic. Also, the newbuilding price index increased by just 1% quarter-on-quarter, but still an increase, which is due to limited availability and increased competition between yards, particularly for eco units and larger feeders. As of February 10, 2025, the idle fleet stood at 0.2 million TEU or just 0.6% of the fleet. Recycling activity picked up just slightly with 58 vessels accounting for 83,000 TEU sent to scrap during 2024. Given that about 25% of the sub 8,000 TEU fleet is over 20 years old, we expect the recycling volumes to increase if market conditions soften. Scrapping prices eased slightly in Q4 to approximately $490 per lightweight ton, but still remain around 20% above 2019 levels. Overall, the fleet grew in 2024 by a staggering 10.8%. Please turn to Slide 12. The IMF's latest update from January 2025 projects stable yet somewhat underwhelming global economic growth with unchanged forecast from that in October 2024, hovering around similar levels for both 2025 and 2026. Undoubtedly, the new US administration's rapid policy changes and reversals, particularly concerning trade policies and geopolitical conflicts collectively pose risks to medium-term growth prospects. Within this background, the US has seen an upward revision by the IMF with growth forecast trending to grow at 2.7%. This stands in stark contrast to other advanced economies, particularly in Europe, which have seen either downgrades or stagnant growth outlooks at around 1%. Emerging markets continue to drive global growth led by India, the ASEAN 5 countries, and of course, China. China's growth appears to be slightly revised upwards, but in a lopsided fashion with projections of 4.6% this year and 4.5% next year as the country continues to face certain domestic demand, persistent inflationary pressures, and falling property and equity markets. India is projected to maintain steady economic growth of 6.5% in both 2025 and 2026, driven by strong investment activity, robust agricultural performance, and continued expansion in the services sector, which remains a key engine of economic growth. Southeast Asian countries are also positioned for solid growth, benefiting from regional demand and investment momentum. Global inflation is expected to decline. However, the near-term trajectory may still face challenges with persistent services and wage inflation in several parts of the world, leading to the synchronized monetary policy responses. The risks to the global inflation outlook will be tilted to the upside given the prospect of increased protectionism, geopolitical tensions, derisking, and demographic constraints. According to Clarksons, the container demand outlook for 2025 remains murky with many variables at play. In its latest market report, Clarksons projects trade growth to decline by 1%. This is attributed to factors such as U.S. tariffs, ongoing geopolitical risks in the Red Sea, and despite the Gaza ceasefire that persisting threat making a return to normal shipping operations more challenging. Looking into 2026, the containerized trade demand is forecast to decline even further by 3.9%, with further potential for a demand/supply imbalance due to continued fleet growth and the possible easing of the Red Sea disruption. In light of this, we remain mindful that both the IMF and Clarksons projections could change depending on macroeconomic risks, U.S. trade policy, and evolving geopolitical tensions, which could impact medium-term growth prospects. Please turn to Slide 13, where you can see the total fleet age profile and containership order book. The containership fleet is relatively young with most vessels under 15 years old and only 11% of the fleet over 20 years old. As of February 2025, the order book as a percentage stands at 27%. Turning on to Slide 14, we go over the fleet age profile and order book only for ships in the 1,000 to 3,000 TEU range, the sizes we mostly operate in. And there, we see a very different picture. The order book here stands at just 3.2% as of February 2025. According to Clarksons, in 2025, new deliveries are projected to amount to just 2.1%. This pace will slow down even further in 2026 and 2027 with even fewer ships expected to be delivered. You can also notice that about 15% of the fleet in this size range is over 15 years old. Let's move to Slide 15. As shown in the previous two slides, the order book is predominantly focused on large containerships. The increase in main lane volumes inevitably drives greater demand for regional distribution by feeder vessels as well. Thus, we believe that there will continue to be quite high demand for feeder and intermediate-sized vessels despite a cascading effect, which pushes towards the use of larger ships when this is possible due to port capacity improvements and increased volume requirements. This category of ships is, however, aging extremely rapidly, and currently, the percentage of vessels exceeding 20 years is on average about 27%. All these ships are prime candidates for scrapping in case there is a market decline also due to the new environmental regulations. Thus, it is highly likely that the fleet capacity in these segments will decline in contrast to the anticipated growth in the larger vessel categories in the overall fleet. Moving on to slide 16. As already discussed, container shipping markets saw substantial gains in 2024, with both freight and charter rates reaching levels not seen since the COVID period. However, in recent weeks, freight rates, particularly on the East/Europe route, have dropped sharply, due to expectations of the rerouting through the Suez Canal following the Gaza ceasefire. This shift has yet to be reflected in the time charter market. Looking ahead, in 2025 and beyond, the container shipping market development is very uncertain, primarily driven by two factors: geopolitical risks and trade war-related issues. While the Gaza ceasefire has prompted discussions, it remains uncertain when shipping lines will resume the routing through the Suez Canal. On the trade war front, the anticipation of higher U.S. customs duties under the new Trump administration has led to a surge in early orders, driving up freight rates. This is now reversing. The 10% tariff on Chinese goods and the 25% tariff on goods from Mexico and Canada set to take effect in March 2025, if that happens, plus tariffs on Europe yet to be determined and the recently announced fees on Chinese-built and owned vessels entering U.S. ports. All these factors remain to be seen and how these controversial actions could lead to slower global growth. Anyway, their full impact remains to be seen as they may also trigger additional inefficiencies, which may create opportunities as often happens in shipping. On the supply side, vessels ordered by shipping companies in the post-COVID years are now entering the market in large numbers. This trend, as discussed, is expected to continue in 2025 up to 2028, and based on cargo volume forecasts, many of these vessels will likely struggle to fill their capacity. If the factors currently supporting the containership market begin to fade, the market downturn could be quite swift. However, potential reductions in vessel speeds, driven by efforts to reduce emissions and support green initiatives, may help ease supply pressures and contribute to market stability. The energy transition has continued to gain traction in the container sector. Although there is a clear shift towards adopting new fuels, the pace of this transition is likely to be slower than anticipated due to technical and economic hurdles. Meanwhile, the premium for charter rates of eco-friendly vessels is expected to grow as both charterers and the industry as a whole become increasingly focused on sustainable transport solutions. Please turn to Slide 16. The left-hand slide graph depicts the strengthening in the containership market throughout the year. As of February 21, 2025, one-year time charter rates for 2,500 TEU containerships stood at $32,500. New building prices also picked up a little bit during the fourth quarter and into the beginning of 2025, reflecting consistent demand driven by the limited shipyard capacity and rising construction costs. Over the long term, elevated costs for green technologies and stricter emission standards are expected to help keep new building prices high. Similarly, secondhand vessel prices have increased from a low of $15 million in late 2023 to $31 million by December 2024, supported by the improving market sentiment and the robust charter demand. In this environment and with our very strong cash position, we continue to look at opportunities that will help us grow the company and enhance shareholder returns. And with that, I will pass the floor over to our CFO, Tasos Aslidis, to go over our financial highlights in further detail.

Tasos Aslidis, CFO

Thank you very much, Aristides. Good morning, everyone. Over the next four slides, I will provide an overview of our financial highlights for the fourth quarter and full year of 2024, along with comparisons to the same periods last year. Let's begin with slide 19. For the fourth quarter of 2024, Euroseas reported total net revenues of $53.3 million, which is an 8.7% increase from $49.1 million in the fourth quarter of last year. This increase was primarily due to the higher average number of vessels we operated in the current quarter compared to last year. We reported net income of $24.4 million, slightly down from $24.7 million for the fourth quarter of 2023. Interest and other financing costs for the fourth quarter of 2024 totaled $3.7 million, with $0.56 million related to interest income, imputed interest charged, and capitalized in relation to our new building program, compared to $2.5 million in the same period last year, where $0.26 million was related to imputed interest from our new building program. This rise is attributed to the increase in debt this quarter compared to last year. Interest income for the fourth quarter of this year was $0.8 million, up from $0.5 million in the fourth quarter of 2023. Adjusted EBITDA for this quarter rose to $32.8 million, compared to $32.4 million in the fourth quarter of 2023. Basic diluted earnings per share for the fourth quarter of 2024 were $3.51 basic and $3.49 diluted, based on approximately 7 million weighted average shares outstanding, compared to $3.58 and $3.56 per share basic and diluted for the fourth quarter of 2023, calculated on about 6.9 million shares. Adjusted earnings per share for the quarter ending December 31, 2024, were $3.35 basic and $3.33 diluted, compared to adjusted earnings of $3.62 and $3.61 per share for the same period last year. You can refer to the press release we issued today for a reconciliation between earnings and adjusted earnings. Now, let's look at the figures for the full year of 2024 versus 2023. For the full year of 2024, we reported total net revenues of $212.9 million, reflecting a 12.4% increase over $189.4 million in 2023, again primarily due to the increased number of vessels we operated, somewhat offset by lower average time charter rates. Our net income for the year was $112.8 million, compared to $114.5 million in 2023. Total interest and other financing costs for 2024 came to $10.6 million, with $4.2 million related to interest income charged and capitalized for our new building program, compared to $6.4 million for 2023, of which $3.2 million was interest income. The total interest expense was $9.8 million, including interest related to the new building program. This increase again reflects the higher levels of debt in 2024 compared to 2023. Interest income in 2024 was about $2.4 million, compared to $1.4 million in 2023 due to higher cash balances throughout the year. Adjusted EBITDA for 2024 increased to $135.8 million from $123.6 million in 2023 due to higher revenues, representing nearly a 10% increase. In terms of earnings per share for 2024, basic earnings were $16.25 and diluted $16.18 based on roughly 6.9 million to 7 million weighted average shares outstanding, compared to $16.53 and $16.52 per share for the full year of 2023. Adjusted earnings for 2024 were $14.92 basic and $14.85 diluted, compared to $14.99 and $14.98 for 2023. As mentioned, our press release earlier today details the reconciliation between earnings and adjusted earnings. Next, let’s move to slide 20 to review our fleet and performance metrics. For the fourth quarter, our overall utilization rate was 99.6%, compared to 99.9% in the fourth quarter of 2023. We operated 23 vessels during this quarter, earning an average time charter equivalent rate of $26,479 per day, compared to 19 vessels in the same quarter last year, which earned an average of $29,266 per vessel per day. Our operating expenses, including management fees and G&A expenses but excluding drydocking costs, were slightly lower this quarter, at $7,728 per vessel per day compared to $7,932 in the same quarter last year. For this quarter, our daily cash flow breakeven rate, which encompasses drydocking expenses, interest expenses, and loan repayments, was $14,935 per vessel per day, a reduction from just above $15,000 in the same period of 2023. Looking at the full year, our overall utilization rate was 99.7%, up from 98.6% in 2023. For the entire year, we operated an average of 21.7 vessels, earning just above $28,000 per day, compared to 18.3 vessels in 2023, which earned an average of about $29,700 per vessel per day. On the cost side, including running expenses, management fees, and G&A but excluding drydocking costs, we averaged $7,526 per vessel per day in 2024 compared to $7,875 per vessel per day in 2023, reflecting an improvement of just under 5%. The cash flow breakeven rate for 2024, considering interest expenses, drydocking expenses, and loan repayments, was about $14,800, compared to $14,150 in 2023. This increase is partly due to higher drydocking expenses and slightly higher interest expenses. Our common dividend was approximately $2,000 per vessel per day for the fourth quarter of both 2023 and 2024, and about $2,100 per vessel per day for the respective full years. Now let’s move to slide 21 to review our debt profile. As of December 31, 2024, our total debt was approximately $208 million, not including about $52 million of additional debt assumed in early January 2025 to finance the delivery of our last two newbuildings. We expect loan repayments of around $24.4 million and balloon repayments of about $16.25 million in 2025. In 2026, scheduled repayments will be about $19.5 million with no balloon payments that year. In 2027, we’ll need to make loan payments of $16.85 million, along with scheduled balloon payments of $20 million. As of last year, our senior debt had an average margin of 2.1%. Combined with a base rate of about 4.3%, this results in a total cost of debt near 6.4%. With part of our debt exposure swapped for a lower SOFR rate, our adjusted overall debt cost is approximately 6.34%. If we factor in the last two loans mentioned, which have a smaller margin over SOFR, the overall debt cost drops below 6.3%. Finally, I want to highlight that our projected cash flow breakeven for the forthcoming 12 months is expected to be around $12,600 per vessel per day, a substantial level below our fleet’s average daily earnings. To conclude, let's review highlights from our balance sheet on slide 22. Our balance sheet is straightforward, featuring cash, current assets, advances for new buildings, and the book value of our assets. As of December 31, we had cash and other current assets totaling approximately $90.3 million, with advances for our new building program nearing $57 million, and book assets valued around $443.4 million, resulting in a total book value of about $590.6 million. On the liabilities side, our debt stood at $207.3 million at year-end, approximately 35% of the book value of our assets, alongside other liabilities totaling about $18 million, or roughly 3% of the book value, leading to shareholders' equity valued at around $365 million or approximately $52 per share. Importantly, the charter-adjusted market value of our fleet exceeds its book value, estimated to be about $130 million higher, translating to an additional $20 per share to our net asset value and bringing our net asset value per share close to $72. For the Euroholdings spin-off referenced earlier, we anticipate adjusting our NAV by about 5% post-spin-off. Hence, the expected NAV after the spin-off will be around $68.2 per share. With our stock currently trading around $34 per share, this reflects a significant discount to our net asset value, demonstrating substantial upside potential for our shareholders and investors.

Aristides Pittas, CEO

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

Operator, Operator

Thank you. We will now be conducting a question-and-answer session. One moment please for your first question. Our first questions come from the line of Mark Reichman with Noble Capital Markets. Please proceed with your questions.

Mark Reichman, Analyst

Yes. While we haven't excluded the two vessels from our estimates yet, it seems reasonable to do so. The question is whether the distribution takes place on March 17 or July 17, Euroseas’ income statements will be based on the drop-down as of January 8. Is that correct?

Aristides Pittas, CEO

Yes.

Mark Reichman, Analyst

Okay. Thank you. And second, the expected scheduled off-hire days, including the laid up, what are your expectations for 2025?

Tasos Aslidis, CFO

I think we have 50 days a quarter. Does that seem...

Aristides Pittas, CEO

I think we have very little dry dockings because that is really what the off-hire is only when we have a dry dock because commercial off-hire we're not having these days with the high charter rates. And technical breakdowns, you can calculate one day per quarter to be pretty safe. So it all depends on dry dockings, and we have extremely few dry dockings this year.

Tasos Aslidis, CFO

I think we're budgeting about 70, 75 days for dry dockings in 2025.

Mark Reichman, Analyst

70 to 75 for the full year. Well, that's reflected in your projections here on your breakeven. I mean you have very little expense in there for dry docking. And then just the last question. The rate for the M/V Oakland, it looked like it increased to $42,000 from $35,500. And you've got the Emmanuel and the Rena, which are both similar intermediate vessels, which come up for recharter in, I believe, in April. Would you kind of expect a similar rate as to the Oakland for those vessels?

Aristides Pittas, CEO

I don't think the rate for the Oakland has increased. The $42,000 rate for the Oakland has been consistent for a while. The current market rate is $35,500, which is what we achieved with the Synergy just a few weeks ago. This reflects the market for those ships. Currently, these ships are not available, so charters are waiting to see how the market evolves. We need to determine how we will manage these vessels, but the current market stands at $35,500, similar to what we achieved with our nearby vessels.

Mark Reichman, Analyst

Okay.

Tasos Aslidis, CFO

Year charters – $35.5.

Mark Reichman, Analyst

Okay.

Aristides Pittas, CEO

Yes, that's for three years. If we do a shorter duration, it will be probably a higher rate, but we would like to fix for a longer duration.

Mark Reichman, Analyst

Okay. And this is the final question. If the distribution happens on the 17th, would that mean Euro Holdings' first day of trading would be the 18th?

Tasos Aslidis, CFO

I believe the 17th will be the first day of trading. There may be some trading opportunities even before that. However, we will issue a release to clarify these details.

Mark Reichman, Analyst

Okay. Thank you very much.

Aristides Pittas, CEO

Thank you.

Tasos Aslidis, CFO

Thank you, Mark.

Operator, Operator

Thank you. Our next questions come from the line of Poe Fratt with Alliance Global Partners. Please proceed with your question.

Poe Fratt, Analyst

Hello, Aristides. Hello, Tasos.

Aristides Pittas, CEO

Hi, Poe.

Poe Fratt, Analyst

Tasos, I'd like to start by complimenting you, Aristides, for your thorough and well-measured overview of the containership market, which I truly appreciate. You highlight many potential issues that could arise, and I value that. Tasos, could you discuss the fourth quarter operating expenses and general and administrative costs per day? It appears they exceeded $1,000. You're predicting a decrease of about 35% for the first quarter. Was this due to the spin-off, or can you point out any unusual general and administrative expenses that occurred in the fourth quarter?

Tasos Aslidis, CFO

Yes. Typically, our fourth quarter sees a slight increase in general and administrative expenses, not primarily due to the spin-off, but because of a year-end bonus that the company pays, which is reflected in the fourth quarter figures.

Poe Fratt, Analyst

Okay. Great. As you mentioned, you will report the first quarter excluding the spinout, correct? Just for modeling purposes?

Tasos Aslidis, CFO

Euroseas will incorporate the Euroholdings vessel's earnings up to the planned distribution date, which we expect to be March 17. This means we will count the earnings from Euroholdings until then. Although we will have these additional vessels, we will adjust the earnings to reflect the ongoing fleet. Since the percentage we are distributing is quite small, we will not need to revise Euroseas' historical results for this adjustment, unlike what occurred with EuroDry seven years ago. It will be more akin to selling the vessel and then providing dividends. The formal accounting figures will include two of the three vessels until March 17, as well as the capital gain from Diamantis on Euroseas, but we will make some adjustments and provide explanations.

Poe Fratt, Analyst

Okay. The first quarter is expected to be somewhat turbulent. Additionally, in your time charter chart, the fleet profile indicates that the Antwerp does not have any follow-on work after March. I want to confirm that it, too, was awarded a three-year time charter at $35,500, just like the Keelung.

Tasos Aslidis, CFO

Yes, I have the slide from my computer, not from the version on the web, and it indicates a rate of $35,500 until May 2028.

Poe Fratt, Analyst

Okay. Yes, in your press release, it's just over there. But can you just highlight how much you're going to spend on the newbuilds in 2025, 2026, and 2027, if you have those numbers handy?

Tasos Aslidis, CFO

I don't think we have any payments to make in 2025.

Aristides Pittas, CEO

Correct. Correct. So it's nothing on 2025.

Tasos Aslidis, CFO

The next payment we have is scheduled for 2026, and I will provide more details shortly. We need to make a progress installment payment in the fall of 2026, specifically in the third quarter, for one of our vessels, with the remaining payment due in 2027. The same applies for the other vessel as well.

Poe Fratt, Analyst

I'm sorry.

Tasos Aslidis, CFO

There will be $6 million per vessel in 2026, totaling $12 million for both vessels in that year, and the remainder will be paid in 2027.

Poe Fratt, Analyst

Great. Thank you so much.

Operator, Operator

Thank you. Our next questions come from the line of Mark Reichman with Noble Capital Markets. Please proceed with your question.

Mark Reichman, Analyst

Yes, I just wanted to clarify. In the first quarter of 2025, when you report, those two vessels will be included in your earnings until March 17. It won't be calculated based on the drop-down date or January 8. Also, you mentioned some adjustments. What were some of those adjustments?

Aristides Pittas, CEO

I think we will provide the figure without those vessels as well.

Mark Reichman, Analyst

With and without the vessels, okay. Great. All right. That’s very helpful. Thank you very much.

Operator, Operator

Thank you. Our next questions come from the line of Poe Fratt with Alliance Global Partners. Please proceed with your question.

Poe Fratt, Analyst

Sorry, I have two quick questions. First, congratulations on the increased dividend. Second, could you discuss stock buybacks, Tasos? It appears that in the last update from the third quarter to the fourth quarter, you repurchased about 11,000 shares at just under $40. Can you explain the role of stock buybacks in your capital allocation strategy?

Tasos Aslidis, CFO

Aristides, you want to answer that one yourself...

Aristides Pittas, CEO

So, obviously, we've been more involved with all the procedures and the practicalities of getting Euroholdings over the bar, and we're happy that we have reached that point. We will have to wait and see how we trade after the spin-off. But it is always something that we have in mind and we might use. We have also been looking at various investment opportunities because indeed, we have quite a lot of cash. So unless we proceed with an investment opportunity with buying an asset supported by a time charter or whatever. If we feel that our share price doesn't respond as we are hoping it will, we might be using it again, yes.

Tasos Aslidis, CFO

I mean in any event, our shares probably represent the best investment opportunity, and we always have that in the back of our mind when we decide about capital budgeting.

Poe Fratt, Analyst

Great. Thank you so much.

Operator, Operator

I'm not showing any further questions at this time. I'd now like to hand the call back over to Mr. Aristides Pittas for any closing remarks.

Aristides Pittas, CEO

Thank you all for being part of this discussion today. We will be back to you in three months' time to go over Q1 results. Thank you very much. Bye-bye.

Operator, Operator

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.