Good afternoon. This is the conference operator. Welcome, and thank you for joining the d'Amico International Shipping first quarter 2026 results web call. All participants are on listen-only mode, and after the presentation, there will be a Q&A session. At this time, I would like to turn the conference over to Mr. Federico Rosen, CFO. Please go ahead, sir.
Hello. Good afternoon, everybody, and welcome to our earnings call. Jumping as usual to our slide number seven, snapshot of our fleet. At the end of March 2026, we had 29 vessels on the water, of which 27 owned and two bareboat chartered. We actually, as you know, sold one of these ships, and we delivered her to her buyers on the 21st of April. Now the ships on the water are 28. On top of that, we have 10 vessels under construction. Four LR1s we've expected delivery in 2027. Four MRs with expected delivery in 2029, and two Handysize with expected delivery in 2029 as well. Average age of our fleet at the end of the period was 9.8 years.
93% of the fleet was eco-design at the period- end. This percentage rose to 96% after the sale of the High Tide. Moving to the next slide. On the bank debt front, we kept on executing our strategy of gradually repaying some of our most expensive debt and refinancing a portion of that with a new facility at a much lower cost of debt. We've been doing that also in Q1 2026. As you can see, we repaid debt for $32.2 million on two vessels. We drew down new facilities for $42 million on three ships at a considerably lower margin over the U.S. dollar SOFR.
On top of that, our strategy was also based on reducing or eliminating our debt maturing in 2027, which is also a year in which we will get the delivery, as I mentioned before, of four of LR1 vessels. Now, as you can see, we're expecting to be active again on the financing front in the remainder part of 2026, and we'll basically get to 2027 with no debt to mature. Also looking on the right-hand side, you can see as always our daily bank loan repayment on our own vessels, which was historically in 2019 at $6,150 almost a day, and it's now up at $2,049 a day. Here slide nine.
We provide as usual our estimated TC earnings for the second quarter of the year, which has been so far much stronger than what we achieved in the first quarter of 2026. As you can see, we have already fixed 21% of our days at $59,733 a day on the spot market. At the same time, we covered 60% of our Q2 days at $23,560 a day. Overall, as we speak, we're talking about 81% of our total days in Q2 2026 fixed at a blended average TC of over $33,000 a day. We are expecting an extremely profitable quarter at the end of June. Next slide. Estimated fleet evolution.
Considering also the vessel that we recently sold, we expect to have right now an average fleet of 28.3 vessels in 2026, rising with the expected delivery of our 10 new building vessels to 34.7 by 2029. On the right, you see also our potential upside earnings, our sensitivity to the spot market, to the spot rate. As we speak, for every $1,000 a day of a higher spot rate, that would translate in $3 million more on our bottom line. Of course, the figure increases for 2027 and 2028 since our coverage is lower as we speak for those years. Right now, we have a sensitivity of approximately $8 million for 2027 and $11 million for 2028.
On the at the bottom of the slide, interesting graph on the left. Based on everything that we have fixed so far, both in terms of time charter and spot and the spot market, and assuming to run the rest of the year at a breakeven level, we would make a net result at the end of the year of almost $83 million. The same goes for the little we've already fixed for 2027, and the figure would be $16.5 million already. On the right, we also show our sensitivity compared to this figure that I just mentioned. Should we run the remaining three days of 2026 at an average of $20,000 a day, then our net result for the year would be of almost $98 million.
Should we run at $22,500 a day, the net result would rise to $105 million. Should we make $25,000 a day on these, on the remaining three days of the year, our net result would be even higher to $112.5 million. On the cost front, it's always not particularly meaningful to look at the OpEx costs on a quarterly basis. Anyway, we saw a slight increase in Q1 2026 relative to the same period of last year. We had a daily OpEx on our fleet of $8,600 a day. The reason for this small increase relative to the same quarter of 2025 was driven mostly by some higher crew expenses and insurance costs.
On the G&A front, we actually had a total cost of $5.3 million in the first quarter of the year compared to $6 million in Q1 2025. A slight increase of approximately $700,000. Again, here the, the increase, we mentioned this many times, the increase that you that you can see relative to the previous years is obviously due to the higher personnel compensation, which is directly linked to the strong financial performance that this has achieved in recent years. Net financial position. Very strong net financial position at the end of the quarter. We had cash and cash equivalent of $189.6 million. Net financial position of $25.8 million, excluding some small effects still arising from the application of IFRS 16.
Our net financial position was of $23.8 million. That compares to a fleet market value assessed by one of the top shipping brokers globally of $1.2 billion. The ratio between our net financial position and our fleet market value at the end of March 2026 was only 2%. I'd like to remind that this ratio was almost 73% at the end of 2018 when we started executing our deleveraging plan of the last years. Following slide. On the income statement side, we generated in the first three months of the year a net profit of $27.5 million compared to $18.9 million in the same quarter of the previous year.
Very strong EBITDA almost $41 million, which entails an EBITDA margin of 60.5%. Extremely strong. Excluding some small non-recurring items, we achieved an adjusted net profit of $26.8 million in the first quarter of the year compared to $19.2 million in Q1 2025. Key operating measures. We achieved a daily spot rate of $32,164 a day in the first quarter of the year. This figure is actually 90% higher than the last quarter of 2025, which was already the best quarter of 2025, and 53% higher than the first quarter of 2025.
At the same time, we covered 62.2% of our total days of the first three months of the year, an average of $23,000 a day. Our total blended ADTC was $26,500 a day for the first quarter of the year. Passing on to Carlos.
Good afternoon. As usual, we now continue with our CapEx commitments, which in relation to our investment plan comprising 10 vessels, amounts to around $512 million. With outstanding commitments of around $437 million. Most of these outlays planned for 2027 and 2029 coinciding with the deliveries of the vessels. In 2027 we will be receiving four LR1s and then in 2029, two LR1s and four MR2s.
All ordered at first-class Chinese shipyards. In relation to the options on the lease vessels, well, the recent movement in forward interest rates makes it less likely that these options will be exercised this year. Both of them can be exercised at any point in time with three months' notice. We continue monitoring the situation, and when a window opens up for us to exercise them generating value for the company, we will do so.
Here we show the difference between the market value and the exercise price at the exercise date of the options we exercised on the six vessels which were previously time-chartered in. We also showed today the difference, or at the end of March, the difference between their market value and their book value, which is even higher than this difference was at the time of exercise. So far, the exercise of these options has generated substantial value for the company. In terms of contract coverage, we now have a 55% coverage for 2026 at an average rate of $23,400. Slightly higher rate of $23,500 for 2027 with, however, a much lower coverage of 23%.
The fleet is increasingly eco-design, as mentioned by Federico. We only have one non-eco-design vessel in our fleet, which we plan to sell by the end of the year. In terms of freight rates, well, as already highlighted by Federico, the fixtures in Q2 have been extremely strong, reflecting the very strong spot market as seen from the graph on the left-hand side with the yellow line, which depicts MR spot clean earnings, which is at record levels. Of course, the also the short-term TCs, one-year TCs have reached record levels. Asset values have moved also up, older vessels by a higher percentage. New buildings, not that much, but there was also an uptick in new building prices.
Here, while this is the major contributor to these exceptional markets, of course, this is the Iran conflict is being layered upon other geopolitical factors which were already supporting the market as well as strong underlying fundamentals for the sector. It added more fuel to this rally. You see refining margins which at very high levels, especially for certain products like the jet fuel and diesel. Creating arbitrage opportunities that are not always open on all routes. They open and close, they are there. This is creating quite a lot of volatility also on rates in on spot rates in different regions.
As the conflict started, we saw a very strong market West of Suez and much weaker market East of Suez. Vessels then moved West t oday. Th ere's not that much difference between the average rates that can be achieved in both basins. The disruption because of the war is very significant. There were around 20 million barrels per day transiting the Strait last year on average of oil, crude and refined products. The beginning of the first two months of this year, the figure was even slightly higher, around 21. During the conflict, there were moments where there was quite a lot of volatility in the amount of oil that transited. There were some brief moments where more vessels were able to transit.
On average, just under 2 million barrels per day were able to transit through Hormuz during the period. 4 million barrels per day were redirected with pipelines to Yanbu or to Fujairah or Ceyhan, therefore creating a net disruption of around 14 million barrels per day of lost flows. This was then compensated partly by releases by the EIA of the announced release of 500 million barrels, which however is being injected into the market at a rhythm of around 2 million barrels per day.
Also, by a drop in demand, of course, which is starting to become quite pronounced and is linked both to the high prices affecting demand for the more, for the products where there is a bit more elasticity of price elasticity of demand. Generally they are quite inelastic. Also, measures taken by certain governments, in particular in Asia, to reduce consumption. Of course, the delta is being met through reduction in stocks, which were quite abundant, in particular in certain countries before the conflict started. This, as we will see later, has helped the market so far, but it is dangerous.
As the stocks start reaching critical levels, there is a risk that oil prices could rise much faster than what we have seen so far, and that economic activity could be much more severely impacted than what we have seen so far. I like to highlight that, I mean, from our perspective, the reopening of the Strait would be a positive because we are more concerned about the closure of the Strait for too long because of the negative associated economic consequences. The reopening instead should create some pent-up demand for our vessels, at least in the beginning, to rebuild stocks which were depleted during the conflict at a very rapid pace.
These are factors which have supported the market throughout last year and which explain the strengthening market that we saw throughout last year and beginning of this year before the conflict started. There was a lot of oil being pushed into the market, but also a lot of inefficiencies because of the tougher sanctions that were being imposed on vessels trading Russian and Iranian and Venezuelan barrels. And therefore, we saw this sharp increase in sanctioned oil on water last year. And a huge increase in the number of vessels sanctioned, which reached over 1,000 vessels, representing 19% of the overall tanker fleet in deadweight terms. We are now starting to see this unwinding.
We see that sanctioned oil on water has been falling also because there were temporary waivers provided for this sanctioned oil to be discharged because of the war in Iran. Initially these waivers were provided to Russian oil, also to Iranian oil. The Red Sea disruptions was very supportive in the first nine months of 2024. As mentioned, this became actually a headwind for the market afterwards because the higher costs of the longer routes through Cape of Good Hope meant that products were traded more regionally and ton-miles actually declined thereafter because of this disruption. Venezuela, this is a positive for the market.
This oil used to be transported on sanctioned vessels. Now it is being transported on compliant vessels. It is very beneficial in particular for the Aframax sector, which are the most suited type of vessels to transport these cargoes out of Venezuela. Indirectly it benefits also the product tankers transporting CPP through the well-known transmission mechanism that we will see later, whereby we have seen a lot of LR2s transiting into dirty trades. Here, this is the forecast that we by the U.S. Energy Information Administration of the production of Venezuela for 26.1 million barrels per day.
Actually, I've seen a report recently where it indicates that their production has already reached 1.2 million barrels per day, so surpassing these estimates. The returning to the production levels of the late 1990s will take time, most likely, but this initial ramp-up was faster than anticipated. Russia's refined product exports continue declining, although staying at quite high levels, both as a result of the tougher sanctions that were imposed and a larger number of sanctioned vessels, but also as a result of attacks by the Ukrainians with drones to export facilities, Russian export facilities. It creates usually not very significant damage, but it does hamper their ability to export products.
We have seen these attacks occurring on a quite frequent basis, and it's creating a further obstacle to Russian exports. These are the estimates of the EIA in terms of demand and throughputs, refinery throughputs. Sharp drop in demand as could be expected in Q2, and a very sharp drop in refined volumes in particular in April, with a recovery thereafter. Of course, it's very difficult to make such forecasts in this environment. A lot will depend on how the conflict with Iran evolves in the coming weeks. In terms of oil supply, very difficult to make forecasts. I mean, this was a market which was very well-supplied.
It was expected to move into contango during the course of this year, and now we are faced with the opposite situation with a very undersupplied market as just mentioned. Inventories were at good levels before the war started, and we are already seeing this drawdown here in the floating oil and total oil at sea, which has been declining over the last two months at quite a fast clip. Here we see this previously mentioned transmission mechanism between the dirty and clean markets with an increasing number of LR2s trading dirty as depicted by the yellow line on the graph on the left and the rapidly declining number of LR2s trading clean.
Despite the quite fast deliveries of LR2s last year and in the beginning of this year. This is because, of course, of the very strong markets, the dirty markets, the Aframax rates, which are still at very high levels. In terms of refinery landscape, there's not much new here. There were important closures of refineries in the Americas and in Europe over the last few years. With new refinery capacity coming online in China, the Middle East, and other Asian countries, in particular in India. This increase in ton-miles as Europe and the Americas have to import more from these more distant locations.
The fleet on the supply side continues aging rapidly, and the order book on the MR and LR1 sectors, which are those we operate in after peaking at the end of 2024 had started declining. Despite there being, you know, orders continuing to come in, but at a lower rate and at a lower rate that relative to the delivery of new vessels. At the end of March, this order book had declined to 13.5% relative to almost 21% of this fleet, which it has already more than 20 years of age. Important to note that by the end of 2027, the portion of the fleet, which is more than 20 years of age, will have risen to almost 25%.
A very sharp increase, which bodes well for the market also next year. This is not surprising, this percentage, which is rising, of the fleet, which is crossing the 20-year threshold, because it is aligned with the graph at the bottom where we show the vessels reaching 25 years of age. The vessels which will reach 20 years of age in 2027 are those that will be reaching 25 years of age in 2032. We see here by this graph that this represents 7.7% of the fleet, around 10 million deadweight tons. A very big number and portion of the fleet, reaching 20 years of age already next year and starting to trade on more marginal trades.
The picture is not as favorable if we look at across all tankers, including also crude tankers, because there has been quite a lot of orders coming in for crude tankers over the last few months. Here the order book rose to 20% and is now pretty much aligned with the portion of the fleet which has more than 20 years of age. We can have a strong product tanker market even without a strong crude tanker market, but the opposite is not true. I mean, a strong crude tanker market will eventually generate strong product tanker market. That is because the crude tanker market is much bigger than the product tanker market.
As you see here, looking at the left- hand axis that when we include also the crude tankers, that the fleet size is much, much bigger than if we look only at product tankers. We look here at the deliveries which have been accelerated. The positive thing to highlight here is that most of the deliveries, the quarter with the largest number of vessels to be delivered was Q1, and that is already behind us, and we are still in an extremely strong market despite this quite large number of vessels, I would say, delivered in Q1. If you said look at deliveries in the coming quarters, they're actually not too dissimilar from what we saw in the last two quarters of the last year.
In particular, if you look at Q4 2026, there are 75 tankers being delivered, relative to 71 in Q4 2025. Very similar number of vessels. Here you look at the vessels that were ordered in the first four months of this year, 28, which analysts puts it pretty much on par with the just over 80 vessels ordered in 2025. Which is quite a low number compared to the over 200 vessels ordered in 2025 and over 115 2023. And also, and especially relative to the over 200 vessels, for example, ordered in 2013 when the fleet was much smaller.
These 225 vessels ordered in 2013 represented a much bigger portion of the fleet than, for example, the 200 vessels ordered in 2014. The supply fleet growth, even in 2026 across all tankers, is actually less than 1%. This is supportive for the market this year, and will be supportive also next year because next year there are even more vessels turning 20 years of age. Our NAV has been rising. NAV per share at the end of March was at around $10. Our discount at the end of the quarter was of 14%. Today it's even lower than that, bit below 10%.
Of course, this relative to the 31st of March NAV, but this is a moving target. We know, for example, that some of our vessels that were valued at the 31st of March at a certain level, today would be valued more because there were some transactions that happened afterwards for vessels which are very similar at higher levels than the valuations we received from the broker at the 31st of March. Not much higher, but still higher. Of course, we also generated a lot of cash in April this year. Finally here, in terms of our payout ratio, it has been rising throughout the last few years in quite a regular fashion. With this 55% payout ratio out of the 2025 net results.
Which is the highest payout ratio we have had. Of course, the balance sheet also, which strengthened significantly as previously mentioned by Federico. That's it, and we pass it over to the Q&A. Thank you.
Thank you. We will now begin the question- and- answer session. To enter the queue for questions, please click on the Q&A icon on the left side of your screen. When announced, please click continue on the pop-up window. If you are connected in audio-only, please press star and one on your telephone. The first question is from Massimo Bonisoli of Equita. Please go ahead.
Hello, Carlos and Federico. I have two questions. One on the Strait of Hormuz reopening. Could you elaborate on the minimum safety and operational conditions required for the d'Amico to resume transit through the Strait of Hormuz? In the sense that there are plenty of situation to be cleared and we still don't know when the Strait will open for commercial traffic. The second question is on the spot rate evolution. Referring to your slide 9 of the presentation. Spot fixture in April were running close to $60,000 per day. Could you provide some color on the trends seen so far in May and on the current environment?
Based on the latest contract, concluded or under negotiation, do you expect the average realized spot rate in Q2 to remain around these levels, improve further, or maybe normalize somewhat versus April peaks? Thank you.
Thank you, Massimo. Two good questions. In terms of the transit through Hormuz, we are not going to be the first one venturing in that. I mean, we have to make sure that, you know, our main priority will be the safety of our crew. An assessment will have to be made that the passage is safe. Of course, we will need to be able to insure the risk which will be reimbursed to us by the charterer. There are, in situations like this, also exclusions to the policy which can mean that you are still exposed to quite a lot of risk. We will assess this very carefully. There's also the risk of mines still.
There has been some de-mining happening, but we don't know to what extent this has been, this has progressed and it's near to completion. We will take a prudent approach in that respect and try to employ our vessels in other regions initially. One port which we could consider calling initially could be the port of Duqm, which is close but outside the Strait of Hormuz, for example, and which is also where there's also an important refinery which exports significant amounts. That could be something we could consider, but we would be very prudent in that respect.
In terms of the rates achieved, the almost $60,000 that we have shown for Q2 so far includes also some fixtures that run into May. The latest fixtures, I would say are at slightly lower levels than that on average. They are still at very good levels. I mean, today the spot market is still above $30,000 in both basins in both East and West. There was more of a correction West recently, but I believe it is a temporary correction. This market in the U.S. Gulf has always been very volatile. For example, the arbitrage for exporting naphtha out of the U.S. Gulf closed momentarily a few weeks ago.
It had, as we had shown in the presentation when we approved our year-end results, it had risen to record highs. Thereafter, it collapsed to levels which were lower than those we had before the conflict started. Now it's starting to move up again. Analysts believe that it could in the coming weeks rise further and possibly return to those very high levels we saw because there's going to be an important need to import petrochemicals into Asia if Hormuz doesn't and open up in an important way soon. Very hard to forecast what will happen.
Of course, if there is a reopening, then we expect a surge in freight rates East of Suez, because we will be seeing more exports out of Hormuz or transiting Hormuz. Not only, I think, also China will then of course be exporting much more. China initially after the conflict started stopped exports of refined products. As a result, its stocks rose and are very abundant right now. It recently declared that it will already, even without the Hormuz reopening, start exporting again in a more limited way to certain countries. It's more of a political move also to support some friendly countries which are suffering in this moment.
That in itself already should help the market in the North Asia region in the coming weeks. With a reopening of Hormuz, we should see a normalization of Chinese exports, so even bigger volumes coming to market. As well as, of course, a lot of volumes coming out of Hormuz. Potentially, you know, if the reopening, if the passage of the Strait is deemed safe by all, very large flows coming out of Hormuz because tank storage in that area is full. They have a very strong incentive to push out product very fast out of that, out of that region. We don't have a lot of vessels there because we have all these vessels that moved into the Atlantic Basin.
We expect that basin to strengthen a lot. Again, this dislocation, which on a net basis will be positive for the market. The markets should come down in the U.S. Gulf, but net-net I think it will be positive for the market. I'm quite positive, but it's very difficult to make forecasts in this moment. I think that's it in terms of circulation.
If I may squeeze in another question, Carlos, just to understand how your fleet is positioned between East and West of Hormuz right now.
We try to keep it tight because it's very difficult to read and to make calls. We are trying to keep quite a balanced allocation of the fleet. Few vessels in the Americas, some trading West Africa, a similar number in Asia, trading out of mostly Southeast Asia and in North Asia, out of Korea and out of Singapore. We have done some Australia runs recently. There was an increase in demand into Australia of refined products. There was a fire in an important refinery in Australia, there's also a seasonal uptick in demand now before the winter season there, which was also associated with an additional demand because of this fire in this refinery there.
I mean, whatever happens, we should do quite well.
Very clear. Thank you very much.
The next question is from Climent Molins, Value Investor's Edge. Mr. Molins, please go ahead. Your line is open. Please click continue. I think you are on mute. The next question is from Matteo Bonizzoni, Kepler Cheuvreux.
Thank you. Good afternoon. I have a quick question with regard to your capital allocation flexibility, let's say. I would like to know if the current market environment, which is probably about what you had, what everybody had in mind, in terms of rates, and profitability and cash flow, could have a implication on your dividend policy or buyback, or also on the feasibility to further expand the fleet after the recent, I mean, decision which you have communicated on the new buildings. I mean, you have clearly more room to go potentially. I would like to know what are your current thoughts as regards future capital allocation choices. Thanks.
Thank you, Matteo. Look, I think that at this moment, there isn't the very strong markets should not affect our policies in this respect. We will, of course, look very carefully when we are closer to the end of the year, you know, what could be the dividend policy out of the 2026 results. If the market is as strong as it looks it will be this year, then it is likely that we will be able to confirm a similar payout ratio that than we had in 2025.
Also in terms of buyback, you know, we will only do it very opportunistically if we see, you know, some very substantial unjustified weakness on the share price. Fleet-wise, we don't expect to make other investments at this stage. We are quite happy with the 10 vessels we have ordered. If opportunities were to arise, more because of an unexpected correction, which creates an attractive entry point, then we might decide to take advantage of that. With the 10 vessels we have ordered today, we have 28 vessels on the water. That represents quite a big percentage of our fleet. Over $500 million in investments. We don't feel we need to do more.
You know, we will look at opportunities if they arise.
Clear. Thank you.
The next question is from Climent Molins, Value Investor's Edge.
Hi. Good afternoon, and thank you for taking my questions. Sorry for the technical problems before. Most has already been covered, but has the recent increase in asset prices changed your view on potentially exercising the purchase options on the High Fidelity and the High Discovery before than previously expected?
Yeah. The decision is more linked to the interest rate environment from our perspective, because these are fixed rates, financing transactions, which were done at the time where interest rates were very low. Of course, the implicit margin in these deals is high relative to what we can achieve today. The swap, implicit swap rate is instead very low. The all-in cost of financing on these deals is actually quite competitive still today. We would need interest rates to move down more the forward interest rate curve to make the exercise of these options attractive.
Otherwise, for us, it is probably more convenient to reimburse some floating rate debt that we have, which is costing us more than than these facilities here. That is our thinking today. I mean, of course, we have the necessary liquidity to exercise these options, but there are also other things we can do with the liquidity that is potentially more attractive for us. We will only exercise them if we see this decreasing for the forward rates.
Makes sense. Thanks for that cover. I'll turn it over.
Thank you for the question, Climent.
Gentlemen, there are no more questions registered at this time.
Thank you. Thank you everyone for participating in our call today, and look forward to seeing you soon when we approve our Q2 results. Good afternoon. Thank you.
Thank you. Bye-bye.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your devices. Thank you.