Earnings Call: Q2 2021

Aug 5, 2021

Thank you for standing by, ladies and gentlemen, and welcome to the EuroDry Conference Call on the Second Quarter 2021 Financial Results. We have with us today Mr. Aristides Pittas, Chairman and Chief Executive Officer and Mr. Tasos Aslidis, Chief Financial Officer of the company. At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session. I must advise you that this conference is being recorded today. Please be reminded that the company announced its results with a press release that has been publicly distributed. Before passing the floor to Mr. Pittas, I would like to remind everyone that in today's presentation and conference call, EuroDry will be making forward looking statements. These statements are within the meaning of the federal securities laws. Matters discussed may be forward looking statements, which are based on current management expectations that involve risks and uncertainties that may result in such expectations not being realized. I kindly draw your attention to Slide 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. I would now like to pass the floor over to Mr. Pittas. Thank you, sir. Please go ahead. Good morning, ladies and gentlemen, and thank you all for joining us today for our scheduled conference call. Together with me is Tasos Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the 6 month period and quarter ended June 30, 2021. Please turn to Slide 3. Our income statement highlights are shown here. For the Q2 of 2021, we reported total net revenues of RMB 14,100,000 and a net income of RMB 2,200,000 Adjusted net income attributable to the common shareholders was $6,600,000 or $2.76 per share diluted. The main difference between net income and adjusted net income was the paper loss of about $3,000,000 on our FFAs covering 1 vessel for Q3 and Q4 at $12,550 per day. Having taken this loss in Q2, our net income for Q3 and Q4 will not be affected by the low rate of that FSA. Adjusted EBITDA for the quarter stood at $9,200,000 Our CFO, Tasos Aslidis, will go over our financial highlights in more detail later on in the presentation. Please turn to Slide 4 for our operational highlights. Motor vessel from Belize was fixed for a trip of about 90 days to 130 days at $23,000 per day and if the trip extends further, the vessel will earn 95% of the BPI. The blessed lag was fixed for 11 to 13 months at $19,500 per day. And lastly, the Alexandros P was fixed for a trip of about 65 days at $25,250 per day. During the Q2, the company settled 90 days of previously sold forward straight agreements, the equivalent of 1 Panamax vessel, which was originally sold at the rate of $12,500 per day with the loss of $590,000 Simultaneously, we had also sold FSAs for 90 days per quarter for Q3 and Q4 of 2021, the equivalent of 1 Panamax vessel at $12,550 per day. For the valuation of Q3 and Q4 outstanding FFA contracts as of the end of June 2021 was negative $4,260,000 as mentioned previously, dollars 3,100,000 of the loss incurred in this quarter. As previously announced, in May 2021, the company acquired motor vessel Blessed Lark, a 76,000 deadweight drybulk vessel built in 2004 in Japan for $12,100,000 As of the time, compared cash in hand was limited. The acquisition was initially partly financed by a short term seller's credit of $5,000,000 and a 1 year bridge loan of $6,000,000 provided by an entity affiliated with my family and approved by the independent members of our Board. Both the seller's credit and the short term loan earned an annual interest rate of 8%. In July 2021, the company repaid the seller's credit and signed a term sheet with the bank to draw a loan of $8,000,000 with motor vessel blessed Lark as collateral, which is expected to be drawn in August. In addition, as disclosed in June 2021, an amount of $3,300,000 of the bridge loan was converted into common stock as per the terms of the loan, leaving just $2,700,000 outstanding. There were no dry dockings or major repairs during the Q2 of 2021. Please turn to Slide 5 for a summary of EuroDry's current fleet. As you can see, the acquisition of the blessed LAC increased our fleet to 8 units and further complemented our cluster of medium aged Japanese built Panamax sized vessels alongside our cluster of own built new buildings. Our current fleet has an average age of 13 years and the cargo carrying capacity of about 600,000 deadweight tons. Slide 6 shows the current vessel employment schedule. As you can see, the effective coverage for the remainder of 2021, including the blessed LAC stands at about 27% in terms of minimum fixed rate contracts. If we include the vessel that is hedged through FFA, our coverage increases to 40%. This figure, of course, excludes ships on index charters that have secured employment, but are open to market movements. We are pleased with our current positioning of forward coverage as we remain optimistic about the development of the market. Tasos will present our EBITDA calculator later on showing how strongly current FSA market predictions can boost our EBITDA and consequently earnings as well. This calculator will enable each one of you to easily use your own charter rate assumptions to determine our approximate expected EBITDA and draw your own conclusions as to what levels our stocks will be trading at. Now let's turn to Slide 7, where we'll go over the market highlights for the quarter ended in June 30, 2021. During Q2, drybulk index continued its strong performance as rates remained firm supported by demand growth, sharp rise in drybulk commodity prices and operational bottlenecks. Similarly, 1 year DC rates remains robust. As seen here, the spot rates for Panamaxes averaged $23,200 a day in the Q2 and by July 30, we had increased to around 27,200 dollars per day after peaking at the end of June at around $30,400 Meanwhile, 1 year time charter rates for Panamax is average at close to $21,700 per day in Q2, reaching $26,900 by the last day of the quarter. Last week, 1 year time charter rates were at around 20 $4,000 per day. As the drybulk freight market has been trading strongly and reaching the high levels not seen in the past decade, vessel prices have also trended upwards. According to Clarksons, 2nd hand bulk carrier ship prices have had a sharp increase of 45%, while newbuilding prices increased around 20% to more than $32,500,000 $30,000,000 respectively for Kamsarmax and Ultramax vessels. During the first half of the year, the fleet has grown by 2 percent. Hello again and sorry for the interruption. The line dropped off, but I will continue. We are at Slide 9. So the global recovery continues at a solid pace, but now variance of COVID-nineteen may extend the uncertainty. The latest forecasts indicate a downward revision in the Asian developing economies and then increase for advanced economies, reflecting the diverse economic prospects across countries. On the one hand, we have the developed countries with improved health metrics and additional fiscal support that have access to vaccines and can look forward to more normalized economic activities, while developing countries are still lagging behind with a worsening pandemic dynamic and tighter financial conditions that may set back the recovery. According to the IMF, the global economy is projected to grow 6% in 2021 and 4.9% in 2022. The 2021 global forecast is unchanged from the April forecast, but without setting revisions. Prospects for emerging market and developing economies have been marked down for 2021, especially for emerging Asia. By contrast, the forecast for advanced economies is revised up. The revisions reflect pandemic developments and changes in policy support. Looking ahead, global growth for 2022 was upgraded by 0.5% deriving largely from the forecast upgrade for advanced economies, particularly the United States, which is expected to grow by 4.9%. China and India are expected to grow at the still very reasonable 5.7% 8.5% respectively. For 2023, global growth is expected to be around 3.5%, a healthy level too. Looking at the drybulk trade growth and based on Clarkson's projections for 2021, we see that the demand growth expectations continue their upward trajectory to 4.3% for this year. For 20222023, the expected drybulk trade to grow at the moderate pace of 2.2% and 2.5% respectively, which I personally think is very conservative if global growth as expected by the IMF and other major institutions remains at elevated levels. Please turn to Slide 10. The order book as a percentage of total fleet up until July 2021 stands at 6.1%. This is still around the lowest levels we've seen in the last 25 plus years. With the current order book and continuing demand trends for the coming years, we expect a fundamentally supported and continuous rebound in the drybulk market for the next couple of years at least. Please turn to Slide 11 for our drybulk fleet overview. According to Clarksons, fleet growth in 2021 will be around 3.8 percent. Taking into account scrapping and other fleet changes, we come to this 3.8%. This is less than the demand growth and supporting the case for a still strengthening market, which is further enhanced due to the logistical bottlenecks we are experiencing. The order book is currently around 6 0.1%, which could imply that through scrapping and slippers, we could see a minimum fleet growth in 20222023. For 2024, new vessels will have to be ordered at some point as otherwise we could see rates and prices surpassing even the previous super cycling rates if demand holds up. Please turn to Slide 12, where we summarize our outlook on the drybulk market. Global recovery continues at a solid pace. Despite the new variants of COVID-nineteen emerging, which may delay but will likely not stop economic growth. Furthermore, several infrastructure projects have been announced, but haven't yet been implemented. The drybulk market has a strong trajectory on the back of highly supportive conditions in the commodity markets having reached 11 year highs in mid June 2021. While earnings could hold firm or reach back from current heights because of the logistical issues, the short and medium term outlook look positive, especially as the order book remains the lowest ever. Moreover, deliveries of new ships in 20222023 are expected to be minimal due to lack of available slots in shipyards. In addition, the lack of clarity for the fuel of the future as not knowing the optimal ship or even 5 years out makes the placing of any new order an uncertain proposition. Overall, a steady recovery in drybulk volumes alongside limited supply growth and positive global economic sentiment should translate to further improvements into 2022 and likely beyond. However, market conditions could remain volatile as a number of risks remain around the eventual costs of the COVID pandemic and also about the COVID rate. Let's turn to Slide 13. The left side of the slide shows the evolution of 1 year time charter rates of Panamax drybulk vessels since 2000. Last July 30th, the 1 year time charter rate for Panamax with capacity of 75,000 tons deadweight tons stood at around $24,000 per day, the highest it has been during the last years and approaching the levels last seen in 2010. The drybulk market has been on a firm footing since the beginning of the year and we expect this trend to extend in the upcoming quarters, which are cyclically stronger than the first half of the year. As you can see on the right hand side of the slide, the current price of the 10 year old Panamax vessel is around $22,000,000 Over the past year, drybulk prices have gradually been increasing, exceeding the historical median and average levels, but still significantly lower than prices seen in 2010. With a continued strengthening freight rate environment, we would expect to see asset values increase even further. In this environment, we are, of course, capitalizing on the strong market by hosting significant payments, refilling our cash coffers and generally strengthening our balance sheet. As free liquidity increases significantly from next quarter onwards, we are evaluating how best to use it for the benefit of our shareholders. This can be in the form of debt and preferred equity reduction, further vessel purchases, share buybacks, the institutional of dividends, almost probably a combination of some of the above. We also continue to evaluate opportunities for possible combinations with other fleets, focusing especially on using our status as a public company, which can provide significant advantages and value. Let me now pass the floor over to our CFO, Tasos Aslidis, to go over our various financial highlights in more detail. Thank you very much, Aristides. Good morning from me as well, ladies and gentlemen. I will now take you through our financial highlights for the Q2 and first half of twenty twenty one and compared to the same periods of last year. For that, let's turn to Slide 15. For the Q2 of 2021, the company reported total net revenues of $14,100,000 representing a 2 51% increase over total net revenues of $4,000,000 during the Q2 of 2020, and this was the result of the higher time charter rates our vessels earned during the period and the additional vessel we acquired in the middle of Q2 of this year. The company also reported net income for the period of $2,200,000 and net income attributable to common shareholders of $1,900,000 as compared to a net loss attributable to common shareholders of $3,800,000 $4,200,000 respectively for the same period of 2020. Interest and other financing costs for the Q2 of 2021 amounted to $500,000 compared to about $6,000,000 for the same period of last year. Depreciation expenses for the Q2 of 2021 amounted to $1,800,000 as compared to $1,600,000 for the Q2 of last year. And again, this increase is due to the higher number of assets we owned during the Q2 of 2021. Adjusted EBITDA for the Q2 of 2021 was $9,200,000 compared to a negative EBITDA level of minus $1,300,000 reported during the same period of last year. Basic and diluted earnings per share attributable to common shareholders for the Q2 of 2021 was $0.83 basic and $0.81 diluted compared to basic and diluted loss per share of $1.86 for the Q2 of 2020. Excluding the effect on the income attributable to common shareholders for the quarter of the unrealized loss on derivatives and the loss on debt extinguishment, the adjusted net income attributable to common shareholders was $6,600,000 compared to a loss of $3,900,000 for the Q2 of last year and the adjusted earnings per share attributable to common shareholders for the quarter ended June 30, 2021 were $2.81 basic and $2.76 diluted for this year compared to an adjusted loss per share of $1.73 basic and diluted for the same period of 2020. Usually, security analysts do not include the above items in their published estimates of earnings per share. Now, if we look at the numbers for the first half of twenty twenty one, for that period, the company reported total net revenues of $22,700,000 representing 150% increase over total net revenues of $9,100,000 during the first half of last year, which again was the result of both the higher time charter rates our vessels earned and the additional vessel we acquired and operated for part of the period. The company reported net income for the period of $3,100,000 and net income attributable to common shareholders of $2,400,000 dollars as compared to a net loss of $6,100,000 and net loss attributable to common shareholders of $6,900,000 dollars for the first half of twenty twenty. Interest and other financing costs for the first half of twenty twenty one amounted to $1,100,000 compared to $1,200,000 for the same period of last year. Depreciation expenses for the first half of 2021 were $3,400,000 compared to $3,300,000 for 2020, again a bit higher due to the additional vessel we own. Adjusted EBITDA for the first half of twenty twenty one was $13,200,000 compared to a negative $1,000,000 reported during the first half of twenty twenty. Basic and diluted earnings per share attributable to common shareholders for the first half of twenty twenty one were $1.03 and $1.01 respectively, compared to basic and diluted loss per share of $3.03 for the first half of twenty twenty. Excluding the effect on the earnings attributable to common shareholders for the first half of this year of the unrealized loss of derivatives and the loss on debt extinguishment, the adjusted net income attributable to common shareholders was $7,900,000 compared to a loss of $6,200,000 during the first half of last year and the adjusted earnings per share attributable to common shareholders for the first half of this year were $3.40 basic and $3.33 diluted compared to a loss of $2.76 per share basically diluted for the same period, the first half of twenty twenty. As I mentioned earlier, security analysts typically do not include these adjustments in their published estimates of earnings per share. Let's now turn to Slide 16 to review our fleet performance. We will start our review by looking first at our fleet utilization rates for the Q2 of 2021 and compare it to the same period of last year. As usual, our utilization rate is broken down into commercial and operational. During the Q2 of both 2021 and 2020, our commercial utilization rate was 100%. Our operational utilization rate for the Q2 of this year was 99.4% compared to 99.9% for the same period of 2020. On average, we operated 7.37 vessels during the Q2 of 2021, earning an average time charter equivalent rate of $22,614 per day, a daily earnings rate that is 3 times higher when compared to the average earnings of $7,297 per day of 7 vessels earned during the Q2 of last year. Our total daily vessel operating expenses, including management fees, general and administrative expenses, but excluding dry docking costs, average about $6,467 per vessel per day during the Q2 of 2021 compared to $6,131 per vessel per day for the Q2 of 2020. If we move further down in this table, we can see the cash flow breakeven rate that we had during the Q2 of this year, which takes into account dry docking expenses, cash interest expense, loan repayments and our preferred dividend payments if paid in cash. Thus, for the Q2 of 2021, our daily cash flow breakeven rate was about $10,313 per vessel per day compared to $11,800 per vessel per day for the same period of 2020, mainly because of lower drydocking expenses incurred. Let's now review our utilization rate and the remaining of the figures for the first half of this year. During the first half of twenty twenty one, our commercial utilization rate was 100% and the operational utilization rate was 99.7% compared to 100% commercial and operational utilization rate for the same period of last year. On average, in 2021, the first half of the year, we operated 7.18 vessels, earning an average time charter equivalent rate of $18,879 per day compared to 7 vessels that we operated last year earning $7,390 per day as an average. Our total daily operating expenses, again, including management fees, G and A, but excluding the higher unit costs for the 6 month period of this year the 1st 6 months of this year amounted to $6,518 per vessel per day compared to $6,093 per vessel per day for the first half of twenty twenty. We look again at the bottom of this table to see our cash flow breakeven level, which for the 1st 6 months of this year amounted to $10,688 per vessel per day and compared to $11,489 for the same period the first half of last year. Let's now move to Slide 17. This is a relatively new slide. We started using it in the previous earnings presentation and we included it here to provide our shareholders and investors a tool to assess the earning potential of our fleet for the rest of 2021. The table shown in this slide has 2 components. The first refers to our fixed trade contracts. It is not worthy that except for the charter of our vessel blessed luck, our vessels having fixed rate contracts are totaling about 114 days during the Q3 and about 8 days in the Q4 of and above the charter of Les Plaque. We consider this for 2 issues as the market is performing very well and producing and being expected to produce significant earnings for us. The rest of our vessels are employed in contracts linked to the relevant to their size Baltic Dry Index. Our calculator here, indicatively shows the Supramax and Panamax Baltic forward rates as of August 30, 2021 and also shows how these index levels get translated to rates for our ships. We actually display the final blended trade for the open days of our fleet, which you can see right below the Supramax and Panamax forward rates in the table and which as you can see turns out to be very similar to the index levels. Based on these assumptions and by further assuming for simplicity $65,100 per vessel per day operating expenses and G and A costs and a 5% commission rate, one can estimate the EBITDA contribution from our fleet. The final result is additionally adjusted for the FFA contract of 90 days per quarter for the rest of the year that we have entered. This reflects a Panamax vessel equivalent. This overall presentation is meant to provide, as I mentioned, a tool to calculate our EBITDA for the remaining quarters of 2021. Obviously, one can under his or her own assumptions about the rates to do that. However, it is hard not to observe that if the market rates for the rest of the year as they are currently indicated by the FSA contracts materialize, our quarterly EBITDA will exceed what we reported in the Q2 by about 50% and result in the EBITDA contribution from the second half of twenty twenty one to be about double of that of the first half. Let's now move to Slide 18 to review our debt repayment profile. On the top part of the slide, we see our loan repayments as well as our balloon payments of our bank debt as of June 30, 2021. The graph on the top does not include the seller's credit and the bridge loan for the acquisition of Blessed Lac that Aristides mentioned, but does include a bank loan we agreed to and plan to draw this month to finance the vessel. All in all, as of June 30, 2021, we had an outstanding debt of about $62,000,000 and that figure includes the seller's credit and the remaining bridge loan. As you can see from the graph, we're going to make about $4,200,000 of debt repayments during the remainder of 2021, and we have an $8,000,000 balloon payment at the end of the year, which is collateralized by 3 of our Panamax vessels. This balloon payment in 2021 is well below the scrap price of the vessels collateralizing it and we anticipate that we have no issues refinancing it, in fact, when we are in the process of doing so. Again, from this chart, we can see that we have a declining level of loan repayments over the next 4 years, of course, assuming that the balloon payments are made as shown, with another balloon payment coming due in 2023 of about $11,300,000 which is collateralized by our 2018 Kamsarmax vessel. Of course, when these balloon payments are refinanced, the revised loan profile will reflect that. I would like to make also a quick note here on the cost of funding. The average margin of our debt, as you can see from the comment on the right part of the slide, is about 3.3%. Assuming a LIBOR rate of about 0.3% on the top of it, the cost of our senior debt is estimated to be around 3.6%. If we include in this figure the cost of the preferred equity, the average blended cost of our non equity funding would be around 4.4% as of the end of the last quarter. Regarding our preferred equity, I would like to highlight that following the $3,000,000 net redemption that we made in the Q1 of this year, we have agreed to reduce the dividend rate on the preferred equity to 8% per annum if paid in cash until January 2023. At the bottom of this slide, you can see also a projection of our cash flow breakeven level over the following 12 months and the breakdown of it, which is expected to be around $11,231 per vessel per day. Let me now move to the next slide, Slide 19, where we can see some highlights from our balance sheet. This slide gives you a snapshot of our assets and liabilities in a simplified way. On our asset side, first, we can see that we have cash and other assets as of June 30, 2021 of about $19,900,000 Of course, on our asset side, we also have our vessels, the book value of which amounts to about $108,000,000 dollars making our total book value of about 127,900,000 dollars On the liability side, our debt as of the end of the last quarter stood a dimension at $62,000,000 which approximately represents 48% of the book value of our assets. Our preferred equities stood at about $13,600,000 which represents another 10.7% of our assets, and we have remaining liabilities of about $8,400,000 or 6.6 percent of our book assets. That leaves us with a net book value of $44,600,000 which translates to $16.9 per share. However, the market value of our fleet is significantly higher than its book value and we need to make such an adjustment to get a better estimate of the value of the company. We estimate that as of the end of June 2021, the market value of the 8 vessels we currently own to be in the range of $140,000,000 to 1 $45,000,000 that is 30% to 35% higher than the book value, resulting in an estimate for our net asset value per share of about $29 at least. And although our share price has recently increased, our stock currently trades below that level and we believe our company investing in our company represents an opportunity with significant appreciation potential. And with that, I would like to turn the floor back to Aristides. Thank you, Tasha. Let me now open up the floor for any questions you may have. Thank you very much, sir. Our first question for today is from Tate Sullivan from Maxim Group. Please go ahead. Hi, thank you. First from me reviewing one of your comments on the newbuild market, Aristides, I think it was on Slide 11 that you're what did you say about 2023? I think you mentioned that an urgent need to start building new vessels by 2023 based on that chart, but then those new vessels want to enter the market for at least a couple of years? Or can you review the timing of that comment, please? Yes. So, Tate, I think that because the current order book for 2022 and 2023 is very low, if demand stays strong, remains quite strong, we will have a shortage of ships. So at some point, we have to start ordering new vessels that will come in, in 2024 onwards because we will have a lack of ships. So I think this we will see more vessels being ordered during the next 18 months. Okay. But not a but the impact on the near term rates has not appeared yet or at least has that started to appear in what you're seeing in the FFAs available for 2022? Yes. That is gradually increasing and not fast enough. I think it will probably increase faster, but of course, it will depend on other things as well, the pandemic and the logistical issues that we may be facing because of that and the global growth rate. So it's very difficult to project the future. What is relatively easy to see is that the order book for 20222020 3 deliveries is extremely low. Yes. And then thank you for putting in the EBITDA calculator slide again with about $40,000,000 of EBITDA in 2021. I was just interested in rolling forward to 2022. I mean, is the FFA market liquid enough for you to start locking in rates besides the ships you have on fixed contracts going in 2022 or still early to talk about the rates that you could start fixing for 2020? So the FFA is liquid enough for somebody who wants to play the FFA markets for 2022. You can find the coverage there. But there is 2 things. 1, we feel that that is still lower than what we will see later on in the year. So we are not inclined to take any protection at those levels today. Plus, the FFAs have the significant issue that you have to post a lot of collateral in order to do an SFA trade. And if it moves against you, you have to be increasing that collateral. So it takes up a lot of cash. An easier way to roll forward perhaps is to fix 1 year time charter rates, which does not consume this extra liquidity. Great. And one more for me, Tasos for the use of cash in the current quarter, and maybe I missed it, maybe it was some netting out amounts, but the Blessed Luck was a $12,000,000 acquisition, but then the cost of the acquisition amount in terms of the cash outflow is $7,000,000 Will there be another outflow in the 3Q based on the seller credit timing? Or how does that usually work? The difference exactly in the seller's credit date that we had the seller's loan essentially, which I think we paid in July this year. So the remaining $5,000,000 will be seen in our cash flow statements next quarter. Okay, perfect. Okay, thank you very much. Thank you, Dave. Thank you, Mr. Sullivan. The next question is from Poe Fratt from Noble Capital Markets. Please go ahead. Good morning, Aristides. Good morning, Tassos. Hi, Paul. Aristides, could you talk about what's happened recently in the context of Panamaxes have been a little weaker than Ultra's and just sort of what's going on there? And then also could you give us a view on sort of the next 6 months in the context of whether we're going to see the typical seasonality in the market or sort of what you're anticipating in the 4th and first quarters coming up? Tough questions, Paul. It's more easy to talk about what has happened than what will happen in the next 6 months. Panamaxes have been very strong during the 1st parts of the year due to the extra grain shipments that we had seen up to June. And this has quietened up a little bit in this last month. And I think that probably explains a little bit of the softening of the Panamax market as compared to the Ultramax market, which we haven't seen any softening yet. So going forward, of course, Q3 and Q4 are historically, as I said and you repeated, seasonally stronger periods than the first half. It remains to be seen exactly what will happen. We have the huge bottlenecks that are created because of the pandemic and the logistic issues and the time it takes for boats to discharge vessels and all that on one side. We have the improving demand from the Western economies from the other hand, it's very difficult to say exactly how the next few months will pan out. But I would think that we would expect strong rates to continue. If they will be much higher or much lower or same, it's very, very difficult, a little bit higher or a little bit lower or the same. It's a little bit difficult to tell. Great. Thanks. And can you talk about the decision or what happened with the LXP as far as exiting the GMAX pool and how you're viewing that? I mean, potentially, are you going to continue to let it work in the spot market? Or is there a view that you potentially would put that on a time charter? I think we decided to take it out after what was it's been a half years because we feel that we can employ ourselves a little bit better in the spot market at these high levels. So that protection was not needed there. If at some point we decide to fix it again for a year or something like that, that remains to be seen. We haven't decided on such thing yet. We are trading it spot. We fixed it for a 1st cargo into Brazil large sales for the next 2 months, which is usually an area where you can get high charter rates. We'll see how it goes, but there is no intention right now to fix longer period. We may though, if we see Q3 strengthening, get a little bit more cover on maybe fixing 1 or 2 more ships of our fleet for the yearly periods. Okay, great. And then Tassos, I know you're in discussions on the new loan of $12,000,000 to take the to refinance the balloon and add some extra, it looks like liquidity of $4,000,000 Can you talk about that decision? And then also the context of the extra liquidity? And then also would you happen to have the terms yet as far as the amortization in balloon payment that might be associated with the new $12,000,000 loan? It's actually of course, I can talk. It is relatively straightforward. I think with the increase in values, we can actually refinance the 8,000,000 dollars using only 2 rather than 3 vessels as collateral and drawing a loan of about $9,000,000 So we would be able to repay if we wanted the whole loan and have a free ship unencumbered. We might end up doing is repaying the portion that is covered by those 2 ships and extending the loan for the third one. You are right indicating that we might have a $4,000,000 additional liquidity, which would be very useful as we are looking at possible investment opportunities and other uses of funds. I think the loan we're looking at is a 4 year term loan with normal amortization going down to above the scrap value. Okay, great. And then Aristides, if you could just talk about the comment about potentially with a public security that you potentially would be looking for acquisition or opportunities to merge or acquire for companies that are looking to exit that might be private now. Can you talk about the strategy? Would it be more oriented towards renewing the fleet? Or would it be adding sort of looking at your current fleet and saying we're looking for a like fleet. I mean, can you just help me understand sort of what your strategically how the fleet might change over time? Yes. It's difficult to say. What I can say, because we don't have any projects that we are looking at right now. So it's difficult to say. And of course, we are there to look at every opportunity that could make sense for our shareholders. But practically, we are focusing on the size of the ships that we currently own from Supramax up to Cancermax. That is the area we feel comfortable with. So we're looking at projects there. We are open to look at older vessels and newer vessels. We would like the idea if there is somebody who wants to contribute their vessel into EuroDry in exchange for sales and some cash to go ahead and add that vessel as long as it fits this broad criteria that I just told you. And of course, it makes financial sense. So we are open to such deals. We have discussed things in the past. We are not currently in any discussion though with anybody about the contribution of 1 or a group of vessels into the company. Great. That's very helpful. Thank you so much. Thank you. Thank you. There are no further questions at this time. I will now hand the call back for closing comments. Okay. Thank you everybody for this discussion today, and we will be back with you in 3 months' time to discuss the Q3 results. Thank you and enjoy the summer. Thanks everybody. Bye. Ladies and gentlemen, that does conclude the call. Thank you all for your participation. You may now disconnect.