Thank you for standing by, ladies and gentlemen, and welcome to the EuroDry conference call on the third quarter 2020 financial results. We have with us today Mr. Pittas, Chairman and Chief Executive Officer, and Mr. Aslidis, Chief Financial Officer of the company. At this time, all participants are on a listen-only mode. There will be a presentation followed by a question and answer session. At which time, if you wish to ask a question, you'll need to press star and one on your keypad and wait for your name to be announced. I must advise you that this conference is being recorded today. Please be reminded that the company announces its results with a press release that has been publicly distributed. Excuse me. Before passing the floor to Mr. Pittas, I would like to remind everyone that in today's presentation and conference call, EuroDry will be making forward-looking statements.
These statements are within the meaning of the Federal Securities laws, matters discussed may be forward-looking statements which are based on current management expectations that involve risks and uncertainties that may result in such expectations not being realized. I kindly draw your attention to slide two of the Webcast presentation, which has the full forward-looking statement. 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, Chief Financial Officer. The purpose of today's call is to discuss our financial results for the third quarter and nine-month period ended September 30th, 2020. Please turn to slide three. Our income statement highlights are shown here. For the third quarter of 2020, we reported total net revenues of $6.8 million and net income of $0.5 million, adjusted EBITDA of $2.8 million and adjusted net income attributable to the common shareholders of $0.1 million or $0.05 per share. During the third quarter of 2020, EuroDry benefited from gradually improving charter markets as a result of the reopening of most economies after the pandemic-related lockdowns.
Since the beginning of October and during early November, the market rates have given up some of the gains, but they remain at satisfactory levels given the increased economic uncertainty due to the second wave of the pandemic and renewed economic lockdowns, especially in Europe. Our CFO, Tasos Aslidis, will go over our financial highlights in more detail later on in the presentation. Please turn to slide four for our chartering and operational highlights. MV Irini was fixed for a period time charter at 99% of the Baltic Panamax Index for the 74,000 deadweight ton vessel, average four-time charter route. With a minimum duration till April 1st, 2021, and a maximum duration of August 15, 2021. The Starlight was fixed in direct continuation of the previous charter at 98.5 of the BPI 74 average 4TC index. With minimum duration till August 15, 2021, and maximum duration of January 15, 2022.
The overall revenues these two vessels received in Q3 and will receive in Q4 after taking into account the FFAs are actually fixed through the previously sold FFA contracts at an average rate of $11,000 per day. Additionally, we have sold FFAs for 30 days in Q1 2021 at a rate of $9,500 per day, providing a month's worth of cover overall for one vessel. There were no dry dockings or repairs for the third quarter. Please turn to slide five for a summary of EuroDry's current fleet. As you can see, it is comprised of seven dry bulk vessels with a fleet average age of 18.8 years and cargo carrying capacity of about 530,000 deadweight tons. Slide six shows the vessel employment schedule.
As you can see, effective coverage as of October 26, 2020, for the remainder of 2020, stood at about 42% in terms of minimum fixed rate contracts, including the vessels that are covered by FFAs. This figure excludes ships on index charters which are open to market fluctuations, even though they might be having secure employment. Turn to slide seven, where we'll go over the market highlights for the third quarter of 2020. The third quarter marked an improved performance with the dry bulk market recovering strongly from the very challenging second quarter after the ending of the lockdowns. Following the second wave of the pandemic and renewed lockdowns, we expect that the dry bulk markets will be affected in the near term by the state of the world economies as influenced by the COVID-19 pandemic.
In the medium term, we are encouraged by the expected improvement in the markets once the pandemic is brought under control, if not otherwise, certainly by the introduction of the vaccines. For rates for Panamaxes, average $12,300 a day in Q3, but currently have retreated to around $9,250 per day. One year time charter rates averaged at close to $12,000 per day, yes, but now hover around $10,300 per day. Please turn to slide nine. As a result of the pandemic, the economic and trade world environment dramatically declined at the beginning of 2020. Initial estimates of its effect were extremely painful, but the last two quarters, the IMF has been gradually increasing its GDP estimates. The IMF projected world GDP growth in 2020 has been revised upwards from -4.9% in the previous quarter, July, to -2.4% now.
Among the developed and developing economies, China is the only big economy expected to post positive growth within 2020. In fact, China's return to growth seems stronger than expected previously, with signs of a more rapid recovery in the third quarter suggesting a 1.9% GDP growth compared to 1% GDP growth in the previous quarter. The U.S. economic growth is projected at -4.3%, while the Eurozone is expected to need a steeper road to recovery, with GDP growth expected for 2020 at -8.3%. All remaining important economies are now expected to contract, as is clearly evident in the slide, albeit at lower rates than those expected a quarter ago, except for India, where staggering contraction of 10.3% is expected. In 2021, global growth, according to the IMF, is projected to return to growth, recovering from the decline in 2020 of -5.4% to a positive 5.2% growth rate.
In this context, the U.S. is expected to grow by 3.1%, while the Eurozone's area growth is expected to be around 5.2%, and China's a very strong 8.2%. Similarly, all other developed economies are projected to show a strong recovery. Looking at the dry bulk trade growth, according to Clarksons, projected growth in 2020 is now estimated at a negative 3.3%, while the 2021 forecast suggests that the dry bulk trade is set to grow at a solid 5% rate. Please turn to slide 10. The order book as a percentage of total fleet up until November 2020 stands at 6.3%, which is the lowest level seen in the last 20 plus years.
The principal reason for the poor performance of dry bulk shipping during the last decade has been the high number of deliveries, which easily outpaced the growth of the trade for the greater part of the last decade. With a relatively small current order book and normal demand expectations for the coming years, a fundamentally supported rebound in the dry bulk market should be expected in the near future. Also bearing in mind that it takes about one and a half to two years for a vessel to be delivered once it is contracted. Please turn to slide 11 to review the dry bulk delivery schedule. For 2020 deliveries, the order book is still dominated by large vessels. According to Clarksons, fleet growth in 2020 will be around 4.3%, taking into account scrapping and other fleet changes that have taken place to date.
For 2021, the order book is estimated at only 3.8%. If one accounts for scrapping and slippage, actual fleet growth will be very low. The order book for 2022 and beyond is currently only 1.1%, which would imply that through scrapping and slippage, we could see a shrinking fleet that year, provided that not too many new orders are placed for 2022 delivery. Please turn to slide 12, where we summarize our outlook on the dry bulk market. The unknown duration of the pandemic and its financial consequences render any type of modeling very difficult. Our base case scenario calls for the recent surge in COVID-19 cases in the northern hemisphere to negatively affect the markets through the first half of 2021. Aided by the progress recently achieved in vaccines, we expect the second half of the year to be very strong.
Current year-to-date trade decline estimates and full year 2020 projections will likely be revised upwards to those discussed before, as the charter rates have been higher since May/June 2020 than what the estimated supply and demand balance implies. COVID-19 related delays in ports have also likely taken more ships out of the market for more days than estimated, thus reducing the effective vessel supply. In parallel, the ordering of new ships is expected to be contained in the midst of the above demand uncertainty, but most importantly on the lack of clarity of the fuel of the future. As not knowing the optimal ship for even five years out makes the placing of any new order speculative and risky. As already discussed, we are looking forward to a promising 2021 amidst a low order book and a V-shaped demand rebound.
We are hopeful for further easing of the trade tensions between China and the U.S., and likely to additional economic stimuluses worldwide. The supply-demand balance over 2021 and 2022 will likely provide a foundation for charter rates, though remaining volatile, to on average, at least maintain the recent levels or probably improve further. Please turn to slide 13. The left side of the slide shows the evolution of one-year time charter rates of Panamax dry bulk vessels since 2000. As of October 30th, 2020, the one-year time charter rate for Panamax with carrying capacity of 75,000 deadweight stood at around $10,375 per day. As you can see on the right-hand side of the slide, the current price of a 10-year-old Panamax vessel is around $13.8 million.
In the last two, three years, dry bulk prices have been gradually increasing towards historical average prices above the all-time low values that were established at the beginning of 2016, but have still not reached those levels. With a freight rate environment close to the median rate, we would expect asset values to increase closer to their median as well. In view of this, we try to position ourselves to benefit from the developments, we continuously evaluate opportunities for investments in vessels or pursue combination with other fleets, especially focusing on using our status as a public company, which can perhaps provide a consolidation platform. To help achieve these goals, we are also focused on efforts to improve our capital structure by reducing our capital costs and create additional liquidity.
Let me now pass the floor over to our CFO, Tasos Aslidis, to go over our financial highlights in more detail. Tasos.
Thank you very much, Aristides. Good morning from me as well, ladies and gentlemen. I will now take you through our financial result highlights for the three and nine-month periods of 2020. For that, let's turn to slide 15. The third quarter of 2020, we reported total net revenues of $6.8 million, amounting to an 11.3% decrease as compared to total net revenues of $7.7 million that we achieved during the third quarter of last year. Our net revenues decreased by almost $0.9 million due to lower time charter equivalent rates our vessels earned compared to the same period of last year. The company reported net income for the period of $0.5 million and net income attributable to common shareholders of $0.1 million, as compared to net loss of $0.4 million and net loss attributable to common shareholders of $0.8 million from the third quarter of 2019.
Interest and other financing costs for the third quarter of this year amounted to $0.6 million, compared to $0.8 million for the same period of last year. Our interest expenses during the third quarter of 2020 were lower due to the lower average outstanding debt, and also the decreased LIBOR rates that our loans experienced as compared always to the same period of 2019. Depreciation expenses for the third quarter of 2020 amounted to about $1.7 million, compared to $1.6 million for the same period of 2019.
Again, for the quarter ended September 30th, 2020, the company recognized a small loss on the interest rate swaps and a $0.2 million realized loss on FFA contracts as compared to a loss on derivatives of $0.6 million for the same period of 2019, comprising of $0.5 million on loss of FFA contracts and $0.1 million on loss on one interest rate swap that we had last year. Adjusted EBITDA for the third quarter of 2020 was $2.8 million. That compares to $2.2 million we achieved during the third quarter of 2019. Basic and diluted earnings per share attributable to common shareholders for the third quarter of 2020 was $0.06, calculated on approximately 2.3 million basic and diluted weighted average number of shares outstanding, compared to a basic and diluted loss per share of $0.35 for the third quarter of 2019.
Excluding the effect on the income attributable to common shareholders for the quarter of the unrealized loss or gain on derivatives, the adjusted earnings per share attributable to common shareholders for this past quarter of 2020 would have been $0.05 compared to a loss of $0.26 per share, basic and diluted for the same period of last year. Usually, security analysts not include the above items in their published estimates of earnings per share. Let's now move on the second half of the slide to discuss the nine-month results for the year. For the first nine months of 2020, we reported total net revenues of $15.9 million, representing a 19.1% decline over total net revenues of $19.6 million that we took during the first nine months of 2019. Again, the result of lower time charter rates our vessels earned during the corresponding period.
The company reported net loss for the first nine months of this year for $5.6 million. A net loss attributable to common shareholders of $6.7 million as compared to a net loss of $1.4 million and a net loss attributable to common shareholders of $2.9 million for the first nine months of 2019. Interest and other financing costs for the first nine months of 2020 amounted to $1.9 million, compared to $2.7 million for the same period of last year. This decrease is due to the lower average levels of debt outstanding and lower LIBOR rates that we experienced during this year's nine-month period. Depreciation expenses for the first nine months of 2020 were $4.9 million, compared to $4.8 million during the same period of last year.
For the first nine months of 2020, we recognized a $0.5 million loss on three interest rate swaps and a $0.3 million loss on FFA contracts, as compared to a gain on derivatives of $0.3 million for the same period of last year, which comprised of $0.6 million gain on FFAs and a $0.3 million loss on interest rate swaps. Adjusted EBITDA for the first nine months of 2020 was $1.8 million, compared to $6.5 million achieved during the first nine months of 2019. Basic and diluted loss per share attributable to common shareholders for the nine-month period of this year was $2.97, calculated on 2.3 million shares, basically diluted, compared to $1.31 basic and diluted loss per share for the first nine months of last year.
Again, excluding the effect on the loss attributable to common shareholders for the first nine months of the year of the unrealized loss on derivatives, the adjusted loss per share attributable to common shareholders for the first nine months of this year would have been $2.7 compared to a loss of $1.13 per share, basically diluted for the same period of 2019. Let me now turn to slide 16 to review our fleet performance. We will start our review by looking first at our fleet utilization rates. As usual, our fleet utilization rate is broken down into commercial and operational. During the third quarter of this year, our commercial utilization rate was 100%, while our operational utilization rate was 98.9%, compared to 100% commercial and 99.5% operational for the third quarter of last year.
I would like to remind you here that our utilization rate calculation does not include vessels in scheduled dry docks or scheduled repair if such events occurred during the period. On average, seven vessels were owned and operated during the third quarter of this year, earning time charter equivalent rate of $11,873 per vessel per day, compared to $12,088 per vessel per day during the third quarter of 2019, during which we also operated the same seven vessels. Our total daily vessel operating expenses, including management fees, general and administrative expenses, but excluding dry dock costs, averaged $6,397 per vessel per day during the third quarter of this year, compared to $5,722 per vessel per day during the third quarter of 2019.
If we move further down in this table, we can see the cash flow breakeven rate that we had during this past quarter, which takes into account dry docking expenses and cash interest expense, loan repayments, and preferred dividends if paid in cash. For the third quarter of this year, our daily cash flow breakeven rate was about $9,846 per vessel per day, compared to $10,845 per vessel per day that we took during the third quarter of 2019. Let's now look on the right part of the slide to review our nine-month figures. During the nine-month period of 2020, our commercial utilization rate was again 100%, and our operational utilization rate was 99.6%. Compared to 100% commercial and 99.2% operational for the corresponding period of the previous year.
In this nine-month period of 2020, we own and operated seven vessels, and we earned a time charter equivalent rate of $8,927 per vessel per day, compared to $10,750 per vessel per day that we earned during the first nine months of 2019, a period during which we operated, again, seven vessels. Our total daily operating expenses for the nine-month period, including management fees, G&A, but excluding dry docking costs, amounted to $6,195 per vessel per day, compared to $5,839 per vessel per day during the corresponding nine months of 2019. Again, at the bottom of the table, we can see our break-even rate for the period. Our cash flow break-even rate was $10,863 per vessel per day in 2020, compared to $12,308 per vessel per day for the same period, the first nine months of last year. Let's now move to slide 17 to review our debt profile.
In this slide, on the top part, we can see our loan repayments as well as our balloon repayments. On the bottom of the slide, we can see the projection of our cash flow break-even level for the following 12 months. As of September 30th, 2020, we had an outstanding bank debt of about $52 million. In 2021, as you can see from the chart, we have to make a balloon payment of about $8 million, which is collateralized by three of our Panamax es . We have also a balloon payment of $2.1 million to make in 2022, which is collateralized by our remaining Panamax vessel. These balloon payments are below the scrap price of the respective vessels, and we anticipate that we will have no issues with financing them when due.
We further can see from the chart additional balloon payments coming in the later years, in 2023 and 2025. I would like to make a quick note on the cost of our funding. The average margin of our debt, as you can see on the comment on the right part of the slide, is about 3%. Assuming a LIBOR rate of 0.5% on the top of it, our cost of senior debt would be around 3.5%. If we include the cost of the dividend that we pay to our preferred equity, which we pay in kind, we have the option to pay in kind until January 2021, the average blended cost of our non-equity funding would have been around 5% as of the end of the last quarter.
Our loan repayments over the next 12 months, expressed on a per-vessel-per-day basis, amount to about $2,381 and make a contribution to our daily cash flow break-even level. You can see that on the chart on the bottom part of the slide. If we make assumptions for the remaining items that make up our cash flow break-even rate, like our operating expenses, our G&A expenses, dry docking, interest, et cetera, we come up with an overall cash flow break-even level per vessel per day that we expect over the next 12 months of approximately $9,850. Let's move now to slide 18, where we can see some highlights from our balance sheet. This is really, you can say, a high-level snapshot of our assets and liabilities.
For the asset side, first, we can see that we have of the cash and other current assets of about $7.1 million. Of course, the book value of our vessels, which amounts to about $101 million, making our total book assets to about $180 million. On the liability side, we had as of the end of last quarter, bank debt of about $52 million, which approximately represents 48% of the book value of our assets. Also, we have preferred equity outstanding of about $16 million, which accounts for another 15% of our book assets. Other liabilities of about $4.3 million, accounting roughly for about 4% of our assets. This leaves us with a net book value of about $35.5 million, which amounts to about $15.4 per share.
If we replace the book value of our vessels with their market value, which we estimate to be about 10% below their aggregated book value, we can calculate our net asset value to be over $10 per share. Clearly, if our shares trade below that level, they present an investment with significant appreciation opportunity. With that, I will pass the floor back to our Chairman and CEO, Aristides, to continue the call.
Thank you, Tasos. I can now open the floor for any questions that you may have.
Thank you, ladies and gentlemen. As a reminder, if you'd like to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. That's star and one for any questions. Your first question comes line of Tate Sullivan from Maxim Group. Please ask your question.
Thank you for the background. One thing that jumped out was the extensions on, I think it was five of your seven vessels to the contract timing. Can you give some feedback you get from customers? What keeps them from committing to longer terms when you have those contract extensions? If there's limited fleet growth next year and an end of lockdowns, should they start to have urgency or can you give some comments on the feedback?
Yes. Firstly, the elder vessels in our fleet, the two 2000-built ships, are ships that are not really favored by operators that want to have a period business. These, we are trading on the spot market, and we expect to continue to trade them in the spot market. The remaining vessels, theoretically, we could fix for longer periods. The medium-aged ships, the 2004 to 2005-built Panamaxes, could be fixed for up to a year. We see these kind of charters happening. For the younger ships, the under five years old, there exists a market for one, two years. It never goes for longer, really, on these type of ships. We could consider ourselves fixing them for a year at a specific rate when we feel that the rate is good. Right now we've seen the correction in the charter rates.
Because we think that 2021, at least from the third quarter, maybe even from the second quarter, we will see improved charter rates, we prefer to keep shorter-term durations at today's levels.
Great. Thank you. That tails with my next question. For 2021, you mentioned rates, I think you said around $10,400 today versus a breakeven of $9,850 a day. I thought you commented next year you see average rates struggling. Did you say closer to where your rates were in 3Q20, or can you review that comment, please?
Yeah. It’s a volatile period. As you've seen, rates have moved this year from $6,000 up to $13, maybe even $14 on the spot market. It's been very volatile. We think that the first part of 2021, because of the pandemic and the lockdowns that follow, will not be a strong half. Certainly the first quarter. Now the second quarter will depend a little bit on how the pandemic develops and, of course, on what happens with trade wars and all that stuff. We do expect that starting either in the second or the third quarter, we will see a higher rate. The average for the year, we expect it to be higher than what was the average of this year. It could be closer to the Q3 rate. It could be around the Q4 rate. It's very difficult to say, honestly, and make a better estimate.
Okay. Well, thank you for those comments.
Thanks, Tate.
Thanks, Tate.
Thank you.
Next question comes from the line of Poe Fratt from Noble Capital Markets. Please ask your question.
Hello.
Hi, Poe.
I just wanted to clarify. Aristides, if you could just clarify your strategy on you’re facing a little bit of weakness near-term. You look at softness in the first half and certainly in the first quarter of 2021 just because of seasonality. You’re using FFAs, but could you have covered more of the fleet with FFAs looking into the first quarter? Right now you only have 90 days of the fleet covered, and I was just wondering sort of what your strategy is. Do you think you layer on more FFAs as the year ends, or is that sort of you’re going to just play the market from now?
Very honestly, Poe, our intention was to get more cover if we saw FFAs at $10,000 a day. We would have taken more cover if we saw that. We didn’t feel very comfortable in taking more cover at levels below our actual all-cost breakeven cost. We were hoping that we would see them go up to 10,000 again, in which case we would take some additional cover. We haven’t seen that, Q1 is trading right now at under $8,000 a day. We wouldn’t do something at this level. If there is a new peak that we see within November or early December, which is possible, and we see levels returning to those levels, we will indeed get some more FFA coverage.
Yeah, you’ll be opportunistic just based on what you see. Can you clarify the, if you said it, I missed it, but on the 42% of days that are covered in the fourth quarter, does that include the FFAs that are in place or does that exclude them? Then if you could also offer potentially a rate that's associated with those, would that contract cover 42%?
Yes. It is included. This 42% includes the two vessels that will make $11,000 because they are covered through the FFAs. It includes the Xenia Kamsarmax, which is covered at $11,000 because it's a guaranteed floor. It includes those three vessels really and some part of the Tasos and the Pantelis whose charters expire now and we have not extended yet. That is an average of $10,000 for those two as well. I would say that our average is slightly below $11,000 for the 42% that is covered and the remaining is really open.
Okay. You do have that floor on the Xenia at $11,000 too. Is that included in there or is it not?
Yes, that is included there.
Okay, great. Then when you look at the contract on the Xenia, it appears to expire at the end of the year. Can you sort of give us a flavor whether you'll be able to, you think, keep that floor in place or whether there'll be a different structure in that contract?
No, this vessel will end its charter, and we are due to pass the special survey of that ship. We could pass it in January, but we've decided that we will pass it immediately after completion of this current charter, and we will see how we will employ the ship afterwards. It doesn't have an employment.
Okay. That would be one special survey that you're looking at. Any other surveys?
No, this is the only vessel that we need to pass through a survey in the coming quarter. I think, Tasos, if you have the figures, correct me, but I think that we have nothing in Q1.
I believe so, that we don't have anything else in Q1.
Great. Tasos, if we could just double-check. It looks like the cost structure is pretty stable looking forward. It's bounced around quarter to quarter a little bit. It looked like it was a little bit, at least from a G&A standpoint, down in the third quarter. Are there any major changes? It doesn't sound like it, but I just want to double-check. Any major changes on the OpEx side looking at 2021?
No, I don't expect that we have any major structural changes on the OpEx side. We should see similar levels to this year, perhaps 1%- 1.5% higher, but no major changes.
I think you alluded to it on the balloon payment that's due in 2021. You're thinking about that. Are you actually in discussions with your banks on that balloon payment and potentially extending that out?
That payment is due later next year, so for that specific payment, not in any discussions yet. This $8 million is less than half or about half of the scrap price of those vessels, which are not even near scrap price anyway. I don't expect any problems to finance that at the current levels. At the current levels, we might be even able to get a little more if we want to.
Great. Thank you so much.
Thank you, Poe, for calling.
Thank you, Poe.
Thank you. I'd now like to hand the conference back to the CEO, Mr. Aristides Pittas. Please continue, sir.
I think this concludes our session of today. Thank you all for listening in, and we'll talk together again in February when we come out with our results for 2020. Thank you.
Thanks, everybody, for attending.
Thank you. That does conclude our conference for today. Thank you for participating, you may now disconnect.