Welcome everyone to Noble Capital Markets Basic Industries Virtual Equity Conference, and thank you for joining us today. I am Mark Reichman, a senior research analyst at Noble. It is my pleasure to introduce Dr. Tasos Aslidis, Chief Financial Officer and Treasurer of EuroDry Limited. EuroDry operates a fleet of thirteen vessels, including five Panamax dry bulk carriers, five Ultramax dry bulk carriers, two Kamsarmax dry bulk carriers, and one Supramax carrier. The company's shares trade on the Nasdaq Capital Market under the symbol EDRY. Welcome, Tasos.
Thank you, Mark. Let me start by thanking you, of course, and Noble for organizing this conference and inviting us to participate. As you said, I will give you some highlights of EuroDry and the dry bulk market. Before I do that, let me first move to a forward-looking statement slide that I can put on the screen for a few seconds for you to have a quick look, and then let me move right away into describing EuroDry. EuroDry was spun off from Euroseas about six years ago in May 2018, to be a pure dry bulk carrier owner to provide worldwide transportation for dry bulk commodities, major bulks like iron ore, coal, grains, and minor bulk, steel products, bauxite, alumina, et cetera.
Owning vessels, dry bulk vessels, that are typically in the middle size range of dry bulk carriers, between 50,000 and 85,000 deadweight tons, Supramax to Kamsarmax. We are there because we believe that that size range both exploits scale economies of scale, and also presents more flexible employment opportunities. We own, as Mark said, thirteen vessels, with an average age of about 13.5 years, and a carrying capacity of more than 900 deadweight tons. Our former parent, Euroseas, from which we spun off, was formed in 2005 by the Pittas family of Greece, which has owned and operated vessels for a hundred and fifty years, since 1870. Euroseas accessed the capital markets in 2005, and it has been listed on Nasdaq since 2007, and as Mark mentioned, we are listed on Nasdaq since 2018.
We take pride that the management of Euroseas, Aristides, myself, Simos, our Chief Administrative Officer, all of us have long experience in shipping, from twenty to thirty years, and in case of Aristides, even more. Also, all the members of our board hold leading positions in their respective industries and have long investment experience in shipping. We manage our ships through Eurobulk and Eurobulk Far East, which are affiliated companies owned by our CEO. The first one, Eurobulk, was founded in 1995, and Eurobulk Far East in 2015. Both are established and well-respected within the industry for their efficient operating track record. They are vertically integrated, having developed strong relationships with charterers, suppliers, bankers, and other participants. I will just flash our fleet that, Mark, was so kind to go through.
We tend to think of our fleet as having two clusters: our modern/new building clusters, which consists of eight vessels. Three of those we built ourselves in China, and the remaining we bought and are either sister ships of our— of the ones that we bought or very similar ones. Those are built with the most modern or relatively modern engine and fuel consumption standards and are considered eco vessels. We also have a, what we call our Panamax cluster, five vessels all built in Japan about twenty years ago, give or take, that were the workhorse of the industry at the time they were built. These vessels are working very well to this day, and are contributing significant to our cash flow and earnings because they have low capital cost for us. It's interesting, but I would—
What is interesting about our fleet is that the last three vessels we bought about three, about a year ago, it was the first time that we financed some of those vessels with joint ventures at the vessel level. One of the three we bought with a 100%- owned funds finance the equity portion. The other two, we had private partners, private investors, who contributed 39% of the equity required. Of course, all three vessels were also financed with about 50% debt. This type of co-invested investment have allowed us to secure better terms from the sellers because we bought the vessels en bloc, and we got a better deal overall and provided us with a new model to grow the company, especially when our stock price and market conditions make it less attractive to raise funds by issuing new shares.
It has also opened a new channel for us to fund future growth. Let me now take the next three or four slides and talk a little bit about the dry bulk market and the area which we are operate. It would not be a surprise to you if I told you that it's a cyclical market, so this chart just makes that point, but I think it makes one more point. It shows, for one thing, in the blue line, the development of the rates in the industry over the last 20 years, and you can see that during the COVID years, the dry bulk market enjoyed pretty good charter rates. But also it shows in the red line how many ships are on order, expressed as a percentage of the existing fleet.
That ratio, the order book-to-fleet ratio, has been running at very low levels by historical standards for about three, four years now. Even you can go all the way back to 2018 and see that the level of order book has been quite low. That sets the stage for limited fleet expansion over the next two to three years. It is that low, partly because, or mainly because there is uncertainty about the right fuel of the future. The industry is in the process of trying to figure out what would replace fossil fuels and to be a greener user of transportation. So that uncertainty has resulted in lower level of orders placed, and creating that situation that we have for the last three years, that supply is not growing as much as compared to previous years.
You can see that back in 2008, supply was at exorbitant levels. This slide also shows a little bit of the history of the sector in terms of prices. It shows that prices, in the blue line, secondhand prices, are relatively elevated, significantly above the historical median. If you remember in the previous slide, the rates were near the historical median. That divergence of rates and prices compared to the historical levels has created a certain peculiarity of the industry, making investments in dry bulk vessels a bit difficult to justify.
I elaborate a little more on the supply side and just show you this slide that shows the, indeed, leading independent analysts in the industry expect that in 2024 and 2025, the supply growth would be limited low by historical standards, and that should allow any changes in demand and increases in demand to be converted to increases in rates. Talking about demand, generally, demand for dry bulk ships is linked to the growth of dry bulk trade, which in turn is linked to the world economic growth, especially economic developments in China, as it accounts for the majority of dry bulk trade and growth. The slide I put here, the graph I put here, visually sort of demonstrates that correlation. It's not perfect, but generally, trends in economic growth affect dry bulk trade. But it's not only that.
There are other factors that affect dry bulk trade. Certain changes in the use of dry bulk commodities, like the shift away from fossil fuels now, could make certain growth for dry bulk commodities, especially coal, negative. Another factor that affects demand for dry bulk ships, the routes over which trade moves. Other factors include port and canal congestion or other limitations, slowing the ships due to various reasons, especially environmental considerations. All of these come into play when demand for dry bulk vessels is determined. Furthermore, dry bulk ships carry a number of commodities, as I mentioned in the beginning, and each one of them could have its own trends and prospects.
After four years during COVID, where on average, dry bulk trade grew by 0.8%, 2023 and 2024 have been good years in terms of trade growth. F or 2025, leading analysts expect change in some trends. For example, coal trade, especially steam coal trade, coal that is used for power generation, it is expected decline. Iron ore trade, linked primarily to Chinese economic developments, to move sideways with a modest decline, but at the same time, grain and minor bulk trades are expected to grow, resulting in an overall increase of the dry bulk trade, although at a lower rate than 2024. And that is basically our our outlook for the dry bulk as we look from the point of view of the company.
We expect the remaining of 2024, the market to move, to remain stable, be a little positive for Cape size vessels and move sideways for Panamax and Ultramaxes. A big factor recently has been the attacks on shipping in the Red Sea area, which have caused rerouting of vessels around Africa, increasing ton miles and helping demand. Earlier in the year, restrictions in the Panama Canal also increased ton miles and helped the market. This situation has been, to a certain degree, alleviated now. In 2025, as I mentioned earlier, we have, on the demand side, really our eyes on two things: what will happen on the Red Sea situation and the ability of China to keep its economy and infrastructure spending increasing. On the supply side, we expect to see support with low supply growth, and we expect further o rders of ships to be limited and definitely not affect the outlook for the next year or two, because even if you put an order for a new ship now, you will not get it before 2028.
And secondly, we expect to see in 2025 the full effect of the emission regulations that could curtail further supply by either inducing scrapping of less efficient vessels or slowing operational speeds of the fleet. Within that environment, EuroDry is positioned as a company that is set to take advantage of possible increase in the market. You can see here a snapshot of our chartering book, and you can see that most of our vessels are in very near-term charters.
Even two of our vessels that have longer-term charters, the EKATERINI and XENIA, at the bottom of this table, the rate of those charters is linked to the developments on the market. So that highlights our belief that because of the supporting supply situation, we expect at some point to see significant demand contributions and rate increases. It hasn't materialized during 2024, but we expect that to be the right position to take vis-a-vis looking at the market. During 2024, we had a challenging first six months in terms of earnings. We had a loss of about $0.81 per share on revenues of about $32 million. As was mentioned, we operated an average of 13 vessels and ran on average $13,500 per day.
Looking in 2024, the second half in 2025, we expect to see an interesting picture in the rest of the year. First, in the third quarter, when we have quite a number of dry docks, we expect to see that those expenses reflected in our results. However, in the fourth quarter of 2024, we don't have any dry dock schedule, and that means that we expect a quite strong fourth quarter for this year. Looking in 2025, the market, as I mentioned, is still trying to sort out the uncertainty around demand. The forward market indicates a rate of around $14,000 for our vessels like our Kamsarmaxes, a level that is average across our fleet should be profitable for our company. A few more highlights for EuroDry.
First, on our debt. We have a debt of just below $100 million as of June 30th of this year. That represented a loan-to-value ratio of a little more than 35% for our fleet. A relatively low leverage ratio that gives us the ability to either raise some funds by re-levering a bit, but definitely have a low risk profile embedded in our balance sheet. At the same time, if we look forward to the next 12 months, our projected cash flow break-even level is around just below $12,000 per day, and that should lead to positive contributions to both our cash flow and earnings if the FFA market rates materialize. What's then from now on? We realize we're a small company for the—
In the dry bulk markets, and we intend to grow EuroDry, but we intend to do that in a non-dilutive way, NAV- wise. An example of that non-dilutive expansion was the acquisition of the vessels we did a year ago, that I mentioned in the beginning, that we financed part of them through joint ventures at the vessel level. We also can finance such expansion by funds generated by our operations, by certain replacements of our older ships, or by re-levering certain of our ships, since we have a relatively low level of debt. As always, we remain open to consider business combinations that could exploit our public listing, are synergistic to our fleet, and above all, are not dilutive to our shareholders. So why one should invest in EuroDry? I can stress two main reasons. One has to do with the industry.
We have an industry with favorable fundamentals, the low supply growth, and which allows any demand development to be translated to better rates. And equally, if not more important, an attractive valuation for our stock, which could offer significant appreciation potential. We trade currently between $20 and $21 per share, and that represents a 65% discount vis-à-vis our NAV, and that despite having registered some gains of about 25%, stock price-wise, over the last 12 months. There are many more other reasons that one would look. Should look at EuroDry. We have a fleet focused on the most flexible segment on the dry bulk spectrum, size spectrum, mid-size vessels that exploit economies of scale for their respective sizes, but also allow themselves multiple trading possibilities. We have a cost-efficient operation, maintaining a low and predictable operating cost level.
We have an experienced management, and still we're the public listing, although it doesn't allow us to raise money because we trade way below our NAV, still provides some additional opportunities for growth, especially under certain circumstances, consolidating with other vessels or other fleets, and with that, Mark, I'll stop my remarks here and offer the floor back to you and whoever wants to ask a question.
Thank you, Tasos. You know, as the Chief Financial Officer, what are your near- and medium-term capital allocation priorities?
I think, in the near term, we're trying to do two things. We're trying to have enough firepower, utilizing some of the ways that I mentioned, either by re-levering, or by securing financing via joint ventures, to be ready to capitalize on any projects that we might see. Second, and we're doing it to the maximum degree possible, is to invest in our own stock. We have—I didn't mention in detail, but we have a share repurchase program, and we have bought over the last couple of years more than 11% of our company's outstanding stock. At 65% discount of NAV, our stock presents for us a significant investment opportunity, and we're exploiting to the maximum.
Because our liquidity is low in the stock market, we cannot buy as much shares as we would like, but we are going to do our utmost in that respect.
At the second quarter, you know, management had mentioned that it planned to continue trading under short-term charters for the time being until employment rates started firming up. Could you just maybe discuss your chartering strategy?
I think, at this rate, two things. Our charter strategy is affected by our view of the markets. We expect at some point the supply support to materialize in higher rates, so we would like to keep a significant percentage of our capacity exposed to the market to be ready to capitalize. Secondly, it is affected by the current level of rates. At this level of rates, we wouldn't commit, we wouldn't bind our vessels for very long periods. If the market was, let's say, 20% higher, 25% higher than today, we would focus on having a portion of our vessels, like 25%, in year-long charters or even longer, if available. So that is how we look at our chartering strategy.
The current fleet is comprised of 13 vessels. How do you see it changing over time in terms of type, size, and I would imagine, it'll continue to get younger over time?
Yeah, I think, it is not a secret that Ultramaxes and Kamsarmaxes are our preferred sizes. We believe, as, I mentioned a couple of times already, have flexible trading patterns and exploit economies of scale in their segments. As you saw, we have a cluster of five Panamaxes that are about 20 years old, on average. So that cluster, it's reasonable to expect that it will gradually be renewed, selling or scrapping some of the older vessels as they become less, economical, and replace them with younger ones, were definitely part of, of our plans.
You know, the industry seems like the growth would be very much pegged to global economic growth, which you really can't control, and you don't have as much control over maybe the rates. What, how do you kind of insulate yourself from the vagaries of the market, you know, in terms of, you know, your size? And are there any opportunities to lower the company's break-even per day?
You are right. It's very little we can do about the overall market. We are market takers, and we take the price that the market give us for our ships. What we control is our operations and our cost side. We strive very hard to keep our costs under control, and I think we have a quite good record of and are amongst the lowest cost operators amongst our peers. So that is one thing. And the second thing to minimize risks is to keep a low leverage. We try to do that to a great degree. We have, as I mentioned, about 36% loan-to-value ratio, and even if we increase that a little more, if we go around 40%, that would be still low-risk leverage.
It's probably the right level to have to provide significant boost to the shareholder returns, and at the same time, don't expose yourself to any dramatic changes in the market.
You know, you mentioned the vessel order book being low, and part of the driver of that being uncertainty with respect to what the fuel of the future will be. Is the industry coalescing around that, or would you kind of expect that order book to remain low for some time?
As you saw in other sectors, like in the container ship sector, during the COVID years when rates increased, order book really jumped. That was container ship owners have the same uncertainties in front of them but have the support of longer-term contracts or a history of long-term contracts. In the dry bulk sector, it's not as common anymore to have long-term contracts, so you are left to face the uncertainty of the future alone. That's why the order book did not jump despite the good rates. It has inched up a bit, it is true. I mean, from about 8.5%, it has approached almost 10%, 9.7% recently.
So inevitably, the fleet has to be replaced, so owners will take the plans and order some ships, but I don't expect it to increase at the rapid fashion that happened in other segments.
And then just lastly, and you've already touched on some of it, what do you think EuroDry's strongest points of differentiation are versus its peer group?
I think really the valuation, I would say, is that we're traded at a much bigger discount than our peers. I think having trading a 65% discount to NAV leaves a lot of appreciation potential. That will be triggered by an improvement in the market. So if the market improves, it will lift all boats, but it will lift our boat a lot more in a percentage-wise than our peers. So I would say this is the comparative advantage in terms of investing in EuroDry. We're clearly a smaller stock, offer less ability, lower ability to enter and exit in our stock with big amounts of investment, but at the same time, offer the higher appreciation potential, especially if the market improves.
Tasos, thank you so much for joining us today.
Thank you very much, Mark, and Noble for organizing this, and all of the attendees for attending my short presentation.
What's up? It is Daymond John from ABC's Shark Tank, the number one shark in the tank. However, I'm going to be joined by my fellow sharks, Robert Herjavec, and the not-so-wonderful, I'm just joking, Mr. Wonderful, for Noble Capital Markets' 20th Emerging Growth Equity Conference on December 4th in Boca Raton, Florida. I can't wait to see you there. Peace.