EuroDry .(US:EDRY)2022-11-11 19:43Financial Data and Key Metrics Changes - For Q3 2022, total net revenues were $15.8 million, an 18.8% decrease from $19.5 million in Q3 2021, primarily due to lower time charter rates and increased idle time for vessels [33] - Net income for Q3 2022 was $6.2 million, down from $12.1 million in Q3 2021, with adjusted EBITDA at $9.5 million compared to $13 million in the same period last year [34][36] - For the first nine months of 2022, total net revenues increased by 30.7% to $55.1 million from $42.1 million in the same period of 2021, driven by a higher number of vessels operated [38] Business Line Data and Key Metrics Changes - The fleet consisted of 10 vessels as of Q3 2022, with a daily charter rate of approximately $20,600 [8][10] - The commercial utilization rate for Q3 2022 was 100%, while operational utilization was 98.9%, compared to 100% and 99.4% respectively in Q3 2021 [44] - Average time charter equivalent rate for Q3 2022 was $2,637 per day, down from $28,103 per day in the same period last year [45] Market Data and Key Metrics Changes - The average spot market rate for Panamaxes was approximately $16,000 per day in Q3 2022, dropping to around $14,900 per day currently [12] - The 1-year time charter rate for Panamaxes decreased from $16,300 per day to $14,565 per day by the end of Q3 2022 [13] - Global GDP growth is forecasted to slow from 6% in 2021 to 3.2% in 2022, with significant impacts from geopolitical tensions and inflation [14][15] Company Strategy and Development Direction - The company plans to continue its share repurchase program, viewing it as the most investor-friendly strategy given the current share price is at a significant discount to NAV [30] - The company is also considering further vessel acquisitions if market conditions allow, particularly if charter rates and prices drop [30] - The strategy includes renewing the fleet by swapping older vessels for newer ones, which is part of the long-term growth plan [73] Management's Comments on Operating Environment and Future Outlook - Management highlighted the uncertainty in the dry bulk market due to geopolitical tensions, particularly the Russia-Ukraine conflict, and its impact on global trade and demand [26][19] - The company remains cautious about the economic outlook, with expectations of a slight recovery in Chinese GDP growth in 2023, but overall market conditions remain uncertain [15][26] - Recent positive news regarding inflation and potential changes in China's COVID policy could provide some optimism, but the situation remains fluid [27] Other Important Information - The company reported a cash flow breakeven rate of $13,984 per vessel per day for Q3 2022, up from $9,992 in the same period last year, attributed to higher dry docking costs and loan repayments [47] - As of September 30, 2022, the company had an outstanding bank debt of about $88 million, with a projected cash flow breakeven rate of around $13,550 per vessel per day for the next 12 months [51][53] Q&A Session Summary Question: What was the assumed time charter equivalent rate used for the $35 million EBITDA calculation? - The calculation assumed a net time charter revenue of $17,564, demonstrating the EBITDA breakeven of $7,564 [61] Question: Can you discuss the decision to add debt by roughly $15 million or $16 million? - The company encumbered two vessels to maintain liquidity for share repurchase and potential acquisitions [62] Question: What are the primary sources of support for the market? - Demand is heavily influenced by global GDP growth, which is difficult to predict due to current geopolitical and economic conditions [63] Question: What is the expected refinancing rate for the $11.3 million debt due next year? - The company anticipates a refinancing margin near 2%, with flexibility to decide closer to the due date [68][71] Question: Is the stock buyback program still favorable given current asset values? - The stock buyback is seen as a positive investment, as shares are trading significantly below NAV, making it a better option than acquiring new vessels at current prices [72][73] Question: Are customers considering locking in longer-term commitments at current rates? - There is no significant pressure from the market for long-term charters at today's rates, as uncertainty makes customers more conservative [74]