EuroDry Ltd.

Thank you for standing by, ladies and gentlemen, and welcome to the Eurodry conference call on the first quarter 2022 financial results. We have with us today Mr. Arsides Pitas, Chairman and Chief Executive Officer, and Mr. Tasos Aslides, Chief Financial Officer of the company. At this time, all participants are in 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, please press star and one on your telephone keypad and wait for an automated message advising your line is open. I must advise you that this conference is being recorded today. Please be reminded that the company announced its results with the press release that has been publicly distributed. Before passing the floor over to Mr. Pitas, 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 the current management's expectation that involves risk and uncertainties that may result in such expectation not being realized. I kindly draw your attention to slide two of the webcast presentation, which has the full forward-looking statements, and the same statement was also included in the press release. Please take a moment to go through the whole statement and read it. And I would now like to pass the floor over to Mr. Pitas. Thank you. Please go ahead, sir.

Good morning, ladies and gentlemen. Thank you all for joining us today for our scheduled conference call. March 31, 2022. Please turn to slide 3. Our income statement highlights are shown here. For the first quarter of 2022, we reported total net revenues of $18.3 million and a net income of $10.5 million. Adjusted net income, attributable to the common shareholders, was $9.5 million for $3.3 per share. adjusted EBITDA for the period stood at $12.7 million. Our CFO Tasos Slidis will go over the financial highlights in more detail later on in the presentation. Please turn to slide 4 for our operational highlights. Motor Vessel Ekaterinis charter has been extended until February Water vessel Alexandros has been fixed for a trip of about 20 to 25 days at $29,000 a day during the quarter. Then it was fixed at $26,250 per day for the next 20 to 25 days, and thereafter it was fixed for about 55 to 65 days at $28,000 a day. Motor vessel Padelis was fixed The motor vessel Tassos was fixed for 57 days at $18,750 per day, and thereafter it was fixed for about 90 days at $20,600 per day. The motor vessel Mollik was locked. for a minimum period of 10.5 months and a maximum of 13.5 months. Finally, Motor Vessel Starlight was extended at 98.5% of the Baltic Panamax Index for a minimum period until October 2022. As previously announced, on April 19, 2022, the company acquired Motor Vessel Santa Cruz, The company also assumed the existing charter of the vessel at $14,800 per day until July 2022. The acquisition was financed with loan funds, and the vessel was delivered to the company on April 20, 2022. Motor vessel Pantelli secured a seven-day repair, while motor vessel Starlight went into dry dock for 27 days. During the quarter, the company was also active on the FFA market and sold 90 days of forward freight agreements, the equivalent of one Panamax vessel, at a rate of $28,000 per day. Please turn to slide five. to see the summary of our current fleet. The company's operating fleet has increased to 11 units. Our current fleet has an average age of 13.5 years with a carrying capacity of about 800,000 deadweight tons. stands at about 30%. This figure excludes the six ships on index charters, which have secured employment but are open to market fluctuations. Moving to slide 7, we shall go over the market highlights for the quarter ended March 31, 2022. Up to now. Despite the challenging global economic and levels. As seen here, the average spot market rate for Panamax Ships was approximately $21,400 a day in the first quarter, and by March 25th, the price had increased to $28,500 per day. Overall, the BPI index started picking up towards the end offset, of course, the decrease in grain trades from those areas. Please now turn to slide 9. Global growth is expected to slow significantly in 2022, largely as a consequence of the war in Ukraine and the pandemic in China. In its latest report, the IMF logged its previous global GDP estimates from 4.4% growth to 3.6% for economies, Japan and the ASEAN-5 should do better than 2021. Citing Taito Fed policy and an anticipated hold to any further stimulus spending by Congress, the IMF has reduced its growth forecast for the U.S. for 2022 by 1.7% to 3.7%. on world growth and trade are being continuously assessed. Please turn to slide 10. The order book as a percentage of total fleet up until May 2022 stands at 6.6%, which is around the lowest levels we've seen in the last 25 plus years. Now please turn to slide 11 for our dry bulk fleet overview. Whilst Claxon expects New vessel ordering continues to be muted given concerns over environmental regulations, and as a result, supplies should remain tight for the foreseeable future. Please turn to slide 12, where we summarize our outlook in the dry bulk market. As previously mentioned, the Ukraine-Russia war We expect earnings to remain volatile at high levels as the short and medium-term outlook are generally positive and supported by one of the lowest order books ever and disruptions from poor congestion and changing trade flows. Ukraine. However, alternative trade routes are increasing ton-mile demand for coal and other tribal commodities as they shift away from Russian ports. Overall, fundamentals remain positive for 2022, forward supply and demand balances. Ordering for new ships for 2023 deliveries is expected to be nonexistent due to lack of available slots in shipyards. In addition, the lack of clarity for the fuel of the future remains an unknown, something that makes placing a new order, even for a later delivery, effective supply at some point. This turns to slide 13. exceeding the historical median and average levels. However, prices have still been significantly lower than what we have seen in the beginning of 2008. Whilst continuing to reap the benefits from the current strong charter market, we are also closely monitoring market developments for any opportunities that may arise to further enhance shareholder value. Thank you.

Thank you very much, Aristides. Good morning from me as well, ladies and gentlemen. Over the next five slides, I will give you an overview of our financial highlights for the first quarter of 2022 and compare them to the same period of last year. For that, let's turn to slide 15. In the first quarter of 2022, the company reported total net revenues of 18.3 million representing a 113% increase of the total net revenues of 8.6 million during the first quarter of 2021. And that was the result of both higher time charter rates that our vessels earned during the first quarter of this year and the increased number of vessels we owned and operated compared to the first quarter of 2021. The company reported net income a net income attributable to common shareholders for the period of 10.5 million as compared to a net income attributable to common shareholders of 0.9 million and 0.4 million respectively for the first quarter of last year. Interest and other financing costs for the first quarter of 2022 amounted to about 0.65 million slightly increased as compared to 0.6 million for the same period of 2021. Interest expenses during the first quarter of this year were higher due primarily to the increased LIBOR rates our loans had to pay as compared again to the first quarter of 2021. Trusted TP DAB for the first quarter of this year was 12.7 million compared to 4 million achieved during the first quarter of 2021 representing a 217% increase. Basic and diluted earnings per share attributable to common shareholders for the first quarter of 2022 were $3.69 and $3.64, respectively, calculated on 2.85 million basic and 2.88 million diluted earnings weighted average number of shares outstanding, compared to basic diluted earnings per share of 19 cents for the first quarter of 2021, calculated on about 2.3 million basic and diluted shares, weighted average number of shares outstanding. Excluding the effect on earnings attributable to common shareholders for the quarter of the unrealized gain on derivatives, The adjusted earnings attributable to common shareholders for the quarter ended March 31, 2022, which have been $3.34 and $3.30 per share basically diluted respectively. Compared to adjusted earnings of $0.55 basically diluted in the first quarter of last year. Usually security analysts do not include the above item in their published estimates of earnings per share, that's why we do the adjustment. 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 first quarter of 2022 and 2021. As usual, our fleet utilization rate is broken down to commercial and operational. During the first quarter of 2022, Our commercial utilization rate was 100%, while our operational utilization rate was 99.6%, compared to 100% commercial and 100% operational for the first quarter of last year. On average, 9.5 vessels were owned and operated during the first quarter of 2022, earning an average time charter equivalent rate of $24,636 per vessel compared to seven vessels in the same period of 2021, earning on average $14,924 per day. Our total operating expenses, including management fees, general and administrative expenses, but excluding the total cost, the operating costs, average $6,610 per vessel per day, during the first quarter of 2022, compared to $6,571 per vessel per day for the first quarter of last year. If we move further down on this table, we can see the cash flow break-even rate for the first quarter of 2022, which also takes into account dialogue in expenses, interest expenses, and loan repayments, excluding our balloon repayment. and preferred dividends if they are paid in cash. Thus, during the first quarter of 2022, our daily cash flow rate even rate was $12,821 per vessel per day, compared to $11,064 per vessel per day for the same period in the first quarter of 2021. Let's now move to slide 17. We have used this slide starting this time last year to indicate as a calculation tool that enables our shareholders and investors to assess the earnings potential of our fleet in the current year and under the current environment. The table shown in the slide has two parts. The top part refers to our fixed trade contracts. As you can see, our contract coverage in fixed trade contracts is about 45% for the year. It is about 56% in the second quarter, but declines to 24% and 11% in the third and fourth quarter. This chartering profile, this chartering strategy, reflects our expectation that the market will be quite strong, as indeed it is indicated by the current forward freight market rates. The rest of our vessels are employed in contracts linked to the relative-to-their-size dry-fault-dry index, or are yet to be contracted. Our calculator indicatively shows, in the second part of the table, the Supamax and Panamax Baltic forward rates as of May 13, 2022, and also shows how these index levels get translated to rates for our ships. We actually display the final blended rate for the open days of our blitz, which you can see right below the Supermax and Panamax forward rates in the table, and which, as you can see, is roughly similar in terms of levels to the rates that we have contracted. Based on these assumptions, and by further assuming for simplicity $7,500 per day per vessel as OPEX and GNA costs, and a 5% commission rate, one can estimate the EBITDA contribution of the days get to be fixed. The final result is additionally adjusted at the bottom of the table for our preliminary direct expense estimates during the year. This overall exercise is meant to provide a tool, as I mentioned, to calculate our EBITDA for 2022. Obviously, one can enter his or her own assumption about the rates to do that. It is worth observing the assumed FFA rates, an annualized EBITDA estimate for 2022 would be in excess of 50 million. The final figure, as I mentioned, will obviously depend on the rates materializing over the rest of the year and possibly on the timing of any charters we book. One can also easily estimate from this table the dependence of the EBITDA to the average rate earned by our open days. A change of $1,000 per day in the average rate earned would result in about $2 million change in our 2022 EBITDA estimates. Let's now move to slide 18. To review our debt profile. As of May 31, 2022, we had an outstanding bank debt of about $75.6 million. By looking at the chart, we can see that our debt repayments over the next three years range between 10 and roughly 14 million, and then drop to 2.8 and 3.6 million in 2025 and 2026. Our next balloon payment is towards the end of 2023 for about 11.3 million, and it refers to one of our cancer investments. We would expect to be able to refinance that balloon payment if we choose so, as we have done in numerous occasions previously like that. A quick note also on this slide about the cost of our debt. The average margin of our debt is about 2.8%, and assuming a LIBOR rate of about 1.25% on the top of it, we can estimate that the cost of our bank debt to be around At the bottom of this slide, we can also see a projection for a cash flow breakeven rate for the next 12 months, and we can see in that projection that a cash flow breakeven level of about $13,000 per vessel per day, which, it is noteworthy to say, includes about $3,800 per vessel per day of loan repayment. Let's now move to slide 19, where we can see some highlights from our balance sheet in a simplified way. This slide shows a snapshot of our assets and our liabilities. On our asset side, you can see the costs that we have and other assets, other liquid assets that account for about $21 million. The book value of our vessels is approximately resulting in a total book value for our assets of about $169 million. On the liability side, our debt as of March 31st, as I mentioned earlier, equals to about $75.6 million, which approximately represents about 45% of the book value of our assets. Accounting for other liabilities at the same time, comes to about $4.6 million, approximately 2.7% for total assets, leaving us shareholder's equity, essentially our net book value, to be approximately $89 million, which translates to $29.8 per share book value. However, we estimate, as of the end of March 2022, that the market value of our vessels to be around $215 million, about 46% higher of their respective BOO values, suggesting an NAV per share in excess of $52. Our share has recently traded around $35, or about 65% of our net asset value, suggesting that there is significant room for appreciation for our stock if it were to approach our NAV level. And with that, I would like to turn the floor back to Aristides to continue the call. Thank you, Tasos.