Euroseas Ltd.

Thank you for standing by, ladies and gentlemen, and welcome to the Eurosea conference call on the second quarter 2024 financial results. We have with us today Mr. Tassos Asseliti, 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 1 on your telephone 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 announced the results for the press release that has been publicly distributed. Before passing the floor to Mr. Aslides, I would like to remind everyone that in today's presentation and conference call, URCs will be making forward-looking statements. These statements are within the meaning of the federal securities law. 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 number two of the webcast presentation, which has the full follow-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. And now I would like to pass the floor to Mr. Tasos Soslidis. Please go ahead, sir.

Good morning, ladies and gentlemen, and thank you all for joining us today for our scheduled conference call. I'm Tasos Soslidis, CFO of Eurosys. Together with me, is Simos Pariaos, our Chief Administrative Officer. Our Chairman and CEO, Mr. Aristides-Peters, who is usually hosting our earnings calls, is not available for this presentation this quarter due to overlapping engagements. The purpose of today's call is to discuss our financial results for the six-month quarter ended June 30th, 2024. Let's turn to slide 3 of the presentation to go over our income statement highlights. For the second quarter of 2024, we reported total net revenues of 58.7 million and a net income of 40.7 million, or $5.84 per diluted share. Adjusted net income for the quarter was $34.3 million, or $4.92 per diluted share. Adjacent EBITDA for the period was $42.3 million. A reconciliation of adjusted EBITDA to net income is presented in the press release that was released earlier today. I will provide you with some further details on our results later in the presentation. As part of the company's common stock dividend policy, our Board of Directors declared a quarterly dividend of 60 cents per common share for the second quarter of 2024, which will be payable on or about September 17 to shareholders of record on September 9. The annualized dividend yield of our stock remains at around 6.5% based on the current share price. Our continuing dividend payments not only highlight our stable performance, but also reinforce our commitment to delivering sustained shareholder value. Along with our dividends, we return funds to our shareholders via our Share Repurchase Program. As of August 6, 2024, and since the initiation of our Repurchase Program in 2022, We have repurchased 400,705 shares of our common stock in the open market for a total of about 8.2 million. Our share repurchase plan of up to 20 million was extended for a year during 2023 and last month our board has extended it for yet another year. We will continue to use our share repurchase program at management discretion depending on the level of our stock price, to enhance our ability to increase long-term shareholder values. Please now turn to slide 4, where we discuss our recent sales and purchase, chartering, and other operational developments. Starting first on the SAP front, we can report that the previously agreed-to-be-sold vessel, motor vessel IEM Astoria, a 2780 ATU feeder container ship built in 2004, was delivered to its new owners. The vessel was sold for approximately 10 million, resulting in a gain on sale of about 5.7 million, or 82 cents per share, and having contributed to the company total earnings of more than 42 million since its acquisition in 2017. During the last four months, there was quite an activity around our new building program. On May 13, 2024, the delivery of our fifth new building vessel from a series of nine, MV Monica, took place. MV Monica is a fuel-efficient 1800 TEU feeder vessel. Following the delivery, the vessel commands a charter for a minimum of 10 months to a maximum of 12 months at a rate of $16,000 per day. Subsequently, the sixth of our new buildings, MV Stefania K, new-built, fuel-efficient 1800 TEU feeder container ship from the Mercedes yard, sister to Monica, was delivered on June 24, 2024. Like its sister, this vessel is equipped with a Tier 3 engine and other sustainability-linked features, including alternative maritime power installation. After its delivery, MV Stefania K commands a charter for a minimum of 23 to a maximum of 25 months, at a rate of $22,000 per day. Furthermore, on July 19, 2024, we took delivery of our seventh new building, MV 30 Star, an eco-friendly incumbent EU feeder container ship from the same yard like the others. Again, the vessel is EEDI Phase III compliant and features a Tier III engine, along with other sustainability enhancements, including alternative maritime power installation. The acquisition of MZ-30 Star was partly financed with a loan from Piraeus Bank, And following the delivery, the vessel commands the charter for a minimum of 23 to a maximum of 25 months at a rate of $24,250 per day. From the above, one can observe the progressive increase of the rate the three sister vessels were chartered, which fully reflect the market developments during the quarter. There are two more vessels remaining in our new building programs. to 2,800 EU vessels. Their deliveries, initially scheduled for November and December 2024, have been rescheduled to January 2025. Continuing our report here, on the chartering side, MZ-IDRA charter was extended for a minimum of 10 to maximum 12 months at $13,000 a day, starting from May 2024. While MZ Joanna, its charter was extended for a minimum period starting from the beginning of August to a maximum period until August 23rd, at an average gross daily rate of $13,500 per day. The vessel will then proceed to the Far East to have its fifth special survey in dry dock performance. She was then fixed, and she will commence a charter for a minimum of 23 and a maximum of 25 months at another 16,500 rate that is staggered. So the first 17 months are at 19,000, the next six months at 9,500, while the two months of the delivery period at the option of the charter at 16,500. Finally, vessel MV Spetses. was fixed for a minimum period of 18 months to a maximum period of 20 months at a rate of $18,100 per day starting from middle of August. We are happy to report that during the second quarter we had no idle period or commercial off-car time. Regarding dry dockings, motor vessel Synergy Keyland underwent the scheduled dry dock which lasted approximately 19.5 days during the second quarter. Next, please turn to slide 5 for an update of our current fleet profile. Our current fleet consists of 23 vessels in the water, including and includes 16 feeder container ships and 7 intermediate container carriers, with total carrying capacity of just about 67,100 TEU, and another at age of about 14 years, weighted by TEU. Turning to slide 6, you can see the two remaining vessels that are under construction, which are to be delivered, as I mentioned earlier, in January, in the first quarter of 2025. After the delivery of these two feeder container ships, our fleet will consist of 25 vessels with a total carrying capacity of just under 73,000 TEU. Let's now turn to slide 7 for a graphical presentation of our vessel employment. As you can see in the slide, we have secured very strong charter coverage over the next two years, with approximately 95% of our fleet fixed for 2024 and nearly 44.5% for 2025. This robust charter coverage, combined with profitable rates for the remaining of our charters, positions us for highly profitable quarters, enhancing our fleet liquidity through 2024 and 2025. Our chartering strategy is crucial in maximizing revenues across market cycles and ensuring that we capitalize on favorable market conditions. At this point, let me pass the floor to our Chief Administrative Officer, Mr. Simon Spagliaros, to go over recent market developments. Simon, go ahead.

Thank you, Tasso. Good morning from me as well, ladies and gentlemen. Let's now move to slide 9 for a broader market review. Let's take a look first on Chapter 8, focusing on the development of C. in 2024, container ship Saturdays experienced a strong increase 500 TEU container ship, the six- to 12-month charter rate stood at about $34,000 per day, much more than triple the almost $9,250 per day which the market paid at the end of 2023. And well above the 10-year average of approximately showing similar favourable comparisons to median and average rates. Now, moving on to slide 10, we go over some further market highlights. We mainly want to highlight here that after climbing through the beginning of July, the market has shown signs of such stabilising in the past three to four weeks, indicating possibly a temporary pause in the upward trend. Let's hope that this will reverse in the weeks to come. The increase up to the end of June is primarily attributed to ongoing disruptions in the Red high volumes from Asia, predominantly to developing economies, leading to a very tight market. Average rates per day during the second quarter of 2024 increased by about 48 percent compared to the first quarter of 2024, while vessel prices increased as well and are now closer to the peak levels of 2022. The average second-hand price index also increased on average by about 15.5% in the second quarter of this year over the first quarter. The new building price index increased by about 1.4% in the second quarter of 2024 over the first quarter of the same year. New building prices continue to stay elevated due to While new building contracting has moderated from the exceptionally high levels observed during the COVID-19 pandemic, it still remains relatively robust. This sustained activity is primarily driven by cash-rich liner companies eager to renew their fleets with alternative fuel-capable vessels, However, this is primarily focused on high, on bigger-sized ships. As of July 15, 2024, the idle fleet or related to Iranian interests. So essentially we can say that there is no idle fleet at all. I will now give you some figures about container vessel recycling within this year. During 2024, up to now, 39 vessels are counting for a activity to increase moderately in the remainder of this year after a number of very quiet years due to the very high market. In the second quarter of 2024, scrapping prices softened slightly to approximately $545 per light-well ton on average, though still remaining above the average observed in the pre-pandemic year of 2019 by about 33%. Please now turn to slide 11. The latest update from IMF from July 2024 sees the global economy to experience modest growth over the next two years, with basically a cooling activity in the U.S., a stabilization in Europe, outlook remain more balanced. However, there are upside risks to inflation and price pressures steaming from the new trade or geopolitical tensions that may appear. Any further escalation of trade tensions could raise near-term risks by increasing the cost of imported goods along the supply chain. As a result, the IMF has maintained this year's growth forecast at 3.2%, consistent with its April projection. In the meantime, the forecast for 2025 was slightly reduced by 0.1 percent to 3.3 percent, with China and India bringing the most notable upward revisions. On the other hand, on the other end, Japan's growth has been revised the most downwards. than the 3.2 percent that is predicted for OCEAN for 2024. Overall, we see that the FLIP continues to grow at a very fast pace, having expanded by about 6.5 percent only this year, without accounting for idle vessel reactivation, which has been to just 170,000 TEUs today. Now, as China's economic momentum is faltering, as the country's economy has further matured, the world is looking for the next tiger or tigers that will lead its economic growth. In that respect, India's growth is projected to remain robust at 7 percent this year. This upward revision is attributed mostly to improved private consumption. However, the IMF India to 6.5 percent. In the meantime, the Asian five economies remain the main agent for the global economy, with the forecast remaining broadly unchanged from April. Now, according to Clarkson's forecast, container ship trade demand is anticipated to rise by a record 16.7% in TUMI terms in 2024, up from the previous estimate of 9.2% back in April. And this is happening due to further rerouting through the Red Sea caused by ongoing disruptions in the area, and also exceptionally good volumes from Asia to Europe and the U.S., along with the developing countries. However, the effects of the Houthi attacks in the Red Sea that have caused these disruptions are expected to normalize at some point going forward, something that we expect will create significant challenges in the market for people. Now please turn to slide 12, where you can see the total fleet age profile and container ship order book. The container ship fleet is becoming older, with about 30% of the capacity being older than 15 years, something that will work as a significant buffer in the medium future when these ships enter the historical average scrapping age. As a result, to import the order book as a year. Turning on to slide 13, please take a note that the fleet aid provides of the smaller ships of the feeder sector, of the 1,000 to 3,000 EU range. These sizes of vessels are the backbone of our operations and the primary focus of our new building program. The order book here stands at a mere 4.7% as of the beginning of August 2024. Now, according to Clarkson, new deliveries are projected to be approximately 8% within the entire 2024, with the vast majority of these ships already delivered. The number... that going forward we will have minimal deliveries of this size segment. With over 50% of the fleet of this size segment being over 15 years old, these favorable fundamentals suggest an anticipated reduction in fleet size in the coming years. Let's now move to slide 14, where we discuss our outlook summary for the container ship market. the container shipping market has seen significant gains throughout 2024. Freight rates have shed the highest level outside the pandemic period, while charter rates have climbed steadily to historically robust levels. These strong market conditions are largely driven by disruptions in the Red Sea, as mentioned before, which have forced vessels to divert around the Additionally, healthy container volumes are bolstered by a continuously strengthening global economy. Freight rates have surged and charter rates have more than doubled since the end of the previous year, reaching their highest levels outside of the COVID-19 period and the strong markets of 20 years ago, of around 2004-2005 period, where the market was also at extremely high levels. The context index has increased by 164 percent since the end of 2023. Looking into the second half of 2024, the developments in the Red Sea will play a critical role in shaping the sector's immediate outlook. The situation remains uncertain, with any resolution heavily dependent on the political landscape. Even if conditions improve, the destruction is expected to continue for several more months. In such a scenario, charters are likely to opt for much shorter duration charges. As we move now into 2025, the container shipping market is anticipated to face challenges, particularly if disruptions in the Red Sea ease. The fleet is projected to expand, creating capacity management indicates a respectable year for container trade volume growth. Additionally, potential reductions in the vessel speeds, driven by efforts to reduce emissions and adhere to green policies, may help alleviate some of the supply pressures, potentially stabilizing the market. The energy transition and the favorable dynamics for the newer Ecovessels, something that has worked very well for the new building investment program of Eurasys. Going forward, we anticipate that the premium for Charter H achieved by Ecovessels vessels with lower environmental impact. Furthermore, the introduction of further environmental measures and carbon taxes worldwide will further boost the premium on these kinds of ships. Now, moving on to the last side of my part, slide number 15. Please take a note of the significant increases in both charter rates and asset prices that we have seen during 2024 for interesting, though, is that the new building price index is almost at the highest historical levels, something that gives further value to our investment program and proves the rightness of our decision to proceed with the vast expansion of our fleet to our new building program just a few years ago. Eurosys will help to fund the remaining equity portion of our new building program. We plan to continue returning money to our shareholders through and discretion, and we continue to plan the renewal and expansion of our fleet with strategic investments that we believe will create further value to our shareholders. And with that, I will pass the floor back to our CFO, Tasos Aslidis, to go over our financial highlights in further detail.