Euroseas Ltd.

Thank you for standing by, ladies and gentlemen, and welcome to Euro-C's conference call on the third quarter 2025 financial results. We have with us today Mr. Astatis Petas, Chairman and Chief Executive Officer, and Mr. Tassos Aslitis, Chief Financial Officer of the company. At this time, all participants are in the 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 their results for 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, URCs will be making forward-looking statements These statements are within the meaning for the federal securities laws. Matters discussed may be forward-looking statements which are based on current management expectations that involves risks and uncertainties and 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 forward-looking statement. The same statement was also included in a press release. Please take a moment to go through the whole statement and read it. And now I would like to pass the floor over to Mr. Pitas. Please go ahead, sir.

Good morning, ladies and gentlemen, and thank you for joining us today for our scheduled conference call. Together with me is Casasas Leavis, our chief financial officer. The purpose of today's call is to discuss our financial results for the three- and nine-month period ended September 30, 2025. Please turn to slide 3 of the presentation for our quarterly financial results. For the third quarter of 2025, we reported total net revenues of $56.9 million and a net income of $29.7 million, or $4.25 per diluted share. Adjusted net income for the quarter was $29.6 million, or $4.23 per diluted share. Adjusted EBITDA for the period was $38.8 million. Please refer to the press release for the reconciliation of adjusted net income and adjusted EBITDA. Tasos, as Levis, will go over our financial highlights in more detail later on in the presentation. We are pleased to announce that our Board of Directors has declared another quarterly dividend of $0.70 per share for the first quarter of 2025, payable on or about December 16 to shareholders of record as of December 9. Based on current share price levels, the distribution reflects an annualized yield of approximately 5%. In addition, since launching our 20 million share repurchase plan in May 2022, We have repurchased 466,000 shares of our common stock in the open market for a total of approximately $10.5 million. This plan was renewed in May 2025. We remain committed to utilizing this program thoughtfully and strategically, deploying it when appropriate to support and enhance long-term shareholder value. Now please turn the slide forward where we review our recent developments. including updates on our sale and purchase activity, charter in progress, and operational highlights. During the third quarter, we completed the sale of motor vessel Marcos V for $50 million. The vessel was delivered to her new unaffiliated donors on October 20th, and we recorded an estimated gain of $9.3 million in transactions. On the employment front, We extended the charter for Motor Vessel Jonathan P. for a minimum of 11 months and up to 12 months at a daily rate of $25,000 a day. The earliest delivery under this contract is October 2026. Motor Vessel Synergy Auckland was extended just yesterday for a further 36 months following the end of the current charter at $33,500 per day. Finally, also yesterday, our four new buildings, Motovessels, Ellen, Atrilos, Nikitaji, and Shotcutter CH, were chartered upon their expected deliveries in second half-27 and first half-28 for a firm period of four years at a daily rate of $35,500 per day, or a five-year period at $32,500 per day at the Charter's option, which is declarable by November 2026. Turning on to operations, the Motovessel Emanuel P successfully completed its scheduled dry docking, resulting in an off-air period of approximately 39 days. As part of this repair, we installed energy-saving devices that are expected to deliver fuel savings in excess of 20%. We experienced no idle or commercial off-hire time during the Tuesday. Now please turn to slide 5. Our current fleet on the water consists of 21 vessels, of total carrying capacity of 61,000 TU and an average age of about 12 years. This includes six intermediate vessels with a combined carrying capacity of 25,500 TU and an average age of around 17 years, as well as 15 feeder vessels with a combined carrying capacity of 35,600 TU and an average age of 8.4 years. In addition, we have four intermediate vessels under construction, each with a capacity of 4,484 TEUs. Two of these are expected to be delivered in the second half of 2027, while the remaining two in the first half of 2028, adding a further 17,000 TEU of capacity to our fleet. On a fully delivered basis, our fleet will now grow to 25 vessels with a carrying capacity of approximately 78,300 TEUs. Please turn to slide 6 for a further update on our fleet employment. We continue to benefit from strong forward coverage, as you can see. For the first quarter of 2025, 100% of our available days have already been secured, and at an average rate of approximately $30,345 per day. Looking ahead in 2026, we have already covered 75% of our voyage days at an average rate of around $31,300 per day. In 2027, this coverage stands at 52% at an even higher average rate of around $33,500 per day. And even in 2028, it stands at 30% at an average rate of around $35,500 per day. Our discipline starter strategy provides us with high visibility of future cash flows and will support that profitability within the next couple of years, even if the market wants to correct heavily. Moving on to slide 8, let's review the market highlights for the third quarter of 2025. Throughout the third quarter, one-year time charters remained firm at elevated levels, supported by tight vessel supply and limited availability. This environment encouraged charters to secure forward cover early in the season. However, towards the end of the quarter, the freight market softened as concerns over rubber supply and increased competition among carriers began to weigh on sentiment. By late September, the Shanghai Container Act Freight Index had declined to its lowest level in nearly two years. However, during October and early November, we witnessed a stabilization and even a strong uptick by 30%. The average second-hand price index rose by about 4.4% in the third quarter versus the second quarter, supported by limited vessel availability, geopolitical tensions, and strong buyer interest. Meanwhile, new building prices remained stable quarter over quarter, with Korean and Japanese yards gradually increasing prices relative to Chinese yards. Idle capacity continues to be practically non-existent. Also, recycling activity remains subdued, with only 11 vessels totaling 6,000 TEU scrapped year-to-date. Bangladesh scrap prices have dropped slightly to around $425 per lightweight ton. Overall, the global fleet has expanded by a significant 6% year-to-date. Please turn to slide 9 for our broader market overview, focusing on the development of 6- to 12-month time charter rates over the past 10 years. The slide illustrates that charter rates across all major container ship segments remain significantly elevated compared to their 10-year median levels. This emphasizes the ongoing strong demand and support for feeder and intermediate vessels in particular. The market's ability to maintain these highs is a testimony of the continuing imbalance between effective vessel supply and demand. Please turn to slide 10. According to the IMF's October 2025 projections, global growth is expected to ease slightly from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026. Advanced economies are forecast to grow by roughly 1.5 percent, while emerging markets and developing economies are projected to grow just about 4 percent. Global inflation is expected to moderate worldwide, albeit unevenly across regions, remaining above target in the United States, where risks are tilted to the upside, and more subdued elsewhere. U.S. growth is projected at 2% in 2025 and 2.1% in 2026, a modest upward revision from earlier forecasts, reflecting smaller-than-expected defects from tariffs and more favorable financial conditions. In late October, the Federal Reserve reduced the target range for the federal funds rate by 25 basis points, bringing it to 3.75% up to 4%. Chair Powell has not ruled out an additional rate cut at the December meeting, but has emphasized that this is by no means guaranteed. The Fed has hinted that interest rates may remain on hold as inflation remains too high and while the labor market is cooling. It continues to show mixed signals. The broader outlook remains fragile, with downside risks stemming from persistent uncertainty, potential protectionist measures, and ongoing labor market constraints. Among emerging markets, India is forecast to expand by 6.6% in 2025 and 6.2% in 2026, supported by strong domestic investment, resilient agricultural output, and a vibrant services sector. The ASEAN 5 economies were also expected to post solid growth of around 4.2% in 2025 and 4.1% in 2026, underpinned by healthy regional demand and continued industrial activity. China's economic outlook is expected to remain positive, but at a decelerating pace. Challenges include a widening gap between industrial supply and weak domestic demand, as well as ongoing trade tensions with the United States, including new tariffs on Chinese goods, export controls, and restrictions on high-tech goods. As a result, China's growth is projected to moderate to 4.8 percent in 2025 and 4.4 percent in 2026. reflecting a gradual slowdown following front-loaded exports and waning fiscal support. Despite these domestic headwinds, the Chinese economy is still being supported by strong export performance to regions such as Southeast Asia and the EU, along with a still resilient manufacturing sector. We analyze global growth data carefully, as it affects directly trade volumes as a whole. Specific factors affecting trade create slight fluctuations around GDP growth. On containerized trade, Clarkson's estimates demand growth for 2025 to expand by 3.2%, signaling a strong correlation with expected GDP growth. Current forecasts, though, point to a deep to 0.7 percent growth in 2026, and a further decline of 6 percent in containerized trade growth in 2027. These expected declines largely reflect the unwinding of extraordinary rerouting patterns and temporary distortions that boosted volumes in prior years. The influx of capacity recently ordered will probably at some point outpace demand growth especially if geopolitical disruptions were to suddenly resolve and allow ships to turn to shorter, more efficient routes. Turning on slide 11, where you can see the total fleet age profile and container ship order book. The top left chart depicts a container ship fleet that is relatively young, with most vessels under 15 years old, and only 12% of the fleet over 20 years old. The top right chart shows the new deliveries as a percentage of the existing fleet, which are projected at 6.9 percent for 2025, 5.1 percent for 2026, and 8.3 percent for 2027, with actual fleet growth expected to be slightly lower due to slippage and future demolition activity. shows that the order book continues to increase rapidly, reaching approximately 32% of the fleet as of November 2025. Moving on to slide 12, we go over the fleet age profile and order book only for ships in the 1,000 to 3,000 TEU range, which is quite different from the overall picture. As of November 2025, the order book for vessels below 3,000 TEU stands at a modest 8.1% of the fleet. According to Clarkson's, deliveries in this size range remain limited, with new building additions projected at only 2.1% of the fleet in 2025, followed by 2% in 2026, 3.4% in 2027, and 2.7% in 2028 and beyond. About half of the fleet is over 15 years old, making them likely candidates for scrapping when the market corrects. Let's move to slide 13 now to see the supply outlook for the 3,000 to 8,000 EU segment, the other sector in which we currently operate. On 11 November 2025, the order book stands at 12% of the fleet, a modest level compared to the larger mainland classes. Meanwhile, the air profile of this segment is notably advanced, with 27% of vessels over 20 years old and another 38% between 15 and 19 years. With a limited new building pipeline, Net fleet growth in this segment is expected to remain contained, if not become negative over the next few years. Moving on to slide 14, this chart places those dynamics and perspectives across the entire container subsector. What stands out is the concentration of new building activity in the larger vessel classes. Near Panamax and post-Panamax vessels some order books representing 40% to nearly 80% of the existing fleets, reflecting the significant capacity being added to the mainline trades. By contrast, the feeder and intermediate segments have significantly smaller order books, ranging from just 4% to 12%, depending on size, even though a substantial portion of these fleets, between 20% and 40%, are already more than 20 years old. This widening gap between new building activity in the large vessel segments and the limited replacement in smaller segments highlights why our core fleet remains structurally well positioned with minimal risk of oversupply. Now please turn to slide 15. Turning to the container sector outlook, conditions across the container shipping sector remain mixed. And charter rates continue to hold firm, supported in part by Red Sea rerouting, even as the Shanghai container freight index has steadily declined. Overall, charter rates remain near historic highs due to limited near-term supply and steady demand across most of the societies. In 2026, U.S. trade policy and broader geopolitical developments will be key drivers of trade volumes and root patterns. Recent tariff agreements, ranging from 10% to 50%, have provided some short-term stability, but uncertainty around U.S.-China relations persists. Q3 2025 was an epitome of this uncertainty. The U.S. imposed pork fees on Chinese-owned, controlled, or bid ships only for China to reciprocate. And then, within days, both these fees were put on ice following discussions between Mr. Trump and Mr. Xi in China at the end of October. Additionally, the recent ceasefire between Israel and Hamas suggests a potential easing of disruptions in the Red Sea. But shipping companies are adopting a cautious wait-and-see stance with no immediate saluting witness yet. In 2027, and on the back of the increased container ship-ordering, even for smaller vessels, if demand in tons or ton miles doesn't surprise on the upside, the market may enter into a more challenging phase. Regarding energy transition, While it continues to be an important factor in the balance of container trade, the recent non-approval of the IMO's net-zero framework has inevitably slowed the process substantially. Arguably, the proposal was overambitious, as technical targets and economic hurdles were in any way insurmountable. The process of transitioning to new, more environmentally friendly fuels will continue, but hopefully in a more disciplined and realistic manner. Let's turn now to the last slide of this section, slide 16. The left-hand graph shows the cycle of the one-year timeshifter rate for 2,500 EU container ships over the past 10 years. As of November 14, 2025, the one-year time shutter rate stands at $35,750 per day, well above both historical averages and medians. This robust rate environment is mirrored in asset values as well. New building vessels are now valued at $45 million, compared with a 10-year median of $35 million. and an average of roughly $36 million. Likewise, 10-year-old second-hand vessels are currently valued at $37 million, significantly higher than that 10-year median of $14 million, and an average of about $20 million. In this environment, owners like us are generally reluctant to buy vessels at today's prices, unless these can be combined with charters, with charters which would bring the residual values down to more normalized prices. It is proving, though, that quite a few charters, fearing the potential loss of market share and consequently market relevance, are providing such charters to smaller new building vessels, even with 2028 deliveries. Unfortunately, until this stops, we will continue to see the order book swelling, which obviously will eventually result in overcapacitating the market. And with that, I will pass the floor to our CFO, Passosas Lidis, to go over our financial highlights in further detail.

Thank you very much, Heretidis. Good morning from me as well, ladies and gentlemen. Over the next five slides, I will give you my usual overview of our financial highlights for the quarter and the nine-month period of 2025, and compare them to the same periods of last year. For that, let's turn to slide 18. For the third quarter of 2025, the company reported total net revenues of 56.9 million, representing a 5.1% increase over total net revenues of 54.1 million during the third quarter of last year. On a per vessel per day basis, our vessels earned a 10.7% higher average charter rate in the third quarter of this year compared to last year. We reported a net income for the period of 29.7 million as compared to a net income of 27.6 million for the third quarter of 2024. Total interest and other financing costs for the third quarter of 2025 amounted to 3.7 million compared to 4.2 million for the previous year, a figure of the previous year that does not include imputed interest income of about 0.9 million, which is related to the self-financing of our pre-delivery payments for our new building program. This decrease is due to the lower interest rates we paid in the third quarter of this year compared to last for our debt. Adjusted EBITDA for the third quarter of 2025 increased to 38.8 million compared to 36.1 million achieved during the third quarter of 2024, again primarily due to the increase in revenue. Basic and diluted earnings per share for the third quarter of 2025, were $4.27 and $4.25, respectively, calculated on about 7 million basically diluted weighted average number of sales outstanding, compared to $3.97 and $3.95, basically diluted, respectively, for the same period of last year. The adjusted earnings per share for the three-month period ended September 30, 2025, which have been $4.26 and $4.23, basically diluted respectively, adjusted for unrealized gains and derivatives, compared to adjusted earnings of $3.94 basic and $3.92 diluted for the same period of last year. Let's now look at the numbers for the corresponding nine-month periods ended September 30th and compare them. For the first nine months of 2025, we reported total net revenues of 170.5 million, representing a 6.8% increase over total net revenues of 159.6 million that we earned during the first nine months of last year. mainly as a result of the higher number of vessels we own and operated and higher average earnings that we had. We reported a net income for the period of 96.5 million as compared to a net income of 88.4 million for the first nine months of last year. Total interest and other financing costs for the first nine months of 2025 amounted to 11.7 million, not including 0.1 million of imputed interest income, compared to 10.7 million for last year, again not including, in that case, 3.6 million of imputed interest income. is due to the increased amount of debt that we felt on average during the respective nine-month period of this year compared to last, partly offset by the lower interest rates we paid. Adjusted EBITDA for the first nine months of 2025 was 115.2 million, compared to 102.9 million for the first nine months of last year, a 12% increase. Basic diluted earnings per share for the first nine months of this year were $13.90 and $13.84, respectively, calculated again on approximately 7 million basic diluted weighted average number of shares outstanding, compared to basic diluted earnings per share of $12.75 and $12.66 for the first nine months of 2024, calculated again on approximately the same number of shares, about 7 million. The adjusted earnings per share for the nine-month period, ending September 30th of this year, would be $12.25 basic and $12.19 diluted, compared to $11.57 basic and $11.49 diluted for the same period of 2024. Let's now turn to slide 19 to review our flitch performance. I will not go through the utilization rate figures as I did in the previous calls, as they are all near 100%, but I will move directly to discuss the rest of the table. On average, in the third quarter of this year, 22 vessels were owned and operated, earning an average time shorter equivalent rate of 29,000 $284 per day, compared to 23 vessels that we operated in the third quarter of 2024, earning an average of $26,446 per day. Our total daily operating expenses, including management fees, G&A expenses, but excluding dry-doting costs, were $7,246 per vessel per day during the third quarter of this year, compared to $7,249 per vessel per day for the same period of 2024. If we look further down on this table, we can see the cash flow breakeven levels, which take into account, in addition to the above expenses, the dry working expenses, interest expenses, and loan repayments. Thus, for the third quarter of 2025, our daily cash flow breakeven level was $13,073 per vessel per day compared to $13,629 per vessel per day for the same period of last year. Below the break-even line, you can see our dividend distribution expressed in dollars per vessel per day basis. And for the third quarter of this year, it amounted to $2,410 compared to $2,013 for the same period of 2024. Let's move now to discuss similar figures for the nine-month period, skipping again the discussion on the utilization rates. We can report that we own and operated an average of 22.6 vessels during the first nine months of 2025, earning an average time charter equivalent rate of $28,735 per day compared to 21.3 vessels that we own and operated in the same period of 2024, earning on average $28,624 per vessel per day. Our operating expenses, again, including management fees and G&A expenses, averaged $7,386 during the first nine months of 2025, compared to $7,452 per vessel per day, for the same period of last year. Again, at the bottom of this table, you can see the break-even level, the cash flow break-even level, which includes, as we said, interest expenses, dry docking expenses, and loan repayments, excluding balloons. And that was $13,133 per vessel per day, compared to $14,743 for the same period of last year. And finally, I will not go through it. There is... dividend that we paid in the nine months expressed in a dollar-per-day basis. Let's now turn the slide to ending. We will use this slide this time around to provide a better perspective of the depth of our contract coverage, especially in light of the recent forward starters concluded that Aristides mentioned at the beginning of the presentation. The table shown presents the development of our fleet ownership days, over the period of the next three years, 2026 to 2028, at an estimated breakdown of how many days are available for hire and how many days are already contracted. It incorporates assumptions about delivery dates for vessels under construction, scrapping dates for oil ships, estimated dry docking timing and duration, utilization rate assumption going forward, we use a quite conservative one, of 98%, and estimates for contracted dates and average contracted rate. Please note that the data in this table is only estimates that we use for our modeling purposes for future time chart equivalent revenues, and the actual figures will be different. But still I hope this can provide some appreciation of our revenue and earnings visibility. As I mentioned earlier, our contract coverage currently stands 75% for 2026, 52% for 2027, and 29% for 2028. Average contracted rates are, respectively, 31,300, 33,500, and 35,500 for each of the three years. Here, if one makes an assumption about the average rate that our uncontracted days will earn, one can easily come up with an estimate of our overall revenues for the respective year. I hope this helps our investors and analysts to cover us in their own analysis of our future profitability. Let's now move to slide 21 to review our debt profile. As of September 30th, 2025, our total outstanding bank debt stood at about 224 million, with an average interest rate margin of about 2%, which, based on a three-month soft rate of 3.87%, results in a cost of our debt of about 5.9%, which is well within the prevailing range for our segment and peers. For the fourth quarter of 2025, we expect loan repayments of approximately 5.4 million, with no balloon payments due in the remainder of the year, which accordingly will reduce our year-end balance. In 2026, scheduled loan repayments amount to approximately 19.5 million, again with no balloon payments during the year. In 2027, we expect regular loan repayments of about 16.8 million, together with a 20 million balloon payment, breaking total scheduled repayments for 2027 to approximately 36.8 million. Similarly, we can see in the table, in the chart, the scheduled payments for the period 2028 to 2030. At the end of 2030, the remaining outstanding debt, assuming no balloon refinancing of our current debt, would be about 76 million. This schedule as shown here does not include debt we expect to draw to finance the construction of our four new buildings, debt which we estimate to be in the range of 140 to 150 million. At the bottom of this slide, as always, we show our cash flow breakeven estimate for the next 12 months, broken down by its key components. On this basis, Our total cash flow break-even level for the next 12 months stands at approximately $12,000 per vessel per day, a level well below the earnings of our fleet. In making the comparison with the other earnings of our fleet, one can really appreciate the cash flow generation potential that our vessels provide. To sum up my presentation here, let's move to slide 22 to review some highlights from our balance sheet. As of September 30, 2025, cash and other current assets in our balance sheet total approximately 126.4 million. We had already made 35.9 million of advances for our new building program. And we had also on our asset side the book value for our vessels, including Marcos V, which as of the end of the month was held for sale, which stood at about 512.5 million for a total book value for our assets of about 675 million. On the liability side, as I mentioned in the previous slide, we had debt amounting to 224 million. Other liabilities for about 24 million. resulting in book shareholders' equity of roughly $427 million. However, the market value for our fleet, the charter-adjusted market value for our vessels, is significantly higher than their book value. According to our latest estimates, our fleet is valued at approximately $680 million, which translates into a net asset value for our company of about $595 million, or roughly almost $85 per share. With our last closing price and recent trading rates of around $60 per share, our stock trades at almost a 30% discount to its charter-adjusted net asset value. And without, let me pass the floor back to Artesis to continue our call. Thank you, Tasso.

Let me open up the floor for any questions we may have.

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. Our first question is from Mark Reitman with Noble Capital Partners. Please proceed.

Thank you. There's just really two areas I wanted to focus on. The first is, what are your expectations for the scheduled off-hire days for the fourth I mean, if I look at your slide deck, it seems like that you're anticipating a very light dry docking schedule at least over the next 12 months. So just a little clarity there would be appreciated.

I think this is correct. We have not many dry dockings over the next 12 months. The likelihood of high for Q4 are as in the previous quarter, almost zero. And for modeling purposes, what I showed you on this new slide, 20, we'll use a 2% or lean of higher just to model it. But typically we run our fleet at the north of 99% utilization rate.

Okay. So if they were at 39 days in the third quarter, do you think that the fourth quarter would be lower than that? If you've got zero, do you have anything in the fourth quarter?

In terms of scheduled eye docs, I think we don't have any scheduled eye docs in the fourth quarter to the best of my, on the top of my head. We have only some in-water surveys.

Oh, okay. And so... Those surveys, I mean, I think in the third quarter, the number of days came maybe in a little higher than what we were expecting, but we might have just had a special survey built in. But, I mean, do you think it would be greater than five or ten days for the fourth quarter?

It's hard to say, but I would say not even. But in the third quarter, we had a manual pit that underwent dry-doting. We have no scheduled idocs in the fourth, and the next scheduled idoc would be in the third quarter of next year, to the best of my understanding.

Okay. Thank you, Cosmos. And the second area is... If container ship ordering has accelerated even in the smaller sector, which could, you know, increase supply, you know, you've mentioned that, you know, you think that could pressure rates from 2027 on. Now, you're pretty well covered in 2027 with 52% locked in. But, I mean, if we look at your slide 9 where you're showing kind of the rates take into consideration that the rerouting, if that kind of settles back, that you're kind of expecting maybe the potential for rates to decline into 2027, 2028. But what I was just kind of curious, I wanted to focus on that slide nine, if I could. Because, you know, I see the averages and the medians. It seems to me median is pretty severe. I mean, I would probably look at it by taking the standard deviation of the rates and maybe putting a plus one minus, you know, one standard deviation around the average. But, I mean, you're also looking at a couple, you know, we're looking at, you know, different regime shifts, if you were to plant a flag and say 2020, what differences do you see in the market, you know, pre-2020 and, you know, maybe the last 10 years versus the next 10 years? I mean, I think you're looking at an aging fleet. You know, you're looking at increasing environmental standards. So I go down or could go up, you know, as you've got more fuel-efficient vessels, so your costs could come down. But I was just kind of, you know, just to kind of flood expectations, and are there differences in the overall market? I mean, is it too simplistic to kind of look at this slide, you know, from 2015 to 2025 and draw a conclusion, or are there some other factors that may have a bearing on rates, you know, going forward?

The main reason why years 2015 to 2020 if we're looking at this decade, is that there was a huge order book, nearly 100 percent back in 2007 and 2008 that got delivered. So we had a huge oversupply of vessels, which was the reason why charter rates for between 2015 and 2020 were extremely low. We had the pandemic with the consequent significant increase in ton miles for vessels, which resulted in this huge boom that we witnessed during the pandemic. And then the market started to correct after the pandemic, and rates dropped again to much more reasonable levels. And then we had the war between Palestine and Israel, which closed the Suez Canal and resulted in the increase in the market that we have seen. These are the three main factors. Of course, there's so many other things that play around with that, but these are the three main factors why we are where we are. I don't think that we can see rates again as low as what we saw between 15 and 20, but you never know. But I don't think you can see that. Also, for one additional reason, that there has been quite significant inflation resulting in prices of new building ships increasing substantially over the last five or six years. So if new building ships cannot become much cheaper, because then shipyards will be losing they place, you know, kind of a flaw for second-hand values as well. So it's a very difficult equation, and it's extremely difficult to predict, you know.

So that's why... But it's not unreasonable to expect that, you know, the rates could be higher than, say, your average, you know, this average, you know, going forward. You know, never a dull day in the shipping market, so there's probably bound to be some volatility. But looking ahead, and your break-even rate is actually pretty high. you have a pretty good cost structure. So I don't know. I'm just extending this back to 2015. Anyway, that's very helpful. It provides a little perspective on the forward numbers. Thank you.

It gives a little bit of color on what has happened, but to predict what will happen is so much more difficult.

Right. Another indication... Another indication, Mark, of what the market thinks is that starters were just concluded. Obviously, and these were levels we've seen in the market, the market believes that the $35,000 per day roughly that we booked our ships for the 4,400 EU class is a level that would be okay to lock yourself in for four years, two years out from now. So that might be an indication that the 54 might be I mean, this is a market opinion, I guess, the counterparty opinion, willing buyer, willing seller type of thing that might provide some other insights, I guess.

Right. No, that's a very good point. Thank you very much.

You're welcome, Mark. Thank you.

Our next question is from Tate Sullivan with Maxim Group. Please proceed.

I think, I mean, you gave a lot of good descriptions on why you're willing to book your new builds well forward. I mean, at a longer timeline to delivery than almost all your other new builds, I think. But can you talk about the charterer's willingness to book the ships that far forward? I mean, is it to avoid sudden spikes in the market like they had post-COVID? I would love to hear your thoughts on that, please.

As we said, the fleet of the ships below 6,000 TEU is a very old fleet, right? Twenty-five percent is older than 20 years, 50 percent is older than 15 years. We are seeing this aging fleet in the smaller sizes. And the charterers are competing amongst them to have those ships, because they know that that these ships are needed to, you know, trade is increasing continuously. The big ships get filled, but then you need the smaller ships to do the regional trade. So I think we are seeing this potential lack of ships and rushing to, you know, to secure

Do you get any market indications that they're willing to book such long-term contracts that they have dormant vessels that are sitting in ports waiting for voyages at all in the current market? Even though you continue to get paid.

Yeah, no, the current market is a market of full employment.

Okay, there might be some delays and some waiting times, small waiting times occasionally. due to the various reroutings that are happening. But no, the market is full.

Okay, thanks, Yael. Your news and commentary echoes some recent news in the sector, too. Tassos' remaining new-build commitments for the new ships, four new ships, I think you gave what you have already funded, so is your remaining commitment about $200 million? Is that fair?

Yes, correct. I think the contracted prices in total are approximately $240 million. And as I mentioned, we have made payments amounting to about $36 million or so. So roughly $200 million are remaining to be paid.

And then maybe one installment payment every year or two every year.

I think the next payment is when there is the steel cutting, which should be about 12 months roughly before the delivery of the ship. So middle of next year, we'll start making additional 10% payments. There will be, I think, three more 10% payments before the final payment.

Okay. All right.

Thank you both.

You're welcome, Katie. Our next question is from Clement Mullins with Value Investor's Edge. Please proceed.

Hi, good afternoon, and thank you for taking my questions. Most has already been covered, but I wanted to delve a bit into your fleet positioning. You have a clearly bifurcated fleet between legacy and modern tonnage. Considering you recently fixed four new goods on order at solid rates, is there any appetite to order additional tonnage alongside long-term contracts, or are you comfortable with your current positioning?

No, there is always the possibility to order something. We are looking at... various possibilities. I don't know if something will develop or not, but obviously having secured these last four vessels gives us significant safety and comfort to look at potentially doing something more.

Makes sense. Thanks for the caller. And final question from me. Performer for the sale of the Marcos 5, and even when including the CapEx and the new builds, you're sitting in a solid financial position. Is there a medium-term leverage target you plan to meet going forward, or is it, let's say, a moving target?

I would say medium-term target, but generally our strategy is

is to have leverage around 50 percent, and we move, you know, 10, 15 percent above or 10, 15 percent below, depending on circumstances and time in the market. You know, in a business that is making more than 6 percent, which is our cost of capital, or debt, sorry, it makes sense to have some leverage if you can earn more than 6 percent, which is what we believe that historically we do. On the other hand, we never want to be too exposed, because we know what happens in a bad market, and we've lived through bad markets through our careers, so we don't want to over-leverage. So I think that gives you guidance about our general leverage strategy.

Yeah, that's helpful. I'll turn it over. Thank you for taking my questions. Thank you, Clement. Thank you.

Our final question is from Poe Frat with Alliance Global Partners. Please proceed. Hi there, Steve. Hi, Tassos.

Tassos, just to do math on the delivery, you know, payments, I'm calculating the second half of 2027, you're going to owe about $65 million on the first two new builds. And then in the first half of 28, you're going to owe about or have to pay about $65 million for the last two new builds. Is that correct?

That's probably right. I think you should think of something like 55% of the contract price to be paid in the year of the delivery, in the half year of the delivery. So something like 65 million for the first pair and 65 million for the second pair sounds right. Yeah, that's what I was using.

And then just a nitpicky one, you know, how did you decide to offer the charterer, you know, the one-year option after the fourth year? You know, if you look at the way that... time charters are structured on the four new builds, you know, four years at 35.5 and then five years at 32.5. It seems like you're giving up a lot on that last year of extra coverage. Can you just talk about that?

I think we were discussing with Charter of Various Options of charging our ships. from three years to five years, and there were different combinations of rates and durations. And we ended up agreeing that we will focus on the four-year duration of 35,500, but they asked to have the option to extend or do the five-year deal, so they have a year to decide about that. That implies a rate of around of low 20s for the fifth year. If you compare four years at 35 and five years at 32.5, the implied trade for the fifth year, if you keep the first four years at 35.5, it's around in the low 20s. So we felt that was an appropriate trade-off to make.

Yeah, I had calculated $20,500. And then on your slide 20, it seems like you're implying that the fleet will, even with the new builds coming to the fleet, will decline in 26 and 27 and 28. Can you just talk about your strategy on selling some of the older assets mainly the feeders that don't have as much contract cover?

We are taking a very conservative approach that the market may decline significantly, and we will need to This, of course, is the, you know, the lowest possible scenario, but we are indeed being very conservative in our projections.

And just to get granular, it looks like the Hydra and the Jonathan P. would be the two scrapping candidates, if the market does do what you think it is going to do. No, the Corfu and the Averdikis.

Okay, perfect.

Thank you so much.

Thank you, Paul.

Okay. With no further questions, I would like to turn the conference back over to management for closing remarks.

Thank you very much, everybody, for listening in. We will be back to you at the beginning of the year with the full year results. Thank you.

Thank you. Thanks, everybody. Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.