Seanergy Maritime Holdings Corp.

...year to renew at, say, more better terms. So, like we have done very successfully on the Fellowship, which we renewed for another two years with Anglo, and we have improved its BCI rating by 2.5% as a benefit. So, we are working with our charters to fix the ships that are being expiring this year, and we anticipate to have better numbers on these renewals. Okay, great. Thank you.

And I want to thank you for adding at least the summary cash flow statement that's included in the press release. I really appreciate that. Can we just talk about, you know, your fleet profile right now and sort of what strategy is going forward? You know, there were some, I believe, some broker reports out there that tied an acquisition to you. Can you just talk about what's going on with the S&P front?

Well, the company will continue to have a balanced deployment of its capital. First and foremost, it's our shareholder rewards, like our convertible debt repurchases that we have executed since the beginning of the year, our dividend payments, and if the opportunity comes across that we believe is going to be accretive for our shareholders, without diluting our shareholders, we will be looking into accretive acquisition opportunities. So all three things are, for us, represent a balanced capital deployment strategy. So we will continue on this plan. We cannot, let's say, confirm any rumor right now. We will announce when and if there is a certain deal that is going to take place. But again, rest assured that we will continue our fully balanced capital deployment plan.

Great. Thank you. And then just on the converts, you have about 10 million of the converts. My understanding, those either mature or you expect to retire those by the end of this year. Is that a good working assumption?

Probably. We have not had any discussions with the holder of the notes. We might have to do a repayment by the end of the year, or we might extend their tenure for a little bit more. So depending on the cash flow, we will revisit the matter end of Q3, beginning of Q4. It's a bit premature to have this discussion now, but whatever the outcome is surely going to be beneficial for us.

Okay. And then on that side, do you expect Any change from the first quarter OPEX looking out over the rest of the year?

Well, I think increases in OPEX in operating expenses are pretty dominant throughout all the reporting companies. The reason is multifaceted. One is because all these years of COVID, we have had accumulation of a number of expenses that now are materializing. And basically we have the crew change costs that become more and more difficult, not just because of COVID, but because of the Russian invasion in Ukraine. So we have all these factors together. I believe that we're going to be stable at these levels that we announced in Q1. So there's not going to be a material increase. And we also had a lot of expenses associated with dry docks and all the other stuff that we went through the last few months. So I would say that the guidance of Q1, I mean the levels of Q1, are numbers that you can pretty much depend on.

Great. Thanks for your time.

Thank you, Tate. Nice to hear from you. Oh, that was Paul. Oh, sorry. Sorry, Paul. Sorry. Nice to hear from you. Apologies.

Thank you for your question. We have another question from the line of Tate Sullivan from Maxim Group. Please go ahead.

Hi, this is following up on your comments on volley production. So it sounds like you've already seen them selling some of their production into the market post the first quarter. I mean, they do have to play catch up with their guidance. I mean, is that a meaningful risk? Let's say they fall short of their guidance. And historically, how much of an impact on rates can that have excluding an impact like a flooding event or so forth?

Okay, so let's think of a worst-case scenario. The worst-case scenario is pretty much what we have been experiencing so far the first five months of the year. So the market year-to-date has been in the region of about, what, $17,000 a day, $18,000 a day, and that is with Vale really exporting its lowest volumes over the last five or more years. So that's the absolute worst-case scenario that we see because coal trade is pretty strong, and we expect that to pick up a lot. So assuming that value remains at these super low levels and they miss their guidance by, let's say, 30%, because this is what we're talking about now, or 25%, then that means that the market is going to have a floor at the current levels, which in my opinion is a very, very unlikely scenario. If it starts to catch up, then the market only has upside from now. Whether that upside for the remaining of the year is going to be $50,000 or $60,000 or it's going to be $30,000 or even $25,000, we're very happy with all these scenarios. So in any case, we're way above break-even and we're way profitable in any case.

Great. Thank you. And then a different topic on the coal trade. I mean, has your percentage of cargo increased meaningfully with coal versus iron ore? And was that the case in the first quarter, I imagine? Yes.

Yes, it has changed substantially. We see European imports of coal increase a lot from longer distances. As I mentioned previously in my script, Europe is importing 50 million tonnes of coal from Russia, and now this has started to be diverted from much longer distances. At the same time, Russia is exporting these lost cargoes to further distances like China. So that has helped Tonmai a lot. We are not seeing the full effect of that yet because there are a lot of inventories here and there in Europe, not so much in India and in other places where they're dangerously low. But we expect that to accumulate and pick up in the next few months. So we expect coal as we turn into the second half of the year in order to procure for the winter of 22-23.

to pick up a lot. Thank you, Mr. Marcus. You're welcome, Dave. Thank you.

Thank you for the question. There are no further questions. I will now hand back the conference to Mr. Tsaniadis.

Well, thanks very much for attending our call today. Roberto, thank you for being a great operator. You may disconnect your lines. Thank you.

Let's conclude the conference for today. Thank you for participating. You may all disconnect. you Thank you. Thank you. Ladies and gentlemen, thank you for standing by and welcome to Synergy Maritime Holdings Curb First Quarter 2022 Financial Call. At this time, all participants are in list and only mode. After the speaker presentation, there will be a question and answer session. Many of the remarks today contain forward-looking statements based on current expectations. These statements may often be identified with words such as expect, anticipate, believe or similar indication of future expectation. Although such forward-looking statements are considered reasonable by the company, cannot assure that any forward-looking statement will prove to be correct. These forward-looking statements are subject to known and unknown risks and uncertain and other factors, many of which are beyond the company's ability to control or predict. Please refer to the company's annual report of Form 20F and other filling with the Securities and Exchange Commission, which discusses many of these risks and uncertainties. Should one or more of these risks of uncertainty materialize or should underlying assumptions or estimates prove to be incorrect, actual results may vary materially from those the company expressed today. In light of uncertainties inherent in any forward-looking statement, listeners are cautioned to not place undue horizons on these statements. The company undertakes no obligation to revise or update any forward-looking statements, whereas the results of the information of future events. In the early call today, the company may refer to non-GAAP financial measures such as ABTDA, adjusted net income, and TCE rate. For further consideration of the known GAAP measures to GAAP measures, please see the company's earnings release post to the news section of the website early today. I would now like to end the conference with the speaker today, Stamatis Stannaris. Please go ahead.

Hello everyone and welcome to our conference call. Today we are presenting the financial figures for the first quarter of 2022 and were announcing a cash dividend for a second consecutive quarter. Following an impressive 2021 performance, Synergy achieved its strongest first quarter results of its recent history despite the expected seasonal slowdown in the Cape size market. This was attributable to the geopolitical uncertainties caused by the war in Ukraine and the COVID related lockdowns in China. Our outlook for the Cape Size market remains very optimistic, with strong expectations for the remainder of the year, with the underlying futures currently trading at levels exceeding $30,000 a day. Moving on to the first quarter highlights, adjusted net income was significantly boosted year-on-year, reaching $7.7 million versus a marginally positive result in the first quarter of 2021. Despite decisional slack in the Cape Size market, our fleet achieved a daily time set equivalent of $19,400 a day, which is 19% higher compared to Q1 2021 and 31% higher than the average of the daily Baltic Cape size index in the same period, which was equal to about 14,700. This is the highest first quarter TCE achieved by Synergy since 2009. Our hedging activities over the past quarters were therefore successful in mitigating the negative effects of dry bulk seasonality. Overall, I am pleased with our commercial performance and I am happy to see that the Cape size market has since risen quite strongly. For the second quarter of 2022, we have fixed approximately 76% of our fleet days at an estimated TCE of $22,750. At the current FFA average, for the remainder of the year, our full-year EBITDA would exceed $101 million, as our CFO will explain shortly. All of our fleet operates in period employment, with some of the world's largest dry-bulk charters, and 15 of our 17 vessels are employed on time charters linked to the Baltic Cape Size Index. This strategy ensures a very high fleet utilization, with minimal working capital requirements, while it allows our performance to track the CAPE size index closely as chatter rates rise. At the same time, our remaining two units are employed on fixed rate time chatters at daily levels exceeding $30,000 per day. Finally, it is worth reminding that the majority of our agreements allow us to convert daily earnings from floating to fixed rates, which we have used numerous times to hedge our downside risk. Meanwhile, with regards to our initiatives on the environmental and energy efficiency fronts, we also continued the relevant upgrades of our vessels, in many cases in cooperation with the Charterers. During this quarter, we completed installation of ballast water treatment systems on all of our vessels, while we continued adding energy-saving devices and artificial intelligence monitoring systems. This provides further future visibility as to the utilization of our vessels and ensures competitiveness of our fleet in the context of fast-changing environmental regulations. We have also continued the testing of biofuels on our Cape sizes with two of our charters and the involvement of a major mining company. Regarding the finance front, in Q1 we continued with the optimization of our capital structure by refinancing a legacy bank facility through a 21.3 million sale and leaseback transaction with a prominent Japanese bank, a structure that is more cost-efficient and provides also considerable financial flexibility. In addition, we continued our shareholder reward program. We proceeded with $10 million of additional buybacks of the remaining convertible note in Q1 eliminating the potential dilution while reducing further our financial leverage and interest cost. This was a continuation of our repurchase plan that was initiated in 2021 and the total repurchases of shares, convertible notes and warrants has amounted to 26.6 million within the last six months. Another important initiative is our dividend with another 2.5 cents payable in early July. Upon this payment, we will have rewarded our shareholders with a cash distribution of 7.5 cents per share, leading to an annualized yield of about 12.5% based on the recent closing price of our shares. I am confident that such capital returns are sustainable and we will be able to continue rewarding our shareholders in the following quarters. Our CFO, Stavros Giftakis, will offer more details on our financial performance and it is now time to pass the call to him. I will come back at the end of the call for the market update shortly. So Stavros, please go ahead.

Thank you Stamatis. Let me first welcome everyone to our first quarter earnings call for 2022. We will start by reviewing the main highlights of our financial statements. In the first quarter we saw the usual seasonal slowdown in the dry bulk and more specifically the cape size market affecting our results but our performance was still much improved compared to the first quarter of the previous year. Net vessel revenue was equal to 29.7 million marking an increase of 46% from the fourth quarter of 2021. As mentioned by Stamatis earlier Our daily time charter equivalent for the quarter was $19,400, increased by 19% when compared to $16,200 for the first quarter of 2021. Our freight hedging strategy has indeed paid off, as our first quarter TCE exceeded the average Baltic Cape Size Index by a considerable margin. Adjusted EBITDA in the first quarter was approximately 16.8 million, up from 7.9 million in the same quarter of 2021, and net income for the quarter was 3.7 million compared to a net loss of 1.3 million in the same quarter last year. During the quarter, we recorded a one-time non-cash loss associated with the buyback of the convertible note and the refinancing of the Amsterdam Trade Bank facility. Adjusted for this loss and other non-cast expenses, net income for the quarter was equal to 7.7 million resulting in non-cap EPS of 4 cents. The year-over-year percentage increase in adjusted EBITDA of about 113% over a 19% increase in our TCE illustrates once again our company's operating leverage. At the current FFA curve, for the remainder of the year, I would expect to see full-year 2022 EBITDA of about 100 million and improvement of 28% compared to 2021. Furthermore, the considerable reduction in finance expenses would result in an even larger percentage increase in our net income, although we are mindful of the increasing trend of the LIBOR. Average daily operating expenses, excluding pre-delivery expenses, were $6,444, a sequential improvement from $7,184 in the fourth quarter of last year. While it is still too early in the year to offer an assessment on the direction of our daily operating expenses, they continue to be negatively affected by the COVID-19 pandemic, which affects both crew-related expenses and forwarding costs, and the rise in raw material prices. We are hopeful that in the current year operating costs can plateau at the level seen in 2021. Moving on to our debt and financial expenses, we have managed to continue reducing this in the first quarter of 2022. Focusing on the cash interest expense, In the first quarter of the year, the company incurred approximately $2.2 million of cash interest and finance costs. The respective expense was $2.9 million last quarter and $2.7 million in the first quarter of 2021. Bringing to the picture the increase of our fleet, the interest expense per operating day in the first quarter of 2022 declined to approximately $1,500 from 2,000 last year and 2,900 in the first quarter of 2021. All these reflect our constant efforts to further improve our position at this front and we expect the positive effect to be even more apparent in the coming quarters. Regarding the debt on our balance sheet, the total debt outstanding per vessel has been decreasing consistently over the past three years, a trend that continued in the first quarter of 2022. Our loan-to-value has reached 43%, more than having since the end of 2020. The total debt outstanding including convertible notes was approximately $226 million as of the end of the first quarter on a fleet of 17 vessels with a total scrap value of approximately $275 million. This compares with $173 million in the first quarter of the previous year on a fleet of just 11 vessels with a total scrap value of $177 million adjusted always for today's scrap prices. Overall total debt outstanding per vessel was about $13.3 million as of the end of the first quarter of 2022 compared to $15.7 million at the end of the first quarter of 2021. All junior debt has now been eliminated while as mentioned earlier $10 million buyback of convertible notes was completed during this quarter. Furthermore, Synergy has cash and cash equivalents of approximately $39 million at the end of the first quarter compared to about $47 million in the previous quarter. The reduction in our cash balance was mainly due to the convertible note prepayment that took place within the quarter. Now regarding the market value of our vessels, this has increased to approximately $730 million as of March 31, 2022. On that basis, our corporate leverage is estimated at approximately 40%. Total book value of shareholders' equity has declined marginally to $231 million compared to $244 million at the end of the fourth quarter of last year, with the decrease being mainly attributed to the adoption of a new accounting treatment on the company's remaining convertible note. It is encouraging to see the steady rise in vessel values despite the spot market volatility seen in the first quarter of 2022. The expansion of our fleet over the past year has been accompanied by an improvement of leverage metrics across the board, which makes us confident about our ability to continue with our shareholder reward policies. Moving on to our recent financing transactions, we have now completed the strategic $21.3 million refinancing of a previous loan facility that was originally due in the fourth quarter of the year, secured by the Partnership. Additionally, we also prepaid the last remaining junior indebtedness of $1.85 million. The new financing provided by a prominent Japanese bank is priced more competitively and helped us expand our strong footing in the Asian SHIB financing market. As regards now to the 22.4 million balloon payment that is due in December of 2022, I remain more than confident that it will be refinanced in a seamless and timely manner. As a matter of fact, we are already in close discussions with existing and prospective lenders who are keen on proceeding with these transactions. However, our attempt to optimize further our capital structure is not limited to this facility. We are continuously discussing with international financing providers opportunities that will allow us to reduce our interest expenses, expand the maturities of our facilities, and provide the liquidity for our future endeavors. This concludes my review. I would now turn the call back to Stamatis, who will discuss the market and industry fundamentals. Stamati?

Thank you, Stavros. As mentioned in my opening remarks, the first quarter of 2022 went through its usual seasonal lows. The average level of the Baltic Cape Size Index for Q1 was approximately $14,700, with rates reaching a bottom of $5,800 per day by late January, before recovering to about $23,400 in March. The key drivers behind the weaker charter rates were the global instability of the war in Ukraine, the seasonal reduction in Brazilian iron ore trade, and the slowdown in China from the new COVID lockdowns. Despite the volatility, Q1 rates were much higher than the 10-year average of first quarter performance, which makes us optimistic about the rest of the year. In fact, according to Clarkson's research, for 2022 and 2023, we expect growth in dry bulk ton mile to be about 1.4% and 1.9% respectively against projected fleet growth that is unlikely to go above 2% until 2024. We expect the slow vessel supply and new regulations starting in 2023 to continue to underpin a strong dry bulk market over the next years. More specifically, in Q1, Vale exported only 64 million tons of iron ore just 19-20% of its annual target. This sets up tremendous potential for the following quarters since Vale has set its production target for 2022 at a range of 320-335 million tonnes and the required export rate for the rest of the year is going to generate considerably higher vessel demand. In China, we are happy to see the beginning of the COVID restriction easing and the normalization in steel production since the lowest point in February. As the country reopens fully from the COVID-induced lockdowns, the decision of the local authorities to introduce a series of fresh infrastructure stimulus measures is expected to be particularly beneficial for iron ore and coal demand. In addition, seaborn coal trade has also been very important in vessel demand this year and we are optimistic that this continued support ton-mile increases. According to Clarkson's research, 2022 coal trade ton-miles are projected to rise by 3.1%, a direct implication of the Ukraine and Russia conflict. Before this conflict, the EU was importing approximately 50 million tonnes of coal annually from Russia. These cargoes are being rerouted from sources of greater distance limiting the available tonnage at sea, which squeezes vessel supply further. Apart from Europe, demand for both caulking and thermal coal has been strong across the board in most regions of the world, which we see as an important factor in shaping demand in the capesite sector outside the regular iron ore exports out of Brazil and Australia. Moving on to vessel supply, the picture continues to be very encouraging as well. The limited ordering activity in the previous quarters has helped in trimming the Cape size fleet growth to just 1.8% in 2022, while the order book as percentage of active fleet continues being the lowest in more than 20 years. Given the uncertainty surrounding compliance with future environmental restrictions and the lack of shipyard capacity, I expect slow fleet growth to be an enduring feature of the market in the next years. The healthy demand-supply dynamics are reflected in the futures curve and we expect the market to follow an upward trajectory in the following quarters at rates even better than 2021. Our efforts to place Synergy in a position to be able to benefit from the current super cycle has started to materialize since the previous year. Finally, by continuing to invest in the energy efficiency improvement of our vessels and based on the strong relationship with our clients, world leading charters, I am sure that Synergy will continue to benefit from the remarkable uptrend of the dry bulk market in the coming quarters. On that note, I would like to turn the call over to the operator and answer any questions you may have. Operator, please take the call.

Ladies and gentlemen, we now begin the question and answer session. If you wish to ask a question, please press star and one on your telephone. The first question is from Magnus Fire from Age When Right. Please go ahead. Your line is open.

Yeah, thank you. Hello, Stamatis and Stavros. Just, you know, you mentioned some positive developments in your key, some of your key markets. I mean, Brazilian iron ore export as well as pickup in China. Where do you see the biggest risk going forward as far as derailing the dry bulk market recovery or continued strength in the market?

Hey, Magnus. Good morning. Thanks for the question. Well, obviously, there are risks when you have wars and conflicts and inflationary pressures and all that. There are risks that we have to take into consideration on a daily basis. Let's start with the conflict in Ukraine. It's tragic to say that every time there is some sort of a global conflict where the normalized routes are being disrupted, then products and raw materials tend to come from longer distances. So that has helped our trade a lot. And we expect the emergence of coal to be positive for dry bulk as well. I mean, if you asked me like a couple of months ago with the COVID restrictions in China and all that, I would tell you that a major Chinese slowdown would be the biggest risk. However, on the contrary, we see that China is going back to the old infrastructure playbook and they have funded the regional governments a substantial amount of infrastructure investments throughout the country. So that is positive as well. Aside from that, I cannot really think of anything that has not either been resolved or we have a clear outlook for the future within this year as to how it's going to play out.

As far as I guess the third one, the Brazilian iron ore exports has been kind of the Achilles heel here, but it looks like Vale is picking up, trying to reach their estimated guidance. What do you see in there now as far as pick up during 2Q?

Well, we are seeing Vale more and more into the market, so it's slowly, slowly catching up. They have to start exporting about 20% more in the second half of the year as compared to the first half of the year in order to meet their annual targets. I am confident that they will be meeting the lowest part of the range they have given as a guidance, so I'm optimistic that the volumes will catch up. We see Vale pretty much in the market on a daily basis. And that's a game that they play very, very well, trying to fix from two months ahead and backwards. So we are seeing volumes picking up slowly, slowly. So there will be additional donuts being absorbed in the Brazilian trade.

All right. Very good. So with all this volatility in the market, I mean, the Cape size market was down quite a bit last week after recovering nicely. What is Synergy doing as far as your chartering strategy for the second half of the year? Are you guys going to stay spot, or are there opportunities to fix vessels at attractive terms?

Well, we have already started to fix some ships for June and the remainder of the year, so we are being active on that. We know that the market can reach and exceed $50,000 a day sometime in Q3, but we don't want to take the risk for the whole fleet, so we have been fixing ships. Right now, the average for the second half of the year is in, let's say, $33,000, $34,000, which is massively profitable for us. We will be continuously fixing from floating to fixed some ships in the next few weeks or months. So we are on top of that.

Okay, great. That's all I had. Thank you.

Thank you, Martin. It was nice to hear from you.

Thank you for your question. We have the next question from Tate Sullivan from Maxim Group. Please go ahead. Hi.

Hi. Thank you. In the prepared remarks, Stavros, I think I heard you say a level of 100 million EBITDA for 2022. Did I hear that right? And can you review the rate outlook for that level of EBITDA, please?

Hi, Tate. Good to hear from you. Yes, yes. And that was under the assumption that the rates going forward would develop in line with the levels, the current levels of the FFAs, which are around 32,000 for the remainder of the year.

Okay, great. And on that point for the 2Q22 TCE guidance, is the level of 24,569 based on if you converted at all to FFAs today? Is that essentially what that is assuming?

No, this assumes, first of all, the existing conversions that we have. It assumes also the two vessels that are running on fixed rates, and it assumes that for the remaining ships for June, for days that have not been invoiced yet, they will average at around 32,000. Okay, great.

Thank you. And one more from me, please. Just Can you review the, you mentioned a change in accounting in the new convertible note accounting treatment and just specifically to diluted shares outstanding, the decrease from 205 million to 177 million. So with this new treatment, is that a, will that be a consistent level of diluted shares?

The new treatment of the convertible has to do with the fact that part of the convertible note that was recorded under equity has moved under liabilities, and that's why you would see slightly marginally higher liabilities on the convertible side, and our equity, shareholders' equity, having been reduced marginally, that basically we've moved part of the convertible from the equity to the liability side. Now, the fact that the notes that are coming out of the convertible have not been included under the diluted number of shares is based on the accounting rule on the fact that based on the movement of the price of the shares, these have not been regarded as dilutive. The instrument has not been regarded as dilutive. Should the share price increase and, on average, be higher than the strike price of the convertible, then this will be included again in the calculation. Okay.

Great. All right. Thank you very much.

Thank you.

Thank you for your question. We have the next question from Paul Frapp from Holliams Global.

Please go ahead. Hi, good morning, Stamatis, good morning, Stavros, or actually afternoon for you guys. Can you talk about the second half of, you know, when you look at what's been fixed, you said that for the second half you have some days fixed at 33,000 to 34,000 a day. Can you just maybe put the other side of the equation on that and say, you know, how many of the second half days are fixed right now?

Yeah, well, basically we have fixed four ships. That is excluding the two that we already have on fixed time setter rates. And that is ranging between 28,000 and 39,000. So it's a big range. If you want to say an average around 34,000 on these four ships, that's how much pretty much it is. So these are the four ships we have converted from floating to fixed for the second half of the year, plus the other two that we're running on a fixed rate. We will continuously look into the market for opportunities to fix some more in the high 30s when this opportunity arises again.

Stamatis, I know that two are fixed, with the Patriot ship and the World ship. Doesn't the Patriot ship time charter expire at the end of this month?

Well, yes, it does, but we have an optional period. It doesn't mean this is the initial period of the ship, so we don't anticipate for that CP to end prior to the end of the year. And in any case, we are in discussions with all of our charterers for whatever is expiring throughout the year to renew at same or better terms. So like we have done very successfully on the Fellowship, which we renewed for another two years with Anglo, and we have improved its BCI rating by 2.5% as a benefit. So we are working with our charters to fix the ships that are being expiring this year, and we anticipate to have better numbers on these renewals. Okay, great. Thank you.

I want to thank you for adding at least the summary cash flow statement that's included in the press release. I really appreciate that. Can we just talk about, you know, your fleet profile right now and sort of what strategy is going forward? You know, there were some, I believe, some broker reports out there that tied an acquisition to you. Can you just talk about what's going on with the S&P front?

Well, the company will continue to have a balanced deployment of its capital. First and foremost, it's our shareholder rewards, like our convertible debt repurchases that we have executed since the beginning of the year, our dividend payments, and if the opportunity comes across that we believe it's going to be accretive for our shareholders, without diluting our shareholders, we will be looking into accretive acquisition opportunities. So all three things are, for us, represent a balanced capital deployment strategy. So we will continue on this plan. We cannot, let's say, confirm any rumor right now. We will announce when and if there is a certain deal that is going to take place. But again, I rest assured that we will continue our fully balanced capital deployment plan.

Great. Thank you. And then just on the converts, you have about 10 million of the converts. My understanding, those either mature or you expect to retire those by the end of this year. Is that a good working assumption?

Probably. We have not had any discussions with the holder of the notes. We might have to do a repayment by the end of the year, or we might extend their tenure for a little bit more. So depending on the cash flow, we will revisit the matter end of Q3, beginning of Q4. It's a bit premature to have this discussion now, but whatever the outcome is surely going to be beneficial for our shareholders.

Okay. And then on that side, do you expect Any change from the first quarter OPEX looking out over the rest of the year?

Well, I think increases in OPEX in operating expenses are pretty dominant throughout all the reporting companies. The reason is multifaceted. One is because all these years of COVID, we have had accumulation of a number of expenses that now are materializing. And basically we have the crew change costs that become more and more difficult, not just because of COVID, but because of the Russian invasion in Ukraine. So we have all these factors together. I believe that we're going to be stable at these levels that we announced in Q1. So there's not going to be a material increase. And we also had a lot of expenses associated with dry docks and all the other stuff that we went through the last few months. So I would say that the guidance of Q1, I mean the levels of Q1, are numbers that you can pretty much depend on.

Great. Thanks for your time.

Thank you, Tate. Nice to hear from you. Oh, that was Paul. Oh, sorry. Sorry, Paul. Sorry. Nice to hear from you. Apologies.

Thank you for your question. We have another question from the line of Tate Sullivan from Maxim Group. Please go ahead.

Hi, this is following up on your comments on volley production. So it sounds like you've already seen them selling some of their production into the market post the first quarter. I mean, they do have to play catch up with their guidance. I mean, is that a meaningful risk? Let's say they fall short of their guidance. And historically, how much of an impact on rates can that have excluding an impact like a flooding event or so forth?

Okay, so let's think of a worst-case scenario. The worst-case scenario is pretty much what we have been experiencing so far the first five months of the year. So the market year-to-date has been in the region of, what, $17,000 a day, $18,000 a day, and that is with Vale really exporting its lowest volumes over the last five or more years. So that's the absolute worst-case scenario that we see because coal trade is pretty strong, and we expect that to pick up a lot. So assuming that value remains at these super low levels and they miss their guidance by, let's say, 30%, because this is what we're talking about now, or 25%, then that means that the market is going to have a floor at the current levels, which in my opinion is a very, very unlikely scenario. If it starts to catch up, then the market only has upside from now. Whether that upside for the remaining of the year is going to be $50,000 or $60,000 or it's going to be $30,000 or even $25,000, we're very happy with all these scenarios. So, you know, in any case, we're way above break-even and we're way profitable in any case.

Great. Thank you. And then a different topic on the coal trade. I mean, has your percentage of cargo increased meaningfully with coal versus iron ore? And was that the case in the first quarter, I imagine? Yes.

Yes, it has changed substantially. We see European imports of coal increase a lot from longer distances. As I mentioned previously in my script, Europe is importing 50 million tonnes of coal from Russia, and now this has started to be diverted from much longer distances. At the same time, Russia is exporting these lost cargoes to further distances like China. So that has helped Tonmai a lot. We are not seeing the full effect of that yet because there are a lot of inventories here and there in Europe, not so much in India and in other places where they're dangerously low. But we expect that to accumulate and pick up in the next few months. So we expect coal as we turn into the second half of the year in order to procure for the winter of 22-23. to pick up a lot.

Thank you, Stomaker. You're welcome, Dave. Thank you.

Thank you for the question. There are no further questions. I will now hand back the conference to Mr. Tsanidis.

Well, thanks very much for attending our call today. Roberto, thank you for being a great operator. You may disconnect your lines. Thank you.