Safe Bulkers, Inc.

Ladies and gentlemen, and welcome to the Safe Bunkers conference call to discuss the first quarter 2022 financial results. Today we have with us from Safe Bunkers, Chairman and Chief Executive Officer, Mr. Polis Hagiwano, President Dr. Lucas Bamparas, and Chief Financial Officer, Mr. Konstantinos Adamopoulos. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. to ask a question, please press star 1 on your telephone keypad and wait for the message advising your line is open. Following this conference call, if you need any further information on the conference call or the presentation, please contact Capital Link at 212-661-7566. I must advise you that this conference is being recorded today. Before we begin, please note that this presentation as amended, and Section 21E of the Securities Exchange Act of 1934 as amended concerning future events, the company's growth strategy, and measures to implement such strategy, including expected vessel acquisitions and entering into further time charters. Words such as expects, intends, plans, believes, anticipates, hopes, estimates, and variations of such words and similar expressions are intended to identify forward-looking statements. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risk and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, changes in the demand for dry bulk vessels, competitive factors in the market in which risks associated with operations outside the United States, and other factors listed from time to time in the company's filings with the Securities and Exchange Commission. The company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company's expectations with respect thereto or any change in events. conditions or circumstances on which any statement is based. And now I pass the floor to Dr. Baramparas. Please go ahead, sir.

Dr. Good morning. I'm Lucas Barbaris, President of St. Bacchus. Welcome to our conference call and webcast to discuss the financial results for the first quarter of 2022. Let's start our presentation in slide three. of 2021 profitability by 15 million, reaching a net revenue of 77.7 million and a net income of 36.4 million. We delivered our balance sheet year over year by more than €200 million, reducing our debt to comparable levels to our flip-strapped value. We issued and listed €100 million five-year unsecured non-amortizing bond with a fixed coupon of €295 million and maintained significant liquidity and capital resources of €298 million. We have redeemed in April 2022 more than a quarter of our 8% preferred shares, improving our weighted average cost of capital. Furthermore, we have a significant cash flow visibility with over 400 million of these other contracts. At the same time, we continue to focus on fleet renewal and expansion with eight Phase III new builds on order and 42 versions on the water with an average fleet age of 10.4 years. In May, we took delivery of our first Phase 3 Gamsermas-class MV Vassos and have also expanded our cape-sized fleet to seven vessels. Our financial strength enables us to declare a dividend of 5 cents per common share, noting that at the same time we are renewing our fleet with second-hand and Phase 3 newbies ahead of the competition. Allow me now to guide you through the company's key investment highlights. Sheik Barker is a top 10 pure dry bulk vessel owner in Panama segment with a heritage of 60 years plus and a track record experience and hands-on management led by Boris Vihadzioan. With a strong company balance sheet, fundamentals, ample liquidity, leverage at comparable levels to flip-stop value, and secure cash flows from reliable counterparts, with eight phase three tier three newbies. Our fleet expansion and you are ahead of peer competition and ahead of the expansion We have 463 million contract revenues. 25% of our fleet is contracted for more than one year. Our fleet average charter period duration is about 1.2 years. And we have an additional yearly revenue capacity of about 20 million plus. with superior modifications and commercial and operational upgrades, which call the substantial premium both in shuttering and resale value. The order book remains at 20 years low, and market fundamentals are positive for the remaining of 2022. We believe that the company is well positioned for the long run, with an environmental-based advantage. Moving to slide 5, we highlight certain key figures in sales budgets. All numbers presented are as of Q8, and more specifically, our liquidity and capital resources are $359 million, consisting of $166 million in cash and $193 million in undrawn available revolving reducing credit passivities and secure commitments. Furthermore, we have contracted revenue of $426 million, head of commissions, from our non-cancellable spot and period time charter contracts. Our capex were €243 million in relation to these nine Phase III new builds, the first of which we took delivery a few days ago. And we had €409 million of outstanding consolidated debt, including our €100 million unsecured bond issued in February 2022. Our fleet scrap value of 395 million is presented in the last column on the right, and it's calculated in the base of our fleet aggregate lightweight tons and scrap rate of 662 per lightweight ton, again, ask of quarter end. On top of our liquidated and capital resources, we had ask of quarter end and additional borrowing capacity in relation to five unencumbered vessels and seven new builds upon their delivery. Moving on to slide seven, and the dry bark market, we present the development of the CRB Commodity Index, which currently stands at a five-year high with further upside potential. The index reflects basic commodities future prices, for example, energy, agriculture, precious metals, and industrial materials, which represent limited indicators for shipping. As a result of the ongoing Russian-Ukraine war, we have witnessed a rapid surge in prices during 2022. The updated forecast of IMF in April following the Russian-Ukraine war sets the global GDP previously, and at 3.6% for 2023, which is again lower from 3.8% previously. In addition, the global projections for inflation started at 5.7% in advanced economies and 8.7% in energy. lockdowns and the Russia-Ukraine war. The forecasted global dry bulk tonne mild demand is expected to increase by 2.2% in 2022, supported by the industrial materials like iron ore, coal, and agricultural, while the expected dry bulk net fleet growth stands at 2.1% for 2022, which means that a squeeze in the supply of vessels may well be a realistic scenario. Let's go to the As shown on the top graph, the CAPE market for the year to date continues to be healthy. CAPE lately has been volatile, driven by the commodities dynamics which have analyzed. forward freight agreement curve, which is in red color, is about 30,000 to 35,000 for 2022. Similarly for Panamax, in the lower part of the graph, the FFA curve is about 25,000 to 30,000 for 2022. The prevailing commodities market, coupled with strong supply fundamentals, are likely to support the freight market throughout 2022. In slide nine, we'll present our scheduled order book deliveries. In this post-discharge market environment, we have one more delivery in 2022 following the delivery of our first phase, our first Tapsa Maxingubil vessel a few days ago, five in 2023, and two in the first quarter of 2022. In the same slide in the bottom graph, we also present a record low order book for the forward years for cakes and paramount vessels. The supply fundamentals are strong, as we witness a historically low order book and a shortage in city capacity, which is mainly covered by other sectors, orders, mainly container ships and tankers. Then in slide number 10, we focus on increasing value of which is about $150 million. Before this business cycle, as part of our fleet renewal strategy, we have invested in nine new builds of the newest design, combined with the IMO regulation for CO2 and NOx emissions. Thirdly, we have acquired three Panamax and three Gates second-hand letters, built in Japanese secret. The average acquisition price of our nine new bits was about $32.5 million, as compared with the current average market value of about $42.5 million. For the six second-hand vessels, the average price was $25.9 million, as compared with the current average market value of $31.9 million. This timely stream of investments has appreciated by about $125 million. Furthermore, the company has previously invested in scrubber technology for 17 of its vessels. The surge in fuel prices in the last months, which is more evident in today's market, has pushed very low sulfur fuel oil versus high sulfur fuel oil differential at high levels. The high five in Singapore stands at about $280 per ton. And according to the future markets, the balance for 2022 stands at about $190 per ton. A scrubber-fitted post-Panama expense of about 7,500 metric tons per year, pushing the implied scrubber gain potential to about 24 million per annum in aggregate for our company's 17 scrubber-fitted vessels. As a result, this intrinsic value of the company is calculated at 150 million approximately. Let's summarize companies' and market takeaways in slide 11. Safe Balkans has a strong upside with new the expansion, and strong balance sheet with leverage comparable to flip-scrap value, future visibility of contracted cash flows. We reward our shareholders with a sustainable dividend policy coupled with our clear renewal strategy. At the same time, the market has strong fundamentals. With limited dry bulk fleet expansion for the next couple of years, and new and forthcoming environmental legislation that sets new standards for shipping, we believe that safe values will be in the forefront of environmental-based competitiveness, with new builds ahead of competition, upgrades in existing fleet, use of biofuels, and research for alternative fuels. Now let me pass the floor to our CFO, Konstantinos Adamopoulos, for our financial overview.

Thank you, Lucas, and good morning to everyone. Let me start with our quarterly financial highlights in strike 13. During the first quarter of 2022, we operated in an improved charter market environment compared to the same period of 2021, with lower interest expense and increased revenues, which also include an Net revenues increased by 24% compared to the same period in 2021, mainly due to the increased TCE rate as a result of the improved market, which was also assisted by the additional revenues earned by our scrap refitted vessels. We had a TCE of $21,352 compared to a TCE of $15,567 during the same period in 2021. 21.3 million during the same period of 2021. A daily OPEX stood at $5,722 compared to $4,702 last year. A daily OPEX excluding dry docking and pre-delivery expenses stood at $4,923 versus $4,350 last year. Vessel operating expenses increased mainly due to the COVID-19 pandemic. The aggregate figure for OPEX and GNA for the first quarter of 2022 was $7,242. This includes all dry docking and pre-delivery expenses and all director and officers' compensation. Our adjusted EBITDA for the first quarter of 2022 increased to $46.9 million compared to $34.6 million for the same period of 2021. million shares, compared to 14 cents during the same period in 2021, calculated on a weighted average number of 103.4 million shares. Let's conclude our presentation on slide 14 with our quarterly operational highlights for the first quarter of 2022, compared to the same period of 2021. We were able to enter into several favorable time charters, substantially delivering As a result of our performance, the Company's Board of Directors decided to declare a 5-cent dividend per common share. position of around $141.5 million as of May 22, and an additional $156.6 million in RCF and secure commitments, combined liquidity of less than $300 million, provides us with significant firepower. Furthermore, An additional borrowing capacity in relation to seven new builds upon their delivery and six existing debt-free vessels. Our present list presents in more detail our financial and operational results, and now we are ready to take your questions.

Thank you. As a reminder, to ask a question, you'll need to press star 1 on your telephone. To withdraw your question, press the pound key. Our first question comes from Chris Weatherby with Citigroup. You may proceed.

Hey, thanks, guys. This is Eli Wenske on for Chris. Maybe we could talk about the updated outlook on the bulk market given some of the geopolitical issues going on here. So just a couple things. Obviously, you guys spoke a little bit about the Russia Ukraine side, but maybe you can talk about how your business specifically is changing to account for the changes in the market right now and what you think. Obviously, I understand you don't have a crystal ball, but what the market could look like towards the end of the year and maybe into the following year.

Yes. Good morning, first of all. The market conditions is that we have entered the second quarter with a healthier market than we had in the first quarter, which underperformed because we had also, after the Chinese New Year, we had a break. the break of the war in February and February between Russia and Ukraine, which had a negative effect, and also the prolonged COVID lockdowns in Shanghai area in China. So this has muted the market for much of Q1. So the recovery started in May, a bit later than other years, and the market is improving rapidly. is improving from that point on. Now, the Ukraine war will change the dynamics of the market in that we will lose the exports of grains from Ukraine, which are around 50 million a year, at least for the foreseeable future. And then we will have a problem with cargo from Russia that people cannot load on their ships. So the joint effect of losing these two countries will be around 100 million tons. And this in part can be replaced by other countries, but without that the whole amount will be replaced by the rest of the world. Of course, the 10-mile effect will be to the Persian Gulf or to Egypt or to places far away that they used to be supplied from Black Sea. So initially there is a benefit on tonniles, but later on I think will be shortage on, especially on grains. To the contrary, we see increased movement of coal because of the conflict. All the environmental issues will be postponed and are postponing. Countries, especially in Europe, have to rely more on coal supplies for the foreseeable future. So the sanctions, in a way, is delaying the decarbonization of the market. indirectly, of course. And there is a benefit from extra cold demand on countries like Europe. So overall, the picture is unclear how it will be developed. But there are plus and minus from this equation. If we add on this COVID fear in China, with the recent lockdown of about seven weeks, We believe that Chinese government will follow stimulus packages for their economy in the months to come to recover this loss of productivity and loss of production, slowdown they had because of COVID. So this should be positive for iron ore trade and trade into China.

Got it. So just a quick clarification. You said out of Ukraine, there's a loss of 50 million tons a year. Is that what you were saying, 50 million tons?

40 to 50 million tons. It's the amount that every year we were expecting to see from Ukrainian exports.

A total net effect of 100 million tons, given the sanctions in Russia.

Yes. Together with Russia, it's around 100 million, yes. This, of course, in other countries will cover a good part of it, but not the whole lot. So, ton miles will increase because other countries are further away from the receiving countries, like North Africa, Egypt, Middle East. So in part will be covered by the ton miles, the loss of cargo, but the quantities won't be there. And this, I think we will see this shortage or shortages in the second half of the year.

Got it. And then so on a time-charter basis, I understand that you guys were up year over year, but it's down sequentially. headwinds that were, that hit one Q specifically? Or is there another reason there that we should be thinking about?

Q1 always is low, always is low. The average we achieved in Q1 is still satisfactory, you know, over $21,000 across the board. You have to remember that also we have a number of dry docks during this quarter. You know, I'm reasonably optimistic for the next few quarters, but, you know, there will be a lot of headwinds from various sources. So we may have at the moment, we may have a very strong market in one basin and very low market in the different basins. So we wait to see the new trends and the new routes that will be created out of so long this war lasts.

One more from me. So what is your contracting strategy here for the rest of the year into 2023? I think you guys are 78% for the full year. What does that look like to increase that number throughout the rest of this year?

For the rest of the 2022, we prefer to work mainly in the stock market. If we can find charters that they could take us well into 2023, we will go for one-year charters. taking us past the first quarter of Q1 of 2023. On the bigger ships, the cave-sized Valkyries, at the right time in the market, we prefer to try and fix for two or three-year charges. It's a lot easier to find a two- or three-year charter on the Cape sizes than on the Kamsa Maxis because the forward curve is always undervalued on Kamsa Maxis, while sometimes it's more fair on the bigger ships. So where possible, the bigger ships will be going for two or three-year charters, and the smaller ones up to one-year charters. Got it. Thank you all.

Thank you. Thank you. Our next question comes from Ben Nolan with Steeple. You may proceed.

Yeah, thanks. As you were talking about or as you discussed the – your outlook for the dry bulk market and just how you see things playing out. I'm curious how you think about maybe where you envision the company in the next three years. You've been pretty active ordering new vessels and upgrading the fleet, and you now have a dividend. But based on sort of how you see the dry bulk market playing out, how would the company maybe look differently three years from now if things were to go the way that you'd hope they would?

Yes, look, I believe that a modern shipping company has to be in the game active around all cycles and have competitive vessels, modern vessels, and be able to compete in the market. For example, we recently took delivery of our first phase 3 tier 3 new building last month, which we fixed a good $7,000 or $8,000 above the spot market at the time of modern Kamsa Maxis. So the ship achieved $35,000. more than Kamsa Maxis were earning $28,000 a day. Reason being that is a very economic ship, burning very low amount of fuel per day. Now, with these ships that we are getting delivery, we started taking delivery, and in the next 18 months we will have nine new ships in the fleet. We are reducing the average age of our fleet by two years. So in two years' time, the average age of the fleet will still be 10 years old. At the same time, we will try and buy a few younger ships, more than second-hand ships. not older than 10 years old, 8, 10 years old. Recently we bought three cape-sized Valkyries. We're working on something more. We believe that these are ships that could still be fixed in the next 18 months at good charter rates for two, three-year charters with very minimal downside risk on the residual value. So we will combine the order book with some selective acquisition, especially on bigger ships. And I believe that the engines of the future is not yet decided and the type of fuel that we will burn in the next decade is not decided. And we cannot predict now whether this is... or anything else. So for the time being, we go for the best ships we can get from reliable shipyards, offering us low consumption. You know, these vessels are burning six, seven tons of fuel per day less than comparable modern ships. At the time when of VLSFO today in the Far East so by keep renewing our fleet and new ships joining the company we shall remain a modern company in the next three years three four years and by that time I believe we will decide where will be wise to invest the liquidity we will create from the, generate from the revenues of the company, to what, to which type of engine, type of vessel will be able to invest this money, what new we will decide to invest. At the moment, we don't have a clear picture. We have an idea, but all these things are changing every half a month. So to be honest with you, we want to have all the options open before we commit ourselves into the long-term planning. So we will stay we have in front of us now, and we will wait to see what happens on the technology front, on the environmental front. and try in between investments in environmental features like paints, like maybe rotors, maybe ducts, maybe other things that technology is offering to us to try and become even more environmental-friendly company. Okay. But you do still expect...

You're in growth to take advantage of the market and to be able to continue to grow the company compared to maybe using this as an opportunity to really...

The dividend to increase is the easy part. You can always do it. The difficult part is to have the dividend sustained in the long run and to grow it in the long run, not to go up and down and give it out in one go when you don't know how much money you will spend on the new technologies. and how much investment you would do. So we have selected the growth plan, the renewal plan, the deliverance path, and we reinstated last quarter a dividend, which is not of course the largest in the market, because we combine it with other actions, but we want to believe that what we are doing here is creating value for our shareholders, in the long run. So we are focusing on what creates value for shareholders in the long run.

Yeah, that's right. And then lastly for me, I know you guys have historically been primarily focused, although recently you've been adding some to the Cape Size business. Is that an area where you see a level of focus such that you can get some of the critical mass, be able to grow that side of the business, maybe not add to as much as you are in the other area, but maybe weighted a little bit more equally?

Yes. No, look, I mean, since all our new ships are Camsa Max and Post Panamaxes, it's logical to try and do on the second hand something that is on a different sector to spread out the risk and have more diversification. We selected the bigger ships because we believe that there are opportunities from time to time. There are ups and downs in the market, which is affecting prices as well. So you can have a low two or three months. You may get a cheap deal from a seller on the cave-sized valkyries. And then the market may recover after six months. And I believe that With the COVID restrictions of China, there will be enough stimulus action taken by Chinese government to increase production in China and do investments that help their economy. So for this reason, we say we don't need to risk more in China. invest in the same sector. The order book of Cape Size is very low. We have seen that scrap value is appreciating. These are ships of 26,000-27,000 steel, which its price the last 12 months. And it gives the company also an extra flavor of that market when all our investments are on the medium sector of Compsamax to post-Panama. So that's why the recent acquisitions have been on Cape-sized bancaries. because I think already the prices in that sector sometimes are more expensive than even a cave size. All right. Very clear. Appreciate the call. Thank you.

Thank you. Thank you. Our next question comes from Chris Robertson with Jefferies University.

Good morning, and thanks for taking my questions. Yes. So you talked a lot about the younger end of the fleet here with the new buildings as well as some of the latest secondhand acquisitions. But could you talk a little bit about the older end of the fleet in terms of kind of sales and investment strategy here? And were any incremental upgrades necessary ahead of the new IMO regulations this year that would require some dry docking or off-hire in the remaining quarters?

As far as we are concerned, our older part of the fleet, which is, we have six vessels built between 2004 and 2006, are all Japanese shipyards, and they are tier two equivalent, so they are pretty much there for the next few years. Of course, we are not a very, very... much interested to trade these ships until they are scrapped. And our history has shown that in the past we used to be selling ships at around 10-year mark, and these days around 16, 17 years mark. But I believe overall the aging of the fleet and the average older vessels around are ships that they cannot comply with the regulations after 2024. And these ships, they need to make big investments, big environmental investments, and big improvement to stay in business. So I think all this will be very positive for the market, not because the ships will be delayed in making their pace, but because many ships in various ports in the world, with all the emission charges and all these things that will hit the industry in the next few years. So I think all this provides a far better, let's say, horizon for the much younger ships, and especially those that consume very low quantity of fuel oil. And as we have seen, a certain part of the fleet will need to slow down to achieve emissions that they are at acceptable levels. So I think overall, whilst our ships, the ships are all built in Japan, we believe in general the market will have a problem

If you may consider that about, I mean, as we have ordered nine ships already, which are phase three, and we have from previous ordering from the previous cycle about, I mean, I think 11 echo ships. Altogether, this new, I mean, the relatively younger segment in our fleet is about 50% of our vessels. The other, let's say, 50%, mostly includes Japanese vessels which, relative to Chinese of that era, are substantially more efficient and can easily comply. So, always, what we should expect is that the problem relies on heavier vessels, larger vessels that, as Paul said just before, will have to face the competition. I mean, in terms of our strategy, We continue to upgrade our fleet continuously during guide dockings, doing what is necessary, and monitoring also very carefully the environmental performance of our fleet to achieve better environmental ratings as we go ahead. So I think this is a very successful and low-cost project because our fleet is, as we said before, it's Japanese and relatively more efficient. I think that at the end result we end up with a very good performance the next few years. Of course any discussion of a new puree It's a question of, let's say, the next generation. I mean, after, I think, 2025 or 2027, probably, because we don't have even today any fuel that is suitable or has been proven that is suitable for such extensive and global fueling of the fleet.

you know, fleet renewal, some deleveraging focus and things like that. But how are you thinking about the remaining Series C preferreds?

Look, it's not our priority. After such a big payment we had in the first quarter, I think it's not our first priority to redeem more... It's a good class of shares to have on the balance sheet. So we've done our part. If the strong market continues for another couple of years, we may consider again that at the appropriate time. But as you know, we have the expansion as well. We have the leverage. also in our plans, and we have dividends also in our plans. So, I mean, we've done the preferred part for this year, I think, and we'll see what happens later on and how strong the market will be in 2023 and 2024 if there is excessive liquidity to redeem some more of those shares.

Overall, the company is looking very closely at the leverage, which is the debt part, not the equity part. And if you consider that right now we have reached a level where the leverage is comparable to our... to our scrap value, this is one of the most important characteristics that we would like to maintain in the future. So we don't want to see our leverage increasing substantially more compared to the scrap value of the vessel. So this is the level that we feel quite comfortable. At the same time, I mean, to the extent that we are able to do additional period-time shorter contracts that gives us the visibility of our cash flows, and as we said, this exceeds 400 million at this stage, I think this makes a very good... company, for anyone who would like to invest, because you invest in a low leverage company with substantial contract revenue, with a dividend, and of course, which is sometimes we tend to ignore with the new facials which are coming much earlier compared to 2025. The facials are coming to our books until 2024.

Also, we try at any given time to utilize the reserves of the company as best as we can for the benefit of the shareholders. So, in the first quarter of this year, we have also the opportunity to draw a a bond in the Greek market with a coupon of less than 3%, which is a very attractive coupon, and with this we use part of it to redeem a preferred of 8%. So whenever we have certain opportunities and we can save money and create value for shareholders, We will be investing in things like that. So if you say that we paid around 40 million and the saving is 5 percent, it's around 2 million a year. It's only the differential of the two interest rates of preferred and bond we issued in February.

Thank you. And as a reminder, to ask a question, you'll need to press star 1 on your telephone. Our next question comes from Magnus Fuhr with H.G. Wainwright. You may proceed.

Thank you. My questions are related to, you know, how your chartering strategy and financing strategy may have changed with recent events in Ukraine and inflationary pressures building. I think you answered the first question correctly. earlier. But just on the financing side, you did the $100 million euro bond. And I'm just curious, you know, with interest rates moving up, are you taking any proactive approach to fix some of that debt or, you know, most of your debt is fixed or a significant portion is fixed? So just curious if you have changed anything with inflationary pressures building.

Yes. Look, I mean, as we reduce the debt, we have less worries about inflation that is hitting us. And when we raise the debt and we fix our... to cash the benefits we had on the swaps at that time. Because at the same time, it's one of our priorities to deliver and refit. Already the loans we have is down to around 30% of our assets, and we intend to reduce it even more. So there will be a point that we will be taking delivery of new buildings without adding So we will be using, you know, liquidity to pay the yards. So we don't feel we need to hedge, because already now the interest rates have risen to a level that you see a flat curve. You see a curve across the two, three, five years that is flat. this will keep going up. It may be in the next 12 months we see some increase and some pressure, but thereafter I think the world does not want this war to keep going forever. And the rest of the world, as well as Russia, will realize that we all pay the penalty for this war. for these sanctions that we have now, apart from the huge humanitarian loss and the people who are losing their lives in Ukraine. So the sooner things stabilize and the sooner things are back to normality and maybe sanctions are normalized, the better it will be for all of us, I believe. And I don't see interest rates going to 5% or 6%. you know, in the next one or two years. I see them going, of course, to 3%, but okay, if you are delivering at the same time, the risk is minimal on the effect to the company. So with the reduced needs for financing and with the issuance of this bond, I think we are well covered to fight that storm, if there is one storm, if there is a storm in the end with interest rates. is more is worrying us the effect of raising interest rates to world economies and to a recession and hitting a recession in the Western economies than the actual interest cost of our activities. So we're more worried about the net effect to world economies out of these interest rates

All right, thank you, Paul. Just one last, I mean, you have one of the lowest operating costs in the industry. Is there anything you can do there to maintain that and, you know, with inflationary pressures building as well, or is that kind of a small cost of your overall, you know, operations? Let's

It's not a small cost, and to be honest with you, I'm not very happy at all with the numbers, because we are shipowners, we do this job the last... Me, I do it the last 35 years, and the company the last 60 years. And I don't remember a phase that we had so many things hitting us at the same time, whether that... It's not only inflation, as you said, but it's mostly the rise of from Europe to the Far East, and especially, you know, we have some heavy-lift spare parts that we usually carry for dry dockings, and we have been using for it mainly heavy-lift aircraft liners, like most of them were belonging to Russian air fleet, these big airlines. transportation on spare parts. At the same time, we have been hit by extended COVID in China with all the restrictions of making crew changes in Chinese ports or in other ports, which is hitting us also from that effect. And the increased dry docking costs, the cost of environmental improvements on low friction paints we are using on all our ships, which is an effect, it has a huge effect on the OPEX, but on the other side, On the other hand, we'll have a huge benefit from increased revenues because The ships will be saving fuel, and we will get this as extra revenue on time charter rates of the ships. All these things you pay now to receive later, but it appears on the OPEX now, because we are painting even the older ships with this type of paints. which is costing a lot to apply them, and also the cost of paint itself. And the benefit will be shown in the following quarter, so I know it's looking a little bit rough at the moment, but I can assure you that we monitor every detail of it, and it's this extra investment that adds to the cost. So, indeed, I expect our OPEX to come down in the...

I mean, we basically, we expense certain investments, certain upgrades, environmental upgrades have been expensive, not appreciated. So this will increase, has increased the operating expenses.

All right, great. Thanks for that additional caller. Thank you.

I'm not sure any further questions at this time. I would now like to turn the call back over to management for any further remarks.

Yes, we would like to thank you for attending this conference call, and we'll be happy to discuss again with you in our next quarter financial discussion. Thank you very much, and have a nice day.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.