d'Amico International Shipping S.A.

Good afternoon, this is the Chorus Call Conference Operator. Welcome, and thank you for joining the D'Amico International Shipping third quarter and nine month 2020 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Paolo D'Amico, Chairman and CEO of D'Amico International Shipping. Please go ahead, sir.

Hello, everybody, and thank you to be with us. Let's go straight to the executive summary. As a net result, DIS posted a net profit of $15.4 million. in the first nine months of 2020. This is against the loss of 32.5% in the first nine months of 2019. And in the third quarter of 2020, this posted a net result of a loss of 1.7 million against a loss of 8.2 million recorded last year. TCA, Time Charger Equivalent. This daily spot rate was 18,592 on the first 9 months of 2020 against 1,2786 achieved last year for the same period. In Q3 2020, this generated a daily spot average rate of 12,866 against 11,616 of last year. The DIS achieved a total daily average rate of 16.973 on the first nine months of 2020, against 13,674 of last year. And of this, 14,860 in Q3 2020, against $13,264 last year. Leverage reduction, the net financial position, excluding IFRS 16 to fleet market value ratio was 65% at the end of September 20, versus 64% at the end of September 2019. And this compared against 72.9% at the end of 2018. As far as the vessel sales, Glenda, which is a 50-50 joint venture with Glencoe, sold one ship, Glenda Meredith, And this transaction generates around $18.8 million in cash. In May 2020, the EIS announced that Damico Tanker signed a memorandum of agreement for the sale of Cielo di Guanzu. In Q2 2020, this transaction allowed Damico Tanker to generate around $8.8 million in cash. in cash net of commission. All this has been already delivered. In July 2020, DIS announced that Damico Tankers signed an MOA for the sale of two MRs, the high progress and high performance. This transaction will allow Damico Tankers to generate a total net cash around $16.3 million in the second half of 2020, of which 8.3 million already in Q3 of 2020. In September 2020, this announced that D'Amico Tankers signed a memorandum of agreement for the sale of the high courage. This further transaction will allow D'Amico Tankers to generate a total net cash around 8.9 million between November 2020 and January 2021. I would move directly at this point to the overview and key financial because the market will touch it later on, so it's useless to do it twice. And I leave the floor to Carlos. Thank you.

Yes, good afternoon to everyone. Just a quick look at our fleet profile as of the 30th of September. It consists of 41 vessels, of which 21 on and 9 on the bare boat side. I would say 30 on and the remaining on time charter. Of course, our main presence has always been and is still today the DMR segment. So we control 29 vessels in that segment. We delivered today one of the vessels that Paolo was mentioning we sold to the new buyers. So as of today, our fleet falls to 40 vessels from 41. We have a young fleet with an average age of 6.8 years. 78% is IMO class and 70% is ECO. This percentage has been rising and is going to continue rising for us as we sell our older non-ECO design vessels. As you all know, we underwent an important new building program to which we ordered 22 new buildings since 2012, and we completed this new building program in Q4-19. In terms of CAPEX commitments, this is also a graph that we look at on a regular basis. This has been falling this year significantly after we completed the new building program. We only had the maintenance capex left. It was a big figure if we take into account it only related to maintenance capex. It was 10.2 for the year. Only 1.1 left for Q4. That is because we had a number of vessels which had to start for a special survey this year. They also had to install water ballast tank systems. This figure falls to 6 million next year. and then to $4 million in 2022. So we are already much lighter, and we're going to become even lighter in terms of capital commitments going forward. The same applies to debt repayments. As we mentioned several times in the past, on the front page of the presentation, page 9, we finished reimbursing the median retirement data facility in the end of 2019, and therefore principal repayments fall quite significantly in 2020 from to $36 million and they continue falling over the course of the next few years. The other positive aspect here on the bank financing side is that we signed last night the loan agreement to refinance all the balloons we had for 2021. We had a number of vessels with balloons in early 2021 and one with a balloon in October We refinance all of these through one facility, which we signed last night, and we are going to be drawing down next week. And so the next balloons to be refinanced are only 2022, and we are going to be working on those in the second half of 2021, most likely. And hopefully we expect in a much better market after the rebalancing, which still is ongoing, but which we hope will have finished by then. Going on to the next page, the purchase options of these vessels. We have nine vessels for which we closed the early spec transactions over the course of the last few years. Six of these are already exercisable. A seventh one will become exercisable in December. And they are all in the money or theoretically in the money. And so this is a potential use of funds. We have been, we build up quite a comfortable cash position over the course of the first nine months of this year through vassal disposals and through the strong performance especially in the first half of the year. So this is something we will look at and at the right time we might decide to leverage a bit our balance sheets by optimizing some of these options and therefore reducing the cost of our debt financing. Going on to page 11, we show the coverage, the forward coverage through PC contracts at fixed rates. We managed to keep quite a good level of coverage for Q3 and Q4. Q3, we were 63% covered. Q4, just slightly less, 58%. And that drops in Q1 to 38%. The average rate for Q3 and Q4 is around 16.3, almost, and so that is quite positive. Of course, as some of these contracts that expire in Q4 and Q1 2021 arrive close to termination, we are most likely going to be asked by the charters to renew them on TC at the going levels, of course, which are nonetheless decent. Today, one year TC for an ECHO-MR vessel is around 14,500, so it's not too distant from our break-even, overall P&L break-even. going on to the yeah so we also highlight at the bottom that the percentage of the echo fleet has been has been rising and it's forecasted to continue rising and that of course is a tailwind for our results going on to the following page we show the fleet evolution and there is a small decrease expected in the fleet mostly as a as a result of the delivery of assets on TCN. But since the coverage through period contracts falls over time, actually our sensitivity to the spot market rises, and in 2021, it's around $10 million for every $1,000 per day change in the TC equivalent earnings, and it's almost $12 million in 2022. it's only $1.5 million in Q420. Going on to the following page, we have done quite well in terms of becoming more efficient in the operation of our vessels, so the daily operating costs have fallen from $7,300 in the first nine months of 2018 to $6,700 in the first nine months of this year, which is pretty much aligned with the $6,700 we had in the first nine months of 2019. The savings are attributable to, I would say, mostly also investments in technology. which allows us through condition-based maintenance to identify problems ahead, but also to lengthen the average lifespan of a lot of our spare parts. So we reduce the breakdowns and we increase significantly the average lifespan of our spare parts. But it's also the result of operating with a more homogeneous fleet and through the 22 new buildings that were delivered over the last few years and also a younger fleet. So that also helps in terms of cost of the operating costs. as well as, of course, some efficiency in purchasing arrangements that we are always trying to improve on and which also to some benefits. The GNAs also improved, although to a lesser extent. There was a bigger improvement between 9 months 18 and 9 months 19. Some of that improvement we lost in the first 9 months of 2020. We must also highlight that there was an element of administrative income that was being offset against these administrative costs that we lost in the first nine months of 2020. There's also some exchange rate differences which play a bigger role here, and in particular in this year. So they penalized us a bit here in terms of the GMA. And then finally, the fact that our fleet has been decreasing means that overall general administrative costs have spread out over a smaller number of vessels. And therefore, that contributed to this increase we experienced between 9 months 19 and 9 months 20. And let me say that relative to our peers, I would say that our GNAs are still very, very competitive. And also peers which have much larger feeds than us. Looking at the balance sheet of liquidity position and looking at the key ratios, the ratio between the net financial position and the fleet market value remained stable this year. It improved still significantly relative to the end of 2018 where it was 70%. Then it declined to 64% at the end of 2019 and it increased only very slightly to 65% at the 30th of September. This is despite a decrease in asset values this year. They rose in the beginning of the year by a few percentage points before declining after peaking in May by around 15%. 5-year-old vessel and 10-year-old vessel declined by between 10% and 12% the asset value. But thanks to the profits and the cash that we generated during the year, we managed to keep this ratio stable. And of course, also thanks to the vessel sales, we managed to help to keep this ratio stable. So this and we are particularly happy with the cash and cash equivalent position, which is a 59.3 million at the end of the quarter. And that does not include, of course, the cash that we generated of around 8 million through the vessel that we delivered to the new owners today. And it doesn't include the cash that we will generate with the vessel that we expect to deliver to the new owners in January next year of around 8.9 million. So this position Even in a weak market that we are seeing today, a weak spot market, given the coverage we have and these vessel disposals, we expect this cash position to keep improving slightly over the coming quarters. And that leaves us in a very comfortable position, I would say, to confront this near-term weakness. In terms of the key items of the P&L, on page 15, the nine months profit, cumulative profit is of 15 million. If we include non-recurring items, it's of 26, which is already, I would say, a number we can be a bit more satisfied with. And if we look only at Q3, the losses of 1.7 million, but excluding the non-recurring items, the losses of 0.4 million. And that is basically break-even, given the size of our fleet. It's basically break-even. Going on to the next page, we look at the daily results. of our vessels from an employment perspective. The Q3 results, we earned 12,900, so it's of course not brilliant, but putting it in context, comparing to Q3 2019, it was actually better than Q3 2019. And thanks to the strong coverage we had this year, 63% at a rate of $16,000, which was also higher than the rate we had in Q2 2019, we managed to achieve a blended average rate in Q3 of $14,900 almost. So that's not bad at all. And as I was mentioning, it's basically, if we exclude no recurring items, it's equivalent to our break-even. And in the nine months of 2020, of course, the figures are much better because we benefit from the very strong results in the first half, and the daily average on the spot market was almost 18.6, and the daily average on the TC contracts was 16,000, leading to a blended average of almost 17,000. I pass it over to Paolo again for the market overview.