d'Amico International Shipping S.A.

Good afternoon. This is the Coral Skull Conference operator. Welcome and thank you for joining the D'Amico International Shipping second quarter 2022 results. As a reminder, all participants are on listen-only mode. After the presentation, there will be a Q&A session. For operator assistance via web call, please press the headset icon on the bottom left side of your screen. For conference call assistance, please press star and zero on your telephone. At this time, I would like to turn the conference over to Mr. Paolo D'Amico, Chairman and CEO. Please go ahead, sir.

Thank you. Good afternoon, everybody. Thank you for joining us at our usual call. We'll go straight to business. If you don't mind, I would skip the executive summary because we are going to repeat during the presentation, and I leave the floor to Carlos for the BIS overview.

Carlos. Thank you, Paolo. Good afternoon to everyone. Yeah, as usual, we start with the fleet overview. This hasn't changed much since our last presentation. We finalized the sale of the high priority in the quarter, so now instead of 36 vessels, we have 35. We have six cellar ones and six handies. And of course, our core fleet is composed of MRs with 23 vessels. The 17 are owned, eight are on bare boat chartered and 10 are time chartered, which one short term and the remaining long term. So a young fleet, as you know, and we have mentioned several times and increasingly an eco fleet thanks to the important fleet renewal program we undertook starting in 2012. Here we show our CAPEX commitments and These haven't changed much since last time also. They have been on a declining trend. We only have maintenance capex left, but also the maintenance capex has been falling. And for the second half of 2022, it's only around $3 million, and it stays at around $4 million for the following two years. In terms of bank debt repayments here, the good news is that, and as you probably saw with our press releases, after having refinanced all the debt maturing in 2022 at the end of last year, beginning of this year, we have now also refinanced almost all the debt maturing in 2023, with the exception of one vessel, which we are going to be signing most likely around September and drawing down around September this year. So then after that, we will only have one vessel to be refinanced in 2024. It's the Channel de Londra, another one vessel. So it means that we will have a very good runway without having to be concerned about refinancing. In terms of repayments, there is a slight, we have benefited from this trend of falling repayments. The refinancing that we closed this year meant that we drew down slightly more than we reimbursed on some facilities. And therefore, that explains also why the repayments increased slightly in 2023. But thereafter, they should continue on the following trend. And going on to the next page, we show here the purchase options on our lease vessels. We, as you know, we exercised the purchase option on the high priority that we then sold and delivered to the new buyers in Q2 this year. But we also have exercised the purchase options on the high fidelity and high discovery, which we have refinanced with new leasing arrangements with very similar terms to the previous leasing arrangements in terms of flexibility, of exercising the purchase options on these new contracts, but that's at a substantially lower cost. So through these transactions, we reduced our break even significantly on these two vessels. And yeah, we still have the flexibility to exercise them eventually in a few years time. refinance them with traditional bank debt. On the remaining six options on these vessels, we will monitor them closely and we are very likely to exercise them gradually over the coming quarters to further lower our break even as part of our deleveraging strategy. Going on, to the following slide. This is a new slide we added to our presentation. We previously did not mention these in our presentations because they were all well out of the money. However, the increase in asset, recent increase in asset prices coupled with the very strong depreciation of the yen relative to the dollar, meant that two of these options are now in the money. And because on only two of these six contracts, we had options which were priced in yen. And therefore, now the purchase options on these two vessels are around 10% below the estimated market value of the vessels. That means that we are likely to exercise these options in the near future, which will allow us to further reduce our breakeven and hold on to these two vessels, which we know are good vessels built at very good shipyards in Japan. And, you know, so we expect that something will happen most likely in relation to at least one, if not two of these options, which are already in the money in the coming months. Going on to the following page, we show here our... average employment rates for the vessels which are fixed through contracts at fixed rates, mostly time charters, but also one bare boat contract. The blue line shows the blended average of both type of contracts. And the good news is that, of course, the average rates are increasing on these contracts. As we move forward, but more importantly, the contract coverage is falling quite rapidly. And for once, we see this as very good news. And it is intentional. We have refrained from extending, renewing some of these time charters as they were terminating. because we were very positive on the outlook for the market in the coming quarters and years. Of course, as we expected over the course of the last few months, time charter rates have been moving up. So eventually they will arrive at a level which we deem attractive and we will then probably start covering again part of our fleet through such contracts. but over the last few months, our preference was really to stay as much exposed as possible on the spot market. On the graph below, we see that the rapid increase in the percentage of athletes, which is echo, which is expected to continue rising over the coming years. And here we show our... the evolution of our fleet and also the sensitivity of our fleet to every $1,000 per day and $3,000 per day change in the TCA equivalent rate. So for every $1,000 per day change in the TCA equivalent rate, in the second half of 22, our sensitivity just drops. just lower than $5 million and it's around $11 million in 2023 and 2024. And in terms of costs, the situation is also under control. In the first half of this year, daily operating costs were only slightly higher than in the first half of last year, an increase of around 2%, which given the inflationary pressures that the economy is facing, most economies worldwide are facing, we believe this is quite a satisfactory result. In terms of G&A, we actually saw a decrease in the first half of this year relative to the first half. of last year of almost 3%. And there, the currency effects played a big role, in particular, the appreciation of the dollar relative to the Euro, since 75% of our G&E expenses are in currencies other than the U.S. dollar. and the large majority of these expenses are in euros. So we expect to continue benefiting from that in the second half of this year and in 2023, also through forward hedges that we already have in place to cover for this FX exposure. here we instead show some key highlights of our balance sheet and in particular the important ratio of net financial position to fleet market value which since December last year decreased from just over 60% to 52.5% which is a very healthy ratio. This improvement is mostly attributable to the increase in asset values. In particular, in the second quarter of this year, only in the second quarter, our fleet, the average value of our fleet increased by 9%. And what you would probably also notice is that the cash and cash equivalents hasn't increased much since the end of December, and that is surprising given the strong results that we achieved and that we will discuss briefly. And the reason for this is negative working capital movements, in particular, we had an increasing number of vessels which moved from time charter contracts to operating on the spot market. When that happens, you have to, upon re-delivery of the vessel at the end of the time charter contracts, buy the bunkers from the charterer. And as you can imagine, bunker prices are very high today. So that tends to be quite a big investment there. And then after that, you then receive your freight income only after discharge. Usual practice in the market is for the freight to be paid around three days after discharge. But what we have experienced recently are some important delays in this with freight being paid one week or 10 days after discharge. And also we have seen a lengthening of the voyages, which we have discussed already in our last call, which is one of the reasons why the market is so strong. And that is, of course, related to the war in Ukraine and the disruption to the traditional trade flows. Nonetheless, we want to reassure you in this respect that the delayed freight payments are coming in. And so during July, our cash position has already improved significantly. And we expect to end July with a cash position of almost $17 million. So much better than the 46 million at the end of June. Here instead the main line items of our P&L. And as you see, we recorded a profit of almost $26 million in the second quarter. and of 19 million dollars in the first half and excluding non-recurring items uh the profit was of 36 and a half in the second quarter and 22.4 in in in the first half um also worth of notice that the also within the second quarter we have experienced an improving trend throughout the quarter. So April, we were only marginally profitable. We were much more profitable already in May and even more profitable in June. And in July, we are trading at around the same levels that we were trading at in June so far. So if the markets remain At these levels, for the rest of the quarter, our expectation is that Q3 22 could be even stronger than Q2 22. Going forward, here we look at the average daily rates achieved for our vessels operating on the spot and time charted and the blended results and on Q2. average daily rate on the spot was of almost 28,700, including the TC contracts, the blended rate was of almost 33,400. In the first half, the average spot rate was of around 21,000 and including the TC contracts of almost 18,600. I pass it over to Paolo for the market overview.