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 3rd Quarter 9 Month 2022 results. As a reminder, all participants are in 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. So, welcome to our third quarter and nine-month result presentation. Let's go straight to the presentation itself. As usual, we jump the executive summary because we don't want to repeat ourselves twice. And I leave the floor to Carlos for the first part of it. Please, Carlos.

Thank you, Paolo, and good afternoon to everyone. So just as usual, a quick glance at our fleet composition. As at the end of the quarter, 36 vessels, which 24 MRs and the same number, of handies and other ones, six of each. In terms of control, 19 are owned, eight are variable chartered, and nine are time chartered in. Young fleet, average age of 7.5 years, mostly IMO class, almost 78%, and also 78% eco design, meaning by that vessels which were delivered since 2014 and which consume around 30 percent less fuel than the conventionally designed vessels. This fleet composition is the result of important investments we did between 2000 and in 2019 to renew our fleet. Over that period, we ordered and received 22 new buildings. And since then, we have had mostly maintenance CapEx, which has been falling actually over the last few years. This year, we had a few opportunities that we could seize in terms of investments. And the first one being the redemption of the shares of our JV partner, England International Shipping, for around $27 million. That company controlled four MR vessels, three built in 2011 and one built in 2010. And the values of the the implicit values of the vessels acquired were around 21 million, whilst today they are around 27 million. So that was a very good deal for us. And we were, I would say, lucky with the timing because the agreement was reached just before vessels' values started moving sharply upwards. We also had a purchase option on a vessel time charted in whose purchase option was in yen and the strong depreciation of the yen relative to the dollar made that purchase option very attractive. So we were able to declare that option and acquire the vessel. It still has to be delivered to us. It will be delivered towards the end of November for $30 million. The vessel, it's a five-year-old vessel built in the Onomichi shipyard, very good shipyard in Japan. We have time-charged the vessel since its delivery, so we knew it very well. The vessel value today is probably around $39 to $40 million. So also that one was, we believe, a very good deal, which allows us to significantly lower our break-even on that particular vessel. Going forward, we still have only mostly maintenance capex. And we do have, however, another option on a vessel, a time charter in, as we will look in more detail later in the presentation that we are likely to exercise. Going on here, we look at bank financing repayments and balloons and As previously discussed, we have already refinanced all the debt, which was maturing in 2023. And we only have one facility maturing in 2024 with a balloon of around 22 million. And so, yeah, that is also quite positive from our perspective, although, of course, Today, this is not a big concern for us as it was in the past, given the very strong markets we are experiencing. The daily repayments on the loans had been falling from 2019 to 2022. As a result of the recent refinancing, these increased in 2023, but should start then gradually falling again. Going on to the next page, the purchase option on the lease vessels. We exercise and sold the high priority in 2021. It was one of the oldest vessels in our fleet. And this year we exercise and refinance through new leasing transactions, the high fidelity and high discovery. We have six other options on these vessels that can be exercised. We are most likely gradually going to be exercising them over the coming quarters and years. as a way of deleveraging and reducing our break even and strengthening our company to be able to then act counter cyclically at the right time. So that is a potential use of funds going forward. Here we then look at the vessels which are time charted in and on which we have purchase options. One, as previously mentioned, High Adventure, was already exercised. And we have also the High Explorer, which has a purchase option in yen. And we have to exercise it by January next year. And it is that the price in yen is the same as for the high adventure. And so it is likely that we are going to be exercising this option in the coming months. The other options, the other, the remaining four options on these vessels are in the money, but They are at a significantly higher value relative to the high adventure and explorers, so we are unlikely to exercise them anytime soon. Going on to the following page, here we show our contract coverage. The blue line includes both the time charter contracts and the verbal charter contracts. The average rates on this coverage is moving up quite sharply over the coming quarters. It is of around 20,500 for Q4 this year. It was of only 15,500 in Q3, and it rises to just over 28,000 for 2023. We have fixed recently some vessels at some very attractive rates. And that is why these average rates have been moving up fast. And we might decide to take some more coverage. We are likely to take some more coverage at the current very attractive rates. We would like to reach coverage of around 20 to 30%. at least 4,023 at the current high rates. The percentage of our echo fleet has been increasing over the years and this trend should continue over the coming years as we sell some of our older vessels in our fleet. Going on to the following page, this is a new slide that we didn't include in the past in our presentation, but we wanted to align ourselves with our peers, which provide also an outlook on the earnings of the current quarter. And so here we are showing, based on the fixed dates, both relating to period contracts and to spot dates already fixed, what is the blended rate achieved so far, which is 32,440. This is composed by 46%. of the available days in the court are fixed to spot contracts at an average rate of 37,500 and period rate contracts representing 20% of the available days at an average rate of 20,500. So we have 65% of our days covered at this blended rate of 32,440 and 35% of our days and the port is still open. Here, these are not indications of what we expect to earn on these three days, but we just made some assumptions. Of course, you as analysts and investors are free to make your own assumptions given how the market is performing and what the outlook for the remaining of the rest of the quarter is. I would say these are quite conservative assumptions. We look here at what our earnings would be if we earned $20,000 per day on average on the free days. Their blended earnings for the quarter would be $28,000, around $28,000. If we earned $25,000 per day on the open days, then our earnings for the quarter would be $30,000. And if we earned $30,000 per day on the free day, our blended earnings for the quarter would be $31,600. And that is higher than the blended rate we achieved in Q3. So it doesn't look like a very high hurdle to overcome to earn $30,000 per day on the remaining quarter. On the remaining open days, given so far we have achieved 37,500 on the spot days, and the market continues to be very strong. We're actually looking at the paper market. The expectation is for the market to strengthen further in the second half of November and in December this year. So going on to the following page, this slide is slightly modified relative to what we presented before. We decided here to show also on the left in the bottom what are the potential earnings from the contracts which are already fixed in relation to Q4 that includes both the spot days already fixed and the time charter days already fixed, assuming P&L breakeven costs, all inclusive of $15,000 per day, but excluding, of course, non-recurring items. And that would imply that on these fixed days, we already have locked in $36 million in profit for Q4. So assuming the remaining days are employed at breakeven, this would be the profits that we would be earning in Q4. And for 2023, we did the same exercise, assuming the same P&L breakeven of $15,000 per day. And the locked-in profits there from the period contracts is $20 million. So on the right-hand side, then we show given the sensitivity that we show on the upper part of the graph of the page of $1.1 million for every $1,000 per day change in the DC equivalent earnings, how this would affect our overall earnings for Q4 and for 2023 and 2024. So... We show them if our earnings on the three days were $20,000 per day. In Q4, our recurring results would be of $40 million. If our earnings on our three days were $25,000 per day, our overall recurring net results would be of $46 million. And if our earnings on our remaining three days were of $30,000 per day, then our net earnings for the period would be of 51 million. We do the same exercise also for 2023, and you can see how the earnings would vary. Here we show the evolution of our daily operating costs and of our GNA. We are glad that we managed to keep under control the daily operating costs despite the inflationary environment that we are confronting. Unfortunately, I believe that is going to be more complicated to keep at the same level going next year because we are likely, especially on the cruise, to face some upward pressure in this respect. Ukrainian crews are important for our vessels and generally for the industry. Of course, there are some issues today finding enough Ukrainian seafarers, so recruiting Ukrainian seafarers. It was a market that was already tight, and so that is, of course, not helping. On the right-hand side, we saw the GNA, where the evolution has been not as positive as on the daily operating costs. Of course, partly this is related to the greater traveling that is happening now, There's also some catch-up traveling for business purposes after the COVID period. There is also some accruals of benefits linked to the long-term incentive plan, which are taken into account this year, which are also contributing to the increase in G&A. It is important to note that they remain below the 2018 figures. Going on to the following page, we show the ratio between the net financial position and fleet market value, which not surprisingly has improved markedly since the end of last year. We are now at 42%. Of course, this is the result of the cash that significant cash we generated this year. as well as the increase in asset values. And yeah, in the end of 2018, this figure was at 73%. So this is a very big improvement and we are glad that we can count today on a very strong balance sheet with 85 million in cash and cash equivalents at the end of the quarter. Here we look at the key P&L line item. The profit for the quarter Q3 was of $44 million and over the nine months it was of $63 million excluding non-recurring items. The profit for Q3 was of almost $46 million and for the first nine months of the year of $68 million. Looking in greater detail at the daily results of our vessels, those employed on the spot market, as previously mentioned, earned on average just over $37,000 per day, which is more than three times more than what they earned in Q4 21. And given also the contracts that we had at an average rate of around 15,500, the blended rate for Q3 was of 30,230. In Q3 and the blended rate for the nine months was of 22,400. I pass it over to Paolo for the market overview. Thank you, Carlos.