d'Amico International Shipping S.A.

Good afternoon, this is the Corsical Conference Operator. Welcome and thank you for joining the Damico International Shipping Full Year 2022 Results Conference Call. 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. Hello to everybody. Thank you for attending our 2022 results presentation. As usual, I would skip the executive summary because we are not repeating ourselves. And I leave the floor to Carlos to start the financial part of the presentation. I'll join you in a second moment. Thank you.

Good afternoon to everyone. As usual, we just start with a quick look, a glance at our fleet as at the end of the year, 36 vessels, 20 of which 20 owned, 8 Belpo chartered in, and 8 time chartered in, of which 6 long-term. Mostly MR vessels, 24 out of 36, and then an equal presence in the LR1 and Handy segments. Young fleet, average age of 7.6 years relative to an industry average of 12.8, and Increasingly, an ECHO fleet, we are now at 79% of the owned and wearable vessels, which are ECHO, and 78% of the entire controlled fleet, which is ECHO. In terms of CAPEX commitments, the usual slide we show here, as you know well, we finished our new building program in 2019. Last year, it wasn't planned at the beginning of the year, but some attractive opportunities materialized during the year, which we took advantage of. So we, through a share redemption, we acquired the shares we didn't own in the JV we had with the Glencoe Group for $27.4 million. And that was a very attractive deal, which for us, we were fortunate in the timing. The values of the vessels which were used to determine the share price for the younger vessels were around 21.2 and 19.75 for the older ones. For the older one, the one vessel built in 2010, the other three were built in 2011. And soon after that, a few months later, these vessels were worth around 27 to $28 million. So it's a very attractive price for us. Also, we exercised the purchase option on a vessel TC Din, the High Adventurer, which was delivered to us in December last year. The purchase option was denominated in yen. That's one of the reasons why the price was so attractive. When we took delivery of the vessel, it was worth around 40 million, and the purchase price was around 30, so also very attractive deal there. We also exercised towards the end of last year the purchase option on another vessel to see in that the same price in yen, which translates into $30 million in this case. and delivery should occur of this vessel around May this year. So it's a sister vessel, will be also around five years old by when it is delivered to us. And also at a very attractive price relative to the vessel's current market value. This year in 23, we also have 14.5 million in maintenance capex plant. That is the, let's say a high case, It involves TriDoc special surveys for 10 vessels. It is possible that some of these special surveys might actually slip into 24, so the actual investment figure might end up being slightly lower than that. And it also includes the installation of two scrubbers on TriDoc. two of our LL1s which are stopping for special surveys this year. Going on to the following page, we show our bank debt repayments. Good news here is we have refinanced all the debt which matures in 23 and we only have one facility for one vessel maturing in 24 with a balloon of around $22 million. And we are now working on refinancing this, and there's a lot of interest from banks, and we are seeing very attractive terms. So we are confident we are going to be refinancing this balloon soon, in the first half of this year, most likely, at very good conditions. And then in 25, we only have one balloon also for one vessel of around $11 million to be refinanced. So we have a good runway without having to be concerned about refinancings. Not that that is a source of concern in any ways, given the very strong markets we are experiencing and we are going to most likely be experiencing over the coming years. In terms of daily bank loan repayments, They have been on a downward trend, a significant downward trend since 19. They are expected to increase in 23 mostly as a result of the 2022 refinancings, but then they are going to resume their downward trend after that. And so that is also positive for us in terms of maintaining a low cash break even. In terms of purchase options on these vessels, we refinanced last year two of our leasing transactions with new leasing deals at substantially lower costs for the high fidelity and high discovery. And we have exercised purchase options on two vessels, the high Voyager, which was delivered to us in January, this year in which we are keeping that free for now. And the high freedom, which would be delivered to us around April, May this year, and which we also intend to keep that free. Also, we have the intention of further strengthening the company, reducing our break-even going forward. So there are... three other options which we are likely to exercise this year. The plan is to exercise these gradually over the course of the year. And then a remaining one which we are going to be exercising in most likely in 2024. In terms of purchase options on time chartered vessels, we already discussed those relating to the adventurer and the explorer. The remaining four options are also in the money, but as previously stated, the exercise prices for these options are not as attractive as those for the adventurer and explorer, so given the flexibility we have by time chartering in these vessels. And we prefer for now to not to delay exercise of these options to a later date potentially. So we will continue monitoring the situation and reevaluate whether to exercise these potentially at a later date closer to the end of their firm periods for their time charter in contracts. In terms of contract coverage, relative to our last update relating to our Q3 results, we, as planned, we have increased our coverage, which is now for 2023 at around 20% And also the average rates for these contracts are increasing throughout the year. And starting from Q2, they are at around $28,000 to $29,000 per day, so much more attractive levels than we have benefited from or that we have experienced rather in 2022. Going on to the following page, we give some highlights of how the Q1 23 is progressing. We have fixed, we have for the quarter, 24% of our available employment days fixed at an average rate of around 25,000. and we have around 58% fixed at an average rate of 38,800, giving a blended rate of 34,700 for 82% of the days. That implies that if on the remaining three days for the quarter, we were to earn $20,000 per day, our blended rate overall would be of just over 32,000 for Q1. But if we were to earn as much as 30,000 on the remaining three days, our blended rate would be closer to 34,000. So going on to the following page. We show the fleet evolution, which on the left top hand side of the slide, and on the right top hand side of the slide, we show the sensitivity for every $1,000 per day and $3,000 per day change in the DC equivalent rate. And for this, so for 23, the sensitivity is around $8 million for every $1,000 per day. On the bottom left-hand side, we show the recurring results on the fixed contract dates, including the time charter contracts and what has been already fixed through spot contracts for fiscal year 23, assuming P&L breakeven of around $15,000 per day for the fee. And on the right-hand side, we show the net results, which could be achieved in 23, 24, and 25 for different scenarios for the free days. So assuming $20,000 or 25 or $30,000 on the free days. Assuming $20,000 on the free days, our net earnings for 23 would be of $111 million. And assuming $30,000 on the free days, our net earnings for 23 would be $194 million. Going on to the following page, we show the evolution of our direct operating costs. We have achieved very good results over the last few years here. Of course, in 22, we were confronted with a much more severe inflationary environment. But despite this, we managed to contain our cost increases of these daily operating costs to only 1.9%. and they are still below where they were in 2018, which is, I would say, a very good result. In terms of the inflationary pressures were more pronounced in relation to crew costs and to insurance costs. Insurance costs increases were also related to the increase in vessel values and the requirements to ensure the vessels at these higher values. The GNA evolution has also been positive since 18, although we have been experiencing more upward pressure here already starting from 2020. The increase in 2022 relative to 2021 is, to a large extent, attributable also to the variable compensation component for our employees, which, of course, is linked to the very strong performance of the company in 2022. Going on to the following page, we show a quick look at our financial position and financial strength. The ratio between the net financial position and the fleet market value, shouldn't come as a surprise, declined significantly since the end of 21. It stood at 36% at the end of 22. relative to 60% at the end of 21. And we were at 73% at the end of 2018. So that is a big improvement. And the vessel values have held up well also in the beginning of 23, actually moving slightly upwards. And we have also been generating substantial amounts of cash this year. So our expectation is that this ratio will have improved, further improved by when we approve our Q1 financials. Going on to the following page, here we finally have the key line items of our P&L. Q4 was exceptionally strong, $72 million in profits. the strongest quarter for this so far. And also on an annual basis, excluding non-recurring items, it was the strongest result so far for this with profits of almost $135 million. excluding non-recurring items for once. The profits are actually slightly smaller. Q4, they are just below $70 million. There was a reversal of impairment of $2 million in the quarter on two vessels for which we had in the past recognized an impairment. And however, on a full year basis, excluding non-recurring items, the results are even higher and they are at $137.6 million. Going on to the following page, we show the results of both our vessels employed on the spot market and of the average rates for our TC contracts and the Charter contracts, as well as the blended rates. And there is, of course, a very clear trend of quarter on quarter improvements throughout the last year. So the Q1, the market was still subdued with an average rate of 12.9, but then every quarter since has been We have almost $29,000 per day achieved in Q2, 37 in Q3, and almost $43,000 per day achieved in Q4 for our vessels operating on the spot market. TC average rates have been close to break even throughout most of last year. with the exception of Q4, where we started seeing these average rates increasing, and they were at almost 20,000 in Q4, leading us to a blended rate in Q4 of 38,300. Overall, the blended rate for 22 was 26,000, almost 400. And that is the summary of the the key financial highlights, and I pass it over to Paolo for the market overview.