d'Amico International Shipping S.A.

Good afternoon, this is the Coruscall conference operator. Welcome and thank you for joining the D'Amico International Shipping first quarter 2023 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 access 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, gentlemen and ladies. Thank you for joining our call with our first quarter result of 2023. I apologize, but this time we are a little bit under pressure because we have a flight to catch in an hour's time, so we must work a little bit on the fast mode. At this point, I leave the floor to my colleague, CFO Carlos Baresa, and please, Carlos, go ahead.

Yes, good afternoon to everyone. Thank you, Paolo. Just as usual, we start with the fleet overview. As in the previous presentation, we control a fleet of 36 vessels. The number of own vessels as of 31st of March was of We had seven bare-board vessels and eight vessels on time charter. This fleet composition actually changed slightly last night, and we now have 22 old vessels and six vessels on bare-board charter as we took delivery of the High Freedom. So... A young fleet still, especially relative to the industry average, an average age of 7.9 years, whilst for the industry the average age for the Amazes of 12.7 and for the other ones it's almost 14 years. Large proportion of echo vessels, so 79% of own and wearable and 78% of the entire fleet, Going on to the following page, in terms of CAPEX commitments, nothing new to report here. We include the High Explorer as part of our investments for $23, $30 million, earmarked for that delivery of the vessel now expected at the end of May. And the maintenance complex for the year is still expected at 14.5 million overall, of which already 4.8 were spent and another 9.7 anticipated for the rest of the year. It involves 10 vessels stopping for dry dock in 23, which is a big number relative to our fleet. And therefore, years where the maintenance cap is anticipated to be much lower, especially 2024. In terms of the investments for 2023, it does include also the installation of two scrappers on two of our other ones. Going on to the following page. In terms of repayments on our back debt, good to highlight that we don't have any more balloons to refinance until 2025. And the only balloon that we have to refinance in 2025 is in relation to one vessel for an amount of around $11 million. We had a balloon in 24 for one of our vessels, the Cielo di Londa, that we reimbursed already this year in April. And we are going to be refurbishing this vessel, expecting to draw down the new facility around the end of June, beginning of July. But we are progressing well. to be able to draw down this facility by that date. On the right-hand side, we show how the daily repayments on our loans have been declining quite rapidly. The future declines are going to be driven mostly by the exercise of the purchase at least initially, and therefore that will hopefully contribute meaningfully to reduce our P&L and cash break events going forward, partly compensating some of the cost pressures that we are seeing in other areas of our business, as you will see later. Going on to the following slide, page 10, here we show the purchase options on these vessels. On the top of the page, we show those which were already exercised. So we see that the trust and the trader, which we recently announced that we that we have exercised, and we expect these vessels to be delivered to us around mid-July. And on the bottom, those which were still not exercised, the high loyalty most likely will be exercised in the coming weeks. And then we have the fidelity of discovery. which were vessels that we refinanced recently through new leasing transactions. So the discovery can be exercised already by September 24. And then there is the Cello di Husson, which is the JOCO, and that one is a bit less flexible as a transaction. The first exercise date is March 24, and if we don't exercise in that window, we have to wait until September 25 when we effectively have a purchase obligation. So we anticipate to continue gradually exercising these options on the remaining options of these lease vessels. Of course, it will depend on the – on the market developments, but we are very positive in that respect. So we expect to have ample availability of resources to be able to exercise these options. Going on to the following page, we show the time chart of the in-vessels. Nothing new to report here. We have exercised the adventurer and the explorer. The explorer, as I mentioned just now, is going to be delivered to us around the end of May. The other options are also in the money, to a lesser extent than the adventurer and explorer were. But since Tesla values seem to continue moving up, They are becoming increasingly interesting and most likely as we arrive closer to the end of these time chartering contracts, the exercise of these options will be reconsidered, especially if we are still in a very strong market. and we are likely to be exercising some of these options too in the future, therefore. Going on to the following page in terms of coverage, we have had some success here in covering some of our vessels. and we are now 24% covered for the rest of 2023 at an average rate of just over $29,000 per day. The coverage does fall quite rapidly in 2024, but I'd like to highlight here that we have covered one of our vessels recently, an ECOMR vessel for 32 months. So just over two years and a half. at a very attractive rate. So there is also interest from charters for longer contracts now, which demonstrates that the players anticipate this market to last for quite some time. Going on to the following page, we provide an outlook of the earnings in the current quarter, which despite volatility has been so far quite a strong quarter. The days fixed on the spot vessels represented 44% of our total available days for the quarter at an average rate of just over 34,000. And the TC contracts for the quarter represent 27% of our available days in the quarter at an average rate of just over 29,000, giving a blended rate of almost 32,300 for 71% of the available vessel days. Which means that even if we were to earn only 20,000 on the remaining three days, our blended rate for the quarter would be of around 28,700. If instead on the three days we were to achieve an average rate of 30,000, our blended rate for the quarter would be around 31,600. So we are here not providing any guidance as to what we expect the rate on the remaining three days to be, but we are just providing the tools to our investors and to the analysts so that they can then make their own calculations and assumptions in this respect. Going on to the following page, we take a slightly longer-term view on our results. At the bottom left, we show our potential recurring results in 2023, making an assumption of an overall breakeven of $15,000 per day for 2023. Given the contracts already in place, given the vessels already fixed on the spot market also, the result, the recurring results would be of around $112 million if we were to break even on the remaining three days. However, if we were to earn on average $20,000 per day on the remaining three days, overall results, net results for 2023 would be of a net profit of $138 million. And in case the average earnings on the remaining three days were of $30,000 per day, these results would be closer to $200 million. So this gives you an idea of the profit potential for the company for the full year 23 and for the coming two years. Going on to the following page, here we look at our costs. As anticipated in our previous calls, the dynamics here, are not as favorable as they were after successfully reducing these costs since 2018 and then keeping them under control over the course of the last few years. We have experienced significant inflationary pressures over the course of 2022, which have then led to this increase in costs in the first quarter of this year. The main items which have contributed to this increase have been crew costs, increasing crew costs, and an increase in insurance costs as, of course, because of the sharp increase in asset values, we have also realigned our coverage to cover our vessels at these higher values. leading to an increase in the premiums that we have to pay to our insurance companies. There were also, of course, some currency effects which impacted this cost. They have been more significant in relation to our G&A, where 75% of our costs are in currency which are different from the U.S. dollar. There were also, in terms of GNA, upward pressures because of the variable compensation component. Of course, this is linked to the very strong results that we have achieved last year and that we anticipate to receive this year. And in a weaker market, part of these increases are therefore expected to unwind. And, yeah, I would say that those are the main items. Of course, there's more traveling which is happening that is not as an important factor. we mentioned, but traveling activity has resumed in full also for us this year and already in the course of 2022, and that also is contributing to some upward pressure on the GNA costs. Going on to the following page, we show a quick glance at the the key indicators relating to our balance sheet. The ratio between the net financial position and the feed market value improved further, decreasing from 36% to 27%. 36% at the end of last year, so 27% at the end of the first quarter. We'd like to Remember that this ratio was at 73% at the end of 2018. So this is a very big improvement that we managed to achieve and that leaves us in a very strong position currently. And we expect this ratio to improve further in the coming quarters. given the strong prospects for the market. We ended the quarter also with $155 million in cash. We generated a very strong EBITDA in the first quarter of $76 million, but also as anticipated, our cash flow generation, cash flow from operations in the quarter was actually even stronger. It was over $99 million. because we had some positive working capital effects, and we had discussed these in our previous call in relation to our full year 2022 results. Looking at going on to the following page, the key points, The key line items of our P&L, the net profit for the first quarter was of 54 million, excluding non-recurring items, it was of 56.5 relative to a loss of 6.5 million in the first quarter of last year. So, of course, a very strong improvement. Going on to the following page on the daily TCE spot, the average was for the first quarter 36.7, 700. And that is... weaker than Q4 last year, which was exceptionally strong, but it's pretty much aligned with Q2 last year, where the average was just above 37,000, and it is stronger than Q2 last year. So it's still a very good result. And as we showed you Just now Q2 has been so far also very strong. I pass it over to Paolo for the market overview.