EuroDry Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 8, 2023

There are 5 speakers on the call.

Operator

Thank you for standing by. Ladies and gentlemen, welcome to the EuroDry Conference Call on the Second Quarter 2023 financial results. We have with us today Mr. Aristides Bipas, Chairman and Chief Executive Officer and Mr. Tahos Ali Hides, Chief Financial Officer of the company.

Operator

At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session. I must advise you that this conference is being recorded today. Please be reminded that the company announced its results with a press release that has been publicly distributed. Before passing the floor over to Mr.

Operator

Picas, I would like to remind everyone that in today's presentation and conference call, EuroDry will be making forward looking statements. These statements are within the meaning of the federal securities Matters discussed may be forward looking statements, which are based on current management expectations that involve risks and uncertainties that may result in such expectations not being realized. I kindly draw your attention to Slide number 2 of the webcast presentation, which has the full forward looking statement and the statement was also included in the press release. Please take a moment to go through the whole statement and read it. And I now would like to pass the floor to Mr.

Operator

Pitas. Please go ahead, sir.

Speaker 1

Good morning, ladies and gentlemen, and thank you all for joining us today for our scheduled conference call. Together with me is Mr. Tasos Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the 6 month period and quarter ended June 30, 2023. Please turn to Slide 3 of the presentation.

Speaker 1

Our financial highlights are shown here. For the Q2 of 2023, we reported total net revenues of $10,300,000 and a net loss of $1,200,000 or $0.43 loss per basic and diluted share. Adjusted net loss was $1,300,000 or $0.48 adjusted loss per basic and diluted share. Adjusted EBITDA for the quarter was $2,500,000 Please refer to the press release for a reconciliation between adjusted net loss and adjusted EBITDA. The Board of Directors approved the extension of its share repurchase program, which was originally established in August 2022 for another year.

Speaker 1

The program provided the company with authorization to repurchase up to $10,000,000 Today, we have repurchased 216,000 of our common shares, I. E. About 8% of our total outstanding shares in the open market for about $3,250,000 since the inception of the program. The extension of our share repurchase program was approved by the Board of Directors as our stock is trading at a very large discount to our net asset value. Thus, buying our own stock represents an attractive investment opportunity for us.

Speaker 1

The Board will review the program after a period of 12 months or after the $10,000,000 deployment. Share repurchases will be made from time to time for cash in open market transactions at prevailing market prices or in privately negotiated transactions. The timing and amount of purchases under the program will be determined by management based upon market conditions and other factors. The program does not require the company to purchase any specific number or amount of shares and may be suspended or reinstated at any time at the company's discretion and without notice. We are also very pleased to announce that today we posted our 2022 ESG report on our website.

Speaker 1

We are committed towards all three elements of ESG, the environment, our social impact and our governance. We are certain that the commitment benefits all our stakeholders in more ways than one. Arcelor will discuss our financial highlights in more detail later on in the presentation. Please turn to Slide 4 for our operational highlights. After recovering early in the Q2, the drybulk markets turned down again, reaching by July 2023, the very low levels last seen in January of this year.

Speaker 1

This decline in the market rates also affected our results for the Q2. Currently, 2 of our vessels continue to be employed under index linked charters until March 2024 and 2025 respectively at 105.5 percent of the average Baltic Khamsin Max Index. 2 other vessels are fixed at medium term time charters at currently above market rates, whilst the remaining 6 vessels are employed under short term charters. You can see the specifics of the various charters we concluded in the accompanying presentation, noting the big drop in charter rates since the beginning of Q2. During this quarter, we were helped by the 2 FFA positions we have taken in the prior quarter and they mitigated the effects of the lower charter rates that are still prevailing.

Speaker 1

We realized the gain of $2,300,000 due to these hedges. Regarding drydocks and repairs, our motor vessel Sante Cruise and motor vessel Catarimi P underwent dry dock. The former for almost 24 days starting towards the end of the previous quarter and the latter for 20 22 days during the Q2. Furthermore, motor vessel volume was locked was commercially off hire for 2 days during the quarter. The incident that hurt us most during this quarter happened on April 29, 2023, when motor vessel Goodhart was detained by the U.

Speaker 1

S. Coast Guard at Corpus Christi for certain deficiencies. It took a long time for the deficiencies to be rectified. Plus EuroDry had to provide a concrete guarantee on alleged smartphone violations. The vessel was able to sail on June 7 after these actions.

Speaker 1

At the moment, there is no litigation, no claims or allegations against us or the manager. We believe that if there are any, the majority of the costs will be covered by insurance. Nevertheless, we have taken a $500,000 provision in our Q2 accounts. The vessel was technically off hire for about 35 days during this period, which unfortunately resulted in the loss of the vessels late in period and the cancellation of a lucrative $35,000 per day charter, thus forcing us to seek alternative employment. The vessel is finally chartered at $18,500 per day until August 2023, although she had to incur an additional 13 days of waiting.

Speaker 1

As a completion of this current voyage, she will proceed to the scheduled dry dock. Please turn to Slide 5, which shows the main particulars of the 10 vessels of Composer fleet, which includes 5 Panamax, 2 Ultramax, 2 Kamsarmax and 1 Supramax Drybulk Carriers with a total cargo capacity of approximately 730,000 deadweight tons and another average of around 13.5 years. Now please turn to Slide 6, which graphically shows our fleet employment. As you can see, our current fixed rate coverage for 2023 stands at around 31%. This figure excludes ships on index charters, which are open to market fluctuations that have secured employment.

Speaker 1

We currently trade our vessels in short term charters reflecting the current state of the market. As these rates increase, we will aim to secure longer term charters for some of our vessels. Turning on to Slide 7, we go over the market highlights for the quarter ended June 30, 2023, up until last week. In the Q2, we saw a much weaker drybulk market across all sectors with rates taking a tumble towards the end of the second quarter. During the Q2 of 2023, the average Panamax spot rate was around $10,500 per day.

Speaker 1

By June 30, spot rates have dropped to approximately $7,900 per day and currently they have increased a little bit to $8,700 per day. Similarly, the average 1 year time charter for Panamaxes was approximately $14,100 per day during the Q2, while the rates started trending low to about $11,900 per day by June 30 and the target is standing at $10,735 per day. We witnessed a similar development with Supramaxes with declining rates. However, we have not seen this slight uptick in the recent days as we currently do in the Panama spot market. Please turn to Slide 9.

Speaker 1

With its latest update in July 2023, the IMF's latest forecast is modestly higher than its prior predictions in April. However, still weak versus all the standards. Global growth is projected to fall from an estimated 3.5% in 2022 to 3% in both 20232024 from previous predictions of 2.8 for 2023 and 3% in 2024. The March slowdown in global activity is anticipated in the second half of twenty twenty three and first half of twenty twenty four, but not a recession. With a look for a gradual stabilization in the second half of twenty twenty four.

Speaker 1

The latter supported by the rate cuts in many areas around the world and the expectation that inflation will continue to fall. Time as the opening appears to be uneven and volatile, even stalled some might say. Renewed softness in the housing market, growing concerns on local government financing risks and an uncertain external environment for the export sector weighing on the economy's near term growth path. Still, China's growth forecast of 5.2% in 2023 and 4.5% in 20 24 remains unchanged, while growth in other emerging and developing countries is projected to defy the overall global economic slowdown. There is strong demand from India, which has delivered the biggest upsized price of this year, with its high GDP growth in Q1 that exceeded expectations.

Speaker 1

This was driven by strong government CapEx and services, exos standing out against other parts of the world. Despite the general global slowdown, the U. S. Economy is forecast to moderately grow by 1.8%, which compared to the previous IMF growth forecast of 1.6%, seems to suggest the U. S.

Speaker 1

Can potentially avoid recession concerns in the second half of twenty twenty three. However, the IMF seems to have lowered its growth projections for the U. S. For 2024, down to 1% from its previous 1.1% growth forecast. On the other side of the world, the Russian economy is fairly better than expected with a revised estimate of 1.5% for 2023 from just 0.7% previously.

Speaker 1

Despite the effect of the sanctions with the Western Financial Markets and many export markets for Russian companies and commodities closed. Europe is slow and will continue to be slower than earlier predicted with a mere 0.9% growth in 2023 and 1.5% growth in 2024. Finally, according to the IMF, the all important areas for shipping India, China and the Aegean-five will all continue to grow at a rate between 4.5% to 6.3% during both 2023 2024, thus suggesting the driver cargo demand could hold up well. This view is reflected in the latest Clarksons forecast as despite the slightly slower overall global growth expectations, drybulk trade demand is expected to return to a steady growth of 3.3% this year and 2.4% in 2024. The drybulkrade growth is improving driven by the Far East and the geopolitical tensions which boost tonnage growth.

Speaker 1

Please turn to Slide 10. The order book continues to fuel positive market sentiment as it remains one of the lowest in history. The order book as a percentage of total fleet as of July 2023 stands at just 7.4%. This suggests minimal fleet growth over the next 2 to 3 years, potentially leading to higher markets even when it was historically other demand growth. Additionally, over the next couple of years, environmental regulations could further influence supply growth either by forcing some vessels to retire or reducing their operational speed.

Speaker 1

Turning to Slide 11, let us now look into supply fundamentals in a little bit more detail. According to Clarkson's latest report, new deliveries as a percentage of total fleet are expected to be 3.8% in 2023, 3% in 2024 and 2.4% in 2025. As of July 23, the total drybulk vessel operating fleet was 13,650 vessels. But the actual fleet growth is expected to be lower than the aforementioned figures due to scrapping and slippage. 8% of the fleet is older than 20 years old as a good candidate for scrapping, especially if the market remains at current levels.

Speaker 1

Please turn to Slide 12, where we summarize our outlook for the drybulk market. The drybulk market drifted downwards for most of 2023 Q2, while geopolitical uncertainties remain. Weaker trends in key regions such as European coal imports and the Chinese real estate sector coupled with lower port congestion, which aids active supply, contributed to this market weakness across the sector. Aside from lower port congestion though, slower speeds are moderating this active supply growth because newly introduced emission regulations will result in slower speeds. Also, the macroeconomic environment improved during the quarter as inflation started coming down in many countries around the world and scientists have revised the economic outlook forecast upwards.

Speaker 1

Nevertheless, uncertainty remains over the scale and timing of potential market improvements with a range of scenarios surrounding key factors, including the global and Chinese economy as discussed and the aforementioned supply impacts from regulations. On balance though, some improvement in earnings is expected to materialize in the coming quarters as supply demand fundamentals appear more balanced for the remainder of 2023. With drybulk trade volumes up, especially for iron ore and coal and the modest scheduled fleet growth on the supply side, we would expect that we will have a strong foundation for rates to increase further in 2024, provided the global economy continues to grow as per recent analyst forecast. Let us now turn to Slide 13. The left side of the slide shows the evolution of 1 year tight charter rates of Panamax drybulk vessels since 2002.

Speaker 1

As of August 4, the 1 year time charter rate for Panamax vessel with a capacity of 75,000 deadweight ton stood at $10,725 per day, lower than the median. On the other hand, you can see the historical price range for the 10 year old Panamax vessel, which has a current price of $21,500,000 Over the past year, dry bulk prices have been gradually coming down from the previous high levels, yet they are still higher than historical average and median prices. The different development of vessel prices and market rates has become a rather perplexing. The former remained at relatively high levels, while charter rates have declined significantly. As prices have started to retreat, we are conservatively positioning the company to take advantage of a probable improvement in rates in the following quarters.

Speaker 1

Our strong balance sheet will continue to be used for further stock repurchases and potential vessel acquisitions. Let me now pass the floor over to our CFO, Tasos, to go over various financial highlights in more detail. Tasos, the floor is yours.

Speaker 2

Thank you very much, Aristides. Good morning from me as well, ladies and gentlemen. Over the next four slides, I will give you an overview of our financial highlights for the Q2 and first half twenty twenty three and compare them to the same periods of last year. For that, let's turn to Slide 15. For the Q2 of 2023, the company reported total net revenues of 10,300,000 representing a 50.7% decrease over total net revenues of $21,000,000 during the Q2 of last year, which decrease was mainly the result of the lower time charter rates our vessels earned during the Q2 of this year compared to last.

Speaker 2

And secondarily, the increase of high periods of the vessel good part as Aristides mentioned earlier. The company reported net loss for the period of $1,200,000 as compared to net income of $10,600,000 for the same period in Q2 of last year. Interest and other financing costs for the Q2 of 2023 amounted to $1,400,000 compared to $800,000 for the same period of 2022. Interest expense during the Q2 of this year was higher, mainly due to the increased amount of debt we paid and the increased LIBOR or soft rates our loans had over the period compared to last year. Interest income for the Q2 of this year stood at about $104,000 compared to practically no interest income during the same period of 2022.

Speaker 2

Adjusted EBITDA for the Q2 of 2023 was $2,500,000 compared to $13,700,000 during the Q2 of 20 22. Basic and diluted loss per share for the Q2 of 2023 was $0.43 calculated on about $2,760,000 weighted average number of shares outstanding compared to earnings per share of $3.66 basic and $3.61 diluted calculated on about $2,900,000 weighted average number of shares outstanding for the Q2 of 2022. Excluding the effect on the loss of the unrealized gain on derivatives, the adjusted loss for the quarter ended June 30, 2023, which have been $0.48 per share based in diluted. Compared to the Q2 of 2022, where we would have $3.43 basic and $2.38 diluted income per share, respectively. User and security analysts do not include the unrealized part of the earnings in their public segment and that's why we adjust our results as well.

Speaker 2

Let's now look at the numbers for the corresponding 6 month periods ending June 30, 20232022. For the first half of this year, the company reported total net revenues of $21,700,000 representing a 34.8% decrease over total net revenues of $39,300,000 during the first half of twenty twenty two. And again, that is the result of lower time charter rates our vessels earned during the first half of this year. The company reported net loss for the period of $2,700,000 as compared to a net income of $21,100,000 dollars during the first half of twenty twenty two. Interest and other financing costs for the first half of twenty twenty three amounted to 2 $900,000 compared to $1,400,000 for the same period of last year.

Speaker 2

This increase again is mainly due to the increased amount of debt we carry as well as the increase in the benchmark rates for our loans we set to pay compared to the same period of

Speaker 3

the previous

Speaker 2

year. For this period as well, we said interest income, which amounted to almost €400,000 compared to practically no interest income during the same period of 2022. Adjusted EBITDA for the first half of this year was $4,800,000 compared to $26,400,000 achieved during the first half of twenty twenty two. Basic and diluted loss per share for the first half of this year was $0.98 calculated on 2,800,000 dollars basic and diluted weighted average number of shares outstanding compared to gain of 7.35 dollars basic and $7.25 diluted for the same period for the 1st 6 months of 2022. Again, if we exclude the effect on the loss for the first half of this year, the unrealized loss of derivatives, the adjusted loss attributable to common shareholders for the 6 month period ended June 30, 2023, would have been $0.33 basic diluted, as compared to a gain of 6 $0.77 basic and $6.68 diluted for the first half of twenty twenty two.

Speaker 2

Let's now move to Slide 16 to review our fleet performance. As usual, we will start our review by looking at our fleet utilization rates for the Q2 of 2023 and compare it to the Q2 of 2022. Our fleet utilization rate is broken down to commercial and operational. During the Q2 of 2023, our commercial utilization rate was 98.3%, while our operational utilization rate was 95% compared to 99.4 percent commercial and 99% operational for the Q2 of last year. On average, 10 vessels were owned and operated during the Q2 of 2023, earning a time charter equivalent rate of $12,179 per day compared to 10.79 vessels we own and operated during the Q2 of last year, earning on average almost twice as much 23

Speaker 1

$1,490 per vessel per day.

Speaker 2

Our total daily operating expenses, including management fees, averaged $6,708 per vessel per day during the Q2 of this year, compared to $5,867 per vessel per day for the Q2 of 2022. General and administrative expenses expressed on a per day per vessel basis amounted to $8.76 for the Q2 of 2023 compared to $6.95 for the Q2 of last year. If we move further down on this table, we can see the cash flow breakeven level, which we set to pay for the Q2 of this year and which takes into account drydocking expenses, interest expenses, loan repayments and dividends is paid in cash. We had no dividends for this period. Thus, for the Q2 of 2023, our daily cash flow breakeven rate was $14,120 per vessel per day compared to $11,980 per vessel per day for the same period of this year or last year.

Speaker 2

Now let's go to the right part of this table to look at the figures for the first half of twenty twenty three and compare them with the equivalent period of last year. During the first half of twenty twenty three, our commercial utilization rate was 99%, and our operational utilization rate was 99.7% compared to 97.4% commercial and 99.3% operational for the same period of last year. On average, 10 vessels were owned and operated during the first half of the year, earning the time charter equivalent rate of $11,696 per vessel per day compared to 10.17 vessels we operated during the same period of 2022, earning another $24,025 per vessel per day. Our vessel operation expenses, again, including management fees, were $6,424 per vessel per day for the first half of twenty twenty three compared to $5,806 per vessel per day for the same period of last year. And G and A expenses, again expressed on a 3rd day conversion basis, were $8.82 this year compared to $7.78 for the 1st 6 months of 2022.

Speaker 2

Similarly, looking at the bottom of this table, we can see the cash flow breakeven rate for the first half of twenty twenty three, which as I mentioned before takes into account revenue expenses, user expense and longer payments. In 2023, we had $13,661 per vessel per day compared to $12,387 per vessel per vessel to date for the same period of last year as we paid higher operating drydocking and interest expenses, partly offset by lower loan repayments. Let's now turn to the next slide, Slide 17, to review our debt profile. As of June 30, 2023, we get outstanding bank debt of about 78,000,000 Looking at the chart on the top of the slide, you can see that our debt repayments during the first half of this year amounted to about $17,800,000 including a balloon payment, which was subsequently refinanced, with $5,700,000 scheduled for the second half of twenty twenty three. In 2024, our debt repayments are set to decrease to $9,700,000 excluding any value repayments, followed by a further decrease down to $6,700,000 $6,000,000 in 2025 and 2026, respectively.

Speaker 2

As of June 30, 2023, the average margin on our debt is about 2.64%, which if we add a soft rate of about 3.37% and adjust for the portion of our debt covered by our interest swaps, swap contracts, we estimate that the total cost of our senior debt at the end of the quarter starts to at about 7.7%. At the bottom of this table, we can see our projected cash flow breakeven rate for the next 12 months, breaking down into its various components. Overall, we expect a customer breakeven level of around $12,815 per vessel per vessel per day. In the same chart, in the middle, you can see our EBITDA breakeven rate, which includes our revenue expenses, G and A expenses and their closing costs, and we extend to about $8,139

Speaker 1

per vessel per day.

Speaker 2

Let's now move to the next slide, Slide 18, the last slide of my brief overview of financial results. We can see in this slide some highlights of our balance sheet in a simplified way. As of Q30, 2023, cash and other assets stood in our balance sheet at about 48,600,000 dollars The book value of our vessels was approximately $144,000,000 resulting in total book value of our assets of about $192,600,000 On our liability side, our debt as of June 30, 2023, as I mentioned earlier, was about $78,000,000 representing 54 0.2% of the book value of our assets, while other liabilities amounted to $4,100,000 dollars or 2.7 percent of the book value of our assets, which in turn resulted in book shareholder safety of about $110,700,000 translating to $39.1 per share. However, based on our own estimates and market transactions, we estimate that the market value of our vessels was above their book value and stood at about $173,000,000 suggesting that our NAV per share to be in excess of $49 per share. Recently, our share price is trading around $14 thus representing a steep discount to our net asset value, which in turn suggests significant appreciation potential for our shareholders and investors.

Speaker 2

With that, I concluded my remarks and I turn the floor back to Aristides to continue the call.

Speaker 1

Thank you, Tasos. I now open up the floor for any questions we may have.

Operator

Thank you. We will now be conducting a question and answer Our first question comes from Tate Sullivan with Maxim Group. Please proceed with your question.

Speaker 3

Thank you. Good day. You mentioned a strong foundation for higher rates and positioning the fleet. Is that mainly moving off of more FSAs? Are you repositioning ships?

Speaker 3

Or what did you what did you imply by that, please?

Speaker 1

Mainly, trade high, first of all. Mainly, we are trading our ships spot at this stage because freight rates are low in anticipation of higher freight rates. So we will be able to capture the market. Of course, we are not taking out any FFAs to hedge the positions at these levels. We are really preparing ourselves to be ready to capitalize on the strengthening market if that happens.

Speaker 3

And you gave a lot of detail on the Goodhart and the MARPOL violation. Does that did that possibly reflect more stringent regulations in that specific port? Or can you give details to start there please? And was that the first Ammar pole violation for your fleet in a long length of time?

Speaker 1

Yes. I spent some time on it because it was a relatively big incident. The vessel was out of service for 48 days for us and we incurred a few expenses there. And it was one of the reasons, probably the main reason why we didn't have a profitable quarter as we thought we would have had despite the 2 dry dockings that we had during this quarter. So that's why I spent some more time on that.

Speaker 1

That. There has been no specific allegation of any wrongdoing, but it might come. But we are insured for that. I don't think it reflects any significant change in anything. It was just an unfortunate incident that may happen and happened during this instance.

Speaker 3

What did the commentary about future potential future $2,000,000 payments reflect? And did you say you posted a reserve of $500,000 for that? And does insurance cover if that is the amount of $2,000,000 Can you put some context to those numbers please?

Speaker 1

Sure. We had to post a guarantee for €2,000,000 for EuroDry and for €2,000,000 for the manager. So it's essentially a guarantee for €4,000,000 dollars which is by far the maximum amount that we may need to pay. If we are if we

Speaker 2

If indeed the market valuation

Speaker 1

If indeed that has occurred and we so agree with the Department of Justice. So this is a maximum that would be payable. In previous instances that we have seen in the past, amounts up to $1,500,000 have been paid for that for similar things. We think that this will be covered by insurance. There will be some costs that will not be covered by insurance, which is why we have agreed to put up a reserve on our accounts to take a provision for $500,000

Speaker 4

We don't expect that we

Speaker 1

will need to pay anything in excess of that.

Speaker 3

Okay. And then, I mean, with the cash breakeven level, I mean, just my last on that point of you said around 14,000 Would that number excluding the Good Heart? I mean, would it have been closer to 12, 12.5 or do you have that number handy or maybe we can take it offline?

Speaker 1

I mean the historical for the quarter, That number, the cash breakeven includes loan repayments and everything.

Speaker 2

It includes a bit of elevated expenses for the product.

Speaker 1

Okay.

Speaker 3

Okay. I'll back into that. And then on the potential slow steaming, I mean, you mentioned energy efficient, existing ship index, EEXI, the CII Carbon Intensity Indicator Rating and then maybe some changes with the EU carbon tax going forward. Has there been any are you preparing for any potential, I mean, financial situations with any of those regulations or has anybody experienced any financial implications or could they in the fleet and maybe it's a topic for a non work offline discussion as well?

Speaker 1

Yes. No, this is a nice topic for general discussion. Very briefly, The EU ETS regulation that will come in effect as of next year will affect financially the charters mainly that wants to bring goods into Europe or out of Europe. So it won't really affect us in particular. It will affect Europe.

Speaker 1

The other regulations, the main effects that they will have is that they will result in us needing to go at lower speeds. If ships go at lower speeds, it is a positive obviously for the market because it effectively reduces supply of vessels. Of course, all companies are taking measures to try and reduce their carbon footprint and we are doing the same. This is done through some modifications that one can do on the vessel. This is done through technological developments, use of digitalization and things like that.

Speaker 3

Okay. Thank you for all the comments. Have a great rest of the day.

Speaker 1

Thanks, Dave.

Operator

Thank you. Our next question comes from Christopher Skee with Arctic Securities. Please proceed with your question.

Speaker 4

Hello, gentlemen. Thank you for the detailed Hello, hello. Thanks a lot for running through the market and appreciate all the colors on the numbers. Just want to sort of first touch upon the market. What do you see as a sort of near term catalyst for any improvement in the rates?

Speaker 4

It seems like it's a bit sluggish and not that directional currently. Do you believe that we might see any revival of congestion during the second half? I mean, we've seen the Panamax Canal that the restrictions there have led to some improvements, at least for the container liners. Now do you think that, that may appear for the drybulk vessels as well?

Speaker 1

I think that congestion has been extremely little during the last couple of months, abnormally little. There are bound to be effects, I think, that will increase it. Also, there is historically an increase in the demand for certain cargoes during the Q3 and Q4. So this historical increase, I think, will happen again. And we are coming out of the seasonally quiet period.

Speaker 1

Thus, we think that we will see improving rates. But as I said, there are various conflicting views now and possibilities that can happen. So, it's really difficult to call the market at this stage.

Speaker 4

Thank you. And with regards to that, I mean, there's a great overview over 1 year time charter rate versus asset values. And it seems like values are a bit disconnected now from rates. What's your view on that? I mean, you touched upon it, but do you believe that values are set to come down or that rates sort of are set to come off?

Speaker 4

I mean, this disconnect, it typically don't last that long. That's my

Speaker 3

experience.

Speaker 1

Yes. You're absolutely right. That's why one has to give either values have to drop significantly or charter rates to improve further. Currently, charter rates are not improving, so we have started to see values dropping a little bit. We will have to see how this whole thing plays out.

Speaker 1

But the values during this last month in July did see some headwinds and they draw and they are on a dropping mode. We will have to see what will happen. I'm with that. There is an expectation by most owners that because of the very low order book, at some point when demand picks up, we should see a significant revival in charter rates. I think this is a valid expectation.

Speaker 4

Yes. I totally agree. And I mean with regards to I mean you have 'twenty four and 'twenty five net fee growth that looks extremely promising. So it should provide sort of a backstop in terms of asset values. And with that in mind, how do you consider share buybacks compared to vessel acquisition?

Speaker 1

Well, vessel acquisition is something that we are yes, I'll tell you. I think I know where you're going. Vessel acquisitions, we will we are considering at this stage because the company I think that if prices drop a little bit, we will be able to see profitable projects in the market. But still, one of the most profitable projects is to buy back our own stock, which is trading at such a significant discount to our NAV. So definitely, we will continue the process of repurchasing stock And we are looking at the possibility of maybe acquiring 1 more vessel.

Speaker 4

Okay. Thank you, Jose. That's it. Thank you for me. Thanks a lot.

Speaker 4

Thank you.

Operator

Thank you. There are no further questions at this time. I would now like to turn the floor back over to Archidedes for closing comments.

Speaker 1

Well, thank you all for listening into our today's conference call. We will be back to you in 3 months' time. Enjoy the rest of the summer.

Speaker 2

Thank you, everybody,

Speaker 3

for attending.

Operator

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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