Euroseas Q1 2024 Earnings Call Transcript

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Provided by Quartr
May 23, 2024

There are 5 speakers on the call.

Operator

Thank you for standing by, ladies and gentlemen, and welcome to ERC's conference call on the Q1 2024 Financial Results. We have with us Mr. Aristides Pittas, Chairman and Chief Executive Officer and Mr. Tasos Aslidis, Chief Financial Officer of the company. I must advise you that this conference call is being recorded today.

Operator

Please be reminded that the company announced their results with a press release that has been publicly distributed. Before passing the floor over to Mr. Pittas, I would like to remind everyone that in today's presentation and conference call, Euroseas will be making forward looking statements. These statements are within the meanings of the federal security laws. 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.

Operator

I kindly draw your attention to Slide number 2 on the webcast presentation, which has the full forward looking statement and the same statement was also included in the press release. Please take a moment to go through the whole statement and read it. And now I would like to pass the floor over to Mr. Petis. 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 Tasos Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the 3 month period ended March 31, 2024. Let's turn to Slide 3 of the presentation to go over our income statement highlights. For the Q1 of 2024, we reported total net revenues of $46,700,000 and a net income of $20,000,000 or $0.287 per diluted share.

Speaker 1

Adjusted net income for the quarter was $18,500,000 or $2.66 per diluted share. Adjusted EBITDA for the period was $24,600,000 A reconciliation of the adjusted net income and adjusted EBITDA to net income is shown in the press release. Our CFO, Tasos, will go over our financial highlights in more detail later on in the presentation. As part of the company's common stock dividend plan, our Board of Directors declared again a quarterly dividend of $0.60 per common share for the Q1 of 2024, which will be payable on or about June 21, 2024 to shareholders of record on June 14. The annualized dividend yield based on the current share price is again above 6%.

Speaker 1

This is the 9th consecutive quarter of paying meaningful dividends. As of May 21, 2020 4, we had also repurchased 400,705 of our common stock in the open market for a total of about $8,200,000 since the initiation of our share repurchase plan of up to $20,000,000 which was announced in May 2022. We will continue to use our sales repurchase program at management's discretion depending on our stock price to enhance our ability to drive long term shareholder value. Please turn to slide 4, where we discuss our recent sales and purchase, new building, chartering and operational developments. On the S and P front, we have agreed to sell motor vessel Astoria, a 2,800 TEU feeder container ship vessel built in 2004 for approximately $10,000,000 to an unaffiliated party.

Speaker 1

The sale capitalizes on the current strong asset prices and we will log a significant profit next quarter when the deal closes. The vessel is expected to be delivered to her new owners by mid June 2024. The delivery of our 4th newbuilding vessel from the Series of 9 took place on April 25, Motor vessel Leonidas Z, a newbuildingfuelefficient 2,800 TEU feeder containership, was chartered with Hapac Lloyd, one of the largest line of companies, for a period of about 2 years at a daily rate of $20,000 a day. This charter is expected to contribute about $9,000,000 of EBITDA for the contracted period and increases our 2024 charter coverage to about 88%. Moreover, the delivery of the 5th vessel took place on May 13, when motor vessel Monica, a fuel efficient 1800 TEU feeder vessel, was chartered for a minimum period of 10 to a maximum period of 12 months at the auction of the charter at a daily rate of $16,000 per day.

Speaker 1

Continuing on the charter side, our Aegean Express, our smallest and oldest vessel, was fixed for a minimum period of 7 to 9 months at $8,000 a day, starting from March 23, after a 3 days' wait, while motor vessel finished the Antwerp was fixed for a minimum of 11.5 months to maximum of 14 months at $26,500 per day, starting immediately upon delivery from the shipyard where it underwent its normal drydocks and retrofits. And this new charter starts from April 2, 2024. Finally, motor vessel Joanna was just extended for a minimum of 2 to maximum of 3 months with current charters at $13,500 per day. Regarding dry dockings, our motor vessel Synergy Auckland underwent its scheduled special survey for approximately 18 days. Our motor vessel, Marcos, successfully completed its scheduled 31 day drydock, which included the retrofits worth about $1,800,000

Speaker 2

As in the case of

Speaker 1

the recent retrofit of motor vessel Synergy Busan, we cooperated closely with the charterers to fund the modifications of the vessel and share the economic benefits from the improved performance. The charterers contemporaneously declared the option to extend the charter by an additional minimum 7 months until August 2020 5. The added rate profits resulted in an improvement of her consumption in the commercial speed range by about 25%. As per our agreement with the charterers, if the vessel is employed after the current charter period, then the owners will refund part of the cost to the charterers up to a maximum of 50%. The motor vessel synergy envelope, as I said, also successfully completed the scheduled 30 day drydock.

Speaker 1

As part of our efforts to minimize our carbon footprint, C2 underwent a $1,250,000 of requisite. Next, please turn to Slide 5 for an update on our current fleet profile. Our current fleet is comprised now of 22 vessels in the water, the 15 feeder container ships and 7 intermediate container carriers with a total carrying capacity of just under 66,500 TEU and an average age of 15 years weighted by TEU. Turn to Slide 6. Here we show our 4 remaining vessels under constructions, with deliveries expected throughout 2024.

Speaker 1

The 4 new buildings have a total carrying capacity of 9,200 TEU and they include 22,800 TEU vessels and 21800 TEU vessels. After the delivery of its 4 remaining feeder container ship new buildings in 2024, Eurus' fleet will consist of 26 vessels with a total carrying capacity of about 75,000,000,000 euros Let's now turn to Slide 7 to see the vessel employment graphically. As you may see, we have a very strong charter coverage throughout the next 2 years with about 88% of our fleet being fixed for 2024 and about 32% for 2025. Our significant charter coverage and profitable rates for the remainder of the year suggest highly profitable quarters that will further enhance our fleet liquidity throughout 2024 2025. Let's turn to slide 9 for a broader market review, starting with the development of the 6 to 12 month time charter rates over the last 10 years.

Speaker 1

During the Q1 and extending into mid May 2024, containership charter rates have shown a robust recovery, surging significantly from the low levels at the start of the year across all segments. As of May 17, 2024, the 6 to 12 month charter rate for the 2,500 TEU containership stood at $19,500 per day, which is higher than the historical median of $9,200 per day, about double, and well supported when compared also with a 10 year average of about $15,500 per day. The comparisons to median and average rates are similar across the smaller and larger container sizes as well. Moving on to Slide 10, we go over some further market highlights. As mentioned, 1 year time charter rates improved across all segments in the Q1, and charter rates have increased by approximately 73% to date since the low of December 21, 2023.

Speaker 1

The current increase is mainly attributed to the tensions in the Red Sea and consequent route diversions. The full impact of rerouting is yet to be seen though as these geopolitical issues are still evolving. As said before, charter rates since the end of the year have increased by over 70%. Average daily rates increased by 26% over the average of Q4 2023 during the Q1 of 20 24 and that can be seen in the table below across all container segments. The vast increase in rates during May 2024 is primarily due to the routing from the Red Sea.

Speaker 1

The average second half hand price index show an increase of about 11% during the Q1 of 2024 compared to the Q4 of 2023. Well prices, of course continue to lag significantly behind the peak levels seen in 2022. They are above the average levels observed before the COVID-nineteen pandemic. The newbuilding price index increased by about 7% in the 1st quarter compared to the previous quarter. Newbuilding prices continued to stay elevated due to cost inflation and extended yard forward cover.

Speaker 1

Although there has been some easing in newbuild contracting from the exceptional high levels witnessed during COVID-nineteen, it remains relatively firm amid continued appetite from liner companies with excess cash renewing their fleets with alternative fuel vessels. As of May 6, 2024, the idle fleet, excluding vessels under repair, stands at just 190 1,000 TEU, accounting for 0.7 percent of the total fleet. This marks a decline from its peak of about 800,000 TEU just 1 year ago, with the downward trend of load since then.

Speaker 2

In 2024

Speaker 1

up to now, 23 vessels accounting for 33,000 TEU have been scrapped. We expect demolition activity to increase slightly in the remainder of 2024 after a number of quieter years due to the which were due to the higher charter rates. Although the current geopolitical disruptions may continue to limit scrapping at the end. In the Q1 of 2024, scrapping prices softened slightly to approximately $5.40 per light per ton, remaining though above the average observed in 2019 by about 30%. Overall, the fleet continues to grow, having expanded by about 4% year to date without accounting, of course, for idle vessel reactivation.

Speaker 1

Please turn to Slide 11. The IMF's latest update from April 2024 projects that the global economy will see another year of slow yet steady growth, raising the forecast from 3.1% to 3.2% in 2024. This growth rate is expected to continue into 2025. This is largely due to a sizable improvement in the economic outlook for the United States, offset by a more modest slowdown in emerging and developing economies. The forecast for the next 5 years is at its lowest in decades at 3.1%.

Speaker 1

The global economy has been surprisingly resilient and projected to lower from 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025. With the advanced economies returning to their inflation targets sooner than emerging markets and developing economies. Now anticipate that the 3 Federal Reserve rate cuts that were projected by the end of 2024 will be reduced to 2 or more due to this persistent inflation. During this quarter, the IMF upgraded 2024 growth forecast to 3.2% from the 2.6% projected in January 2024. Due to the continued strong oil exports amid higher global oil prices despite the price cut mechanism imposed by Western countries, as well as due to strong government spending and investment related to ore production, along with higher consumer spending in the tight labor market.

Speaker 1

The IMF also upgraded Russia's 2025 growth forecast to 1.8% from 1.1%. It seems that the Western sanctions are not working. For shipping, we continue to monitor China's economy closely, which is relatively to the past struggling by the enduring downturn in its property sector. The Chinese economy is focused to grow by just 4.6% in 2024 and 4.1% in 2025. China's economic woes may further intensify due to trade tensions in a non ready weakened geopolitical environment and therefore stability may take even longer to be restored.

Speaker 1

On a more positive note though, growth in India is projected to remain strong at 6.8% in 2020 4 and 6.5% in 2025, with robustness reflecting strong domestic demand and rising working age population. Similarly, the Asian five economies are expected to grow quite strongly, thus assisting shipping. According to Clarkson's forecast, containership trade demand is expected to significantly increase from the 5.5%, which was previous projections, to 9.2% now. However, a decrease of 2.4% in trade demand is now projected for 2025. These latest forecasts assume about half a year more of disruption to container trade due to Red Sea rerouting, uplifting TEU mild demand to about 11% currently and 5% overall for the full year.

Speaker 1

Panama Canal impacts are less severe, but demand estimates have allowed for some additional transpacific trade volumes being shipped to the U. S. West Coast rather than the East Coast, given restrictions on the Panama Canal tranches. This is generally, though, a much smaller impact than the Red Sea disruption. And of course, a longer than assumed crisis in the Red Sea will likely result in significant higher demand growth.

Speaker 1

Please turn to slide 12, where you can see the total fleet age profile and containership order book. The containership fleet is relatively young with most vessels under 15 years old and only 10% of the fleet over 20 years old. The largest percentage of which though lies within feeder vessels, suggesting high potential recycling for this type of ship. As of April 24, 2024, the order book as a percentage of lead stands at around 21%, reduced from close to 30%, which we saw last year. Turning on to Slide 13, we also go over the fleet age profile and order book for ships in the 1,000 TEU to 3,000 TEU range.

Speaker 1

These sizes of vessels are the backbone of our operations and the primary focus of our newbuilding program. The order book here stands at 6.8% as of May 24, 2024. According to Clarksons, new deliveries are projected to be approximately 8% this year, 1.9% in 2025 and 0.7% in 2026 and beyond, suggesting that after 2024, we will have minimal deliveries in 20252026. With over 50% of the fleet being over 15 years old, these favorable fundamentals suggest an anticipated reduction in fleet size in the coming years. Let's move to Slide 14, where we discuss our outlook summary for the container ship market.

Speaker 1

The container shipping markets have significantly strengthened since last December due to the rerouting of vessels away from the Red Sea and the Gulf of Aden. The rerouting has had a substantial impact on the supply demand balance as most vessels on affected east west services are now taking longer alternative routes. Consequently, demand for ships has increased, boosting fleet utilization by more than 10%. Freight rates have surged and charter rates have significantly risen and continue to climb, indicating a halt to the previous softening trend, at least for now. The context index has increased by 73% since December 21.

Speaker 1

For the remainder of 2024, we anticipate a strong market to continue until their political issues cease. However, the substantial new vessel supply is expected to gradually take over and lead to lower rates. Despite this, the potential risk of a full closure of the state of Khormuz, although it has minimal impact on containers, and the ongoing disruption in the Suez Canal and the Red Sea continued to affect vessel activity in the shipping markets. The Red Sea security crisis shows no signs of resolution, and the Israel Iran crisis could further exacerbate the situation. If geopolitical tensions ease, we anticipate a softening in container freight in charter markets, driven by the accelerated capacity growth.

Speaker 1

Conversely, if these tensions persist, the extended period of vessel rerouting will support higher charter rates. Looking ahead to 2025, if geopolitical issues are resolved, supply and demand fundamentals would likely lead to a softening of the market. The extent of this softening will depend on the development of the geopolitical situation, but if conditions normalize, the significant fleet expansion could result in a substantial decline. In any event, market conditions will remain challenging. Market performance will be sensitive to capacity management, vessel speeds and various inefficiencies such as congestion that could alleviate some of the pressure.

Speaker 1

Also, the energy transition has continued to gain momentum in the containership sector. Whilst it is evident that the shift is taking place, the long term outcome remains uncertain. One thing is sure though, the spread between charter rates achieved by eco vessels will increase further as charters become more sensitive to greener transport options. Let's move to Slide 15. The left chart shows the evolution of 1 year time charter rates to containers with a capacity of 2,500 TEUs since 2013.

Speaker 1

1 year time charter rates are far below their peak in early 'twenty two, but as previously mentioned, have earned back lost ground to stand at $19,500 per day, above historical average and medium range. The right hand chart illustrates the historical range for newbuild and 10 year old secondhand containerships with a capacity of 2,500 TEU. Recent data shows a rebound from year end prices, with value still remaining significantly higher than both at historical average and median levels. Newbuilding prices for containers of this size currently stand at 41,250,000 dollars while for historical average, the median price for new buildings of this size for the last 10 years is 33 $700,000 $31,500,000 respectively. For the 10 year old secondhand vessels of this size, prices currently stand at around $23,000,000 while the expected historical average of medium prices are approximately 17,000,000 dollars 13,000,000 respectively.

Speaker 1

Given these persistently elevated prices, we are hesitant to pursue further acquisitions unless they can be paired with charters that will reduce residual values at expiration to below the historical median. And with that, I will pass the floor to our CFO, Tasos, to go over our financial highlights in further detail.

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 Q1 of 2024 and compare those results to the same period of last year. For that, let's turn to slide 17. For the Q1 of 2024, the company reported total net revenues of $46,700,000 dollars representing an 11% increase over total net revenues of $41,900,000 during the Q1 of 2023.

Speaker 2

We reported a net income for the period of $20,000,000 as compared to a net income of $28,800,000 for the Q1 of last year. Interest and other financing costs for the Q1 of 20 24 amounted to $3,200,000 as compared to interest and other financing costs of $2,000,000 for the same period of 2023. This increase is due to the increased amount of debt we carry and the increase in the softer rates of our bulk rates in the current period as compared to the same period of last year. In the Q1 of 2024, our interest figures are reduced by the capitalized imputed interest of $1,400,000 and due to the self financing of the pre delivery payments for our newbuilding program as compared to $1,100,000 of included interest during the same period of last year. Finally, interest income in the Q1 of this year amounted to $550,000 compared to 0.23 $1,000,000 for the same period of 2023.

Speaker 2

Adjusted EBITDA for the Q1 of 2024 was $24,600,000 compared to $26,000,000 achieved in the same period of last year. Basic and diluted earnings per share for the Q1 of this year were $2.89 $2.87 respectively, calculated on approximately 6,900,000 basic and 7,000,000 diluted weighted average number of shares outstanding compared to basic and diluted earnings per share of $4.11 $4.10 for the Q1 of 2023, calculated in turn on approximately $7,000,000 based on the diluted weighted average number of shares outstanding. Excluding the effect on the income for the quarter of the unrealized loss or gain on derivatives, the amortization of below market time charters acquired, the depreciation charged due to the increased value of vessels acquired with below market time charters, and for the Q1 of 2023, the gain on the sale of a vessel, the adjusted earnings per share for the quarter ended March 31, 2024 would have been $2.67 $2.66 per share basic and diluted respectively compared to adjusted earnings of $3.10 $3.09 per share, basic and diluted respectively for the Q1 of 2023. Usually, security analysts do not include the above items in the published estimates of earnings per share. I would like to mention here that during the Q1 of 2024, we had 3 dry dockings, 2 of which included, as Arthiv mentioned, retrofits in order to improve the carbon footprint and future earning capacity of the vessels, that these drytocks resulted in increased drydocking expenses for the period and loss of approximately more ready days as compared to either the Q1 of last year or the previous quarter.

Speaker 2

These investments influenced obviously our earnings percent this quarter, but will be reversed in subsequent periods. Let's now move to Slide 18 to review our fleet performance. We will start our review by first examining the utilization rates during the Q1 of this year as compared to the previous year. As usual, our fleet utilization rate is broken down into commercial and operational. During the Q1 of 2024, our commercial utilization rate was 99.8%, while our operational utilization rate was 99.9% compared to 98.1% commercial and 97.6 percent operational for the Q1 of last year.

Speaker 2

On average, 19.6 vessels were owned and operated during the Q1 of 2024, earning another time charter equivalent rate of $27,806 per vessel compared to 17.1 vessels in the same period of 2023, bearing on average to $29,231 per day. Our total daily operating expenses, including management fees, G and A expenses, but excluding direct operating costs, were $7,963 per vessel per day for the Q1 of this year compared to $8,074 per vessel per day for the Q1 of 2023. If we include our interest expenses, drydocking expenses and loan repayments, our cash flow breakeven rate per day during the Q1 of 2024 was $17,171 per day versus $14,160 during the Q1 of last year, the difference being due, as I mentioned earlier, to the increased drydocking expenses during the quarter. Finally, if we look at the very last line of this slide, we can see the common dividend expressed in dollars per day per vessel that we paid in the two periods. For the Q1 of 2024, that amounted to about $2,328 per vessel per day, while for the same period of light gear, it amounted to $2,271 per vessel per day.

Speaker 2

Let's now move to Slide 19 to review our debt profile and our forward cash flow breakeven level. As of March 31, 2024, our total debt amounted to approximately $148,600,000 The chart at the right of the at the top left of the slide displays our current debt repayment schedule for the next 4 years. As you can see, in 2024, we made loan repayments totaling $9,400,000 dollars in the Q1 of this year and we expect to make an additional $25,700,000 in the remaining of the year for a total of about $35,000,000 In 2025, our projected loan payments are around $19,900,000 along with balloon payments of $17,600,000 while in 2026, our loan repayments are expected to amount to about $13,000,000 with no balloon payments due. Please note that these figures include repayments from the 2 loans we drew in the Q2 of 2024 to partly finance the acquisition of our recent deliveries, Noniva, Z and Monica, from our newbuilding program. They do not include repayments for approximately another $100,000,000 of debt we expect to assume to partly finance the next 4 remaining newbuildings from our newbuilding program.

Speaker 2

A few words now regarding the cost of our debt as of the end of the last quarter. The average margin was 2.29 percent and assuming a softer rate of around 5 0.31%, the cost of our senior debt as of March 31 was approximately 7.6%. If we further include the savings from certain interest rate swaps we have for a portion of our debt, the overall cost of our debt is reduced to about 7.34%. That's approximately 13% of our debt carries a basis of rate of around 3.4%. I would like to draw your attention now to the bottom of this slide where we present the level and components of our expected cash flow breakeven for the next 12 months and show various cash flow breakeven levels.

Speaker 2

First, our EBITDA breakeven level is $7,645 per vessel per day. If we add to what interest expenses and loan repayments, our overall projected breakeven level over the next 12 months is expected to be around $13,653 per vessel per day. Let's sum up now our presentation of the financial figures by moving to the next slide, Slide 20, to review some highlights from our balance sheet. Our assets mainly include cash and other current assets, advances for our vessels under construction and of course our vessels in the water, their book value. As of March 31, 2024, we had cash and other current assets amounting to about $70,200,000 advances that we paid for our newbuilding program of about $87,700,000 and vessels with a book value of around $308,000,000 resulting in a total book value for our assets of about $466,000,000 On the liability side, our debt, as I mentioned, as of March 31 stood at $148,600,000 which represents approximately 32% of the book value of our assets.

Speaker 2

We had also other liabilities like the fair value of our below market acquired charters representing about 1.4% of our assets and other liabilities totaling about $20,400,000 or $4,400,000 of our total assets, resulting in a net book value for our shareholders of about $291,000,000 or about $41 per share. However, I think it is important to highlight here that the market value for our fleet significantly exceeds its book value. We estimate that the charter attractive value of our fleet to be in the range of $390,000,000 to $295,000,000 which translates to a net asset value for the company of $385,000,000 to $390,000,000 or around $54 to $45 per share. Our closing price yesterday was just under $37 a level at a significant discount to our NAV and thus representing a considerable appreciation potential for our shareholders and investors. With that, I'd like to turn the floor back to Aristides to continue the call.

Speaker 1

Thank you, Darshaw. Let us now open the floor for any questions.

Operator

Thank Our first question is from Tate Sullivan with Maxim Group. Please proceed.

Speaker 3

Hello, thank you. Good day. Starting with the cash commitments for the new builds yet to be delivered and the 2 that were already delivered this quarter, You said you're adding $100,000,000 I think I heard in debt to finance the newbuild. What's the remaining newbuild commitment for the payments schedule tonsils? Do you

Speaker 2

mind going on? The remaining, I think I can make a quick estimate. I believe we have paid about $87,000,000 Therefore, I think we've been roughly about $20,000,000 I can't get you a more exact number, but I think roughly about $20,000,000 would be the equity commitment.

Speaker 3

Okay. So total $120,000,000 Okay, okay. Thank you. And then for the contracting the new builds and then since you already you contracted the Monika already for 16,000 and then can you talk about the stephanie of what do

Speaker 4

you still expect to get that before the end of

Speaker 3

the quarter? Should we expect a similar newbuild rate? Or if you could decide to go longer term, could it be lower than that $16,000 daily rate?

Speaker 1

I think that we will be able to fix something which is very similar to this level. We would like to fix around a year's time. We will see. We are talking with some charters and we will know relatively soon.

Speaker 4

And just logistically, you start

Speaker 3

to get paid on the contracts for new builds right when they exit upon exiting the shipyard, is that correct based on your previous? Okay. And then to toss this for the financing for the new Vogue, thank you, RC. Will you secure the financing upon delivery or do you will you get financing for the installment payments for the remaining? How do you manage that?

Speaker 2

We finance we pay the installment payments ourselves and we arrange a delivery financing. Usually we arrange the financing of the vessels at delivery a month or more in advance. For example, the next two vessels that we expect to take delivery of are already financed, as we announced already. The last two, we haven't completed our financing arrangements yet.

Speaker 3

Okay, excellent. Thank you very much.

Speaker 2

Yes. Thank you,

Operator

Tate. Our next question is from Christopher Skie with Ardix Securities. Please proceed.

Speaker 2

Good morning. How are you?

Speaker 1

Good morning. We're fine. Thank you.

Speaker 4

Thank you for taking my questions. I was wondering if you could provide some color on more color on the ongoing charter discussion with regards to open vessel days in 2025 and into 2026.

Speaker 2

Are you seeing a lot of interest for forward fixing by liners?

Speaker 4

With regards to that, has the duration on these discussions changed during the months? Are you seeing sort of upside for longer charters now that spot rate has bounced back? Thanks.

Speaker 1

Yes. We currently don't have many ships opening up soon other than this new building vessel that will take delivery in about 1.5 times. So there's not too much to fix at this point. The market though is definitely improving. We've seen that we fixed our 2,800 TEU ship at around $20,000 a day about a month ago for 2 years and now we've seen similar ships being fixed to $25,000 a day.

Speaker 1

So the market is firming up. Periods available are increasing and there is a continuous increase in the market. How long this continues is very difficult to say. The liners would fix ships that open up within the next couple of months, but not they wouldn't offer anything really competitive for ships opening up 6 months from today. And therefore, we're not really active in trying to find something today.

Operator

And our next question is Tate Sullivan with Maxim Group. Please proceed.

Speaker 3

A follow-up, sorry. Thank you. You announced the sale of Astoria in April for 10,000,000 dollars The 20 F indicated a cost of the repairing value of $3,950,000 Did that change or are there other considerations for the implied gain on that sale for this current quarter?

Speaker 2

I think that would be that's correct. The difference of the 2 minus commission expense or whatever would be the implied capital gain on sale.

Operator

Okay. And we do have a follow-up from Christopher with Arctic Securities. Please proceed.

Speaker 4

Hi, Dan. Can you just comment on what you're seeing in terms of sort of the interest on potential divestments. I mean, you saw the one in April as previously mentioned. Are you considering to reduce exposure or reduce your fee by divesting the vessels?

Speaker 1

We are considering, yes, what to do with the elder vessels as the charters expire. And we haven't taken any decisions yet. But of course, the elder vessels, which initially we were thought that we would be needing to scrap at the end of the lucrative charters that we had secured for all of them. Today, the market is better. So we are considering the options that we have of re selling them or keeping them and re chartering them, and we will develop our strategy as things move on.

Speaker 4

Okay, good. And in terms of our useful life, what do you see as sort of typical useful life on these vessels now?

Speaker 1

Well, technically, even though we have the issues with the CII and the EXI and all these new requirements, technically, the ships can still easily last till the 2,050 year. And by sailing at a little bit slower speeds, they do satisfy the requirements. So it's more of a commercial decision to decide what to do with them rather than the technical decision. So that means that if charter rates are satisfactory, we can easily keep them for longer.

Operator

Day. We have reached the end of our question and answer session. I would like to turn the conference back over to Mr. Pittos for closing remarks.

Speaker 1

Well, thank you all for listening in to our results of this quarter. We will be back to you in 3 months' time.

Operator

This will

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Euroseas Q1 2024
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