Euroseas (NASDAQ:ESEA) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.

Benzinga APIs provide real-time access to earnings call transcripts and financial data. Visit https://www.benzinga.com/apis/ to learn more.

The full earnings call is available at https://www.euroseas.gr/investor-relations/ir-webcast-2026-2Q.html

Summary

Euroseas Ltd reported Q2 2026 net revenues of $56.5 million, slightly down from Q2 2025 due to a reduced number of vessels, but offset by higher charter rates.

Net income attributable to controlling shareholders was $33.2 million for Q2 2026, with an adjusted EBITDA of $40.1 million.

The Board declared a quarterly dividend of $0.80 per share, maintaining an annualized yield between 4.2% and 4.5%.

The company announced the construction of four new container ships with deliveries expected between December 2028 and March 2029, financed through a mix of debt and equity.

Euroseas has secured multi-year charter extensions for two vessels at favorable rates, ensuring earnings visibility through early 2028.

The company operates 21 vessels and plans to expand its fleet to 33 vessels by Q1 2029, aiming for one of the youngest fleets in the market.

Chartering coverage stands at 96% for 2026, with favorable average daily rates projected through 2028.

Container shipping markets have been strong, with elevated charter and freight rates, though geopolitical tensions present uncertainties.

Management emphasized disciplined capital allocation, including potential further investments, dividend growth, and share repurchases.

The company has a solid balance sheet with $164 million in cash and $208 million in debt, highlighting strategic flexibility.

Full Transcript

OPERATOR

Thank you for standing by, ladies and gentlemen, and welcome to the Euroseas Ltd conference call on the second quarter 2026 financial results. We have with us Mr. Aristides Pittas, Chairman and Chief Executive Officer, and Mr. Tassos Aslidis, Chief Financial Officer of the company. At this time all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session, at which time, if you wish to ask a question, please press star 1 on your telephone keypad and wait for your name to be announced.

I must advise you that this conference is being recorded today. Please be reminded that the company announced their results with a press release that has been publicly distributed. Before passing the floor 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 meaning of the federal securities 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.

I kindly draw your attention to slide number two of 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 to Mr. Pittas. Please go ahead, sir.

Aristides Pittas, Chairman and CEO

Good morning, ladies and gentlemen, and thank you all for joining us today for our scheduled conference call. I'd like to apologize for the 10-minute delay, but I was caught in another very important phone call. Sorry about that. Together with me, Tasos Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the three- and six-month period ended June 30, 2026. Please turn to slide three of the presentation for our quarterly financial highlights.

For the second quarter of 2026, we reported total net revenues of $56.5 million and net income attributable to controlling shareholders of $33.2 million, or $4.74 per diluted share. Adjusted net income for the quarter was $32.9 million, or $4.70 per diluted share. Adjusted EBITDA for the period was $40.1 million. Please refer to the press release for a reconciliation of adjusted net income and adjusted EBITDA. Our CFO, Tasos Aslidis, will go over our financial highlights in more detail later on in the presentation.

We are pleased to announce that our Board of Directors has declared another quarterly dividend of $0.80 per share for the second quarter of 2026 as part of the Company's common stock dividend plan. Based on current share price levels, the distribution reflects an annualized yield between 4.2% and 4.5% based on the recent range of our share price. Since the launch of our 20 million share repurchase program in May 2022, we have repurchased 480,000 shares in the European market through August 13, 2026, representing approximately 6.8% of our outstanding shares for a total consideration of around $11.4 million.

We remain committed to executing the program in a disciplined and opportunistic manner, allocating capital prudently while enhancing long-term value for our shareholders. Please turn to slide four for an overview of our recent developments covering key activities across vessel sales, acquisitions, chartering, and fleet operations. On the fleet front, as announced in mid-June, we entered into an agreement with Nantong CIMC SOE Offshore and Engineering in China for the construction of two additional 1,800 TEU class container ships, similar to the two we ordered in April 2026, with expected deliveries in December 2028 and March 2029.

Total consideration for these vessels is approximately $64.5 million, which will be financed with a combination of debt aiming at 60% to 65% and equity. On May 4, we entered into a joint venture with NRP Project Finance for our first intermediate newbuilding, motor vessel Threelos. The vessel is scheduled for delivery in Q1 2028. Under the terms of the agreement, NRP investors will acquire a 49% stake for approximately $12.2 million, with the transaction assuming at least 60% debt financing.

The first capital contribution has already been paid. On the chartering side, we have secured multi-year charter extensions for motor vessel Pepystar and motor vessel Stefania K. Both vessels are fixed for a minimum of 24 to a maximum of 26 months at a daily rate of $25,500 per day, providing earnings visibility through at least the first quarter of 2028. We had no technical or commercial off-hire days this period. Now please turn to slide four. Our operating fleet consists of 21 vessels with a combined carrying capacity of approximately 61,000 TEU and an average age of 13 years.

This includes six intermediate containerships with a carrying capacity of 25,500 TEU and an average age of 18 years, alongside 15 feeder containerships with a combined carrying capacity of 35,600 TEU and an average age of 9 years. We have 12 newbuilding vessels on order—eight feeders and four intermediate containerships—with deliveries scheduled from Q3 2027 through Q1 2029. Upon completion of our newbuilding program, our fleet will expand to 33 vessels with a total carrying capacity of approximately 97,000 TEU, positioning us with one of the youngest feeder and intermediate containership fleets in the market.

Please turn to slide 6 for a further update on our fleet employment and forward coverage. Our chartering coverage stands at 96% for 2026, 81% for 2027, and 47% for 2028 at highly attractive average daily rates of approximately $30,900 per day for 2026, $31,700 for 2027, and $32,300 for 2028. This insulates our earnings even if market rates soften when current charters expire. Moving on to slide 8, let me walk you through the market key developments that shaped the container subsector over the second quarter of 2026.

Broadly, container shipping markets continued their upward trajectory through the whole of Q2 and Q3 to date, driven by robust mainland demand and supply disruptions tied to the Middle East's geopolitical tensions. Charter rates reached the highest level since before the COVID-19 pandemic, while freight rates extended their momentum, posting notable gains through July. On the asset side, secondhand vessel prices held steady during the second quarter compared with the first.

Despite ongoing geopolitical uncertainties, the fundamentals remain solid. Tight supply of available tonnage and strong competition for prompt, charter-free vessels continue to underpin valuations. Newbuilding prices also moved higher, up approximately 2% quarter over quarter, reflecting robust demand across the sector. Fleet utilization remains remarkably tight. Idle capacity, excluding vessels under repair, was just 200,000 TEU as of early July.

This remains at historic lows and underscores the structural supply tightness seen during this market cycle. Finally, recycling activity has been notably subdued year to date, with only 10 vessels accounting for 25,000 TEU sent to scrap through July. This further reflects the high-value environment for tonnage and limited incentive to recycle. Meanwhile, the fleet grew by 2.6% year to date. Please turn to slide 9, which illustrates the development of six- and 12-month time charter rates over the past decade across all vessel classes from smaller feeders to the larger intermediate container segment.

Current time charter rates remain noticeably above both their respective 10-year historical averages and median levels. These smaller vessel classes play an essential role in maintaining network flexibility and supporting regional and intra-regional trade flows, a role that has become increasingly critical amidst the political uncertainties and supply chain disruptions. With scarce available tonnage and underlying demand holding firm, the conditions supporting elevated time charter rates appear strongly intact for now.

Please turn to slide 10, where we review the global macroeconomic backdrop and its implications for container shipping demand. According to the IMF July 2026 World Economic Outlook, global growth is projected at 3.0% in 2026, recovering to 3.4% in 2027, broadly unchanged cumulatively from April's forecast. The outlook is elevated energy prices and geopolitical tensions, particularly the Iranian conflict and the Ukraine–Russia war, are driving inflation and interest rates higher.

However, AI-driven investment is supporting growth in technology-integrated countries. Meanwhile, global disinflation has stalled, with the inflation shock pushing the yield on the 10-year U.S. Treasury to approximately 4.7%. The U.S. economy has remained comparatively resilient at 2.3% growth. China is projected to grow 4.6% this year, supported by infrastructure investment and high-tech exports, but decline to just 4.1% growth in 2027, while the region is projected to slow to 4.1% in 2026, then recovering to 4.3% growth in 2027.

On container trade, as measured in TEU, volume is projected to moderate from 4.6% growth in 2024 to just 3.7% in 2026, reflecting tariff impacts and slower global growth. Overall, due to the geopolitical disruptions, growth is expected to remain subdued at 3.4% in 2027 as the effects of the current disruption will take longer to dissipate. For container shipping specifically, containerized demand measured in TEU-miles is projected to grow by approximately 3.6% in 2026.

However, we anticipate a normalization effect in 2027, with TEU-mile demand projected to decline by 4.8%, reflecting spectacular trade route and sailing distances returning to historical patterns. Turning to slide 11, you can see the total fleet age profile in containerships. Starting with the age profile in the upper left, the overall containership fleet remains relatively young, with a majority of vessels under 15 years of age and only about 15% of the fleet over 20 years old.

However, this aggregate view is totally different when examining the feeder and intermediate segments in isolation, which we will explore in greater detail over the next several slides. Going to vessel deliveries, the top-right chart illustrates scheduled new deliveries as a percentage of the existing fleet. Deliveries are projected at approximately 5.5% for 2026, 9.4% for 2027, and 24.2% for 2028 onwards, although actual fleet growth is expected to be somewhat lower due to slippage and future demolition activity.

The bottom chart puts the current orderbook in historical context. At approximately 39.8% of the fleet as of August 2026, the orderbook has climbed to levels not seen in over 15 years, a development that warrants close attention as we think about the medium-term supply outlook for the sector. Turning to slide 12, we highlight the age profile and orderbook for the 1,000 to 3,000 TEU feeder segment. The supply here tells a markedly different story from the broader market.

The age profile here is striking. Approximately 24% of the fleet is between 15 to 19 years, while 30% of the fleet is over 20 years old, meaning more than half of the feeder fleet is at or approaching scrapping age. As environmental regulations tighten and compliance costs rise, a meaningful portion of these older tonnage will likely exit the market over the coming years, depending on how challenging market conditions become. Against this aging backdrop, newbuilding activity in the sub-3,000 TEU segment remains significantly restrained.

As of August 2026, the orderbook stands at 17.6%, substantially below the broader market’s 39.8%, with scheduled deliveries of just 3.1% for 2026, 6.8% for 2027, and 8.1% for 2028 and beyond. Let's move to slide 13 to focus on the intermediate segment, the other core segment of our fleet. As of August 2026, the orderbook in this segment stands at approximately 28% of the existing fleet. While higher than the feeder segment, this remains modest relative to the large mainline vessel classes where newbuilding activity has been considerably more active.

What makes this segment particularly compelling from a supply perspective is the age profile. About 36% of the fleet is between 15 to 19 years old, while 30% of assets in this size range are over 20 years of age, meaning roughly two-thirds of the fleet is either at or approaching an age where retirement decisions become likely. Scheduled deliveries are projected at 3.8% for 2026, rising to approximately 7.8% in 2027 and 15.9% for 2028 and beyond.

However, when weighed against potential accelerated scrapping among the older tonnage, net fleet growth in this segment is expected to remain contained over the coming years. The interplay between a maturing fleet and the measured newbuilding pipeline continues to create a structurally supportive environment for intermediate containership operators, despite an avoidable cascade effect, which of course will also take place. Turning to slide 14, this chart places the dynamics we've discussed in broader context across the entire containership sector.

What's evident is the pronounced concentration of newbuilding activity in the larger vessel classes. Neo-Panamax and Post-Panamax segments carry orderbooks of 40% to 87% of their existing fleet, reflecting the significant capacity directed towards major mainlane trades. These are the segments facing the most acute oversupply risk. By contrast, feeder and intermediate segments exhibit significantly lower ordering activity, ranging from 14% to 28% depending on vessel size.

This modest ordering activity is occurring against an aging fleet backlog. The gap between the wave of newbuildings in larger vessel classes and limited fleet renewal in feeders and intermediate segments points to a structurally more favorable supply outlook for the sizes in which Euroseas Ltd operates. Now, please turn to slide 15, where we summarize our outlook. Markets have gained meaningful momentum through July, with rates at decade highs supported by strong east–west demand and Middle East disruptions.

A limited 2026 supply is supporting the near-term balance, though we do expect some moderation towards the end of the year. Looking ahead to 2027, the supply–demand peaks, Red Sea route normalization, and the significant uptick in vessel deliveries could pressure the market. That said, capacity management, accelerated scrapping, and slower steaming will help absorb the incremental supply. Geopolitical uncertainty also complicates the timing of any normalization.

Finally, the impact of tariffs has been more muted than feared, though U.S. trade policy remains variable; we are continuing to monitor closely. Turning to slide 16, the charts illustrate the strength of the current one-year time charter rate for 2,500 TEU containerships, which stands at $38,250 per day, substantially above the 10-year historical average of $24,000 and median of $16,000 per day. This is obviously reflected in asset values as well.

The right chart shows newbuilding vessels are now priced at $45.5 million versus the 10-year median and average of approximately $36.7 million, while the 10-year-old vessel is valued at $41 million compared to a historical average of $22.5 million and a median of $18.75 million. These elevated secondhand valuations, particularly without attached employment, present a less competitive reward profile at this stage of the cycle. Newbuilding, by contrast, offers greater pricing flexibility and cost predictability.

This conviction has driven our decision to expand our orderbook to 12 vessels, building on the nine vessels we completed in early 2025. This strategic position, combined with our strong balance sheet and substantial liquidity, puts us in an enviable position, being well-capitalized to pursue accretive opportunities when they arise. Our modern fleet benefits from lower operating costs and environmental advantages that differentiate us competitively.

I will now turn the call over to Tasos, who will go over our financial results for the second quarter and first half of 2026 in more detail.

Tasos Aslidis, CFO

Thank you very much, Anthesides. Good morning from me as well, ladies and gentlemen. Over the next five slides I will give you the usual overview of our financial highlights for the second quarter and first half of 2026 and compare those results to the same period of last year. For that, let's turn to Slide 18. For the second quarter of 2026, the company reported total net revenues of 56.5 million, representing a 1.3% decrease over total net revenues of 57.2 million during the second quarter of 2025.

This was the result of the lower average number of vessels we owned and operated this quarter in 2026 compared to the same second quarter of 2025, and was partly offset by the increase in the time charter rates that we earned. On average in the respective period, the company reported net income of 32.6 million, and net income attributable to controlling shareholders of 33.2 million for the second quarter of 2026, as compared to net income attributable to controlling shareholders of 29.9 million for the second quarter of 2025.

The net loss attributable to non-controlling shareholders of 0.6 million in the second quarter of 2026 represents the 49% ownership of the entities owning our newbuilding and these three vessels, which are represented by NRP investors' interest. Other financing costs for the second quarter of 2026 amounted to 2.7 million compared to 4.0 million for the second quarter of 2025. This decrease is due to the decreased amount of debt and the decrease due to the repayment of our loans in the current period compared to the same period last year.

If we account for interest income, the respective amounts become 1.3 million and 3.7 million for the second quarter of 2026 and 2025, respectively, and these are the figures shown in the net interest line. As part of our liquidity management strategy, we entered into investments in equity and debt securities in the first quarter of 2026. For the three months ended June 30, 2026, the company recognized a 0.329 million unrealized mark-to-market gain on its investments in equity securities resulting from an increase in the fair value of the investments.

At the same time, we acquired debt securities with an initial cost of 20 million classified as available for sale under US GAAP, for which the fair value decreased between quarters, resulting in an unrealized loss of approximately 0.24 million during the second quarter of 2026. We did not have such investments in the respective quarter of last year. It is worth noting that these investments are intended to be held to maturity and, as such, the loss is purely accounting in nature and there's no cash impact.

In fact, these holdings continue to generate regular dividend income, which partially offsets any short-term valuation fluctuations. Adjusted EBITDA for the second quarter of 2026 was 40.1 million compared to 39.3 million during the same period of last year. Basic and diluted earnings per share attributable to controlling shareholders for the second quarter were $4.77 and $4.74, calculated on approximately 7 million of weighted average number of shares outstanding, compared to basic and diluted earnings attributable to controlling shareholders of $4.32 and $4.29 per share, respectively, for the second quarter of last year.

Excluding the effect on the net income attributable to controlling shareholders for the quarter of the unrealized gain on investments in equity securities, the adjusted earnings attributable to controlling shareholders for the second quarter of 2026 would have been $4.73 basic and $4.71 diluted, compared to adjusted earnings attributable to controlling shareholders of $4.23 basic and $4.20 diluted for the same period of last year. Let's now look at the numbers on the same slide and look at the numbers corresponding to the six-month period ended June 30th and compare them to the same period of last year.

For the first half of 2026, the company reported total net revenues of 112.3 million, representing a 1.1% decrease versus total net revenues of 113.6 million during the first half of last year. The same reasons that I used to explain the quarterly decline apply here. The company reported a net income for the period of 65.1 million, and net income attributable to controlling shareholders of 65.7 million, as compared to net income and net income attributable to controlling shareholders of 66.8 million for the first half of 2025.

Total interest and other financing costs for the first half of 2026 amounted to 5.7 million. Total interest and other financing costs for the first half of 2025 amounted to 7.9 million. The decrease is again due to the lower levels of debt on average and the lower interest rate. Interest income became 2.44 million and 3.7 million for the first half of 2026 and 2025, and these are the two figures shown on the slide, and they include the net interest that we recognize.

Adjusted EBITDA for the first half of 2026 was 81.0 million, compared to 76.4 million for the same period of last year. Basic and diluted earnings per share attributable to controlling shareholders for the first half of 2026 were $9.44 basic and $9.39 diluted, compared to $9.63 basic and $9.60 diluted for the same period of 2025. The adjusted earnings per share attributable to controlling shareholders for the six months ended June 30, 2026 would have been $9.45 basic and $9.40 diluted, compared again to adjusted earnings for the same period of last year of $7.99 basic and $7.97 diluted.

And let's now turn to Slide 19 to review our fleet performance. We'll start our review by looking at the fleet utilization rate for the second quarter of 2026 and 2025. As usual, our fleet utilization rate is broken down into commercial and operational components. During the second quarter of 2026 and 2025, commercial utilization was for both periods 100% while operational utilization was 99.9%. On average, 21 vessels were owned and operated in the second quarter of 2026, earning an average time charter equivalent rate of $30,306 per day, compared to 22 vessels for the period of last year earning an average of $29,420 per day.

Our total daily operating expenses including G&A expenses, but excluding diversion costs, were $8,036 per vessel per day in the second quarter of this year, compared to $7,694 per vessel per day in the second quarter of 2025. If we move further down on this table, we can see, as always, the daily cash flow breakeven level, which takes into account in addition to the operating expenses, the drydocking expenses, interest expenses and loan repayments without accounting for balloon repayments, and all of those are expressed on a per vessel per day basis.

For the second quarter of 2026, our daily cash flow breakeven rate was $12,233 per vessel per day as compared to $13,261 for the second quarter of 2025. At the very bottom of the table you can see the dividend we paid expressed in dollars per vessel per day in the second quarter of 2026. This amounted to $2,916 compared to $2,275 in the same period of last year, the increase reflecting the increase in the actual amount of dividend paid and the reduction in the number of assets.

Let's now look at the rest of the slide and review the same metrics for the first half period. During the first half period for 2026, both commercial and operational utilization rates were at 100%, while operational utilization for the corresponding period of 2025 was 99.6% and commercial was again 100%. On average for the six-month period, we owned and operated 21 vessels, earning an average time charter equivalent rate of $30,330 per day, compared to 22.83 vessels we operated in the same period of last year, earning an average of $28,468 per day.

Operating expenses, again including management fees and G&A expenses, but no diversion costs, averaged $7,963 per vessel per day this year compared to $7,454 for the first half of 2025. The breakeven levels, again at the bottom of this table, were $12,290 for the six months of this year compared to $13,163 for 2025, and the common dividend expressed in dollars per vessel per day in the first half of this year amounted to $2,839, up 29% from $2,196 in the first half of last year.

Let's now move to the next slide, which has fewer numbers and aims to provide a better perspective of the depth of our contract cover that Aristides discussed in an earlier slide. This table presents the development of fleet ownership days over the period of the next three years because we have newbuildings coming in, and an estimated breakdown of how many days are available for hire and how many days are already contracted. It incorporates assumptions about delivery times for the vessels under construction, scrapping times for older vessels, estimated drydocking duration and timing, utilization rate assumptions going forward, and estimates for contracted days and average contracted rate per day. Please note that the data presented in this table represents our internal estimates provided only for indicative purposes to be used for modeling future time charter revenues, and of course actual results might differ. Nevertheless, we believe this provides a useful visibility into our covered revenue and earnings profile. Although our contracted coverage has been discussed earlier, just for reference I will mention that the contract coverage currently stands at approximately 96% for the remainder of 2026, 81% for 2027 and almost 47% for 2028, while our average contracted rate for those periods are $30,858 for 2026, $31,658 for 2027 and $32,010 for 2028. Let me now turn to Slide 21 to review our debt profile. As of June 30, our total outstanding bank debt stood at about 208 million with an average interest rate margin of around 2%. We assume here a three-month SOFR rate of 3.17%. Our total debt cost amounts to a little more than 5.75%, which is well within the prevailing range for our peers. Turning to our debt amortization profile on the top left of this slide, we can see that in 2026 total repayments amounted to 19.6 million, consisting of approximately 9.06 million of scheduled loan repayments and 10.49 million of already paid loan obligations. In 2027, total debt service increases to approximately 36.85 million inclusive of a balloon payment of 20 million. In 2028, repayments of loans are lower, down to 12 million, and no balloon payments are due. Looking further ahead, 2029 includes total repayments of 40.6 million which includes 10.6 million of scheduled loan repayments and a 30 million balloon. 2030 includes total repayments of 33.8 million, split between 7.4 million of scheduled repayments and 26.4 million of balloons.

Historically, we have been able to refinance balloon payments on several terms and we expect to maintain that capacity in the future if we choose to do so. These figures reflect our current debt profile and do not include financing that we will assume to finance our newbuilding program. At the bottom of this table we show our cash breakeven, which stands at $13,382 per vessel per day, and you can see the components broken down. Let me conclude this presentation by returning to Slide 22 for a quick review of selected highlights from our balance sheet.

As usual, we present our balance sheet in a simplified way in the form of two bars. On the left bar we show the asset side: we have cash and other current assets of approximately 226 million. We have made approximately 74 million of advances against our newbuilding program, and the book value of our fleet stands at about 453 million. The total assets in our balance sheet amount to 753 million. Moving to the right bar, the liabilities: there we mentioned we had bank debt of 208 million and additional liabilities of about 21 million and a small amount of minority interests, resulting in about 523 million of shareholders' equity.

However, the true shareholders' equity should be adjusted for the market value of our fleet, which is significantly higher than its book value. We estimate that our current fleet is valued at approximately $660 million, which translates to a net asset value for the company of more than 725 million, or about $103 per share. The current price levels, although they have increased, still trade below our net asset value, and this valuation gap presents an opportunity for both our shareholders and investors that want to consider investing in Euroseas Ltd. And with that, I'll turn the floor back to Anthesides to moderate the question and answer period.

Aristides Pittas, Chairman and CEO

Thank you, Tasso. Let me now open up the floor for any questions you may have.

OPERATOR

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.

Thank you. Our first question comes from the line of Mark Reichman with Noble Capital Markets. Please proceed with your question.

Mark Reichman, Analyst at Noble Capital Markets

So advances for vessels under construction. So those were about 74 million at June 30th. And I was just wondering if you could just maybe kind of walk us through, you know, how much additional equity capital will need to be contributed to the new build program between now and first quarter 2029, and just maybe the breakout, I guess, between. Can you hear me?

Tasos Aslidis, CFO

Yeah, I can hear you. I can hear you. So I think on the top of my head, the overall cost of our new building program is around 560 million. And we plan to finance it, about 60% debt. So, roughly speaking, the equity requirements altogether would be around 230 million, of which 74 million have been made.

Mark Reichman, Analyst at Noble Capital Markets

Okay, that's helpful. And then the fleet table, you know, on page seven. I think what's interesting is, you know, clearly the older vessels remain on attractive charters, you know, while you've got this much younger fleet coming. But because six of those vessels, you know, were built between 2001 and 2009, you know, and have charters that are expiring over the next several years. What are your thoughts on, you know, whether you continue to operate those, you know, as the new builds arrive, you know, do you plan to sell some?

And I guess just related to that question, you know, on page 20, you have 20.8 vessels, you know, for 2026, which would imply, you know, 21 vessels through the first three quarters and maybe 20 vessels in the fourth quarter. So if maybe you could just kind of square that up as part of the discussion.

Aristides Pittas, Chairman and CEO

Yes, we are not thinking of selling any vessels currently. The market is so strong that it makes sense operating the other vessels as well. So we are fixing these ships, you know, for two years at least, charters. So this will become an issue, you know, maybe two years down the line if the market has dropped significantly. But for now, I think that the earnings that these older vessels generate are worth keeping them. And in Slide 20, I think we have indicative figures.

The two elder vessels that you, I think, essentially pinpointed, we are negotiating to recharter, and at the end of 2027, we start getting the new buildings in. So there might be some assumptions about some disposals then, but one can make their own assumptions about farming vessels.

Mark Reichman, Analyst at Noble Capital Markets

On page 20 of the presentation, I think you have 20.8, and you've got 21 vessels in your portfolio. So what accounts for the 20.8? Is that the one single dry document?

Aristides Pittas, Chairman and CEO

I think we have one vessel that we have potential to be sold to one of the elder ones. But we are in the process of negotiating an extension to each other at this point. You should assume 21 vessels. Yeah. The model shows that vessel, namely EM Corfu, provisionally as a potential for.

Mark Reichman, Analyst at Noble Capital Markets

Okay. So we could, you could assume potentially 21 vessels for the remainder of the year, but you could. You could sell one maybe by the fourth quarter, in which case that would get. That would get to the 20.7%.

Aristides Pittas, Chairman and CEO

That is a very slight. That is a very slight possibility. That was a thought in our model, you know, a few months ago, but now we are seeing significant interest in that vessel. So it will probably be extended with the charter for at least two years. So that postpones the selling time by a couple of years.

Mark Reichman, Analyst at Noble Capital Markets

I see. Okay. And then just last question. So you had, you know, a little over 164 million, you know, in restricted and unrestricted cash, you know, 208, I think about $208 million of debt. So how do you kind of think about the capital allocation in terms of, you know, putting that marginal dollar to work in new builds, you know, acquisitions, debt repayments, dividends, and of course your share repurchases, which you, which you have highlighted.

Aristides Pittas, Chairman and CEO

Yes, well, this is the balancing act that we need to do because we do have this 150 million, as you say. Of course we have another 160 million to pay for our new builds during the next couple of years. However, we will be making a similar amount, I think in the next couple of years. So there will be enough money to look into further investments, perhaps growing the dividend, perhaps share repurchase. Everything is on the table and we discuss it in our quarterly board of directors meetings in order to best utilize the capital.

Mark Reichman, Analyst at Noble Capital Markets

Okay, well, that's very helpful.

Aristides Pittas, Chairman and CEO

Thank you very much. You're welcome, Mark.

Tasos Aslidis, CFO

Thank you, Mark.

OPERATOR

Our next question comes from the line of Kate Sullivan with Maxim Group. Please proceed with your question.

Kate Sullivan, Analyst at Maxim Group

I thank you. And you provided the new build commitment number earlier. Thank you for that. And then with the number of ships under construction and your experience in the last two, three years with building new ships, is it reasonable to forecast any delays in delivery schedules at this point given the busier shipyards or. It seems quite consistent, but would love to appreciate your comments, please.

Aristides Pittas, Chairman and CEO

Yeah, at this point we don't foresee any delay in the construction of the seats. Of course, you know, we will only know closer to the delivery times. But shipyards in general seem to be more or less making their delivery schedules.

Kate Sullivan, Analyst at Maxim Group

Yeah, it's been impressive. And your streak has been as well. And then your contracting strategy for the new builds, would you say consistent to your prior new build contracts? In terms of fixing multi year contracts, is there any change in the discussions to change contract structures in the container ship industry to have floors and potential upside to those rates? Can you comment on that, please?

Aristides Pittas, Chairman and CEO

Not really. Not really. The idea is to fix longer term charters if we can, but it's a bit too early for us to do that right now. If we were to do it right now, we would have to accept the lower rates than what we think we can get if we wait a little longer. We fixed the four intermediate ships, as you know, but the remaining eight ships we will. You know, we're waiting to see if we can get a good rate. We have not seen any change in the contract structure like a floor and a cap.

Whatever discussions we have are the traditional sort of flat rate, possibly with some early expiring options to do three or four years or two or three years.

Kate Sullivan, Analyst at Maxim Group

Thank you very much.

Aristides Pittas, Chairman and CEO

Thank you.

OPERATOR

As a reminder, if you would like to ask a question, press star one on your telephone keypad. Our next question comes from the line of PO FRAT with Alliance Global Partners. Please proceed with your question.

Po Frat, Analyst at Alliance Global Partners

I was wondering if you could help me reconcile the dry docking activity that's on page six with the information in your 20-F. The 20-F is showing six dry docks or intermediate and special surveys over the second half of the year. And the slide on page six only shows two. Is there more dry docking activity ahead of us and certainly in 27 there will be, but I was just looking about asking about the rest of 2026.

Aristides Pittas, Chairman and CEO

With the rest of 2026, we have three dry dockings to be done. The remaining three, perhaps, that you see, might be in-water dry docks, which is, you know, small delay of one day and the minimum cost. We have three big dry dockings within this quarter and the next one on three of our elder vessels, the Corfu and the Jonathan.

Po Frat, Analyst at Alliance Global Partners

Okay, that's helpful. Thank you for clarifying that. And I apologize if I missed this when you reported your fourth quarter numbers, but can you just talk about the equity investments that you've made and, you know, the nature of those equity investments and sort of, you know, risk profile potentially of those of those equity investments?

Tasos Aslidis, CFO

I think, yes, these are bond funds just to get a little bit higher return than just the deposit. These are bond funds investing in investment based bonds. So it's a very safe investment and very liquid. And then we have one additional investment in a capital protected structured fund, which again is capital protected and depending on various parameters might give us a little bit of a higher return. So it's really actually cash management, but trying to get a little bit more than just the pure deposit rate.

Po Frat, Analyst at Alliance Global Partners

Okay. I'm sorry, Tasos, I didn't understand.

Tasos Aslidis, CFO

Easily. It can be easily liquidated if we need the funds, which we will not need because we have 160 million outside this. 39, 38 million.

Po Frat, Analyst at Alliance Global Partners

Okay, but just to clarify, you're not investing in individual companies and you know, with a higher risk profile than a bond? Yes.

Tasos Aslidis, CFO

No, you know, it's not that.

Po Frat, Analyst at Alliance Global Partners

Okay, great. Thank you for clarifying that.

OPERATOR

Our next question comes from the line of Clement Mullins with Value Investors Edge. Please proceed with your question.

Clement Mullins, Analyst at Value Investors Edge

Hi, good afternoon and thank you for taking my questions. I wanted to follow up on Mark's question on your older vessels. We've seen some forward fixtures in recent months, but mostly on modern tonnage. Could you talk a bit about the dynamics of forward fixing on older vessels. Is that something widely available? And if that were the case, how does the implied discount compare to more modern vessels?

Aristides Pittas, Chairman and CEO

There is actually a lack of vessels today, so one can fix even other vessels that open up within the next three to six months quite easily at very decent rates. Very small discounts to the more modern ones, mainly reflecting the fact that they consume less fuel. But overall the market is very tight. And that is why we expect we'll be able to fix, you know, our three ships that open up within this year, later towards the end of the year. But I think we will be able to fix them within the next month or so.

Clement Mullins, Analyst at Value Investors Edge

Okay, that's helpful. And final question from me. The order book for smaller vessels is significantly lower than for the larger sizes. Have you seen any cascading from larger vessels cannibalizing routes that are usually serviced by smaller vessels? And looking ahead, do you view this as a risk or is it unlikely to have a material impact?

Aristides Pittas, Chairman and CEO

Well, you know, the markets are totally unstable due to the geopolitical developments, so that makes it difficult for liner companies to adjust their schedule significantly. So the answer is no. Currently, you know, the lines are in a difficult position trying to carry the cargo they have to carry. It difficult for them to optimize routes when things normalize. If things normalize at some point. They have to, at some point. I don't know if it's in three months or in a year or two, but when things normalize, that's when the lines start to try to optimize.

And optimization, of course, leads to increasing the size of the ships that serve various points. So yes, we will see the cascading effect as things normalize, but to now we don't really see that. And also if you look at slide 14 and you see the size groups, you know, the elder fleet percentage and order book there between the larger sizes, where there is a huge order book and now there are some other sizes that also are relatively balanced. So although what artificials could happen will happen, we were farther away from the larger seeds that will cascade down.

They have to dump, obviously, to push other sizes down which are also balanced. It's a little bit less of an issue than if we owned 8,000 EU vessels.

Clement Mullins, Analyst at Value Investors Edge

That's helpful, that's helpful. Thank you. I'll turn it over. Thank you for taking my questions and congratulations for the quarter.

Aristides Pittas, Chairman and CEO

Thank you.

OPERATOR

A final reminder, if you would like to ask a question, press star one on your telephone keypad. One moment please, while we repoll for any additional questions. Thank you. It appears we have no further questions at this time. Mr. Pittas, I'd like to turn the floor back over to you for closing comments.

Aristides Pittas, Chairman and CEO

Thank you all for standing by and listening to our presentation. We'll be back to you in three months' time. Thank you.

OPERATOR

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.