EuroDry Ltd.
Q3 2019 Earnings Call Transcript

Published: 15 Nov 2019

[Operator:]

Thank you for standing by, ladies and gentlemen, and welcome to the EuroDry Conference Call on the Third Quarter 2019 Financial Results.We have with us today, Mr. Pittas, Chairman and Chief Executive Officer; and Mr. Aslidis, Chief Financial Officer of the Company.At this time, all participants are in listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions]I must advise you that this conference is being recorded today, Friday the 15th of November, 2019. Please be reminded that the Company announced its results with the 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, EuroDry 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.Kindly draw your attention to slide two of the webcast presentation, which has the full forward-looking statements and the same statement was also included in the press release. Please take a moment to go through the whole statement and read it.I’d now like to pass the floor over to Mr. Pittas. Thank you, sir. Please go ahead.

[Aristides Pittas:]

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 nine-month period and quarter ended September 30, 2019.As a reminder, I would like to mention that in May 2018, Euroseas contributed to EuroDry drybulk fleet of six vessels, one Ultramax and two Kamsarmax vessels built between 2016 and 2018, and three Japanese-built Panamax vessels built between 2000 and 2004. EuroDry was spun-off from Euroseas on May 30, 2018. Since the spin-off, EuroDry bought an additional Panamax bulker. Comparisons in the following presentation to periods of last year refer to the drybulk fleet existing at the time for the periods presented.Please turn to slide three. Our income statement highlights are shown here. The third quarter of 2019, we reported total net revenues of $7.7 million, adjusted EBITDA of $2.2 million, and adjusted net income attributable to common shareholders of minus $0.6 million or minus $0.26 per share.Q3 operation of EuroDry commenced as a separately listed public company with the focus on positioning the company to capitalize on market opportunities. By the financing of portion of our debt, we managed to raise required funds and pursued selected vessel acquisitions, like the Starlight, which we acquired late last year. We generally expect that the drybulk market could offer opportunities for realizing significant returns in the medium term as the fleet supply is expected to grow modestly in the next couple of years.Thus, leaving the focus on trade demand developments is partly dependent on political factors. The aftermath of the emissions implementation and ballast water treatment regulations over the next two years could possibly further squeeze vessel supply, leading to a solid freight demand growth, therefore creating a very revolving market environment for vessel owners. At the same time, EuroDry stock continues to trade at a significant discount to its NAV. This discount we believe will start shrinking as the performance of EuroDry is appreciated in our fleet growth, either through single vessel acquisitions or by exploiting our public platform to consolidate other fleets, thus offering additional returns to our shareholders.Please now see slide four, which shows how the markets improved all the way till nearly the end of Q3, but subsequently are correcting in Q4. Average spot levels for Panamaxes in Q3 were about $16,250, whilst average one year charter stood at around $13,600 per day.Please turn to slide five for our chartering, operational, S&P and drydocking highlights. The Eirini was fixed for about 11 to 13 months at $12,500 per day for the first 55 days and thereafter at a 100% of the BPI 4TC index. The Pantelis was fixed for about 90 to 100 days at $11,500 per day. And the Tasos was fixed with the similar trade of about 100 to 120 days at $11,500 per day.At the beginning of Q4, we sold the Q4 contract, Q4 FFA contract at $14,550, the equivalent to the open base of one Panamax ship. Subsequently, we closed the above position with the net profit of about $112,000, which is the equivalent of about $1,200 daily on one Panamax service for the whole of Q4.In the longer term, we may continue using FFAs solidly to hedge our open day positions at management's discussion.Eirini P completed its drydock in the third quarter of 2019 in roughly 30 days at the cost which is similar to the budget we had of approximately $1.1 million including the ballast water treatment plant used.Please turn to slide six for the synopsis of the EuroDry fleet as of today. As you can see, EuroDry comprises of seven drybulk vessels with a cargo carrying capacity of about 530,000 deadweight tons and with the fleet average age of 10.8 years.Slide seven shows the employment schedule. Coverage for the remainder of 2019 as of November 1st excluding ships on index charters which are open to market fluctuations but have secured employment stands at about 56%. The only vessel that is still expected to open up for charter during Q4 is the Pantelis at some point in the second half of November.In the following slides, we synopsize our outlook in the drybulk market.Let's turn to slide 9. The IMF projected world GDP growth in 2019 is revised downwards from 3.2% in the previous quarter to 3% now. Among the developed economies, China's third quarter suggests a weakening growth rate of 6.1%, compared to 6.2% in the previous quarter. For the advanced economies, the revision of U.S. growth in 2019 reflects a less strong performance of 2.4% compared to 2.6% in the previous quarter. The IMF also scales back predictions for the Eurozone slightly, 1.2% from 1.3%, while India is down from 7% to 6.1% only. Only Brazil is expected to see a slow uplift from 0.8% to 0.9%.For 2020, the IMF predicts stronger growth of 3.4%, even though the U.S., China and Japan are expected to grow a bit more slower. Stronger growth is expected for Europe, India, Russia and Brazil. It has been noted, however, that some analysts believe that global growth may be slightly lower in 2020 than in 2019.Looking on to the drybulk trade, according to Clarkson, the trade in 2019 is now projected to grow by 1.4%, up from 1.3% expected in the previous quarter estimates. In 2020, and according to Clarkson forecast, the freight rate is set to grow at a solid 2.9% rate.Please turn to slide 10 to review the drybulk delivery schedule. Currently, the order book stands at 5.7% for 2019 and 2020, and 3.3% for 2021. This is comparatively very low, near the lowest levels of the last 20 years. Also note that due to slippage, cancellations and scrapping, the order on fleet growth during the next two years, unless a significant number of new orders placed, should be very small.Please turn to page 11 where we summarize our outlook on the drybulk market. Since the beginning of 2019 we have seen that rates for Capesize vessels moved from below OpEx levels in the first quarter to multiyear highs of above $40,000 daily in the third quarter.Panamaxes and Supramaxes were much less affected by the Vale disaster and dropped much less before increasing again also to multiyear highs of about $18,000 per day and 15,000 per day, respectively, by September. Since then, however, the market has corrected by about 50%, currently standing at around $9,000 mark for Panamax vessels.The main reason for these strong movements we've seen in this year in rates was the accident in Vale’s iron ore mine in Brazil which was estimated to reduce Brazilian iron ore exports by 90 million tons annually until mines came back to operation. However, it seems that the big part of the capacity is already coming back.The Brazilian iron ore exports and the driver for the cape market, as said, have shown improvements from minus 30% in the first half of the year to minus 15% and still improving.Our mid-year analysis for 2019 has been accurate predicting the total recovery of the market in the second half of the year as it happened. However, the rate expectations for the remaining two months of the year are rather flat in view of the return back into the market of the ships having installed scrubbers as compared to ships taking the time to install them and less coal imports by China.Our outlook moving forward is as follows

[Anastasios Aslidis:]

Thank you very much, Aristides. Good morning from me as well, ladies and gentlemen.I will now take you over our financial results highlights for the third quarter and nine-month period of 2019. For that, please turn now to slide 14.For the third quarter of this year, we reported net revenues of $7.7 million, representing 13% increase over total net revenues of $6.8 million during the third quarter of 2018. And that increase was mainly the result of increased average number of vessels we operated this year.The Company reported net loss for the period of $0.4 million and net loss attributable to common shareholders of $0.8 million as compared to net income of $1.7 million and net income attributable to common shareholders of $1.4 million for the third quarter of 2019.Depreciation expenses for the third quarter of 2019 amounted $1.6 million compared to $1.4 million for the same period of last year. Interest and other financing costs for the third quarter of 2019 amounted to $0.8 million, remaining about the same to the corresponding year of last year.Adjusted EBITDA for the third quarter of 2019 was $2.2 million compared to $3.8 million for 2018.Basic and diluted loss per share, attributable to common shareholders for the third quarter of 2019 was $0.35 calculated on 2.25 million basic and diluted weighted average number of shares outstanding compared to basic diluted earnings per share of $0.63 for the third quarter of last year.Excluding the effect on the income or loss attributable to common shareholders for the quarter of the unrealized gain or loss in derivatives, the adjusted loss attributable to common shareholders for the quarter ended September 30, 2019 would have been $0.26 per share basic and diluted compared to adjusted earnings of $0.62 per share basic and diluted for the same period for the third quarter of 2018. Usually, security analysts do not include unrealized items in their published estimates of earnings per share.Let’s now move on the second half of the slide to discuss the nine-month results for the year. For the nine months of this year, we reported total net revenues of $19.6 million, representing a 12% increase over total net revenues of $17.5 million during the third quarter of 2019. The result, the increased partly due to the higher average number of vessels we operated this year.The Company reported net loss for the period of nine months of $1.4 million and net loss attributable to common shareholders of $2.9 million as compared to net income of $0.3 million and net loss attributable to common shareholders of $0 million for the same period of 2018.Depreciation expenses for the nine-month period of this year amounted to $4.8 million compared to $3.9 million for the same period of 2018.Interest and other financing costs for the nine-month period of this year amounted to $2.7 million as compared to $1.8 million for the nine-month period of 2018. Finally, adjusted EBITDA for the first nine months of this year was $6.5 million, compared to $5.9 million for the same period of 2018.Basic and diluted loss per share attributable to common shareholders for the nine months -- for the first nine months of 2019 was $1.31 calculated on 2.48 million basic and diluted weighted average number of shares outstanding compared to basic and diluted loss per share of zero dollars, slightly negative but zero for the same period of 2019.Again, excluding the effect on the income or loss attributable to common shareholders for the period of the unrealized gain or loss on derivatives, the adjusted loss attributable to common shareholders for the nine-month period that ended September 30, 2019 would have been $1.13 compared adjusted loss of $0.07 for the first nine months of 2018. Again, typically security analysts not include unrealized contribution into the estimates of results.Let's now turn to slide 15. In this slide, we will review our fleet performance for the third quarter of 2019 and the nine-month period, and compare it to the corresponding periods of the previous year. Let's look first at our three-month figures.Our utilization rate is as usual, broken down into commercial and operational. For the third quarter of 2019, we had a 100% commercial utilization rate and 99.5% operational utilization rate, compared to 100% commercial 99.7% operational for the corresponding quarter of the previous year. I want to remind you here that our utilization rate calculation does not include vessels that were in scheduled drydocks or repairs, if any such event occurred during the period.During the third quarter of this year, we operated 7 vessels with an average time charter equivalent rate of $12,088 per vessel per day, compared to 6 vessels during the same period third quarter of 2018, which had an average $13,839 per vessel per day. Total daily vessel operating expenses, including management fees, general and administrative expenses, but excluding drydocking costs, averaged $5,722 per vessel per day during the third quarter of this year, compared to $6,182 per vessel per day for the same period -- same quarter of 2018.Let’s now look at the bottom of this table to our daily cash flow breakeven levels presented here on a per vessel per day basis. For the third quarter of 2019, we reported an operating cash flow breakeven level, including loan repayments, and the cash portion of our preferred dividend of $11,222 per vessel per day, compared to $11,115 per vessel per day for the third quarter of 2018.Now, let's look on the right part of the slide to review our nine-month figures. Our utilization rate again here is broken into commercial and operational. We had a 99.9% commercial utilization rate for the quarter -- for the period, for the nine-month period and 99.2% operational utilization rate compared to 100% commercial and 99.6% operational utilization rate for the corresponding nine months of 2018.In the nine-month period, we operated 7 vessels with an average time charter equivalent rate of $10,750 per vessel per day compared to 5.5 vessels for the same period of 2018, the first nine months, during which they earned $11,649 per vessel per day.Total daily operating expenses, including management fees, general and administrative expenses and excluding drydocking costs, average $5,839 per vessel per day during the nine months of 2018 as compared to $6,512 per vessel per day for the same period of last year.Let’s now look again at the bottom of this table to our daily cash flow breakeven level, again presented on a per vessel per day basis. For the nine months we reported an operating cash flow breakeven level, including loan repayments and the cash portion of our preferred dividend of$11,314 per vessel per day, as compared to $12,227 per vessel per day for the first nine months of 2018.Let's now turn to slide 16. This slide shows on the right hand side an estimate of our cash flow breakeven level for the next 12 months. On the left side of the slide we show our scheduled debt repayments, including scheduled balloon repayments over the next six years.This chart shows our debt profile before and after the recent -- the financing of the balloon payment of Eirini that took place earlier this year. We see in the chart that we have no balloon payments coming up before 2021.We believe we have a very competitive cost of debt for the size of our Company. The average senior debt margins stands at about 3%, which assuming LIBOR cost of around 2% would translate to an all-in cost for our debt of about 5%. And if we included the cost of dividend we pay to our preferred equity, the overall cost of debt on preferred equity financing is around 5.9%.I would like to note here that we prepaid $4.3 million of Series B preferred shares in exchange of a decrease of the quarterly -- of the annual dividend rate to 9.25% from the 12%, which was originally, until January 2021. At that time, the dividend -- the annual dividend rate would increase to 14%. The remaining amount of our Series B preferred shares is about $15.4 million.We see the contribution of our loan repayments to our cash flow breakeven expressed in dollars per day in the second to last line of the table at the right part of the slide. We can see there, our loan repayments over the next 12 months contribute about $2,750 per vessel per day to our cash flow breakeven level. In the same table, we can see that our preferred dividend amounts to about $550 per vessel per day. If we make similar assumption for the rest of the components of our cash flow breakeven, that is our operating expenses, general and administrative expenses, interest, drydocking, et cetera, always expressed in a per vessel per day basis, we can estimate that we would have approximately a cash flow breakeven level over the next 12 months of $11,350 per vessel per day.Let's now turn to the next slide, slide 17. This slide provides in graphical form a snapshot of our balance sheet as of September 30, 2019. It helps us assess the intrinsic value of EuroDry stock, highlighting how undervalued that is. Left bar of the chart tracks our assets, which are mainly the value of our fleet and the current assets including our cash, while the right bar of the chart shows our bank debt, preferred stock and other liabilities with the difference shown in yellow being the net value of the Company.As you can see, the book value of our vessels is about $107 million, which is very close to what we believe their market value is. Our outstanding debt is about $58.4 million, which represents about 50% of our total assets, while our preferred stock, as I mentioned earlier, amounts to $15.4 million, representing more or less 15% of our total assets.Taking into account other current assets and liabilities, we conclude that we have a book value for the Company of almost $40 million or about $17.5 per share, which should be very close to the market value of our stock.With our stocks trading about $8 per share, we believe that investment in EuroDry is a very attractive proposition.And with that, I would like to pass the floor back to our Chairman and CEO, Aristides Pittas, to continue the call.

[Aristides Pittas:]

Thank you, Tasos. Let's open the floor for any questions there might be.

[Operator:]

[Operator Instructions] We will now take our first question. Please go ahead. Your line is open.

[Tate Sullivan:]

Hi. Tate Sullivan from Maxim Group. Good morning. Thanks for taking my questions. Could we start with just your market comments and -- I mean, what are the -- and they were helpful in terms of the new supply coming into the market. But, can you comment in terms of -- can you give an approximate number of active vessels in your market including your own as well as absolute number of scheduled additions for the next couple of years, please, if you have that available?

[Anastasios Aslidis:]

We can get that number, I think, it -- we don’t have it on the top of our heads, the expected fleet growth in terms of vessels, solid and deadweight for our segments. But, we’ll be happy to provide that information.

[Aristides Pittas:]

We don't have the actual numbers in my head but what I have in my head is the percentage increase of vessels that will be supplied in 2019, 2020 and 2021. 2019 is practically done, so we don't have. But in 2020, we expect 5.7% increase in the fleet. The majority of that growth comes from Capesize size vessels. So, in the Panamax vessels where we evolved; and the Supramax is a bit less than that. Similar growth rates are expected in 2021. About 5.7% -- sorry, 3.3% in 2021, 5.7% in 2019, and 2020 growth. From that, you have to supply -- subtract the scrapping and the late deliveries and the occasional cancellations and all that stuff.So, overall, we would expect the global fleet to grow around 3% next year.

[Anastasios Aslidis:]

You can look in slide 10, there is a little insert there in that actually shows what is scheduled to be delivered by segment in terms of vessel numbers for the next two years quarter. So, that is -- but the numbers are gross, they are not net growth rates. The net growth rates lower than the 5.7, which is mentioned.

[Aristides Pittas:]

Yes, 5.7 is what is planned to be supplied, to be delivered within that year. But, it will not necessarily happen, because there are delays, and of course there will be scrapping, which you have to subtract from that.

[Tate Sullivan:]

And then how -- and right now in terms of the newbuild market, how long does it take from the time of order to delivery, roughly? And based on…

[Anastasios Aslidis:]

Yes. Normally, it takes about 18 months from the time you order till the time you deliver, 18 to 24 months.

[Tate Sullivan:]

Okay. And I know it's hard to generalize, but can you give some comments on what are the most common routes and ports for your ships or the number of ships around Brazil versus the numbers around Australia? And again, I know, it's hard to generalize, but any comment?

[Anastasios Aslidis:]

This is a big discussion. I suggest, we a call after this call, and we can discuss the matters then.

[Tate Sullivan:]

Okay, thanks. And then, the last one for me. Do you have a normal time or an expected time between the contract for the one ship that ends the contract this month or is that hard to say?

[Anastasios Aslidis:]

It will be in direct continuation. So, there will be no downtime. In drybulk these days, there is no downtime or waiting time. It will be in direct continuation.

[Operator:]

We'll now take our next question. Go ahead. Your line is open.

[Poe Fratt:]

Yes, sorry. I can't tell if my line is open. This is Poe Fratt from Noble Capital Markets. Good morning. Just go back to slide 10…

[Aristides Pittas:]

Good morning.

[Poe Fratt:]

Good morning. To go back to slide 10, you're showing 5.9% -- or 5.7% growth. What has -- that’s a gross number. What has scrapping run so far? We're almost done with the year. So, what do you think the net growth is for 2019?

[Anastasios Aslidis:]

I think, it should be closer to…

[Aristides Pittas:]

3.5%.

[Anastasios Aslidis:]

3.5%.

[Poe Fratt:]

Yes, just want to clarify, because that chart does show higher than expected growth, just to make sure we’re on the same page.

[Anastasios Aslidis:]

This is -- what that shows is the scheduled deliveries as a percent of the fleet. It's only the schedule deliveries, doesn't do all the accounting or the -- subtract the scrapping. If we do…

[Aristides Pittas:]

Also, the 5.7% is what -- is in the analyst, Clarkson’s books to be delivered in this year, but not all of it will be delivered. There is slippage of around 10% in that. So, there is slippage, there is the scrapping. So, overall, we expect the growth rate will be around 3.5.

[Anastasios Aslidis:]

3.9. I think, if we did our internal analysis, we make assumptions for scrapping, that certain and it is expected to ship in the last couple of months, we would be just below 4%, 3.7% to 3.9% net growth of the fleet for 2019.

[Poe Fratt:]

Yes. Great, yes. Because scrapping and slippage will mute that gross number and take it down by almost half. When you look at sort of the scrubber situation out there, my impression is that there -- people have been scrambling to get shipyard time and the installations are maybe taking a little bit longer. Is that your impression too? And then, second part of that question is, is IMO 2020 changing your chartering strategy at all? Are you -- how are you approaching the potential for fuel cost to diverge here?

[Aristides Pittas:]

Yes. First, on the scrubber issue, you're absolutely right. It's not an impression, it's an actual fact that it has been taking longer to install the scrubbers than originally anticipated by maybe 10 days or something like that on average. So, this obviously is happening.On the change of fuel from January 2020, we are already taking the necessary measures and we will be starting to get supplies of high sulfur -- of low sulfur fuel oil on our ship obviously. Before that time, we've already started in one or two ships. And there will be this disadvantage, let's say to the ships that do not have scrubbers against the scrubber fitted ships, at least initially, with the price difference being around $250 per ton at this point in time, $200 to $250, depending on the port. There are going to be problems in availability of both types of fuels, samples, we have only one or the other. So, planning will need to be made to where you bunker which to be much more careful. This is something we will be discussing together with our charterers and helping them because they are the ones in time charters that direct the vessel where it needs to go. And we will be discussing with them to try and help and optimize the situation.But, all this will create some disruption generally, and this disruption is essentially reducing the number of ships available. So, we think that it will be a positive disruption, even though the scrubber fitted ships will be benefiting with higher time charter rates. Of course, if the time charter rates that they will be getting a sufficient to amortize the investment, this is something that remains to be seen.

[Poe Fratt:]

Great. But, your chartering strategy won't change. You still expect to focus more on time charters; the fuel cost risk is on customer or the charterer?

[Aristides Pittas:]

Yes. The big majority of our fixes will be time charters, either spot time charter for one trip or the longer time charters. Yes.

[Poe Fratt:]

Great. And then, if you can -- if you look at the -- can you give us color on the third quarter rate from the Guardian Pool, on the Alexandros P? And then, sort of give us an idea of where that is quarter-to-date for the fourth quarter. That would be helpful.

[Aristides Pittas:]

Yes. I can tell you that generally the Guardian Pool has outperformed the index by a very little bit over all over the years that we've been within. So, we've outperformed the index. Of course adjusted for the size of our vessels because the Supramax index is 57,000 deadweight vessel, but we are 63,000 [ph] which means that -- implies generally at least the 10% higher rate. And this is what we have been achieving. We have been achieving a little bit higher than 10% above the index historically upto now. And this quarter, I think, it’s running around the same level. We have better standard when we get the next statement from them.

[Anastasios Aslidis:]

Generally results from pools -- in general, have more lag with the market. So, if the market drops, we do a little better during the period of the market drop because they carry the older charters; and if the market increases, they do it in-house [ph] because they get the lower charter that have been fixed before. So, the same is reflected in the results of pool.

[Poe Fratt:]

Yes. And a lot of companies give Tasos forward cover, percentage of days booked for the fourth quarter, and sort of an average TCE rating. Do you have ballpark numbers for those two? I know that most of your capacity is under contract, but indexed. So, I was just trying to get a flavor where we stand during the middle of the quarter on both, on really rates.

[Anastasios Aslidis:]

Yes. I mean, the best way to -- if you look on slide seven, what we show is fixed, which is what determines a big chunk of what our rates will be for the third quarter. The remaining part -- the unfixed part or the part that is open to the market, I think looking at the average index today is probably the best estimate of what is there. This is what we do frankly ourselves, we -- to make projection for the quarter. So I don’t have on the top of my head a number to give you. But, you can see on slide seven, the fixed charters and the ones that are linked to the index, the others to-date index and whatever expectations you might want to put for the remaining month and a half, would constitute good guess for Q4.

[Poe Fratt:]

Yes. And I noticed on that, the Guardian Pool, the Alexandros P is highlighted in blue, it shows as an option. And should we view that as an option or is that more in the pool, it's in the pool permanently and it should work and generate 112 pool points each quarter?

[Aristides Pittas:]

Yes, it's our option really to exit the pool, if we decide at any point that we want to do that. But, this is not something we're currently considering.

[Poe Fratt:]

Yes. So, we should have this for pool employment?

[Aristides Pittas:]

At the pool, yes.

[Poe Fratt:]

Okay, great. And then, Tasos, if you could just talk about costs and what throw cost down over the third quarter and then sort of where, relative to what the 5,200 per day that you're guiding or offering for the next 12 months? That would be helpful.

[Anastasios Aslidis:]

There is -- I mean, from quarter-to-quarter, there is some -- variation on the operating expenses is nothing the way certain expenses happen, and that affects the quarterly average. I think compared to the same period of last year that we saw, I think we saw a little lower cost compared to last year. I think we were having some vessels that were relatively new to the fleet that we would get to a vessel -- join the fleet middle of last year and sort of -- originally the results, the contribution of the new vessels is a little higher. But there is nothing -- there is no real trend there. I think we're doing that around budget. If you look at the quarter -- volatility of the OpEx, which I happened to see that -- look at just before our call, it’s around $5,000, give or take, even $100 up and down. So, I think, we are -- not expect them to certainly move the course. [Ph] We're trying to keep them as low as we can. We have been helped little bit, because I think the exchange rate we had budgeted it 12% -- 10%, I mean the dollar-euro exchange rate is slightly lower. That's basically -- there's nothing more to add than that.

[Poe Fratt:]

And then, you've done a good job of refinancing, redeeming the preferred or partially redeeming the preferred. Should we expect 2020 to be pretty quiet from a refinancing standpoint? You have, what, about $7 million due in 2020. When should we sort of expect you to start looking into refinancing, you might have to do in 2021?

[Aristides Pittas:]

We will refinance, the plan is to refinance the remaining of the preferred sometime towards the end of 2020, because in 2021, the coupon steps up to 14%, and obviously, we don't want to do that. So the plan is to refinance it at some point within this year.

[Anastasios Aslidis:]

Within next year.

[Aristides Pittas:]

Yes. Within this coming year. And…

[Anastasios Aslidis:]

In terms of debt, there is no urgency to refinance anything. We have no balloons. We have capacity, access -- we have borrowing capacity in one of our ships, the Xenia. And there is a possibility, if we needed to invest, we can refinance one of our ships to increase -- by increasing the debt to create investment capacity.

[Aristides Pittas:]

More investment capacity from what we already have.

[Poe Fratt:]

Would you highlight how much financing capacity that's on the Xenia?

[Anastasios Aslidis:]

I think probably $4 million to $5 million.

[Poe Fratt:]

Great. Thank you so much.

[Anastasios Aslidis:]

Thank you for the questions.

[Aristides Pittas:]

Thank you.

[Operator:]

Thank you. There are no further questions at this time. I would now like to turn the floor back to Mr. Pittas.

[Aristides Pittas:]

Thank you all for listening in to our conference call this quarter. And we'll be with you in next year, early next year to discuss how the year ended and what we think will happen. Thank you very much.

[Anastasios Aslidis:]

Thank you, guys. Thanks, everybody.

[Operator:]

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.