Euroseas Ltd (NASDAQ:ESEA) Q2 2022 Earnings Conference Call August 11, 2022 9:00 AM ET
Company Participants
Aristides Pittas – Chairman and CEO
Tasos Aslidis – CFO
Conference Call Participants
Tate Sullivan – Maxim Group
Poe Fratt – Alliance Global Partners
James Jang – Univest Securities
Operator
Thank you for standing by, ladies and gentlemen, and welcome to the Euroseas Conference Call on the Second Quarter 2022 Financial Results. We have with us today Mr. Aristides Pittas, Chairman and Chief Executive Officer; and Mr. Tasos 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. [Operator Instructions] 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 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’d like to pass the floor over to Mr. Pittas. Please go ahead sir.
Aristides Pittas
Good morning, ladies and gentlemen. 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 six months period and the quarter ended June 30th, 2022.
Let’s go to slide three. Our income statement highlights are shown here. The second quarter of 2022 was another great quarter for us producing the best results since our inception.
With an extremely high charter coverage for the remainder of the year through 2024, we expect to be able to deliver robust profitability for the next couple of years regardless of market developments.
For the second quarter of 2022, we reported total net revenues of $48.5 million and net income of $30.7 million or $4.54 per share diluted. Adjusted net income attributable to common shareholders was $29.6 million or $4.08 per share diluted. Adjusted EBITDA for the period stood at $34.2 million.
As part of the company’s common stock dividend plan, our Board of Directors have declared a quarterly dividend of $0.50 per share for the second quarter of 2022, which will be payable on or about September 16th, 2022 to shareholders of record on September 9th, 2022. This underline corresponds to a yield of about 7%.
As of august 10, 2022, we have repurchased 40,000 shares of our common stock in the open market for about $900,000 under our share repurchase plan of up to $20 million, which was announced in May 2022. Tasos will go over the financial highlights in more detail later in the presentation.
Please go to slide four where we discuss our recent chartering and operational developments. During the second quarter, we took delivery of motor vessel Emmanuel P and motor vessel Rena P May 24th and June 27th, respectively. Both vessels have a capacity of 4,250 TUE each and were built in 2005 and 2007.
There are no new charter this quarter, as all our vessels are fixed until the fourth quarter of 2022. Regarding repairs and drydocking, EM Hydra commenced second schedule the drydock, which was completed in the first quarter of 2022. There were no idle vessels during this quarter.
Please turn to slide five where you can see our fleet profile. Our current fleet consists of 18 vessels including 10 feeder and eight intermediate containerships with a cargo capacity of close to 60,000 TEU and an average age of 17 years, weighted by size and TEU.
Turning to slide six, we present our vessels under construction, which consists of nine Feeder containerships, which are expected to be delivered in 2023 and 2024. The nine Feeder containership newbuildings will have a capacity of 22,000 TEU. After the delivery of these newbuildings, our fleet will consist of 27 vessels with a total carrying capacity of approximately 81,000 TEU.
Slide seven shows our vessel employment schedule. As you can see fixed rate coverage as of the end of Q2 2022 stands at approximately 98% for the remainder of 2022, 78% of 2023, and almost 54% to 2024.
Please now turn to slide nine to the review how the six to 12 month time charter rates have developed in the last decade. Charter rates were low across all segments until mid-2020. But since the onset of the pandemic, they have dramatically improved, posting all-time highs.
Even though rates started retreating towards the end of 2021, they jumped to new highs during the first half of the year. In the last few months, rates appear to have decreased due to a number of reasons including a lack of demand for longer term charters, meaning three years plus, partly due to the limited availability of vessels and partly because of the wait and see approach of charter rule as well as lower demand for the transportation of finished goods, which is treated by the uncertainty surrounding the ongoing geopolitical and global economic events. Nevertheless, rates still remain at record highs by any historical comparison.
Please turn to slide 10 where we summarize becomes the containership market highlights for the second quarter of 2022. Time charter rates across all segments declined slightly over the past three months, but are still higher than at the start of 2022 and more than four times higher than at the end of 2020 and still well above the historical median of the last 12 years.
Even though the secondhand price index decreased on average by about 3% in the second quarter of 2022 over the previous quarter, secondhand prices remain very high historically. Generally speaking, the market softened a bit in the second quarter as the war in Ukraine raised uncertainty and diminished appetite for any investments.
In the meantime, the newbuilding price index increased by about 2.6% in the second quarter of 2022 over the past quarter. In fact, we believe prices for containerships rose even further in the second quarter against the backdrop of decreasing slot availability at yard, rising building costs, manpower costs, and energy costs.
The containerships fleet has grown by approximately 2% year-to-date without accounting for isle vessel reactivation or idling. The idle containership fleet as of July 18th, 2022 stands at about 0.9% of the fleet and has remained stable during the last year at the lowest levels.
However, this number includes Iranian sanctioned ships and ships that were involved in blank sailings due to lockdowns in China during May and June, bring the actual number of ships really idle and inoperable to fairly low number.
With containership market conditions still being exceptionally strong, no containership have been sold for recycling so far this year, and none are expected to be recycled by the end of the year. By and large, it has been the quietest period for containership scrapping since 2006.
Scrapping price fell sharply to about $600 per lightweight-tonne in the second quarter of 2022. The prices were clearly impacted by currency depreciations and the softening of the steel markets locally. In addition, these prices are based on a very shallow market with no transactions reported and only available base much lower than what owners are willing to accept.
Please turn to slide 11. The global GDP growth forecast has been further reduced for 2022 according to the IMF’s latest report as several global events have hit the world’s economy already weakened by the pandemic.
The ongoing geopolitical conflict between Russia and Ukraine added to existing inflationary pressures that have already started building up due to the economic stimuli provided during the pandemic, with strict monetary policies, including a series of aggressive interest rate hikes to help address inflation.
With elevated energy prices mainly due to the Russia-Ukraine conflict and lingering supply chain issues, as well as additional slowdowns due to sporadic COVID-19 lockdowns and the property sector crisis that may further suppress Chinese growth, the IMF lowered its global GDP estimates from 3.6% to 3.2% for this year, and to 2.9% for 2023.
GDP growth for the United States was revised downwards to 2.3% for 2022, a 1.4 percentage point lower from April’s forecast due to lower growth and tighter monetary policy.
Similarly, European growth has dropped to 2.6% resulting from the Russia-Ukraine conflict and tighter monetary policies. Due to rates global spillovers caused by various regional issues, China’s growth was also revised down to 3.3% for 2022, a 1.1 percentage difference from the April’s forecast.
Growth in emerging markets and developing economies is also expected to sharply accelerate [ph]. And India’s forecast has been revised down to 7.4% for 2022 and 6.1% for 2023. While the only country with better forecast this quarter seems to be Brazil, with an anticipated growth of 1.7% in 2022 from 0.8% previously due to the robust recovery in Latin America.
From developed economies, Japan and ASEAN-5 have also been revised downwards for 2022 and 2023 due to concerns about slowing economies following the U.S. interest rate hike and ongoing inflation.
Looking at the containerized trade and accounting to Clarksons research demand, demand is expected to decline by 0.6% in 2022 compared to 6.5% growth for the previous year. For 2023 containerized trade is projected to grow by 2.3%.
Rates and growth projections are being continuously revised as the effects of the lockdowns in China and geopolitical tensions between Russia and Ukraine on world growth and trade are being continuously reassessed.
Please turn to slide 12. The containership fleet is relatively young, with most vessels under 15 years old and only 9% of the fleet over 20 years old. The right side chart shows the delivery schedule of the current containership orderbook which is expressed as a percentage of the fleet.
The circled figures for 2022 to 2025 reflects the anticipated fleet growth before any scrapping and slippages.
Clarksons expects new deliveries of about 4.5% of the current fleet to be delivered in 2022, 9.5% in 2023, 9.7% in 2024. Currently, the total containership orderbook stands at 27.8% of the fleet and the majority of the deliveries are scheduled for the second part of 2023 onwards.
Please turn to slide 13, where you can see the fleet age profile and orderbook for ships from 1,000 to 3,000 TEU. As can be seen here the number of vessels in this size range that are older than 20 years is 22%, much larger than the 9% for the average of the fleet shown in the previous slide.
Also the total orderbook in this size bracket is under 15%, about half of that the whole fleet. In other words, the supply dynamics for the smaller sizes are much more favorable than for the bigger ships. This was one of the prime reasons for us traction our newbuilding program around these sizes.
Please turn to slide 14 where we discuss our outlook summary for the containership market. Charter rates have dropped by about 10% to 20% from recent record highs. While freight rates have fallen 20% to 30% below historical highs. Nevertheless, they both still remain spectacular.
Pressure on container trade has increased as macroeconomic headwinds, lockdowns in China, the Russia-Ukraine conflict, inflationary pressure on consumers, and a shift back towards services spending have impacted volumes
Ongoing disruption caused by port congestion remains extremely supportive to the charter market, despite trade volumes in 2022 having come under pressure. Charter rates have shown no material signs of softening, edging down only marginally, but charterers appear reluctant to fix longer periods or fix forward.
With port congestion likely to take time to ease, demand remains above pre-COVID levels, despite major headwinds and moderate fleet expansion. Container market conditions look likely to remain positive in the short-term.
Consequently, we expect the remainder of 2022 to remain strong. However, in 2023 increased deliveries, easing of port congestion, and demand destruction should take their toll and charter rates should decline significantly.
Looking beyond 2023, fundamentals are complex, with a range of factors likely to have an impact, including the direction of the global growth rates, which may move in either way depending on the fight to control inflation and the outcome of the Ukraine-Russia war. Material supply pressure from 2023 onwards, which may overtake demand growth. And lastly, new environmental regulations will probably result in even slower steaming by 2023/2024, effectively, removing capacity from the market.
Let’s move to slide 15. The left side of the slide shows the evolution of one year time charter rates to containers with a capacity of 2,500 TEUs since 2010. According to Clarksons, [indiscernible] the one year daily time charter rates for 2,500 TEU containerships is at $72,500 per day.
The right hand side of the slide shows the historical price range for the newbuilding and the 10-year old containership with the capacity of 2,500 TEU. As you can see, secondhand prices increased significantly in terms of the charter rates during the last two years. However, the increase in prices for newbuildings was muted.
This was the second reason that prompted us to invest a significant part of the proceeds we have secured in newbuilding prices. The first being the under-investment in smaller sized vessels as already discussed.
Third, and probably the most important reason for putting in place our newbuilding program was the fact that due to environmental concerns, the world will need new more economical prices.
These ships which consume nearly half the fuel that older vessels do, will adhere to conditions to a greener environment. We are confident that this will be appreciated by the markets to rewarding our vessels with higher charters than for elder ships.
Indeed, this has been the case for our first two vessels that have been followed chartered for three year period starting upon the delivery in first half 2023 at $48,000 per day. Rate which repays the full investment in just three years.
Given our charter fleet between now and the end of 2024 at very profitable rates generate significant cash flow reserves. We intend to use the cash flow we are generating not only to fund the equity portion of our nine vessel newbuilding program, but also the growth on shareholders via our ongoing dividends and share repurchase program.
Notwithstanding the above, we will still have a significant shares to pursue other investment opportunities, which can be accretive to shareholders when such opportunities arise.
And with that, I will now pass the floor to our CFO, Tasos Aslidis to go over our financial highlights in further detail.
Tasos Aslidis
Thank you very much Aristides. Good morning from me as well, ladies and gentlemen. As usual, I will now take you through the next five slides of our presentation and give you an overview of our financial highlights for the second quarter and first half of 2022 and compare them to the same period of last year.
For that let’s go first to slide 17. The company reported total net revenues for second quarter of $48.5 million, representing a 165% increase over total net revenues of $18.3 million during the second quarter of 2021, the increase being the result of the increased time charter rates [indiscernible] in the second quarter of this year compared to last.
Due to the increase in the number of vessels, we own and operated in the second quarter of this year again compared to last year.
The company company’s income and net income attributable to common shareholders for period was $30.7 million as compared to a net income of $7.9 million and net income attributable to common shareholders of $7.6 million respectively for the same period of 2021.
Interest and other financing costs for the second quarter of 2022 amounted to about $1.1 million compared to $0.7 million for the same period of 2021. This increase is due to the increased amount of debt and the increase in the weighted average LIBOR rate that we pay in the current period compared to same periods of last year.
Adjusted EBITDA for the second quarter of 2022 was $34.2 million compared to $10.3 million achieved during the second quarter of 2021, an increase of 231%.
Earnings per share attributable to comments shareholders for the second quarter of 2022 were $4.26 and $4.24 basic and diluted calculated on 7.2 weighted average number of shares outstanding as compared to basic and diluted earnings per share of $1.12 and $1.11 respectively for the second quarter of 2021 calculated on 6.8 million approximately basic and diluted weighted average number of shares outstanding.
Excluding the effect on the income attributable to common shareholders of the unrealized gain and derivatives, the amortization of below market time charters acquired and the depreciation charged due to the increased value of the vessel acquired with below market time charter.
The adjusted earnings attributable to common shareholders for the quarter. which have been $4.1 per share basic and $4.08 per share diluted respectively compared to adjusted earnings of $1.04 per share basic and diluted for the quarter ended June 30th, 20201, which we excluded unrealized gain on derivatives. Usually [indiscernible] did not included the above items in the past six months to furnish while we’re making the assessment.
Now, let us look at the numbers for the six-month periods. For the first half of 2022, the company reported total net revenues of $93.9 million representing an 188% increase over total net revenues of $32.6 million for the first half of 2021.
We reported net income and net income attributable to common shareholders for the period in the first half of $60.7 million compared to a net cinema of $11.7 — net income attributable to common shareholders of $11.1 million the first half of 2021, an increase of 445%.
Interest and other financing cost for the first half of 2022 amounted $2.1 million compared to $1.4 million for the same period of 2021. This increase is generally due to the increased amount of debt we’re carrying and the increase in the average LIBOR we pay for the period.
Adjusted EBITDA for the first half of 2022 was $65.3 million compared to $15.9 million for the same period the first half of 2021. Earnings per share attributable to common shareholders for the first half of 2022 were $8.40 basic calculated on 7.2 million average number of shares outstanding and $8.36 per share diluted calculated on 7.3 million average number of shares outstanding compared to basic and diluted earnings per share of $1.65 and $1.64 respectively for the first half of 2021.
Again excluding the effect from the income attributable to common shareholders for the first half of this year, the unrealized gains derivatives, the amortization of below market time charters acquired, and the depreciation charged due to the increased value of the vessel acquired with below market charters, the adjusted earnings per share to the common shareholders for the six months also [indiscernible] compared to adjusted earnings of $1.58 basic and $1.57 per share diluted for the same period of 2021 against compared to period the unrealized gain of derivatives and the loss on the sale of a vessel.
Let’s now go to slide 18 to review our fleet our performance. We will start our review by looking first at our fleet utilization rate for the second quarter 2022 in comparison to 2021.
As usual, our fleet utilization rate is broken down to commercial and operational. In the second quarter of 2022, our commercial utilization rate was 100% and our operational utilization rate was 99.7% compared to 100% commercial and 99% operational for the second quarter of 2021.
On average, 16.43 vessels were owned and operated during the second quarter of this year, and an average time charter equivalent rate of $33,714 per day compared to 14 vessels that we own and operated in the second quarter of 2021 and an average of $14,853 per day.
Our total operating expenses, including management fees, G&A expenses, excluding drydocking cost average $7,732 per vessels per day during the second quarter of this year compared to $6,860 per vessels per day for the second quarter of 2021.
If you look further down on this page, you can see the cash flow breakeven rate for the second quarter of 2022 which in addition to the operating cost mentioned above takes into account interest expenses, drydocking expenses and loan repayment excluding our balloon repayments.
Thus during the second quarter of 2022, our daily customer operating rate of $13,561 per vessels per day compared to $9,937 per vessel per day for the same period second quarter of last year with a big part of the difference being accounted by the higher
Loan repayments made during this period.
Next let’s go over to our utilization rate and remaining figures for the first half of the year and compare them again to the same period 2021.
During the first half of 2022, our commercial utilization rate was 99.8% and our operational utilization rate was 99.6%, compared to 100% commercial and 98.3% operational utilization rate for the same period the first half of last year.
Owned and operated 16.23 vessels in the first half of 2022, earning an average time charter equivalent rate of $33,843 per day compared to 14 vessels earning $13,523 per day during the first half of 2021.
Our total operating expenses, including management fees, G&A expenses, before drydocking costs were $7,534 per day during the first half of this year compared to $6,897 per vessel per day for the same period of 2021.
Again if we look further down in the table, we can see again the cash flow breakeven rate for the first six months of 2022, that amount to be $13,805 per vessel per day compared to $9,638 per vessel per day for the first half of 2021. The difference again mostly is accounted by the higher loan repayments during the year.
Let’s now move to slide 19. This slide provides [indiscernible] investors a tool to assess the earnings per share for our fleet in the coming periods. The table shown here recorded EBITDA calculated in two parts. The first part reflect to our current contract in place.
Starting with current vessels days available, the fleet shows fleet days after making some structures per day scheduled guidance. Also it shows the number of conducted days — productive days, the percentage in the average and the average contracted trade in each period.
By making an assumption of the operating expenses and other G&A expenses and drydocking costs, you can estimate the EBITDA contribution for the contracted portion of our fleet.
The second part of the table and for future periods, we can see the difference of the available dates and the contracted days, what will remain open days of our fleet. To complete our EBITDA calculation for the entire fleet, we need to make an assumption about the average rate that will be aired by our open days.
Here want to make huge the assumptions, indicatively, we will assume that the open days in the second part of 2022, 2023 and 2024 will get the same rate as the average of the current contracted days, you can see — you can get the estimates of EBITDA that you see at the bottom of the page.
Furthermore, knowing our open days in each period, we can usually calculate the sensitivity of our EBITDA estimates to charter rate changes. The note below the table provides the sensitivity for EBITDA per charter changes, for example, if our 2023 open days are assumed to have $20,000 daily vessel $33,218 shown in the table, our EBITDA for the year would be approximately $143 million [ph].
Let’s now turn to slide 20 to review our debt profile. On the top of this slide, you can see our current debt repayments over the next several years. Our loan repayment schedule without balloons for this year $27.4 million, result payments of current debt going down over the next couple of years.
So, the number of balloon payments coming due in 2023 which we expect to be able to repayment if we choose to do so. Please note our debt profile does not include any debt that may [indiscernible] to finance our newbuilding program.
If we look on the slide — on this slide, about the cost of our debt, which is related the loans outstanding at the end of the quarter. The average is marking of our debt is about 3% and assuming the LIBOR rate [indiscernible] our cost of senior debt about be on average about 5.8%.
[indiscernible] interest rates swaps which are on average about 1.7%, the average cost of coming down to 4.7%. Looking now at the bottom of this table, we can see our cash flow breakeven level expectation over the next 12 months [indiscernible]. You can see the components that make up our customer breakeven level that resulted.
The final breakeven rate for the next 12 months was expected to be a little less than $40,000, $13,993 of which about $4,227 per vessel per day is the contribution from loan repayments.
Due to this segmentation, let’s now move to slide 21 to provide some highlights from our balance sheet. As of June 30th, 2022, our assets improved cash and other assets amounting to about $17.1 million. Advances for our newbuilding is about $27.8 million and our total book value for vessels of about $222.6 million, resulting in book value for our assets of about $288.5 million.
On the liability side, our debt as of June 1, 2022, stood at $105.2 million, representing about 36.5% of the book value of our assets. We said on our liability side to report the value of our recently acquired low market charters, which was estimated in order to record the recent vessel acquisitions in their fair value or $42.7 million or 14.8% of our assets and other liabilities amounting to about $27.4 million or 25% of our total assets, resulting in about $123 million book value of our shareholders equity.
However, the market value for our fleet is much higher than its book value. Based on own estimations, using the charter adjusted market value of our vessels and new bid contracts. Our vessels are worth are estimated to be below about $538 million as was the end of June 2022, which translate to net asset value of $439 million or about $66 per share.
Recently, our shares have been trading in the range between $22 and $29 per share, part representing a significant discount to our net asset value in offering good appreciation potential for our sale process and good investment opportunities for our investors.
And with that, I would like to close my presentation and pass the floor back to Aristides to continue the discussion.
Aristides Pittas
Thank you, Tasos. May I now open-up the floor for any questions you have. Thank you,
Question-and-Answer Session
Operator
Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question is from Tate Sullivan with Maxim Group. Please proceed with your question.
Tate Sullivan
Thank you. Good day. With your comments about no scrapping this year, but then with the rates, the potential for rates to decline meaningfully in 2023 And then taking delivery of nine new builds over the next three years, two and a half years? What’s the balance sheet look for? When would you decide to start to scrap some of your older ships? Would we have to see rates decline for those ships to below breakeven levels? Or would you look for some other factor? Please.
Aristides Pittas
Sure. Of course, everything will depend on how the market develops, right? Depends. So we’re not taking any decision now about what we’re going to do in 2024, when essentially most of these charters end. We’ve got a couple of years left for most of the ships, which are under employment, so we will take the decision much closer to the time, if at that time the market is terrible, then probably we will scrap them. If the market is imposing well, and the seats are worth passing the next way and can still contribute, we will keep them. It’s a decision for the future not for now.
Tate Sullivan
Okay. Thank you. And then, you comment on the new builds in three year rates well, in general, in the market, three year rates, no longer available currently, but are you still try going to target potentially one or two year rates or, or even shorter based on just depend on how severe the decline is at 2023 for the new build contracts?
Aristides Pittas
Again, this is not the decision that I think will be taken this year, except if we see a sudden strengthening in interested in demand for longer term charters. We would prefer to fix longer term, but we’ve got a lot of time to wait till then because the next the first vessel to be delivered to us only comes in the third or fourth quarter of 2023, fourth quarter actually. So we’ve got more than a year’s time in that ship delivers. And we will wait and see.
Tasos Aslidis
And even with the rate decline, and if you look at the literature of charter rate you can see that there’s a decline assumed there is the levels are way above what our new buildings breakeven and would be significant profitable anyway.
Tate Sullivan
Yes. But yeah, great point. And also just a quick run on the capital ratio based on the NAV, I mean, are you still on a fully delivered basis? Potentially, I mean, with your nav ratio below capital ratio below 20% based on a fully delivered basis or basis, are you targeting 35% capital ratios?
Tasos Aslidis
I think we mean, you mean the financial, right?
Tate Sullivan
Yes. Yes.
Tasos Aslidis
The new building, we intend to finance on the order of 50% to 60% of the contract price as a base, and we see what our options we have. So if you blend the card leverage, which is below 20% of the base of market values in the, let’s say, 60% leverage of the new buildings, we will be in co-pay below 40% of our leverage, even assuming a decline of our aging of the vessels.
Tate Sullivan
Okay. Thank you. Thank you, both.
Aristides Pittas
Thank you, Tate.
Operator
Thank you. Our next question is from Poe Fratt with Alliance Global Partners. Please proceed with your question.
Poe Fratt
Good afternoon, Aristides. Good afternoon Tasos. Several questions. First of which is a housekeeping item. It looks like over the last two quarters your commission rates have dropped into the 3.5% range from you know closer to 100 basis points higher have commission rates declined or is that just something is something else going on their?
Aristides Pittas
Well, the commission rates really depend on who the charter is and through which channels we are able to fix them. There’s been a few fixes with very little commission rate charge which affects the average, but I wouldn’t consider this as a normal.
Tasos Aslidis
If you look at the release that we have on our website, you will see at least in one case, there is an attending the era is sort of net of commission because the way that deal was developed we have built the absolute lower commission rate because it is paid before the results. So we don’t record it, and that in really what reduces the average.
Poe Fratt
Okay. Yeah, I’m just using 4.5%. So just wanted — fine tune that. Then secondly, if you could talk about, the updated EBITDA calculated on page 19. It didn’t look like 2023 and 2024 changed much from the bottom line totally EBITDA number. But the EBIT done number versus the first quarter went down just about, almost $7 million. It looks like you know, some of that was dry-docking expenses. But can you just talk about the changes in the second quarter EBITDA calculator versus the first quarter EBITDA calculator?
Tasos Aslidis
Yeah. These are meant to be due to the fashion and the assumption that is put on those tables has to repeat the existing contract or pay to aromatics assumption, if you want to put that ratio there is we were key were different at towards the existing contract that would result in a difference or it could be the other wanting operating costs due to discern this quarter or higher drydock cost or of a drive for more quarters than others. So those were the reasons that might change the EBITDA on the margins.
Poe Fratt
Okay. But its looks like — Tasos, the average contracted PC weighed — went down from 32,000 to about 31,200 is down by about $800. And why would that have gone down if it’s already contracted?
Tasos Aslidis
I need to get back to you on that to give…
Poe Fratt
Okay.
Tasos Aslidis
But to answer, a set of vessels that should result will shift it and change the address or something like that, I need to get back on that one.
Poe Fratt
Okay. It didn’t look like the 2023 drydocking nor that 2024 drydocking estimates changed at all. So just nitpicky, but just wanted to check that out. Then if you look on page 20 that your drydock expenses are up over the next 12 months, so your interest expenses. So your breakeven is up about $750 on a pre-debt amortization schedule. What other than what you’ve already talked about? Is there any anything else going on as far as pushing those numbers up?
Tasos Aslidis
Drydocking —
Poe Fratt
Either drydocking or the interest expenses, the interest expense seems to be going up pretty materially relative to last quarter. And your debt expense or debt load shouldn’t have gone up that much. And your capital structure hasn’t — shouldn’t change much over the next 12 months. So just trying to figure out why that would be up $380 relative to the first quarter?
Tasos Aslidis
In that range, higher obviously [indiscernible] that in some extent. Secondly, the interest expense might include maturity debt which we maintain once it comes from vessels. So that might meet the debt levels that is about 20% higher, and already — over the next two years, over the next four quarters, we will have a at least the quarter of newbuilding delivers over — interest on that as well.
Poe Fratt
Okay. And then can — you sort of talked about the contracting environment right now more on the newbuilds, it seemed like more versus the existing fleet. Can you just talk about some of the upcoming fixtures that you’re looking at whether it’s the Akinada Bridge or the Hydra others that are coming up over the next six to nine months?
Aristides Pittas
Yes. We are not discussing currently any potential started for the next vessels, we are having some preliminary discussions on the Akinada and what its future will be, but really nothing to report yet.
Tasos Aslidis
In the [indiscernible] four months before that, the next one was the Joanna, which open sometime in January 2023. So those are the two vessels that we might be using over the next quarter.
Poe Fratt
Okay. Sounds good. And then can you talk about the stock buyback program and just the cadence whether it seems it’s good to see the stock buyback. But I’m surprised to see amount wasn’t a little bit larger, given the context of where the stock was, can you just talk about sort of the cadence on that $20 million program, and there’s a lot left and just any color you can give us on this stock buyback program, that would be helpful.
Aristides Pittas
Sure. The issue is that you cannot use the stock buyback program during a period, a quiet period. So the last month and a half when the stock was really depressed, we could not use it, because of all these constraints. Therefore, we didn’t have the opportunity to implement more which we would have done at the levels that you saw that we bought for the 1 million worth of stock that we did.
Poe Fratt
Great. That’s helpful.
Tasos Aslidis
Stop using more than around July 10th, I believe.
Poe Fratt
July 10th. Great. Thanks for your time.
Aristides Pittas
Thank you.
Tasos Aslidis
Thank you Poe.
Operator
Our next question is from James Jang with Univest Securities. Please proceed with your question.
James Jang
Good afternoon guys.
Aristides Pittas
Hi, James. Nice to hear you.
James Jang
Nice to hear you. Yes, it’s been a while. How everything is going well for you guys? Just a couple of quick questions. I probably know the answer to this, but I do have to ask. Since you have three new boats coming in in 2023. And you’ve got the two the Akinada and the Joanna coming off charter this year. Would you look to possibly sell those vessels after the charters are completed since rates are pretty strong in 2023, could be a little more challenging for long-term rate in charters?
Aristides Pittas
It is always under consideration. It’s in our mind. So we are confused about that possible path as well. So we’re looking at that, too. But most the options are mostly amongst the option of chartering it’s continued, it’s monitored continuously.
James Jang
Okay. And what the dividend just looks like with the contracted vessels even though let’s say you, it’ll be hard to contract that the vessels are coming off to the first half of 2023, would you say the dividend is safe at a decent?
Aristides Pittas
The dividend, we decided to do repeat the previous dividend. We consider the yield that is made on the stock quite satisfactory. And we will see next quarter what we will do and the effect will remain the same. But the main assumption it remains — that it remains the same until it change.
Tasos Aslidis
In the institute the dividend going to take it only in the couple of quarters. So, I think although a lot depends on the market, and of course, our boat may decide anytime differently. As Aristides mentioned the underlying belief is that it would be here for one.
James Jang
Okay. Understood. And just on an operational front, the Akinada and the Joanna — charter, where will they be positioned? Would they be in the Pacific, the Atlantic?
Aristides Pittas
I think they’re both in the Pacific. But I don’t think that is that important. Charter rates are quite similar today in the various positions.
James Jang
Okay. So any — have you seen any big discrepancies between charter rates between the two halves Pacific or Atlantic? Or is it just because the market is strong right now, it doesn’t matter, and there’s no real repositioning fees or anything else?
Aristides Pittas
Yes. I would say that at this point, there isn’t any real big differences.
James Jang
Excellent. Those are all the questions I had. Thank you guys.
Aristides Pittas
Thanks, James.
Tasos Aslidis
Thanks, James.
Operator
Thank you. There are no further questions at this time. I’d like to turn the floor back over to Mr. Aristides Pittas for any closing comments.
Aristides Pittas
Thank you all for standing with us and listening to our presentation today, and we’ll be with you in three months’ time for the next quarter’s results. Thank you.
Tasos Aslidis
Thanks, everybody.
Operator
Thank you. This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.
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