Euroseas - Q3 2022

Transcript

Operator (participant)

Thank you for standing by, ladies and gentlemen, and welcome to the Euroseas Conference Call on the third quarter 2022 financial results. We have with us Mr. Aristides Pittas, Chairman and Chief Executive Officer, and Mr. Anastasios 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 one on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded today, and 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. Now I'd like to pass the floor to Mr. Pittas. Please go ahead, sir.

Aristides Pittas (Chairman and CEO)

Good morning, ladies and gentlemen. Thank you all for joining us today for our scheduled conference call. Together with me is Anastasios Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the third quarter and nine-month period ended September 30, 2022. Let's go to slide three. For the third quarter of 2022, we reported total net revenues of $46 million and net income attributable to common shareholders of $35.2 million or $3.50 per share, basic and diluted. Adjusted net income attributable to common shareholders was $20.9 million or $2.90 per share, basic and diluted. Adjusted EBITDA for the period stood at $36.2 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 third quarter of 2022, which will be payable on or about December 16 to shareholders of record on December 9, 2022. This represents a 9.4% annualized yield on our stock price of last Friday. As of November 14, 2022, we have also repurchased 139,000 of our common stock in the open market for about $3 million under our share repurchase plan of up to $20 million announced in May 2022. Tasos will go over the financial highlights in more detail later in the presentation. Please turn to slide four where we discuss our recent chartering and operational developments.

We have no sale and purchases or chartering updates as all vessels were fully contracted during the quarter. There were also no idle or off-hire periods during the quarter. On the dry docking front, motor vessel Libra underwent repairs for 46 days, of which about six days occurred in the second quarter and 40 days occurred within the third quarter of 2022. Motor vessel EM KEA underwent a scheduled drydock as well for a total period of 61 days, of which 41 days were within the quarter and the rest during the fourth quarter. Motor vessel Rena P also underwent a drydock for a period of about 33 days. Finally, motor vessels Akinada Bridge and Aegean Express have both been in drydock since October 2022 and November 2022 respectively. While Akinada Bridge was in drydock, a tail shaft system damage was identified.

Hull and machinery and loss of hire underwriters have been notified, and the managers are presently working to evaluate necessary repair options. Please turn to slide five, where you can see our current fleet profile. Our fleet consists of 18 vessels, including 10 feeders and eight intermediate container ships with a cargo capacity of 59,000 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 eco feeder container ships. Six with a carrying capacity of 2,800 TEU each and three with a carrying capacity of 1,800 TEU each, expected to be delivered within 2023 and 2024. The nine feeder container ships will have a capacity of 32,000 TEU.

After the delivery of these newbuildings, our fleet will consist of 37 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 stands at approximately 99% for the remainder of this year, 78% for 2023 and almost 54% for 2024. Turning to slide nine, we review how the six to 12 month time charter rates have developed over the last 10 years. Container charter rates have declined significantly since the beginning of September, with slower container trade demand growth in response to the global economic slowdown, changing consumer patterns, and the alleviation of congestion issues. Scheduled newbuilding containership deliveries starting from mid-2023 onwards, in combination with further softening import congestion, will likely add further pressure on the containership rates, more so for the larger containership segments.

Nevertheless, rates are still higher than at the end of 2020 and well above the 12-year historical median. Please turn to slide 10, where we summarize the containership market highlights for the third quarter of 2022. As just mentioned, one-year time charter rates across all segments have generally seen a sharp decline in the last three months. Average rates per day during the Q3 were down by 10%-30% compared to Q2 2022, and have since fallen by more than 7%. The average secondhand price index decreased on average by about 20% in the third quarter of 2022 over the second quarter, while prices dropped at an even lower level in October 2022. The containership secondhand sales activity was a lot quieter in Q3 2022 as major macroeconomic uncertainties and weaker demand trends diminished any appetite for new investments.

On the contrary, newbuilding price index increased by about 0.3% in the third quarter over the second quarter of 2022, with newbuilding prices remaining firm despite the growing negative market sentiment. The containership fleet has grown by approximately 3.4% year-to-date, without accounting for idle vessel reactivation or further idling. The idle containership fleet as of October 24th stood at about 1.8% of the fleet, and has been increasing gradually since last year. No containerships have been sold for scrap so far this year, and none are expected to be cycled by the end of the year as a result of strong containership market thus far. However, it is projected to pick up from 2023, potentially as markets cool further, older tonnage is replaced with more modern ships, and increasing environmental regulations start coming into effect.

Scrap prices softened to around $600 per lightweight ton in the third quarter. They still remain about 40% above the 2019 average as a result of currency depreciations and softening of steel markets. Please turn to slide 11. The global GDP growth is forecast to slow from 6% in 2021 to 3.2% in 2022, and 2.7% in 2023, according to the IMF. This is the weakest growth profile in the last 15 years, apart from the global financial crisis and the critical phase of the COVID-19 pandemic. Russia's invasion of Ukraine, China's zero-COVID policy, soaring energy prices, and global inflation all weigh down heavily on the global outlook.

China's growth is projected to slow to 3.2% in 2022, significantly lower than the pre-pandemic years, marking one of the worst performances in almost half a century. In 2023, the IMF expects a slight, for Chinese standards, strengthening to 4.4%. GDP growth for the United States was revised downwards to 1.6% for 2022 from 2.3% in previous projections, and is now projected to inch down further to just 1% in 2023. On the other hand, European growth projections have increased to 3.1% from previously 2.6% in 2022, but the risks remain on the downside, and in 2023, GDP growth is expected to be just 0.5%.

Growth in emerging markets is forecast to be slow in 2022, while the only country with a better forecast seems to be Brazil, with an anticipated growth of 2.8% from 1.7% previously forecasted due to the robust recovery in Latin America. For 2023, all other developing countries are expected to do a little bit worse than in 2022, except Russia, which should improve relatively to 2022 but still face a negative growth of 2%, 2.3%. Looking at the containerized trade, according to Clarksons' latest research, containerized trade is now expected to be negative at -1.6% in 2022. For 2023, containerized trade is expected to grow by only 1.7%.

Of course, trade and growth projections are being continuously revised as the effects of geopolitical tensions between Russia and Ukraine on world growth and trade are being continuously assessed. Please turn to slide 12. The containership fleet is relatively young, with most vessels under 15 years old and only 10% of the fleet over 20 years old. The right side of the slide shows the delivery schedule of the current containership order book, which is expressed as a percentage of the fleet. The circular figures for 2022-2025 reflect the anticipated fleet growth before any scrapping or slippages. Marshals expects new deliveries of about 4.5% of the current fleet to be delivered in 2022, 9.5% in 2023, and 9.8% in 2024.

Currently, the total containership order book stands at close to 29% of the fleet, and the majority of the deliveries are scheduled for the second half of 2023 onwards. Please turn to slide 13, where you can see the fleet age profile and order book for ships from 1,000-3,000 TEU, which form the backbone of our operations and the size range where we have focused our new building program. As you can see, the breakdown of this segment and the prospective order book seem significantly better than the broader picture. The order book currently stands at 14.3%, half that of the whole fleet, and the number of vessels over 20 years at 20% is double that of the whole fleet.

Thus, we are very optimistic that we will be able to employ the seven eco new builds that will deliver from Q4 2023-Q4 2024 at very satisfactory levels. I remind you that the first two vessels of our new building program that will be delivered in the first half of 2023 have already been chartered for three years at very lucrative rates. Please turn to slide 14, where we discuss our outlook summary for the containership markets. Political and economic uncertainties are affecting the prospects of container shipping, with freight rates plunging over the past quarter, as was already said. Decline in spot freight rates are to be mirrored in time charter rates, with benchmark rates falling by about 7% in the last month.

While charter rates have also fallen due to the easing in supply chain disruptions that were built up over the pandemic, a lot of the slowdown in container and industrial demand has been due to the recent cargo movement. Container shipping market is facing volume headwinds amid an increasingly pessimistic economic outlook, primarily due to the Russia-Ukraine conflict, inflation pressures on consumers and a shift back towards service suspended. Consequently, we expect the market softening trend to continue in the near-term. The high order book set to hit the water in the next 24-26 months is expected to exert a big pressure on the supply of ships and consequently time charter rates. Somewhat mitigating this pressure, the new environmental regulations will probably result in even slower steaming by 2023 and 2024, effectively removing excess capacity from the market.

This could slow the decline in rates or even reverse it if we witness a stabilization in the global economy as well. Let's move to slide 16. The left side of the slide shows the evolution of one-year time charter rates for containers with a capacity of 2,500 TEU since 2010. The decline in rates is evident with one-year daily time charter rates for these containerships currently standing at $19,200 per day, according to Clarksons. The right-hand side of the slide shows the historical price range for the newbuilding and 10-year-old containerships with a capacity of 2,500 TEU. As you can see, there has been a sharp decline in secondhand vessel prices, which have been rising steadily in the last two years up until August 2022.

In the meantime, new building prices remain elevated despite a small drop in the last month. In any event, the explosion of charter rates from May 2020 to August 2022 has allowed us to charter all our vessels at very profitable rates for periods extending up to three or more years, creating a backlog of contracted revenues in excess of $450 million. From the strength of this extremely successful period, we embarked onto our transformative new building program and ordered these nine modern ecologically friendly feeder vessels, two of which we have already contracted, as aforesaid, for a minimum period of three years at highly profitable rates. We intend to gradually transition into one of the most environmentally friendly feeder operators.

Our balance sheet has strengthened considerably, as has our liquidity, which will continue to grow strongly during 2023 and 2024 as well, despite our new building program based on our secure charter coverage. In view of this, we continue to evaluate investment opportunities that may arise as market conditions change. With a focus on potential acquisitions that will not require above average future charter rates to be profitable. Further, we are also returning cash to our shareholders through our reestablished steady dividend and by executing on our buyback program. With that, I will now pass the floor to our CFO, Anastasios Aslidis, to go over our financial highlights in further detail.

Anastasios Aslidis (CFO)

Thank you very much, Aristides. Good morning from me as well, ladies and gentlemen. As usual, I will now take you through the next four slides of our presentation to give you an overview of our financial highlights for the third quarter and nine-month period ended September 30, 2022, and compare them to the same period of last year. For that, let's turn to slide 17. In the third quarter of 2022, the company reported total net revenues of $46 million, representing an almost 100% increase over total net revenues of $23 million during the third quarter of 2021, which was mainly the result of the higher average charter rate our vessels earned in the third quarter of this year compared to last, and the fact that we owned and operated four more vessels.

The company reported a net income attributable to common shareholders for the third quarter of $25.2 million, as compared to a net income attributable to common shareholders of $8.5 million for the third quarter of last year, an increase of almost 200%. Interest and other financing costs for the third quarter of 2022 amounted to $1.2 million, compared to $0.6 million for the same period of last year. This increase is due to the increased amount of debt we carried, almost twice as much as the same period of last year, an increase in the weighted average LIBOR rate in the current period compared to the same period in the third quarter of 2021.

It is noteworthy that for the three months ended September 30, 2022, the company recognized an unrealized gain of $1.8 million from its interest rate swap contracts. For the three months ended September 30, 2021 last year, the company recognized a small gain on the same contracts. Adjusted EBITDA for the third quarter of 2022 was $26.2 million, compared to $10.6 million achieved during the third quarter of 2021, an increase of almost 150%.

Basic and diluted earnings per share attributable to common shareholders for the third quarter of this year were $3 and a half, calculated on about 7.2 million weighted average number of shares outstanding, compared to basic and diluted earnings per share of $1.18 and $1.17 respectively for the third quarter of 2021, calculated again on about 7.2 million weighted average number of shares outstanding.

Excluding the effect on the income attributable to common shareholders for the quarter of the unrealized gain on derivatives, the amortization of fair value of below market time charters acquired, and the vessel depreciation and the portion of the consideration of assets acquired in the attached charters allocated to below market charters, the adjusted earnings attributable to common shareholders for the quarter ended September 30, 2022, which would be $2.90 per share, basic and diluted, compared to adjusted earnings of $1.16 per share basic and diluted for the quarter, the same period of September of 2021, a quarter during which we excluded the unrealized gain on derivatives. Usually, securities analysts do not include the above items in the public estimates of earnings per share. That's why we make the adjustments ourselves.

Let us now look at the numbers for the corresponding nine-month periods ended September 30th, 2022 and 2021. For the first nine months of this year, the company reported total net revenues of $139.8 million, representing a 150% increase over total net revenues of $55.6 million during the first nine months of 2021. Again, the result of higher average earnings our vessels earned and the higher number of vessels owned and operated during the period compared to last year.

The company reported a net income attributable to common shareholders for the period of $85.9 million, as compared to a net income of $20.2 million and a net income attributable to common shareholders of $19.6 million for the same period, the first nine months of 2021, an increase of more than 300%. Interest and other financing costs for the first nine months of 2022 amounted to $3.5 million, compared to $2 million for the same period of last year. Again, this increase is due to the increased amount of debt and the higher LIBOR rates of our bank loans set to pay in the current period as compared to the previous one.

Again, it is not working, but for the first nine months of this year, the company recognized an unrealized gain of $4.1 million on its interest rate swap contracts, compared to a $0.4 million gain that it recognized over the same period of last year. Adjusted EBITDA for the first nine months of 2022 was $91.5 million, compared to $26.6 million for the first nine months of 2021, representing a 244% increase.

Basic and diluted earnings per share attributable to common shareholders for the first nine months of this year were $11.91 and $11.96 respectively, calculated on about 7.2 million weighted average number of shares outstanding compared to basic and diluted earnings per share of $2.84 and $2.82 for the first nine months of 2021.

Again, excluding the effect on the income attributable to common shareholders for the first nine months of this year for the unrealized gain on derivatives, the amortization of fair value of below market charters acquired, and the vessel depreciation and the portion of the consideration of vessels acquired with attached below market charters, the adjusted earnings per share attributable to common shareholders for the first nine months of this year, which has been $10.71 basic and $10.67 diluted, compared to adjusted earnings per share of $2.76 basic and $2.74 diluted for the same period of last year. Let's now move to slide 18 to review our fleet performance. As usual, we will start our review by looking first at our fleet utilization rates for the third quarter of 2022 and 2021.

As shown here and as always, our utilization rate is broken down to commercial and operational. During the third quarter of 2022, our commercial utilization rate was 100% and our operational utilization rate was 99.5% compared to 100% commercial and 98.8% operational for the third quarter of 2021. On average, 18 vessels were owned and operated during the third quarter of this year, earning an average time charter equivalent rate of $30,896 per day, compared to 14 vessels that we owned and operated during the third quarter of 2021, earning an average $19,482 per vessel per day.

Our total operating expenses, including management fees and G&A expenses, but excluding drydocking costs, averaged $7,180 per vessel per day during the third quarter of this year, compared to $7,221 per vessel per day for the third quarter of 2021. If we move further down in this table, we can see the cash flow breakeven rate for the third quarter of 2022, which in addition to the operating costs mentioned above, takes into account interest expenses, drydocking expenses and loan repayments that excludes balloon repayments if any. Thus, during the third quarter of 2022, our daily cash flow breakeven rate was $14,364 per vessel per day, compared to $11,831 per vessel per day for the same period of last year.

Next, let's go over to the right part of this table and review our utilization rate and the remaining of the same, on the same figures for the nine-month periods of the two years. During the first nine months of 2022, our commercial utilization rate was 99.9% and our operational utilization rate 99.6% compared to 100% commercial and 98.5% operational for the same period of last year. On average, 16.8 vessels were owned and operated during the first nine months of 2022, earning an average time charter equivalent rate of $32,814 per day, compared to 14 vessels earning $16,478 per day for the first nine months of 2021.

Looking again at the bottom of the table, we can see our breakeven rate, our cash flow breakeven rate for the nine-month period of 2022 being $14,018 per vessel per day, compared to $10,377 per vessel per day for the same period of 2021. As you can see, drydocking expenses and loan repayments making up most of the difference. Let's now move to slide 19 to review our debt profile and our forward cash breakeven levels. On the top of the slide, you can see our scheduled current debt repayments over the next several years. Our loan repayment schedule for this year stands at about $28 million.

That is including, of course, the $20.7 million of repayments we make in the first nine months, but does not account for the $1.9 million of our balloon payment that we made earlier this year. With our debt payments of our current debt going down over the next couple of years. We have a balloon payment. We have a number of balloon payments in 2023, which we expect to routinely be able to refinance if we choose to do so. Please note that our debt profile does not include any debt that we expect to assume to finance our newbuilding program. Let's have a quick look to the right part of the slide and to take a note about the cost of our debt.

The average margin of our current debt is about 2.875% and assuming the LIBOR rate of around 4.5%, meaning the cost of our senior debt would be on average about 7.4% as of the end of September. However, if we account for our interest rate swaps and a portion of our debt, our total average cost of debt as of September thirtieth drops down to about 5.9%. Looking now at the bottom of the table, you can see our cash flow breakeven level projected for the next 12 months which, as you can see, we expect to be just a bit above $14,000 per day per vessel per day, of which about $4,300 are contributed from our loan repayments.

To conclude the presentation of our financial highlights, let's move to slide 20 to review our balance sheet. As of September 30, 2022, our assets include cash and other current assets amounting to about $41.1 million. Advances that we paid for our newbuilding, for our newbuildings standing at about $50.5 million. Of course, the book value for our vessels at about $230 million resulted in a total book value for our assets of about $621.7 million. On the liability side, our debt as of September 30, 2022, stood at $115.7 million, representing about 36% of the book value of our assets.

In the report also on the liability side, the value of our recently acquired below market charters, which was estimated taking into consideration the recent vessel acquisitions and their fair value for $38.8 million, or about 12.1% of our assets. We have other liabilities that amount to about $13.9 million or 4.2% of our total book value for our assets. However, the market value for our fleet is much higher than its book value.

Based on our own estimates and using charter adjusted values for our fleet and newbuilding contracts, the estimated worth of our vessels is approximately $432.6 million as of the end of September, which translates to a net asset value for our company of $395 million or about $55 per share. Recently, our shares have been trading around $20 per share, thus representing a significant discount to our net asset value and a good appreciation potential for our shareholders and investors based on the above measure. It is not only that. I would like to make a simple calculation that highlights certain financial aspects of Euroseas and the strength of our balance sheet charter book.

Between October 1, 2022, and the end of 2024 when our newbuilding program concludes, we have about 11,550 contracted days at an average rate of about $33,000 per day. There are also about 4,500 or so open days. If we ignore the latter, but take into account all the costs, we are set to earn over the next two years and one quarter about $20 per share. On top of that, the open days will earn something. Even if they just earn $10,000 per day, one third of what our contracted days earn, that would add another $6 per share. This earnings suffice to fund the remaining equity portion of the newbuilding program.

At the end of 2024, only the scrap price of the existing second-hand fleet of ours, less any remaining of its present debt could add another $10-$15 per share. For the value of our company. We have not accounted yet for the payment we have already made for our new building, the $50 million or so I mentioned earlier. For the $32.5 million of cash we currently have. With the above quick information, I wanted to highlight the strength of our belief in the value of Euroseas. With that, I would like to close my part of the presentation and turn the floor back to our speakers to continue the discussion.

Aristides Pittas (Chairman and CEO)

Thank you, Tasios. I want to open up the floor for any questions we may have.

Operator (participant)

At this time, we will 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. Our first question comes from the line of Tate Sullivan with Maxim Group. Please proceed with your question.

Tate Sullivan (Managing Director and Senior Research Analyst)

Thank you. Good day. Can you first touch on the considerations of the repairs on the Akinada Bridge in terms of the remaining useful life of the vessel and how much the repairs may cost? Ultimately, what would make you decide to scrap the ship instead of repairing the ship, please?

Aristides Pittas (Chairman and CEO)

Yes. This is something I cannot really answer at this stage, because we are still evaluating the situation. Of course, we believe that the cost of repairs will be covered by our insurance, so there isn't going to be a significant repair cost. We need to see how much time this whole project would take before being able to make a final evaluation.

Tate Sullivan (Managing Director and Senior Research Analyst)

Okay. Thank you. Then regarding the new build market for container ships and understanding it's bifurcated between the larger ships and size of your ships, have there been any reports of any new build delivery delays at all? I know it's usually quite reliable, but in this current environment, do you expect to take your ships mostly on time from your shipyards?

Aristides Pittas (Chairman and CEO)

Yes. I would say I do believe that we will take our ships mostly on time. We're building the ships in one of the most reputable shipyards in the world, which is known to be on time and not face delays. I would not think that we will see delays. Definitely not any significant delays.

Tate Sullivan (Managing Director and Senior Research Analyst)

Thank you. Last from me, are there any with what we've seen the rates do and with the new builds under construction, not your new but across the industry? Have any operators considered selling ships under construction in this market or not at this point yet? Could that be an opportunity going forward?

Aristides Pittas (Chairman and CEO)

We are not aware yet of somebody willing to go ahead and sell their ships at this point in time, especially at prices which are lower than the current newbuilding prices. There is a lot of resistance on newbuilding prices dropping. Anyway, they were never exorbitantly high as were the values of second-hand ships.

Tate Sullivan (Managing Director and Senior Research Analyst)

Thank you very much.

Aristides Pittas (Chairman and CEO)

Thanks.

Anastasios Aslidis (CFO)

Thank you.

Operator (participant)

Our next question comes from the line of James Jang with Univest Securities. Please proceed with your question.

James Jang (Managing Director of Research)

Good afternoon.

Aristides Pittas (Chairman and CEO)

Hi, James.

James Jang (Managing Director of Research)

Hi, guys. The Akinada Bridge, the damages and everything, but, you know, I guess it would be fair to assume we shouldn't look at any earnings from the vessel until what? Maybe if you don't scrap us all, I guess, until the second half of next year, would that be fair to say?

Aristides Pittas (Chairman and CEO)

I think that's fair to say.

James Jang (Managing Director of Research)

Going on to the vessels going off charter, you got Joanna, Synergy Keelung, EM Hydra, Evridiki G and Synergy Antwerp. They're gonna be coming off charters throughout 2023. When do you start discussions with rechartering or extending charters? And if you could kinda let us know, you know, 'cause it looks soft next year for rates, with the new builds coming in and with the revised down forecast for economic growth. I mean, would it be fair to say that you would take, you know, spot, you know, below market charters at this point in time, to protect some downside risk? Or would you be willing to go through 2023 and then try to recharter them when the vessels are redelivered?

Aristides Pittas (Chairman and CEO)

Yeah, I think everybody is reluctant at this stage to do something with vessels that are not strong. The charters don't want to take on ships today that are coming open in three or six months' time. Similarly, the owners don't want to fix at rates that seem to be so much softer than they were. The only fixings that you're seeing done are the very few vessels that are opening up that are currently being fixed.

James Jang (Managing Director of Research)

What about the Joanna? Have you had any discussions with the current charter to extend even a few months or is that still up for discussion?

Aristides Pittas (Chairman and CEO)

We have not had any serious discussion yet, but we've agreed that we will be discussing within the next month or so. Because this ship indeed does come open. It's the first ship to come open. We will be discussing, I presume, within this next month.

James Jang (Managing Director of Research)

Okay. Excellent. I guess my final question here is, let's say 2023 is really bad for rates. How does that affect the dividend? Would you be able to support the $0.50, you know, 2024 should be a better year. Like would you keep the $0.50 in 2023 or-

Aristides Pittas (Chairman and CEO)

Yeah. James, I can tell you about the current thinking because obviously every quarter we reevaluate and we keep that privilege to decide what the dividend will be every quarter. The way we have thought about it is that, the dividend is sustainable and will continue within the next few quarters at least. I remind you that, you know, $0.50 that we are currently paying is just 15% of the net income that we are currently making. We do expect that throughout 2023 we will easily be able to be paying a dividend. I won't promise it, but I believe that that will be the case.

James Jang (Managing Director of Research)

Okay. Excellent. Oh, actually just one final question here. I know the market's soft, everything is doom and gloom right now. How is the S&P market? Has it just gone quiet or is there still some activity?

Aristides Pittas (Chairman and CEO)

No, there's very, very little activity on this S&P market. Very little activity. Very few ships are coming open. Only a handful of buyers are in the market. People have secured longer-term time charters for their vessels and they're not willing to sell at the discounted prices. We're really at a wait and see situation and only what is necessary is being done in today's markets.

James Jang (Managing Director of Research)

Excellent. Okay. That is all I had. All right. Thank you very much.

Aristides Pittas (Chairman and CEO)

Thanks, James.

Anastasios Aslidis (CFO)

Thanks. Thank you, James.

James Jang (Managing Director of Research)

Thanks.

Operator (participant)

Our next question comes from the line of Poe Fratt with Alliance Global Partners. Please proceed with your questioning.

Poe Fratt (Managing Director, Equity Research and Senior Transportation Analyst)

Yeah. Hi. Good morning, Aristides. Good morning, Anastasios.

Anastasios Aslidis (CFO)

Good morning. Good morning, Poe.

Poe Fratt (Managing Director, Equity Research and Senior Transportation Analyst)

Tasios, you went through the, you know, the new build advances right now are $50 million. You have, you know, potentially financing of $200 million-$220 million. What are you assuming on your financing lever or leverage levels? Can you walk us through your remaining CapEx for the new builds in 2023, 2024 and 2025? Just sort of a overall ballpark number for each year on your new build costs.

Anastasios Aslidis (CFO)

We said our new building program will cost about $260 million. Of that amount, $50 million we have already paid by making installments. We expect to fund it at about 60%, so we are on slide 19, about $200-$220 million of debt covered, about 60%. We have to make about $100 million of equity payments between now and the end of 2024. This is when we expect our new building program to end.

I mean, I don't have a problem with a detailed schedule of payments, but I would guess that we are to make about 40% of the payments of the remaining payments in 2023 and the remaining 60% in 2024. There are more deliveries in 2024, so that would be my take or rather to answer as well. I can get you of course a bit more accurate CapEx time schedule.

Poe Fratt (Managing Director, Equity Research and Senior Transportation Analyst)

Okay, great. You know, you talked about the current market, you talked about some of the rollovers potentially for, you know, the charters that are ending. Can you. You know, you've already locked in two of the nine new builds. Are you in any discussions for locking in additional new builds or is it sort of the same thing that's going on in the market right now? You know, limited interest in making long-term commitments and, you know, we'll have to wait to see the next new builds contracted.

Aristides Pittas (Chairman and CEO)

We are always monitoring the market, Poe. The truth is that right now with the current uncertainty, I would think that we would probably not be moving with this within this side of the year for something new. We are constantly following the markets and if there is something to discuss we will obviously let you know.

Poe Fratt (Managing Director, Equity Research and Senior Transportation Analyst)

Great. Thank you very much.

Anastasios Aslidis (CFO)

Remind you the next delivery is in Q4 of 2023, so it's a year out.

Operator (participant)

We have reached the end of the question and answer session. I'll now turn the call back over to Aristides Pittas for closing remarks.

Aristides Pittas (Chairman and CEO)

Thank you everybody for being with us today on our conference call, and we'll be back with you the beginning of next year to discuss how the year closed. Thank you very much.

Anastasios Aslidis (CFO)

Thank you everybody.

Operator (participant)

I'm sorry. This concludes it. You may disconnect your lines at this time. Thank you for your participation.