Euroseas Ltd. (ESEA) Q4 FY2025 Earnings Call Transcript & Summary

Thank you for standing by, ladies and gentlemen, and welcome to the Euroseas Conference Call on the Fourth Quarter 2025 Financial Results. We have with us Mr. Aristides Pittas, Chairman and Chief Executive Officer; and Mr. Tasos Aslidis, Chief Financial Officer of the company. [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 over to Mr. Pittas, I would like to remind everyone that in today's presentation and conference call, Euroseas will be making forward-looking statements. These statements are within the 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 #2 of the webcast presentation, which has the full forward-looking statement, and the same statement was included in the press release. Please take a moment to go through the whole statement and read it. And now I would like to pass the floor over to Mr. Pittas. Please go ahead, sir.

Good morning, ladies and gentlemen, and thank you all for joining us today for our scheduled conference call. Together with me is Tasos Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the 3- and 12-month period ended December 31, 2025. Please turn to Slide 3 of the presentation for our quarterly financial highlights. For the fourth quarter of 2025, we reported total net revenues of $57.4 million and net income of $40.5 million or $5.79 per diluted share. Adjusted net income for the quarter was $31.3 million or $4.48 per diluted share. Adjusted EBITDA for the period was $40.7 million. Please refer to the press release for the reconciliation of adjusted net income and adjusted EBITDA. Tasos Aslidis will go over our financial highlights in more detail later on in the presentation. As part of the company's common stock dividend plan, we are pleased to announce that our Board of Directors increased the quarterly dividend by 7% to $0.75 per share for the fourth quarter of 2025. This represents an annualized dividend per share of $3, resulting in an annualized dividend yield of about 5% based on our current share price. Additionally, since the launch of our $20 million share repurchase program in May 2022, we have repurchased 480,000 shares of our common stock in the open market, representing about 6.8% of our outstanding shares for an aggregate price of approximately $11.4 million. Following a few 1-year extensions, the program was renewed for the third time in May 2025. We intend to continue executing our repurchase program in a disciplined manner, deploying capital when appropriate to support and enhance long-term shareholder value. Please turn to Slide 4 for an overview of our recent developments where we highlight key progress across vessel sales and purchases chartering activity and operational performance. As previously announced, we successfully completed the sale and delivery of Motor Vessel Marcos V to her unaffiliated owners on October 20, 2025. This transaction generated a gain on sale of $9.2 million. On the chartering front, we secured multiyear employment for several vessels, further strengthening our revenue stability. Motor Vessel Gregos, Terataki and Leonidas where all fixed for about 3 years at an attractive daily rate of $30,000 per day. In addition, Motor Vessel EM Spetses was fixed for a minimum of 22 months to a maximum of 24 months at a daily rate of $21,500 per day. We had no idle or commercial off-hire days for the period. Now please turn to Slide 5. Our on-the-water fleet currently consists of 21 vessels with a total carrying capacity of 61,000 TEUs with an average age of 13.1 years. This includes 6 intermediate vessels with the combined carrying capacity of approximately 25,500 TEU and an average age of 18.2 years and 15 Feeder vessels with the combined carrying capacity of about 35,000 TEU and an average age of 9.4 years. In addition, we have 4 intermediate vessels under construction each with a capacity of 4,484 TEUs, 2 of these are expected to be delivered in the third and fourth quarters of 2027 and the remaining 2 in the first and second quarter of 2028, adding a further 18,000 TEU capacity to our fleet. On a fully delivered basis, our fleet will grow to 25 vessels with a carrying capacity of approximately 80,000 TEU. [Technical Difficulty] Sorry for the interruption. We had a line break down. I hope you can hear me. I will continue. I just described the 4,484 TEU vessels that we expect to take delivery in 2027 and 2028. So now please turn to Slide 6 for a further update on our fleet employment. We continue to benefit from high level of forward coverage. Looking ahead, we have secured a high degree of revenue visibility in the next several years. For 2026, 87% of our available voyage days have been fixed at an average daily rate of approximately $30,700 per day. In 2027, our coverage stands at about 71% with an average rate of around $31,900 per day whilst for 2028, we already have 41% of our days secured at an average rate of around $32,400 per day. This forward coverage achieved through our disciplined chartering strategy allows us to balance market exposure with earnings stability across different phases of the cycle. It provides meaningful cash flow visibility and positions us to sustain profitability over the next several years, even in the event of a sudden market correction. Moving on to Slide 8. Let's review the key market developments during the fourth quarter of 2025. 1-year time charter rates remained firm at historically elevated levels, supported in the near term by a substantial portion of the fleet being fixed forward. This forward coverage has helped sustain charter rate resilience even though the freight market softened amid increased vessel supply and seasonally weaker demand. The Shanghai Containerized Freight Index recovered by approximately 13% from near 2-year lows recorded in late September. On a quarter-on-quarter basis, average rates across the major container segments were largely unchanged and continue to hover around similar high levels. Secondhand asset prices remained stable in the fourth quarter of 2025 compared to the previous quarter. This resilience was supported by limited vessel availability and continued competition among buyers seeking to expand their fleets amid ongoing trade disruptions. Meanwhile, the newbuilding price index declined modestly, easing by 1.5% quarter-over-quarter. After an extended period of strong growth, container newbuilding prices softened compared to -- in the fourth quarter compared to the third as yards are mostly full till the end of 2028 and consequently, ordering activity has slowed. However, prices remain high by historical standards. Idle fleet capacity has trended steadily downward and is now approaching negligible levels. Recycling activity remained muted in 2025 with just 11 vessels being scrapped during the year. Scrap prices have recently softened to around $435 per lightweight ton in Bangladesh. Overall, the global fleet expanded by approximately 7% in 2025. Please turn to Slide 9 for our broader market overview, focusing on the development of 6- to 12-month time charter rates over the past 10 years. As illustrated on the slide, charter rates across all major containership segments remain meaningfully above the respective 10-year historical averages and median levels. While rates have moderated from the extraordinary peaks of 2021 and 2022, they continue to reflect a structurally stronger earnings environment than the long-term norm. This is particularly evident in the feeder and intermediate segments where demand remains solid. These vessel classes continue to play a critical role in maintaining network flexibility and supporting regional and intra-regional trade flows, especially amid ongoing geopolitical uncertainties and supply chain realignments. Moreover, limited vessel availability at the moment, combined with sustained demand continued to support the elevated time charter rates. Please turn to Slide 10. According to the IMF 2026 World Economic Outlook update, the global economy is projected to maintain a resilient expansion with GDP growth now forecast at 3.3% in 2026 and 3.2% in 2027, reflecting a slight upward revision to the outlook relative to last October's projections. Inflation pressures are expected to ease further with headline inflation declining from an estimated 4.1% in 2025 to 3.8% in 2026 and 3.4% in 2027, supporting a gradual return to target price stability. Despite relatively stable medium-term outlook, there are still meaningful downside risks though. These include the possibility that expectations around technology-driven growth proved too optimistic as well, of course, as the risk of escalating geopolitical tensions. Ongoing trade frictions and broader geopolitical fragmentation continue to create uncertainty for the global economy. The recent events in Venezuela, Greenland and the Middle East are reminders that external risks remain always present. That said, some trade pressures could possibly ease in 2026, which could help reduce the drag from the tariffs on overall growth. In the United States, growth is projected to remain broadly steady with GDP growth expanding by about 2.4% in 2026 and 2% in 2027, although business and consumer sentiment appears subdued and inflation is expected to ease towards target only gradually. Among emerging markets and developing economies, India is forecast to remain one of the fastest-growing major economies with GDP growth projected at about 6.4% for both 2026 and 2027, which is undermined by robust domestic demand and investment momentum. The ASEAN-5 region is projected to also maintain solid growth with expansion of 4.2% in 2026 and 4.4% in 2027, supported by strong domestic investment and technology exports even amid global trade uncertainties and tariff pressures. Finally, China's growth trajectory is expected to moderate more with GDP forecast of 4.5% in 2026, down from 5% in 2025 and easing further to 4% in 2027. The slowdown reflects pressure from weaker external demand, subdued manufacturing investment and ongoing challenges in the property sector. While segments of the economy, particularly exports and AI-related investment continue to grow at a healthy pace, broader domestic demand remains soft, pointing to an increasingly K-shaped recovery. On the containerized trade, according to Clarksons' latest estimates, containership trade growth is projected to soften with TEU/miles demand expected to decline by approximately 1% in 2026 and 5.5% in 2027. This decline is solely due to the expectation that trading through the Suez will normalize during these 2 years. Some of this artificial uplift in TEU/miles demand is expected to unwind beginning in 2026 with a more pronounced impact anticipated in 2027. At the same time, the substantial newbuilding capacity ordered during the pandemic period is scheduled for delivery over the coming years. This influx of tonnage is likely to outpace underlying demand growth at certain points in the cycle, particularly if geopolitical disruptions ease more rapidly than expected and vessels are able to return to more efficient routes. Turning on to Slide 11, you can see the total fleet age profile and containership outlook. The top left chart shows that the total containership fleet remains relatively young with the majority of vessels under 15 years of age and only about 13% of the fleet over 20 years old. This, however, changes drastically if you look in the feeder, intermediate segments in isolation, which we will go over in the next few slides. Staying on this slide for a moment, the top right chart illustrates scheduled new deliveries as a percentage of the existing fleet standing at approximately 5% for 2026, 8.5% for 2027 and 17.6% for 2028 onwards, although actual fleet growth is expected to be somewhat lower due to slippage and future demolition activity. The bottom chart shows that the order book has increased to close to 35% of the fleet as of February 2026. Let's turn to Slide 12, where we highlight the fleet age profile and order book specifically for ships in the 1,000 to 3,000 TEU range, which represents our feeder fleet. As of February 2026, order book for vessels below 3,000 TEU stands at a relatively modest 10% of the fleet. At the same time, roughly 28% of the fleet is over 20 years old. This dynamic points to a clear imbalance between limited newbuilding activity on one side and an aging fleet on the other. As environmental regulations tighten and compliance costs increase, a meaningful portion of these older vessels are likely to be scrapped. According to Clarksons, deliveries in this size range remain limited with newbuilding additions projected at only 2.4% of the fleet in 2026, followed by 3.9% in 2027 and 3.8% in 2028 and beyond. Let's move to Slide 13 now to see the supply outlook for the 3,000 to 8,000 TEU segment, representing the intermediate containership segment. As of February 2026, the order book here stands at 17% of the fleet, a modest level compared to the largest main classes. Meanwhile, the age profile of this segment is also notably advanced with almost 29% of vessels being over 20 years old and another 37% between 15 and 19 years. With a limited newbuilding pipeline, net fleet growth in this segment is expected to remain contained over the next few years. Moving on to Slide 14. This chart places those dynamics in a broader context across the entire containership sector. What becomes very clear is how sharply the order book is concentrated in the larger vessel classes. Neo-Panamax and Post-Panamax units show order books of 40% to nearly 80% of the existing fleets in line with the significant capacity being added to the main lane trades. By contrast, the Feeders and Intermediate segment show significantly smaller order books ranging from just 4% to 18% depending on size, despite a meaningful share of these fleets between 20% and almost 40% already being more than 20 years old. This widening gap between newbuilding activity in the large vessel segments and the more limited replacement of smaller sizes highlights why our core segments remain structurally well positioned with minimal risk of oversupply. Now please turn to Slide 15 for a synopsis of our outlook on the container sector. Trends remain multifaceted. While time charter rates remain strong, weaker freight rates, firm fleet growth, macroeconomic uncertainty and the possibility of vessels being rerouted again via the Red Sea point to the potential for a softer market environment ahead. Overall, time charter rates remain near historical highs. Looking into 2026, the container sector is expected to deliver one of the lowest order books in recent years with only 5% expected to be delivered versus 8.5% expected to be delivered in '27 and over 17% in 2028 and beyond. However, any return to normality in routes could release effective capacity back into the market, potentially putting pressure on rates and prompting further network adjustments. Looking further ahead to 2027, when containership deliveries are set to accelerate, we could experience additional softening in container shipping markets. While capacity management and higher demolition management and higher demolition activity may help to mitigate part of this pressure, the sector still faces the potential for a more challenging supply-demand balance. The energy transition continues to pick up speed in the containership sector. Alternative fuels are clearly on the horizon, but the shift is not happening overnight. Technical challenges, economic hurdles and delays in finalizing the IMO Net Zero framework mean the journey to zero emissions will be gradual. Still, the momentum is undeniable, and the industry is steadily charting a course towards an even cleaner future. Let's turn to Slide 16. The left-hand graph shows the cycle of the 1-year time charter rate for 2,500 TEU containerships over the past 10 years. As of February 20, 2026, the 1-year time charter rate stands at $36,000 per day, well above both the 10-year historical average and median levels. This firm rate environment is mirrored in asset values as well. Newbuilding vessels are now valued at approximately $43 million compared to a 10-year median of $35 million and an average of roughly $36 million. Likewise, 10-year-old secondhand vessels are currently valued at $37.5 million, significantly higher than the 10-year historical median of $15 million and historical average of about $21 million. The continued firmness in charter rates and asset values highlights the underlying resilience of the containership market and reflects the robust long-term fundamentals that continue to underpin demand for these vessels. Our financial strength allows us to act strategically as attractive investments emerge in both the secondhand and newbuilding segments. Supported by our strong liquidity profile and revenue visibility, we believe we are well positioned to further enhance shareholder returns. Our investors can rely on us continuing to offer a meaningful dividend as our recent 7% increase demonstrates, whilst retaining excess earnings for further optimized growth. And with that, I will pass the floor to our CFO, Tasos Aslidis, to go over our financial highlights in more detail.

Thank you very much, Aristides. Good morning from me as well, ladies and gentlemen. Over the next few slides, I will give you the usual overview of our financial highlights for the fourth quarter and full year of 2025 and compare them to the same periods of the year before, 2024. For that, let's turn to Slide 18. For the fourth quarter of 2025, the company reported total net revenues of $57.4 million, representing a 7.7% increase over total net revenues of $53.3 million during the fourth quarter of 2024; the increase is mainly due to the result of the higher charter rates earned in the fourth quarter of 2025 compared to the corresponding period of the previous year, partly offset by the decreased average number of vessels that we operated in the fourth quarter of 2025. Consequently, and including the $9.2 million gain on the sale of our vessel MV Marcos V during the fourth quarter, we reported a net income for the period of $40.5 million as compared to a net income of $24.4 million for the fourth quarter of 2024. Total interest and other financing costs for the fourth quarter of 2025 amounted to $3.4 million compared to $4.1 million for the fourth quarter of the previous year before accounting for $0.6 million of imputed interest income related to the self-financing of the pre-delivery payments for one of our newbuildings at the time, which was capitalized. This decrease is mainly due to the decreased benchmark interest rates of our bank's loans in the current period in the fourth quarter of 2025, partly offset by the slightly higher amount of debt we carried. During both periods, we recorded interest income of about $0.8 million. Adjusted EBITDA for the fourth quarter of 2025 increased to $40.7 million compared to $32.8 million for the corresponding period of 2024, a 24% increase, primarily due to the higher revenues we collected. Basic and diluted earnings per share for the fourth quarter of 2025 were $5.82 and $5.79 respectively, calculated approximately about 7 million basic diluted weighted average number of shares outstanding compared to basic diluted earnings per share of $3.51 and $3.49, respectively, for the fourth quarter of 2024. Excluding the gain on the sale of vessel and the unrealized income or loss on derivatives, the adjusted earnings per share for the fourth quarter of 2025 would have been $4.50 basic and $4.48 diluted; one of our highest quarters compared to adjusted earnings per share of $3.35 basic and $3.33 diluted for the same period of 2024, during which we also had to adjust our results for the contribution of the fair value of below market charter rate contracts and the related depreciation. Let's now look at the numbers for the full year 2025 and compare them to the full year of 2024. For the full year of 2025, the company reported total net revenues of $227.9 million, representing a 7% increase over the total net revenues of $212.9 million during the fourth quarter of -- during the full year of 2024. And that, again, mainly is a result of the higher number of vessels we own and operated and the higher average time charter equivalent rates we earned during 2025. We reported a net income for the year of 2025 of $137 million compared to a net income of $112.8 million during 2024. Total interest and other financing costs for the 12 months of 2025 amounted to $15.1 million, again, not including $0.1 million of imputed interest income compared to interest and other financing costs of $13.8 million during 2024, not including a gain of $4.2 million of this interest income in relation to our newbuilding program. This increase is mainly due to the increased amount of debt in the current period compared to the same period of 2024. Adjusted EBITDA for the 12 months of 2025 increased to $155.9 million compared to $135.8 million during 2024, a 15% increase, again, primarily as a result of the higher revenues we collected. For the full year of 2025, we recorded a $19.4 million gain on sale of vessels, a $10 million gain on the sale of Motor Vessel Diamantis early in the year and a $9.2 million gain on the sale of Motor Vessel Marcos V compared to $5.7 million gain on the sale of Motor Vessel EM Astoria we recorded during 2024. Basic and diluted earnings per share for 2025 were $19.73 and $19.72, respectively, calculated on about 6.9 million basic diluted weighted average number of shares outstanding compared to basic diluted earnings per share of $16.25 and $16.20 during 2024. Again, excluding the gain on sale of vessels, the unrealized income or loss of derivatives -- on derivatives and the contribution of the fair value of below market time charter contracts and related depreciation for the relevant periods, the adjusted earnings per share for the 12 months ended December 31, 2025, would have been $16.75 basic and $16.74 diluted compared to $14.92 basic and $14.87 diluted for 2024. Now let's turn to Slide 19, which highlights our fleet performance. As usual, we report our utilization rate there and our utilization figures are near 100% across all periods. So I will not get into describing in detail the individual utilization rates. On average, 21.22 vessels were owned and operated during the fourth quarter of 2025, earning an average time charter equivalent rate of $30,268 per day compared to 23 vessels during the fourth quarter of 2024, earning on average $26,479 per day. Our total daily operating expenses, including management fees, G&A expenses, but excluding drydocking costs were $8,284 per day during the fourth quarter of 2025 compared to $7,728 per vessel per day for the same period, the fourth quarter of 2024. If we move further down on this table, we can see the cash flow breakeven levels, which take into account the above expenses and in addition, interest and drydocking expenses and loan repayments without accounting for balloon payments. For the fourth quarter of 2025, our daily cash flow breakeven level on that basis was $13,009 per vessel per day compared to $14,936 per vessel per day for the fourth quarter of 2024. Finally, below the breakeven line, you can see the dividend we distributed expressed in dollars per vessel per day. And that amounts to a little more than $2,000 for $2539 for the fourth quarter of 2025, where the dividend was increased than $2,035 for the fourth quarter of 2024. Let's move quickly and review the annual figures on the right part of this slide. Again, the full year -- for the full year of 2025 and 2024, utilization rates were near 100%, so let me jump and say that on average, 22.2 vessels were owned and operated during 2025, earning on average $29,107 per day compared to 21.7 vessels in 2024, earning on average $28,054 per day. Total operating expenses for the full year, including management fees and G&A expenses, but again, without counting for drydocking costs were $7,600 in 2025 compared to $7,526 in 2024. The cash flow breakeven level for the full year ended up being $13,100 in 2025 compared to $14,794 for 2024. And again, in the last line, we can see the dividend we paid expressed in dollars per vessel per day, and that amounted to $2,335 in 2025 versus $2,131 in 2024. Let's now turn to Slide 20. And in this slide, we want to provide a better perspective of the depth of our contract coverage, especially in light of the recent charter that we concluded Aristides mentioned earlier in the presentation. The table shown presents the development of our fleet ownership days over the period of the next 3 years at an estimated breakdown of how many days are available for hire and how many days are already contracted. It incorporates assumptions about delivering dates for the vessels under construction, scrapping days for older ships, estimate drydocking and timing and duration, utilization rate assumption going forward and estimates for contracted days and average contracted rate. Please note that the data presented in this table represents our internal estimates provided for indicative purposes and used for modeling future time charter equivalent revenues and actual results may differ. Nevertheless, we believe this provides useful visibility into our forward revenue and earnings profile. Our contract coverage currently stands at approximately 87% for 2026, 71% for 2027 and about 41% for 2028, as Aristides mentioned earlier. Average contracted rates are approximately $30,700, 31,890 and $32,400 per day for the respective years. We hope this framework will assist investors and analysts in evaluating any potential forward by making their own assumption for the uncontracted days of the fleet and coming to an estimate of our revenues and future profitability. Let's now turn to Slide 21 to review our debt profile. As of December 31, 2025, our total outstanding bad debt stood at about $218.4 million with an average interest rate margin of about 2% we assume a 3-year SOFR rate of 3.7%, the total cost of our debt stands at about 5.7%, which is well within the prevailing rates for our segment and peers. Turning to our debt amortization profile. In 2026, scheduled repayments amount to approximately $19.5 million. In 2027, our total debt service, debt repayments increases to about $36.8 million, consisting of $16.8 million of regular repayments and a $20 million balloon payment. Repayments moderate to approximately $12 million in 2028 with no balloon maturities during that year. Looking further ahead, 2030 includes total repayments for about $33.8 million, again, comprising $7.4 million of scheduled repayments and a $26.4 million balloon repayment. In the past, we were able to refinance balloon repayments routinely if we chose to do so, and this remains our expectation for the upcoming balloon payments over the next 5 years shown in this chart. If we choose to refinance them, we expect to be able to do so relatively straightforwardly. Please also note that this schedule show here does not include debt that we expect to draw to finance the construction of our 4 new buildings, which we estimate to be in the range of $140 million to $150 million for the 4 vessels. Overall, our debt maturity profile remains well targeted with no significant near-term refinancing pressure. At the bottom of this slide, we show our cash flow breakeven estimate for the next 12 months broken down by its key components. On this basis, our total cash flow breakeven level for the next 12 months stands approximately $12,200 per vessel per day, a level well below the contracted and prevailing earnings of our fleet. Given the average earnings of our fleet for 2026 stand above $30,000 per vessel per day, one can appreciate the cash flow generation that our vessels provide. To sum up my remarks, let's move to Slide 22 to review some highlights from our balance sheet. As of the end of last year, cash and other current assets totaled $188.7 million. We've already made about $35.9 million in advances for our newbuilding vessels. The book value of our fleet stood at $465 million, bringing -- $465.9 million, bringing the total book value of our assets to about $700 million. On the liability side, as I mentioned in the previous slide, we had debt amounting to $218.6 million and other liabilities amounting to about $18.2 million, resulting in a shareholders book equity of roughly $463 million. However, the market value of our fleet is significantly higher than their respective book value. According to our last estimates, our fleet is valued at approximately $664 million, which translates into a net asset value for our company of about $660 million or around $93.7 per share. With our last closing price in the recent trading range of $62.4 per share, our stock trades at almost 33% discount to charter adjusted net asset value. That highlights the appreciation potential that our stock has given the discount and the depth of our contracted revenues. And with that, let me pass the floor back to our Aristides to continue the call.

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

[Operator Instructions] Our first question comes from the line of Mark Reichman with Noble Capital Markets.

Well, I know you've got some of those balloon payments coming up, but I was just wondering, given your strong liquidity and contracted backlog, how are you prioritizing kind of between the dividends and share repurchases, secondhand acquisitions and potential new build orders including your capital allocation priorities?

Yes, yes, yes. We will continue giving a strong dividend to our shareholders. We will continue looking at opportunities to grow the company accretively. We don't see such opportunities currently on the secondhand market. So we are more focused on the new building market. We will keep very moderate leverage. And we will capitalize whenever there is an investment opportunity to do. I think that's the strategy in 1 minute.

Okay. On the last call, you had mentioned that containership orders had accelerated as charters had committed to take new ships on charter for longer periods, even with deliveries well into the future. And I think you had mentioned that with that new supply, you thought that rates for older vessels to experience pressure beyond 2026 unless demand accelerates. So it just seems like the containership market is kind of transitioning towards those newer vessels. But do you -- it sounds like you kind of expect scrapping to accelerate meaningfully over the next 2 to 3 years? And to what extent do you think that could offset the new deliveries?

Scrapping will not happen unless we see charter rates falling, right? Because now even very old vessels continue to get employment at very decent rates. So as soon as the market drops, though, I would expect a significant increase in the number of ships that go to the scrapyard because indeed, the average age of the fleet has grown dramatically. So first step that will happen is the market will drop at some point, perhaps because the world find some equilibrium and we start trading through this Suez and don't have such disruptions. That will mean there will be too many ships around. That will mean the market will fall, charter rates will drop, vessels will be scrapped, older vessels will be scrapped and then we will be buying more secondhand vessels at significantly lower prices. The newbuilding market has grown sufficiently as we discussed. But now one can expect to take a newbuilding delivery in 2029 onwards. So this makes quite a lot of people reluctant to place order when they're going to receive the vessels 3, 4 years down the line.

Okay. And then just -- I asked this question generally every conference call. Could you just provide some visibility on the off-hire or drydocking days in 2026 and maybe even 2027?

It will be -- I'll be happy to provide that, I mean, I do have on the top of my head, the drydocking schedule for the next...

It's very, very limited. It's very, very limited for this year.

So I've gone through most of the as I said, imminent drydockings.

We have 2, I think, within the year.

Yes. And whatever...

And the expenses are pretty minimal for the next 12 months so...

You can tell from the chart on Slide 21 that the drydocking component is very small per day, so that is reflective, I guess for the day.

Our next question comes from the line of Tate Sullivan with Maxim.

Inarguably, I think asset values and the long-term contracting value for the sector has gone up and M&A probably lifting higher, but separately on the other side, I mean, I see operating expenses per day of $7,000 roughly in the fourth quarter, up about 5% year-over-year. Based on our exposure in the sector, can you talk -- is pricing higher for crew cost supplies? Or what do you see across your businesses?

A big part of those, Tate, is the dollar-euro exchange rate that was -- that moved opposite for us during the fourth -- during the latter part of 2025. A portion of our operating expenses are in euros, the management fee and some other expenses. So that is part of it.

Are you seeing any higher salary costs, salaries?

You mean crew salaries?

Yes, crew salaries and probably not to that 5% increase amount. Or is that...

Increases are below 5%, both on crew costs and G&A. It's mainly the euro-dollar thing that has increased a little bit spare parts, management fee costs things like that affected by the euro-dollar.

Also, please note that on the quarter at least, where we operated 2 vessels less in the fourth quarter of this year, the G&A component is divided by a smaller number of ships. And so that's why the -- you see probably a little bit bigger jump on a per day basis -- on a per vessel basis.

Okay. And while I have you too, I mean, the dividend policy impressive streak of dividend increases. How do you -- you and your Board evaluate the dividend? I mean, how do you compare what you see from other containership companies? Are you looking at a 20%, 30% payout ratio or depending on your fleet?

We don't have a steady payout ratio that some other companies have, but we do have a strategy of providing a very decent dividend to our shareholders. I think our current dividend yield of around 5% is about the lowest levels we will have with that. So if need, we might pay out more out of our -- repay more out of our revenues in dividends so that we continue to pay a very decent dividend.

Our next question comes from the line of Poe Fratt with Alliance Global Partners.

You've covered a lot of ground and you always do a comprehensive overlook of the -- overview of the industry. Aristides, if you could just highlight what the near-term prospects are for some of your upcoming open days, specifically looking at the older assets, the Corfu, the Evridiki -- I never pronounce this correctly, but...

Evridiki, it's the name of my grandmother.

I know, and I always apologize for pronouncing her name incorrectly. I just can't get it. But if you could just talk about the prospects there? And then at what point do you considering -- consider scrapping those older assets?

I can tell you, Poe, that on all our modeling, we had been assuming up to very recently that the vessels will be scrapped. But the market has proven too strong for this to happen. So we will pass the special surveys and charter them out for minimum 1, hopefully, 2 years. We are discussing with potential charterers, but I can't make any further comment at this point.

Okay. My -- the implication is that rates are high enough to keep those in the fleet active until maybe the 2027 time frame, maybe 2028? So...

Yes, I would say, Poe, that they're going to pass the special survey now. So they will potentially have another 3 years of life if they pass the special survey, we will be able to train them for another 3 years before we need another extensive survey. And that's probably the time that they will be scrapped.

Okay. And with the extensive board cover, as you -- as Tasos says, it makes it simpler for us to model out the cash flows and how your financial position is going to look. And even with newbuild costs of $140 million to $150 million, I think, over the next 2 years, I have you in a net cash position, assuming that you don't need to finance those newbuild payments. What -- you have bought stock back fairly not as sizable as maybe you would have hoped just given the potential volume constraints. You've increased the dividend. Even with the higher dividend, you're still be in a net cash position. At what point -- and you're talking about newbuilds potentially, but newbuilds would be 2029, 2030 delivery at this point in time. What -- are you thinking at all about a special dividend to distribute some of the cash to shareholders? I mean you're -- at least in my model, you're overcapitalized when I look at out into 2027 and even 2028. Is a special dividend something you might consider?

You are correct, I think, in your calculations. We're not really considering a special dividend at this stage. So probably we are hopeful that we will be able to find a use for the extra capital that we currently have, better use than returning it to shareholders. But we will continue providing a very decent dividend to our shareholders.

Yes. And implied in that, Aristides, I had you increased the dividend in the middle of the year, not at the beginning of the year. Is the potential cadence of dividend increases going to be a little quicker because of how much cash you have on the balance sheet and how much cash you get.

That's very probable, but I really can't comment on how we will decide. But the dividend will be decent. Hopefully, our share price will appreciate and then we will feel that we need to always have a minimum dividend and therefore, increase the dividend as well.

[Operator Instructions] Our next question comes from the line of Climent Molins with Value Investors.

Most has already been covered, but I wanted to follow up on Tate's question on the cost side. Is your OpEx guidance for 2026 based on the current euro and USD exchange rate?

What's the question -- what is the guidance for what is that we assume for the dollar-euro exchange rate?

Exactly. Because your guidance aims lower than Q4 OpEx, and it was like what were the key drivers behind that?

I think there is -- basically, every year, we're making a budget for our expected OpEx for the following year and which reflects potentially special expenses required for certain ships during the period and an assumption for the dollar-euro exchange rate. So I think we expect the dollar-euro exchange rates to remain in the high teens, $1.15 to $1.20 range. And typically, we budget -- we are finalizing the budgets for this year now, but we -- as a base, we assume the 3% overall increase for our OpEx expenses. I don't know whether I captured this exactly what you asked for...

Yes. I was asking like your assumption on the euro-USD exchange rate because you mentioned that as the driver behind the cost increase?

I mean it is in the high teens $1.15 to $1.20.

If you -- but for 2025, we started off with $1.05, we ended at $1.18. So that was -- and our costs are maybe, I would say, about 25% overall euro-related.

That's helpful.

And [indiscernible].

Our next question is a follow-up question from Mark Reichman with Noble Capital Markets.

I just wanted to follow up on Poe's question. You've got the 4 intermediate vessels to be delivered in '27 and '28. But when you look at your feeder vessels, I mean, you've got a few that are aging. So it's now the time to start ordering some feeder vessels? I mean if there's the lead time, if you're telling us that Evridiki and Corfu probably have about 3 years left?

Of course. But then we are looking into that possibility to report yet.

We have reached the end of the question-and-answer session. Mr. Pittas, I'd like to turn the floor back to you for closing comments.

Thank you all for attending our today's conference call, and we will be back in 3 months' time with similar kind of results. Thank you.

Thanks, everybody.

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