Prepared remarks
Thank you for standing by, ladies and gentlemen, and welcome to the Euroseas Conference Call on the Second Quarter 2026 Financial Results. We have with us Mr. Aristides Pittas, Chairman and Chief Executive Officer; and Mr. Tasos Aslidis, Chief Financial Officer of the company. 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 2 of the webcast presentation, which has the full forward-looking statement, and the same statement was also included in the press release. Please take a moment to go through the whole statement and read it. And now I would like to pass the floor to Mr. Pittas. Please go ahead, sir.
Good morning, ladies and gentlemen, and thank you all for joining us today for our scheduled conference call. I'd like to apologize for the delay; I was caught in another very important phone call. Sorry about that. Together with me is Tasos Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the three- and six-month period ended June 30, 2026. Please turn to Slide 3 of the presentation for our quarterly financial highlights. For the second quarter of 2026, we reported total net revenues of $56.5 million and net income attributable to controlling shareholders of $33.2 million, or $4.74 per diluted share. Adjusted net income for the quarter was $32.9 million, or $4.70 per diluted share. Adjusted EBITDA for the period was $40.1 million. Please refer to the press release for a reconciliation of adjusted net income and adjusted EBITDA to net income. Our CFO, Tasos Aslidis, will go over our financial highlights in more detail later on in the presentation. We are pleased to announce that our Board of Directors declared another quarterly dividend of $0.80 per share for the second quarter of 2026 as part of the company's common stock dividend plan. Based on current share price levels, the distribution reflects an annualized yield between 4.2% and 4.5% based on the recent range of share price. Since the launch of our $20 million share repurchase program in May 2022, we have repurchased 480,000 shares in the open market through August 13, 2026, representing approximately 6.8% of our outstanding shares for a total consideration of around $11.4 million. We remain committed to executing the program in a disciplined and opportunistic manner, allocating capital prudently while enhancing long-term value for our shareholders. Please turn to Slide 4 for an overview of our recent developments, covering key activities across vessel sales, acquisitions, charter, and fleet operations. On the S&P front, as announced in mid-June, we entered into an agreement with Nantong CIMC Sinopacific Offshore & Engineering in China for the construction of two additional 1,800 TEU TLS containerships, sisters to the two we ordered in April 2026, with expected deliveries in December 2028 and March 2029. Total consideration for these vessels is approximately $64.5 million, which will be financed with a combination of debt aiming at 60% to 65%, and equity. On May 4, we entered into a joint venture with NRP Project Finance for our first intermediate newbuilding, motor vessel Piraeus. The vessel is scheduled for delivery in Q1 2028. Under the terms of the agreement, NRP investors will acquire a 49% stake for approximately $12.2 million, with the transaction assuming at least 60% debt financing. The first capital contribution has already been paid. On the chartering side, we have secured multi-year charter extensions for motor vessel Pepi Star and motor vessel Stephania K. Both vessels are fixed for a minimum of 24 to a maximum of 26 months at a daily rate of $25,500 per day, providing earnings visibility through at least the first quarter of 2028. We had no technical or commercial off-hire days this period. Now, please turn to Slide 5. Our operating fleet consists of 21 vessels with a combined carrying capacity of approximately 61,000 TEU and an average age of 13 years. This includes six intermediate containerships with a carrying capacity of 25,500 TEU and an average age of 18 years, alongside 15 feeder containerships with a combined carrying capacity of 35,600 TEU and an average age of 9 years. We have 12 newbuilding vessels on order, eight feeders and four intermediate containerships, with delivery schedules Q3 2027 through Q1 2029. Upon completion of our newbuilding program, our fleet will expand to 33 vessels with a total carrying capacity of approximately 97,000 TEU, positioning us with one of the youngest feeder and intermediate containership fleets in the market. Please turn to Slide 6 for a further update on our fleet employment and forward coverage. Our chartering coverage stands at 96% for 2026, 81% for 2027, and 47% for 2028 at highly attractive average daily rates of approximately $30,900 per day for 2026, $31,700 for 2027, and $32,300 for 2028. This insulates our earnings even if market rates soften when current charters expire. Moving on to Slide 8, let me walk you through the market key developments that shaped the containership sector over the second quarter of 2026. Container shipping markets continued their upward trajectory through the whole of Q2 and Q3 to date, driven by robust mainlane demand and supply disruptions tied to the Middle East geopolitical tensions. Charter rates reached the highest level since before the COVID-19 pandemic, while freight rates extended their momentum, posting multiple gains through July. On the asset side, secondhand vessel prices held steady during the second quarter compared with the first, despite ongoing geopolitical uncertainties. The fundamentals remain solid: high supply of available tonnage and strong competition for prompt, charter fleet vessels continued to underpin valuations. Newbuilding prices also moved higher, up approximately 2% quarter-over-quarter, reflecting robust demand across the sector. Fleet utilization remains remarkably tight. Idle capacity, excluding vessels under repair, was just 200,000 TEU or 6% of the global fleet as of early July. This remains at historic lows and underscores the structural supply tightness we are seeing during this market cycle. Finally, recycling activity has been notably subdued year-to-date, with only 10 vessels accounting for 25,000 TEU sent to scrap through July. This further reflects the high-value environment for tonnage and limited incentive to recycle. Meanwhile, the fleet grew by 2.6% year-to-date. Please turn to Slide 9, which illustrates the development of 6-12 month time charter rates over the past decade. Across all vessel classes, from smaller feeders to the larger intermediate container segment, current charter rates remain notably above both their respective 10-year historical averages and median levels. These smaller vessel classes play an essential role in maintaining network flexibility and supporting regional and interregional trade flows, a role that has become increasingly critical amidst geopolitical uncertainties and supply chain disruptions. With scarce available tonnage and underlying demand holding firm, the conditions supporting elevated time charter rates appear broadly intact for now. Please turn to Slide 10, where we review the global macroeconomic backdrop and its implications for container shipping demand. According to the IMF July 2026 World Economic Outlook, global growth is projected at 3% in 2026, recovering to 3.4% in 2027, broadly unchanged cumulatively from April's forecast. Elevated energy prices and geopolitical tensions, particularly the Iran conflict and the Russia-Ukraine war, are driving inflation and interest rates higher. However, AI-driven investment is supporting growth in technology-integrated countries. Meanwhile, global disinflation has stalled, with the inflation shock pushing the yield on the 10-year U.S. Treasury to approximately 4.7%. The U.S. economy has remained comparatively resilient at 2.3% growth. China is projected to grow 4.6% this year, supported by infrastructure investment and high-tech exports, but decline to just 4.1% growth in 2027, while the ASEAN-5 region is projected to slow to 4.1% in 2026, before recovering to 4.3% growth in 2027. On container trade, as measured in TEUs, volume is projected to moderate from 4.6% growth in 2025 to just 3.7% in 2026, reflecting tariff impacts and slower global growth overall due to the geopolitical disruptions. Growth is expected to remain subdued at 3.4% in 2027, as the effects of the current disruption will take longer to dissipate. For container shipping specifically, containerized trade measured in TEU-miles is projected to grow by approximately 3.6% in 2026. However, we anticipate a normalization effect in 2027, with TEU-miles demand projected to decline by 4.8%, reflecting expectations of trade routes and sailing distances returning to historical patterns. Turning to Slide 11, you can see the total fleet age profile and containership orderbook. Starting with the age profile in the upper left, the overall containership fleet remains relatively young, with a majority of vessels under 15 years of age and only about 15% of the fleet over 20 years old. However, this aggregate view is totally different when examining the feeder and intermediate segments in isolation, which we will explore in greater detail over the next several slides. Turning to vessel deliveries, the top right chart illustrates scheduled new deliveries as a percentage of the existing fleet. Deliveries are projected at approximately 5.5% for 2026, 9.4% for 2027, and 24.2% for 2028 onwards, although actual fleet growth is expected to be somewhat lower due to slippage and future demolition activity. The bottom chart puts the current order book in historical context. At approximately 39.8% of the fleet as of August 2026, the order book has climbed to levels not seen in over 15 years, a development that warrants close attention as we think about the medium-term supply outlook for the sector. Turning to Slide 12, we highlight the age profile and order book for the 1,000 to 3,000 TEU feeder segment. The supply here tells a markedly different story from the broader market. The age profile here is striking. Approximately 24% of the fleet is between 15 to 19 years, while 30% of the fleet is over 20 years old, meaning more than half of the feeder fleet is at or approaching scrapping age. As environmental regulations tighten and compliance costs rise, a meaningful portion of these older vessels will likely exit the market over the coming years, depending on how challenging market conditions become. Against this aging backdrop, newbuilding activity in the sub-3,000 TEU segment remains significantly restrained. As of August 2026, the order book stands at 17.6%, substantially below the broader market, which is 39.8%, with scheduled deliveries of just 3.1% for 2026, 6.8% for 2027, and 8.1% for 2028 and beyond. Let's move to Slide 13 to focus on the intermediate segment, the other core segment of our fleet. As of August 2026, the order book in this segment stands at approximately 28% of the existing fleet. While higher than the feeder segment, this remains modest relative to the large mainline vessel classes, where newbuilding activity has been considerably more active. What makes this segment particularly compelling from a supply perspective is the age profile. About 36% of the fleet is between 15 to 19 years old, while 30% of vessels in this range are over 20 years of age, meaning roughly two-thirds of the fleet is either at or approaching an age where retirement decisions become likely. Scheduled deliveries are projected at 3.8% for 2026, rising to approximately 7.8% in 2027, and 15.9% for 2028 and beyond. However, when weighed against potential accelerated scrapping among the older tonnages, net fleet growth in this segment is expected to remain contained over the coming years. The interplay between a maturing fleet and the measured newbuilding pipeline continues to create a structurally supported environment for intermediate containership operators, despite a potential cascade effect, which of course will also take place. Turning to Slide 14, this chart places the dynamics we've discussed in broader context across the entire containership sector. What's evident is the pronounced concentration of newbuilding activity in the larger vessel classes. Neo-panamax and Post-Panamax segments carry orderbooks of 40% to 87% of their existing fleet, reflecting the significant capacity directed towards major mainlane trades. These are the segments facing the most acute oversupply risk. By contrast, feeders and intermediate segments exhibit significantly lower orderbook activity, ranging from 14% to 28%, depending on vessel size. This modest ordering activity is occurring against an aging fleet backdrop. The gap between the wave of newbuildings in larger vessel classes and limited fleet renewal in feeders and intermediate segments points to a structurally more favorable supply outlook for the sizes in which Euroseas operates. Now please turn to Slide 15, where we summarize our outlook. Markets have gained meaningful momentum through July, with rates at decade highs supported by strong East-West demand amid these disruptions. A limited 2026 supply is supporting the near-term balance, though we do expect some moderation towards the end of the year. Looking ahead to 2027, the supply-demand picture shifts. Red Sea route normalization and the significant uptick in vessel deliveries could pressure the market. That said, capacity management, accelerated scrapping, and slower steaming could help absorb incremental supply. Geopolitical uncertainty also complicates timing of any normalization. Finally, the impact of tariffs has been more muted than feared. Though U.S. trade policy remains a variable we are continuing to monitor closely. Turning to Slide 16, the charts illustrate the strength of the current cycle. One-year time charter rates for 2,500 TEU containerships stand at $38,250 per day, substantially above the 10-year historical average of $24,000 and median of $16,000 per day. This is obviously reflected in asset values as well. The right chart shows newbuilding vessels are now priced at $45.5 million, versus a 10-year median and average of approximately $36.7 million, while the 10-year-old vessel is valued at $41 million compared to the historical average of $22.5 million and a median of $18.75 million. These elevated secondhand valuations, particularly without attached employment, present a less competitive risk-reward profile at this stage of the cycle. Newbuilding, by contrast, offers greater pricing flexibility and cost predictability. This conviction has driven our decision to expand our order book to 12 vessels, building on the nine vessels we completed in early 2025. This strategic position, combined with our strong balance sheet and substantial liquidity, puts us in an enviable position, well-capitalized to pursue accretive opportunities when they arise, while our fleet benefits from lower operating costs and environmental advantages that differentiate us competitively. I will now turn the call over to Tasos, who will go over our financial results for the second quarter and first half of 2026 in more detail.
Thank you very much, Aristides. Good morning from me as well, ladies and gentlemen. Over the next five slides, I will give you the usual overview of our financial highlights for the second quarter and first half of 2026 and compare those results to the same period of last year. For that, let's turn to Slide 18. For the second quarter of 2026, the company reported total net revenues of $56.5 million, representing a 1.3% decrease over total net revenues of $57.2 million during the second quarter of 2025. These were the result of the lower average number of vessels we owned and operated this past quarter in 2026, compared to the same second quarter of 2025, and it was partly offset by the increase in the time charter rates that we earned on average in the respective periods. The company reported net income of $32.6 million and net income attributable to controlling shareholders of $33.2 million for the second quarter of 2026 as compared to a net income attributable to controlling shareholders of $29.9 million for the same period for the second quarter of 2025. The net loss attributable to non-controlling shareholders of $0.6 million in the second quarter of 2026 represents the 49% ownership of the entities owning our newbuilding M/V Thrylos, which are represented by NRP investors. Interest and other financing costs for the second quarter of 2026 amounted to $2.7 million, compared to $4.0 million for the second quarter of 2025. This decrease is due to the decreased amount of debt and the decreased interest rate of our loans in the current period compared to the same period last year. If we account for interest income, the respective amounts become $1.3 million and $3.7 million for the second quarter of 2026 and 2025 respectively, and these are the figures shown in the net interest line in the table on the slide. As part of our liquidity management strategy, we entered into investments in equity and debt securities in the first quarter of 2026. For the three months ended June 30, 2026, the company recognized a $0.29 million unrealized mark-to-market gain on its investments in equity securities, resulting from an increase in the fair value of the investments. At the same time, we acquired debt securities with an initial cost of $20 million, classified as available for sale under GAAP, for which the fair value decreased between quarters, resulting in an unrealized loss of approximately $0.24 million during the second quarter of 2026. We did not have such investments in the second quarter of last year. It is worth noting that these investments are intended to be held to maturity, and as such, the loss is purely accounting in nature and there's no cash impact. In fact, these holdings continue to generate regular dividend income, which partially offsets any short-term valuation fluctuations. Adjusted EBITDA for the second quarter of 2026 was $40.1 million compared to $39.3 million during the same period of last year. Basic and diluted earnings per share attributable to controlling shareholders for the second quarter of the year were $4.77 and $4.74, basic and diluted, calculated on approximately 7 million of weighted average number of shares outstanding, compared to basic and diluted earnings attributable to controlling shareholders of $4.32 and $4.29 per share, basic and diluted respectively, for the second quarter of last year. Excluding the effect on the net income attributable to controlling shareholders for this quarter for the unrealized gain on investments in equity securities, the adjusted earnings attributable to controlling shareholders for the second quarter of 2026 would have been $4.73 basic and $4.70 diluted, compared to adjusted earnings attributable again to controlling shareholders of $4.23 basic and $4.20 diluted for the same period of last year. Let's now look at the numbers on the same slide, and look at the numbers corresponding to the six-month period ended June 30, and compare them to the same period of last year. For the first half of 2026, the company reported total net revenues of $112.3 million, representing a 1.1% decrease over total net revenues of $113.6 million during the first half of last year. The same reasons that are used to explain the quarterly decline apply here. The company reported a net income for the period of $65.1 million, a net income attributable to controlling shareholders of $65.7 million, as compared to net income and net income attributable to controlling shareholders of $66.8 million for the same period for the first half of 2025. Total interest and other financing costs for the first half of 2026 amounted to $5.7 million. Total interest and other financing costs for the first half of 2025 amounted to $7.9 million. The decrease, again, is due to the lower levels of debt on average and the lower interest rate paid. Accounting for interest income, the respective amounts become $2.44 million and $3.37 million for the first half of 2026 and 2025, and these are the two figures shown on the slide, and they include the net interest that we recognize. Adjusted EBITDA for the first half of 2026 was $81.0 million compared to $76.4 million for the same period of last year. Basic and diluted earnings per share attributable to controlling shareholders for the first half of 2026 were $9.44 basic and $9.39 diluted, compared to $9.63 basic and $9.60 diluted for the same period of 2025. The adjusted earnings per share attributable to controlling shareholders for the six months ended June 30, 2026, would have been $9.45 basic and $9.40 diluted, compared again to adjusted earnings for the same period of last year of $7.99 basic and $7.97 diluted. Let's now turn to Slide 19 to review our fleet performance. We'll start our review by looking at the fleet utilization rate for the second quarters of 2026 and 2025. As usual, our fleet utilization rate is broken down into commercial and operational components. During the second quarter of 2026 and 2025, commercial utilization was for both periods 100%, while operational utilization was 99.9% as expected. On average, 21 vessels were owned and operated in the second quarter of 2026, earning an average Time Charter Equivalent rate of $30,306 per day, compared to 22 vessels for the same period of last year, earning an average $29,420 per day. Our total daily operating expenses include management fees and G&A expenses, but exclude dry docking costs, and were $8,036 per vessel per day in the second quarter of this year, compared to $7,694 per vessel per day in the second quarter of 2025. If we move further down on this table, we can see as always, the daily cash flow break-even levels, which take into account, in addition to the operating expenses, the dry docking expenses, interest expenses, and loan repayments without accounting for balloon repayments, and all of those are expressed on a per vessel per day basis. For the second quarter of 2026, our daily cash flow break-even rate was $12,233 per vessel per day as compared to $13,261 for the same period, the second quarter of 2025. At the very bottom of this table, you can see the dividend we paid, expressed in dollars per vessel per day. In the second quarter of 2026, this amounted to $2,916, compared to $2,275 in the same period of last year. The increase reflects the increase in the actual amount of dividend paid and the reduction in the number of vessels. Let's now look at the right-hand side of this table and review the same metrics for the first half period. During the first half of 2026, both operational and commercial utilization rates were at 100%, while the operational utilization rate for the corresponding period of 2025 was 99.6%, and commercial was again 100%. On average, for the six-month period, we owned and operated 21 vessels, earning an average Time Charter Equivalent rate of $30,330 per day, compared to 22.83 vessels we operated in the same period of last year, earning an average of $28,468 per day. Operating expenses, again, including management fees and G&A expenses, but not dry docking costs, averaged $7,963 per vessel per day this year compared to $7,454 for the same period for the first half of 2025. The break-even levels, again, at the bottom of this table, were $12,290 for the six months of this year compared to $13,163 for 2025. And the common dividend expressed in dollars per day per vessel in the first half of this year amounted to $2,839, up 29% from $2,196 in the first half of last year. Let's now move to the next slide, which has fewer numbers and aims to provide a better perspective of the depth of our contract coverage that I previously discussed. This table presents the development of our fleet ownership days over the period of the next three years because we have newbuildings coming in, and it provides an estimated breakdown of how many days are available for hire and how many days are already contracted. It incorporates assumptions about delivery times for the vessels under construction, scrapping times for older vessels, estimated dry docking duration and timing, utilization rate assumptions going forward, and estimates for contracted days and average contracted rate per day. Please note that the data presented in this table represents our internal estimates provided only for illustrative purposes to be used for modeling future Time Charter Equivalent revenues, and of course, actual results might differ. Nevertheless, we believe this provides a useful visibility into our forward revenue and earnings profile. Although our contracted coverage has been discussed earlier, just for reference, I will mention that the contract coverage currently stands at approximately 96% for the remainder of 2026, 81% for 2027, and almost 47% for 2028. Our average contracted rate for those periods are $30,858 for 2026, $31,658 for 2027, and $32,310 for 2028. Moving on to Slide 21 to review our debt profile. As of June 30, our total outstanding bank debt stood at about $208 million, with an average interest rate margin of around 2%. We assume here a three-month SOFR rate of 3.76%. Our total debt cost amounts to a little more than 5.75%, which is well within the prevailing rate for our peers. Turning to our debt amortization profile on the top left of this slide, we can see that in 2026, total repayments amounted to $19.6 million, consisting of approximately $9.06 million of scheduled loan repayments and $10.49 million of already paid loan obligations. In 2027, total debt service increases to approximately $36.85 million, inclusive of a balloon payment of $20 million. In 2028, repayments of loans are lower, down to $12 million, and no balloon payments are due. Looking farther ahead, 2029 includes total repayments of $40.6 million, which includes $10.6 million of scheduled loan repayments and a $30 million balloon. 2030 includes total repayments of $33.8 million, split between $7.4 million of scheduled repayments and $26.4 million of balloon. Historically, we have been able to finance balloon payments on favorable terms, and we expect to maintain that capacity of doing so in the future if we choose to do it. These figures reflect our current debt profile and do not include financing that we will assume to finance our newbuilding program. At the bottom of this table, we show our vessel month forward revenue rate, which stands at $13,382 per vessel per day, and you can see the components broken down. Let me conclude this presentation by turning to Slide 22 for a quick review of selected highlights from our balance sheet. As usual, we present our balance sheet in a simplified way, in the form of two bars. On the left bar, we show the asset side. We have current assets of cash and other current assets of approximately $226 million. We have made approximately $74 million of advances against our newbuilding program, and the book value of our fleet stands at about $453 million, bringing the total assets in our balance sheet to $753 million. Moving to the right bar, the liabilities, there we mentioned we have a bank debt of $208 million and additional liabilities of about $21 million, and a small amount of minority investment, resulting in about $523 million of book shareholders' equity. However, the true shareholders' equity should be adjusted for the market value of our fleet, which is significantly higher than its book value. We estimate that our current fleet is valued at approximately $660 million, which translates to a net asset value for the company of more than $725 million, or about $103 per share. The current price levels, although they have increased, still trade below our net asset value, and this valuation gap presents an opportunity for both our shareholders and investors that want to consider investing in Euroseas. With that, I'll turn the floor back to Aristides to moderate the question-and-answer period.
Thank you, Tasos. Let me now open up the floor for any questions you may have.
Questions and answers
Our first question comes from the line of Mark Reichman with Noble Capital Markets.
Yes. So advances for vessels under construction were about $74 million at June 30. I was wondering if you could walk us through how much additional equity capital will need to be contributed to the newbuild program between now and first quarter 2029, and maybe the breakout between…
Can you just speak up, please?
Can you hear me?
Yes. I can hear you. So I think off the top of my head, the overall cost of our newbuilding program is around $560 million, and we plan to finance it about 60% with debt. So roughly speaking, the equity requirements altogether would be around $230 million, of which $74 million have been paid.
Okay. That's helpful. And then the fleet table on Page 7—I think what's interesting is clearly the older vessels remain on attractive charters while you've got this much younger fleet coming. Because six of those vessels were built between 2001 and 2009 and have charters that are expiring over the next several years, what are your thoughts on whether you continue to operate those as the newbuilds arrive? Do you plan to sell some? And related to that, on Page 20, you have 20.8 vessels for 2026, which would imply 21 vessels through the first three quarters and maybe 20 vessels in the fourth quarter. Could you square that up as part of the discussion?
We are not thinking of selling any vessels currently. The market is so strong that it makes sense to continue operating the older vessels as well. We are fixing these ships for two years at least on charters. This might become an issue maybe two years down the line if the market has dropped significantly. But for now, the earnings that these older vessels generate are worth keeping them.
On Slide 20, we have indicative figures. The two older vessels that you essentially pinpointed are under negotiation for recharter. At the end of 2027, we start getting the newbuildings in, so there might be some assumptions about disposals then, but one can model different scenarios about how many vessels we will be operating.
On Page 20 of the presentation, I think you have 20.8 and you've got 21 vessels in your portfolio. What accounts for the 20.8? Is that the one single dry docking?
We have one vessel that we are modeling as potential to be sold—one of the older ones. But we are in the process of negotiating an extension to its charter at this point.
I see. So you could assume potentially 21 vessels for the remainder of the year, but you could sell one maybe by the fourth quarter, which would get to the 20.7 mark?
That is a very slight possibility. That was a scenario in our model a few months ago, but now we are seeing significant interest in that vessel, so it will probably be extended under charter for at least two years. So that postpones any potential sale by a couple of years.
I see. Okay. And then just last question. You had a little over $164 million in restricted and unrestricted cash and about $208 million of debt. How do you think about capital allocation in terms of putting that marginal dollar to work in newbuilds, acquisitions, debt repayments, dividends and share repurchases, which you have highlighted?
This is a balancing act. We do have this cash you mentioned. Of course, we have further obligations to pay for our newbuilds during the next couple of years. However, we expect to generate cash in the coming years as well. There will be enough flexibility to consider further investments, perhaps growing the dividend or share repurchases. Everything is on the table and we discuss it in our quarterly Board of Directors meetings to best utilize the capital.
Our next question comes from the line of Tate Sullivan with Maxim Group.
You provided a newbuild commitment number earlier. With the number of ships under construction and given your experience in the last two to three years with building new ships, is it reasonable to forecast any delays in delivery schedules at this point given busier shipyards? Or does it seem quite consistent? I would appreciate your comments. And then, your contracting strategy for the newbuilds: would you say it is consistent with your prior newbuild contracts in terms of fixing multi-year contracts? Is there any change in discussions to change contract structures to include floors and potential upside to those rates?
At this point, we don't foresee any delay in the construction of the ships. Of course, we will only know closer to the delivery times, but shipyards in general seem to be making their delivery schedules. Regarding contracting strategy, the idea is to fix longer-term charters if we can, but it's a bit early to do that right now. If we were to fix today, we might have to accept lower rates than we think we can get by waiting a little longer. We fixed the four intermediate ships, as you know, but for the remaining eight ships we're waiting to see if we can get attractive rates.
We have not seen any change in contract structure such as floors and caps. Discussions remain around traditional flat-rate charters, possibly with early expiration options for two to four years depending on the case.
Our next question comes from the line of Poe Fratt with Alliance Global Partners.
I was wondering if you could help reconcile the dry docking activity shown on Page 6 with the information in your 20-F. The 20-F shows six dry docks or intermediate and special surveys over the second half of the year, while the slide on Page 6 only shows two. Is there more dry docking activity ahead for the rest of 2026? And secondly, can you talk about the equity investments you've made—the nature of those equity investments and their risk profile?
For the rest of 2026, we have three dry dockings to be done. The remaining items you see in the 20-F might include short in-water surveys or minor works that do not require full dry docking, which could be one-day activities with minimal cost. The three significant dry dockings planned are on three of our older vessels: Evridiki, EM Corfu, and Jonathan P. Regarding the equity investments, these are essentially bond funds to achieve slightly higher returns than deposits. They invest in investment-grade bonds and are very liquid. We also have one investment in a capital-protected structured fund that is capital protected and may give a higher return depending on various parameters. So it's really cash management, aiming for a bit more than pure deposit rates.
Okay. That's helpful. I'm sorry, Tasos, I didn't understand one point earlier.
No problem. These holdings can be easily liquidated if we need the funds, which we do not expect to need because we have other liquidity available.
Just to clarify, you're not investing in individual companies with a higher risk profile than a bond fund?
No, it's not that. These are conservative instruments for cash management rather than equity stakes in operating companies.
Our next question comes from the line of Climent Molins with Value Investors Edge.
I wanted to follow up on Mark's question regarding your older vessels. We've seen some forward fixtures in recent months, but mostly on modern tonnage. Could you talk about dynamics of forward fixing on older vessels? Is that widely available and, if so, how does the implied discount compare to more modern vessels? Also, the order book for smaller vessels is significantly lower than for larger sizes. Have you seen any cascading from larger vessels cannibalizing routes usually serviced by smaller vessels? Looking ahead, do you think this is a risk or is it unlikely to have a material impact?
There is currently a lack of available vessels, so one can fix even older vessels that open up within the next three to six months quite easily at very decent rates. Discounts to modern tonnage are relatively small and mainly reflect higher fuel consumption on older ships. Overall, the market is very tight, and we expect to be able to fix our three ships that open up later this year. Concerning cascading from larger vessels, markets are unstable due to geopolitical developments, which makes it difficult for liner companies to optimize schedules significantly today. As things normalize, liner companies will optimize and we could see cascading, but right now we don't really see widespread cascading activity.
If you look at Slide 14, you can see the order book and age distribution by size group. The large order book is concentrated in the bigger vessel sizes, and while cascading can occur over time, our segments are relatively balanced compared to those larger sizes. So cascading is a potential risk but less acute for feeders and intermediates than it would be for larger vessels.
It appears we have no further questions at this time. Mr. Pittas, I'd like to turn the floor back over to you for closing comments.
Thank you all for standing by and listening to our presentation. We'll be back to you in three months' time. 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.