Navios Maritime Partners [NMM] Conference call transcript for 2022 q3
2022-11-10 13:12:03
Fiscal: 2022 q3
Operator: Thank you for joining us for Navios Maritime Partners Third Quarter 2022 Earnings Conference Call. With us today from the company are Chairwoman and CEO, Ms. Angeliki Frangou; Chief Operating Officer, Mr. Stratos Desypris; Chief Financial Officer, Ms. Eri Tsironi; and Vice Chairman, Mr. Ted Petrone. As a reminder, this conference call is being webcast. To access the webcast, please go to the Investorsâ section of the Navios Partners website at www.navios-mlp.com. You can see the webcasting link in the middle of the page and a copy of the presentation referenced in todayâs earnings conference call will also be found there. Now, I will review the Safe Harbor statement. This conference call could contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Navios Partners. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are based upon the current beliefs and expectations of Navios Partners management and are subject to risks and uncertainties, which could cause actual results to differ materially from the forward-looking statements. Such risks are more fully discussed in Navios Partners filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks. Navios Partners does not assume any obligation to update the information contained in this conference call. The agenda for todayâs call is as follows: first, Ms. Frangou will offer opening remarks; next, Mr. Desypris will give an overview of Navios Partners segment data; next, Ms. Tsironi will give an overview of Navios Partners financial results; then Mr. Petrone will provide an operational update and industry overview; and lastly, weâll open the call to take questions. Now, Iâll turn the call over to Navios Partners Chairwoman and CEO, Ms. Angeliki Frangou. Angeliki?
Angeliki Frangou: Thank you, Daniela, and good morning to all of you joining us on todayâs call. We are pleased to report our results for the third quarter of 2022, in which we recorded $322.4 million of revenue and $257.2 million of net income. Net income amounts to $8.36 per unit. We are caught in the crossroads of unprecedented macro events. First, in terms of the general economic environment, central banks are reducing the existing liquidity in the financial system as they turn to normalize balances. At the same time, central banks are increasing interest rates to capitalizing and enduring inflation. Second, China, the major consumer of raw materials and produces of to much of the world has reduced appetite as it experiences slow economic growth and focuses on zero COVID policies. Finally, the conflict in Ukraine has disturbed normal trading patterns for oil and gas, while also creating a scarcity of grains and mineral commodities. In the face of these challenges are the sales side approach has helped as stakeholders well. We have about 16 different vessel types operating in three segments. The average age of vessels in each segment is below the industry average. In the container sector, we were able to take advantage of the market strength by selling two 60 year old containerships for $220 million. Given the appetite for containerships, we were able to order new vessels and hedging the ownership risk by charting them out for a long period ensuring a reasonable return on the investor. We also used our balance sheet strength to enter in the new tanker class, the Aframax because other tanker companies at the time were constrained by the legacy balancing issues. Today, we have six on another or we have long-term charters on four of them, we continue to monitor events closely managing a risk, as well as seeking new opportunity. Slide 6 takes a look at selected segment data. Today, we have 185 vessels with an average age of 9.5 years. Each segment has an average fleet eight material below the industry average. You can see the good work that we have done by developing a contracted revenue. In the third quarter alone, we generated $331 million of long-term contracted revenue from our various sectors. Turning to Slide 7. We review recent development. Our LTV has picked up primarily because of compression of containership values. However, this is mitigated by the $3.2 billion of contracted revenue of which $2.3 billion is from the containerships. I also would like to focus in a break-even for the fourth quarter of 2022 and fiscal year 2023. You can see that we have $51.2 million contracted revenue in nexus of total cash expense for the fourth quarter of 2022. So any revenue from a 4,000 open and index days will be profitable. We also have a very low break-even per open day for 2023, as on November 3, 2022 our breakeven per open day was likely less than $6,000. Slide 8 reviews our balance sheet initiatives. In their phase of rising interest rate who have been working to mitigate interest rate risk, 30% of our debt has fixed interest rate with an average rate of about 5.8% and 70% balance has floating interest rate. We have been actively working to reduce our average margin on our floating rate debt. So far, we have been able to reduce this margin by about 10% to 2.8% in 2022, as compared to 3.1% in 2021. We have done even better in a new building program where the average margin is slightly less than 2%. We have in $1.1 billion debt program to finance annual building. $740 million has either been approved or is in the process of approval. We are in a serious discussion on the remaining $340 million. We have been able to secure favorable terms on annual building program. 60% of the purchase price must be paid only on delivery. In addition, $500 million of the new building debt has no commitment fee. At this point, I would like to turn the call over to Mr. Stratos Desypris. Stratos?
Stratos Desypris: Thank you, Angeliki, and good morning, all. Slide 9 details our strong operating free cash flow potential for the fourth quarter of 2022. We fixed 73.3% of available days at an average rate of $25,351 net per day. For Q4 2022 contracted revenue already exceeds total cash expenses by over $51 million. We have 4,022 available days that will provide additional profitability once we â for 2023, we have 60,591 available days approximately 65% of these are days with market exposure. Slide 10 demonstrates the basic principles of our diversified platform in action. We benefit from counter cyclicality, which creates opportunity to redeploy cash flow and from well performing segments into activities in underperforming segments. Asset values can be volatile in a diversified asset base moves the balanced volatility. We can see this dynamic now asset base as of Q3 2022 container values dropped by 42% and dry bulk dropped by 4% while tanker vessel values increased by 32%. In some the net change, our fleet values a decrease of approximately 14%. In addition, multiple segments allows us to optimize starting, in segments with attractive returns we can enter into period charter rates. In other segments, we can be pacing. As you can see from the chart on the bottom, the container segment was enjoying historically high charter rates. Not surprisingly, we fixed our container fleet on long-term charter with almost 90% of our available containers days fixed for 2023. This reduced market and residual risk, we manage the credit risk of the long-term charters independently to ensure we are not simply trading one risk for another. In our tanker segment, current charter rates are surpassing the 20-year average levels. We increase peaks in available tanker days to almost 40% for 2023, taking advantage of this market. We expect our tanker fleet will generate strong returns. Lastly, now drybulk segments, rates are below the historical averages, so we remain pacing by entering short-term charters whereby fixing only 9% of available days. Over 90% of available days are exposed to market rates, which will be fixed long-term as the market recovers. In slide 11, you can see our fleet renewal activities. We are always renewing the fleet so that we maintain the client profile benefiting from newer technologies and more carbon efficient vessels. Navios Partners means made $1.5 billion investment in 23 new building vessels that will deliver to our fleet through 2025. In containerships, we are acquiring 12 vessels for a total of $860 million. We hazed our investment by entering into long-term credit worth charters generating about $1.1 billion in contract revenue for the 6.4 years after duration of the related charters. In the tanker space, we entered the LR2 Aframax sub sector by ordering six vessels for a total price of $380 million. Four of the vessels are charted out for five years at an average net daily rate of $25,971, generating revenues of approximately $190 million. The charter rate has the option to the charter the other two vessels. Slide 12 gives an update of our field activities. Starting with tankers, during Q, we agreed to acquire two LR2 Aframax vessels for $16.5 million per vessel plus 4.1 additional features. We have given the option to an investment grade counterparty to charter the vessels for five years at a net rate of $27,798 per day, plus additional five one year options at increased rates. The option is declarable in Q4 2022. We also contracted two of the LR2 Aframax vessels for five years at a net daily rate of $25,576 generating almost $95 million in contracted revenue. We also capitalized on the strength of the tanker market chartering eight product tankers for an average net daily rate of $24,045 and an average duration of 1.8 years providing contracted revenue of $125 million. On the containerships in Q3, we completed the sale of two 8,200 TEU containerships for $220 million. Also, we fixed our only remaining open vessel for 2022 for six months at the net daily rate of $2,895. Finally, on the drybulk vessels, we acquired 58 vessels including a new building cape size vessel, while at the same time we sold four vessels with an average age of 16 years for $52 million. On the chartering front, we created $112.6 million contracted revenue by chartering three of our cape size new building vessels for five years at an average net daily rate of $20,567. Moving to Slide 15, we continue to secure long-term employment for our fleet. Our contracted revenue amounts to $3.2 billion. 72% of our contracted revenue comes from our containerships with cutters extending 2036 with a diverse group of quality counterparties. Almost 50% of this contracted revenue will be earning in the next two and a half years. Iâll pass the call to Eri Tsironi, our CFO, which will take you through the financial highlights. Eri?
Eri Tsironi: Thank you, Stratos, and good morning, all. I will briefly review our unaudited financial results for the third quarter and nine month ended September 30, 2022. The financial information is included in the press release and is summarized in the slide presentation available on the companyâs website. I would like to highlight that the 2022 results are not comparable to 2021. As in 2021, NMM acquired two companies and recently 36 bases significantly expanding its fleet. Moving to the earnings highlights in Slide 14, total revenue for the third quarter of 2022 increased by 41% to $322.4 million, compared to $228 million for the same period in 2021. Time charter revenue is understated because of a $13.6 million adjustment required for accounting purposes due to the straight line effect of container charters with deescalating rates. The overall revenue increased results from a 43% increase in available days to 12,897 compared to 9,027 for the same quarter last year. Our time charter equivalent rate decreased by 3% to 23,781 per day, compared to 24,447 per day for the same period in 2021. In terms of sector performance, both containers and tankers enjoyed rates that increased 45% period over period to 32,600 for containers and 21,828 tankers. In contrast, our drybulk fleet rate by 31% lower at $20,061. EBITDA for Q3 2022 increased by 81% to $321.4 million compared to $177.2 million for the same period last year. Excluding one of items are described in our press release adjusted EBITDA increased by $32.5 million to $177.7 million. Net income for Q3 2022 increased by 59% to $257.2 million, compared to $162.1 million for the same period in 2021. Per unit net income was $836, excluding one of items as detailed in the price release, adjusted net income was $113.4 million compared to $130.1 million in 2021. Adjusted net income per unit was $3.7. Total revenue for the first nine months of 2022 increased by 89% to $839.7 million compared to $445 million for the same period in 2021. For the nine month period ended September 30, 2022, revenue is understated because of a $30.1 million adjustment requires for accounting purposes due to the straight line effect of containerships charters with de-escalating rates. The overall increase in revenue was a result of a 72% increase in available days to 35,394 compared to 20,521 for the same period in 2021 and an 8% increase in the fleet average TCE rate to $22,717 per day compared to $20,991 per day for the same period in 2021. In terms of sector performance, TCE rates increased 39% for containers to $30,486 and 18% for tankers to $17,834. Drybulk rates were in line with 2021 rates for the same period at $21,381. EBITDA for the nine month period ended September 30, 2022 increased by 43% to $611 million compared to $426.2 million for the same period last year. Excluding one-off items has described in our price list, adjusted EBITDA increased by $197.5 million to $467.3 million. Net income for the nine month period ended September 30, 2022 increased by 16% to $461 million compared to $398.6 million for the same period last year. Net income per unit was $15. Excluding one-off items described in detailing the press release, adjusted net income amounts to $317.2 million compared to $242.3 million in 2021. Adjusted net income per unit was $10.31. Turning to Slide 15, I will briefly discuss some key balances data. As of September 30, 2022, cash and cash equivalents were $110.3 million. During the first nine months of 2022, we paid $95.5 million of pre-delivery installments under our newbuilding program. We also paid $380.4 million to acquire 36 second hand and four newbuilding vessels. Finally, we sold two containers for $215.3 million net. During the period, we had $161 million scheduled repayments under our credit facilities. Long-term bonds, including the current portion, net of deferred fees amounted to $1.9 billion. Net debt to book capitalization stood at 43.6%. Slide 16 highlights our debt profile. Our debt and lease liabilities at 2.4 times covered by the value of our fleet based on publicly available valuations. We continue to diversify our funding resources between bank debt and leasing structures while approximately 30% of our debt, including operating lease liabilities have fixed interest rate at an average rate of 5.8%, providing a natural hit against current rate increases. Our maturity profile is target with no significant volumes due in any single year. Furthermore, we decrease the average margin on our undrawn facilities to 2.8% from 3.1% at the end of 2021. The average margin for our new building facilities is 1.9%. Slide 17 provides an update of our recent financing activities. In September 2022, we signed an $86.2 million credit facility with European bank financing two containers for delivery in 2023 at SOFR + 2%, and we completed the bareboat agreement at an effective fixed rate of 5.5% for the financing of one newbuilding Capesize for delivery in 2023. In October, we concluded a $100 million leasing facility refinancing 12 containers at SOFR + 2.1%. Currently, weâre completing our first export credit agency facility for $161.6 million, financing four containers for delivery 2023 and 2024 at SOFR + 1.7% and the financing of a 2016 built Kamsarmax at Libor + 2%. We are progressing the financing of our newbuilding program and we have signed our in documentation phase for an aggregate amount of $480 million, representing approximately 44% of our financing requirements. Including the facilities under approval process, we are close to $740 million or two heads of our newbuilding financing lease. Of this amount $500 million represents financing arrangements with no commitment fee. Turn to Slide 18, you can see our ESG initiatives. We aspire to have zero emissions by 2050. In this process, we have been pioneering and are adopting certain environmental regulations up to three years in advance, aiming to be one of the first fleet to achieve full compliance. Navios is a socially conscious group, whose core values include diversity, inclusion and safety. We have very strong corporate governance and clear code of ethics. Our Board is composed by majority independent directors and independent committees that oversee our management and operations. Slide 19 details our company highlights. Navios Partners is a leading U.S. publicly listed company. Our diversification strategy creates resiliency and enables us to mitigate individual segment volatility. Our diversification, scale and financial strength should make NMM an attractive investment platform as we take advantage of global trade patterns. I now pass the call to Ted Petrone to take you through the industry section. Ted?
Ted Petrone: Thank you, Eri. Please turn the Slide 21 for the review of the tanker industry. Tanker rates rose sharply in Q3 and rates today continue firm in all sizes for both crude and clean vessels. What has negatively affected the container industry has positively affected tankers. That is consumer activity has switched from purchasing goods to increasing travel and services. About two-thirds of Seaborne product trade is related to transportation. In spite of economic uncertainties in the Ukraine crisis, the IEA still projects a 2% increase in world oil demand for 2022. The expectation is that oil demand will grow by 1.7% in 2023 to 101.3 million barrels per day exceeding 2019 pre-pandemic levels. Turning to Slide 22, tanker rates continue across the board and have risen due to solid supply and demand fundamentals combined with the invasion of the Ukraine, which has redirected Russian crude and clean products to new and longer routes. Additional European refineries are replacing Russian crude and products with supply from the U.S. and Middle East Gulf further increasing ton miles and trade in efficiencies. Incremental support, the crude tanker rates should come into effect as new EU sanctions and a price cap begin on December 5. Product tankers should also be aided by discounted Russian crude exported to the far east, returning to the Atlantic as clean product. This could add upward pressure on already strong rates. 2023 crude and product ton mile growth is expected to increase by 5.3% and 9.5% respectively. Turning to Slide 23, vessel net fleet â VLCC net fleet growth is projected at 4.2% for 2022 and only 2% for 2023. This decline can be partially attributed to ownerâs hesitance to order expensive long-lived assets in light of macroeconomic uncertainty and engine technology concerns due to upcoming CO2 restrictions. The current order book is only 3.4% of the fleet, the lowest in 30 years. Vessels over 20 years of age are 10.3% of the total fleet, which compares very favorably with the low order book. Turning to Slide 24, product tanker net fleet growth is projected at 1.8% for 2022 and only 1.5% for 2023. The current product tanker order book is 4.9% of the fleet, one of the lowest on recorded, and it compares favorably with the 7% of the fleet, which is 20 years of age or older. We believe that the overall tanker order book and fleet are well-balanced as the IMO 2023 regulations will lead to some vessel retirements in the coming months. In concluding, the tanker sector review, tanker rates across the board continue at strong levels. The combination of low global inventories oil demand returning to free pandemic levels, new longer trading routes for both crude and product as well as the lowest order book in three decades should provide for healthy tanker earnings going forward. Please turn to Slide 26, focusing on the container industry since topping out at 5,110 at the beginning of the year, the Shanghai Container Freight Index, SCFI currently stands at just below 1,600, which is dramatically weakened on the back of uncertain macroeconomic conditions combined with consumer spending switching back to services over goods, which is led to decrease in container trade, easing port congestion and blank sailings. Tumbling rates have moderated recently, however, they remain above historical pre-COVID averages. As you will note in the graph on the lower right, the U.S. inventory sales ratio is off the recent low, but still well below the long-term average. The graph on the lower left shows moderating purchases of goods, which have slowed import throughput using port takeaway bottlenecks and port congestion, slowing U.S. AAU goods imports have not been helped by Chinaâs zero COVID policy, which has slowed some finished goods exports. Turn to the Slide 27. Net fleet growth is expected to be 3.7% for 2022 and 7.3% for 2023. The current order book stands at 28.8% against 9.9% of the fleet 20 years of age or older. About 71% of the order book is for 10,000 TEU vessels or larger. In concluding the container sector review, supply and demand fundamentals remain challenged due to economic uncertainty, a pullback in demand for consumables and easing supply chain bottlenecks. Please turn to Slide 29 for the review of the drybulk industry. After a strong Q2, the BDI experienced a count of seasonally soft Q3, averaging 1,655 ending below both the previous quarter and the same period last year. The BDI started Q3 at a high of 2,214 over a combination of the cooling Chinese economy and the weather related export disruptions, so the BDI decline to a low of 965 on the last day of August before strengthening in September due to increased exports from Australia, Brazil, and Guinea. Since then, the BDI is up approximately 45% to about 1,400 on the back of higher Capesize and Panamax earnings. Overall, supply and demand fundamentals remain intact as the microeconomic environment continues to evolve and uncertainties remain. For 2023, the historical low order book and tightened GHD admissions regulations remain a positive factor. Please turn to Slide 30, concerning coal, the Ukraine crisis continues to support increased global coal imports as European supply concerns persist. This has led European countries to reactivate coal fire power plants. European seaborne coal imports are expected to increase by 17% in 2022 and a further 5% in 2023. Additionally, the EU ban on Russian coal will lead to shifting trading patterns toward longer haul roots. Overall, seaborne coal trade is expected to be flat in 2022, but supported by an estimated 1.7% growth in ton miles. On the grain side, global seaborne grain trade is expected to decrease by 2.4% in 2022, followed by a healthy increase of 4.2% in 2023. Global grain trade continues to be driven by heightened food security issues driven initially by the pandemic. Currently, a severe drought in the Northern Hemisphere has reduced harvest and export estimates. The war in the Ukraine is negatively affecting grain exports from the Black Sea. These issues are moderated by new trading patterns resulting in an expected ton mile growth of 4.3% in 2023. With regard to iron ore, Chinaâs zero COVID policy and real estate concerns significantly impacted steel production and iron ore demand through September of 2022. Chinese seaborne imports decreased by 2% as steel production fell 3% through the same period. Expectations that COVID restrictions will be eased along with increases in infrastructure spending should bolster Chinese imports in 2023. Please turn to Slide 31. The current order book stands at 6.9% of the fleet, one of the lowest on the record. Net fleet growth for 2022 is expected at 2.7% and only 0.5% in 2023 as owners removed tonnage that will be uneconomic when the IMO 2023 CO2 rules come into force. Vessels over 20 years of age are about 8% of the total fleet, which compares favorably with the historically low order book. In concluding our drybulk sector review, continuing demand for natural resources, war in sanction related longer haul trades combined with a slowing pace of new building deliveries, all support freight rates going forward. This concludes our presentation. Iâd now like to turn the call with Angeliki for her final comments. Angeliki?
Angeliki Frangou: Thank you, Ted. This completes our presentation and will open the call to questions.
Operator: Thank you. Weâll take our first question from Omar Nokta with Jefferies.
Omar Nokta: Thank you. Hi there. Hey guys. Good morning. Good afternoon.
Angeliki Frangou: Good morning. Good morning.
Omar Nokta: Morning. Yes, just â weâve seen today your agreements to sell a handful of older drybulkers. Youâre bringing in two younger ones. Weâve also added two more LR2 newbuildings, given I guess your diversified platform. I guess, weâll be seeing this a lot more frequently going forward. Just generally, how do you see Navios now especially with the platform we have today? Got the strong earnings coming in from the tanker exposure, the solid cash flows from the containers, with secondhand prices coming under pressure here in the container market and then obviously some softness here in drybulk. Are there opportunities starting to develop where you could take advantage of this weakness or you maybe taking a bit more of a wait and see approach in looking at the secondhand market?
Angeliki Frangou: Actually, Omar, it is a very good question, but you have seen that we already have done an acquisition. We show the â we have a fleet of vessels on the both on the drybulk. We have taken a position which we saw that was quality vessels Japanese vessels, and we have them in the water waiting for the opportunity where with how China will develop, how the zero COVID restriction will be. And that will give us an opportunity on the sport market. Of course, we also have some newbuildings that provide us a more efficient vessel. On the container fleet grid, we see we have taken an approach of we saw earlier directions with we contracted our fleet and we sold at the appropriate time. So on the container sector, we are more â we have now positioned it in a situation where we enjoy cash flows. We have about $3 billion of contracted revenue, about $2 billion is from the containers, and we are enjoying this cash flow. On the tanker sector, as you very well said, we are in a position where we enjoying the spot market opportunity, while at the same time we did â we enter in a sector and we actually have built some very nice cash flows there. So it is totally opportunistic. We are â we see the opportunity and we move forward on disposing of assets and also on acquisition. On the drybulk and in our overall portfolio, one thing you will see very often, we will move from â we will be selling all the vessels, all the technology that they need CapEx and moving to younger fleet that it will inevitably be more better fuel consumption, better carbon footprint. So this is a trade that weâll be doing constantly and you will see us doing it. Thatâs why we saw all the aggressive and we substitute with our younger tank size vessels. They are about 50% less â they consume less fuel. They have about 50% better carbon emissions.
Omar Nokta: Thanks, Angeliki. And then maybe just on the point there, the efficiency saw that youâve now taken up your LR2 orders to six ships, and I just wanted to double check. Is it now the original four that were contracted maybe six months ago? Those are now chartered? And the latest two orders from today, those are under option to be contracted by the charter. Does that make sense? So four out of the six are officially chartered?
Angeliki Frangou: Yes, youâre absolutely right.
Omar Nokta: Okay. Thank you. Sorry. I just want to double check that. And then maybe just final question and itâs a â youâll probably be getting this or youâve gotten this in the past. But how do you think now about how are you using some of your excess free cash? Weâve seen, obviously youâve been very dynamic with the fleet, but with the Navios Holdings, drybulk fleet now fully delivered into NMM as of September, how do you think about the $100 million buyback you got in place? Do you use that a bit more significantly now? Or does the pullback in containers, even though youâre contracted, but does the pullback there? Does the softness in drybulk, does that give you a bit of pause in buying back share?
Angeliki Frangou: We adopted the buyback because we wanted to have the flexibility. Yes, of course, because of macro certainties that we saw and the balance sheet consideration â that balance sheet considerations, we have not put it in that yet, but itâs something that we are looking. This is about Navios is concentrating on total returns. This is a very important thing and the decision of how we return to our shareholders, it depends on the value. But we are â this is something that we adopted because we wanted the flexibility to use it.
Omar Nokta: Okay. Thanks, Angeliki. Iâll turn that over.
Angeliki Frangou: Thank you.
Operator: Thank you. Weâll take our next question from of Citi.
Unidentified Analyst: Hello. Good morning.
Angeliki Frangou: Good morning. Good morning.
Unidentified Analyst: So we were wondering if you could just touch on a little bit more about the softness in the container market right now. And where you really see that going? Not only in 4Q, but also if you could potentially shed some light on the first half of 2023. And also in addition to that, if you wouldnât mind touching on the points of hedging out that new build risk with the longer-term charters. If you could just talk a little bit more on those two points that would be very helpful.
Angeliki Frangou: I will start with the container market. This is a market that to be honest we saw the opportunity of â we saw that people moved from the COVID period where we are all about products and purchases of products to services. Everyone is traveling, everyone is going to restaurant. So it was inevitable that we have a softer market and thatâs why we contracted as we have hedged our position and we took possible ways of maximizing our returns. The short vessels, you saw the transaction of $220 million, which was completed in September and $220 million sale of â 2006 built container vessels. And also we contracted as new buildings. And one of the things that we did is we care â we have about some $3.2 billion contracted revenue. $2 billion is in the container sector, and of that is a very front loaded, about a $1 billion weâre going to get earn within the first two years. So itâs a very front loaded, because we see that now the companies are earning very well good money. So the balances are very good and we want to earn as soon as possible this amount. So we are very â we have a graded committee that we monitor all this, but we also have taken measures from the beginning, front-loaded and head the exposure.
Unidentified Analyst: Yes. Thank you very much for that. And then letâs see if you donât mind just giving a little bit more detail, on your puts and takes on the bulk market, on one hand, bulk demand remains it remains strong, but softening so taking into consideration the supply issues, itâs likely going to put pressure on what youâre able to move. How would you break down this market dynamic, heading into the winter and the first half of next year?
Angeliki Frangou: I will give you a very macro level. I let Ted speak to all this, but one thing Iâll say is that today you have call, which is basically depends on the energy crisis in Europe. Youâll have more demand is an advertise there. And the other big issue is the zero-COVID policy in China. At the end of the story, China is a 50% buyer of all commodities. The moment you have an easier COVID strategy, you will see that this will create an opportunity on the drybulk and made on the larger vessel will be always, I donât know, the larger commodities will be the driver of that market. And with that, I think Ted can give you a better details on this.
Ted Petrone: Sure. Thank you, Angeliki. Just taking step back on the macro, letâs just remember that the order book is under 7%. Net growth next year is going to be 0.5%. You may have some softness here into the winter, eventually China will fix the zero-COVID policy, whether now or in a couple of months. Thatâs why youâre seeing, the rates were have will come off a bit from the spring, but the actual S&P values have not, because thereâs a lot of confidence that the marketâs going to bounce back. They havenât come down as much as the rates, and the rates are actually starting to move up a bit, I would say. And I think youâll be seeing next year some really good grain ton mile increases of almost 5%. Coalâs going to be 3%. Youâre seeing longer hole roots for two out the three, or the three majors coal and grain. Iron ore will not have a ton mile, but it should come back next year as China infrastructure projects take a hold in the spring and the COVID-zero policy goes away. So, I think thereâs a lot of optimism, but you may have a soft touch in front of us right now.
Unidentified Analyst: Thank you very much. Thatâs very helpful. And then just finishing up, would you be able to break down the available days specifically within drybulk container and tanker for the quarter?
Angeliki Frangou: I will ask Eri to talk about this. One quick thing, Iâll, what Iâll give you on a macro level for 2023. You have a 6,000 breakeven per open day of which we have 40,000 days, 30,000 more or less on the drybulk and 10,000 on the tankers, which gives you a good outlook on our 2023 earning capacity. You want the Q3 or the Q4 quarter? Sorry, which quarter are you looking after?
Unidentified Analyst: We â so we were looking at the third quarter.
Angeliki Frangou: The third quarter. So roughly we have around 4,000 bank a day of which 1000 are the VLCC days, 901 days close to 2000 MR1 and MR2 days. And just below 200 chemical days. On the container side, we have 3,200 days. And this is the 10,000 day you will have a roughly to better. So itâs a bit more than 600 days, 2000 days in the 4,000 side, and then 600 days for 3450 and below. And then on the drybulk side, we have a roughly 6,000 days, I think.
Unidentified Analyst: Thank you very much. Thatâs very helpful.
Angeliki Frangou: I think we can take this and we can â that is around 2,000 days and then 3,000 Panamax days and the rest is .
Unidentified Analyst: Thank you very much.
Angeliki Frangou: And definitely you can â we can give you all your modeling questions so that you can reconcile your modeling.
Unidentified Analyst: Perfect. Thank you.
Angeliki Frangou: Thank you.
Operator: Thank you. I will now turn the floor back over to Angeliki for any additional or closing remarks.
Angeliki Frangou: Thank you. This completes Q3 results. Thank you very much.
Operator: This concludes todayâs earnings call. We appreciate your participation. You may now disconnect.
