Euroseas Ltd. (NASDAQ: ESEA, the “Company” or “Euroseas”), an owner
and operator of container carrier vessels and provider of seaborne
transportation for containerized cargoes, announced today its
results for the three and nine-month periods ended September 30,
2022.
Third Quarter 2022 Financial
Highlights:
- Total net revenues of $46.0
million. Net income and net income attributable to common
shareholders of $25.2 million or $3.50 earnings per share
basic and diluted. Adjusted net income attributable to common
shareholders1 for the period was $20.9 million or $2.90 per
share basic and diluted.
- Adjusted EBITDA1 was $26.2
million.
- An average of 18.0 vessels were
owned and operated during the third quarter of 2022 earning an
average time charter equivalent rate of $30,893 per day.
- Declared a quarterly dividend of
$0.50 per share for the third quarter of 2022 payable on or about
December 16, 2022 to shareholders of record on December 9, 2022 as
part of the Company’s common stock dividend plan.
- As of November 14, 2022 we had
repurchased 138,936 of our common stock in the open market for a
total of about $3.0 million, under our share repurchase plan of up
to $20 million announced in May 2022.
Nine Months 2022 Financial
Highlights:
- Total net revenues of $139.8
million. Net income and net income attributable to common
shareholders of $85.9 million or $11.91 and $11.86 earnings
per share basic and diluted, respectively. Adjusted net income
attributable to common shareholders1 for the period was $77.3
million or $10.71 and $10.67 per share basic and diluted,
respectively.
- Adjusted EBITDA1 was $91.5
million.
- An average of 16.8 vessels were
owned and operated during the first nine months of 2022 earning an
average time charter equivalent rate of $32,814 per day.
Aristides Pittas, Chairman and CEO of
Euroseas commented:“Containership rates reached all-time
highs for most vessel segments during March of 2022, stayed near
those levels through August, but since the beginning of September
2022 have started declining, dropping almost 80% until the
beginning of November. Still, present charter rates are, for the
segments we operate, more than double the average rates during
2019, the year before the pandemic. We believe that the precipitous
decline in rates was the result of lower shipping demand due to the
economic slowdown across the globe combined with the reversal of
port delays and other related inefficiencies that had crept in the
transportation system which increased effective vessel supply.
“Looking forward, one of the challenges in the
market is the absorption of the containership orderbook standing
now at nearly 29% of the existing fleet. This orderbook will start
being delivered, mainly, from the second half of 2023 and onwards
and is heavily concentrated on the larger containership segments
and much less so on the feeder size segments we operate. The feeder
fleet, in addition, has an age profile that is tilted towards older
vessels and as a result it is expected to be affected the most, as
compared to larger ships, by the greenhouse gas regulations being
introduced in 2023, thus, further mitigating the supply growth for
the segment.
“In any event, the explosion of charter rates
from late 2020 to August 2022 has allowed us to charter all our
vessels at very profitable rates for periods extending up to three
or more years creating a backlog of contracted revenues in excess
of $450 million. On the strength of this backlog, we embarked onto
a newbuilding program and ordered nine modern ecologically friendly
(“eco”) feeder vessels, two of which we have already contracted for
a minimum period of three years. These orders will assist our
transitioning into one of the most environmentally friendly feeder
operators. We continuously evaluate investment opportunities that
might emerge as the market conditions change but we only focus on
potential acquisitions which will not require above average future
charter rates to be accretive.
“Our increased earnings and liquidity have
allowed us to reward our shareholders by establishing a quarterly
dividend of $0.50 per share. In addition, we have also established
a share repurchase program as we believe that repurchasing our
stock which is trading significantly below its charter adjusted net
asset value represents not only a great investment opportunity for
us but also enhances the value of our company for the benefit of
all of our shareholders.”
Tasos Aslidis, Chief Financial Officer
of Euroseas commented: “The results of the third quarter
of 2022 reflect the significantly higher time charter rates our
vessels earned in the third quarter of 2022, compared to the
corresponding period of 2021. The Company operated an average of
18.0 vessels, versus 14.0 vessels during the same period last year.
Our net revenues increased to $46.0 million in the third quarter of
2022 compared to $23.0 million during the same period of last year.
On a per-vessel-per-day basis, our vessels earned a 58.6% higher
average charter rate in the third quarter of 2022 as compared to
the same period of 2021. At the same time, total daily vessel
operating expenses, including management fees, general and
administrative expenses but excluding drydocking costs, during the
third quarter of 2022, averaged $7,180 per vessel per day, as
compared to $7,321 for the same period of last year and $7,406 per
vessel per day for the first nine months of 2022 as compared to
$7,033 per vessel per day for the same period of 2021. The
increased operating expenses for the first nine months of 2022 are
mainly attributable to difficulties in crew rotation due to
COVID-19 related restrictions, the higher prices in the supply of
lubricants and the increase in hull and machinery insurance
premiums.
Adjusted EBITDA during the third quarter of 2022
was $26.2 million versus $10.6 million in the third quarter of last
year, and it reached $91.5 million versus $26.6 million for the
respective nine-month periods of 2022 and 2021.
As of September 30, 2022, our outstanding debt
(excluding the unamortized loan fees) was $115.7 million versus
unrestricted and restricted cash of $33.0 million. As of the same
date, our scheduled debt repayments over the next 12 months
amounted to about $40.1 million (excluding the unamortized loan
fees).”
Third Quarter 2022 Results:For
the third quarter of 2022, the Company reported total net revenues
of $46.0 million representing a 99.5% increase over total net
revenues of $23.0 million during the third quarter of 2021 which
was mainly the result of the higher average charter rates our
vessels earned in the third quarter of 2022 compared to the
corresponding period of 2021. The Company reported a net income and
net income attributable to common shareholders for the period of
$25.2 million, as compared to a net income and a net income
attributable to common shareholders of $8.5 million, for the third
quarter of 2021. On average, 18.0 vessels were owned and operated
during the third quarter of 2022 earning an average time charter
equivalent rate of $30,893 per day compared to 14.0 vessels in the
same period of 2021 earning on average $19,482 per day.
Vessel operating expenses for the third quarter
of 2022 amounted to $9.7 million as compared to $7.6 million for
the same period of 2021. The increased amount is mainly due to the
higher number of vessels owned and operated in the three months of
2022 compared to the same period of 2021.
Depreciation expense for the third quarter of
2022 amounted to $5.3 million compared to $1.6 million for the same
period of 2021 due to the increased number of vessels in the
Company’s fleet and the fact that the new vessels acquired in the
fourth quarter of 2021 and second quarter of 2022 have a higher
average daily depreciation charge as a result of their higher
acquisition price compared to the remaining vessels.
Related party management fees for the three
months ended September 30, 2022 were $1.3 million compared to $1.1
million for the same period of 2021 due to the higher number of
vessels in our fleet. General and administrative expenses amounted
to $1.0 million for the third quarter of 2022, as compared to $0.7
million for the third quarter of 2021. This increase is mainly
attributable to the increased cost of our stock incentive plan.
In the third quarter of 2022 two of our vessels
completed their special survey with drydock. The above mentioned
drydocking expenses amounted to $3.7 million. In the corresponding
period of 2021, the total cost was $2.7 million, incurred in
connection with the special survey with drydock of one vessel and
drydocking costs of another vessel that completed her special
survey in the fourth quarter of 2021.
Interest and other financing costs for the third
quarter of 2022 amounted to $1.3 million compared to $0.6 million
for the same period of 2021. This increase is due to the increased
amount of debt and increase in the weighted average LIBOR / SOFR
rate in the current period compared to the same period of 2021.
For the three months ended September 30, 2022
the Company recognized a $1.8 million gain on its interest rate
swap contracts, comprising $1.8 million unrealized gain from the
mark-to-market valuation of our outstanding interest rate swaps and
a marginal realized gain. For the three months ended June 30, 2021
the Company recognized a $0.03 million gain on its interest rate
swap contract, comprising a $0.08 million unrealized gain and a
$0,05 million realized loss.
Adjusted EBITDA1 for the third quarter of 2022
increased to $26.2 million compared to $10.6 million achieved
during the third quarter of 2021, primarily due to the increase in
revenues.
Basic and diluted earnings per share
attributable to common shareholders for the third quarter of 2022
were $3.50, calculated on 7,199,448 and 7,211,204 basic and diluted
weighted average number of shares outstanding, respectively,
compared to basic and diluted earnings per share of $1.18 and $1.17
for the third quarter of 2021, calculated on 7,198,991 and
7,241,740 basic and diluted weighted average number of shares
outstanding, respectively.
Excluding the effect on the income attributable
to common shareholders for the quarter of the unrealized gain on
derivatives, the amortization of fair value of below market time
charters acquired and the vessel depreciation on the portion of the
consideration of vessels acquired with attached time charters
allocated to below market time charters, the adjusted earnings
attributable to common shareholders for the quarter ended September
30, 2022 would have been $2.90 per share basic and diluted,
compared to adjusted earnings of $1.16 per share basic and diluted
for the quarter ended September 30, 2021, after excluding
unrealized gain on derivative. Usually, security analysts do not
include the above items in their published estimates of earnings
per share.
Nine Months 2022 Results:For
the first nine months of 2022, the Company reported total net
revenues of $139.8 million representing a 151.3% increase over
total net revenues of $55.6 million during the first nine months of
2021, as a result of the higher average charter rates our vessels
earned and the increased number of vessels owned and operated in
the first nine months of 2022 compared to the corresponding period
of 2021. The Company reported a net income and net income
attributable to common shareholders for the period of $85.9
million, as compared to a net income of $20.2 million and a net
income attributable to common shareholders of $19.6 million for the
first nine months of 2021. On average, 16.8 vessels were owned and
operated during the first nine months of 2022 earning an average
time charter equivalent rate of $32,814 per day compared to 14.0
vessels in the same period of 2021 earning on average $15,478 per
day.
Vessel operating expenses for the nine-month
period of 2022 amounted to $27.5 million as compared to $21.4
million for the same period of 2021. The increased amount is mainly
due to the higher average number of vessels owned and operated in
the nine months of 2022 compared to the same period of 2021, in
addition to the increased crewing costs for our vessels, resulting
from difficulties in crew rotation due to COVID-19 related
restrictions, the higher prices in the supply of lubricants and the
increase in hull and machinery insurance premiums, compared to the
same period of 2021.
Depreciation expense for the first nine months
of 2022 was $13.2 million compared to $4.8 million during the same
period of 2021, due to the increased number of vessels in the
Company’s fleet and the fact that the new vessels acquired in the
fourth quarter of 2021 and the second quarter of 2022 have a higher
average daily depreciation charge as a result of their higher
acquisition price compared to the remaining vessels.
Related party management fees for the nine
months ended September 30, 2022 were $3.6 million compared to $3.2
million for the same period of 2021 as a result of the higher
number of vessels in our fleet, partly offset by the favorable
movement of the euro/dollar exchange rate.
General and administrative expenses amounted to
$2.9 million for the nine months period ended September 30, 2022,
as compared to $2.2 million for the same period of 2021. This
increase is mainly attributable to the increased cost of our stock
incentive plan.
Drydocking expenses amounted to $6.2 million for
the nine months of 2022 (three vessels completed their intermediate
survey in water, three vessels passed their special survey with
drydock and another one started its drydock in September 2022 and
completed her special survey in the fourth quarter of 2022),
compared to $2.9 million for the same period of 2021 (two vessels
passed their special survey with drydock).
Finally, during the nine month period of 2022
and 2021, we had other operating expenses of $0.4 million and other
operating income of $1.3 million, respectively. The operating
expense for the nine month period of 2022 relates to the settlement
of accounts with charterers, while the operating income for the
nine months of 2021 mainly consisted of the proceeds from a claim
award related to the sale of one of our vessels, M/V “Manolis P”,
for scrap in March 2020 that initially failed to be completed due
to COVID-related reasons with the vessel finally being sold to
another buyer within the second quarter of 2020.
Interest and other financing costs for the first
nine months of 2022 amounted to $3.5 million compared to $2.0
million for the same period of 2021. This increase is due to the
increased amount of debt and the increased LIBOR / SOFR rates of
our bank loans in the current period compared to the same period of
2021. For the nine months ended September 30, 2022 the Company
recognized a $4.1 million gain on its interest rate swap contracts.
For the nine months ended September 30, 2021 the Company recognized
a $0.4 million gain on its interest rate swap contract.
Adjusted EBITDA1 for the first nine months of
2022 was $91.5 million compared to $26.6 million for the first nine
months of 2021.
Basic and diluted earnings per share
attributable to common shareholders for the first nine months of
2022 were $11.91 and $11.86, calculated on 7,215,189 and 7,240,848
basic and diluted weighted average number of shares outstanding,
respectively, compared to basic and diluted earnings per share of
$2.84 and $2.82 for the first nine months of 2021, calculated on
6,898,195 and 6,942,614 basic and diluted weighted average number
of shares outstanding, respectively.
Excluding the effect on the income attributable
to common shareholders for the first nine months of 2022 of the
unrealized gain on derivatives, the amortization of fair value of
below market time charters acquired and the vessel depreciation on
the portion of the consideration of vessels acquired with attached
time charters allocated to below market time charters, the adjusted
earnings per share attributable to common shareholders for the
nine-month period ended September 30, 2022 would have been $10.71
and $10.67 basic and diluted, respectively, compared to adjusted
earnings of $2.76 and $2.74 per share basic and diluted,
respectively, for the same period in 2021, after excluding
unrealized gain on derivative and net loss on sale of vessel. As
mentioned above, usually, security analysts do not include the
above items in their published estimates of earnings per
share.Fleet Profile:
The Euroseas Ltd. fleet profile is as follows
Name |
Type |
Dwt |
TEU |
YearBuilt |
Employment(*) |
TCE Rate ($/day) |
Container Carriers |
|
|
|
|
|
|
MARCOS V(*) |
Intermediate |
72,968 |
6,350 |
2005 |
TC until Dec-24 plus 12 months option |
$42,200Option $15,000 |
AKINADA BRIDGE |
Intermediate |
71,366 |
5,610 |
2001 |
Undergoing dry dock/repairs(**) |
- |
SYNERGY BUSAN(*) |
Intermediate |
50,726 |
4,253 |
2009 |
TC until Aug-24 |
$25,000 |
SYNERGY ANTWERP(+) |
Intermediate |
50,726 |
4,253 |
2008 |
TC until Dec-23 |
$18,000 |
SYNERGY OAKLAND(*) |
Intermediate |
50,787 |
4,253 |
2009 |
TC until May-26 |
$42,000 |
SYNERGY KEELUNG(+) |
Intermediate |
50,969 |
4,253 |
2009 |
TC until Feb-23 |
$14,500 |
EMMANUEL P(*) |
Intermediate |
50,796 |
4,250 |
2005 |
TC until Mar-25 |
$19,000 |
RENA P(*) |
Intermediate |
50,796 |
4,250 |
2007 |
TC until Apr-24 then until Feb-25 |
$20,250then CONTEX(***) basis ($13,000 floor and $21,000
ceiling) |
EM KEA(*) |
Feeder |
42,165 |
3,100 |
2007 |
TC until May-23 |
$22,000 |
EM ASTORIA (*) |
Feeder |
35,600 |
2,788 |
2004 |
TC until Feb-23then until Feb-24then until Feb-25 |
$65,000$50,000$20,000 |
EVRIDIKI G(*) |
Feeder |
34,677 |
2,556 |
2001 |
TC until Feb-25 |
$40,000 |
EM CORFU(*) |
Feeder |
34,654 |
2,556 |
2001 |
TC until Feb-25 |
$40,000 |
DIAMANTIS P(*) |
Feeder |
30,360 |
2,008 |
1998 |
TC until Oct-24 |
$27,000 |
EM SPETSES(*) |
Feeder |
23,224 |
1,740 |
2007 |
TC until Aug-24 |
$29,500 |
JONATHAN P(*) |
Feeder |
23,357 |
1,740 |
2006 |
TC until Sep-24 |
$26,662(****) |
EM HYDRA(*) |
Feeder |
23,351 |
1,740 |
2005 |
TC until Apr-23 |
$20,000 |
JOANNA(*) |
Feeder |
22,301 |
1,732 |
1999 |
TC until Dec-22 |
$16,800 |
AEGEAN EXPRESS(*) |
Feeder |
18,581 |
1,439 |
1997 |
TC until Apr-25 |
$41,000 |
Total Container Carriers on the Water |
18 |
737,404 |
58,871 |
|
|
|
Vessels under construction |
Type |
Dwt |
TEU |
To bedelivered |
Employment |
TCE Rate(4/day) |
GREGOS (*) (H4201) |
Feeder |
37,237 |
2,800 |
Q1 2023 |
TC until Mar-26 |
$48,000 |
TERATAKI (*) (H4202) |
Feeder |
37,237 |
2,800 |
Q2 2023 |
TC until Jun-26 |
$48,000 |
TENDER SOUL (H4236) |
Feeder |
37,237 |
2,800 |
Q4 2023 |
|
|
LEONIDAS Z (H4237) |
Feeder |
37,237 |
2,800 |
Q1 2024 |
|
|
MONICA (H4248) |
Feeder |
22,262 |
1,800 |
Q2 2024 |
|
|
STEPHANIA K (H4249) |
Feeder |
22,262 |
1,800 |
Q2 2024 |
|
|
PEPI STAR (H4250) |
Feeder |
22,262 |
1,800 |
Q2 2024 |
|
|
DEAR PANEL (H4251) |
Feeder |
37,237 |
2,800 |
Q4 2024 |
|
|
SYMEON P (H4252) |
Feeder |
37,237 |
2,800 |
Q4 2024 |
|
|
Total under construction |
9 |
290,208 |
22,200 |
|
|
|
Notes:(*) TC denotes time charter. Charter duration indicates
the earliest redelivery date; all dates listed are the earliest
redelivery dates under each TC unless the contract rate is lower
than the current market rate in which cases the latest redelivery
date is assumed; vessels with the latest redelivery date shown are
marked by (+). (**) Repairs refer to tailshaft system damage found
while the ship was in drydock. Hull & Machinery and Loss of
Hire underwriters have been notified and the managers are presently
working to evaluate necessary repair options.
(***) The CONTEX (Container Ship Time Charter
Assessment Index) has been published by the Hamburg and Bremen
Shipbrokers’ Association (VHBS) since October 2007. The CONTEX is a
company-independent index of time charter rates for container
ships. It is based on assessments of the current day charter rates
of six selected container ship types, which are representative of
their size categories: Type 1,100 TEU and Type 1,700 TEU with a
charter period of one year, and the Types 2,500, 2,700, 3,500 and
4,250 TEU all with a charter period of two years.(****) Rate is net
of commissions (which are typically 5-6.25%)
Summary Fleet Data:
|
ThreeMonths,Ended September 30,
2021 |
|
ThreeMonths,Ended September30,
2022 |
|
NineMonths,Ended September30,
2021 |
|
NineMonths,Ended
September30, 2022 |
|
FLEET DATA |
|
|
|
|
Average number of vessels (1) |
14.0 |
|
18.0 |
|
14.0 |
|
16.8 |
|
Calendar days for fleet (2) |
1,288.0 |
|
1,656.0 |
|
3,822.0 |
|
4,594.0 |
|
Scheduled off-hire days incl. laid-up (3) |
57.3 |
|
114.4 |
|
57.3 |
|
173.0 |
|
Available days for fleet (4) = (2) - (3) |
1,230.7 |
|
1,541.6 |
|
3,764.7 |
|
4,421.0 |
|
Commercial off-hire days (5) |
- |
|
- |
|
- |
|
5.3 |
|
Operational off-hire days (6) |
14.4 |
|
7.4 |
|
56.7 |
|
18.4 |
|
Voyage days for fleet (7) = (4) - (5) - (6) |
1,216.3 |
|
1,534.2 |
|
3,708.0 |
|
4,397.3 |
|
Fleet utilization (8) = (7) / (4) |
98.8 |
% |
99.5 |
% |
98.5 |
% |
99.5 |
% |
Fleet utilization, commercial (9) = ((4) - (5)) / (4) |
100.0 |
% |
100.0 |
% |
100.0 |
% |
99.9 |
% |
Fleet utilization, operational (10) = ((4) - (6)) / (4) |
98.8 |
% |
99.5 |
% |
98.5 |
% |
99.6 |
% |
|
|
|
|
|
AVERAGE DAILY RESULTS (usd/day) |
|
|
|
|
Time charter equivalent rate (11) |
19,482 |
|
30,893 |
|
15,478 |
|
32,814 |
|
Vessel operating expenses excl. drydocking expenses (12) |
6,741 |
|
6,601 |
|
6,445 |
|
6,771 |
|
General and administrative expenses (13) |
580 |
|
579 |
|
588 |
|
635 |
|
Total vessel operating expenses (14) |
7,321 |
|
7,180 |
|
7,033 |
|
7,406 |
|
Drydocking expenses (15) |
2,073 |
|
2,223 |
|
758 |
|
1,346 |
|
(1) Average number of vessels is the number of
vessels that constituted the Company’s fleet for the relevant
period, as measured by the sum of the number of calendar days each
vessel was a part of the Company’s fleet during the period divided
by the number of calendar days in that period.
(2) Calendar days. We define calendar days as
the total number of days in a period during which each vessel in
our fleet was in our possession including off-hire days associated
with major repairs, drydockings or special or intermediate surveys
or days of vessels in lay-up. Calendar days are an indicator of the
size of our fleet over a period and affect both the amount of
revenues and the amount of expenses that we record during that
period.
(3) The scheduled off-hire days including
vessels laid-up are days associated with scheduled repairs,
drydockings or special or intermediate surveys or days of vessels
in lay-up.
(4) Available days. We define available days as
the Calendar days in a period net of scheduled off-hire days
including laid up. We use available days to measure the number of
days in a period during which vessels were available to generate
revenues.
(5) Commercial off-hire days. We define
commercial off-hire days as days a vessel is idle without
employment.
(6) Operational off-hire days. We define
operational off-hire days as days associated with unscheduled
repairs or other off-hire time related to the operation of the
vessels.
(7) Voyage days. We define voyage days as the
total number of days in a period during which each vessel in our
fleet was in our possession net of commercial and operational
off-hire days. We use voyage days to measure the number of days in
a period during which vessels actually generate revenues or are
sailing for repositioning purposes.
(8) Fleet utilization. We calculate fleet
utilization by dividing the number of our voyage days during a
period by the number of our available days during that period. We
use fleet utilization to measure a company’s efficiency in finding
suitable employment for its vessels and minimizing the amount of
days that its vessels are off-hire for reasons such as unscheduled
repairs or days waiting to find employment.
(9) Fleet utilization, commercial. We calculate
commercial fleet utilization by dividing our available days net of
commercial off-hire days during a period by our available days
during that period.
(10) Fleet utilization, operational. We
calculate operational fleet utilization by dividing our available
days net of operational off-hire days during a period by our
available days during that period.
(11) Time charter equivalent rate, or TCE, is a
measure of the average daily revenue performance of our vessels.
Our method of calculating TCE is determined by dividing time
charter revenue and voyage charter revenue net of voyage expenses
by voyage days for the relevant time period. Voyage expenses
primarily consist of port, canal and fuel costs that are unique to
a particular voyage, which would otherwise be paid by the charterer
under a time charter contract, or are related to repositioning the
vessel for the next charter. TCE, which is a non-GAAP measure,
provides additional meaningful information in conjunction with
voyage revenues, the most directly comparable GAAP measure, because
it assists our management in making decisions regarding the
deployment and use of our vessels and because we believe that it
provides useful information to investors regarding our financial
performance. TCE is a standard shipping industry performance
measure used primarily to compare period-to-period changes in a
shipping company's performance despite changes in the mix of
charter types (i.e., spot voyage charters, time charters and
bareboat charters) under which the vessels may be employed between
the periods. Our definition of TCE may not be comparable to that
used by other companies in the shipping industry.
(12) We calculate daily vessel operating
expenses, which includes crew costs, provisions, deck and engine
stores, lubricating oil, insurance, maintenance and repairs and
related party management fees by dividing vessel operating expenses
and related party management fees by fleet calendar days for the
relevant time period. Drydocking expenses are reported
separately.
(13) Daily general and administrative expense is
calculated by us by dividing general and administrative expenses by
fleet calendar days for the relevant time period.
(14) Total vessel operating expenses, or TVOE,
is a measure of our total expenses associated with operating our
vessels. We compute TVOE as the sum of vessel operating expenses,
related party management fees and general and administrative
expenses; drydocking expenses are not included. Daily TVOE is
calculated by dividing TVOE by fleet calendar days for the relevant
time period.
(15) Daily drydocking expenses is calculated by
us by dividing drydocking expenses by the fleet calendar days for
the relevant period. Drydocking expenses include expenses during
drydockings that would have been capitalized and amortized under
the deferral method. Drydocking expenses could vary substantially
from period to period depending on how many vessels underwent
drydocking during the period. The Company expenses drydocking
expenses as incurred.
Conference Call and
Webcast:Today, Monday, November 14, 2022 at 9:30 a.m.
Eastern Standard Time, the Company's management will host a
conference call to discuss the results.
Conference Call details:
Participants should dial into the call 10 minutes before the
scheduled time using the following numbers: 877 405 1226 (US
Toll-Free Dial In) or +1 201 689 7823 (US and Standard
International Dial In). Please quote “Euroseas” to the operator
and/or conference ID 13734397. Click here for additional
participant International Toll-Free access numbers.
Alternatively, participants can register for the
call using the call me option for a faster connection to join the
conference call. You can enter your phone number and let the system
call you right away. Click here for the call me option.
Audio webcast - Slides
Presentation:There will be a live and then archived audio
webcast of the conference call, via the internet through the
Euroseas website (www.euroseas.gr). Participants to the live
webcast should register on the website approximately 10 minutes
prior to the start of the webcast. A slide presentation on the
Third Quarter 2022 results in PDF format will also be available 10
minutes prior to the conference call and webcast accessible on the
company's website (www.euroseas.gr) on the webcast page.
Participants to the webcast can download the PDF presentation.
Euroseas Ltd. Unaudited
Consolidated Condensed Statements of
Operations(All amounts expressed in U.S. Dollars –
except number of shares)
|
Three MonthsEnded September
30, |
Three MonthsEnded September
30, |
Nine MonthsEnded September
30, |
Nine MonthsEnded September
30, |
|
|
2021 |
2022 |
2021 |
2022 |
|
|
|
|
|
Revenues |
|
|
|
|
Time charter revenue |
24,006,648 |
|
47,736,642 |
|
57,980,391 |
|
145,185,170 |
|
Commissions |
(966,598 |
) |
(1,781,458 |
) |
(2,340,579 |
) |
(5,376,839 |
) |
Net revenues |
23,040,050 |
|
45,955,184 |
|
55,639,812 |
|
139,808,331 |
|
|
|
|
|
|
Operating expenses / (income) |
|
|
|
|
Voyage expenses |
310,724 |
|
340,844 |
|
588,706 |
|
892,130 |
|
Vessel operating expenses |
7,629,855 |
|
9,652,894 |
|
21,431,974 |
|
27,483,359 |
|
Drydocking expenses |
2,669,597 |
|
3,681,923 |
|
2,898,981 |
|
6,184,667 |
|
Vessel depreciation |
1,596,543 |
|
5,347,010 |
|
4,789,629 |
|
13,174,664 |
|
Related party management fees |
1,052,884 |
|
1,278,851 |
|
3,201,105 |
|
3,624,795 |
|
Net loss on sale of vessel |
- |
|
- |
|
9,417 |
|
- |
|
General and administrative expenses |
744,624 |
|
958,078 |
|
2,247,097 |
|
2,918,559 |
|
Other operating (income) / expenses |
- |
|
- |
|
(1,298,318 |
) |
350,000 |
|
Total operating expenses, net |
14,004,227 |
|
21,259,600 |
|
33,868,591 |
|
54,628,174 |
|
|
|
|
|
|
Operating income |
9,035,823 |
|
24,695,584 |
|
21,771,221 |
|
85,180,157 |
|
|
|
|
|
|
Other (expenses) / income |
|
|
|
|
Interest and other financing costs |
(621,410 |
) |
(1,329,511 |
) |
(2,003,077 |
) |
(3,476,113 |
) |
Gain on derivatives, net |
33,163 |
|
1,809,263 |
|
421,308 |
|
4,119,167 |
|
Foreign exchange gain |
15,425 |
|
30,107 |
|
7,921 |
|
67,421 |
|
Interest income |
1,015 |
|
17,717 |
|
2,969 |
|
18,664 |
|
Other (expenses) / income, net |
(571,807 |
) |
527,576 |
|
(1,570,879 |
) |
729,139 |
|
Net income |
8,464,016 |
|
25,223,160 |
|
20,200,342 |
|
85,909,296 |
|
Dividend Series B Preferred shares |
- |
|
- |
|
(255,324 |
) |
- |
|
Preferred deemed dividend |
- |
|
- |
|
(345,423 |
) |
- |
|
Net income attributable to common
shareholders |
8,464,016 |
|
25,223,160 |
|
19,599,595 |
|
85,909,296 |
|
Weighted average number of shares outstanding, basic |
7,198,991 |
|
7,199,448 |
|
6,898,195 |
|
7,215,189 |
|
Earnings per share, basic |
1.18 |
|
3.50 |
|
2.84 |
|
11.91 |
|
Weighted average number of shares outstanding, diluted |
7,241,740 |
|
7,211,204 |
|
6,942,614 |
|
7,240,848 |
|
Earnings per share, diluted |
1.17 |
|
3.50 |
|
2.82 |
|
11.86 |
|
Euroseas Ltd.Unaudited
Consolidated Condensed Balance Sheets(All amounts
expressed in U.S. Dollars – except number of shares)
|
December 31, 2021 |
September 30,
2022 |
|
|
|
ASSETS |
|
|
Current
Assets: |
|
|
Cash and cash equivalents |
26,530,944 |
27,395,261 |
Trade accounts receivable,
net |
1,274,729 |
584,298 |
Other receivables |
1,722,885 |
745,281 |
Inventories |
2,274,454 |
2,402,628 |
Restricted cash |
167,285 |
184,681 |
Prepaid expenses |
382,729 |
636,054 |
Derivatives |
540,753 |
1,982,183 |
Total current assets |
32,893,779 |
33,930,386 |
Fixed
assets: |
|
|
Vessels, net |
176,111,486 |
230,078,227 |
Long-term
assets: |
|
|
Advances for vessels under
construction |
7,615,958 |
50,499,455 |
Derivatives |
- |
1,788,395 |
Restricted cash |
4,800,000 |
5,400,000 |
Total assets |
221,421,223 |
321,696,463 |
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
Current
liabilities: |
|
|
Long-term bank loans, current
portion |
29,034,049 |
39,773,409 |
Trade accounts payable |
2,804,194 |
4,565,517 |
Accrued expenses |
1,702,925 |
3,497,063 |
Accrued dividends |
- |
43,150 |
Deferred revenue |
3,293,986 |
6,463,028 |
Due to related company |
309,970 |
201,485 |
Total current
liabilities |
37,145,124 |
54,543,652 |
|
|
|
Long-term
liabilities: |
|
|
Long-term bank loans, net of
current portion |
89,004,951 |
75,091,196 |
Derivatives |
952,666 |
- |
Fair value of below market
time charters acquired |
17,461,586 |
38,815,342 |
Total long-term
liabilities |
107,419,203 |
113,906,538 |
Total
liabilities |
144,564,327 |
168,450,190 |
|
|
|
Shareholders’
equity: |
|
|
Common stock (par value $0.03, 200,000,000 shares authorized,
7,294,541 and 7,162,200, issued and outstanding) |
218,836 |
214,866 |
Additional paid-in
capital |
264,609,233 |
262,356,737 |
Accumulated deficit |
(187,971,173) |
(109,325,330) |
Total shareholders’ equity |
76,856,896 |
153,246,273 |
Total liabilities and shareholders’ equity |
221,421,223 |
321,696,463 |
Euroseas Ltd. Unaudited
Consolidated Condensed Statements of Cash Flows
(All amounts expressed in U.S. Dollars)
|
Nine MonthsEndedSeptember 30, |
|
Nine MonthsEndedSeptember 30, |
|
2021 |
|
2022 |
|
|
|
|
|
|
Cash flows from operating
activities: |
|
Net
income |
20,200,342 |
|
85,909,296 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
Vessel depreciation |
4,789,629 |
|
13,174,664 |
|
Amortization of deferred
charges |
150,008 |
|
250,565 |
|
Share-based compensation |
73,676 |
|
650,829 |
|
Net loss on sale of vessel |
9,417 |
|
- |
|
Amortization of fair value of
below market time charters acquired |
- |
|
(6,945,691 |
) |
Unrealized gain on
derivatives |
(552,632 |
) |
(4,182,491 |
) |
Changes in operating assets and
liabilities |
2,052,628 |
|
6,490,535 |
|
Net cash provided by
operating activities |
26,723,068 |
|
95,347,707 |
|
|
|
|
Cash flows from investing
activities: |
|
|
Cash paid for vessels under
construction |
(7,615,294 |
) |
(42,608,461 |
) |
Cash paid for vessel acquisitions
and capitalized expenses |
(2,550,714 |
) |
(36,504,636 |
) |
Cash paid for vessel
improvements |
(621,704 |
) |
(1,172,500 |
) |
Net cash used in
investing activities |
(10,787,712 |
) |
(80,285,597 |
) |
|
|
|
Cash flows from financing
activities: |
|
|
Proceeds from issuance of common
stock, net of commissions paid |
743,553 |
|
- |
|
Redemption of Series B preferred
shares |
(2,000,000 |
) |
- |
|
Cash paid for share
repurchase |
|
(2,907,090 |
) |
Preferred dividends paid |
(424,000 |
) |
- |
|
Dividends paid |
- |
|
(7,220,509 |
) |
Loan arrangement fees paid |
(225,000 |
) |
(115,500 |
) |
Offering expenses paid |
(69,900 |
) |
(27,838 |
) |
Proceeds from long- term bank
loans |
10,000,000 |
|
19,250,000 |
|
Repayment of long-term bank
loans |
(17,556,380 |
) |
(22,559,460 |
) |
Repayment of related party
loan |
(2,500,000 |
) |
- |
|
Net cash used in
financing activities |
(12,031,727 |
) |
(13,580,397 |
) |
|
|
|
Net increase in cash, cash
equivalents and restricted cash |
3,903,629 |
|
1,481,713 |
|
Cash, cash equivalents and
restricted cash at beginning of period |
6,338,177 |
|
31,498,229 |
|
Cash, cash equivalents
and restricted cash at end of period |
10,241,806 |
|
32,979,942 |
|
Cash
breakdown |
|
|
|
|
Cash and cash equivalents |
5,880,947 |
|
27,395,261 |
|
Restricted cash, current |
160,859 |
|
184,681 |
|
Restricted cash, long term |
4,200,000 |
|
5,400,000 |
|
Total cash, cash
equivalents and restricted cash shown in the statement of cash
flows |
10,241,806 |
|
32,979,942 |
|
|
|
|
|
|
Euroseas
Ltd.Reconciliation of Adjusted EBITDA to Net
income(All amounts expressed in U.S.
Dollars)
|
Three MonthsEndedSeptember
30,2021 |
Three MonthsEndedSeptember
30,2022 |
Nine MonthsEndedSeptember
30,2021 |
Nine MonthsEndedSeptember
30,2022 |
Net income |
8,464,016 |
|
25,223,160 |
|
20,200,342 |
|
85,909,296 |
|
Interest and other financing costs, net (incl. interest
income) |
620,395 |
|
1,311,794 |
|
2,000,108 |
|
3,457,449 |
|
Vessel depreciation |
1,596,543 |
|
5,347,010 |
|
4,789,629 |
|
13,174,664 |
|
Net loss on sale of vessel |
- |
|
- |
|
9,417 |
|
- |
|
Amortization of fair value of below market time charters
acquired |
- |
|
(3,881,904 |
) |
- |
|
(6,945,691 |
) |
Gain on interest rate swap derivatives, net |
(33,163 |
) |
(1,809,263 |
) |
(421,308 |
) |
(4,119,167 |
) |
Adjusted EBITDA |
10,647,791 |
|
26,190,797 |
|
26,578,188 |
|
91,476,551 |
|
Adjusted EBITDA
Reconciliation:Euroseas Ltd. considers Adjusted EBITDA to
represent net income before interest and other financing costs,
income taxes, depreciation, gain on interest rate swaps, net loss
on sale of vessel and amortization of fair value of below market
time charters acquired. Adjusted EBITDA does not represent and
should not be considered as an alternative to net income, as
determined by United States generally accepted accounting
principles, or GAAP. Adjusted EBITDA is included herein because it
is a basis upon which the Company assesses its financial
performance because the Company believes that this non-GAAP
financial measure assists our management and investors by
increasing the comparability of our performance from period to
period by excluding the potentially disparate effects between
periods of, interest and other financing costs, net loss on sale of
vessel, amortization of fair value of below market time charters
acquired gain on interest rate swaps and depreciation. The
Company's definition of Adjusted EBITDA may not be the same as that
used by other companies in the shipping or other
industries.
Euroseas Ltd.
Reconciliation of Adjusted net income to Net
income(All amounts expressed in U.S. Dollars –
except share data and number of shares)
|
Three MonthsEndedSeptember
30,2021 |
Three MonthsEndedSeptember
30,2022 |
Nine Months
EndedSeptember 30,2021 |
Nine MonthsEndedSeptember
30,2022 |
Net income |
8,464,016 |
|
25,223,160 |
|
20,200,342 |
|
85,909,296 |
|
Unrealized gain on derivatives |
(78,985 |
) |
(1,771,835 |
) |
(552,632 |
) |
(4,182,491 |
) |
Net loss on sale of vessel |
- |
|
- |
|
9,417 |
|
- |
|
Amortization of fair value of below market time charters
acquired |
- |
|
(3,881,904 |
) |
- |
|
(6,945,691 |
) |
Vessel depreciation on portion of the consideration of vessels
acquired with attached time charters allocated to below market time
charters |
- |
|
1,307,189 |
|
- |
|
2,511,790 |
|
Adjusted net income |
8,385,031 |
|
20,876,610 |
|
19,657,127 |
|
77,292,904 |
|
Preferred dividends |
- |
|
- |
|
(255,324 |
) |
- |
|
Preferred deemed dividend |
- |
|
- |
|
(345,423 |
) |
- |
|
Adjusted net income attributable to common
shareholders |
8,385,031 |
|
20,876,610 |
|
19,056,380 |
|
77,292,904 |
|
Adjusted earnings per share, basic |
1.16 |
|
2.90 |
|
2.76 |
|
10.71 |
|
Weighted average number of shares, basic |
7,198,991 |
|
7,199,448 |
|
6,898,195 |
|
7,215,189 |
|
Adjusted earnings per share, diluted |
1.16 |
|
2.90 |
|
2.74 |
|
10.67 |
|
Weighted average number of shares, diluted |
7,241,740 |
|
7,211,204 |
|
6,942,614 |
|
7,240,848 |
|
Adjusted net income and Adjusted
earnings per share Reconciliation:Euroseas Ltd. considers
Adjusted net income to represent net income before unrealized gain
on derivatives, net loss on sale of vessel, amortization of fair
value of below market time charters acquired and vessel
depreciation on portion of the consideration of vessels acquired
with attached time charters allocated to below market time
charters. Adjusted net income and Adjusted earnings per share are
included herein because we believe they assist our management and
investors by increasing the comparability of the Company's
fundamental performance from period to period by excluding the
potentially disparate effects between periods of the aforementioned
items, which may significantly affect results of operations between
periods.
Adjusted net income and Adjusted earnings per
share do not represent and should not be considered as an
alternative to net income or earnings per share, as determined by
GAAP. The Company's definition of Adjusted net income and Adjusted
earnings per share may not be the same as that used by other
companies in the shipping or other industries.
About Euroseas Ltd.Euroseas
Ltd. was formed on May 5, 2005 under the laws of the Republic of
the Marshall Islands to consolidate the ship owning interests of
the Pittas family of Athens, Greece, which has been in the shipping
business over the past 140 years. Euroseas trades on the NASDAQ
Capital Market under the ticker ESEA. Euroseas operates in the
container shipping market. Euroseas' operations are managed by
Eurobulk Ltd., an ISO 9001:2008 and ISO 14001:2004 certified
affiliated ship management company, which is responsible for the
day-to-day commercial and technical management and operations of
the vessels. Euroseas employs its vessels on spot and period
charters and through pool arrangements. The Company has a
fleet of 18 vessels, including 10 Feeder containerships and 8
Intermediate containerships. Euroseas 18 containerships have a
cargo capacity of 58,871 teu. After the delivery of nine feeder
containership newbuildings in 2023 and 2024, Euroseas’ fleet will
consist of 27 vessels with a total carrying capacity of 81,071 teu.
Forward Looking StatementThis press release
contains forward-looking statements (as defined in Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended) concerning future
events and the Company's growth strategy and measures to implement
such strategy; including expected vessel acquisitions and entering
into further time charters. Words such as "expects," "intends,"
"plans," "believes," "anticipates," "hopes," "estimates," and
variations of such words and similar expressions are intended to
identify forward-looking statements. Although the Company believes
that the expectations reflected in such forward-looking statements
are reasonable, no assurance can be given that such expectations
will prove to have been correct. These statements involve known and
unknown risks and are based upon a number of assumptions and
estimates that are inherently subject to significant uncertainties
and contingencies, many of which are beyond the control of the
Company. Actual results may differ materially from those expressed
or implied by such forward-looking statements. Factors that could
cause actual results to differ materially include, but are not
limited to changes in the demand for containerships, competitive
factors in the market in which the Company operates; risks
associated with operations outside the United States; and other
factors listed from time to time in the Company's filings with the
Securities and Exchange Commission. The Company expressly disclaims
any obligations or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein to
reflect any change in the Company's expectations with respect
thereto or any change in events, conditions or circumstances on
which any statement is based.
Visit our website www.euroseas.gr
Company
Contact |
Investor Relations /
Financial Media |
Tasos AslidisChief Financial
OfficerEuroseas Ltd.11 Canterbury Lane,Watchung, NJ 07069Tel. (908)
301-9091E-mail: aha@euroseas.gr |
Nicolas BornozisMarkella
KaraCapital Link, Inc.230 Park Avenue, Suite 1540New York, NY
10169Tel. (212) 661-7566E-mail: euroseas@capitallink.com |
_________________________1Adjusted EBITDA, Adjusted net
income and Adjusted earnings per share are not recognized
measurements under U.S. GAAP (GAAP) and should not be used in
isolation or as a substitute for Euroseas financial results
presented in accordance with GAAP. Refer to a subsequent section of
the Press Release for the definitions and reconciliation of these
measurements to the most directly comparable financial measures
calculated and presented in accordance with GAAP.
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