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-month period and full year ended December 31,
2022.
Fourth Quarter 2022 Financial
Highlights:
- Total net revenues of $42.9
million.
- Net income and net income
attributable to common shareholders of $20.3 million or $2.87 and
$2.86 earnings per share basic and diluted, respectively.
- Adjusted net income attributable to
common shareholders1 for the period was $17.7 million or $2.50 per
share basic and diluted.
- Adjusted EBITDA1 was $22.9
million.
- An average of 18.0 vessels were
owned and operated during the fourth quarter of 2022 earning an
average time charter equivalent rate of $29,399 per day. Refer to a
subsequent section of the Press Release for the definition and
method of calculation of time charter equivalent rate.
- Declared a quarterly dividend of
$0.50 per share for the fourth quarter of 2022 payable on or about
March 16, 2023 to shareholders of record on March 9, 2023 as part
of the Company’s common stock dividend plan.
- As of February 14, 2023 we had
repurchased 251,685 of our common stock in the open market for a
total of about $5.3 million, under our share repurchase plan of up
to $20 million announced in May 2022.
- On December 29, 2022 we announced
the sale of M/V Akinada Bridge, a 5,610 teu intermediate
containership vessel built in 2001, at a gross price of $14.2
million. The vessel was delivered to its buyers on January 9,
2023.
Full Year 2022 Highlights:
- Total net revenues of $182.7
million.
- Net income and net income
attributable to common shareholders of $106.2 million or $14.79 and
$14.78 earnings per share basic and diluted, respectively.
- Adjusted net income attributable to
common shareholders1 for the period was $95.0 million or $13.23 and
$13.21 per share basic and diluted, respectively.
- Adjusted EBITDA1 was $114.4
million.
- An average of 17.12 vessels were
owned and operated during 2022, earning an average time charter
equivalent rate of $31,964 per day. Refer to a subsequent section
of the Press Release for the definition and method of calculation
of time charter equivalent rate.
Recent developments
- Continental Shipping Line,
Singapore (CSL), the charterers of M/V Aegean Express, in January
2023 repudiated its charter as the vessel was completing its
scheduled drydock. The Company is pursuing legal action and entered
into negotiations seeking a replacement charter.
____________________1 Adjusted 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.
Aristides Pittas, Chairman and CEO of
Euroseas commented: “During the fourth quarter of 2022,
containership markets dropped more than 80% from their
end-September levels as a result of reduced demand for trade and
the reversal of port congestion and other transportation system
inefficiencies. In early 2023, market rates gave up a bit more
ground and they seem to have stabilized, for now, at levels still
better than their levels before the COVID pandemic. However, with a
large orderbook, at 29% of the existing fleet looming, we expect
the markets to remain at low levels over the next couple of years.
Fortunately for Euroseas, the majority of our vessels are fixed
through 2024. Also most of the orderbook is for larger vessels not
competing directly with our ships. The orderbook for the feeder and
intermediate size classes which we compete in is notably smaller,
at around 15%, which coupled with the higher average age of ships
in these size segments could even result in supply decreases. Yet,
it is undeniable that the larger vessels set the tone of the
markets.
“Our focus over the next two years remains on
ensuring smooth operations of our existing fleet to serve our
current charter contracts with contracted revenues in excess of
$425 million over the next three years. We are also focused on the
prompt delivery of our nine-vessel orderbook program and, of
course, the chartering of the newbuild vessels. The first of our
newbuilds is to be delivered towards the end of next month and it
is scheduled to immediately commence its $48,000/day three-year
charter while its sistership is expected to be delivered in June of
2023 commencing a similar $48,000/day three-year long charter.
“In parallel, we intend to continue rewarding
our shareholders with our quarterly dividend and share repurchase
program. We also continuously evaluate investment opportunities as
our balance sheet strength allows us to pursue those accretive to
our earnings and beneficial to our shareholders.”
Tasos Aslidis, Chief Financial Officer
of Euroseas commented: “Our revenues for the fourth
quarter of 2022 are comparable to the same period of 2021 as a
result of the Company’s action to charter all of its vessels, at
the very profitable rates of last year, for periods extending up to
three years or more. Net revenues amounted to $42.9 million for the
fourth quarter of 2022 compared to $38.3 million for the fourth
quarter of 2021. The Company operated an average of 18.00 vessels,
versus 15.01 vessels during the same period last year. On average,
during the fourth quarter of 2022, our vessels earned approximately
the same time charter equivalent rates compared to the fourth
quarter of 2021.
“Total daily vessel operating expenses,
including management fees, general and administrative expenses, but
excluding drydocking costs, were higher by 3.0% during the fourth
quarter of 2022 compared to the same quarter of last year. The
increased operating expenses for the fourth quarter of 2022 are
mainly attributable to the increase in hull and machinery insurance
premiums and the higher prices paid for the supply of lubricants,
spare parts and stores for our vessels, as a result of the war in
Ukraine.
“Adjusted EBITDA during the fourth quarter of
2022 was $22.9 million compared to $26.2 million achieved in the
fourth quarter of last year, reaching $114.4 million versus $52.7
million in the respective twelve-month periods of 2022 and
2021.
“As of December 31, 2022, our outstanding bank
debt (excluding the unamortized loan fees) was $108.0 million,
versus restricted and unrestricted cash of approximately $31.4
million. As of the same date, our scheduled debt repayments over
the next 12 months amounted to about $56.0 million (excluding the
unamortized loan fees). The working capital deficit of the Company
as of December 31, 2022, is $26.8 million. We intend to fund this
deficit from cash flows from operations, debt refinancing and
equity offerings, among other options.”
Fourth Quarter 2022 Results:For
the fourth quarter of 2022, the Company reported total net revenues
of $42.9 million representing a 12.1% increase over total net
revenues of $38.3 million during the fourth quarter of 2021, which
was the result of the increased average number of vessels operating
in the fourth 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 $20.3
million, as compared to a net income and a net income attributable
to common shareholders of $22.8 million for the fourth quarter of
2021. On average, 18.0 vessels were owned and operated during the
fourth quarter of 2022 earning an average time charter equivalent
rate of $29,399 per day compared to 15.01 vessels in the same
period of 2021 earning on average $30,068 per day.
Vessel depreciation for the fourth quarter of
2022 increased to $5.3 million from $2.4 million in the fourth
quarter of 2021, as a result of the increased number of vessels
operated and the fact that the new vessels acquired in the fourth
quarter of 2021 and in 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.
For the fourth quarter of 2022, voyage expenses
amounted to $1.6 million as compared to voyage expenses of $0.04
million for the same period of 2021. This increase is mainly
attributable to bunkers consumption by one of our vessels that had
suffered unrepaired damages and was consequently sold for scrap.
Vessel operating expenses for the same period of 2022 amounted to
$10.2 million as compared to $8.3 million for the same period of
2021. The increased amount is mainly due to the higher number of
vessels owned and operated in the last three months of 2022
compared to the same period of 2021, as well as due to the increase
in hull and machinery insurance premiums and the higher prices paid
for the supply of lubricants, spare parts and stores for our
vessels, as a result of the war in Ukraine.
Drydocking expenses amounted to $3.3 million
during the fourth quarter of 2022 comprising the cost of two
vessels passing their special survey with drydock. For the same
period of 2021 drydocking expenses amounted to $1.2 million
comprising the cost of one vessel completing her special survey
with drydock. Related party management fees for the three months
ended December 31, 2022 were $1.3 million compared to $1.1 million
for the same period of 2021, as a result of the higher number of
vessels in our fleet and the increase in daily vessel management
fee for inflation, partly offset by the favorable movement of the
euro/dollar exchange rate. General and administrative expenses
increased to $1.7 million in the fourth quarter of 2022, as
compared to $1.2 million in the fourth quarter of 2021, mainly due
to the increased cost of our stock incentive plan. The operating
income for the fourth quarter of 2022 relates to an “unrepaired
damage” claim agreed with the hull and machinery underwriters and
loss of hire insurance in relation to M/V Akinada Bridge. No such
case existed in the fourth quarter of 2021.
Interest and other financing costs for the
fourth quarter of 2022 amounted to $1.6 million compared to $0.8
million for the same period of 2021. This increase is due to the
increased amount of debt and the increase in the weighted average
LIBOR / SOFR rate in the current period compared to the same period
of 2021.
For the three months ended December 31, 2022 the
Company recognized a $0.2 million gain on its interest rate swap
contracts, comprising a $0.04 million unrealized gain from the
mark-to-market valuation of our outstanding interest rate swaps and
a $0.20 million of realized gain. For the three months ended
December 31, 2021 the Company recognized a $0.5 million loss on its
interest rate swap contracts, comprising a $0.4 million unrealized
loss and a $0.05 million realized loss.
Adjusted EBITDA1 for the fourth quarter of 2022
decreased to $22.9 million compared to $26.2 million for the
corresponding period in 2021.
Basic and diluted earnings per share
attributable to common shareholders for the fourth quarter of 2022
were $2.87 and $2.86 calculated on 7,081,776 and 7,100,432 basic
and diluted weighted average number of shares outstanding,
respectively, compared to basic and diluted earnings per share of
$3.16 and $3.14 for the fourth quarter of 2021, calculated on
7,210,466 basic and 7,244,042 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 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 December
31, 2022 would have been $2.50 per share basic and diluted,
compared to an adjusted earnings of $3.19 and $3.18 per share basic
and diluted for the quarter ended December 31, 2021. Usually,
security analysts do not include the above items in their published
estimates of earnings per share.
Full Year 2022 Results:For the
full year of 2022, the Company reported total net revenues of
$182.7 million, representing a 94.6% increase, over total net
revenues of $93.9 million during the twelve months of 2021, as a
result of the higher average charter rates our vessels earned as
well as the increased number of vessels owned and operated in the
twelve 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 year of $106.2 million, as compared to
a net income of $43.0 million and a net income attributable to
common shareholders of $42.4 million for the twelve months of 2021.
On average, 17.12 vessels were owned and operated during the twelve
months of 2022 earning an average time charter equivalent rate of
$31,964 per day compared to 14.25 vessels in the same period of
2021 earning on average $19,327 per day.
For the twelve months of 2022, voyage expenses
amounted to $2.5 million, as compared to voyage expenses of $0.6
million in the same period of 2021. This increase is mainly
attributable to bunkers consumption by one of our vessels that had
suffered unrepaired damages and was consequently sold for scrap.
Vessel operating expenses for the twelve months of 2022 amounted to
$37.7 million as compared to $29.7 million for the same period of
2021. This increase in vessel operating expenses is due to the
higher average number of vessels operated by the Company in the
twelve months of 2022 as compared to the same period of 2021, the
increase in hull and machinery insurance premiums and the higher
prices paid for the supply of lubricants, spare parts and stores
for our vessels, as a result of the war in Ukraine.
Vessel depreciation for the twelve months of
2022 was $18.5 million compared to $7.2 million during the same
period of 2021, due to the increased average number of vessels
operating in 2022 as compared to the same period of 2021 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 twelve
months of 2022 were $4.9 million compared to $4.3 million for the
same period of 2021 as a result of the higher number of vessels in
our fleet and the increase in daily vessel management fee for
inflation, partly offset by the favorable movement of the
euro/dollar exchange rate.
General and administrative expenses amounted to
$4.6 million during the twelve months of 2022 as compared to $3.5
million in the last year. This increase is mainly attributable to
the increased cost of our stock incentive plan.
Drydocking expenses amounted to $9.5 million for
the twelve months of 2022 (three vessels completed their
intermediate survey in water, while five vessels passed their
special survey with drydock), compared to $4.1 million for the same
period of 2021 (three vessels passed their special survey with
drydock).
During 2022 and 2021, we had other operating
income of $1.6 million and $1.3 million, respectively. The
operating income for the period of 2022 relates to an “unrepaired
damage” claim agreed with the hull and machinery underwriters and
loss of hire insurance in relation to M/V Akinada Bridge, partly
offset by the settlement of accounts with charterers. The operating
income for 2021 mainly consists 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
twelve months of 2022 amounted to $5.1 million compared to $2.8
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 twelve months ended December 31, 2022 the Company
recognized a $4.4 million gain on its interest rate swap contracts,
comprising a $4.2 million unrealized gain from the mark-to-market
valuation of its outstanding interest rate swaps and a $0.2 million
realized gain. For the twelve months ended December 31, 2021 the
Company recognized a $0.03 million loss on its interest rate swap
contracts, comprising a $0.15 million unrealized gain and $0.18
realized loss.
The results for the twelve months of 2022
include a $10.8 million of amortization of below market time
charters acquired and a $4.2 million unrealized gain on
derivatives. The results for the twelve months of 2021 include $0.2
million of amortization of below market time charters acquired and
$0.2 million unrealized gain on derivatives.
Adjusted EBITDA1 for the twelve months of 2022
increased to $114.4 million compared to $52.7 million during the
twelve months of 2021, primarily as a result of higher
revenues.
Basic and diluted earnings per share
attributable to common shareholders for the twelve months of 2022
was $14.79 and $14.78, calculated on 7,181,561 and 7,190,107 basic
and diluted weighted average number of shares outstanding,
respectively, compared to basic and diluted earnings per share of
$6.07 and $6.06 for the twelve months of 2021, respectively,
calculated on 6,976,905 and 6,993,405 basic and diluted weighted
average number of shares outstanding.
Excluding the effect on the income attributable
to common shareholders for the twelve months of 2022 of unrealized
gain on derivatives, amortization of the below market time charters
acquired, vessel depreciation on the portion of the consideration
of vessels acquired with attached time charters allocated to below
market time charters and net loss on sale of vessel (if any), the
adjusted earnings attributable to common shareholders for the year
ended December 31, 2022 would have been $13.23 and $13.21 basic and
diluted, respectively, compared to adjusted earnings of $6.03 and
$6.02, per share basic and diluted. As previously mentioned,
usually, security analysts do not include the above items in their
published estimates of earnings per share.
Fleet Profile:
The Euroseas Ltd. fleet profile as of February 15, 2023 is as
follows:
Name |
Type |
Dwt |
TEU |
Year Built |
Employment(*) |
TCE Rate ($/day) |
Container Carriers |
|
|
|
|
|
|
MARCOS V(*) |
Intermediate |
72,968 |
6,350 |
2005 |
TC until Dec-24plus 12 monthsoption |
$42,200option $15,000 |
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 Jun-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 |
$20,250CONTEX (**) basis with $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 |
23,351 |
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 May-23 |
$14,500 |
AEGEAN EXPRESS (*) |
Feeder |
18,581 |
1,439 |
1997 |
Seeking employment |
- |
Total Container Carriers |
17 |
666,038 |
53,261 |
|
|
|
Vessels under construction |
Type |
Dwt |
TEU |
To be delivered |
Employment |
TCE Rate($/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 (H4251) |
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. All dates
listed are the earliest redelivery dates under each time charter
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 (+).(**)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:
|
Three Months, EndedDecember 31,
2021 |
|
Three Months, EndedDecember 31,
2022 |
|
Twelve Months, Ended December 31,
2021 |
|
Twelve Months, Ended
December 31, 2022 |
|
FLEET DATA |
|
|
|
|
Average number of vessels (1) |
15.01 |
|
18.00 |
|
14.25 |
|
17.12 |
|
Calendar days for fleet (2) |
1,381.0 |
|
1,654.5 |
|
5,203.0 |
|
6,248.5 |
|
Scheduled off-hire days incl. laid-up (3) |
31.1 |
|
121.4 |
|
88.4 |
|
294.4 |
|
Available days for fleet (4) = (2) - (3) |
1,349.9 |
|
1,533.1 |
|
5,114.6 |
|
5,954.1 |
|
Commercial off-hire days (5) |
- |
|
- |
|
- |
|
5.3 |
|
Operational off-hire days (6) |
20.5 |
|
75.2 |
|
77.2 |
|
93.6 |
|
Voyage days for fleet (7) = (4) - (5) - (6) |
1,329.4 |
|
1,457.9 |
|
5,037.4 |
|
5,855.2 |
|
Fleet utilization (8) = (7) / (4) |
98.5 |
% |
95.1 |
% |
98.5 |
% |
98.3 |
% |
Fleet utilization, commercial (9) = ((4) - (5)) / (4) |
100.0 |
% |
100.0 |
% |
100.0 |
% |
99.9 |
% |
Fleet utilization, operational (10) = ((4) - (6)) / (4) |
98.5 |
% |
95.1 |
% |
98.5 |
% |
98.4 |
% |
|
|
|
|
|
AVERAGE DAILY RESULTS (usd/day) |
|
|
|
|
Time charter equivalent rate (11) |
30,068 |
|
29,399 |
|
19,327 |
|
31,964 |
|
Vessel operating expenses excl. drydocking expenses (12) |
6,807 |
|
6,938 |
|
6,541 |
|
6,816 |
|
General and administrative expenses (13) |
901 |
|
999 |
|
671 |
|
732 |
|
Total vessel operating expenses (14) |
7,708 |
|
7,937 |
|
7,212 |
|
7,548 |
|
Drydocking expenses (15) |
866 |
|
2,008 |
|
787 |
|
1,521 |
|
(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, vessels committed for sale or vessels that
suffered unrepaired damages, are days associated with scheduled
repairs, drydockings or special or intermediate surveys or days of
vessels in lay-up, or with vessels that were committed for sale or
suffered unrepaired damages.
(4) Available days. We define available days as
the Calendar days in a period net of scheduled off-hire days as
defined above. 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 net 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, Wednesday, February 15, 2023 at 10:00 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 13736385. 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
webcast of the conference call and accompanying slides, available
through the Company’s website. To listen to the archived audio
file, visit our website http://www.euroseas.gr and click on Company
Presentations under our Investor Relations page. Participants to
the live webcast should register on the website approximately 10
minutes prior to the start of the webcast. The slide presentation
on the fourth quarter ended December 31, 2022 will also be
available in PDF format 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.
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|
Euroseas Ltd. Unaudited Consolidated
Condensed Statements of Operations(All amounts
expressed in U.S. Dollars – except number of shares) |
|
|
Three Months Ended December
31, |
Three Months Ended December
31, |
Twelve Months Ended December
31, |
Twelve Months Ended December
31, |
|
2021 |
2022 |
2021 |
2022 |
|
|
|
|
|
Revenues |
|
|
|
|
Time charter revenue |
39,996,998 |
|
44,445,295 |
|
97,977,389 |
|
189,630,465 |
|
Commissions |
(1,745,138 |
) |
(1,559,382 |
) |
(4,085,717 |
) |
(6,936,221 |
) |
Net revenues |
38,251,860 |
|
42,885,913 |
|
93,891,672 |
|
182,694,244 |
|
|
|
|
|
|
Operating expenses/ (income) |
|
|
|
|
Voyage expenses |
36,028 |
|
1,584,724 |
|
624,734 |
|
2,476,854 |
|
Vessel operating expenses |
8,307,463 |
|
10,183,832 |
|
29,739,437 |
|
37,667,191 |
|
Drydocking expenses |
1,195,712 |
|
3,322,008 |
|
4,094,693 |
|
9,506,675 |
|
Vessel depreciation |
2,413,569 |
|
5,347,553 |
|
7,203,198 |
|
18,522,217 |
|
Related party management fees |
1,093,684 |
|
1,295,268 |
|
4,294,789 |
|
4,920,063 |
|
Net loss on sale of vessel |
- |
|
- |
|
9,417 |
|
- |
|
General and administrative expenses |
1,244,023 |
|
1,652,471 |
|
3,491,120 |
|
4,571,030 |
|
Other operating income |
- |
|
(1,960,000 |
) |
(1,298,318 |
) |
(1,610,000 |
) |
Total operating expenses, net |
14,290,479 |
|
21,425,856 |
|
48,159,070 |
|
76,054,030 |
|
|
|
|
|
|
Operating income |
23,961,381 |
|
21,460,057 |
|
45,732,602 |
|
106,640,214 |
|
|
|
|
|
|
Other (expenses)/ income |
|
|
|
|
Interest and other financing costs |
(776,652 |
) |
(1,596,507 |
) |
(2,779,729 |
) |
(5,072,619 |
) |
(Loss) / gain on derivatives, net |
(448,449 |
) |
236,490 |
|
(27,141 |
) |
4,355,657 |
|
Foreign exchange gain / (loss) |
26,497 |
|
(13,186 |
) |
34,418 |
|
54,235 |
|
Interest income |
541 |
|
248,765 |
|
3,510 |
|
267,429 |
|
|
|
|
|
|
|
|
|
|
Other expenses, net |
(1,198,063 |
) |
(1,124,438 |
) |
(2,768,942 |
) |
(395,298 |
) |
Net income |
22,763,318 |
|
20,335,619 |
|
42,963,660 |
|
106,244,916 |
|
Dividend Series B Preferred shares |
- |
|
- |
|
(255,324 |
) |
- |
|
Preferred deemed dividend |
- |
|
- |
|
(345,428 |
) |
- |
|
Net income attributable to common
shareholders |
22,763,318 |
|
20,335,619 |
|
42,362,908 |
|
106,244,916 |
|
Weighted average number of shares outstanding, basic |
7,210,466 |
|
7,081,776 |
|
6,976,905 |
|
7,181,561 |
|
Earnings per share attributable to common shareholders -
basic |
3.16 |
|
2.87 |
|
6.07 |
|
14.79 |
|
Weighted average number of shares outstanding, diluted |
7,244,042 |
|
7,100,432 |
|
6,993,405 |
|
7,190,107 |
|
Earnings per share attributable to common shareholders -
diluted |
3.14 |
|
2.86 |
|
6.06 |
|
14.78 |
|
|
Euroseas Ltd., Unaudited Consolidated
Condensed Balance Sheets(All amounts expressed in
U.S. Dollars – except number of shares) |
|
|
December 31,2021 |
|
December 31, 2022 |
|
ASSETS |
|
Current
Assets: |
|
|
|
|
Cash and cash equivalents |
26,530,944 |
|
25,845,333 |
|
Trade accounts receivable, net |
1,274,729 |
|
572,961 |
|
Other receivables |
1,722,885 |
|
5,515,311 |
|
Inventories |
2,274,454 |
|
2,306,177 |
|
Restricted cash |
167,285 |
|
2,193,173 |
|
Prepaid expenses |
382,729 |
|
350,206 |
|
Derivatives |
540,753 |
|
1,142,682 |
|
Vessel held for sale |
- |
|
8,909,172 |
|
Due from related company |
- |
|
32,146 |
|
Total
current assets |
32,893,779 |
|
46,867,161 |
|
|
|
|
|
|
Fixed
assets: |
|
|
|
|
Vessels, net |
176,111,486 |
|
216,570,426 |
|
Long-term
assets: |
|
|
|
|
Advances for vessels under construction |
7,615,958 |
|
59,083,594 |
|
Restricted cash |
4,800,000 |
|
3,400,000 |
|
Derivatives |
- |
|
2,669,244 |
|
Total
assets |
221,421,223 |
|
328,590,425 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Long-term bank loans, current portion |
29,034,049 |
|
55,419,815 |
|
Trade accounts payable |
2,804,194 |
|
5,160,068 |
|
Accrued expenses |
1,702,925 |
|
1,756,383 |
|
Liability associated with asset held for sale |
- |
|
3,556,641 |
|
Accrued dividends |
- |
|
66,375 |
|
Deferred revenue |
3,293,986 |
|
7,730,422 |
|
Due to related company |
309,970 |
|
- |
|
Total
current liabilities |
37,145,124 |
|
73,689,704 |
|
Long-term
liabilities: |
|
|
|
|
Long -term bank loans, net of current portion |
89,004,951 |
|
51,812,086 |
|
Derivatives |
952,666 |
|
- |
|
Fair value of below market time charters acquired |
17,461,586 |
|
34,933,438 |
|
Total
long-term liabilities |
107,419,203 |
|
86,745,524 |
|
Total
liabilities |
144,564,327 |
|
160,435,228 |
|
Shareholders’ equity: |
|
|
|
|
Common stock (par value $0.03, 200,000,000 shares authorized,
7,294,541 and 7,116,206 issued and outstanding,
respectively) |
218,836 |
|
213,486 |
|
Additional paid-in capital |
264,609,233 |
|
260,539,222 |
|
Accumulated deficit |
(187,971,173 |
) |
(92,597,511 |
) |
Total shareholders’ equity |
76,856,896 |
|
168,155,197 |
|
Total
liabilities and shareholders' equity |
221,421,223 |
|
328,590,425 |
|
|
|
|
|
|
|
Euroseas Ltd. Unaudited Consolidated
Condensed Statements of Cash Flows (All amounts
expressed in U.S. Dollars) |
|
|
Twelve Months Ended December 31,2021 |
|
Twelve Months Ended December 31,2022 |
|
|
|
|
|
|
Cash flows from
operating activities: |
|
|
|
|
Net income |
42,963,660 |
|
106,244,916 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
Vessel depreciation |
7,203,198 |
|
18,522,217 |
|
Amortization and write off of
deferred charges |
223,492 |
|
342,861 |
|
Share-based compensation |
182,324 |
|
951,385 |
|
Net loss on sale of
vessel |
9,417 |
|
- |
|
Amortization of fair value of
below market time charters acquired |
(230,112 |
) |
(10,827,595 |
) |
Unrealized gain on
derivatives |
(153,835 |
) |
(4,223,839 |
) |
Changes
in operating assets and liabilities |
2,414,795 |
|
3,072,626 |
|
Net cash provided by operating activities |
52,612,939 |
|
114,082,571 |
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
Cash paid for vessels under
construction |
(7,615,958 |
) |
(50,866,784 |
) |
Cash paid for capitalized
expenses and acquisition of vessels including attached time charter
agreements |
(66,474,058 |
) |
(39,822,933 |
) |
Net proceeds and advances from
sale of vessels |
(9,417 |
) |
3,556,641 |
|
Net cash used in investing activities |
(74,099,433 |
) |
(87,133,076 |
) |
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
Redemption of Series B
preferred shares |
(2,000,000 |
) |
- |
|
Proceeds from issuance of
common stock, net of commissions paid |
743,553 |
|
- |
|
Cash paid for share
repurchase |
- |
|
(5,026,541 |
) |
Preferred dividends paid |
(424,000 |
) |
- |
|
Dividends paid |
- |
|
(10,804,879 |
) |
Loan arrangement fees
paid |
(758,000 |
) |
(115,500 |
) |
Offering expenses paid |
(123,167 |
) |
(27,838 |
) |
Proceeds from long- term bank
loans |
75,500,000 |
|
19,250,000 |
|
Repayment of long-term bank
loans |
(23,791,840 |
) |
(30,284,460 |
) |
Repayment of related party
loan |
(2,500,000 |
) |
- |
|
Net cash provided by / (used in) financing
activities |
46,646,546 |
|
(27,009,218 |
) |
|
|
|
|
|
Net increase / (decrease) in cash, cash equivalents and restricted
cash |
25,160,052 |
|
(59,723 |
) |
Cash,
cash equivalents and restricted cash at beginning of year |
6,338,177 |
|
31,498,229 |
|
Cash, cash equivalents and restricted cash at end of
year |
31,498,229 |
|
31,438,506 |
|
Cash breakdown |
|
|
|
|
Cash and cash equivalents |
26,530,944 |
|
25,845,333 |
|
Restricted cash, current |
167,285 |
|
2,193,173 |
|
Restricted cash, long term |
4,800,000 |
|
3,400,000 |
|
Total cash, cash equivalents and restricted cash shown in
the statement of cash flows |
31,498,229 |
|
31,438,506 |
|
|
|
|
|
|
|
Euroseas
Ltd. Reconciliation of Net income to Adjusted
EBITDA(All amounts expressed in U.S.
Dollars) |
|
|
Three Months EndedDecember 31,
2021 |
Three Months EndedDecember 31,
2022 |
Twelve Months EndedDecember 31,
2021 |
Twelve Months EndedDecember 31,
2022 |
Net income |
22,763,318 |
|
20,335,619 |
|
42,963,660 |
|
106,244,916 |
|
Interest and other financing costs, net (incl. interest
income) |
776,111 |
|
1,347,742 |
|
2,776,219 |
|
4,805,190 |
|
Vessel depreciation |
2,413,569 |
|
5,347,553 |
|
7,203,198 |
|
18,522,217 |
|
Net loss on sale of vessel |
- |
|
- |
|
9,417 |
|
- |
|
Amortization of fair value of below market time charters
acquired |
(230,112 |
) |
(3,881,904 |
) |
(230,112 |
) |
(10,827,595 |
) |
Loss / (gain) on interest rate swap derivatives |
448,449 |
|
(236,490 |
) |
27,141 |
|
(4,355,657 |
) |
Adjusted EBITDA |
26,171,335 |
|
22,912,520 |
|
52,749,523 |
|
114,389,071 |
|
Adjusted EBITDA
Reconciliation:Euroseas Ltd. considers Adjusted EBITDA to
represent net income before interest, income taxes, depreciation,
loss / (gain) on interest rate swap derivatives, 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 and we believe 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, financial costs, amortization of fair value of
below market time charters acquired, loss / (gain) on interest rate
swaps, net loss on sale of vessel 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. Adjusted
EBITDA is not adjusted for all non-cash income and expense items
that are reflected in our statement of cash flows.
|
Euroseas Ltd. Reconciliation of Net income
to Adjusted net income(All amounts expressed in
U.S. Dollars – except share data and number of
shares) |
|
|
Three Months EndedDecember 31,
2021 |
Three Months Ended December 31, 2022 |
Twelve
MonthsEndedDecember 31,
2021 |
Twelve Months EndedDecember 31,
2022 |
Net income |
22,763,318 |
|
20,335,619 |
|
42,963,660 |
|
106,244,916 |
|
Unrealized loss / (gain) on derivatives |
398,797 |
|
(41,348 |
) |
(153,835 |
) |
(4,223,839 |
) |
Net loss on sale of vessel |
- |
|
- |
|
9,417 |
|
- |
|
Amortization of fair value of below market time charters
acquired |
(230,112 |
) |
(3,881,904 |
) |
(230,112 |
) |
(10,827,595 |
) |
Depreciation on the portion of the consideration of vessels
acquired with attached time charters allocated to below market time
charters |
99,941 |
|
1,307,189 |
|
99,941 |
|
3,818,979 |
|
Adjusted net income |
23,031,944 |
|
17,719,556 |
|
42,689,071 |
|
95,012,461 |
|
Preferred dividends |
- |
|
- |
|
(255,324 |
) |
- |
|
Preferred deemed dividend |
- |
|
- |
|
(345,428 |
) |
- |
|
Adjusted net income attributable to common
shareholders |
23,031,944 |
|
17,719,556 |
|
42,088,319 |
|
95,012,461 |
|
Adjusted earnings per share, basic |
3.19 |
|
2.50 |
|
6.03 |
|
13.23 |
|
Weighted average number of shares, basic |
7,210,466 |
|
7,081,776 |
|
6,976,905 |
|
7,181,561 |
|
Adjusted earnings per share, diluted |
3.18 |
|
2.50 |
|
6.02 |
|
13.21 |
|
Weighted average number of shares, diluted |
7,244,042 |
|
7,100,432 |
|
6,993,405 |
|
7,190,107 |
|
Adjusted net income and Adjusted
earnings per share Reconciliation:Euroseas Ltd. considers
Adjusted net income to represent net income before unrealized loss
/ (gain) on derivatives, net loss on sale of vessel, amortization
of below market time charters acquired and vessel depreciation on
the 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. Adjusted net income
and Adjusted earnings per share are not adjusted for all non-cash
income and expense items that are reflected in our statement of
cash flows.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 17 vessels, including 10 Feeder containerships and 7
Intermediate containerships. Euroseas 17 containerships have a
cargo capacity of 53,261 teu. After the delivery of nine feeder
containership newbuildings in 2023 and 2024, Euroseas’ fleet will
consist of 26 vessels with a total carrying capacity of 75,461
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 |
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