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 six-month periods ended June 30, 2023.
Second Quarter 2023 Financial
Highlights:
- Total net revenues of $47.7
million. Net income of $28.9 million or $4.17 and $4.15 earnings
per share basic and diluted, respectively. Adjusted net income1 for
the period was $29.0 million or $4.19 and $4.17 per share basic and
diluted.
- Adjusted EBITDA1 was $30.6
million.
- An average of 17.95 vessels were
owned and operated during the second quarter of 2023 earning an
average time charter equivalent rate of $30,151 per day.
- Declared a quarterly dividend of
$0.50 per share for the second quarter of 2023 payable on or about
September 16, 2023, to shareholders of record on September 9, 2023,
as part of the Company’s common stock dividend plan.
- As previously announced, on July 6,
2023, the Company took delivery of its second newbuilding M/V
“Terataki”, an eco 2,800 teu feeder containership from Hyundai Mipo
Dockyard Co. in South Korea. The vessel is EEDI Phase 3 compliant
and equipped with a Tier III engine and other sustainability linked
features including installation of AMP (alternative maritime
power). The acquisition was financed with a combination of own
funds and a sustainability-linked loan provided by the National
Bank of Greece S.A. Following its delivery, M/V “Terataki”
commenced a thirty-six- to forty-month charter with Asyad
Lines.
- The original share repurchase
program of $20 million approved by the Board during 2022 has been
extended for another year. As of August 9, 2023, we have
repurchased 396,615 shares of our common stock in open market
transactions for $8.1 million.
- The Company also announced that it
completed its 2022 Sustainability Report which is available at its
website (http://www.euroseas.gr/company/sustainability.html).
First Half 2023 Financial Highlights:
- Total net revenues of $89.6
million. Net income of $57.6 million or $8.28 and $8.25 earnings
per share basic and diluted, respectively. Adjusted net income1 for
the period was $50.7 million or $7.29 and $7.26 per share basic and
diluted, respectively.
- Adjusted EBITDA1 was $56.6
million.
- An average of 17.52 vessels were
owned and operated during the first half of 2023 earning an average
time charter equivalent rate of $29,714 per day.
Aristides Pittas, Chairman and CEO of Euroseas
commented:
“We are very pleased with our results for the
second quarter of 2023 which are one of the best results we have
ever had since Euroseas became a containership focused public
company in 2018. At the same time, our very high charter coverage
at quite profitable rates for the remainder of the year but also
for 2024 suggests that we should continue registering highly
profitable quarters regardless of charter rates development.
“One-year time charter rates were up in the
first half of the second quarter but up to now they have declined
again by about 15% compared to their highs in mid-May. They are
about 75% lower than their levels a year ago but they are still
higher than their pre-pandemic levels. However, the direction they
will take during the rest of 2023 and 2024 remains quite uncertain
based on the projected supply and demand trends. There is good news
on the economic front as it appears that the attack on inflation
via interest rates increases has worked without causing a
recession, at least, in the developed economies; undoubtedly,
stronger economic growth is positive for containerized trade and
containership demand. But there remain geopolitical uncertainties
and, quite importantly, a large orderbook of containership vessels
to be delivered over the next 2-3 years that the market needs to
absorb. The latter seems a difficult task despite the expectation
that fleet growth is to be somewhat mitigated by greenhouse gas
emission regulations that will force some vessels to either reduce
their speeds or stop trading.
“We believe we are well insulated from market
volatility and expect to generate significant cash flow reserves
that will allow us to comfortably fund the equity portion of our
remaining seven newbuilding vessels, continue our dividend and
share repurchase program and still have a significant war chest to
pursue investment opportunities in an accretive way to our
shareholders.
“Within the aforementioned concept we published
our third Environmental, Social and Governance (ESG) Report. Our
ESG report for 2022 presents our priorities and goals, reports on a
wide range of sustainability-related Key Performance Indicators and
provides extensive information about the ways in which our Company
manages its impact on the environment, its people and society.”
Tasos Aslidis, Chief Financial Officer
of Euroseas commented: “Within the second quarter of 2023
the container charter market has slightly improved as compared to
the first quarter of the year. Still the charter rates observed in
the second quarter of 2023 are significantly lower compared to the
ones of the same period of 2022. Despite the significant decrease
in the charter rates, our results for the second quarter of 2023
are slightly lower compared to the same period of 2022. This was
due to the fact that most of our vessels are employed in time
charter contracts booked before the decline of the market rates
started. During the second quarter of 2023, we operated 17.95
vessels versus 16.46 vessels during the same period of last year.
Our net revenues decreased to $47.7 million in the second quarter
of 2023 compared to $48.5 million during the same period of last
year. On a per-vessel-per-day basis, our vessels earned a 10.6%
lower average charter rate in the second quarter of 2023 as
compared to the same period of 2022.
“Daily vessel operating expenses, including
management fees, averaged $7,114 per vessel per day during the
second quarter of 2023 as compared to $7,080 per vessel per day for
the same quarter of last year, and $7,220 per vessel per day for
the first half of 2023 as compared to $6,867 per vessel per day for
the same period of 2022, reflecting a 0.4% and 5.1% increase,
respectively, which was attributable to the higher prices for all
the categories of vessel supplies paid for our vessels compared to
the same period of 2022. General and administrative expenses
averaged $715 per vessel per day during the second quarter of 2023
as compared to $652 per vessel per day for the same quarter of last
year, and $728 per vessel per day for the first half of 2023 as
compared to $667 per vessel per day for the same period of 2022.
The increase is mainly due to inflation adjustments.
“Adjusted EBITDA during the second quarter of
2023 was $30.6 million versus $34.2 million in the second quarter
of last year. As of June 30, 2023, our outstanding debt (excluding
the unamortized loan fees) was $132.8 million versus restricted and
unrestricted cash of $38.2 million. As of the same date, our
scheduled bank debt repayments over the next 12 months amounted to
about $45.6 million (excluding the unamortized loan fees), and we
are in compliance with all our loan covenants.”
Second Quarter 2023 Results:
For the second quarter of 2023, the Company
reported total net revenues of $47.7 million representing a 1.6%
decrease over total net revenues of $48.5 million during the second
quarter of 2022 which was a result of the decreased time charter
rates our vessels earned in the second quarter of 2023 compared to
the same period of 2022, partly offset by the increase in the
average number of vessels owned and operated in the second quarter
of 2023 compared to the same period of 2022. On average, 17.95
vessels were owned and operated during the second quarter of 2023
earning an average time charter equivalent rate of $30,151 per day
compared to 16.46 vessels in the same period of 2022 earning on
average $33,714 per day. The Company reported a net income for the
period of $28.9 million, as compared to a net income of $30.7
million, respectively, for the same period of 2022.
Vessel operating expenses were $10.3 million in
the second quarter of 2023 as compared to $9.4 million for the
second quarter of 2022. The increase is due to the higher average
number of vessels owned and operated in the second quarter of 2023
compared to the corresponding period of 2022, as well as due to
inflationary increases, resulting in higher prices being paid for
all the categories of vessel supplies.
Depreciation expense for the second quarter of
2023 amounted to $5.6 million compared to $4.1 million for the same
period of 2022 due to the increased number of vessels in the
Company’s fleet and the fact that the two new vessels acquired at
the end of May and June 2022 and the new-building vessel delivered
in April 2023, 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 second
quarter of 2023 were also slightly increased to $1.3 million from
$1.2 million for the same period of 2022 due to the higher number
of vessels in our fleet and the adjustment for inflation in the
daily vessel management fee, effective from January 1, 2023,
increasing it from 720 Euros to 775 Euros, partly offset by the
favorable movement of the euro/dollar exchange rate.
General and administrative expenses amounted to
$1.2 million for the second quarter of 2023, as compared to $1.0
million for the second quarter of 2022. This increase is mainly
attributable to the increased cost of our stock incentive plan.
In the second quarter of 2023 none of our
vessels was drydocked, with an amount of $0.4 million accounted for
drydocking expenses incurred in relation to upcoming drydockings.
In the corresponding period of 2022, the total cost was $0.7
million, where one of our vessels completed her intermediate survey
in water, while another one was drydocked in order to pass her
special survey, which was completed in the third quarter of
2022.
Interest and other financing costs for the
second quarter of 2023 amounted to $1.2 million, after deducting
capitalized interest of $1.2 million charged on the cost of our
newbuilding program, for a total interest and other financing cost
of $2.4 million, compared to $1.1 million for the same period of
2022. 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 2022.
For the three months ended June 30, 2023, the
Company recognized a $3.7 million realized gain and a $2.7 million
unrealized loss for a total of $1.0 million gain on its interest
rate swap contracts. For the three months ended June 30, 2022, the
Company recognized a $0.06 million realized loss and a $0.03
unrealized gain for a total of $0.03 million loss on its interest
rate swap contracts.
Adjusted EBITDA for the second quarter of 2023
was $30.6 million compared to $34.2 million achieved during the
second quarter of 2022.
Basic and diluted earnings per share for the
second quarter of 2023 was $4.17 and $4.15, calculated on 6,919,716
basic and 6,956,447 diluted weighted average number of shares
outstanding, compared to basic and diluted earnings per share of
$4.26 and $4.24, respectively, for the second quarter of 2022,
calculated on 7,224,424 basic and 7,258,436 diluted weighted
average number of shares outstanding.
Excluding the effect on the income of the
unrealized loss / (gain) on derivatives, the amortization of below
market time charters acquired and the vessel depreciation charged
on 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
June 30, 2023 would have been $4.19 per share basic and $4.17
diluted, respectively, compared to adjusted earnings of $4.10 and
$4.08 per share basic and diluted for the quarter ended June 30,
2022. Usually, security analysts do not include the above items in
their published estimates of earnings per share.
First Half 2023 Results:
For the first half of 2023, the Company reported
total net revenues of $89.6 million representing a 4.5% decrease
over total net revenues of $93.9 million during the first half of
2022. On average, the Company owned and operated 17.52 vessels
during the first half of 2023, earning an average time charter
equivalent rate of $29,714 per day. For the same period of 2022 the
Company owned and operated 16.23 vessels that earned on average
$33,843 per day. The Company reported a net income for the period
of $57.6 million, as compared to a net income of $60.7 million, for
the first half of 2022.
Vessel operating expenses for the first half of
2023 amounted to $20.1 million as compared to $17.8 million for the
same period of 2022. The increase is due to the higher average
number of vessels owned and operated in the first half of 2023
compared to the corresponding period of 2022, in addition to the
increased crewing costs for our vessels compared to the same period
of 2022, as well as due to inflationary increases, resulting in
higher prices being paid for all the categories of vessel
supplies.
Depreciation expense for the first half of 2023
was $10.9 million compared to $7.8 million during the same period
of 2022, due to the increased number of vessels in the Company’s
fleet and the fact that the two new vessels acquired at the end of
May and June 2022 and the new-building vessel delivered in April
2024 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 first half
of 2023 increased to $2.8 million from $2.3 million for the same
period of 2022 as a result of the higher number of vessels in our
fleet and the adjustment for inflation in the daily vessel
management fee, effective from January 1, 2023, increasing it from
720 Euros to 775 Euros.
General and administrative expenses amounted to
$2.3 million for the first half of 2023, as compared to $2.0
million for the same period of 2022. This increase is mainly
attributable to the increased cost of our stock incentive plan.
In the first half of 2023 one of our vessels
completed her special survey with drydock for a total cost of
approximately $0.6 million, with an amount of $0.4 million
accounted for drydocking expenses incurred in relation to upcoming
drydockings. In the same period of 2022, three of our vessels
completed their intermediate survey in water, one of our vessels
completed her special survey with drydock and another entered into
a drydock in order to complete her special survey; the latter was
completed within the third quarter of 2022. The total cost of the
drydockings for the first half of 2022 was $2.5 million.
Finally, during the first half of 2023 and 2022,
we had other operating income of $1.4 million and other operating
expenses of $0.35 million, respectively. The operating income for
the first half of 2023 relates to loss of hire insurance for two of
our vessels, while the operating expense for the first half of 2022
relates to the settlement of accounts with charterers. The results
of the Company for the first half of 2023 include a $5.2 million
gain on sale of M/V “Akinada Bridge” that was completed in January
2023.
Interest and other financing costs for the first
half of 2023 amounted to $2.1 million, after deducting capitalized
interest of $2.3 million charged on the cost of our newbuilding
program, for a total interest and other financing cost of $4.4
million, compared to $2.1 million for the same period of 2022. This
increase is due to the increased amount of debt and the increase in
the weighted average LIBOR / SOFR rate of our bank loans in the
current period compared to the same period of 2022. For the six
months ended June 30, 2023 the Company recognized a $4.0 million
realized gain and a $3.3 million unrealized loss for a total of
$0.7 million gain on its interest rate swap contracts. For the six
months ended June 30, 2022 the Company recognized a $0.1 million
realized loss and a $2.4 million unrealized gain for a total of
$2.3 million gain on its interest rate swap
contracts.
Adjusted EBITDA for the first half of 2023 was
$56.6 million compared to $65.3 million achieved during the first
half of 2022.
Basic and diluted earnings per share
attributable to common shareholders for the first half of 2023 was
$8.28 calculated on 6,958,748 basic and $8.25, calculated on
6,985,422 diluted weighted average number of shares outstanding
compared to basic and diluted earnings per share of $8.40 and $8.36
respectively, for the first half of 2022, calculated on 7,223,189
basic and 7,256,434 diluted weighted average number of shares
outstanding.
Excluding the effect on the income for the first
half of the year of the unrealized loss / (gain) on derivatives,
the amortization of below market time charters acquired, the vessel
depreciation charged on portion of the consideration of vessels
acquired with attached time charters allocated to below market time
charters and the gain on sale of a vessel (if any), the adjusted
earnings per share attributable to common shareholders for the
six-month period ended June 30, 2023 would have been $7.29 and
$7.26, basic and diluted, respectively, compared to adjusted
earnings per share of $7.81 basic and $7.77 diluted for the same
period in 2022. As mentioned above, usually, security analysts do
not include the above items in their published estimates of
earnings per share.
Share Repurchase Program:The
Board of Directors approved the extension of the $20 million share
repurchase program, originally approved last year, for another
year. To date, about $8.1 million has been used to repurchase
396,615 shares of the Company. The Board will review again the
program after a period of 12 months or when the original $20
million are used. As previously stated, share repurchases will be
made from time to time for cash in open market transactions at
prevailing market prices or in privately negotiated transactions.
The timing of purchases and amount under the program will be
determined by management based upon market conditions and other
factors. The program does not require the Company to purchase any
specific number of shares or amount and may be suspended or
reinstated at any time at the Company's discretion and without
notice.
Fleet Profile:
The Euroseas Ltd. fleet profile is as follows:
Name |
Type |
Dwt |
TEU |
Year Built |
Employment(*) |
TCE Rate ($/day) |
Container Carriers |
|
|
|
|
|
|
MARCOS V(*) |
Intermediate |
72,968 |
6,350 |
2005 |
TC until Dec-24 plus 12 months option |
$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 Apr-25 |
$23,000 |
EMMANUEL P(*) |
Intermediate |
50,796 |
4,250 |
2005 |
TC until Aug-23then until Apr-25 |
$19,000$21,000 |
RENA P(*) |
Intermediate |
50,796 |
4,250 |
2007 |
TC until Aug-23then until Apr-25 |
$20,250$21,000 |
EM KEA(*) |
Feeder |
42,165 |
3,100 |
2007 |
TC until May-26 |
$19,000 |
GREGOS(*) |
Feeder |
37,237 |
2,800 |
2023 |
TC until Apr-26 |
$48,000 |
TERATAKI(*) |
Feeder |
37,237 |
2,800 |
2023 |
TC until Jul-26 |
$48,000 |
EM ASTORIA (*) |
Feeder |
35,600 |
2,788 |
2004 |
TC until Feb-24then until Feb-25 |
$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 Jul-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 May-24 |
$15,000 |
JOANNA(*) |
Feeder |
22,301 |
1,732 |
1999 |
TC until Jan-24 |
$13,900 |
AEGEAN EXPRESS(*) |
Feeder |
18,581 |
1,439 |
1997 |
TC until Aug-23 |
$13,000 |
Total Container Carriers on the Water |
19 |
740,512 |
58,861 |
|
|
|
Vessels under construction |
Type |
Dwt |
TEU |
To be delivered |
Employment |
TCE Rate (4/day) |
TENDER SOUL (H4236) |
Feeder |
37,237 |
2,800 |
Q1 2024 |
|
|
LEONIDAS Z (H4237) |
Feeder |
37,237 |
2,800 |
Q2 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 |
7 |
215,734 |
16,600 |
|
|
|
Note: (*) 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 (+). (**) Rate is net of commissions
(commissions are typically 5-6.25%).
Summary Fleet Data:
|
Three months, ended June 30,
2022 |
|
Three months, ended June 30,
2023 |
|
Six months, endedJune 30,
2022 |
|
Six months, endedJune 30,
2023 |
|
FLEET DATA |
|
|
|
|
Average number of vessels (1) |
16.46 |
|
17.95 |
|
16.23 |
|
17.52 |
|
Calendar days for fleet (2) |
1,498.0 |
|
1,632.0 |
|
2,938.0 |
|
3,171.0 |
|
Scheduled off-hire days incl. laid-up (3) |
6.2 |
|
0.0 |
|
58.6 |
|
0.0 |
|
Available days for fleet (4) = (2) - (3) |
1,491.8 |
|
1,632.0 |
|
2,879.4 |
|
3,171.0 |
|
Commercial off-hire days (5) |
0.0 |
|
0.0 |
|
5.3 |
|
28.9 |
|
Operational off-hire days (6) |
4.8 |
|
3.8 |
|
11.0 |
|
40.8 |
|
Voyage days for fleet (7) = (4) - (5) - (6) |
1,487.0 |
|
1,628.2 |
|
2,863.1 |
|
3,101.3 |
|
Fleet utilization (8) = (7) / (4) |
99.7 |
% |
99.8 |
% |
99.4 |
% |
97.8 |
% |
Fleet utilization, commercial (9) = ((4) - (5)) / (4) |
100.0 |
% |
100.0 |
% |
99.8 |
% |
99.1 |
% |
Fleet utilization, operational (10) = ((4) - (6)) / (4) |
99.7 |
% |
99.8 |
% |
99.6 |
% |
98.7 |
% |
|
|
|
|
|
AVERAGE DAILY RESULTS |
|
|
|
|
Time charter equivalent rate (11) |
33,714 |
|
30,151 |
|
33,843 |
|
29,714 |
|
Vessel operating expenses excl. drydocking expenses (12) |
7,080 |
|
7,114 |
|
6,867 |
|
7,220 |
|
General and administrative expenses (13) |
652 |
|
715 |
|
667 |
|
728 |
|
Total vessel operating expenses (14) |
7,732 |
|
7,829 |
|
7,534 |
|
7,948 |
|
Drydocking expenses (15) |
477 |
|
249 |
|
852 |
|
316 |
|
(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 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 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, pool
agreements 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) Daily vessel operating expenses, which
include crew costs, provisions, deck and engine stores, lubricating
oil, insurance, maintenance and repairs and related party
management fees are calculated 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 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. TVOE is 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) Drydocking expenses include expenses during
drydockings that would have been capitalized and amortized under
the deferral method divided by the fleet calendar days for the
relevant period. 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, August 9, 2023 at 10:00 a.m. Eastern Time,
the Company's management will host a conference call and webcast 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 13740510. 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 for the second quarter
ended June 30, 2023 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.
Euroseas Ltd. Unaudited
Consolidated Condensed Statements of
Operations(All amounts expressed in U.S. Dollars –
except number of shares)
|
Three Months Ended June 30, |
Three Months Ended June 30, |
Six Months Ended June 30, |
Six Months Ended June 30, |
|
2022 |
2023 |
2022 |
2023 |
|
(unaudited) |
(unaudited) |
Revenues |
|
|
|
|
Time charter revenue |
50,329,436 |
|
49,311,751 |
|
97,448,528 |
|
92,771,677 |
|
Commissions |
(1,849,827 |
) |
(1,616,162 |
) |
(3,595,381 |
) |
(3,139,471 |
) |
Net revenues |
48,479,609 |
|
47,695,589 |
|
93,853,147 |
|
89,632,206 |
|
|
|
|
|
|
Operating expenses/(income) |
|
|
|
|
Voyage expenses |
197,262 |
|
219,540 |
|
551,286 |
|
619,286 |
|
Vessel operating expenses |
9,431,572 |
|
10,298,601 |
|
17,830,465 |
|
20,142,818 |
|
Drydocking expenses |
714,818 |
|
406,514 |
|
2,502,744 |
|
1,001,882 |
|
Vessel depreciation |
4,106,538 |
|
5,616,645 |
|
7,827,654 |
|
10,888,582 |
|
Related party management fees |
1,173,912 |
|
1,311,603 |
|
2,345,944 |
|
2,752,178 |
|
Other operating (income) / expenses |
- |
|
(139,511 |
) |
350,000 |
|
(1,429,511 |
) |
General and administrative expenses |
977,409 |
|
1,167,359 |
|
1,960,481 |
|
2,308,006 |
|
Gain on sale of vessel |
- |
|
- |
|
- |
|
(5,158,370 |
) |
Total operating expenses |
16,601,511 |
|
18,880,751 |
|
33,368,574 |
|
31,124,871 |
|
|
|
|
|
|
Operating income |
31,878,098 |
|
28,814,838 |
|
60,484,573 |
|
58,507,335 |
|
|
|
|
|
|
Other (expenses)/income |
|
|
|
|
Interest and other financing costs |
(1,132,171 |
) |
(1,199,728 |
) |
(2,146,602 |
) |
(2,087,399 |
) |
(Loss) / gain on derivatives, net |
(32,613 |
) |
987,883 |
|
2,309,904 |
|
743,633 |
|
Foreign exchange gain / (loss) |
36,262 |
|
7,234 |
|
37,314 |
|
(27,436 |
) |
Interest income |
266 |
|
265,434 |
|
947 |
|
496,782 |
|
Other (expenses)/ income, net |
(1,128,256 |
) |
60,823 |
|
201,563 |
|
(874,420 |
) |
Net income |
30,749,842 |
|
28,875,661 |
|
60,686,136 |
|
57,632,915 |
|
Weighted average number of shares, basic |
7,224,424 |
|
6,919,716 |
|
7,223,189 |
|
6,958,748 |
|
Earnings per share, basic |
4.26 |
|
4.17 |
|
8.40 |
|
8.28 |
|
Weighted average number of shares, diluted |
7,258,436 |
|
6,956,447 |
|
7,256,434 |
|
6,985,422 |
|
Earnings per share, diluted |
4.24 |
|
4.15 |
|
8.36 |
|
8.25 |
|
Euroseas Ltd. Unaudited
Consolidated Condensed Balance Sheets(All amounts
expressed in U.S. Dollars – except number of shares)
|
December 31,2022 |
|
June 30, 2023 |
|
|
|
|
|
ASSETS |
|
|
|
|
Current
Assets: |
|
|
|
|
Cash and cash equivalents |
25,845,333 |
|
31,841,476 |
|
Trade accounts receivable, net |
572,961 |
|
976,496 |
|
Other receivables |
5,515,311 |
|
7,796,257 |
|
Inventories |
2,306,177 |
|
2,572,426 |
|
Restricted cash |
2,193,173 |
|
972,338 |
|
Prepaid expenses |
350,206 |
|
1,105,850 |
|
Due from related company |
32,146 |
|
- |
|
Derivatives |
1,142,682 |
|
444,068 |
|
Asset held for sale |
8,909,172 |
|
- |
|
Total current assets |
46,867,161 |
|
45,708,911 |
|
Fixed
assets: |
|
|
|
|
Vessels, net |
216,570,426 |
|
249,127,642 |
|
Long-term
assets: |
|
|
|
|
Advances for vessels under construction |
59,083,594 |
|
93,816,071 |
|
Derivatives |
2,669,244 |
|
73,007 |
|
Restricted cash |
3,400,000 |
|
5,400,000 |
|
Total assets |
328,590,425 |
|
394,125,631 |
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Long-term bank loans, current portion |
55,419,815 |
|
45,255,407 |
|
Trade accounts payable |
5,160,068 |
|
3,667,935 |
|
Liability associated with asset held for sale |
3,556,641 |
|
- |
|
Accrued expenses |
1,756,383 |
|
1,294,811 |
|
Accrued dividends |
66,375 |
|
150,625 |
|
Deferred revenue |
7,730,422 |
|
11,592,977 |
|
Due to related company |
- |
|
1,141,102 |
|
Total current
liabilities |
73,689,704 |
|
63,102,857 |
|
|
|
|
|
|
Long-term
liabilities: |
|
|
|
|
Long-term bank loans, net of current portion |
51,812,086 |
|
86,542,876 |
|
Fair value of below market time charters acquired |
34,933,438 |
|
27,296,214 |
|
Total long-term
liabilities |
86,745,524 |
|
113,839,090 |
|
Total
liabilities |
160,435,228 |
|
176,941,947 |
|
|
|
|
|
|
Shareholders’
equity: |
|
|
|
|
Common stock (par value $0.03, 200,000,000 shares authorized,
7,116,206 and 6,995,752, issued and outstanding) |
213,486 |
|
209,873 |
|
Additional paid-in
capital |
260,539,222 |
|
258,970,263 |
|
Accumulated deficit |
(92,597,511 |
) |
(41,996,452 |
) |
Total shareholders’ equity |
168,155,197 |
|
217,183,684 |
|
Total liabilities and shareholders’ equity |
328,590,425 |
|
394,125,631 |
|
Euroseas Ltd.Unaudited
Consolidated Condensed Statements of Cash Flows
(All amounts expressed in U.S. Dollars)
|
Six MonthsEnded June 30, |
|
Six MonthsEnded June 30, |
|
2022 |
|
2023 |
|
|
|
|
Cash flows from operating
activities: |
|
Net income |
60,686,136 |
|
57,632,915 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
Vessel depreciation |
7,827,654 |
|
10,888,582 |
|
Amortization of deferred
charges |
166,993 |
|
192,381 |
|
Share-based compensation |
431,502 |
|
680,294 |
|
Gain on sale of vessel |
- |
|
(5,158,370 |
) |
Unrealized (gain) / loss on
derivatives |
(2,410,656 |
) |
3,294,851 |
|
Amortization of fair value of
below market time charters acquired |
(3,063,787 |
) |
(7,637,224 |
) |
Changes in operating assets and liabilities |
399,823 |
|
(93,621 |
) |
Net cash provided by operating activities |
64,037,665 |
|
59,799,808 |
|
|
|
|
Cash flows from investing
activities: |
|
|
Cash paid for vessels under
construction |
(30,161,477 |
) |
(78,087,935 |
) |
Cash paid for vessel acquisitions
and capitalized expenses |
(36,504,636 |
) |
(80,688 |
) |
Cash paid for vessel
improvements |
(580,791 |
) |
(113,857 |
) |
Net proceeds from sale a
vessel |
- |
|
10,100,598 |
|
Net cash used in investing activities |
(67,246,904 |
) |
(68,181,882 |
) |
|
|
|
Cash flows from financing
activities: |
|
|
Cash paid for share
repurchase |
(346,631 |
) |
(2,206,846 |
) |
Dividends paid |
(3,615,593 |
) |
(6,952,895 |
) |
Loan arrangement fees paid |
- |
|
(481,000 |
) |
Proceeds from long-term bank
loans |
- |
|
52,000,000 |
|
Repayment of long-term bank
loans |
(13,770,921 |
) |
(27,145,000 |
) |
Offering expenses paid |
(27,838 |
) |
(56,877 |
) |
Net cash (used in) / provided by financing
activities |
(17,760,983 |
) |
15,157,382 |
|
|
|
|
Net (decrease) / increase in
cash, cash equivalents and restricted cash |
(20,970,222 |
) |
6,775,308 |
|
Cash, cash equivalents and restricted cash at beginning of
period |
31,498,229 |
|
31,438,506 |
|
Cash, cash equivalents and restricted cash at end of
period |
10,528,007 |
|
38,213,814 |
|
Cash breakdown
Cash and cash equivalents |
4,952,773 |
31,841,476 |
Restricted cash, current |
175,234 |
972,338 |
Restricted cash, long-term |
5,400,000 |
5,400,000 |
Total cash, cash equivalents and restricted cash shown in
the statement of cash flows |
10,528,007 |
38,213,814 |
|
|
|
Euroseas Ltd.
Reconciliation of Net income to Adjusted EBITDA
(All amounts expressed in U.S. Dollars)
|
Three MonthsEndedJune 30,
2022 |
Three MonthsEndedJune 30,
2023 |
Six MonthsEndedJune 30, 2022 |
Six MonthsEndedJune 30, 2023 |
Net income |
30,749,842 |
|
28,875,661 |
|
60,686,136 |
|
57,632,915 |
|
Interest and other financing costs, net (incl. interest
income) |
1,131,905 |
|
934,294 |
|
2,145,655 |
|
1,590,617 |
|
Vessel depreciation |
4,106,538 |
|
5,616,645 |
|
7,827,654 |
|
10,888,582 |
|
Gain on sale of vessel |
- |
|
- |
|
- |
|
(5,158,370 |
) |
Loss / (gain) on interest rate swap derivatives, net |
32,613 |
|
(987,883 |
) |
(2,309,904 |
) |
(743,633 |
) |
Amortization of below market time charters acquired |
(1,845,547 |
) |
(3,839,709 |
) |
(3,063,787 |
) |
(7,637,224 |
) |
Adjusted EBITDA |
34,175,351 |
|
30,599,008 |
|
65,285,754 |
|
56,572,887 |
|
Adjusted EBITDA
Reconciliation:Euroseas Ltd. considers Adjusted EBITDA to
represent net income before interest, income taxes, depreciation,
loss / (gain) on interest rate swap derivatives, gain on sale of
vessel and amortization 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 liquidity position and
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 financial
costs, loss / (gain) on interest rate swaps, gain on sale of
vessel, depreciation and amortization of below market time charters
acquired. 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 Net income to Adjusted net
income(All amounts expressed in U.S. Dollars –
except share data and number of shares)
|
Three MonthsEndedJune
30,2022 |
Three MonthsEndedJune
30,2023 |
Six MonthsEndedJune
30,2022 |
Six MonthsEndedJune 30,2023 |
Net income |
30,749,842 |
|
28,875,661 |
|
60,686,136 |
|
57,632,915 |
|
Unrealized (gain) / loss on derivatives |
(26,892 |
) |
2,693,251 |
|
(2,410,656 |
) |
3,294,851 |
|
Amortization of below market time charters acquired |
(1,845,547 |
) |
(3,839,709 |
) |
(3,063,787 |
) |
(7,637,224 |
) |
Gain on sale of vessel |
- |
|
- |
|
- |
|
(5,158,370 |
) |
Depreciation on the portion of the consideration of vessels
acquired with attached time charters allocated to below market time
charters |
709,793 |
|
1,292,974 |
|
1,204,601 |
|
2,571,745 |
|
Adjusted net income |
29,587,196 |
|
29,022,177 |
|
56,416,294 |
|
50,703,917 |
|
Adjusted earnings per share, basic |
4.10 |
|
4.19 |
|
7.81 |
|
7.29 |
|
Weighted average number of shares, basic |
7,224,424 |
|
6,919,716 |
|
7,223,189 |
|
6,958,748 |
|
Adjusted earnings per share, diluted |
4.08 |
|
4.17 |
|
7.77 |
|
7.26 |
|
Weighted average number of shares, diluted |
7,258,436 |
|
6,956,447 |
|
7,256,434 |
|
6,985,422 |
|
Adjusted net income and Adjusted
earnings per share Reconciliation:Euroseas Ltd. considers
Adjusted net income to represent net income before unrealized
(gain) / loss on derivatives, gain on sale of vessel, amortization
of below market time charters acquired, and 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 19 vessels, including
12 Feeder containerships and 7 Intermediate containerships.
Euroseas 19 containerships have a cargo capacity of 58,861 teu.
After the delivery of seven feeder containership newbuildings in
2024, Euroseas’ fleet will consist of 26 vessels with a total
carrying capacity of 75,461teu.
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 |
_____________________1 Adjusted EBITDA, Adjusted
net income and Adjusted earnings per share are not recognized
measurements under US 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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