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,
2023.
Third Quarter 2023 Financial
Highlights:
- Total net revenues of $50.7
million. Net income of $32.2 million or $4.67 and $4.65
earnings per share basic and diluted, respectively. Adjusted net
income1 for the period was $28.2 million or $4.08 and $4.07
per share basic and diluted.
- Adjusted EBITDA1 was $34.5
million.
- An average of 19.0 vessels were
owned and operated during the third quarter of 2023 earning an
average time charter equivalent rate of $30,074 per day.
- Declared a quarterly dividend of
$0.50 per share for the third quarter of 2023 payable on or about
December 16, 2023 to shareholders of record on December 9, 2023 as
part of the Company’s common stock dividend plan.
- As previously announced, on July 6,
2023 we took delivery of M/V Terataki, an Eco EEDI Phase 3, 2,800
teu feeder containership newbuilding from Hyundai Mipo Dockyard
Co., in South Korea. The vessel is 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 National Bank of Greece S.A. Following its delivery,
M/V Terataki commenced a thirty-six to forty months charter with
Asyad Lines at a daily rate of $48,000 per day.
- On July 25, 2023 we announced new
charters for our two 4,250 teu containerships, 2007-built Rena P
and 2005-built Emmanuel P at $21,000 per vessel per day following a
mutually agreed termination of their existing charters. The new
charters commenced in August 2023, for a minimum period of twenty
to a maximum period of twenty-four months, at the option of the
charterer.
- As of November 9, 2023 we had
repurchased 400,705 of our common stock in the open market for a
total of about $8.2 million, under our share repurchase plan of up
to $20 million announced in May 2022.
Nine Months 2023 Financial
Highlights:
- Total net revenues of $140.3
million. Net income of $89.8 million or $12.95 and
$12.90 earnings per share basic and diluted, respectively.
Adjusted net income1 for the period was $78.9 million or $11.37 and
$11.33 per share basic and diluted, respectively.
- Adjusted EBITDA1 was $91.1
million.
- An average of 18.0 vessels were
owned and operated during the first nine months of 2023 earning an
average time charter equivalent rate of $29,843 per day.
Aristides Pittas, Chairman and CEO of
Euroseas commented:“By the end of the third quarter of
2023, containership market rates were down 20-25% for the types of
vessels in our fleet as compared to June 2023; and, furthermore
during October and early November, they continued their decline
dropping approximately another 5%. Still, present charter rates
are, for the segments we operate, higher, and in several cases
significantly higher, than their level during December 2019, just
before the pandemic. A drop in demand, the reduction of
inefficiencies in the global transportation system and a spike in
vessel deliveries ordered during the boom years has caused the rate
declines.
“As it is evident, one of the challenges in the
market is the absorption of the containership orderbook still
standing at about 26.6% of the existing fleet. This orderbook is
heavily concentrated on the larger containership segments and much
less so on the feeder size segments we operate. In addition, the
age profile of the feeder fleet contains a percentage, about 25%,
of vessels older than 20 years of age which are primary candidates
for removal affected by the declined market and the operating and
economic challenges imposed by the greenhouse gas regulation
requirements. However, although the size of the feeder fleet could
decline and provide some better supply/demand balance for the
segment and, consequently, some protection to further rate
pressures, the tone in the market will likely be set by the large
orderbook of the intermediate and large containership sectors.
“Based on the contracted revenue backlog of more
than $400 million we have developed during 2021 and 2022, we
believe we are largely insulated from developments in the charter
market during 2024. Additionally, we have a significant secured
revenue base for 2025 having covered more than 25% of our operating
days at highly profitable levels. Our liquidity is growing fast
which will enable us to easily fund the equity portion of our 7
vessel strong newbuilding program, continue paying a very
meaningful dividend and executing on our share repurchasing program
and also leave us with ample free cash to acquire further vessels
when we deem the timing appropriate.
“In that respect we will continue our quarterly
dividend of $0.50 per share and continue executing on our share
repurchase program as we believe that repurchasing our stock which
is trading significantly below its charter adjusted net asset
value, represents a great investment opportunity.”
Tasos Aslidis, Chief Financial Officer
of Euroseas commented: “The results of the third quarter
of 2023 reflect time charter rates that our vessels earned in the
third quarter of 2023 at approximately the same level compared to
the corresponding period of 2022. The Company operated an average
of 19.0 vessels, versus 18.0 vessels during the same period last
year. Our net revenues increased to $50.7 million in the third
quarter of 2023 compared to $46.0 million during the same period of
last year. On a per-vessel-per-day basis, our vessels earned a 2.7%
lower average charter rate in the third quarter of 2023 as compared
to the same period of 2022. 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 2023, averaged $7,692 per vessel per day, as
compared to $7,180 for the same period of last year and $7,858 per
vessel per day for the first nine months of 2023 as compared to
$7,406 per vessel per day for the same period of 2022. The
increased operating expenses in the recent periods are attributable
to the higher prices for all the categories of vessel supplies paid
for our vessels compared to the same period of 2022.
Adjusted EBITDA during the third quarter of 2023
was $34.5 million versus $26.2 million in the third quarter of last
year, and $91.1 million versus $91.5 million for the respective
nine-month periods of 2023 and 2022.
As of September 30, 2023, our outstanding debt
(excluding the unamortized loan fees) was $138.4 million versus
unrestricted and restricted cash of $54.4 million. As of the same
date, our scheduled debt repayments over the next 12 months
amounted to about $29.4 million (excluding the unamortized loan
fees).”
Third Quarter 2023 Results:For
the third quarter of 2023, the Company reported total net revenues
of $50.7 million representing a 10.3% increase over total net
revenues of $46.0 million during the third quarter of 2022 which
was mainly the result of the higher number of vessels owned and
operated in the third quarter of 2023 compared to the corresponding
period of 2022. The Company reported a net income for the period of
$32.2 million, as compared to a net income of $25.2 million, for
the third quarter of 2022. On average, 19.0 vessels were owned and
operated during the third quarter of 2023 earning an average time
charter equivalent rate of $30,074 per day compared to 18.0 vessels
in the same period of 2022 earning on average $30,893 per
day.
Vessel operating expenses for the third quarter
of 2023 amounted to $11.0 million as compared to $9.7 million for
the same period of 2022. The increased amount is mainly due to the
higher number of vessels owned and operated in the third quarter of
2023 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 third quarter of
2023 amounted to $5.9 million compared to $5.3 million for the same
period of 2022 due to the increased number of vessels in the
Company’s fleet and the fact that the new-building vessels
delivered in April and July 2023, have a higher average daily
depreciation charge as a result of their higher acquisition price
compared to the remaining vessels.
In the third quarter of 2023 the Company
recorded an impairment charge of $13.8 million. The impairment was
booked to reduce the carrying amount of a containership (M/V
“Jonathan P”) to its estimated market value, since based on the
Company’s impairment test results it was determined that its
carrying amount was not recoverable.
Related party management fees for the three
months ended September 30, 2023 were $1.5 million compared to $1.3
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.
General and administrative expenses amounted to
$0.9 million for the third quarter of 2023 remaining at
approximately the same level compared to the third quarter of
2022.
In the third quarter of 2023 none of our vessels
were drydocked. An amount of $0.1 million was accounted for
drydocking expenses incurred in relation to upcoming drydockings.
In the corresponding period of 2022, two of our vessels completed
their special survey with drydock for a total cost of $3.7
million.
In the third quarter of 2023, a gain on time
charter agreements termination of $16.0 million was recognized in
connection with the write-off of the outstanding balance of the
attached time charter liability recognized as part of the
acquisitions of two of our vessels in 2022, which was fully
amortized in August 2023 due to the early termination of the
respective attached time charter agreements. No such case existed
in the corresponding period in 2022.
Finally, in the third quarter of 2023, we had
other operating income of $0.2 million. The other operating income
relates to loss of hire insurance for one of our vessels.
Interest and other financing costs for the third
quarter of 2023 amounted to $1.8 million, after deducting
capitalized interest of $0.9 million charged on the cost of our
newbuilding program, for a total interest and other financing cost
of $2.7 million, compared to $1.4 million for the same period of
2022, after deducting capitalized interest of $0.2 million charged
on the cost of our newbuilding program, for a total interest and
other financing cost of $1.6 million. This increase is due to the
increased amount of debt and increase in the weighted average
benchmark rates of our bank loans in the current period compared to
the same period of 2022.
For the three months ended September 30, 2023
the Company recognized a $0.4 million gain on its interest rate
swap contract, comprising $0.3 million unrealized gain from the
mark-to-market valuation of our outstanding interest rate swap and
a marginal realized gain. 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.
Adjusted EBITDA1 for the third quarter of 2023
increased to $34.5 million compared to $26.2 million achieved
during the third quarter of 2022, primarily due to the increase in
revenues.
Basic and diluted earnings per share for the
third quarter of 2023 were $4.67 and $4.65, respectively,
calculated on 6,899,941 and 6,930,548 basic and diluted weighted
average number of shares outstanding, compared to basic and diluted
earnings per share of $3.50 for the third quarter of 2022,
calculated on 7,199,448 basic and 7,211,204 diluted weighted
average number of shares outstanding.
Excluding the effect on the income for the
quarter of the unrealized gain on derivatives, the amortization of
fair value of below market time charters acquired, the vessel
depreciation on the portion of the consideration of vessels
acquired with attached time charters allocated to below market time
charters and the gain on time charter agreements termination (if
any), the adjusted earnings attributable to common shareholders for
the quarter ended September 30, 2023 would have been $4.08 and
$4.07 per share basic and diluted, respectively, compared to
adjusted earnings of $2.90 per share basic and diluted for the
quarter ended September 30, 2022. Usually, security analysts do not
include the above items in their published estimates of earnings
per share.
Nine Months 2023 Results:For
the first nine months of 2023, the Company reported total net
revenues of $140.3 million representing a 0.4% increase over total
net revenues of $139.8 million during the first nine months of
2022, mainly as a result of the increased number of vessels owned
and operated in the first nine months of 2023 compared to the
corresponding period of 2022, partly offset by the lower average
charter rates our vessels earned. The Company reported a net income
for the period of $89.8 million, as compared to a net income of
$85.9 million for the first nine months of 2022. On average, 18.0
vessels were owned and operated during the first nine months of
2023 earning an average time charter equivalent rate of $29,843 per
day compared to 16.8 vessels in the same period of 2022 earning on
average $32,814 per day.
Vessel operating expenses for the nine-month
period of 2023 amounted to $31.2 million as compared to $27.5
million for the same period of 2022. The increased amount is mainly
due to the higher average number of vessels owned and operated in
the nine months of 2023 compared to the same 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 nine months
of 2023 was $16.8 million compared to $13.2 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 vessels delivered
in April and July 2023, have a higher average daily depreciation
charge as a result of their higher acquisition price compared to
the remaining vessels.
For the nine months of 2023, the Company
recorded an impairment charge of $13.8 million. The impairment was
booked to reduce the carrying amount of a containership (M/V
“Jonathan P”) to its estimated market value, since based on the
Company’s impairment test results it was determined that its
carrying amount was not recoverable.
Related party management fees for the nine
months ended September 30, 2023 were $4.2 million compared to $3.6
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
$3.2 million for the nine-month period ended September 30, 2023, as
compared to $2.9 million for the same period of 2022. This increase
is mainly attributable to the increased cost of our stock incentive
plan.
In the first nine months 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 $0.5 million
accounted for drydocking expenses incurred in relation to upcoming
drydockings. Drydocking expenses amounted to $6.2 million for the
first 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).
In the first nine months of 2023, a gain on time
charter agreements termination of $16.0 million was recognized in
connection with the write-off of the outstanding balance of the
attached time charter liability recognized as part of the
acquisitions of two of our vessels in 2022, which was fully
amortized in August 2023 due to the early termination of the
respective attached time charter agreements. No such case existed
in the corresponding period in 2022.
The results of the Company for the nine months
of 2023 include a $5.2 million gain on sale of M/V “Akinada Bridge”
that was completed in January 2023.
Finally, during the nine month periods of 2023
and 2022, we had other operating income of $1.6 million and other
operating expenses of $0.35 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 2023 relates to loss of hire insurance for two of
our vessels.
Interest and other financing costs for the first
nine months of 2023 amounted to $3.9 million, after deducting
capitalized interest of $3.2 million charged on the cost of our
newbuilding program, for a total interest and other financing cost
of $7.1 million, compared to $3.5 million for the same period of
2022, after deducting capitalized interest of $0.2 million charged
on the cost of our newbuilding program, for a total interest and
other financing cost of $3.7 million. This increase is due to the
increased amount of debt and the increase in the weighted average
benchmark rates of our bank loans in the current period compared to
the same period of 2022. For the nine months ended September 30,
2023 the Company recognized a $1.1 million gain on its interest
rate swap contracts. For the nine months ended September 30, 2022
the Company recognized a $4.1 million gain on its interest rate
swap contracts.
Adjusted EBITDA1 for the first nine months of
2023 was $91.1 million compared to $91.5 million for the first nine
months of 2022.
Basic and diluted earnings per share for the
first nine months of 2023 were $12.95 and $12.90, respectively,
calculated on 6,938,930 and 6,964,967 basic and diluted weighted
average number of shares outstanding, compared to basic and diluted
earnings per share of $11.91 and $11.86 for the first nine months
of 2022, respectively, calculated on 7,215,189 and 7,240,848 basic
and diluted weighted average number of shares
outstanding.
Excluding the effect on the income for the first
nine months of 2023 of the unrealized (gain) / loss on derivatives,
the amortization of fair value of below market time charters
acquired, the vessel depreciation on the portion of the
consideration of vessels acquired with attached time charters
allocated to below market time charters, the gain on time charter
agreements termination (if any) and the gain on sale of vessel (if
any), the adjusted earnings per share for the nine-month period
ended September 30, 2023 would have been $11.37 and $11.33 basic
and diluted, respectively, compared to adjusted earnings of $10.71
and $10.67 per share basic and diluted, respectively, for the same
period in 2022. As mentioned above, usually, security analysts do
not include the above items in their published estimates of
earnings per share.
Fleet Profile:
The Euroseas Ltd. fleet profile is as follows
Name |
Type |
Dwt |
TEU |
Year Built |
Employment(*) |
TCE Rate ($/day) |
Container Carriers |
|
|
|
|
|
|
MARCOS V(*) |
Intermediate |
72,968 |
6,350 |
2005 |
TC until Dec-24 TC until Aug-25 |
$42,200$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 |
$18,250 |
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 Apr-25 |
$21,000 |
RENA P(*) |
Intermediate |
50,796 |
4,250 |
2007 |
TC until Apr-25 |
$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 Dec-23 |
$9,000 |
Total Container Carriers on the Water |
19 |
740,512 |
58,861 |
|
|
|
Vessels under construction |
Type |
Dwt |
TEU |
To be delivered |
Employment |
TCE Rate ($/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 |
|
|
|
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 (+).(**) Rate is net of commissions (which are
typically 5-6.25%)
Summary Fleet Data:
|
Three Months, Ended September 30,
2022 |
Three Months, Ended September 30,
2023 |
Nine Months, Ended September 30,
2022 |
Nine Months, Ended
September 30, 2023 |
FLEET DATA |
|
|
|
|
Average number of vessels (1) |
18.0 |
19.0 |
16.8 |
18.0 |
Calendar days for fleet (2) |
1,656.0 |
1,742.0 |
4,594.0 |
4,913.0 |
Scheduled off-hire days incl. laid-up (3) |
114.4 |
- |
173.0 |
- |
Available days for fleet (4) = (2) - (3) |
1,541.6 |
1,742.0 |
4,421.0 |
4,913.0 |
Commercial off-hire days (5) |
- |
- |
5.3 |
28.9 |
Operational off-hire days (6) |
7.4 |
13.2 |
18.4 |
54.0 |
Voyage days for fleet (7) = (4) - (5) - (6) |
1,534.2 |
1,728.8 |
4,397.3 |
4,830.1 |
Fleet utilization (8) = (7) / (4) |
99.5% |
99.2% |
99.5% |
98.3% |
Fleet utilization, commercial (9) = ((4) - (5)) / (4) |
100.0% |
100.0% |
99.9% |
99.4% |
Fleet utilization, operational (10) = ((4) - (6)) / (4) |
99.5% |
99.2% |
99.6% |
98.9% |
|
|
|
|
|
AVERAGE DAILY RESULTS (usd/day) |
|
|
|
|
Time charter equivalent rate (11) |
30,893 |
30,074 |
32,814 |
29,843 |
Vessel operating expenses excl. drydocking expenses (12) |
6,601 |
7,192 |
6,771 |
7,210 |
General and administrative expenses (13) |
579 |
500 |
635 |
648 |
Total vessel operating expenses (14) |
7,180 |
7,692 |
7,406 |
7,858 |
Drydocking expenses (15) |
2,223 |
70 |
1,346 |
229 |
(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
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) 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 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. 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) 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, Thursday, November 9, 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 13742554.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 third quarter
ended September 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 September
30, |
Three Months Ended September
30, |
Nine Months Ended September
30, |
Nine Months Ended September
30, |
|
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
|
|
|
|
|
Revenues |
|
|
|
|
Time charter revenue |
47,736,642 |
|
52,315,773 |
|
145,185,170 |
|
145,087,450 |
|
Commissions |
(1,781,458 |
) |
(1,649,542 |
) |
(5,376,839 |
) |
(4,789,013 |
) |
Net revenues |
45,955,184 |
|
50,666,231 |
|
139,808,331 |
|
140,298,437 |
|
|
|
|
|
|
Operating expenses / (income) |
|
|
|
|
Voyage expenses |
340,844 |
|
323,596 |
|
892,130 |
|
942,882 |
|
Vessel operating expenses |
9,652,894 |
|
11,036,296 |
|
27,483,359 |
|
31,179,114 |
|
Drydocking expenses |
3,681,923 |
|
121,699 |
|
6,184,667 |
|
1,123,581 |
|
Vessel depreciation |
5,347,010 |
|
5,949,853 |
|
13,174,664 |
|
16,838,435 |
|
Related party management fees |
1,278,851 |
|
1,492,923 |
|
3,624,795 |
|
4,245,101 |
|
General and administrative expenses |
958,078 |
|
873,205 |
|
2,918,559 |
|
3,181,211 |
|
Impairment loss |
- |
|
13,832,716 |
|
- |
|
13,832,716 |
|
Other operating (income) / expenses |
- |
|
(216,321 |
) |
350,000 |
|
(1,645,832 |
) |
Gain on time charter agreements termination |
- |
|
(15,984,253 |
) |
- |
|
(15,984,253 |
) |
Gain on sale of vessel |
- |
|
- |
|
- |
|
(5,158,370 |
) |
Total operating expenses, net |
21,259,600 |
|
17,429,714 |
|
54,628,174 |
|
48,554,585 |
|
|
|
|
|
|
Operating income |
24,695,584 |
|
33,236,517 |
|
85,180,157 |
|
91,743,852 |
|
|
|
|
|
|
Other (expenses) / income |
|
|
|
|
Interest and other financing costs |
(1,329,511 |
) |
(1,830,213 |
) |
(3,476,113 |
) |
(3,917,612 |
) |
Gain on derivatives, net |
1,809,263 |
|
388,848 |
|
4,119,167 |
|
1,132,481 |
|
Foreign exchange gain / (loss) |
30,107 |
|
(4,736 |
) |
67,421 |
|
(32,172 |
) |
Interest income |
17,717 |
|
409,334 |
|
18,664 |
|
906,116 |
|
Other income / (expenses), net |
527,576 |
|
(1,036,767 |
) |
729,139 |
|
(1,911,187 |
) |
Net income |
25,223,160 |
|
32,199,750 |
|
85,909,296 |
|
89,832,665 |
|
Weighted average number of shares outstanding, basic |
7,199,448 |
|
6,899,941 |
|
7,215,189 |
|
6,938,930 |
|
Earnings per share, basic |
3.50 |
|
4.67 |
|
11.91 |
|
12.95 |
|
Weighted average number of shares outstanding, diluted |
7,211,204 |
|
6,930,548 |
|
7,240,848 |
|
6,964,967 |
|
Earnings per share, diluted |
3.50 |
|
4.65 |
|
11.86 |
|
12.90 |
|
|
Euroseas Ltd.Unaudited Consolidated
Condensed Balance Sheets(All amounts expressed in
U.S. Dollars – except number of shares) |
|
|
December 31, 2022 |
September 30, 2023 |
|
|
|
ASSETS |
|
|
Current
Assets: |
|
|
Cash and cash equivalents |
25,845,333 |
|
48,341,257 |
|
|
Trade accounts receivable, net |
572,961 |
|
1,583,776 |
|
|
Other receivables |
5,515,311 |
|
8,578,783 |
|
|
Inventories |
2,306,177 |
|
2,747,247 |
|
|
Restricted cash |
2,193,173 |
|
318,245 |
|
|
Prepaid expenses |
350,206 |
|
855,854 |
|
|
Due from related company |
32,146 |
|
- |
|
|
Derivatives |
1,142,682 |
|
421,148 |
|
|
Asset held for sale |
8,909,172 |
|
- |
|
|
Total current assets |
46,867,161 |
|
62,846,310 |
|
|
Fixed
assets: |
|
|
|
Vessels, net |
216,570,426 |
|
272,630,490 |
|
|
Long-term
assets: |
|
|
|
Advances for vessels under construction |
59,083,594 |
|
67,328,530 |
|
|
Derivatives |
2,669,244 |
|
404,275 |
|
|
Restricted cash |
3,400,000 |
|
5,700,000 |
|
|
Total assets |
328,590,425 |
|
408,909,605 |
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Long-term bank loans, current portion |
55,419,815 |
|
29,039,539 |
|
|
Trade accounts payable |
5,160,068 |
|
3,660,559 |
|
|
Liability associated with asset held for sale |
3,556,641 |
|
- |
Accrued expenses |
1,756,383 |
|
2,263,033 |
|
|
Accrued dividends |
66,375 |
|
120,000 |
|
|
Deferred revenue |
7,730,422 |
|
10,536,973 |
|
|
Due to related company |
- |
|
1,141,121 |
|
|
Total current liabilities |
73,689,704 |
|
46,761,225 |
|
|
|
|
|
Long-term
liabilities: |
|
|
Long-term bank loans, net of current portion |
51,812,086 |
|
108,221,758 |
|
|
Fair value of below market time charters acquired |
34,933,438 |
|
8,825,618 |
|
|
Total long-term
liabilities |
86,745,524 |
|
117,047,376 |
|
|
Total
liabilities |
160,435,228 |
|
163,808,601 |
|
|
|
|
|
|
Shareholders’
equity: |
|
|
|
|
Common stock (par value $0.03, 200,000,000 shares authorized,
7,116,206 and 6,953,831, issued and outstanding) |
213,486 |
|
208,615 |
|
|
Additional paid-in
capital |
260,539,222 |
|
258,173,941 |
|
|
Accumulated deficit |
(92,597,511 |
) |
(13,281,552 |
) |
|
Total shareholders’ equity |
168,155,197 |
|
245,101,004 |
|
|
Total liabilities and shareholders’ equity |
328,590,425 |
|
408,909,605 |
|
|
|
Euroseas Ltd. Unaudited Consolidated
Condensed Statements of Cash Flows (All amounts
expressed in U.S. Dollars) |
|
|
Nine Months Ended September
30,2022 |
|
Nine Months Ended September
30,2023 |
|
|
|
|
Cash flows from operating activities: |
|
Net income |
85,909,296 |
|
89,832,665 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
Vessel depreciation |
13,174,664 |
|
16,838,435 |
|
Impairment loss |
- |
|
13,832,716 |
|
Amortization of deferred charges |
250,565 |
|
385,395 |
|
Share-based compensation |
650,829 |
|
821,303 |
|
Gain on
sale of vessel |
- |
|
(5,158,370 |
) |
Amortization of fair value of below market time charters
acquired |
(6,945,691 |
) |
(10,123,567 |
) |
Gain on
time charter agreements termination |
- |
|
(15,984,253 |
) |
Unrealized gain on derivatives |
(4,182,491 |
) |
2,986,503 |
|
Changes
in operating assets and liabilities |
6,490,535 |
|
(2,484,127 |
) |
Net cash provided by operating activities |
95,347,707 |
|
90,946,700 |
|
|
|
|
Cash flows from investing activities: |
|
|
Cash
paid for vessels under construction |
(42,608,461 |
) |
(93,120,238 |
) |
Cash
paid for vessel acquisitions and capitalized expenses |
(36,504,636 |
) |
(48,127 |
) |
Cash
paid for vessel improvements |
(1,172,500 |
) |
(893,171 |
) |
Net
proceeds from sale of a vessel |
- |
|
10,100,598 |
|
Net cash used in investing activities |
(80,285,597 |
) |
(83,960,938 |
) |
|
|
|
Cash flows from financing activities: |
|
|
Cash
paid for share repurchase |
(2,907,090 |
) |
(3,145,435 |
) |
Dividends paid |
(7,220,509 |
) |
(10,460,435 |
) |
Loan
arrangement fees paid |
(115,500 |
) |
(731,000 |
) |
Offering
expenses paid |
(27,838 |
) |
(102,896 |
) |
Proceeds
from long- term bank loans |
19,250,000 |
|
92,000,000 |
|
Repayment of long-term bank loans |
(22,559,460 |
) |
(61,625,000 |
) |
Net cash (used in) / provided by financing
activities |
(13,580,397 |
) |
15,935,234 |
|
|
|
|
Net
increase in cash, cash equivalents and restricted cash |
1,481,713 |
|
22,920,996 |
|
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 |
32,979,942 |
|
54,359,502 |
|
|
Nine Months Ended September
30,2022 |
|
Nine Months Ended September
30,2023 |
|
Cash breakdown |
|
|
|
|
Cash and
cash equivalents |
27,395,261 |
|
48,341,257 |
|
Restricted cash, current |
184,681 |
|
318,245 |
|
Restricted cash, long term |
5,400,000 |
|
5,700,000 |
|
Total cash, cash equivalents and restricted cash shown in
the statement of cash flows |
32,979,942 |
|
54,359,502 |
|
|
|
|
|
|
Euroseas Ltd. Reconciliation of Adjusted
EBITDA to Net income (All amounts expressed in
U.S. Dollars) |
|
Three Months EndedSeptember 30,
2022 |
Three Months EndedSeptember 30,
2023 |
Nine Months EndedSeptember 30,
2022 |
Nine Months EndedSeptember 30,
2023 |
Net income |
25,223,160 |
|
32,199,750 |
|
85,909,296 |
|
89,832,665 |
|
Interest and other financing costs, net (incl. interest
income) |
1,311,794 |
|
1,420,879 |
|
3,457,449 |
|
3,011,496 |
|
Vessel depreciation |
5,347,010 |
|
5,949,853 |
|
13,174,664 |
|
16,838,435 |
|
Impairment loss |
- |
|
13,832,716 |
|
- |
|
13,832,716 |
|
Gain on sale of vessel |
- |
|
- |
|
- |
|
(5,158,370 |
) |
Gain on time charter agreements termination |
- |
|
(15,984,253 |
) |
- |
|
(15,984,253 |
) |
Amortization of fair value of below market time charters
acquired |
(3,881,904 |
) |
(2,486,343 |
) |
(6,945,691 |
) |
(10,123,567 |
) |
Gain on interest rate swap derivatives, net |
(1,809,263 |
) |
(388,848 |
) |
(4,119,167 |
) |
(1,132,481 |
) |
Adjusted EBITDA |
26,190,797 |
|
34,543,754 |
|
91,476,551 |
|
91,116,641 |
|
Adjusted EBITDA
Reconciliation:Euroseas Ltd. considers Adjusted EBITDA to
represent net income before interest and other financing costs,
income taxes, depreciation, impairment loss, gain on interest rate
swap derivatives, net, gain on sale of vessel, gain on time charter
agreements termination 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 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, gain on interest rate swaps,
gain on sale of vessel, gain on time charter agreements
termination, depreciation, impairment loss 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 Adjusted net income
to Net income(All amounts expressed in U.S.
Dollars – except share data and number of
shares) |
|
Three Months EndedSeptember 30,
2022 |
Three Months EndedSeptember 30,
2023 |
Nine
Months EndedSeptember 30,
2022 |
Nine Months EndedSeptember 30,
2023 |
Net income |
25,223,160 |
|
32,199,750 |
|
85,909,296 |
|
89,832,665 |
|
Unrealized (gain) / loss on derivatives |
(1,771,835 |
) |
(308,348 |
) |
(4,182,491 |
) |
2,986,503 |
|
Impairment loss |
- |
|
13,832,716 |
|
- |
|
13,832,716 |
|
Gain on sale of vessel |
- |
|
- |
|
- |
|
(5,158,370 |
) |
Gain on time charter agreements termination |
- |
|
(15,984,253 |
) |
- |
|
(15,984,253 |
) |
Amortization of fair value of below market time charters
acquired |
(3,881,904 |
) |
(2,486,343 |
) |
(6,945,691 |
) |
(10,123,567 |
) |
Vessel depreciation on portion of the consideration of vessels
acquired with attached time charters allocated to below market time
charters |
1,307,189 |
|
927,009 |
|
2,511,790 |
|
3,498,754 |
|
Adjusted net income |
20,876,610 |
|
28,180,531 |
|
77,292,904 |
|
78,884,448 |
|
Adjusted earnings per share, basic |
2.90 |
|
4.08 |
|
10.71 |
|
11.37 |
|
Weighted average number of shares, basic |
7,199,448 |
|
6,899,941 |
|
7,215,189 |
|
6,938,930 |
|
Adjusted earnings per share, diluted |
2.90 |
|
4.07 |
|
10.67 |
|
11.33 |
|
Weighted average number of shares, diluted |
7,211,204 |
|
6,930,548 |
|
7,240,848 |
|
6,964,967 |
|
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, gain on time
charter agreements termination, amortization of below market time
charters acquired, impairment loss 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 noncash
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 75,461 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 |
___________________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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