EuroDry, an owner and operator of drybulk vessels and provider of seaborne transportation for drybulk cargoes, announced its results for the three-month period ended March 31, 2019.
Euroseas contributed to the Company seven subsidiaries comprising its drybulk fleet of six vessels, one Ultramax and two Kamsarmax vessels built between 2016 and 2018, and three Japanese-built Panamax vessels built between 2000 and 2004. The Company was spun-off from Euroseas Ltd. on May 30, 2018. Historical comparative period reflects the results of the carve-out operations of the seven subsidiaries that were contributed to the Company.
First Quarter 2019 Highlights:
- Total net revenues of $5.8 million. Net income of $0.9 million; net income attributable to common shareholders (after a $0.5 million dividend on Series B Preferred Shares) of $0.4 million or $0.18 earnings per share basic and diluted. The results include a $0.9 million or $0.39 per share of unrealized gains on derivatives.
- Adjusted EBITDA1 was $2.5 million.
- An average of 7.0 vessels were owned and operated during the first quarter of 2019 earning an average time charter equivalent rate of $9,472 per day (for the definition of time charter equivalent rate please refer to a subsequent section of the Press Release).
- The Company declared its fourth in-kind dividend of $0.1 million by issuing additional Series B Preferred Shares. The Company also declared a dividend of $0.4 million to be paid in cash, on its Series B Preferred Shares.
1Adjusted EBITDA, Adjusted net income/(loss) and Adjusted earnings/(loss) per share are not recognized measurements under US GAAP (GAAP) and should not be used in isolation or as a substitute for EuroDry’s 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 EuroDry commented:
“During the first quarter of 2019, the drybulk markets continued the declining trend of the fourth quarter of last year as they were affected by trade uncertainties and iron ore supply disruptions. Charter rates reached a bottom in February but have since recovered to their levels in the beginning of the year. For our fleet, this decline was significantly mitigated due to our physical and FFA contracts we put in place in the beginning of the quarter that partly insulated us from the depressed markets.”
“We believe that the recent market slowdown is due to short term factors and that, in the medium and long term, the fundamental supply-demand balance is supportive of an improving market. Low orderbook levels and reduced vessel availability – from unavoidable downtime to implement solutions required for compliance with emissions and ballast water treatment regulation – and possible slowdown of the average speed of the fleet would limit fleet growth and allow any trade recovery to translate to higher charter rates.”
“We continuously evaluate opportunities for investment in vessels or refinancing options that would allow us to use our cash liquidity to generate consistent returns for our existing shareholders or new ones who might take advantage of the significant discount to the NAV that our stock trades at.”
Tasos Aslidis, Chief Financial Officer of EuroDry commented:
“The net revenues of the first quarter of 2019 increased by 24.7% compared to the first quarter of 2018 as a result of the increased number of vessels operating in our fleet compared to the first quarter of 2018 partially offset by the charter rates our vessels earned during the quarter which were lower by 20.4% compared to the average time charter equivalent rate our vessels earned in the first quarter of 2018. More than half of this decline in the average daily charter was mitigated from the realized gain in our FFA contracts.”
“Total daily vessel operating expenses, including management fees, general and administrative expenses, but excluding drydocking costs, decreased approximately 12% during the first quarter of 2019 compared to the same quarter of last year. Although the average number of vessels increased by two vessels, the new vessels acquired have a lower average daily operating expense charge due to their age and condition (one new-built vessel and a Japanese 2004-build Panamax). As always, we want to emphasize that cost control remains a key component of our strategy.”
“Adjusted EBITDA during the first quarter of 2019 was $2.5 compared to $0.1 million achieved for the first quarter of last year. As of March 31, 2019, our outstanding debt (excluding the unamortized loan fees) was $61.7 million versus restricted and unrestricted cash of approximately $12.4 million.“
First Quarter 2019 Results:
For the first quarter of 2019, the Company reported total net revenues of $5.8 million representing a 24.7% increase over total net revenues of $4.6 million during the first quarter of 2018, which was the result of the increased average number of vessels. The Company reported net income for the period of $0.9 million and net income attributable to common shareholders of $0.4 million, as compared to net loss and net loss attributable to common shareholders of $1.4 million for the same period of 2018. Depreciation expenses for the first quarter of 2019 increased to $1.6 million compared to $1.2 million for the same period of 2018 as a result of the increased average number of vessels. Increased general and administrative expenses reflected mainly the operation of the Company as a separate public company following the completion of the Spin-off.
Interest and other financing costs for the first quarter of 2019 amounted to $1.0 million compared to $0.4 million for the same period of 2018. Interest during the first quarter of 2019 was higher due to higher debt and higher Libor during the period as compared to the same period of last year.
On average, 7.0 vessels were owned and operated during the first quarter of 2019 earning an average time charter equivalent rate of $9,472 per day compared to 5.0 vessels in the same period of 2018 earning on average $11,896 per day.
Adjusted EBITDA for the first quarter of 2019 was $2.5 million compared to $0.1 million achieved during the first quarter of 2018.
Basic and diluted earnings per share attributable to common shareholders for the first quarter of 2019 was $0.18 calculated on 2,244,803 basic and 2,252,427 diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $0.65 for the first quarter of 2018, calculated on 2,226,753 basic and diluted weighted average number of shares outstanding.
Excluding the effect on the earnings attributable to common shareholders for the quarter of the unrealized gain on derivatives, the adjusted loss attributable to common shareholders for the quarter ended March 31, 2019 would have been $0.21 per share basic and diluted compared to adjusted loss of $0.69 per share basic and diluted for the quarter ended March 31, 2018. Usually, security analysts do not include the above item in their published estimates of earnings per share.
The EuroDry Ltd. fleet profile is as follows:
|Name||Type||Dwt||Year Built||Employment(*)||TCE Rate ($/day)|
|Dry Bulk Vessels|
|Vessels in the water|
|XENIA||Kamsarmax||82,000||2016||TC until Jan-2020
+ 1 year in Charterers Option
|EIRINI P||Panamax||76,466||2004||TC until Aug-19||Hire 103%
|TASOS||Panamax||75,100||2000||TC until Jun-19||$6,900|
|PANTELIS||Panamax||74,020||2000||TC until Jun-19||$9,850|
|ALEXANDROS P.||Ultramax||63,500||2017||Guardian Navigation GMax LLC Pool||Pool revenue from August 2018|
|EKATERINI||Kamsarmax||82,000||2018||TC until Apr-20||$13,000|
|STARLIGHT||Panamax||75,845||2004||TC until Jul-19||Hire 100%
|Total Dry Bulk Vessels||
(*) Represents the earliest redelivery date
(**) BPI stands for the Baltic Panamax Index; the average BPI 4TC is an index based on four time charter routes.
Summary Fleet Data:
|Three months, ended
March 31, 2018
|Three months, ended
March 31, 2019
|Average number of vessels (1)||5.0||7.0|
|Calendar days for fleet (2)||450.0||630.0|
|Scheduled off-hire days incl. laid-up (3)||43.7||0.0|
|Available days for fleet (4) = (2) – (3)||406.3||630.0|
|Commercial off-hire days (5)||0.0||0.0|
|Operational off-hire days (6)||1.3||2.0|
|Voyage days for fleet (7) = (4) – (5) – (6)||405.0||628.0|
|Fleet utilization (8) = (7) / (4)||99.7||%||99.7||%|
|Fleet utilization, commercial (9) = ((4) – (5)) / (4)||100.0||%||100.0||%|
|Fleet utilization, operational (10) = ((4) – (6)) / (4)||99.7||%||99.7||%|
|AVERAGE DAILY RESULTS|
|Time charter equivalent rate (11)||11,896||9,472|
|Vessel operating expenses excl. drydocking expenses (12)||6,061||4,928|
|General and administrative expenses (13)||572||921|
|Total vessel operating expenses (14)||6,633||5,849|
|Drydocking expenses (15)||3,247||69|
(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 total number of days in a period during which each vessel in our fleet was in our possession net of scheduled off-hire days incl. 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 rate, 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 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 includes crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs and management fees are calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period. Drydocking expenses are reported separately.
(13) Daily general and administrative expense is calculated by dividing other general and administrative expense 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, management fees and other 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, which 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.