Euroseas posts high profit, completes sale of three containerships

Euroseas_Pittas

Euroseas, an owner and operator of container carrier vessels and provider of seaborne transportation for containerized cargoes, announced its results for the three and six month period ended June 30, 2020.

Second Quarter 2020 Financial Highlights:

• Total net revenues of $13.5 million. Net income of $1.3 million and net income attributable to common shareholders (after a $0.2 million dividend on Series B Preferred Shares) of $1.1 million or $0.20 earnings per share basic and diluted. Adjusted net income attributable to common shareholders1 for the period was $1.4 million or $0.25 per share basic and diluted.
• Adjusted EBITDA1 was $4.4 million.

• An average of 19.00 vessels were owned and operated during the second quarter of 2020 earning an average time charter equivalent rate of $9,458 per day.

First Half 2020 Financial Highlights:

• Total net revenues of $28.9 million. Net income of $3.2 million; net income attributable to common shareholders (after a $0.3 million of dividend on Series B Preferred Shares) of $2.9 million or $0.52 earnings per share basic and diluted. Adjusted net income attributable to common shareholders1 for the period was $2.3 million or $0.42 per share basic and diluted.

• Adjusted EBITDA1 was $8.4 million.
• An average of 19.00 vessels were owned and operated during the first half of 2020 earning an average time charter equivalent rate of $9,541 per day.

Other Developments

During the second quarter of 2020, the Company agreed with certain of its lenders to defer a portion of its 2020 loan repayments to be repaid together with the respective balloon installments. A total of $4.7 million was rescheduled to December 2021 or within 2022. Furthermore, the Company agreed with the holders of its Series B Preferred Shares to have the option of paying the quarterly dividends in-kind, for the period from April 1, 2020 to January 29, 2021, by issuing additional Series B Preferred Shares and increasing the dividend rate to 9% (from 8%) if paid in-kind.

During July 2020, the Company completed the sale of three of its vessels, M/V Manolis P, M/V EM Oinousses and M/V Kuo Hsiung for a total of approximately $7.6 million of net proceeds of which $7.0 million was used to repay the outstanding loans of the vessels.

Aristides Pittas, Chairman and CEO of Euroseas commented: “The second quarter of 2020 turned out to be highly profitable despite the challenges of the pandemic which affected the charter rates of our vessels in the second half of the period and the numerous operational difficulties that we encountered. We have responded quickly to address the possibility of cash flow squeeze issues by agreeing with certain of our banks to defer installments and relax restricted cash covenants in case such liquidity is needed. At the same time, certain planned sales of our vessels for scrap were delayed and eventually completed in Q3 at lower prices, as a result of lockdowns and declines in scrap steel demand. In addition, port lockdowns have affected our ability to change crew on board our vessels. We have taken relevant measures to ensure our crew members’ and shore employees’ health and safety, despite the ongoing hurdles and travel restrictions imposed by lockdowns around the world.

“Looking forward, however, we are encouraged with the starting recovery of the charter market in late July 2020, but we still believe that the economic uncertainties remain high due to both the possibility of recurrence of the COVID-19 pandemic and the continuing trade tensions between the U.S. and China, which affect the containership markets. The record low orderbook remains a positive characteristic of the containership sector which would allow a resumption of trade to normal levels to be translated in much improved market rates. In the meantime, our focus remains on ensuring that our vessels remain employed. On the strategic front, we continue to evaluate opportunities for mergers with other fleets or vessel acquisitions by issuing shares at non-dilutive levels.”

Tasos Aslidis, Chief Financial Officer of Euroseas commented: “The results of the second quarter of 2020 reflect the significantly increased net revenues compared to the same period of 2019, as we operated an average of 19.0 vessels, versus 11.0 vessels during the same period last year, even though two of our vessels remained idle during the quarter waiting to be scrapped. Our results have also benefitted from other income of $2.7 million, net related to insurance proceeds for our vessel M/V EM Oinousses, which had been idle since January 2020 and compensated for the costs and LOH incurred both in Q1 and Q2.

“Total daily vessel operating expenses, including management fees, general and administrative expenses but excluding drydocking costs, averaged $6,120 per vessel per day during the second quarter of 2020 as compared to $6,423 per vessel per day for the same quarter of last year, and $6,003 per vessel per day for the first half of 2020 as compared to $6,324 per vessel per day for the same period of 2019, reflecting a 4.7% and 5.1% decrease, respectively, which is attributed to the different composition of our fleet during the periods. As always, we want to emphasize that cost control remains a key component of our strategy.”

“Adjusted EBITDA during the second quarter of 2020 was $4.4 million versus $1.6 million in the second quarter of last year. As of June 30, 2020, our outstanding debt (excluding the unamortized loan fees) was
$84.3 million versus restricted and unrestricted cash of $3.9 million. As of the same date, our scheduled bank debt repayments over the next 12 months amounted to about $13.4 million (excluding the unamortized loan fees), and we are in compliance with all our loan covenants.”

Second Quarter 2020 Results:
For the second quarter of 2020, the Company reported total net revenues of $13.5 million representing a 67.2% increase over total net revenues of $8.1 million during the second quarter of 2019 which was a result of the increased average number of vessels in the second quarter of 2020 compared to the same period of 2019. Market charter rates during the second quarter of 2020 were on average at higher levels for our containership vessels compared to the corresponding period in 2019 due to the different composition of our fleet, which in the second quarter of 2020 contained younger and larger vessels on average compared to the corresponding period in 2019, which was also reflected in the average earnings of our ships. The Company reported net income for the period of $1.3 million and net income attributable to common shareholders of $1.1 million, as compared to a net loss of $0.7 million and a net loss attributable to common shareholders of $1.7 million, respectively, for the same period of 2019. Drydocking expenses amounted to $0.4 million during the second quarter of 2020 as one vessel passed its intermediate survey in water and another vessel its special survey in-water. In the corresponding period of 2019, one vessel passed its intermediate survey in- water. Depreciation expenses for the second quarter of 2020 amounted to $1.7 million compared to $0.8 million for the same period of 2019. Vessel operating expenses were $8.5 million in the second quarter of 2020 as compared to $5.0 million for the second quarter of 2019, mainly due to the increased average number of vessels operated due to the increased number of vessels in the Company’s fleet. General and administrative expenses amounted to $0.8 million for the second quarter of 2020 marginally higher compared to $0.7 million for the second quarter of 2019. On average, 19.0 vessels were owned and operated during the second quarter of 2020 earning an average time charter equivalent rate of $9,458 per day compared to
11.0 vessels in the same period of 2019 earning on average $8,307 per day.

Interest and other financing costs for the second quarter of 2020 amounted to $1.1 million compared to $0.8 million for the same period of 2019. Interest during the second quarter of 2020 was higher due to higher average outstanding debt during the period as compared to the same period of last year, partly offset by the decreased Libor rates of our bank loans during the period as compared to the same period of last year.

Adjusted EBITDA for the second quarter of 2020 was $4.4 million compared to $1.6 million achieved during the second quarter of 2019.

Basic and diluted earnings per share attributable to common shareholders for the second quarter of 2020 was $0.20 calculated on 5,576,960 basic and diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $1.12 for the second quarter of 2019, calculated on 1,542,508 basic and diluted weighted average number of shares outstanding.

Excluding the effect on the income attributable to common shareholders for the quarter of the unrealized loss on derivatives and the amortization of below time market charters acquired, the adjusted earnings per share attributable to common shareholders for the quarter ended June 30, 2020 would have been $0.25, compared to adjusted loss of $1.14 per share basic and diluted for the quarter ended June 30, 2019. Usually, security analysts do not include the above items in their published estimates of earnings per share.

First Half 2020 Results:
For the first half of 2020, the Company reported total net revenues of $28.9 million representing a 76.3% increase over total net revenues of $16.4 million during the first half of 2019, as a result of the increased average number of vessels. Market charter rates in the six months of 2020 were on average at higher levels for our containership vessels compared to the first six months of 2019 due to the different composition of our fleet, which in the first six months of 2020 contained younger and larger vessels on average compared to the corresponding period in 2019, which was also reflected in the average earnings of our ships. The Company reported net income for the period of $3.2 million and net income attributable to common shareholders of $2.9 million, as compared to a net loss of $0.8 million and a net loss attributable to common shareholders of $2.2 million respectively, for the first half of 2019. Depreciation expenses for the first half of 2020 were $3.4 million compared to $1.6 million during the same period of 2019. On average, 19.0 vessels were owned and operated during the first half of 2020 earning an average time charter equivalent rate of $9,541 per day compared to 11.0 vessels in the same period of 2019 earning on average $8,693 per day.

Interest and other financing costs for the first half of 2020 amounted to $2.4 million compared to $1.5 million for the same period of 2019. This increase is due to the increased amount of debt in the current period compared to the same period of 2019, partly offset by the decreased Libor rates of our bank loans during the period as compared to the same period of last year.

Adjusted EBITDA for the first half of 2020 was $8.4 million compared to $3.0 million achieved during the first half of 2019.

Basic and diluted earnings per share attributable to common shareholders for the first half of 2020 was $0.52, calculated on 5,576,960 basic and diluted weighted average number of shares outstanding compared to basic and diluted loss per share of $1.44 for the first half of 2019, calculated on 1,542,508 basic and diluted weighted average number of shares outstanding.

Excluding the effect on the income attributable to common shareholders for the first half of the year of the unrealized loss on derivatives and the amortization of below market time charters acquired, the adjusted earnings per share attributable to common shareholders for the six-month period ended June 30, 2020 would have been $0.42, compared to adjusted net loss of $1.47 per share basic and diluted for the same period in 2019. As mentioned above, usually, security analysts do not include the above items in their published estimates of earnings per share.

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