Euroseas announced its results for the three month period ended March 31, 2016.
First Quarter 2016 Highlights:
•Total net revenues of $6.5 million. Net loss of $2.8 million; net loss attributable to common shareholders (after a $0.4 million of dividend on Series B Preferred Shares) of $3.3 million or $0.40 loss per share basic and diluted. Adjusted net loss attributable to common shareholders1 for the period was $3.0 million or $0.38 loss per share basic and diluted.
•Adjusted EBITDA1 was ($0.1) million.
•An average of 11.54 vessels were owned and operated during the first quarter of 2016 earning an average time charter equivalent rate of $6,565 per day.
•The Company declared its ninth dividend of $0.4 million on its Series B Preferred shares; the dividend was paid in-kind by issuing additional Series B Preferred Shares.
•Finally, as previously announced, the Company sold its vessel, M/V Captain Costas, a 1992-built containership for scrap for approximately $2.8 million in gross proceeds. The vessel was delivered to its buyers in May 2016.
1Adjusted EBITDA, Adjusted net loss and Adjusted loss per share are not recognized measurements under 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 U.S. GAAP.
Aristides Pittas, Chairman and CEO of Euroseas commented: “The beginning of 2016 found both the drybulk and containership markets at historical low levels with drybulk rates in particular staying below operating cost levels. While the drybulk market improved in April, it has given up some of the gains in May with rates currently hovering around operating cost levels. Containership rates for our vessels are just above operating cost levels having not recovered after the Chinese New Year as it was expected. In midst of such a challenging environment, a significant supply side correction is under way, especially in the drybulk sector, with high levels of scrapping but more importantly with cancellation of newbuilding projects. These reactions alongside the very low level of new orders placed provide the best hope for the medium term recovery of the markets. In the absence of a meaningful recovery of demand, which depends mainly on developments in China for the drybulk market and Europe for the containership one, we expect both segments to struggle to find a clear direction in the remaining of the year.
“We have been focusing in managing our cash flow and liquidity due to the dire markets but at the same time trying to take advantage of this very market to renew our fleet most optimally. In February, we refinanced part of our indebtedness extending the maturity and reducing debt repayments; our efforts in this front are continuing and promising. Also, in February, we took delivery of our first Kamsarmax newbuilding, M/V Xenia, which commenced a four-year charter at a daily rate significantly above the present market levels. We expect to take delivery of two of the remaining vessels of our newbuilding program, two Ultramaxes, in 2016 according to the schedule provided by the yard. The remaining third vessel of our newbuilding program, a Kamsarmax, is scheduled for 2018. On the investment front, we are looking for opportunities to replace our older vessels with vessels several years younger with minimal incremental investment as prices for vessels older than 15-years, especially containerships, have been squeezed around scrap prices. In that context, we sold in May our vessel M/V Captain Costas, one of our eldest containerships; we intend to replace it with a vessel several years younger and looking for opportunities to that respect.”
Tasos Aslidis, Chief Financial Officer of Euroseas commented: “The results of the first quarter of 2016 reflect the continued depressed state of the drybulk and container markets. Comparing our results for the first quarter of 2016 with the same period of 2015, our net revenues declined by about $1.6 million and incurred $0.1 million lower voyage expenses. Operating expenses, including management fees and general and administrative expenses decreased by approximately $2.4 million as compared to the first quarter of 2015. This was mainly due to the operation of 11.54 vessels during the first quarter of 2016 versus 15 vessels during the same period of last year; on a per-vessel-per-day basis, operating expenses, including management fees and general and administrative expenses declined by 6.3% during the first quarter of 2016 as compared to the same period in 2015. General and administrative expenses, which increased by about $0.03 million (i.e. 3.3%) as compared to the first quarter of 2015, show a larger increase if expressed on a per-vessel-per-day basis again due to the fewer vessels operated during the quarter. We believe that we continue to maintain one of the lowest operating cost structures amongst the public shipping companies which, we believe, is one of our competitive advantages.
“Adjusted EBITDA during the first quarter of 2016 was ($0.1) million versus $(1.8) million in the first quarter of last year.
“As of March 31, 2016, our outstanding debt (excluding the unamortized loan fees) is about $55.0 million versus restricted and unrestricted cash of about $12.6 million. We are compliance with all our loan covenants subject to finalization of documentation of an in-principle agreement for the relaxation of loan-to-value covenant with certain of our banks.”
First Quarter 2016 Results:
For the first quarter of 2016, the Company reported total net revenues of $6.5 million representing a 20.0% decrease over total net revenues of $8.2 million during the first quarter of 2015. The Company reported a net loss for the period of $2.8 million and a net loss attributable to common shareholders of $3.3 million, as compared to a net loss of $5.4 million and $5.8 million respectively for the first quarter of 2015. The results for the first quarter of 2016 include a $0.1 million unrealized loss on derivatives and a $0.1 million realized loss on derivatives, similar to the same period of 2015. There were no drydocking expenses during the first quarter of the year 2016 as compared to $0.5 million for the first quarter of 2015. Depreciation expense for the first quarter of 2016 amounts to $2.1 million compared to $2.9 million for the same period of 2015. On average, 11.54 vessels were owned and operated during the first quarter of 2016 earning an average time charter equivalent rate of $6,565 per day compared to 15.00 vessels in the same period of 2015 earning on average $6,501 per day.
Adjusted EBITDA for the first quarter of 2016 was ($0.1) million up from $(1.8) million achieved during the first quarter of 2015. Please see below for Adjusted EBITDA reconciliation to net loss and cash flow provided by operating activities.
Basic and diluted loss per share for the first quarter of 2016 was $0.40, calculated on 8,104,860 weighted average number of shares outstanding compared to basic and diluted loss per share of $1.00 for the first quarter of 2015, calculated on 5,783,231 weighted average number of shares outstanding.
Excluding the effect on the loss for the quarter of the unrealized loss and realized loss on derivatives, the adjusted loss per share for the quarter ended March 31, 2016 would have been $0.38 per share basic and diluted, compared to the loss, for the quarter ended March 31, 2015 of $0.97 per share basic and diluted. Usually, security analysts do not include the above items in their published estimates of earnings per share.