Euroseas Returns to Profitability During Fourth Quarter

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Euroseas announced its results for the three month period and full year ended December 31, 2017.

Fourth Quarter 2017 Highlights:

Total net revenues of $13.5 million. Net income attributable to common shareholders of $1.5 million or $0.13 earnings per share basic and diluted. This income includes, amongst other items, a $0.5 million dividend on Series B Preferred Shares and a $0.3 million gain on the sale of M/V Aggeliki P. Adjusted net income attributable to common shareholders1 for the period was $1.1 million or $0.10 earnings per share basic and diluted.

Adjusted EBITDA was $4.4 million.

An average of 16.3 vessels were owned and operated during the fourth quarter of 2017 earning an average time charter equivalent rate of $9,083 per day.

The Company declared its sixteenth dividend of $0.5 million on its Series B Preferred Shares; the dividend was paid in-kind by issuing additional Series B Preferred Shares.

Full year 2017 Highlights:

Total net revenues of $42.9 million. Net loss attributable to common shareholders of $7.9 million or $0.71 loss per share basic and diluted. This loss includes, among other items, a $1.8 million dividend on Series B Preferred Shares and a $4.6 million loss on write-down of M/V Aggeliki P and M/V Monica P, which were held for sale since September 30, 2017. M/V Aggeliki P was sold in December 2017. Adjusted net loss attributable to common shareholders for the period was $4.2 million or $0.38 loss per share basic and diluted.

Adjusted EBITDA was $9.3 million.

An average of 14.2 vessels were owned and operated during the twelve months of 2017 earning an average time charter equivalent rate of $8,290 per day.

Aristides Pittas, Chairman and CEO of Euroseas, commented: “During the last quarter of 2017, Euroseas returned to profitability not only because of the recovery of the drybulk and containership markets but also due to its continuous efforts to control its operating, financial and capital cost structure and cash flows. We believe that, over the last couple of years, we have positioned the Company to benefit from the unfolding market recovery by renewing and expanding our fleet in both sectors we operate. In the drybulk sector, after the upcoming delivery of our Kamsarmax newbuilding and the planned sale of our elder handymax unit, we will own a fleet of six vessels from ultramax to kamsarmax size, three Chinese-built in the last two years and three Japanese-built of 2000-04 vintage. In the containership sector, we have a fleet of eleven medium age and elder feeder units that produce earnings at present market levels with low capital investment. ”

“At the same time, we are optimistic about the prospects for both bulkers and containerships as demand for ships is expected by most analysts to remain strong over the next couple of years on the back of strong worldwide economic growth and modest supply pressure. As we have stated in the past, we believe, we can provide a publicly-listed consolidation platform in both sectors. The latter along with accretive acquisitions remain our main strategy for 2018.”

Tasos Aslidis, Chief Financial Officer of Euroseas, commented: “The operating results of the fourth quarter of 2017 reflect the recovered level of charter rates in both the drybulk and containership markets. On average during the fourth quarter of 2017, our vessels earned 19.4% higher time charter equivalent rates than in the fourth quarter of 2016.”

“Total daily vessel operating expenses, including management fees, general and administrative expenses, but excluding drydocking costs, decreased approximately 4.6% during the fourth quarter of 2017 compared to the same quarter of last year, while for the full year 2017 the decrease was approximately 3.8%. As always, we want to emphasize that cost control remains a key component of our strategy.”

“As of December 31, 2017, our outstanding debt (excluding the unamortized loan fees) was $74.4 million versus restricted and unrestricted cash of approximately $13.2 million. We complied with all our debt covenants as of December 31, 2017.”

Fourth Quarter 2017 Results:

For the fourth quarter of 2017, the Company reported total net revenues of $13.5 million representing a 85.2% increase over total net revenues of $7.3 million during the fourth quarter of 2016. The Company reported a net income for the period of $2.0 million and a net income attributable to common shareholders of $1.5 million, as compared to a net loss of $17.6 million and a net loss attributable to common shareholders of $18.1 million for the fourth quarter of 2016. On average, 16.3 vessels were owned and operated during the fourth quarter of 2017 earning an average time charter equivalent rate of $9,083 per day compared to 12.1 vessels in the same period of 2016 earning an average time charter equivalent rate of $7,609 per day.

The results for the fourth quarter of 2017 include a $0.1 million net gain on derivatives and a $0.3 million net gain on sale of a vessel, as compared to a $0.1 million net gain on derivatives, a $5.9 million loss on write-down of vessel held for sale, a $3.8 million loss on termination of a shipbuilding contract and a $4.5 million impairment loss in other investment and investment in joint venture for the same period of 2016.

Depreciation expenses for the fourth quarter of 2017 were $1.9 million, compared to the $2.2 million for the same period of 2016. Although the average number of vessels increased, the new vessels acquired have a lower average daily depreciation charge as a result of their lower initial values (acquisition price) and greater remaining useful life (i.e. m/v Alexandros P) compared to the remaining vessels. In the fourth quarter of 2017, there was no equity loss in joint venture as compared to equity loss of $1.0 million and impairment loss in other investment and investment in joint venture of $4.5 million for the three months ended December 31, 2016, as in 2016, the Company concluded that its equity investment in Euromar and the invested portion of its investment in preferred units of Euromar were entirely impaired and hence the Company ceased recognising income on the preferred units. Euromar is a wholly owned subsidiary of Euroseas since September 2017, but its vessels were substantially under the control of its lenders and were all sold by the end of 2017, and, thus, it has not been consolidated in our results nor any gain or loss from it has been recognized.

Adjusted EBITDA for the fourth quarter of 2017 was $4.4 million compared to $(0.6) million for the same of the fourth quarter of 2016. Please see below for Adjusted EBITDA reconciliation to net loss and cash flow provided by operating activities.

Basic and diluted earnings per share attributable to common shareholders for the fourth quarter of 2017 was $0.13 calculated on 11,113,718 basic and diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $2.17 for the fourth quarter of 2016, calculated on 8,312,708 basic and diluted weighted average number of shares outstanding.

Excluding the effect on the income/(loss) attributable to common shareholders for the quarter of the net gain on derivatives, the net gain on sale of a vessel, the loss on termination of a shipbuilding contract, the loss on write-down of vessels held for sale and the impairment loss of other investment and investment in joint venture, the adjusted earnings per share attributable to common shareholders for the quarter ended December 31, 2017 would have been $0.10 per share basic and diluted compared to net loss of $0.47 per share basic and diluted for the quarter ended December 31, 2016. Usually, security analysts do not include the above items in their published estimates of earnings per share.

Full Year 2017 Results:

For the full year of 2017, the Company reported total net revenues of $42.9 million representing a 51.0% increase over total net revenues of $28.4 million during the twelve months of 2016. The Company reported a net loss for the period of $6.1 million and a net loss attributable to common shareholders of $7.9 million, as compared to a net loss of $44.2 million and a net loss attributable to common shareholders $45.9 million for the twelve months of 2016. On average, 14.2 vessels were owned and operated during 2017 earning an average time charter equivalent rate of $8,290 per day compared to 11.52 vessels in the same period of 2016 earning on average $7,259 per day.

The results for the twelve months of 2017 include a $0.1 million net gain on derivatives, a $0.8 million net gain on sale of two vessels and a $4.6 million loss on write-down of two vessels held for sale, as compared to a $0.1 million net loss on derivatives, a $5.9 million loss on write-down of vessel held for sale, a $7.1 million loss on termination of shipbuilding contracts and a $18.5 million impairment loss in other investment and investment in joint venture for the same period of 2016.

Depreciation expenses for 2017 were $8.4 million compared to $8.8 million during the same period of 2016. Although the average number of vessels increased in the twelve months of 2017 compared to the same period of 2016, the new vessels acquired have a lower average daily depreciation charge as a result of their lower initial values (acquisition price) and greater remaining useful life (i.e. m/v Alexandros P) compared to the remaining vessels. During 2017, there was no equity loss in joint venture and other investment income, as compared to equity loss of $2.4 million and other investment income of $1.0 million for the twelve months ended December 31, 2016, since the equity investment in Euromar and the invested portion of its investment in preferred units of Euromar was entirely impaired in 2016, as mentioned above.

Adjusted EBITDA for 2017 was $9.3 million increasing from the ($1.3) million recorded during 2016. Please see below for Adjusted EBITDA reconciliation to net loss and cash flow provided by operating activities.

Basic and diluted loss per share attributable to common shareholders for 2017 was $0.71 calculated on 11,067,524 basic and diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $5.63 for 2016, calculated on 8,165,703 basic and diluted weighted average number of shares outstanding.

Excluding the effect on the loss attributable to common shareholders of the net gain/loss on derivatives, the net gain on sale of vessels and loss on write-down of vessels held for sale, the loss on termination of shipbuilding contracts and the impairment loss of other investment and investment in joint venture, the adjusted net loss per share attributable to common shareholders for 2017 would have been $0.38 compared to a loss of $1.76 per share basic and diluted for 2016. Usually, security analysts do not include the above items in their published estimates of earnings per share.

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