EuroDry reports USD 6.27 million net income in fourth quarter

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EuroDry, an owner and operator of drybulk vessels and provider of seaborne transportation for drybulk cargoes, announced its results for the three and twelve-month periods ended December 31, 2022.

Fourth Quarter 2022 Highlights:

  • Total net revenues of $15.1 million.
  • Net income attributable to common shareholders of $6.3 million or $2.21 and $2.20 earnings per share basic and diluted, respectively.
  • Adjusted net income attributable to common shareholders1 for the quarter of $3.3 million, or, $1.18 per share basic and diluted, respectively.
  • Adjusted EBITDA1 was $7.3 million.
  • An average of 10.1 vessels were owned and operated during the fourth quarter of 2022 earning an average time charter equivalent rate of $16,689 per day. Refer to a subsequent section of the Press Release for the definition and method of calculation of time charter equivalent rate.
  • As of February 10, 2023, we had repurchased 147,362 shares of our common stock in the open market for $2.1 million, under our repurchase plan of up to $10 million, announced in August 2022.

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1Adjusted EBITDA, Adjusted net income and Adjusted earnings 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.

Full Year 2022 Highlights:

  • Total net revenues of $70.2 million.
  • Net income attributable to common shareholders of $33.5 million, or $11.66 and $11.61 earnings per share basic and diluted, respectively.
  • Adjusted net income attributable to common shareholders1 for the period was $28.4 million or $9.90 and $9.85 adjusted earnings per share basic and diluted, respectively.
  • Adjusted EBITDA1 was $43.2 million.

An average of 10.4 vessels were owned and operated during the twelve months of 2022 earning an average time charter equivalent rate of $21,304 per day. Refer to a subsequent section of the Press Release for the definition and method of calculation of time charter equivalent rate.

Aristides Pittas, Chairman and CEO of EuroDry commented:

“The drybulk market declined significantly since October 2022 with the spot rates and Baltic indices for Panamax and Kamsarmax vessels falling by more than 50% while one-year time charter rates declined by about 15%. As our fleet is mostly employed in short term or index-linked charters, the market drop was reflected in our earnings for the quarter.

“Slowdown of imports to China, worldwide economic unease as well as trade seasonality resulted in the drop of demand which coupled with the easing of port congestion resulted in the overall weakness of the market. While it is unclear how quickly the demand factors can be reversed, there are certain developments that could act as catalysts for the recovery of drybulk demand. China’s return to “normality” after the back-and-forth on its COVID policy, end of the war in Ukraine possibly leading to reconstruction of the country and a predictable investment environment with inflation under control could go long way to enabling drybulk demand to return to historically average levels and beyond.

“However, our biggest source of optimism comes from the historically low orderbook as percentage of the fleet which should limit fleet growth over the next 2-3 years. Environmental regulations could further influence supply growth either by forcing some vessels to leave service or reducing their operational speed.

“We believe we are well positioned to take advantage of the developing trends in the market environment despite the low rates in the near term. We are focused on expanding our fleet either by acquisitions of individual vessels or fleets based on our strong balance sheet and, possibly, utilizing our public listing as a consolidation platform. Furthermore, we continue to pursue our share repurchase program as we believe that our share price is currently significantly undervalued.”

Tasos Aslidis, Chief Financial Officer of EuroDry commented: “The net revenues of the fourth quarter of 2022 decreased significantly compared to the same period of 2021 as a result of the time charter equivalent rates our vessels earned during the quarter which were lower by 42.8% compared to the average time charter equivalent rates our vessels earned in the fourth quarter of 2021.

“Total daily vessel operating expenses, including management fees, general and administrative expenses but excluding drydocking costs, averaged $7,035 per vessel per day during the fourth quarter of 2022 as compared to $6,324 per vessel per day for the same quarter of last year, and $6,698 per vessel per day for the entire year of 2022 as compared to $6,456 per vessel per day for the same period of 2021. The increase is mainly attributable to the higher prices paid for the supply of lubricants, spare parts and stores for our vessels compared to the same period of 2021, as a result of the war in Ukraine.

“Adjusted EBITDA during the fourth quarter of 2022 was $7.3 million versus $16.0 million in the fourth quarter of last year. As of December 31, 2022, our outstanding debt (excluding the unamortized loan fees) was $81.9 million, while unrestricted and restricted cash was $37.1 million. As of the same date, our scheduled debt repayments including balloon payments over the next 12 months amounted to about $23.0 million (excluding the unamortized loan fees).”

Fourth Quarter 2022 Results:

For the fourth quarter of 2022, the Company reported total net revenues of $15.1 million representing a 32.3% decrease over total net revenues of $22.3 million during the fourth quarter of 2022 which was the result of the lower time charter rates our vessels earned in the fourth quarter of 2022 compared to the same period of 2021. The Company reported a net income and net income attributable to common shareholders for the period of $6.3 million, as compared to a net income of $16.0 million and a net income attributable to common shareholders of $15.2 million for the same period of 2021.

For the fourth quarter of 2022, voyage expenses, net amounted to $0.8 million as compared to positive voyage expenses of $0.2 million resulting from gain on bunkers in the same period of 2021. Vessel operating expenses were $4.9 million for the fourth quarter of 2022 as compared to $3.7 million for the same period of 2021. The increase is mainly attributable to the increased number of vessels operating in the fourth quarter of 2022 compared to the corresponding period in 2021 as well as the higher prices paid for the supply of lubricants, spare parts and stores for our vessels compared to the same period of 2021, as a result of the war in Ukraine. Depreciation expense for the fourth quarter of 2022 amounted to $2.6 million, as compared to $2.3 million for the same period of 2021. This increase is due to the higher number of vessels operating in the fourth quarter of 2022 as compared to the same period of 2021. General and administrative expenses for the fourth quarter of 2022 remained at the same level of $0.9 million compared to the fourth quarter of 2021. During the fourth quarter of 2022, one of our vessels completed her special survey with drydocking, which has commenced in the third quarter of 2022, for a drydocking cost for the quarter of $0.4 million, while there were no vessels undergoing drydocking during the fourth quarter of 2021. On September 8, 2022, the Company agreed to sell M/V Pantelis, a 74,020 dwt drybulk vessel, built in 2000, for approximately $9.7 million, resulting in a gain on sale of $2.9 million. The vessel was delivered to her new owners, an unaffiliated party, on October 17, 2022.

Interest and other financing costs for the fourth quarter of 2022 increased to $1.5 million as compared to $0.7 million for the same period of 2021. Interest expense during the fourth quarter of 2022 was higher mainly due to the increased amount of debt and the increased benchmark rates of our loans during the period as compared to the same period of last year. For the three months ended December 31, 2022, the Company recognized a gain on four interest rate swaps of $0.1 million and a gain on forward freight agreement (“FFA”) contracts of $0.04 million, as compared to a gain on four interest rate swaps of $0.2 million and a gain on FFA contracts of $1.4 million for the same period of 2021.

On average, 10.1 vessels were owned and operated during the fourth quarter of 2022 earning an average time charter equivalent rate of $16,689 per day compared to 9.0 vessels in the same period of 2021 earning on average $29,157 per day.

Adjusted EBITDA for the fourth quarter of 2022 was $7.3 million compared to $16.0 million achieved during the fourth quarter of 2021.

Basic and diluted earnings per share attributable to common shareholders for the fourth quarter of 2022 was $2.21 calculated on 2,833,440 basic and $2.20 calculated on 2,853,273 diluted weighted average number of shares outstanding, compared to $5.38 basic and $5.32 diluted calculated on 2,827,316 basic and 2,859,573 diluted weighted average number of shares outstanding for the third quarter of 2021.

Excluding the effect of the unrealized gain on derivatives and gain on sale of a vessel on the earnings attributable to common shareholders for the quarter, the adjusted earnings attributable to common shareholders for the quarter ended December 31, 2022 would have been $1.18 per share basic and diluted, compared to adjusted earnings of $4.34 per share basic and $4.29 per share diluted for the quarter ended December 31, 2021. Usually, security analysts do not include the above items in their published estimates of earnings per share.

Full Year 2022 Results:

For the full year of 2022, the Company reported total net revenues of $70.2 million representing a 8.9% increase over total net revenues of $64.4 million during the twelve months of 2021, as a result of the increased number of vessels, partly offset by the lower time charter rates earned by our vessels in the twelve months of 2022 compared to the same period of 2021. The Company reported a net income and net income attributable to common shareholders for the period of $33.5 million, as compared to a net income of $31.2 million and a net income attributable to common shareholders of $29.4 million, for the same period of 2021.

For the twelve months of 2022, a gain on bunkers resulted in positive voyage expenses of $2.0 million, as compared to positive voyage expenses of $0.8 million in the same period of 2021. Vessel operating expenses were $19.3 million for the twelve months of 2022 as compared to $13.6 million for the same period of 2021. The increase is attributable to the increased number of vessels operating in 2022 compared to the corresponding period in 2021, as well as the higher prices paid for the supply of lubricants, spare parts and stores for our vessels compared to the same period of 2021, as a result of the war in Ukraine. Depreciation expenses for the twelve months of 2022 were $10.8 million compared to $7.7 million during the same period of 2021, mainly due to the higher number of vessels operating in the same period.

On average, 10.4 vessels were owned and operated during the twelve months of 2022 earning an average time charter equivalent rate of $21,304 per day compared to 7.9 vessels in the same period of 2021 earning on average $24,222 per day. In the twelve months of 2022, five vessels underwent special survey and one vessel passed her intermediate survey in water (in lieu of drydock) for a total cost of $4.8 million, while there were no vessels undergoing drydocking in the twelve months of 2021. General and administrative expenses increased to $3.1 million during the twelve months of 2022 as compared to $2.6 million in the last year. This increase is mainly attributable to the increased cost of our stock incentive plan. Related party management fees for the twelve months of 2022 were $3.0 million compared to $2.4 million for the same period of 2021 as a result of the higher number of vessels in our fleet, partly offset by the favorable movement of the euro/dollar exchange rate. On September 8, 2022, the Company agreed to sell M/V Pantelis, a 74,020 dwt drybulk vessel, built in 2000, for approximately $9.7 million, resulting in a gain on sale of $2.9 million. The vessel was delivered to her new owners, an unaffiliated party, on October 17, 2022.

Interest and other financing costs for the twelve months of 2022 amounted to $3.9 million compared to $2.3 million the same period of 2021. Interest expense for the period was higher due to the increased amount of debt and the increased benchmark rates of our loans during the period as compared to the same period of last year. For the twelve months ended December 31, 2022, the Company recognized a $2.2 million unrealized gain and a $0.1 million realized loss on five interest rate swaps, as well as a 0.04 million unrealized gain and a $1.1 million realized gain on FFA contracts as compared to a $0.6 million unrealized gain and a $0.3 million realized loss on four interest rate swaps and a $0.1 million unrealized gain and a $4.2 million realized loss on FFA contracts for the same period of 2021. For the twelve months ended December 31, 2021, loss on debt extinguishment was $1.6 million and related to the conversion of part of our related party loan, amounting to $3.3 million, into common shares of the Company. The difference between the share price less the conversion price was reflected in loss on debt extinguishment. No such case existed in 2022.

Adjusted EBITDA for the twelve months of 2022 was $43.2 million compared to $42.3 million achieved during the twelve months of 2021.

Basic and diluted earnings per share attributable to common shareholders for the twelve months of 2022 was $11.66, calculated on 2,876,320 basic and $11.61, calculated on 2,889,991diluted weighted average number of shares outstanding, compared to basic and diluted earnings per share attributable to common shareholders of $11.63, calculated on 2,528,507 basic and $11.54, calculated on 2,548,950 diluted weighted average number of shares outstanding, for the same period of 2021.

Excluding the effect of the unrealized gain on derivatives and the gain on sale of a vessel on the earnings attributable to common shareholders for the year, the adjusted earnings attributable to common shareholders for the year ended December 31, 2022 would have been $9.90 and $9.85 per share basic and diluted, respectively, compared to adjusted earnings of $11.98 and $11.88 per share basic and diluted, respectively, for 2021, after excluding unrealized gain on derivatives and loss on debt extinguishment. As previously mentioned, usually, security analysts do not include the above items in their published estimates of earnings per share.

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