Euroseas Ltd., an owner and operator of container carrier vessels and

provider of seaborne transportation for containerized cargoes, announced its results for the three and nine-month period ended September 30, 2020.

Third Quarter 2020 Highlights:

Total net revenues of $12.3 million. Net income of $0.2 million; net income attributable to common shareholders (after a $0.2 million dividend on Series B Preferred Shares) of $0.03 million or $0.01 earnings per share basic and diluted. Adjusted net loss attributable to common shareholders1 for the period was $1.5 million or $0.261 per share basic and diluted.

Adjusted EBITDA1 was $1.2 million.

An average of 16.52 vessels were owned and operated during the third quarter of 2020 earning an average time charter equivalent rate of $8,403 per day.

The Company declared a dividend of $0.2 million on its Series B Preferred Shares as required. The dividend will be paid in-kind by issuing additional Series B Preferred Shares.

On August 3, 2020, the Company issued and sold 200,000 shares of its common stock through its at-the-market offering for net proceeds of approximately $0.7 million.

In September 2020, the Company completed the sale of M/V Ninos for a total of approximately $2.3 million of net proceeds of which $1.0 million was used to repay the outstanding loan of the vessel.
Nine Months 2020 Highlights:

Total net revenues of $41.3 million. Net income of $3.5 million; net income attributable to common shareholders (after a $0.5 million 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 $0.9 million or $0.151 per share basic and diluted.

Adjusted EBITDA1 was $9.7 million.

An average of 18.17 vessels were owned and operated during the first nine months of 2020 earning an average time charter equivalent rate of $9,171 per day.
Recent developments

In November 2020, the Company completed the sale of M/V EM Athens for a total of approximately $4.9 million of net proceeds of which $3.75 million was used to repay the outstanding loan of the vessel. Also, in November 2020, the Company made a supplementary payment of $125,000 in common shares for each of the four vessels it acquired in November 2019 pursuant to the terms of the purchase agreement. The payment was contingent to certain market indices exceeding an agreed upon level, and as a result, the Company issued a total of approximately 161,000 common shares.

Aristides Pittas, Chairman and CEO of Euroseas commented:
“Over the second and third quarters of this year we disposed four of our vessels, including the three eldest ones in our fleet, while in November we also sold the M/V EM Athens, a vessel that would have faced a significant drydocking expense later this year. After the above sales, our fleet numbers 14 vessels with an average age of 15.5 years. In parallel, since July, the feeder and intermediate containership markets have been getting stronger every week reaching –and for several size vessels exceeding – the highs observed over the last decade. If the present levels of rates are sustained, we expect that our vessels will generate significant cash flow and earnings, especially, when the present legacy charters are replaced with ones reflecting the levels of the market.

We are cautiously optimistic about the charter rate developments over the next year as we believe the potential return to normality after the pandemic could restore containerized trade to pre-pandemic -or, likely, higher- growth rates. Such a development when combined with the very low expected fleet growth, as the orderbook is at its lowest level of, at least, the last two decades, could support the current level of charter rates and even propel them to higher levels. We believe our current fleet is well positioned in terms of type and size of vessels to take full advantage of such developments.”

Tasos Aslidis, Chief Financial Officer of Euroseas commented:
“The results of the third quarter of 2020 reflect the increased net revenues compared to the same period of 2019 as we operated an average of 16.52 vessels, versus 13.5 vessels during the same period last year, partly offset by the slightly lower time charter rates our vessels earned in the third quarter of 2020 compared to the corresponding period of 2019. At the same time, total daily vessel operating expenses, including management fees, general and administrative expenses but excluding drydocking costs, during the third quarter of 2020, averaged $6,759 per vessel per day, as compared to $6,388 for the same period of last year and $6,234 per vessel per day for the first nine months of 2020 as compared to $6,348 per vessel per day for the same period of 2019. The increased operating expenses for the third quarter of 2020 is mainly due to increased crewing costs for our vessels compared to the same period of 2019, resulting from difficulties in crew rotation due to COVID-19 related restrictions. In that respect, we are pleased to report that we have been able to rotate the crews on all of our vessels; the safety and well-being of our crew and the safety of our vessel operations are our first priority.

Adjusted EBITDA during the third quarter of 2020 was $1.2 million versus $1.6 million in the third quarter of last year, and it reached $9.7 million versus $4.1 million for the respective nine-month periods of 2020 and 2019.

As of September 30, 2020, our outstanding debt (excluding the unamortized loan fees) was $75.5 million versus restricted and unrestricted cash of $4.8 million. As of the same date, our scheduled debt repayments over the next 12 months amounted to about $14.7 million excluding the unamortized loan fees).”

Third Quarter 2020 Results:
For the third quarter of 2020, the Company reported total net revenues of $12.3 million representing a 19.7% increase over total net revenues of $10.3 million during the third quarter of 2019 which was the result of the increased average number of vessels operating in the third quarter of 2020, partly offset by the lower time charter rates our vessels earned in the third quarter of 2020 compared to the corresponding period of 2019. The Company reported net income for the period of $0.2 million and net income attributable to common shareholders of $0.03 million, as compared to a net loss of $0.2 million and a net loss attributable to common shareholders of $0.3 million respectively, for the third quarter of 2019. The results for the third quarter of 2020 include a $0.3 million amortization of below market time charters acquired and a $1.3 million of net gain on sale of vessels. Related party management fees for the three months ended September 30, 2020 were $1.4 million compared to $0.9 million for the same period of 2019. The increase is due to the higher average number of vessels operated by the Company in the third quarter of 2020 as compared to the same period of 2019. Depreciation expense for the third quarter of 2020 was $1.6 million as compared to $1.1 million for the same period of 2019 due to the increased number of vessels operated by the Company.

Vessel operating expenses for the same period of 2020 amounted to $8.2 million as compared to $6.3 million for the same period of 2019. The increased amount is mainly due to the higher number of vessels owned and operated in the three months of 2020 compared to the same period of 2019. Additionally, some of our vessels incurred increased crewing costs in the third quarter of 2020 compared to the same period of 2019, resulting from difficulties in crew rotation due to COVID-19 related restrictions.

On average, 16.52 vessels were owned and operated during the third quarter of 2020 earning an average time charter equivalent rate of $8,403 per day compared to 13.5 vessels in the same period of 2019 earning on average $8,554 per day.

Interest and other financing costs for the third quarter of 2020 amounted to $0.9 million compared to $0.8 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 EBITDA1 for the third quarter of 2020 was $1.2 million compared to $1.6 million achieved during the third quarter of 2019.

Basic and diluted earnings per share attributable to common shareholders for the third quarter of 2020 was $0.01 calculated on 5,708,610 basic and diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $0.10 for the third quarter of 2019, calculated on 3,283,551 basic and diluted weighted average number of shares outstanding.

Excluding the effect on the loss attributable to common shareholders for the quarter of the amortization of below market time charters acquired, the net gain on sale of vessels and the unrealized loss on derivative, the adjusted loss attributable to common shareholders for the quarter ended September 30, 2020 would have been $0.26 per share basic and diluted compared to an adjusted loss of $0.15 per share basic and diluted for the quarter ended September 30, 2019. Usually, security analysts do not include the above items in their published estimates of earnings per share.

Nine Months 2020 Results:
For the first nine months of 2020, the Company reported total net revenues of $41.3 million representing a 54.5% increase over total net revenues of $26.7 million during the first nine months of 2019, as a result of the increased average number of vessels combined with the higher time charter rates our vessels earned in the first nine months of 2020 compared to the corresponding period of 2019. The Company reported net income for the period of $3.5 million and net income attributable to common shareholders of $2.9 million, as compared to a net loss of $0.9 million and a net loss attributable to common shareholders of $2.5 million, respectively, for the first nine months of 2019. The results for the first nine months of 2020 include a $1.3 million net gain on sale of vessels, $1.5 million of amortization of below market time charters acquired, a $0.1 loss on write down of vessel held for sale and $0.6 million of unrealized loss on derivative. The results for the first nine months of 2019 include $0.2 million of amortization of below market time charters acquired and $0.04 million of unrealized gain on derivative. Related party management fees for the nine months ended September 30, 2020 were $4.0 million compared to $2.5 million for the same period of 2019. The increase is due to the higher average number of vessels operated by the Company in the first nine months of 2020 as compared to the same period of 2019. Depreciation expense for the first nine months of 2020 was $5.0 million compared to $2.7 million during the same period of 2019.

Vessel operating expenses for the same period of 2020 amounted to $24.7 million as compared to $16.1 million for the same period of 2019. The increased amount is mainly due to the higher number of vessels owned and operated in the nine months of 2020 compared to the same period of 2019.

Drydocking expenses amounted to $0.4 million for the nine months of 2020 (one vessel passed its intermediate survey in-water and two vessels their special survey in-water), compared to $1.2 million for the same period of 2019 where one of our vessels completed her special survey with drydock, another one completed her intermediate survey in-water and one vessel entered into drydock that was completed in the fourth quarter of 2019.

On average, 18.17 vessels were owned and operated during the first nine months of 2020 earning an average time charter equivalent rate of $9,171 per day compared to 11.83 vessels in the same period of 2019 earning on average $8,638 per day.

Interest and other financing costs for the first nine months of 2020 amounted to $3.3 million compared to $2.3 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 EBITDA1 for the first nine months of 2020 was $9.7 million compared to $4.1 million during the first nine months of 2019.

Basic and diluted earnings per share attributable to common shareholders for the first nine months of 2020 were $0.52, calculated on 5,621,159 basic and diluted weighted average number of shares outstanding compared to basic and diluted loss per share of $1.19 for the first nine months of 2019, calculated on 2,129,233 basic and diluted weighted average number of shares outstanding.

Excluding the effect on the income attributable to common shareholders for the first nine months of 2020 of the unrealized loss on derivative, the net gain on sale of vessels, the loss on write down of vessel held for sale and the amortization of the below market time charters acquired, the adjusted earnings per share attributable to common shareholders for the nine-month period ended September 30, 2020 would have been $0.15, compared to an adjusted loss of $1.30 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.

Full Report

Source: Euroseas Ltd.