Euroseas Ltd., an owner and operator of drybulk and container carrier vessels and provider of seaborne transportation for drybulk and containerized cargoes, announced its results for the three month period ended March 31, 2013.
First Quarter 2013 Highlights:
•Net loss of $4.6 million or $0.10 loss per share basic and diluted on total net revenues of $10.9 million. Adjusted net loss 1 for the period was the same.
•Adjusted EBITDA 1 was $(0.1) million.
•An average of 15.00 vessels were owned and operated during the first quarter of 2013 earning an average time charter equivalent rate of $8,718 per day.
•Declared a quarterly dividend of $0.015 per share for the first quarter of 2013 payable on June 14, 2013 to shareholders of record on June 5, 2013. This is the thirty-first consecutive quarterly dividend declared.
1 Adjusted 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, "During the first four months of 2013, both drybulk and containership markets appeared to be bottoming out. Renewal rates were just slightly higher than fixtures that were made during the last six months; however for expiring charters that had been concluded more than six months ago (mostly our drybulk vessels) renewal rates were lower than the previous ones. We do not see any significant improvement in the near term as deliveries of new vessels are to continue at a high rate eclipsing any demand growth. The current market information for supply and demand trends seems to indicate that in all likelihood a meaningful charter market recovery will have to wait the coming of 2014. Our chartering strategy is focused on keeping our vessels employed ideally with charters of short duration so our vessels could take advantage of any market recovery.
"On the investment front, the depressed charter market is starting to suggest that attractive investment opportunities for both sectors can be made as ship values appear to be bottoming out too. We continue to evaluate such opportunities and we intend to soon acquire additional vessels whilst possibly selling some of our older ships. During the first quarter, we invested our remaining capital commitment of $6.25 million in Euromar, our joint venture with two private equity firms. Euromar has a young fleet of ten large feeder vessels and is in a position to expand further by acquiring two-four vessels worth $30-35 million, thus benefiting from the current state of the containership market and the expected recovery.
"Faithful to our strategy of paying meaningful dividends, our Board decided to continue paying a dividend of $0.015 per share which represents a yield of about 5.4% on the basis of our stock price on May 15, 2013."
Tasos Aslidis, Chief Financial Officer of Euroseas commented: "The results of the first quarter of 2013 primarily reflect depressed state of the markets and the drydocking expenses that we incurred for the drydocking of 3 of our vessels. If we compare our results for the first quarter of 2013 with the same period of 2012, our net revenues declined by about $3 million and we incurred an additional $1.8 million of drydocking expenses for a total of $4.8 million difference, or about $0.11/ share,which explains the difference in the results between the two periods.
"Total daily vessel operating expenses, including management fees and general and administrative ("G&A") expenses increased by 4.7% on a per vessel per day basis during the first quarter of 2013 as compared to the first quarter of 2012. This increase mainly reflects higher running expenses and higher G&A expenses per vessel because our fleet was reduced by about one vessel during the first quarter of 2013 as compared to the first quarter of 2012. Our drydocking expenses in the first quarter of 2013 were $1,343/day on a per vessel per day basis, a level that was significantly higher as compared to the $22/day for same period of 2012. 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.
"As of March 31, 2013, our outstanding debt is about $59.5 million versus restricted and unrestricted cash of about $35.9 million. We were in compliance with all our loan covenants."
First Quarter 2013 Results:
For the first quarter of 2013, the Company reported total net revenues of $10.9 million representing a 21.7% decrease over total net revenues of $13.9 million during the first quarter of 2012. The Company reported losses for the period of $4.6 million as compared to a net loss of $9.0 million for the first quarter of 2012. The results for the first quarter of 2013 include a $0.5 million unrealized gain on derivatives as compared to $0.2 million unrealized gain on derivatives and trading securities for the same period of 2012; and a $0.4 million realized loss on derivatives compared to a $0.4 million realized loss in the same period of 2012. Drydocking expenses of $1.8 million during the quarter were higher than the $0.03 million incurred in the first quarter of 2012 and refer to expenses for three of our vessels drydocked in the first quarter of 2013. Depreciation expense for the first quarter of 2013 was $4.3 million compared to $4.5 million during the same period of 2012. On average, 15.00 vessels were owned and operated during the first quarter of 2013 earning an average time charter equivalent rate of $8,718 per day compared to 15.92 vessels in the same period of 2012 earning on average $11,258 per day.
Adjusted EBITDA for the first quarter of 2013 was $(0.1) million, a 101.5% decrease from $4.9 million achieved during the first quarter of 2012. 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 2013 was $0.10, calculated on 45,319,605 weighted average number of shares outstanding compared to basic and diluted loss per share of $0.28 for the first quarter of 2012, calculated on 31,910,518 weighted average number of shares outstanding.
Excluding the effect on the loss for the quarter of the unrealized gain and realized losses on derivatives, the adjusted loss per share for the quarter ended March 31, 2013 would have remained the same at $0.10 per share basic and diluted, compared to the loss, for the quarter ended March 31, 2012 of $0.00 per share basic and diluted. Usually, security analysts do not include the above items in their published estimates of earnings per share.