Euroseas' Reports 1H & 2Q, 2014 Results

By Joseph R. Fonseca August 8, 2014

Euroseas Ltd., an owner and operator of drybulk and container carrier vessels and provider of seaborne transportation for drybulk and containerized cargoes, announced today its results for the three and six month period ended June 30, 2014 as well as certain fleet updates.

Second Quarter 2014 Highlights:
*Net loss of $5.0 million; net loss available to common shareholders of $5.4 million or $0.09 loss per share basic and diluted. Total net revenues of $9.6 million. Adjusted net loss available to common shareholders1 for the period remained the same at $0.09 per share basic and diluted.
*Adjusted EBITDA was $(1.6) million.
*An average of 14.4 vessels were owned and operated during the second quarter of 2014 earning an average time charter equivalent rate of $7,373 per day.
*The Company declared its second dividend of $0.4 million on its Series B Preferred shares; the dividend was paid in-kind by issuing additional Series B Preferred Shares.

First Half 2014 Highlights:

*Net loss of $7.2 million; net loss available to common shareholders of $7.9 million or $0.15 loss per share basic and diluted. Total net revenues of $19.1 million. Adjusted net loss per share available to common shareholders1 for the period was $0.15.
*Adjusted EBITDA1 was $(0.6) million.
*An average of 14.2 vessels were owned and operated during the first half of 2014 earning an average time charter equivalent rate of $7,585 per day.

Aristides Pittas, Chairman and CEO of Euroseas commented: "During the first half and during the month of July of 2014, the drybulk market weakened significantly against expectations widely held in the industry while the containership market remained static at low levels. Despite these developments, we continue to believe that both markets will show a gradual improvement over the rest of 2014 and during 2015. Our fleet continues to have a high exposure to the spot market and our chartering strategy remains to pursue short term charters of 3-12 months when possible. We are thus well positioned to take advantage of an improving market."

Tasos Aslidis, Chief Financial Officer of Euroseas commented: "The results of the second quarter of 2014 reflect the depressed level of the containership and drybulk markets compared to the same quarter of 2013, despite the better commercial utilization rate of the vessels.

"Total daily vessel operating expenses, including management fees, general and administrative expenses but excluding drydocking costs, averaged $6,449 per vessel per day during the second quarter of 2014 as compared to $6,115 per vessel per day for the same quarter of last year, and $6,398 per vessel per day for the first half of 2014 as compared to $6,192 per vessel per day for the same period of 2013, reflecting a 5.5% and 3.3% increase, respectively. As always, we want to emphasize that cost control remains a key component of our strategy.

"On the financing front, we were able to secure financing for our recent acquisition of M/V Eirini P as well as refinance the balloon payment of loan of M/V Eleni P. As of June 30, 2014, our outstanding debt was $59.4 million versus restricted and unrestricted cash of about $46.4 million.

As of the same date, our scheduled debt repayments over the next 12 months amounted to about $14.6 million, inclusive of about $4.9 million of balloon repayments which may be refinanced. All our debt covenants are satisfied."

Second Quarter 2014 Results:

For the second quarter of 2014, the Company reported total net revenues of $9.6 million representing a 0.7% increase over total net revenues of $9.6 million during the second quarter of 2013. The Company reported net loss for the period of $5.0 million, net loss available to common shareholders of $5.4 million, as compared to net loss of $8.9 million for the second quarter of 2013. The results for the second quarter of 2014 include a $0.2 million unrealized gain on derivatives, a $0.2 million realized loss on derivatives, as compared to $0.4 million unrealized gain on derivatives, a $0.4 million realized loss on derivatives and $3.2 million loss on sale of a vessel for the same period of 2013.

Depreciation expenses for the second quarter of 2014 were $3.0 million compared to $4.2 million during the same period of 2013. On average, 14.4 vessels were owned and operated during the second quarter of 2014 earning an average time charter equivalent rate of $7,373 per day compared to 14.96 vessels in the same period of 2013 earning on average $7,708 per day.

Adjusted EBITDA for the second quarter of 2014 was $(1.6) million compared to $(1.0) million achieved during the second quarter of 2013. Please see below for Adjusted EBITDA reconciliation to net loss and cash flow provided by operating activities.

Basic and diluted loss per share available to common shareholders for the second quarter of 2014 was $0.09 calculated on 56,888,123 basic and diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $0.20 for the second quarter of 2013, calculated on 45,319,605 basic and diluted weighted average number of shares outstanding.

Excluding the effect, on the loss available to common shareholders, for the quarter of the unrealized gain on derivatives and the realized loss on derivatives, the adjusted net loss per share available to common shareholders for the quarter ended June 30, 2014 remained $0.09 per share basic and diluted compared to net loss of $0.12 per share basic and diluted for the quarter ended June 30, 2013. Usually, security analysts do not include the above items in their published estimates of earnings per share.

First Half 2014 Results:
For the first half of 2014, the Company reported total net revenues of $19.1 million representing a 6.5% decrease over total net revenues of $20.5 million during the first half of 2013. The Company reported a net loss for the period of $7.2 million, net loss available to common shareholders of $7.9, as compared to net loss of $13.5 million for the first half of 2013. The results for the first half of 2014 include a $0.3 million unrealized gain on derivatives, a $0.4 million realized loss on derivatives as compared to $0.9 million unrealized gain on derivatives, a $0.9 million realized loss on derivatives and a $3.2 million loss on sale of a vessel for the same period of 2013.

Depreciation expenses for the first half of 2014 were $5.8 million compared to $8.5 million during the same period of 2013. On average, 14.2 vessels were owned and operated during the first half of 2014 earning an average time charter equivalent rate of $7,585 per day compared to 14.98 vessels in the same period of 2013 earning on average $8,256 per day. Adjusted EBITDA for the first half of 2014 was $(0.6) million compared to $(1.1) million achieved during the first half of 2013.

Basic and diluted loss per share available to common shareholders for the first half of 2014 was $0.15 respectively, calculated on 52,446,850 basic and diluted weighted average number of shares outstanding compared to basic and diluted loss per share of $0.30 for the first half of 2013, calculated on 45,319,605 basic and diluted weighted average number of shares outstanding.

Excluding the effect, on the loss available to common shareholders, for the first half of 2014 of the unrealized gain on derivatives, realized loss on derivatives and the loss on sale of vessel, the adjusted net loss per share available to common shareholders for the six-month period ended June 30, 2014 remained $0.15 compared to loss of $0.23 per share basic and diluted for the same period in 2013. Usually, security analysts do not include the above items in their published estimates of earnings per share.