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EuroDry Ltd. Expects Profitable Fourth Quarter on Improved Market Conditions

EuroDry Ltd., an owner and operator of drybulk vessels and provider of seaborne transportation for drybulk cargoes, announced today its results for the three- and nine-month period ended September 30, 2019. Euroseas Ltd. (“Euroseas” or “Former Parent Company”) contributed to the Company seven subsidiaries comprising its drybulk fleet of six vessels, one Ultramax and two Kamsarmax vessels built between 2016 and 2018, and three Japanese-built Panamax vessels built between 2000 and 2004 (the “Spin-off”). The Company was spun-off from Euroseas Ltd. on May 30, 2018. Historical comparative period reflects the results of the carve-out operations of the seven subsidiaries that were contributed to the Company.

Third Quarter 2019 Highlights:

Total net revenues of $7.7 million. Net loss of $0.4 million; net loss attributable to common shareholders (after a $0.4 million dividend on Series B Preferred Shares) of $0.8 million or $0.35 loss per share basic and diluted. Adjusted net loss attributable to common shareholders1 for the period was $0.6 million or $0.26 adjusted loss per share basic and diluted.

Adjusted EBITDA1 was $2.2 million.

An average of 7.0 vessels were owned and operated during the third quarter of 2019 earning an average time charter equivalent rate of $12,088 per day.

The Company declared its third cash dividend of $0.4 million on its Series B Preferred Shares.
Nine Months 2019 Highlights:

Total net revenues of $19.6 million. Net loss of $1.4 million; net loss attributable to common shareholders (after a $1.4 million dividend on Series B Preferred Shares and a $0.2 million preferred deemed dividend arising out of the redemption of approximately $4.3 million of Series B Preferred Shares in the second quarter of 2019) of $2.9 million or $1.31 loss basic and diluted. Adjusted net loss attributable to common shareholders1 for the period was $2.5 million or $1.13 adjusted loss per share basic and diluted.

Adjusted EBITDA1 was $6.5 million.

An average of 7.0 vessels were owned and operated during the first half of 2019 earning an average time charter equivalent rate of $10,750 per day.

Image: EuroDry Ltd.

Aristides Pittas, Chairman and CEO of EuroDry commented: “During the third quarter of 2019, EuroDry benefited from the stronger drybulk market as the earnings of several of its ships were based on renewed charters or linked to market indices. However, given the small size of our fleet, our net income is influenced by any vessel drydocking expense that occurs during the quarter as the latter is expensed like it happened in the past quarter. In the fourth quarter of this year, we do not have any drydocking scheduled and that would mean that “barring any unforeseen circumstances,” it should be a profitable quarter.

We expect that the drybulk market supply and demand balance will be shaped by the limited supply growth expected over the next couple of years due to one of the lowest orderbook levels, especially for the segments we operate, and potential further vessel availability squeeze due to the implementation of the emissions and ballast water treatment regulations. We hope that this will translate to higher earnings for our ships, despite the drop of the market rates during October and November. We expect that trade developments will directly influence the rates with any reduction of the uncertainty relating to trade wars being a positive factor amongst others and any overall economic slowdown being a negative one.

We remain committed to grow our fleet either through single vessel acquisitions or by exploiting our public platform to consolidate other fleets. As EuroDry’s stock continues to trade at a significant discount to its NAV, we believe it represents a significant opportunity for investing in the drybulk market as in addition to any potential overall market recovery, the possible shrinkage of the discount to NAV could offer additional returns to our investors.”

Tasos Aslidis, Chief Financial Officer of EuroDry commented: “Comparing our results for the third quarter of 2019 with the same period of 2018, our net revenues increased by about $0.9 million, due to the increased average number of vessels operating in 2019 and partially offset by the lower rates our vessels earned during this period. Operating expenses, including management fees and general and administrative expenses increased by approximately $0.3 million as compared to the third quarter of 2018. This was mainly due to the operation of 7.0 vessels during the third quarter of 2019 versus 6.0 vessels during the same period of last year; on a per-vessel-per-day basis, operating expenses, including management fees and general and administrative expenses decreased by 7.4% during the third quarter of 2019 as compared to the same period in 2018. We believe that we maintain one of the lowest operating cost structures amongst the public shipping companies which is one of our competitive advantages.

Adjusted EBITDA during the third quarter of 2019 was $2.2 compared to $3.8 million achieved for the third quarter of last year. Finally, as of September 30, 2019, our outstanding debt (excluding the unamortized loan fees) is about $58.4 million versus restricted and unrestricted cash of about $9.0 million.”

Third Quarter 2019 Results:
For the third quarter of 2019, the Company reported total net revenues of $7.7 million representing a 12.8% increase over total net revenues of $6.8 million during the third quarter of 2018 which was the result of the increased average number of vessels operating in 2019 partly offset by the decrease in the average time charter equivalent rate our vessels earned in the third quarter of 2019 compared to the corresponding period of 2018. The Company reported net loss for the period of $0.4 million and net loss attributable to common shareholders of $0.8 million, as compared to net income of $1.7 million and net income attributable to common shareholders of $1.4 million for the same period of 2018. For the third quarter of 2019, losses on derivatives of $0.6 million and drydocking expenses of $0.7 million contributed to the loss for the period as compared to small positive contribution from derivatives during the third quarter of 2018. Depreciation expenses for the third quarter of 2019 amounted to $1.6 million compared to $1.4 million for the same period of 2018.

Interest and other financing costs for the third quarter of 2019 amounted to $0.8 million, remaining the same compared to the corresponding period of 2018.

On average, 7.0 vessels were owned and operated during the third quarter of 2019 earning an average time charter equivalent rate of $12,088 per day compared to 6.0 vessels in the same period of 2018 earning on average $13,839 per day.

Adjusted EBITDA for the third quarter of 2019 was $2.2 million compared to $3.8 million achieved during the third quarter of 2018.

Basic and diluted loss per share attributable to common shareholders for the third quarter of 2019 was $0.35 calculated on 2,254,830 basic and diluted weighted average number of shares outstanding, compared to basic and diluted earnings per share of $0.63 for the third quarter of 2018, calculated on 2,236,785 and 2,238,442 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 unrealized (gain) / loss on derivatives, the adjusted loss attributable to common shareholders for the quarter ended September 30, 2019 would have been $0.26 per share basic and diluted compared to adjusted earnings of $0.62 per share basic and diluted for the quarter ended September 30, 2018. Usually, security analysts do not include the above items in their published estimates of earnings per share.

First Nine Months 2019 Results:
For the first nine months of 2019, the Company reported total net revenues of $19.6 million representing a 12.0% increase over total net revenues of $17.5 million during the first nine months of 2018, as a result of the increased average number of vessels in the Company’s fleet partly offset by the decrease in the average time charter equivalent rate our vessels earned in the first nine months of 2019 compared to the same period of 2018. The Company reported net loss for the period of $1.4 million and a net loss attributable to common shareholders of $2.9 million, as compared to net income of $0.3 million and marginal net loss attributable to common shareholders, for the first nine months of 2018. Vessel operating expenses were $8.0 million for the first nine months of 2019 as compared to $6.8 million for the first nine months of 2018, mainly due to the increased average number of vessels operated. Depreciation expenses for the first nine months of 2019 were $4.8 million compared to $3.9 million during the same period of 2018. Interest and other financing costs for the first nine months of 2019 amounted to $2.7 million compared to $1.8 million for the same period of 2018. This increase is due to the increased amount of debt in the current period compared to the same period of 2018 and due to interest capitalized in 2018 during the construction period of m/v Ekaterini.

On average, 7.0 vessels were owned and operated during the first nine months of 2019 earning an average time charter equivalent rate of $10,750 per day compared to 5.5 vessels in the same period of 2018 earning on average $12,473 per day. In the first nine months of 2019, two vessels underwent special survey for a total cost of $1.6 million, as compared to two vessels that underwent special survey in the first nine months of 2018 for a total cost of $1.4 million.

Adjusted EBITDA for the first nine months of 2019 was $6.5 million compared to $5.9 million achieved during the first nine months of 2018.

Basic and diluted loss per share attributable to common shareholders for the first nine months of 2019 was $1.31, calculated on 2,248,182 basic and diluted weighted average number of shares outstanding compared to a marginal basic and diluted loss per share for the first nine months of 2018, calculated on 2,230,137 basic and diluted weighted average number of shares outstanding.

Excluding the effect on the loss attributable to common shareholders for the first nine months of the year of the unrealized (gain) / loss on derivatives, the adjusted net loss per share attributable to common shareholders for the nine-month period ended September 30, 2019 would have been $1.13 compared to a loss of $0.07 per share basic and diluted for the same period in 2018. As previously mentioned, usually, security analysts do not include the above items in their published estimates of earnings per share.

Full Report

Soure: EuroDry Ltd.

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