EuroDry Ltd. Reports 248% Increase In Fourth Quarter Revenue

EuroDry Ltd., 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, 2021.

Fourth Quarter 2021 Highlights:

Total net revenues of $22.3 million.
Net income attributable to common shareholders of $15.2 million or $5.38 and $5.32 earnings per share basic and diluted, respectively, inclusive of unrealized gain on derivatives.
Adjusted net income attributable to common shareholders1 for the quarter of $12.3 million, or, $4.34 and $4.29 per share basic and diluted, respectively. The adjusted net income attributable to common shareholders includes a $0.5m non-cash charge for a “Preferred deemed dividend” resulting from the redemption of the Company’s Series B Preferred Shares.
Adjusted EBITDA1 was $16.0 million.
An average of 9.0 vessels were owned and operated during the fourth quarter of 2021 earning an average time charter equivalent rate of $29,157 per day.
The Company declared a dividend of $0.2 million on its Series B Preferred Shares. The dividend was paid in cash. In addition, as previously announced, in December 2021 the Company redeemed all of its outstanding Series B Preferred Shares at par amounting to $13.6 million.
1Adjusted EBITDA, Adjusted net income/(loss) and Adjusted earnings/(loss) 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 2021 Highlights:

Total net revenues of $64.4 million.
Net income attributable to common shareholders of $29.4 million, or $11.63 and $11.53 earnings per share basic and diluted, respectively, inclusive of unrealized loss on derivatives and a loss on debt extinguishment.
Adjusted net income attributable to common shareholders1 for the period was $30.3 million or $11.98 and $11.88 adjusted earnings per share basic and diluted, respectively. The adjusted net income attributable to common shareholders includes a $0.7m non-cash charge for a “Preferred deemed dividend” resulting from the redemption of the Company’s Series B Preferred Shares.
Adjusted EBITDA1 was $42.3 million.
An average of 7.9 vessels were owned and operated during the twelve months of 2021 earning an average time charter equivalent rate of $24,222 per day.
Recent developments

In January 2022, the Company acquired M/V Molyvos Luck, a 57,924 dwt drybulk vessel built in 2014, for $21.2 million. The vessel was majority owned by a third party and has been managed by Eurobulk Ltd., also the manager of the majority of the Company’s vessels. The vessel will be delivered to the Company around the middle of February 2022.The Company will also assume the existing charter of the vessel at $13,250/day until April 2022. The acquisition will be initially financed by the Company’s own funds; a bank loan will be arranged to partly finance the acquisition, using the acquired vessel as collateral.

Aristides Pittas, Chairman and CEO of EuroDry commented:

“We are pleased to report that, in the fourth quarter of 2021, we took advantage of the market levels registering our best quarter on record with more than $15m of net income. We also redeemed all our outstanding Series B Preferred shares reducing our cost of capital and increasing earnings to our common shareholders in 2022 and beyond.

“During the quarter, drybulk spot earnings, after peaking in October 2021 when they registered their highest level since early 2010, subsequently retreated by about 35% in November and December, while in January 2022 they retreated by approximately another 30%; at the same time, after initially retreating too, one-year time rates recovered during December 2021 and January 2022 suggesting that there are expectations amongst the market participants that the spot earnings’ retreat, a cyclically common effect during the first couple of months of every year, is only temporary. Even at their present levels though, spot earnings are at high levels relative to the last decade.

“Despite the market strength during 2021, the orderbook remained at historically low levels. This suggests minimal fleet growth over the next 2-3 years, likely, leading to higher rates in the rest of 2022 if trade increases even at just historically average levels. Within this framework of expectations, we have expanded our fleet acquiring our tenth vessel, M/V Molyvos Luck, which will further position us to take advantage of expected market increases.

“Overall, we are committed to continue growing EuroDry focusing on the middle size range of drybulk carriers. Our increased liquidity and low leverage ratio provide us with significant firepower to pursue our strategy.”

Tasos Aslidis, Chief Financial Officer of EuroDry commented: “The net revenues of the fourth quarter of 2021 increased significantly compared to the same period of 2020 as a result of the time charter equivalent rates our vessels earned during the quarter which were higher by 171% compared to the average time charter equivalent rates our vessels earned in the fourth quarter of 2020.

“Total daily vessel operating expenses, including management fees, general and administrative expenses but excluding drydocking costs, averaged $6,324 per vessel per day during the fourth quarter of 2021 as compared to $6,258 per vessel per day for the same quarter of last year, and $6,456 per vessel per day for the entire year of 2021 as compared to $6,211 per vessel per day for the same period of 2020. This increase is mainly due to increased crewing costs in 2021 compared to 2020, resulting from difficulties in crew rotation due to COVID-19 related restrictions.

“Adjusted EBITDA during the fourth quarter of 2021 was $16.0 million versus $1.8 million in the fourth quarter of last year. As of December 31, 2021, our outstanding debt (excluding the unamortized loan fees) was $79.4 million, while unrestricted and restricted cash was $29.5 million. As of the same date, our scheduled debt repayments including balloon payments over the next 12 months amounted to about $14.1 million (excluding the unamortized loan fees).”

Fourth Quarter 2021 Results:

For the fourth quarter of 2021, the Company reported total net revenues of $22.3 million representing a 248% increase over total net revenues of $6.4 million during the fourth quarter of 2020 which was the result of the increased average time charter equivalent rate our vessels earned and the higher number of vessels operating in the fourth quarter of 2021 compared to the same period of 2020. The Company reported a net income for the period of $16.0 million and a net income attributable to common shareholders of $15.2 million, as compared to a net loss of $0.3 million and a net loss attributable to common shareholders of $0.7 million for the same period of 2020. For the fourth quarter of 2021, voyage expenses, net amounted to income of $0.2 million resulting from gain on bunkers as compared to voyage expenses of $0.1 million in the same period of 2020. Vessel operating expenses were $3.7 million for the fourth quarter of 2021 as compared to $2.9 million for the same period of 2020. The increase is mainly attributable to the increased number of vessels operating in the fourth quarter of 2021 compared to the corresponding period in 2020. Depreciation expenses for the fourth quarter of 2021 amounted to $2.3 million, as compared to $1.7 million for the same period of 2020. This increase is due to the higher number of vessels operating in the fourth quarter of 2021 as compared to the same period of 2020. General and administrative expenses increased to $0.9 million in the fourth quarter of 2021, as compared to $0.6 million in the fourth quarter of 2020 due to higher legal and insurance expenses.

Interest and other financing costs for the fourth quarter of 2021 increased to $0.7 million as compared to $0.5 million for the same period of 2020. The increase is mainly due to the higher average outstanding debt of the period compared to the same period of 2020. For the three months ended December 31, 2021, the Company recognized a gain on four interest rate swaps of $0.2 million and a realized gain on FFA contracts of $1.4 million, as compared to a marginal loss on three interest rate swaps and a marginal gain on FFA contracts for the same period of 2020.

On average, 9.0 vessels were owned and operated during the fourth quarter of 2021 earning an average time charter equivalent rate of $29,157 per day compared to 7.0 vessels in the same period of 2020 earning on average $10,761 per day.

Adjusted EBITDA for the fourth quarter of 2021 was $16.0 million compared to $1.8 million achieved during the fourth quarter of 2020.

Basic and diluted earnings per share attributable to common shareholders for the fourth quarter of 2021 was $5.38 calculated on 2,827,316 basic and $5.32 calculated on 2,860,357 diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $0.31 for the fourth quarter of 2020, calculated on 2,285,601 basic and diluted weighted average number of shares outstanding.

Excluding the effect on the income attributable to common shareholders for the quarter of the change in fair value of derivatives, the adjusted earnings attributable to common shareholders for the quarter ended December 31, 2021 would have been $4.34 and $4.29 per share basic and diluted, respectively, compared to adjusted loss of $0.34 per share basic and diluted for the quarter ended December 31, 2020. Usually, security analysts do not include the above item in their published estimates of earnings per share. Full Year 2021 Results:

For the full year of 2021, the Company reported total net revenues of $64.4 million representing a 189% increase over total net revenues of $22.3 million during the twelve months of 2020, as a result of the increased average time charter equivalent rate our vessels earned in the twelve months of 2021 compared to the same period of 2020. The Company reported a net income for the period of $31.2 million and a net income attributable to common shareholders of $29.4 million, as compared to a net loss for the period of $5.9 million and a net loss attributable to common shareholders of $7.5 million, for the twelve months of 2020. For the twelve months of 2021, voyage expenses, net amounted to income of $0.8 million resulting from gain on bunkers as compared to voyage expenses of $0.3 million in the same period of 2020. Vessel operating expenses were $13.6 million for the twelve months of 2021 as compared to $11.6 million for the same period of 2020. The increase is attributable to the increased number of vessels operating in 2021 compared to the corresponding period in 2020, as well as to the increased crewing costs for our vessels compared to the same period of 2020, resulting from difficulties in crew rotation due to COVID-19 related restrictions, and the increase in hull and machinery insurance premiums. Depreciation expenses for the twelve months of 2021 were $7.7 million compared to $6.6 million during the same period of 2020, mainly due to the increase in the cost base of certain of our vessels due to the recent installation of ballast water management systems and the higher number of vessels operating in the same period.

On average, 7.9 vessels were owned and operated during the twelve months of 2021 earning an average time charter equivalent rate of $24,222 per day compared to 7.0 vessels in the same period of 2020 earning on average $9,387 per day. In the twelve months of 2020, three vessels underwent special survey for a total cost of $2.3 million, while there were no vessels undergoing drydocking in the twelve months of 2021. General and administrative expenses increased to $2.6 million during the twelve months of 2021 as compared to $2.3 million in the last year due to higher legal and insurance expenses.

Interest and other financing costs for the twelve months of 2021 remained unchanged at $2.3 million compared to the same period of 2020. For the twelve months ended December 31, 2021, the Company recognized a $0.3 million gain on four interest rate swaps and a $4.1 million realized loss on FFA contracts as compared to a loss on derivatives of $0.8 million for the same period of 2020, comprising of a $0.3 million loss on FFA contracts and a $0.5 million loss on three interest rate swaps. 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 2020.

Adjusted EBITDA for the twelve months of 2021 was $42.3 million compared to $3.7 million achieved during the twelve months of 2020.

Basic and diluted earnings per share attributable to common shareholders for the twelve months of 2021 was $11.63, calculated on 2,528,507 basic and $11.53, calculated on 2,548,950 diluted weighted average number of shares outstanding compared to basic and diluted loss of $3.28 per share for the twelve months of 2020, calculated on 2,275,062 basic and diluted weighted average number of shares outstanding.

Excluding the effect on the earnings attributable to common shareholders for the year of the change in fair value of derivatives and the loss on debt extinguishment, the adjusted earnings attributable to common shareholders for the year ended December 31, 2021 would have been $11.98 and $11.88 per share basic and diluted, respectively, compared to an adjusted loss of $3.04 per share basic and diluted for 2020. As previously mentioned, usually, security analysts do not include the above item in their published estimates of earnings per share.
Source: EuroDry Ltd.