Euroseas Ltd. Reports Best Results in Years
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 six-month periods ended June 30, 2024.
Second Quarter 2024 Financial Highlights:
Total net revenues of $58.7 million. Net income of $40.7 million or $5.89 and $5.84 earnings per share basic and diluted, respectively. Adjusted net income1 for the period was $34.3 million or $4.95 and $4.92 per share basic and diluted.
Adjusted EBITDA was $42.3 million.
An average of 21.26 vessels were owned and operated during the second quarter of 2024 earning an average time charter equivalent rate of $31,639 per day.
Declared a quarterly dividend of $0.60 per share for the second quarter of 2024 payable on or about September 17, 2024, to shareholders of record on September 9, 2024, as part of the Company’s common stock dividend plan.
On July 19, 2024, the Company took delivery of its seventh newbuilding M/V “Pepi Star”, an eco 1,800 teu feeder containership from Hyundai Mipo Dockyard Co. in South Korea. The vessel is EEDI Phase 3 compliant and equipped with a Tier III engine and other sustainability linked features including installation of AMP (alternative maritime power). The acquisition was financed with a combination of own funds and a loan provided by Piraeus Bank S.A. Following its delivery, M/V “Pepi Star” commenced a twenty-three to twenty-five month charter at a rate of $24,250 per day.
As of August 6, 2024, we have repurchased 400,705 shares of our common stock in open market transactions for $8.2 million, since the initiation of our share repurchase plan of up to $20 million announced in May 2022. The original share repurchase program of $20 million approved by the Board during 2022 and extended for a year during 2023, has been extended for another year.
First Half 2024 Financial Highlights:
Total net revenues of $105.4 million. Net income of $60.8 million or $8.77 and $8.71 earnings per share basic and diluted, respectively. Adjusted net income1 for the period was $52.8 million or $7.63 and $7.57 per share basic and diluted, respectively.
Adjusted EBITDA1 was $66.9 million.
An average of 20.43 vessels were owned and operated during the first half of 2024 earning an average time charter equivalent rate of $29,836 per day.
Aristides Pittas, Chairman and CEO of Euroseas commented:
“We are very pleased to report our results for the second quarter of 2024 which are the best we recorded in recent years. Also, we are pleased to have welcomed through the second quarter and in early July 2024, four more of our nine vessel newbuilding program with the remaining two vessels scheduled to be delivered to us in January 2025.
“The second quarter was a good quarter for the containership markets, with charter rates continuing their increase and on average [more than doubling] over their levels at the end of 2023, a trend clearly evident in the charter rates and contract periods we secured for our own vessels. In July 2024, we saw market charter rates pausing their increase consolidating their levels, partly due to summer seasonality and partly to the evolving geopolitical scene.
“In the containership supply front, the challenges the market may face looking forward remain as there is a significant orderbook still to be delivered, at about 22% of the fleet down from a peak of about 30%, and, in addition, fleet capacity could be released if trade routes return to their end-2023 pattern, i.e. before Houthi attacks on Suez Canal crossing shipping forced liner companies to re-route their ships around Africa. To absorb such additional supply, the industry depends on demand for containerized trade continuing and, even, increasing and that, in turn, requires global economic growth and trades staying healthy. The anticipated interest rate cuts in the remaining of 2024 by central banks should contribute to the latter and it is a factor to watch for shipping demand prospects in the medium term as are government protectionist measures that may reduce trade.
“In any event, we believe that with charter coverage of about 75% over the next twelve months, we are sufficiently insulated from market developments. We hope that we will also be able to re-charter the few vessels opening up this year at levels around the current ones further strengthening our forward cover. We, thus, focus on appropriately managing the cash flow our charter contracts generate. We continue returning funds to our shareholders via our dividend program offering an annual yield of about 6.5% at current share price levels and a share repurchase program as our stock trades below our net asset value. Furthermore, we are diligently looking for and evaluating accretive investment opportunities.”
Tasos Aslidis, Chief Financial Officer of Euroseas commented: “Within the second quarter of 2024 the container charter market has improved as compared to the first quarter of the year. Our results for the second quarter of 2024 are significantly higher compared to the same period of 2023. This was the result of the higher average number of vessels operating (we operated 21.26 vessels during the second quarter of 2024 versus 17.95 vessels during the same period of last year) and the increased time charter equivalent rate our vessels earned during the second quarter of 2024 compared to the same period of last year. On a per-vessel-per-day basis, our vessels earned a 4.9% higher average charter rate in the second quarter of 2024 as compared to the same period of 2023. Our net revenues increased to $58.7 million in the second quarter of 2024 compared to $47.7 million during the same period of last year.
“Daily vessel operating expenses, including management fees but excluding drydocking costs, averaged $6,612 per vessel per day during the second quarter of 2024 as compared to $7,114 per vessel per day for the same quarter of last year, and $6,926 per vessel per day for the first half of 2024 as compared to $7,220 per vessel per day for the same period of 2023, reflecting a 7.1% and 4.1% decrease, respectively, which was attributable to the significantly lower daily operating costs of the six new building vessels delivered to the Company gradually within the past fourteen months. General and administrative expenses averaged $581 per vessel per day during the second quarter of 2024 as compared to $715 per vessel per day for the same quarter of last year, and $637 per vessel per day for the first half of 2024 as compared to $728 per vessel per day for the same period of 2023. The decrease is mainly due to the increased number of fleet calendar days within 2024 as compared to 2023 as the actual cost of the general and administrative expenses remained at the same levels in both periods.
“Adjusted EBITDA during the second quarter of 2024 was $42.3 million versus $30.6 million in the second quarter of last year, a nearly 40% increase. As of June 30, 2024, our outstanding debt (excluding the unamortized loan fees) was $208.1 million versus restricted and unrestricted cash of $76.3 million. As of the same date, our scheduled bank debt repayments over the next 12 months amounted to about $39.1 million (excluding the unamortized loan fees).”
Second Quarter 2024 Results:
For the second quarter of 2024, the Company reported total net revenues of $58.7 million representing a 23.1% increase over total net revenues of $47.7 million during the second quarter of 2023. This was a result of the increased time charter rates our vessels earned in the second quarter of 2024 compared to the same period of 2023, and the increase in the average number of vessels owned and operated in the second quarter of 2024 compared to the same period of 2023. On average, 21.26 vessels were owned and operated during the second quarter of 2024 earning an average time charter equivalent rate of $31,639 per day compared to 17.95 vessels in the same period of 2023 earning on average $30,151 per day. The Company reported a net income for the period of $40.7 million, as compared to a net income of $28.9 million, respectively, for the same period of 2023.
For the second quarter of 2024, a gain on bunkers from the sale of M/V “EM Astoria”, resulted in positive voyage expenses of $0.25 million. For the same period of 2023, voyage expenses amounted to $0.2 million, representing mainly owners’ expenses at certain ports.
Vessel operating expenses were $11.1 million in the second quarter of 2024 as compared to $10.3 million for the second quarter of 2023. The increase is due to the higher average number of vessels owned and operated in the second quarter of 2024 compared to the corresponding period of 2023, partly offset by the lower daily vessel operating expenses, mainly attributable to the significantly lower daily operating costs of the six new building vessels delivered to the Company gradually within the past fourteen months.
Depreciation expense for the second quarter of 2024 amounted to $6.8 million compared to $5.6 million for the same period of 2023 due to the increased number of vessels in the Company’s fleet.
Related party management fees for the second quarter of 2024 were also increased to $1.7 million from $1.3 million for the same period of 2023 due to the higher number of vessels in our fleet and the adjustment for inflation in the daily vessel management fee, effective from January 1, 2024, increasing it from 775 Euros to 810 Euros and the unfavorable movement of the euro/dollar exchange rate.
General and administrative expenses amounted to $1.1 million for the second quarter of 2024, remaining at the same levels of last year’s $1.2 million for the second quarter of 2023.
In the second quarter of 2024 two of our vessels completed their special survey with drydock. The first one entered the drydock yard within the previous quarter and completed the survey in the second quarter while the second one was performed during the quarter. The total cost of these surveys was $1.6 million. In the second quarter of 2023 none of our vessels was drydocked, with an amount of $0.4 million accounted for drydocking expenses incurred in relation to upcoming drydockings. The results of the Company for the second quarter of 2024 include a $5.7 million gain on sale of M/V “EM Astoria” that was completed in June 2024.
Total interest and other financing costs for the second quarter of 2024 amount to $3.5 million, of which $1.4 million relates to interest charged and capitalized in relation to our newbuilding program, compared to $2.4 million, of which $1.2 million relates to interest charged and capitalized in relation to our newbuilding program for the second quarter of 2023. This increase is due to the increased amount of debt and the increase in the weighted average benchmark rates of our bank loans in the current period compared to the same period of 2023.
For the three months ended June 30, 2024, the Company recognized a $0.1 million realized gain and a $0.02 million unrealized gain for a total of $0.1 million gain on its interest rate swap contracts. For the three months ended June 30, 2023, the Company recognized a $3.7 million realized gain and a $2.7 million unrealized loss for a total of $1.0 million net gain on its interest rate swap contracts.
Adjusted EBITDA for the second quarter of 2024 was $42.3 million compared to $30.6 million achieved during the second quarter of 2023.
Basic and diluted earnings per share for the second quarter of 2024 was $5.89 and $5.84, calculated on 6,923,331 basic and 6,978,682 diluted weighted average number of shares outstanding, compared to basic and diluted earnings per share of $4.17 and $4.15, respectively, for the second quarter of 2023, calculated on 6,919,716 basic and 6,956,447 diluted weighted average number of shares outstanding.
Excluding the effect on the income of the unrealized loss / (gain) on derivatives, the gain on sale of a vessel, the amortization of below market time charters acquired and the vessel depreciation charged on portion of the consideration of vessels acquired with attached time charters allocated to below market time charters, the adjusted earnings for the quarter ended June 30, 2024 would have been $4.95 per share basic and $4.92 diluted, respectively, compared to adjusted earnings of $4.19 and $4.17 per share basic and diluted for the quarter ended June 30, 2023. Usually, security analysts do not include the above items in their published estimates of earnings per share.
First Half 2024 Results:
For the first half of 2024, the Company reported total net revenues of $105.4 million representing a 17.6% increase over total net revenues of $89.6 million during the first half of 2023. On average, the Company owned and operated 20.43 vessels during the first half of 2024, earning an average time charter equivalent rate of $29,836 per day. For the same period of 2023 the Company owned and operated 17.52 vessels that earned on average $29,714 per day. The Company reported a net income for the period of $60.8 million, as compared to a net income of $57.6 million, for the first half of 2023.
Voyage expenses for the first half of 2024 amounted to $0.8 million as compared to voyage expenses of $0.6 million for the same period of 2023. The increased amount of 2024 is mainly attributable to bunkers consumption by four of our vessels (M/V “Synergy Antwerp”, M/V “Synergy Oakland”, M/V “Synergy Keelung” and M/V “Marcos V”) during their drydock period partly offset by a gain on bunkers from the sale of M/V “EM Astoria”.
Vessel operating expenses for the first half of 2024 amounted to $22.5 million as compared to $20.1 million for the same period of 2023. The increase is due to the higher average number of vessels owned and operated in the first half of 2024 compared to the corresponding period of 2023 partly offset by the lower daily vessel operating expenses, mainly attributable to the significantly lower daily operating costs of the six new building vessels delivered to the Company gradually within the past fourteen months.
Depreciation expense for the first half of 2024 was $12.3 million compared to $10.9 million during the same period of 2023, due to the increased number of vessels in the Company’s fleet.
Related party management fees for the first half of 2024 increased to $3.3 million from $2.8 million for the same period of 2023 as a result of the higher number of vessels in our fleet and the adjustment for inflation in the daily vessel management fee, effective from January 1, 2024, increasing it from 775 Euros to 810 Euros.
General and administrative expenses amounted to $2.4 million for the first half of 2024, remaining at the same levels as compared to $2.3 million for the same period of 2023.
In the first half of 2024 four of our vessels completed their special survey with drydock for a total cost of approximately $7.2 million. In the same period of 2023 one of our vessels completed her special survey with drydock for a total cost of approximately $0.6 million, with an amount of $0.4 million accounted for drydocking expenses incurred in relation to upcoming drydockings.
In the first half of 2023, we had other operating income of $1.4 million. This operating income relates to loss of hire insurance for two of our vessels. The results of the Company for the first half of 2024 include a $5.7 million gain on sale of M/V “EM Astoria” that was completed in June 2024, while the results for the first half of 2023 include a $5.2 million gain on sale of M/V “Akinada Bridge” that was completed in January 2023.
Total interest and other financing costs for the first half of 2024 amount to $6.6 million, of which $2.7 million relates to interest charged and capitalized in relation to our newbuilding program, compared to $4.4, of which $2.3 million relate to interest charged and capitalized in relation to our newbuilding program for the same period of 2023. This increase is due to the increased amount of debt and the increase in the weighted average benchmark rates of our bank loans in the current period compared to the same period of 2023.
For the six months ended June 30, 2024 the Company recognized a $0.2 million realized gain and a $0.8 million unrealized gain for a total of $1.0 million gain on its interest rate swap contracts. For the six months ended June 30, 2023 the Company recognized a $4.0 million realized gain and a $3.3 million unrealized loss for a total of $0.7 million net gain on its interest rate swap contracts.
Adjusted EBITDA for the first half of 2024 was $66.9 million compared to $56.6 million achieved during the first half of 2023.
Basic and diluted earnings per share for the first half of 2024 was $8.77 calculated on 6,923,331 basic and $8.71, calculated on 6,973,973 diluted weighted average number of shares outstanding compared to basic and diluted earnings per share of $8.28 calculated on 6,958,748 basic and $8.25, calculated on 6,985,422 diluted weighted average number of shares outstanding, for the same period of 2023.
Excluding the effect on the income for the first half of the year of the unrealized loss / (gain) on derivatives, the gain on sale of vessel, the amortization of below market time charters acquired, the vessel depreciation charged on portion of the consideration of vessels acquired with attached time charters allocated to below market time charters, the adjusted earnings per share for the six-month period ended June 30, 2024 would have been $7.63 and $7.57, basic and diluted, respectively, compared to adjusted earnings per share of $7.29 basic and $7.26 diluted for the same period in 2023. As mentioned above, usually, security analysts do not include the above items in their published estimates of earnings per share.
Full ReportSource: Euroseas Ltd.