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Euroseas Ltd. Reports Fourth Quarter Profits, on 15.5% Higher Charter Rates

Euroseas Ltd., an owner and operator of container carrier vessels and provider of seaborne transportation for containerized cargoes, announced yesterday its results for the three-month period and full year ended December 31, 2020.

Full Year 2020 Highlights:

Total net revenues of $53.3 million. Net income of $4.0 million; net income attributable to common shareholders (after a $0.7 million dividend on Series B Preferred Shares) of $3.3 million or $0.58 earnings per share basic and diluted. Adjusted net loss attributable to common shareholders1 for the year was $0.1 million or $0.021 per share basic and diluted.
Adjusted EBITDA1 was $11.8 million.
An average of 17.23 vessels were owned and operated during the twelve months of 2020 earning an average time charter equivalent rate of $9,445 per day.

Fourth Quarter 2020 Highlights:

Total net revenues of $12.0 million. Net income of $0.6 million; net income attributable to common shareholders (after a $0.2 million dividend on Series B Preferred Shares) of $0.4 million or $0.07 earnings per share basic and diluted. Adjusted net loss attributable to common shareholders1 for the period was $1.0 million or $0.161 per share basic and diluted.
Adjusted EBITDA1 was $2.1 million.
An average of 14.43 vessels were owned and operated during the fourth quarter of 2020 earning an average time charter equivalent rate of $10,497 per day.
The Company declared a dividend of $0.2 million on its Series B Preferred Shares as required. The dividend will be paid in cash.

Recent developments

On January 29, 2021, we redeemed 2,000 of our Series B Convertible Perpetual Preferred Shares (“Preferred Shares”) outstanding (par value $1,000 per share) and paid $2,000,000 to our Preferred Shares shareholders. In connection with the redemption, the Company agreed with its Preferred Shares shareholders to set the dividend rate of its Preferred Shares to 8% per annum if paid in cash and 9% if paid in-kind at the Company’s option until January 29, 2023, after which date the dividend rate will increase to 14%, and will be payable only in cash; the dividend rate was set to increase to 14% per annum on January 29, 2021.
In January and February 2021, we sold 82,901 shares of common stock under our at-the-market offering for approximately $0.74 million of net proceeds.

Aristides Pittas, Chairman and CEO of Euroseas commented:
“During the fourth quarter of 2020 and early 2021, containership time charter rates have increased significantly despite further concerns about the coronavirus pandemic, exceeding median levels and reaching twelve-year highs for certain sizes. The quarter also registered an increase of more than 40% in secondhand sale prices for the 1,700 to 4,500 teu containership size range, for both younger and older fleets.

“Our fleet benefitted from the market increase as four of our vessels renewed their charters at rates more than double their previous levels and are set to make significant contributions to our earnings. We remain very optimistic for the medium term prospects of the market due to the relatively low orderbook, the expected rebound of the containerized trade, especially, if the COVID-19 pandemic comes under control and the expanding regulatory and environmental requirements that effectively increase the need for more vessel capacity. If, as result of the above trends, the charter rates remain near their current levels for the next four to five months, we should be able to renew the charters of almost all of our vessels at similarly higher rates than they currently earn further contributing to our profitability.

“Given the increasing interest in the sector from both public and private capital markets, our overall strategy remains focused on exploiting our position as the only publicly-listed feeder and small containership-focused company to continue growing pursuing accretive opportunities via mergers or combinations with privately owned vessels or fleets.”

Tasos Aslidis, Chief Financial Officer of Euroseas commented: “The operating results of the fourth quarter of 2020 reflect the increased levels of charter rates in the containership markets as compared to the same period of 2019, with net income amounting to $0.6 million for the fourth quarter in 2020 compared to a net loss of $0.8 million for the fourth quarter of 2019. On average, during the fourth quarter of 2020, our vessels earned approximately 15.5% higher time charter equivalent rates compared to the fourth quarter of 2019.”

“Total daily vessel operating expenses, including management fees, general and administrative expenses, but excluding drydocking costs, were higher by 15.9% during the fourth quarter of 2020 compared to the same quarter of last year. The increased operating expenses for the fourth quarter of 2020 are mainly due to increased crewing costs for our vessels compared to the same period of 2019, resulting from difficulties in crew rotation due to COVID-19 related restrictions. Adjusted EBITDA during the fourth quarter of 2020 was $2.1 million compared to the $1.2 million achieved in fourth quarter of last year, and it reached $11.8 million versus $5.3 million for the respective twelve-month periods of 2020 and 2019.”

“As of December 31, 2020, our outstanding bank debt (excluding the unamortized loan fees) was $67.3 million, versus restricted and unrestricted cash of approximately $6.3 million.”

Fourth Quarter 2020 Results:
For the fourth quarter of 2020, the Company reported total net revenues of $12.0 million representing a 9.6% decrease over total net revenues of $13.3 million during the fourth quarter of 2019, which was the result of the decreased average number of vessels operating in the fourth quarter of 2020, partly offset by the higher time charter rates our vessels earned in the fourth quarter of 2020 compared to the corresponding period of 2019. The Company reported net income for the period of $0.6 million and net income attributable to common shareholders of $0.4 million, as compared to a net loss of $0.8 million and a net loss attributable to common shareholders of $0.9 million for the fourth quarter of 2019. Drydocking expenses amounted to $0.1 million during the fourth quarter of 2020 comprising the cost of one vessel completing her intermediate survey in-water. For the same period of 2019 drydocking expenses amounted to $1.5 million comprising the cost of one vessel completing her special survey with drydock and two vessels completing their intermediate surveys in-water. Depreciation expense for the fourth quarter of 2020 increased to $1.6 million from $1.5 million in the fourth quarter of 2019. Although the average number of vessels operating in the fourth quarter of 2020 decreased to 14.43 as compared to 16.84 for the same period of 2019, the new vessels acquired at the end of 2019, have a higher average daily depreciation charge as a result of their higher initial values (acquisition price) compared to the remaining vessels.

On average, 14.43 vessels were owned and operated during the fourth quarter of 2020 earning an average time charter equivalent rate of $10,497 per day compared to 16.84 vessels in the same period of 2019 earning on average $9,086 per day.

Adjusted EBITDA1 for the fourth quarter of 2020 was $2.1 million compared to $1.2 million for the corresponding period in 2019.

Basic and diluted earnings per share attributable to common shareholders for the fourth quarter of 2020 was $0.07 calculated on 6,149,300 basic and diluted weighted average number of shares outstanding, compared to a basic and diluted loss per share of $0.18 for the fourth quarter of 2019, calculated on 5,036,122 basic and diluted weighted average number of shares outstanding.

Excluding the effect on the income attributable to common shareholders for the quarter of the unrealized gain on derivatives, the amortization of below market time charters acquired and the gain on sale of a vessel, the adjusted loss attributable to common shareholders for the quarter ended December 31, 2020 would have been $0.16 per share basic and diluted compared to an adjusted loss of $0.32 per share basic and diluted for the quarter ended December 31, 2019. Usually, security analysts do not include the above items in their published estimates of earnings per share.

Full Year 2020 Results:
For the full year of 2020, the Company reported total net revenues of $53.3 million representing a 33.2% increase over total net revenues of $40.0 million during the twelve months of 2019. The Company reported net income for the year of $4.0 million and net income attributable to common shareholders of $3.3 million, as compared to a net loss of $1.7 million and a net loss attributable to common shareholders of $3.5 million for the twelve months of 2019. The results for the twelve months of 2020 include $1.7 million of amortization of below market charters acquired, a $0.6 million unrealized loss on derivatives, a $2.5 million net gain on sale of vessels and a $0.1 million loss on write-down of vessel held for sale. The results for the twelve months of 2019 include a $0.9 million of amortization of below market charters acquired and $0.04 million of unrealized gain on derivatives. Our results have also benefitted from other income of $2.7 million related to insurance proceeds from an “unrepaired damage” claim agreed with the H&M underwriters for our vessel EM Oinousses, which was eventually sold in July 2020. Depreciation expense for the twelve months of 2020 was $6.6 million compared to $4.2 million during the same period of 2019, due to the increased number of vessels in the Company’s fleet.

Vessel operating expenses for the twelve months of 2020 amounted to $32.2 million as compared to $24.0 million for the same period of 2019. The increased amount is due to the higher number of vessels owned and operated in the twelve months of 2020 compared to the same period of 2019. Additionally, some of our vessels incurred increased crewing costs in 2020 compared to 2019, resulting from difficulties in crew rotation due to COVID-19 related restrictions. Related party management fees for the twelve months of 2020 were $5.3 million compared to $3.7 million for the same period of 2019. The increase is due to the higher average number of vessels operated by the Company in the twelve months of 2020 as compared to the same period of 2019 as well as due to termination fees paid for the vessels sold in accordance with the management agreement.

Drydocking expenses amounted to $0.5 million for the twelve months of 2020 (one vessel passed her intermediate survey in-water and three vessels passed their special survey in-water), compared to $2.7 million for the same period of 2019 (one of our vessels completed her special survey with drydock, another four vessels completed their intermediate surveys in-water and a vessel completed her special survey with drydock that started in 2018).

On average, 17.23 vessels were owned and operated during the twelve months of 2020 earning an average time charter equivalent rate of $9,445 per day compared to 13.10 vessels in the same period of 2019 earning on average $8,782 per day.

Interest and other financing costs for the twelve months of 2020 amounted to $4.1 million compared to $3.4 million for the same period of 2019. This increase is due to the increased amount of debt in the current period compared to the same period of 2019.

Adjusted EBITDA for the twelve months of 2020 was $11.8 million compared to $5.3 million during the twelve months of 2019.

Basic and diluted earnings per share attributable to common shareholders for the twelve months of 2020 was $0.58, calculated on 5,753,917 basic and diluted weighted average number of shares outstanding compared to basic and diluted loss per share of $1.21 for the twelve months of 2019, calculated on 2,861,928 basic and diluted weighted average number of shares outstanding.

Excluding the effect on the income attributable to common shareholders for the twelve months of 2020 of the unrealized loss on derivatives, the amortization of the below market time charters acquired, the net gain on sale of vessels and the loss on write down of vessel held for sale, the adjusted loss attributable to common shareholders for the year ended December 31, 2020 would have been $0.02 per share compared to adjusted loss of $1.52 per share basic and diluted for 2019, which was also adjusted by excluding unrealized gain on derivatives and amortization of the below market time charters acquired. As previously mentioned, usually, security analysts do not include the above items in their published estimates of earnings per share.

Fleet Profile:

The Euroseas Ltd. fleet profile is as follows:

Source: Euroseas Ltd.

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