More Vessels Improve EuroDry’s First Quarter Results
EuroDry Ltd., an owner and operator of drybulk vessels and provider of seaborne transportation for drybulk cargoes, announced its results for the three-month period ended March 31, 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.
First Quarter 2019 Highlights:
• Total net revenues of $5.8 million. Net income of $0.9 million; net income attributable to common shareholders (after a $0.5 million dividend on Series B Preferred Shares) of $0.4 million or $0.18 earnings per share basic and diluted. The results include a $0.9 million or $0.39 per share of unrealized gains on derivatives.
• Adjusted EBITDA1 was $2.5 million.
• An average of 7.0 vessels were owned and operated during the first quarter of 2019 earning an average time charter equivalent rate of $9,472 per day (for the definition of time charter equivalent rate please refer to a subsequent section of the Press Release).
• The Company declared its fourth in-kind dividend of $0.1 million by issuing additional Series B Preferred Shares. The Company also declared a dividend of $0.4 million to be paid in cash, on its Series B Preferred Shares.
Aristides Pittas, Chairman and CEO of EuroDry commented:
“During the first quarter of 2019, the drybulk markets continued the declining trend of the fourth quarter of last year as they were affected by trade uncertainties and iron ore supply disruptions. Charter rates reached a bottom in February but have since recovered to their levels in the beginning of the year. For our fleet, this decline was significantly mitigated due to our physical and FFA contracts we put in place in the beginning of the quarter that partly insulated us from the depressed markets.”
“We believe that the recent market slowdown is due to short term factors and that, in the medium and long term, the fundamental supply-demand balance is supportive of an improving market. Low orderbook levels and reduced vessel availability – from unavoidable downtime to implement solutions required for compliance with emissions and ballast water treatment regulation – and possible slowdown of the average speed of the fleet would limit fleet growth and allow any trade recovery to translate to higher charter rates.”
“We continuously evaluate opportunities for investment in vessels or refinancing options that would allow us to use our cash liquidity to generate consistent returns for our existing shareholders or new ones who might take advantage of the significant discount to the NAV that our stock trades at.”
Tasos Aslidis, Chief Financial Officer of EuroDry commented:
“The net revenues of the first quarter of 2019 increased by 24.7% compared to the first quarter of 2018 as a result of the increased number of vessels operating in our fleet compared to the first quarter of 2018 partially offset by the charter rates our vessels earned during the quarter which were lower by 20.4% compared to the average time charter equivalent rate our vessels earned in the first quarter of 2018. More than half of this decline in the average daily charter was mitigated from the realized gain in our FFA contracts.”
“Total daily vessel operating expenses, including management fees, general and administrative expenses, but excluding drydocking costs, decreased approximately 12% during the first quarter of 2019 compared to the same quarter of last year. Although the average number of vessels increased by two vessels, the new vessels acquired have a lower average daily operating expense charge due to their age and condition (one new-built vessel and a Japanese 2004-build Panamax). As always, we want to emphasize that cost control remains a key component of our strategy.”
“Adjusted EBITDA during the first quarter of 2019 was $2.5 compared to $0.1 million achieved for the first quarter of last year. As of March 31, 2019, our outstanding debt (excluding the unamortized loan fees) was $61.7 million versus restricted and unrestricted cash of approximately $12.4 million.”
First Quarter 2019 Results:
For the first quarter of 2019, the Company reported total net revenues of $5.8 million representing a 24.7% increase over total net revenues of $4.6 million during the first quarter of 2018, which was the result of the increased average number of vessels. The Company reported net income for the period of $0.9 million and net income attributable to common shareholders of $0.4 million, as compared to net loss and net loss attributable to common shareholders of $1.4 million for the same period of 2018. Depreciation expenses for the first quarter of 2019 increased to $1.6 million compared to $1.2 million for the same period of 2018 as a result of the increased average number of vessels. Increased general and administrative expenses reflected mainly the operation of the Company as a separate public company following the completion of the Spin-off.
Interest and other financing costs for the first quarter of 2019 amounted to $1.0 million compared to $0.4 million for the same period of 2018. Interest during the first quarter of 2019 was higher due to higher debt and higher Libor during the period as compared to the same period of last year.
On average, 7.0 vessels were owned and operated during the first quarter of 2019 earning an average time charter equivalent rate of $9,472 per day compared to 5.0 vessels in the same period of 2018 earning on average $11,896 per day.
Adjusted EBITDA for the first quarter of 2019 was $2.5 million compared to $0.1 million achieved during the first quarter of 2018.
Basic and diluted earnings per share attributable to common shareholders for the first quarter of 2019 was $0.18 calculated on 2,244,803 basic and 2,252,427 diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $0.65 for the first quarter of 2018, calculated on 2,226,753 basic and diluted weighted average number of shares outstanding.
Excluding the effect on the earnings attributable to common shareholders for the quarter of the unrealized gain on derivatives, the adjusted loss attributable to common shareholders for the quarter ended March 31, 2019 would have been $0.21 per share basic and diluted compared to adjusted loss of $0.69 per share basic and diluted for the quarter ended March 31, 2018. Usually, security analysts do not include the above item in their published estimates of earnings per share.Full Report