Euroseas Ltd. Reports Results for the Year and Quarter Ended December 31, 2016

By: | at 08:51 AM | Maritime  

MAROUSSI, ATHENS, GREECE - Euroseas Ltd. (NASDAQ: ESEA

) (the “Company” or “Euroseas”), an owner and operator of drybulk and container carrier vessels and provider of seaborne transportation for drybulk and containerized cargoes, announced today its results for the three month period and full year ended December 31, 2016.

Fourth Quarter 2016 Highlights:

  • Total net revenues of $7.3 million. Net loss attributable to common shareholders of $18.1 million or $2.17 loss per share basic and diluted. This loss includes, amongst other items, a $0.4 million of dividend on Series B Preferred Shares, a $5.9 million loss on write-down of M/V Eleni which was held for sale, $3.8 million loss on expected termination of our Kamsarmax newbuilding contract and a $4.7 million impairment loss in our “Other investment” and “Investment in joint venture” (“Euromar investments”). Adjusted net loss attributable to common shareholders1 for the period was $3.7 million or $0.45 loss per share basic and diluted.
  • Adjusted EBITDA1 was $(0.4) million.
  • An average of 12.1 vessels were owned and operated during the fourth quarter of 2016 earning an average time charter equivalent rate of $7,666 per day.
  • The Company declared its twelfth dividend of $0.4 million on its Series B Preferred Shares; the dividend was paid in-kind by issuing additional Series B Preferred Shares.

Full year 2016 Highlights:

  • Total net revenues of $28.4 million. Net loss attributable to common shareholders of $45.9 million or $5.63 loss per share basic and diluted. This loss includes, among other items, a $1.7 million of dividend on Series B Preferred Shares, a $5.9 million loss on write-down of M/V Eleni which was held for sale, $7.1 million loss on termination of our Ultramax newbuilding contracts and on expected termination of our Kamsarmax newbuilding contract and a $18.7 million impairment loss in our Euromar investments. Adjusted net loss attributable to common shareholders1 for the period was $14.2 million or $1.74 loss per share basic and diluted.
  • Adjusted EBITDA1 was $(1.1) million.
  • An average of 11.52 vessels were owned and operated during the twelve months of 2016 earning an average time charter equivalent rate of $7,331 per day.

1 Adjusted EBITDA, Adjusted net loss and Adjusted loss per share are not recognized measurements under 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 U.S. GAAP.

As previously announced, the Company:

  • Took delivery of its Ultramax newbuilding, M/V Alexandros P, and the Panamax vessel, M/V Tasos in January 2017; also, completed the sale of M/V Eleni P and, in February 2017, sold M/V RT Dagr.
  • Drew a $10.9 million loan collateralized by its new vessel, M/V Alexandros P.
  • Sold to date approximately 1.28 million shares raising about $2.7 million of net proceeds through its at-the-market (“ATM”) stock offering.

Aristides Pittas, Chairman and CEO of Euroseas, commented: “During the last quarter of 2016 and the month of January of 2017, we were able to transform the company by resolving its liquidity needs through a combination of equity raisings (through our at-the-market equity program, the contribution of a vessel that was scrapped and a private placement of our common stock), debt rescheduling and new financings. In addition, we added a further drybulk newbuilding to our fleet and replaced certain older vessels with slightly younger ones. We believe all of these steps help position Euroseas to benefit from a potential market recovery. Our fleet now includes two drybulk newbuilding vessels; at the same time, we have no remaining capital commitments since we can opt out of our Kamsarmax newbuilding contract by end of March 2017. We also face a low loan repayment burden in 2017.”

“Looking forward, we could see a gradual improvement in the drybulk market if China’s commodity appetite continues as supply pressures are expected to subside in the second half of 2017. We are hopeful to also see an improvement in the containership rates on the back of supply correction (increased scrapping and more slippage in new deliveries).”

“We now have the financial capacity to pursue selected acquisitions and take advantage of opportunities to invest while the prices of vessels are still relatively low. And we hope we will be able to continue acting as a platform to consolidate other ownership interests using our stock to pay for acquisitions such as the recent acquisition of M/V RT Dagr.”

Tasos Aslidis, Chief Financial Officer of Euroseas, commented: “The operating results of the fourth quarter of 2016 reflect the continuing low level of charter rates in the containership market and the modestly improved (especially during November 2016) drybulk market during the quarter. On average during the fourth quarter of 2016, our vessels earned 0.7% per day per vessel less than in the fourth quarter of 2015.”

“Total daily vessel operating expenses, including management fees, general and administrative expenses, but excluding drydocking costs, decreased approximately 3.8% during the fourth quarter of 2016 compared to the same quarter of last year, while for the full year 2016 the decrease was approximately 3.1%. As always, we want to emphasize that cost control remains a key component of our strategy, especially at depressed markets like at present.”

“As of December 31, 2016, our outstanding debt was $52.4 million versus restricted and unrestricted cash of approximately $9.3 million. We complied with all our debt covenants as of December 31, 2016.”

Fourth Quarter 2016 Results: For the fourth quarter of 2016, the Company reported total net revenues of $7.3 million representing a 17.0% decrease over total net revenues of $8.8 million during the fourth quarter of 2015. The Company reported a net loss for the period of $17.6 million and a net loss attributable to common shareholders of $18.1 million, as compared to a net loss of $3.9 million and net loss attributable to common shareholders of $4.4 million for the fourth quarter of 2015. On average, 12.1 vessels were owned and operated during the fourth quarter of 2016 earning an average time charter equivalent rate of $7,666 per day compared to 13.97 vessels in the same period of 2015 earning an average time charter equivalent rate of $7,717 per day.

Depreciation expenses for the fourth quarter of 2016 were $2.2 million, compared to the $2.4 million for the same period of 2015. The results for the fourth quarter of 2016 include a $0.1 million net gain on derivatives, a $5.9 million loss on write-down of vessel held for sale, a $3.8 million loss on termination of a newbuilding contract and a $4.7 million impairment loss in other investment and investment in joint venture as compared to a $0.1 million net gain on derivatives, and a $1.2 million net loss resulting from gains on sale of vessels and loss on write-down of vessel held for sale for the same period of 2015.

Adjusted EBITDA for the fourth quarter of 2016 was $(0.4), million compared to $(0.2) million for the same of the fourth quarter of 2015. Please see below for Adjusted EBITDA reconciliation to net loss and cash flow provided by operating activities.

Basic and diluted loss per share attributable to common shareholders for the fourth quarter of 2016 was $2.17 calculated on 8,312,708 basic and diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $0.54 for the fourth quarter of 2015, calculated on 8,093,610 basic and diluted weighted average number of shares outstanding.

Excluding the effect on the loss attributable to common shareholders for the quarter of the net gain on derivatives, the net gain on sale of vessels, the loss on write-down of vessel held for sale, the loss on termination of a newbuilding contract and impairment loss in other investment and investment in joint venture, the adjusted net loss per share attributable to common shareholders for the quarter ended December 31, 2016 would have been $0.45 per share basic and diluted compared to net loss of $0.41 per share basic and diluted for the quarter ended December 31, 2015. Usually, security analysts do not include the above items in their published estimates of earnings per share.

Full Year 2016 Results: For the full year of 2016, the Company reported total net revenues of $28.4 million representing a 24.6% decrease over total net revenues of $37.7 million during the twelve months of 2015. The Company reported a net loss for the period of $44.2 million and a net loss attributable to common shareholders of $45.9 million, as compared to a net loss of $14.0 million and a net loss attributable to common shareholders $15.7 million for the twelve months of 2015. On average, 11.52 vessels were owned and operated during 2016 earning an average time charter equivalent rate of $7,331 per day compared to 14.74 vessels in the same period of 2015 earning on average $7,570 per day.

Depreciation expenses for 2016 were $8.8 million compared to $11.0 million during the same period of 2015. The results for the twelve months of 2016 include a $0.1 million net loss on derivatives, a $5.9 million loss on write-down of vessel held for sale, a $7.1 million loss on termination of newbuilding contracts and a $18.7 million impairment loss in other investment and investment in joint venture, as compared to a $0.3 million net loss on derivatives and a $1.2 million net loss resulting from gains on sale of vessels and loss on write-down of vessel held for sale for the same period of 2015.

Adjusted EBITDA for 2016 was $(1.1) million decreasing from the ($0.2) million recorded during 2015. Please see below for Adjusted EBITDA reconciliation to net loss and cash flow provided by operating activities.

Basic and diluted loss per share attributable to common shareholders for 2016 was $5.63 calculated on 8,165,703 basic and diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $2.45 for 2015, calculated on 6,410,794 basic and diluted weighted average number of shares outstanding.

Excluding the effect on the loss attributable to common shareholders of the net loss on derivatives, the net gain on sale of vessels and loss on write-down of vessel held for sale, the loss on termination of newbuilding contracts and impairment loss in other investment and investment in joint venture, the adjusted net loss per share attributable to common shareholders for 2016 would have been $1.74 compared to a loss of $2.22 per share basic and diluted for 2015. Usually, security analysts do not include the above items in their published estimates of earnings per share.

Fleet Profile: The Euroseas Ltd. fleet profile as of February 16, 2017 is as follows:

Name Type Dwt TEU Year Built Employment(*) TCE Rate ($/day)
Dry Bulk Vessels (**)
XENIA Kamsarmax 82,000 2016 TC ‘till Jan-2020 + 1 year in Charterers Option $14,100 $14,350
EIRINI P Panamax 76,466 2004 TC ‘till Jan-18 Hire 104% of Average BPI(***) 4TC
TASOS Panamax 75,100 2000 TC ‘till Apr-17 $6,950
PANTELIS Panamax 74,020 2000 TC ‘till Feb-17 $5,850
ALEXANDROS P. Ultramax 63,500 2017 Open(****)
MONICA P Handymax 46,667 1998 Voyage Charter ‘till Feb-17 TC equivalent of $8,000
Total Dry Bulk Vessels 6 417,753
Container Carriers
EVRIDIKI G Feeder 34,677 2,556 2001 TC ‘till Jan-18 $11,000
AGGELIKI P Feeder 30,360 2,008 1998 TC ‘till Aug-17 $6,000
JOANNA Feeder 22,301 1,732 1999 Laid up
MANOLIS P Feeder 20,346 1,452 1995 TC ‘till Mar-17 Thereafter TC ‘till Sep-17 $6,800 $6,000
AEGEAN EXPRESS Feeder 18,581 1,439 1997 TC ‘till Feb-17 $6,300
NINOS Feeder 18,253 1,169 1990 TC ‘till Apr-17 $7,000
KUO HSIUNG Feeder 18,154 1,169 1993 TC ‘till May-17 $7,000
Total Container Carriers 7 162,672 11,525
Fleet Grand Total 13 580,425 11,525

(*) Represents the earliest redelivery date (**) The Company has the option to decide whether to proceed with the construction contract for a Kamsarmax drybulk vessel (Hull Number YZJ 1153) until March 31, 2017 with delivery in 2018. (***) BPI stands for Baltic Panamax Index; the Average BPI 4TC is an index based on four time charter routes. (****) M/V Alexandros P is “on sublects” (i.e. awaiting final approval by the charterer) for a charter until Aug-17 at a hire rate of 114% of BSI (BSI stands for Baltic Supramax Index).

Summary Fleet Data:

Three months, ended December 31, 2015 Three months, ended December 31, 2016 Year ended December 31, 2015 Year ended December 31, 2016
FLEET DATA
Average number of vessels (1) 13.97 12.1 14.74 11.52
Calendar days for fleet (2) 1,285.0 1,113.0 5,380.0 4,218.0
Scheduled off-hire days incl. laid-up (3) 0.0 89.8 89.6 147.5
Available days for fleet (4) = (2) - (3) 1,285.0 1,023.2 5,290.4 4,070.5
Commercial off-hire days (5) 207.0 46.4 324.8 174.3
Operational off-hire days (6) 16.6 1.7 32.2 9.2
Voyage days for fleet (7) = (4) - (5) - (6) 1,061.4 975.1 4,933.4 3,887.0
Fleet utilization (8) = (7) / (4) 82.6% 95.3% 93.3% 95.5%
Fleet utilization, commercial (9) = ((4) - (5)) / (4) 83.9% 95.5% 93.9% 95.7%
Fleet utilization, operational (10) = ((4) - (6)) / (4) 98.7% 99.8% 99.4% 99.8%
AVERAGE DAILY RESULTS
Time charter equivalent rate (11) 7,717

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