Euroseas Reports Results FY & Q4 2014

 

Euroseas Ltd. 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, 2014.

Fourth Quarter 2014 Highlights:

•Total net revenues of $11.5 million. Net loss of $7.0 million; net loss attributable to common shareholders (after a $0.4 million of dividend on Series B Preferred Shares) of $7.3 million or $0.13 loss per share basic and diluted. Adjusted net loss attributable to common shareholders1 for the period was $3.8 million or $0.07 loss per share basic and diluted.

•Adjusted EBITDA1 was 0.3 million.

•An average of 15.00 vessels were owned and operated during the fourth quarter of 2014 earning an average time charter equivalent rate of $7,823 per day.

•The Company declared and paid its fourth 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 2014 Highlights:

•Total net revenues of $40.6 million. Net loss of $17.9 million; net loss attributable to common shareholders (after a $1.4 million of dividend on Series B Preferred Shares) of $19.4 million or $0.35 loss per share basic and diluted. Adjusted net loss attributable to common shareholders1 for the period was $15.8 million or $0.29 loss per share basic and diluted.

•Adjusted EBITDA1 was $(0.5) million.

•An average of 14.6 vessels were owned and operated during the twelve months of 2014 earning an average time charter equivalent rate of $7,534 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.

Aristides Pittas, Chairman and CEO of Euroseas, commented:"Rates in the containership sector and particularly in the feeder size where we operate remained stable but at low levels during the fourth quarter of 2014. This being said, the trend for larger ships was positive especially for the Panamax and Post-Panamax classes and we expect to see higher rates trickling down to the feeder sector during 2015.

"The drybulk sector weakened further during the fourth quarter and the weakness continued into 2015 so far with the BDI standing close to its historical low levels. Looking forward, we expect a challenging and volatile drybulk market environment in 2015. Lower demand growth expectations and scheduled vessel deliveries could continue putting pressure on market rates. As our vessels are mainly employed through short term contracts and index linked charters, we should be able to make the most from an increase in freight rates when this materializes.

"At the same time, we are proceeding with the implementation of our fleet modernization and growth strategy through our newbuilding program. Additionally, falling asset value trends could create opportunities to either further invest in individual ships during 2015 or to grow the Company through larger and more sophisticated transactions by leveraging our experience and status as a listed Company."

Tasos Aslidis, Chief Financial Officer of Euroseas, commented: "The operating results of the fourth quarter of 2014 reflect the continuing depressed state of the drybulk market which influenced the charter rates earned by our drybulk vessels. Additionally, increased operating and voyage expenses as compared to the fourth quarter of 2013 affected our results. Our vessels earned on average about 1.2% per day per vessel less in the fourth quarter of 2014. Adjusted EBITDA during the fourth quarter of 2014 resulted in $0.3 million versus $(0.1) million in the fourth quarter of last year.

"Higher voyage expenses for the fourth quarter of 2014 were mainly due to employing one of our drybulk vessels on voyage charters under which we pay for such expenses as opposed to time charter contracts under which the charter pays. Total daily vessel operating expenses, including management fees, general and administrative expenses, but excluding drydocking costs, decreased approximately 5.7% during the fourth quarter of 2014 compared to the same quarter of last year, while for the full year 2014 the decrease was marginal over 2013. Drydocking expenses expressed on a per vessel per day basis were lower by 48.4% for the full year 2014 and lower by 90.3% for the fourth quarter of 2014 as compared to the same periods in 2013, and were a function of the number of vessels undergoing drydocking in the respective periods. As always, we want to emphasize that cost control remains a key component of our strategy, especially at depressed markets like at present.

"We are also in the process of finalizing the financing of the 2nd Ultramax (Hull Number DY 161) vessel of our newbuilding program. Our first Kamsarmax (Hull Number YZJ 1116) due at the end of 2015, is already chartered for a four-year charter which should make its financing easier.

"As of December 31, 2014, our outstanding debt was $54.3 million versus restricted and unrestricted cash of approximately $33.4 million. Our scheduled debt repayments over the next 12 months amount to about $19.5 million which includes approximately $10.7 million of three balloon repayments which we are considering refinancing. We complied with all our debt covenants as of December 31, 2014."

Fourth Quarter 2014 Results: For the fourth quarter of 2014, the Company reported total net revenues of $11.5 million representing a 19.4% increase over total net revenues of $9.7 million during the fourth quarter of 2013. The Company reported a net loss for the period of $7.0 million and a net loss attributable to common shareholders of $7.3 million, as compared to a net loss of $86.1 million for the fourth quarter of 2013. The results for the fourth quarter of 2014 include a $0.05 million net unrealized gain on derivatives, a $0.08 million net realized loss on derivatives and a $3.5 million impairment loss on a vessel as compared to $0.1 million net unrealized gain on derivatives, a $78.2 million impairment loss on vessels (or $1.71 loss per share, basic and diluted) and a $0.2 million net realized loss on derivatives for the same period of 2013.

Depreciation expenses for the fourth quarter of 2014 were $3.2 million, compared to the $7.4 million for the same period of 2013 mainly due to the lower book values of the Company's containerships as a result of an impairment charge in the fourth quarter of 2013. On average, 15.00 vessels were owned and operated during the fourth quarter of 2014 earning an average time charter equivalent rate of $7,823 per day compared to 14.00 vessels in the same period of 2013 earning an average time charter equivalent rate of $7,923 per day.

Adjusted EBITDA for the fourth quarter of 2014 was $0.3 million increasing from the $(0.1) million achieved during the fourth quarter of 2013. 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 2014 was $0.13 calculated on 57,219,248 basic and diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $1.89 for the fourth quarter of 2013, calculated on 45,617,130 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 unrealized gain on derivatives, the net realized loss on derivatives and impairment loss on a vessel in the fourth quarter of 2014, the adjusted net loss per share attributable to common shareholders for the quarter ended December 31, 2014 would have been $0.07 per share basic and diluted compared to net loss of $0.17 per share basic and diluted for the quarter ended December 31, 2013. Usually, security analysts do not include the above items in their published estimates of earnings per share.

Full Year 2014 Results: For the full year of 2014, the Company reported total net revenues of $40.6 million representing a 3.8% increase over total net revenues of $39.2 million during the twelve months of 2013. The Company reported a net loss for the period of $17.9 million, net loss attributable to common shareholders of $19.4 million, as compared to a net loss of $103.4 million for the twelve months of 2013. The results for the twelve months of 2014 include a $0.7 million net unrealized gain on derivatives, a $0.8 million net realized loss on derivatives and a $3.5 million impairment loss on a vessel, as compared to a $1.4 million net unrealized gain on derivatives, a $1.6 million net realized loss on derivatives, a $78.2 million impairment loss (or $1.72 loss per share, basic and diluted) and a $1.9 million net loss on sale of vessels for the same period of 2013.

Depreciation expenses for 2014 were $12.1 million compared to $20.0 million during the same period of 2013 mainly due to the lower book values of the Company's containerships as a result of an impairment charge in the fourth quarter of 2013. On average, 14.60 vessels were owned and operated during 2014 earning an average time charter equivalent rate of $7,534 per day compared to 14.56 vessels in the same period of 2013 earning on average $7,945 per day.

Adjusted EBITDA for 2014 was $(0.5) million increasing from the $(1.7) million achieved during the twelve months of 2013. Please see below for Adjusted EBITDA reconciliation to net loss and cash flow provided by operating activities.

Excluding the effect, on the loss attributable to common shareholders of the net unrealized gain on derivatives, net realized loss on derivatives and the impairment loss on a vessel, the adjusted net loss per share attributable to common shareholders for 2014 would have been $0.29 compared to a loss of $0.51 per share basic and diluted for 2013. Usually, security analysts do not include the above items in their published estimates of earnings per share.