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Euroseas Ltd. Reports Results for the Quarter Ended June 30, 2009
Marketwire
Aug 11, 2009
MAROUSSI, ATHENS, GREECE -- (Marketwire) -- 08/11/09 -- Euroseas Ltd. (NASDAQ: ESEA), 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 and six month periods ended June 30, 2009.
Second Quarter 2009 Highlights:
-- Net loss of $5.4 million or $0.18 loss per share basic and diluted on
total net revenues of $14.8 million. Excluding the effect of unrealized
loss on derivatives, unrealized gain on trading securities and amortization
of the fair value of charters acquired, the net income for the period would
have been $0.5 million, or $0.02 per share basic and diluted.
-- Adjusted EBITDA was $5.8 million. Please refer to a subsequent section
of the Press Release for a reconciliation of adjusted EBITDA to net income.
-- An average of 16 vessels were owned and operated during the second
quarter of 2009 earning an average time charter equivalent rate of $13,062
per day.
-- Declared a quarterly dividend of $0.10 per share for the second
quarter of 2009 payable on September 4, 2009 to shareholders of record on
August 27, 2009. This is the sixteenth consecutive quarterly dividend
declared.
First Half 2009 Highlights:
-- Net loss of $1.5 million or $0.05 loss per share basic and diluted on
total net revenues of $30.2 million. Excluding the effect of unrealized
loss on derivatives, unrealized gain on trading securities and amortization
of the fair value of charters acquired, the net income for the period would
have been $2.4 million, or $0.08 per share basic and diluted.
-- Adjusted EBITDA was $12.0 million. Please refer to a subsequent
section of the Press Release for a reconciliation of adjusted EBITDA to net
income.
-- An average of 15.85 vessels were owned and operated during the first
half of 2009, earning an average time charter equivalent rate of $12,875
per day.
-- Declared two quarterly dividends for a total of $0.20 per share during
the first half of 2009.
Aristides Pittas, Chairman and CEO of Euroseas, commented: "The first half of 2009 presented us with a mix of opportunities and challenges: it has proven to be a very difficult chartering environment for our container fleet, but, at the same time, it gave us the opportunity to expand and renew our bulker fleet by purchasing three younger panamax bulkers at attractive prices. We continue evaluating further investment opportunities in drybulk vessels and containerships as we see unique opportunities potentially emerging in both subsectors.
"As we have stated before, we expect to face a difficult and volatile market environment well into 2010. Thus, we have covered 100% of our drybulk fleet for 2009 and 75% for 2010 via either time charter contracts or Freight Forward Agreement ("FFA") contracts. Our containership coverage is currently 57% for the remaining of 2009 and 22% for 2010. We have started seeing some signs that the container market as well may have passed its trough, especially, in the case of containerships below 2,000 teu, like ours. The number of smaller containerships being laid up has decreased and there is more enquiry for such ships than for larger vessels, most likely due to a better balance between supply and demand: the fleet supply side reflects a significantly lower orderbook and more scrapping due to the older age profile, and, the demand side reflects a relative increased activity as shipment sizes tend to reduce in periods of austerity, thus favoring smaller vessels, and intra-regional trade is faring better compared to trade across the oceans.
"Our Board reconfirmed its intention to continue paying healthy dividends to our shareholders throughout the market cycle without compromising our expansion program. In that respect, we have maintained our quarterly dividend at $0.10 per share which represents a yield of about 7.6% on the basis of our stock price on July 31, 2009."
Tasos Aslidis, Chief Financial Officer of Euroseas, commented: "The results of the second quarter of 2009 reflect the lower level of the charter markets compared to the same period a year ago. Our results were negatively influenced by non-cash losses mainly on FFA contracts despite some non-cash gains on interest rate swaps.
"Total daily vessel operating expenses, including management fees and general and administrative expenses, during the second quarter of 2009 reflect a decreased by about 19% on a per vessel per day basis compared to the second quarter of 2008. Part of this decrease (about 8%) is due to the fact that three of our vessels were laid-up during the second quarter of 2009 and, thus, incurred significantly lower daily costs, but, a significant part (about 11%) is associated with the success of our manager's cost reduction and optimization plan launched in mid-2008. Cost control remains a key component of our strategy.
"As of June 30, 2009, our net debt position was close to zero with our outstanding debt at $69.5 million versus restricted and unrestricted cash of about $68.4 million. As of the same date, our scheduled debt repayments over the next 12 months amounted to about $12.3 million a number low enough to provide us with significant operational cash flow comfort. I would like to repeat that we continue to enjoy our bankers' support and have been able to finance all three of our vessel purchases this year with about 50% debt as further evidenced by the $13 million loan we about to conclude to partly finance M/V 'Pantelis,' a vessel that we purchased last month."
Second Quarter 2009 Results:
For the second quarter of 2009, the Company reported total net revenues of $14.8 million representing a 56.9% decrease over total net revenues of $34.5 million during the second quarter of 2008. The Company reported a net loss for the period of $5.4 million as compared to net income of $15.6 million for the second quarter of 2008. The results for the second quarter of 2009 include a $6.3 million net unrealized loss on derivatives and trading securities as compared to $0.2 million unrealized gain on trading securities for the same period of 2008. Depreciation expenses for the second quarter of 2009 were $4.8 million compared to $7.5 million during the same period of 2008. The decline was due to a change in estimates (see below) and the sale of M/V Nikolaos P and M/V Ioanna P, which contributed $2.0 million to the depreciation expenses in the second quarter of 2008, partly balanced by the depreciation of two vessels purchased in 2009. On average, 16 vessels were owned and operated during the second quarter of 2009 earning an average time charter equivalent rate of $13,062 per day compared to 15.44 vessels in the same period of 2008 earning on average $25,918 per day. Three of the Company's containerships were laid-up throughout the second quarter of 2009.
Adjusted EBITDA for the second quarter of 2009 was $5.8 million, a 71.9% decrease from $20.7 million achieved during the second quarter of 2008. Please see below for Adjusted EBITDA reconciliation to net income and cash flow provided by operating activities.
Basic and diluted loss per share for the second quarter of 2009 was $0.18, calculated on 30,575,611 weighted average number of shares outstanding, compared to basic and diluted earnings per share of $0.51 for the second quarter of 2008, calculated on 30,428,810 and 30,554,537 weighted average number of shares outstanding, respectively.
Excluding the effect on the earnings for the quarter of the unrealized loss on derivatives, unrealized gain on trading securities and amortization of the fair value of time charter contracts acquired, the earnings per share for the quarter ended June 30, 2009 would have been $0.02 per share basic and diluted, and, for the quarter ended June 30, 2008 would have been $0.43 per share basic and diluted. Usually, security analysts do not include the above items in their published estimates of earnings per share.
First Half 2009 Results:
For the first half of 2009, the Company reported total net revenues of $30.2 million representing a 55.2% decrease over total net revenues of $67.3 million during the first half of 2008. The Company reported a net loss for the period of $1.5 million as compared to net income of $29.3 million for the first half of 2008. The results for the first half of 2009 include a $4.5 million net unrealized loss on derivatives and trading securities as compared to $0.2 million unrealized gain on trading securities for the same period of 2008. Depreciation expenses for the first half of 2009 were $9.3 million compared to $14.8 million during the same period of 2008. The decline was due to a change in estimates (see below) and the sale of M/V Nikolaos P and M/V Ioanna P, which contributed $4.0 million to the depreciation expenses in the first half of 2008, partly balanced by the depreciation of two of the vessels purchased in 2009 that contributed to the depreciation expense for the first half. On average, 15.85 vessels were owned and operated during the first half of 2009 earning an average time charter equivalent rate of $12,875 per day compared to 15.22 vessels in the same period of 2008 earning on average $25,824 per day. One of the Company's vessels was laid up during the entire first half of 2009 and two more vessels for the second quarter of 2009.
Adjusted EBITDA for the first half of 2009 was $12.0 million, a 69.6% decrease from $39.4 million achieved during the first half of 2008. Please see below for Adjusted EBITDA reconciliation to net income and cash flow provided by operating activities.
Basic and diluted loss per share for the first half of 2009 was $0.05, calculated on 30,575,611 weighted average number of shares outstanding, compared to basic and diluted earnings per share of $0.96 basic and diluted per share for the first half of 2008, calculated on 30,375,182 and 30,501,654 weighted average number of shares outstanding, respectively.
Excluding the effect on the earnings for the first half of 2009 of the unrealized loss on derivatives, unrealized gain on trading securities and amortization of the fair value of time charter contracts acquired, the earnings per share for the six-month period ended June 30, 2009 would have been $0.08 per share basic and diluted, and, for the same period in 2008 would have been $0.81 per share basic and diluted. Usually, security analysts do not include the above items in their published estimates of earnings per share.
Change in accounting principle and change in estimates:
Beginning with the first quarter of 2009, the Company changed its accounting policy of drydocking costs from the deferral method, under which the Company amortized drydocking costs over the estimated period of benefit between drydockings, to the direct expense method, under which the Company expenses all drydocking costs as incurred. The Company believes that the direct expense method is preferable as it eliminates the significant amount of time and subjectivity involved in determining which costs and activities related to drydocking qualify for the deferral method. When the accounting principle was retrospectively applied, net income for the three-month and for the six-month periods ended June 30, 2008 decreased by $0.1 and $1.6 million, respectively.
The Company reflected this change as a change in accounting principle from an accepted accounting principle to a preferable accounting principle in accordance with Statement of Financial Accounting Standards No. 154, Accounting Changes and Error Corrections. The new accounting principle will be applied retrospectively to all periods presented in earnings releases and filings.
During the fourth quarter of 2008, the Company also changed its estimates of the scrap price and useful life of its containerships to better reflect the present market environment, industry practice and intended use. The effect of these changes increased net income for the three and six-month periods ended June 30, 2009 by $1.6 and $3.3 million, respectively.
Fleet Profile:
The Euroseas Ltd. fleet profile is as follows:
Year
Name Type Dwt TEU Built Employment TCERate ($/day)
------------ ------- ------ ----- --------- -----------------
Dry Bulk
Vessels
------------ ------- ------ ----- --------- -----------------
TC 'til
PANTELIS Panamax 74,020 2000 Dec-09 $25,200
------------ ------- ------ ----- --------- -----------------
TC 'til
ELENI P Panamax 72,119 1997 May-10 $15,350
------------ ------- ------ ----- --------- -----------------
Baumarine
IRINI (*) Panamax 69,734 1988 Pool
------------ ------- ------ ----- --------- -----------------
TC 'til
ARISTIDES N.P. Panamax 69,268 1993 Jan-10 $12,350
------------ ------- ------ ----- --------- -----------------
Bulk-
MONICA P (**) handling
Handymax 46,667 1998 Pool
------------ ------- ------ ----- --------- -----------------
GREGOS Handysize 38,691 1984 Spot
------------ ------- ------ ----- --------- -----------------
Total Dry
Bulk Vessels 6 370,499
------------ ------- ------ ----- --------- -----------------
Multipurpose
Dry Cargo
Vessels
------------ ------- ------ ----- --------- -----------------
$9,500
TC 'til 'til Dec-10,
TASMAN TRADER 1 22,568 950 1990 Mar-12 $9,000
'til Mar-12
------------ ------- ------ ----- --------- -----------------
Container
Carriers
------------ ------- ------ ----- --------- -----------------
$16,800
TC 'til 'til Aug-11
Aug-11 $18,735
(3 annual 'til Aug-12
MAERSK Intermediate 34,677 2,556 2001 options $19,240
NOUMEA 'til 'til Aug-13
Aug-14) $19,750
'til Aug-14
------------ ------- ------ ----- --------- -----------------
TIGER TC 'til
BRIDGE Intermediate 31,627 2,228 1990 Mar-10 $7,500
------------ ------- ------ ----- --------- -----------------
ARTEMIS Intermediate 29,693 2,098 1987 Laid-up
------------ ------- ------ ----- --------- -----------------
DESPINA P Handy size 33,667 1,932 1990 Laid-up
------------ ------- ------ ----- --------- -----------------
JONATHAN P
(ex-OEL
INTEGRITY) Handy size 33,667 1,932 1990 Laid-up
------------ ------- ------ ----- --------- -----------------
OEL TRANSWORLD
(ex-CLAN TC 'til
GLADIATOR) Handy size 30,007 1,742 1992 Sep-09 $18,000
------------ ------- ------ ----- --------- -----------------
TC 'til
Sep-09
(option
'til
YM XINGANG I Handy size 23,596 1,599 1993 Dec-09) $3,850
------------ ------- ------ ----- --------- -----------------
TC 'til
MANOLIS P Handy size 20,346 1,452 1995 Oct-09 $15,800
------------ ------- ------ ----- --------- -----------------
NINOS
(ex-YM TC 'til
QINGDAO I) Feeder 18,253 1,169 1990 Apr-10 $8,060
------------ ------- ------ ----- --------- -----------------
TC 'til
Dec-09
(option
'til
KUO HSIUNG Feeder 18,154 1,169 1993 Jun-10) $3,850
------------ ------- ------ ----- --------- -----------------
Total
Container
Carriers 10 273,687 17,877
------------ ------- ------ ----- --------- -----------------
Fleet Grand
Total 17 666,754 18,827
------------ ------- ------ ----- --------- -----------------
(*) "IRINI" is employed in the Baumarine spot pool that is managed by
Klaveness, a major global charterer in the dry bulk area.
(**) "Monica P" is employed in the Bulkhandling spot pool that is also
managed by Klaveness.
Summary Fleet Data:
3 3 6 6
months, months, months, months,
ended ended ended ended
June 30, June 30, June 30, June 30,
2008 2009 2008 2009
------- ------- ------- -------
FLEET DATA
Average number of vessels (1) 15.44 16.00 15.22 15.85
Calendar days for fleet (2) 1,405.0 1,456.0 2,770.0 2,869.0
Scheduled off-hire days incl. laid-up
(3) 35.7 293.0 98.8 373.0
Available days for fleet (4) = (2) -
(3) 1,369.3 1,163.0 2,671.2 2,496.0
Commercial off-hire days (5) 0.0 28.2 7.7 112.4
Operational off-hire days (6) 15.8 8.3 17.3 21.3
Voyage days for fleet (7) = (4) - (5)
- (6) 1,353.5 1,126.5 2,646.2 2,362.3
Fleet utilization (8) = (7) / (4) 98.8% 96.9% 99.1% 94.6%
Fleet utilization, commercial
(9) = ((4) - (5)) / (4) 100.0% 97.6% 99.7% 95.5%
Fleet utilization, operational
(10) = ((4) - (6)) / (4) 98.8% 99.3% 99.4% 99.1%
AVERAGE DAILY RESULTS
Time charter equivalent rate (11) 25,918 13,062 25,824 12,875
Vessel operating expenses (12) 6,050 4,906 5,820 5,081
General and administrative
expenses (13) 894 672 829 722
Total vessel operating expenses (14) 6,944 5,578 6,649 5,803
------- ------- ------- -------
(1) Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of calendar days each vessel was a part of our fleet during the period divided by the number of calendar days in that period.
(2) Calendar days. We define calendar days as the total number of days in a period during which each vessel in our fleet was in our possession including off-hire days associated with major repairs, drydockings or special or intermediate surveys or days of vessels in lay-up. Calendar days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during that period.
(3) The scheduled off-hire days including vessels laid-up are days associated with scheduled repairs, drydockings or special or intermediate surveys or days of vessels in lay-up. The shipping industry uses available days to measure the number of days in a period during which vessels were available to generate revenues.
(4) Available days. We define available days as the total number of days in a period during which each vessel in our fleet was in our possession net of scheduled off-hire days including days of vessels laid-up.
(5) Commercial off-hire days. We define commercial off-hire days as days waiting to find employment.
(6) Operational off-hire days. We define operational off-hire days as days associated with unscheduled repairs or other off-hire time related to the operation of the vessels,
(7) Voyage days. We define voyage days as the total number of days in a period during which each vessel in our fleet was in our possession net of commercial and operational off-hire days. The shipping industry uses voyage days to measure the number of days in a period during which vessels actually generate revenues.
(8) Fleet utilization. We calculate fleet utilization by dividing the number of our voyage days during a period by the number of our available days during that period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons such as unscheduled repairs or days waiting to find employment.
(9) Fleet utilization, commercial. We calculate commercial fleet utilization by dividing our available days net of commercial off-hire days during a period by our available days during that period.
(10) Fleet utilization, operational. We calculate operational fleet utilization by dividing our available net of operational off-hire days during a period by our available days during that period.
(11) Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards and is determined by dividing revenue generated from voyage charters net of voyage expenses by available days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, as well as commissions. TCE is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot voyage charters, time charters and bareboat charters) under which the vessels may be employed between the periods.
(12) Daily vessel operating expenses, which includes crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs and management fees are calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period.
(13) Daily general and administrative expense is calculated by dividing general and administrative expense by fleet calendar days for the relevant time period.
(14) Total vessel operating expenses, or TVOE, is a measure of our total expenses associated with operating our vessels. TVOE is the sum of vessel operating expenses and general and administrative expenses. Daily TVOE is calculated by dividing TVOE by fleet calendar days for the relevant time period.
Conference Call and Webcast:
Tomorrow, Wednesday, August 12, 2009 at 10:00 a.m. EDT, the company's management will host a conference call to discuss the results.
Conference Call details:
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 866 819 7111 (from the US), 0800 953 0329 (from the UK) or +44 (0)1452 542 301 (international standard dial in). Please quote "Euroseas."
A recording of the conference call will be available until August 19, 2009 by dialing 1 866 247 4222 (from the US), 0800 953 1533 (from the UK) or +44 (0)1452 550 000 (international standard dial in). Access Code: 6973591#
Audio webcast - Slides Presentation:
There will be a live and then archived audio webcast of the conference call, via the internet through the Euroseas website (www.euroseas.gr). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast. A slide presentation on the Second Quarter and First Half 2009 results in PDF format will also be available 30 minutes prior to the conference call and webcast accessible on the company's website (www.euroseas.gr) on the webcast page. Participants to the webcast can download the PDF presentation.
Euroseas Ltd.
Consolidated Condensed Statements of Operations
(All amounts expressed in U.S. Dollars - except share amounts)
Six Months Six Months
Ended Ended
June 30, June 30,
2008 2008
(as originally (as adjusted
reported under the Six Months
under the direct Ended
deferral expense June 30,
method) method) 2009
----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
Revenues
Voyage revenue 70,453,207 70,453,207 31,344,875
Commissions (3,167,155) (3,167,155) (1,188,660)
Net revenues 67,286,052 67,286,052 30,156,215
Operating expenses
Voyage expenses 2,117,459 2,117,459 857,576
Vessel operating expenses 13,407,911 13,407,911 12,200,619
Drydocking expenses - 3,274,716 -
Amortization and depreciation 16,456,481 14,787,848 9,283,929
Management fees 2,714,535 2,714,535 2,374,359
Other general and administrative
expenses 2,297,429 2,297,429 2,070,858
Charter termination fees - - (103,577)
Total operating expenses 36,993,815 38,599,898 26,683,764
Operating income 30,292,237 28,686,154 3,472,451
Other income/(expenses)
Interest and finance cost (1,700,736) (1,700,736) (688,453)
Change in fair value of derivatives - - (5,778,948)
Realized & unrealized gain on
trading securities 256,695 256,695 660,705
Foreign exchange (loss) gain (13,382) (13,382) 24,847
Interest income 1,860,219 1,860,219 808,082
Dividend income 175,000 175,000 -
Other income/(expenses), net 577,796 577,796 (4,973,767)
----------- ----------- -----------
Net income \ (loss) 30,870,033 29,263,950 (1,501,316)
----------- ----------- -----------
Earnings (loss), per share, basic 1.02 0.96 (0.05)
Weighted average number of shares,
basic 30,375,182 30,375,182 30,575,611
----------- ----------- -----------
Earnings (loss), per share, diluted 1.01 0.96 (0.05)
----------- ----------- -----------
Weighted average number of shares,
diluted 30,501,654 30,501,654 30,575,611
----------- ----------- -----------
Three Months Three Months
Ended Ended
June 30, June 30,
2008 2008
(as originally (as adjusted
reported under the Three Months
under the direct Ended
deferral expense June 30,
method) method) 2009
----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
Revenues
Voyage revenue 35,982,504 35,982,504 15,423,831
Commissions (1,518,387) (1,518,387) (576,782)
Net revenues 34,464,117 34,464,117 14,847,049
Operating expenses
Voyage expenses 902,168 902,168 280,235
Vessel operating expenses 7,097,071 7,097,071 5,952,620
Drydocking expenses - 1,056,908 -
Amortization and depreciation 8,486,784 7,512,484 4,782,779
Management fees 1,403,355 1,403,355 1,191,603
Other general and administrative
expenses 1,256,180 1,256,180 978,725
Charter termination fees - - -
Total operating expenses 19,145,558 19,228,166 13,185,962
Operating income 15,318,559 15,235,951 1,661,087
Other income/(expenses)
Interest and finance cost (677,742) (677,742) (364,730)
Change in fair value of derivatives - - (7,842,832)
Realized and unrealized gain on
trading securities 239,653 239,653 765,280
Foreign exchange (loss) gain 8,444 8,444 (4,746)
Interest income 723,422 723,422 339,352
Dividend income 84,849 84,849 -
Other income/(expenses), net 378,626 378,626 (7,107,676)
----------- ----------- -----------
Net income \ (loss) 15,697,185 15,614,577 (5,446,589)
----------- ----------- -----------
Earnings \ (loss), per share, basic 0.52 0.51 (0.18)
Weighted average number of shares,
basic 30,428,810 30,428,810 30,575,611
----------- ----------- -----------
Earnings \ (loss), per share, diluted 0.51 0.51 (0.18)
----------- ----------- -----------
Weighted average number of shares,
diluted 30,554,537 30,554,537 30,575,611
----------- ----------- -----------
Euroseas Ltd.
Consolidated Condensed Balance Sheets
(All amounts expressed in U.S. Dollars - except share amounts)
December 31, December 31,
2008 (as 2008 (as
originally adjusted
reported under the
under the direct
deferral expense June 30,
method) method) 2009
----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
ASSETS
Current Assets:
Cash and cash equivalents 73,851,191 73,851,191 56,249,817
Trade accounts receivable 1,233,895 1,233,895 1,310,760
Other receivables, net 1,439,628 1,439,628 860,571
Due from related company 4,678,750 4,678,750 4,676,284
Inventories 2,011,973 2,011,973 2,069,190
Restricted cash 2,181,264 2,181,264 5,427,316
Vessels held for sale 6,067,020 6,067,020 -
Trading securities 771,727 771,727 691,184
Derivatives 61,670 61,670 -
Prepaid expenses 241,102 241,102 291,003
Total current assets 92,538,220 92,538,220 71,576,125
Fixed assets:
Vessels, net 231,963,606 231,963,606 259,168,663
Advances for vessel acquisition 1,821,798 1,821,798 2,751,326
Long-term assets:
Restricted cash 4,800,000 4,800,000 6,733,260
Deferred charges, net 7,771,342 373,702 613,636
Derivatives 68,038 68,038 -
Fair value of above market time
charter acquired 1,653,422 1,653,422 177,876
Total long-term assets 248,078,206 240,680,566 269,444,761
----------- ----------- -----------
Total assets 340,616,426 333,218,786 341,020,886
----------- ----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Long term debt, current portion 12,450,000 12,450,000 12,250,000
Trade accounts payable 2,283,488 2,283,488 2,770,656
Accrued expenses 1,206,466 1,206,466 1,516,129
Accrued dividends 116,750 116,750 163,750
Deferred revenue 4,533,601 4,533,601 2,498,777
Derivatives 827,210 827,210 6,394,003
Total current liabilities 21,417,515 21,417,515 25,593,315
Long-term liabilities:
Long term debt, net of current portion 43,565,000 43,565,000 57,290,000
Derivatives 2,700,028 2,700,028 1,790,002
Fair value of below market time
charter acquired 8,704,811 8,704,811 6,627,574
Total long-term liabilities 54,969,839 54,969,839 65,707,576
Total liabilities 76,387,354 76,387,354 91,300,891
Shareholders' equity:
Common stock (par value $0.03,
100,000,000 shares authorized,
30,575,611 and 30,575,611 issued
and outstanding) 917,269 917,269 917,269
Preferred shares (par value $0.01,
20,000,000 shares authorized, no
shares issued and outstanding)
Additional paid-in capital 234,567,670 234,567,670 235,119,672
Retained earnings 28,744,133 21,346,493 13,683,054
Total shareholders' equity 264,229,072 256,831,432 249,719,995
----------- ----------- -----------
Total liabilities and shareholders'
equity 340,616,426 333,218,786 341,020,886
----------- ----------- -----------
Euroseas Ltd.
Consolidated Condensed Statements of Cash Flows
(All amounts expressed in U.S. Dollars)
Six Months Six Months
Ended June Ended June
30, 2008 30, 2008
(as originally (as adjusted
reported under the
under the direct Six Months
deferral expense Ended June
method) method) 30, 2009
----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
----------- ----------- -----------
Cash flows from operating
activities:
Net income \ (loss) 30,870,033 29,263,950 (1,501,316)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation of vessels 14,787,848 14,787,848 9,283,929
Amortization of deferred charges 1,712,454 43,821 46,611
Amortization of fair value of time
charters (4,516,612) (4,516,612) (601,691)
Share-based compensation 877,398 877,398 552,001
Unrealized loss on derivatives, net - - 4,786,475
Purchase of trading securities (503,602) (503,602) -
Sale of trading securities 786,248 786,248 741,248
Realized gain on trading securities (93,737) (93,737) (411,444)
Unrealized gain on trading
securities (162,958) (162,958) (249,261)
Changes in operating assets and
liabilities (3,802,539) (527,823) (5,673,515)
----------- ----------- -----------
Net cash provided by operating
activities 39,954,533 39,954,533 6,973,037
----------- ----------- -----------
Cash flows from investing
activities:
Purchase of vessels including
improvements (43,582,320) (43,582,320) (34,667,188)
Advances for vessels acquisition - - (2,751,326)
Change in restricted cash (455,644) (455,644) (411,262)
Proceeds from sale of vessels - - 5,980,487
----------- ----------- -----------
Net cash (used in) investing
activities (44,037,964) (44,037,964) (31,849,289)
----------- ----------- -----------
Cash flows from financing
activities:
Issuance of share capital 5,030 5,030 -
Net proceeds from shares issued 1,805,892 1,805,892 -
Dividends paid (18,561,707) (18,561,707) (6,115,122)
Offering expenses paid (110,340) (110,340) -
Loan arrangements fees paid - - (135,000)
Proceeds from long-term debt - - 20,000,000
Repayment of long-term debt (14,490,000) (14,490,000) (6,475,000)
----------- ----------- -----------
Net cash provided by (used in)
financing activities (31,351,125) (31,351,125) 7,274,878
----------- ----------- -----------
Net decrease in cash and cash
equivalents (35,434,556) (35,434,556) (17,601,374)
Cash and cash equivalents at
beginning of period 104,135,320 104,135,320 73,851,191
----------- ----------- -----------
Cash and cash equivalents at end of
period 68,700,764 68,700,764 56,249,817
----------- ----------- -----------
Euroseas Ltd.
Reconciliation of Adjusted EBITDA to
Net Income and Cash Flow Provided By Operating Activities
(All amounts expressed in U.S. Dollars)
Three Months Three Months
Ended June Ended June
30, 2008 30, 2008
(as originally (as adjusted
reported under the
under the direct Three Months
deferral expense Ended June
method) method) 30, 2009
------------ ------------ ------------
Net income \ (loss) 15,697,185 15,614,577 (5,446,589)
------------ ------------ ------------
Interest and finance costs, net
(incl. interest income) (45,680) (45,680) 25,378
------------ ------------ ------------
Depreciation and amortization 8,486,784 7,512,484 4,782,779
------------ ------------ ------------
Loss on derivatives, net - - 6,813,206
------------ ------------ ------------
Amortization of deferred revenue
of below market time charter
acquired (3,142,739) (3,142,739) (1,101,598)
------------ ------------ ------------
Amortization of deferred revenue
of above market time charter
acquired 737,773 737,773 737,773
------------ ------------ ------------
Adjusted EBITDA 21,733,323 20,676,415 5,810,949
============ ============ ============
Three Months Three Months
Ended June Ended June
30, 2008 30, 2008
(as originally (as adjusted
reported under the
under the direct Three Months
deferral expense Ended June
method) method) 30, 2009
----------- ----------- -----------
Net cash flow provided by operating
activities 17,199,980 17,199,980 540,672
----------- ----------- -----------
Changes in operating assets /
liabilities 5,418,141 4,361,233 5,351,160
----------- ----------- -----------
Loss on interest rate derivatives
(realized) - - 177,187
----------- ----------- -----------
Gain on trading securities, net 239,653 239,653 765,280
----------- ----------- -----------
Investment in trading securities,
net (547,828) (547,828) (741,248)
----------- ----------- -----------
Share-based compensation (509,658) (509,658) (282,925)
----------- ----------- -----------
Interest, net (66,965) (66,965) 823
----------- ----------- -----------
Adjusted EBITDA 21,733,323 20,676,415 5,810,949
=========== =========== ===========
Six Months Six Months
Ended June Ended June
30, 2008 30, 2008
(as originally (as adjusted
reported under the
under the direct Six Months
deferral expense Ended June
method) method) 30, 2009
------------ ------------ ------------
Net income \ (loss) 30,870,033 29,263,950 (1,501,316)
------------ ------------ ------------
Interest and finance costs, net
(incl. interest income) (159,483) (159,483) (119,629)
------------ ------------ ------------
Depreciation and amortization 16,456,481 14,787,848 9,283,929
------------ ------------ ------------
Loss on derivatives, net - - 4,911,034
------------ ------------ ------------
Amortization of deferred revenue
of below market time charter
acquired (5,992,158) (5,992,158) (2,077,237)
------------ ------------ ------------
Amortization of deferred revenue
of above market time charter
acquired 1,475,546 1,475,546 1,475,546
------------ ------------ ------------
Adjusted EBITDA 42,650,419 39,375,703 11,972,327
============ ============ ============
Six Months Six Months
Ended June Ended June
30, 2008 30, 2008
(as originally (as adjusted
reported under the
under the direct Six Months
deferral expense Ended June
method) method) 30, 2009
----------- ----------- -----------
Net cash flow provided by operating
activities 39,954,533 39,954,533 6,973,037
----------- ----------- -----------
Changes in operating assets /
liabilities 3,802,539 527,823 5,673,515
----------- ----------- -----------
Loss on interest rate derivatives
(realized) - - 124,559
----------- ----------- -----------
Gain on trading securities, net 256,695 256,695 660,705
----------- ----------- -----------
Investment in trading securities,
net (282,646) (282,646) (741,248)
----------- ----------- -----------
Share-based compensation (877,398) (877,398) (552,001)
----------- ----------- -----------
Interest, net (203,304) (203,304) (166,240)
----------- ----------- -----------
Adjusted EBITDA 42,650,419 39,375,703 11,972,327
=========== =========== ===========
EBITDA Reconciliation:
Euroseas Ltd. considers Adjusted EBITDA to represent net earnings before interest, income taxes, depreciation, amortization, gain in derivatives and amortization of deferred revenues from above or below market time charters acquired. Adjusted EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by United States generally accepted accounting principles, or U.S. GAAP, and our calculation of Adjusted EBITDA may not be comparable to that reported by other companies. Adjusted EBITDA is included herein because it is a basis upon which we assess our financial performance and liquidity position and because we believe that it presents useful information to investors regarding a company's ability to service and/or incur indebtedness. The Company's definition of Adjusted EBITDA may not be the same as that used by other companies in the shipping or other industries.
Euroseas Ltd.
Reconciliation of Net Income Excluding the Effect from Unrealized Loss on
derivatives, Unrealized Gain on trading securities, Amortization of the
Fair Value of Charters Acquired to Net Income
(All amounts expressed in U.S. Dollars - except share data and per share
amounts)
Three Months Three Months
Ended June Ended June
30, 2008 30, 2008
(as originally (as adjusted
reported under the
under the direct Three Months
deferral expense Ended June
method) method) 30, 2009
------------- ------------- -------------
Net income \ (loss) 15,697,185 15,614,577 (5,446,589)
------------- ------------- -------------
Unrealized loss on
derivatives, net - - 6,636,019
------------- ------------- -------------
Unrealized gain on trading
securities (145,916) (145,916) (353,836)
------------- ------------- -------------
Amortization of deferred
revenue of below market time
charter acquired (3,142,739) (3,142,739) (1,101,598)
------------- ------------- -------------
Amortization of deferred
revenue of above market time
charter acquired 737,773 737,773 737,773
------------- ------------- -------------
Net Income excluding
unrealized loss on
derivatives, unrealized gain
on trading securities,
amortization of the fair
value of charters acquired 13,146,303 13,063,695 471,769
------------- ------------- -------------
Net Income per share excluding
unrealized loss on derivatives,
unrealized gain on trading
securities, amortization of
the fair value of charters
acquired basic 0.43 0.43 0.02
------------- ------------- -------------
Weighted average number of
shares, basic 30,428,810 30,428,810 30,575,611
------------- ------------- -------------
Net Income per share excluding
unrealized loss on derivatives,
unrealized gain on trading
securities, amortization of
the fair value of charters
acquired, diluted 0.43 0.43 0.02
------------- ------------- -------------
Weighted average number of
shares, diluted 30,554,537 30,554,537 30,680,038
------------- ------------- -------------
Six Months Six Months
Ended June Ended June
30, 2008 30, 2008
(as originally (as adjusted
reported under the
under the direct Six Months
deferral expense Ended June
method) method) 30, 2009
------------- ------------- -------------
Net income \ (loss) 30,870,833 29,263,950 (1,501,316)
------------- ------------- -------------
Unrealized loss on
derivatives, net - - 4,786,475
------------- ------------- -------------
Unrealized gain on trading
securities (162,958) (162,958) (249,261)
------------- ------------- -------------
Amortization of deferred
revenue of below market time
charter acquired (5,992,158) (5,992,158) (2,077,237)
------------- ------------- -------------
Amortization of deferred
revenue of above market time
charter acquired 1,475,546 1,475,546 1,475,546
------------- ------------- -------------
Net Income excluding unrealized
loss on derivatives, unrealized
gain on trading securities,
amortization of the fair
value of charters acquired 26,191,263 24,584,380 2,434,207
------------- ------------- -------------
Net Income per share excluding
unrealized loss on derivatives,
unrealized gain on trading
securities, amortization of
the fair value of charters
acquired, basic 0.86 0.81 0.08
------------- ------------- -------------
Weighted average number of
shares, basic 30,375,182 30,375,182 30,575,611
------------- ------------- -------------
Net Income per share excluding
unrealized loss on derivatives,
unrealized gain on trading
securities, amortization of
the fair value of charters
acquired, diluted 0.86 0.81 0.08
------------- ------------- -------------
Weighted average number of
shares, diluted 30,501,654 30,501,654 30,641,379
============= ============= =============
About Euroseas Ltd.
Euroseas Ltd. was formed on May 5, 2005 under the laws of the Republic of the Marshall Islands to consolidate the ship owning interests of the Pittas family of Athens, Greece, which has been in the shipping business over the past 136 years. Euroseas trades on the NASDAQ Global Select Market under the ticker ESEA.
Euroseas operates in the dry cargo, drybulk and container shipping markets. Euroseas' operations are managed by Eurobulk Ltd., an ISO 9001:2000 certified affiliated ship management company, which is responsible for the day-to-day commercial and technical management and operations of the vessels. Euroseas employs its vessels on spot and period charters and through pool arrangements.
The Company has a fleet of 17 vessels, including 4 Panamax drybulk carriers, 1 Handymax and 1 Handysize drybulk carriers, 3 Intermediate container ship, 5 Handysize container ships, 2 Feeder container ships and a multipurpose dry cargo vessel. Euroseas' 6 drybulk carriers have a total cargo capacity of 370,499 dwt, its 10 container ships have a cargo capacity of 17,877 teu and its 1 multipurpose vessel has a cargo capacity of 22,568 dwt or 950 teu.
Forward-Looking Statement
This press release contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events and the Company's growth strategy and measures to implement such strategy; including expected vessel acquisitions and entering into further time charters. Words such as "expects," "intends," "plans," "believes," "anticipates," "hopes," "estimates," and variations of such words and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to changes in the demand for dry bulk vessels and container ships, competitive factors in the market in which the Company operates; risks associated with operations outside the United States; and other factors listed from time to time in the Company's filings with the Securities and Exchange Commission. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.
Visit our website www.euroseas.gr
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