Euroseas Ltd. Reports Results for the Nine-Month Period and Quarter Ended September 30, 2014

Euroseas Ltd., an owner and operator of drybulk and container carrier vessels and provider of seaborne transportation for drybulk and containerized cargoes, announced its results for the three and nine month periods ended September 30, 2014.

Third Quarter 2014 Highlights:

Net loss of $3.7 million; net loss attributable to common shareholders of $4.1 million or $0.07 loss per share basic and diluted. Total net revenues of $9.9 million. Adjusted net loss attributable to common shareholders1 for the period was $4.2 million or $0.07 loss per share basic and diluted.

Adjusted EBITDA1 was $(0.2) million.

An average of 15.00 vessels were owned and operated during the third quarter of 2014 earning an average time charter equivalent rate of $7,168 per day.

The Company declared and paid its third dividend of $0.4 million on its Series B Preferred shares; the dividend was paid in-kind by issuing additional Series B preferred Shares.

First Nine Months 2014 Highlights:

Net loss of $11.0 million; net loss attributable to common shareholders of $12.0 million or $0.22 loss per share basic and diluted. Total net revenues of $29.0 million. Adjusted net loss attributable to common shareholders1 for the period was $12.0 million or $0.22 loss per share basic and diluted.

Adjusted EBITDA1 was $(0.8) million.

An average of 14.47 vessels were owned and operated during the first nine months of 2014 earning an average time charter equivalent rate of $7,438 per day.

1 Adjusted EBITDA, Adjusted net loss, Adjusted net loss attributable to common shareholders and Adjusted loss per share attributable to common shareholders 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: “Both the drybulk and containership shipping sectors remained weak during the third quarter and the month of October of 2014 except some small rebound of drybulk rates in late October. Clearly, the market weakness influenced our third quarter results. Although 2015 drybulk prospects appear challenging both with respect to revised expectations of lower demand growth and continuing supply growth, we expect rates to stay above third quarter levels; on the containership front, the facts that the orderbook stands at about 19\%, the lowest level since early 2003, and that demand growth rate is improving should help charter rates recover gradually but consistently. Despite this market environment, our vessels continue to be employed in a mix of mostly short term charters which would allow us to quickly take advantage of any increase in rates.

“On the investment front, whilst pushing ahead with our new building program where construction of the first two ships is planned to start in December and January and for which we have recently secured bank commitments for financing between 60-65\% of their price, we continue to evaluate additional investment opportunities. Such opportunities are either on individual vessel basis which we can finance with our own means, or, even, combinations with other fleets as we believe our status as a public company will allow us to raise financing to fund such deals.”

Tasos Aslidis, Chief Financial Officer of Euroseas commented: “The results of the third quarter of 2014 were in line with our expectations and reflect the continued low level of drybulk and containership charter rates. Operating results during the third quarter of 2014 improved compared to the results of the same quarter of 2013 before dividend payments (in-kind) to holders of Preferred Series B shares were made.

“Total daily vessel operating expenses, including management fees, general and administrative expenses but excluding drydocking costs, reflected a decline of about 1.2\% during the third quarter of 2014 compared to the same quarter of last year and an increase of about 1.8\% for the nine month period ended September 30, 2014 over the same period of 2013. Drydocking expenses expressed on a per vessel per day basis were lower by 42.5\% in the nine month period of 2014 and 3.0\% lower for the third quarter of 2014, respectively, as compared to the same periods in 2013. As always, we want to emphasize that cost control remains a key component of our strategy.

“As of September 30, 2014, our outstanding debt was $57.5 million whilst restricted and unrestricted cash amounted to about $42.2 million. We complied with all our debt covenants as of September 30, 2014.”

Third Quarter 2014 Results:
For the third quarter of 2014, the Company reported total net revenues of $9.9 million representing a 10.1\% increase over total net revenues of $9.0 million during the third quarter of 2013. The Company reported a net loss for the period of $3.7 million and a net loss attributable to common shareholders of $4.1 million, as compared to a net loss of $3.8 million for the third quarter of 2013. The results for the third quarter of 2014 include a $0.3 million unrealized gain on derivatives, a $0.2 million realized loss on derivatives, as compared to $0.3 million unrealized gain on derivatives and $0.4 million realized loss on derivatives and $1.3 million gain on sale of a vessel for the same period of 2013.

Depreciation expenses for the third quarter of 2014 were $3.2 million, compared to the $4.0 million of 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 third quarter of 2014 earning an average time charter equivalent rate of $7,168 per day compared to 14.28 vessels in the same period of 2013 earning on average $7,320 per day.

Adjusted EBITDA for the third quarter of 2014 was $(0.2) million, an improvement from the $(0.5) million for the third 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 third quarter of 2014 was $0.07 calculated on 57,113,123 basic and diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $0.08 for the third quarter of 2013, calculated on 45,511,005 basic and diluted weighted average number of shares outstanding.

Excluding the effect on the loss attributable to common shareholders, for the quarter of the unrealized gain on derivatives, the realized loss on derivatives and the net gain from the sale of vessel in the third quarter of 2013, the adjusted net loss per share attributable to common shareholders for the quarter ended September 30, 2014 would have been $0.07 per share basic and diluted compared to net loss of $0.11 per share basic and diluted for the quarter ended September 30, 2013. Usually, security analysts do not include the above items in their published estimates of earnings per share.

First Nine Months 2014 Results:
For the first nine months of 2014, the Company reported total net revenues of $29.0 million representing a 1.5\% decrease over total net revenues of $29.5 million during the first nine months of 2013. The Company reported a net loss for the period of $11.0 million, net loss attributable to common shareholders of $12.0 million, as compared to net loss of $17.3 million for the first nine months of 2013. The results for the first nine months of 2014 include a $0.7 million unrealized gain on derivatives, a $0.7 million realized loss on derivatives as compared to a $1.2 million unrealized gain on derivatives, a $1.3 million realized loss on derivatives and a $1.9 million loss on sale of vessels for the same period of 2013.

Depreciation expenses for the first nine months of 2014 were $9.0 million compared to $12.6 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, 14.47 vessels were owned and operated during the first nine months of 2014 earning an average time charter equivalent rate of $7,438 per day compared to 14.75 vessels in the same period of 2013 earning on average $7,953 per day.

Adjusted EBITDA for the first nine months of 2014 was $(0.8) million compared to $(1.6) million for the first nine months 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 first nine months of 2014 was $0.22 respectively, calculated on 54,019,367 basic and diluted weighted average number of shares outstanding compared to basic and diluted loss per share of $0.38 for the first nine months of 2013, calculated on 45,383,405 basic and diluted weighted average number of shares outstanding.

Excluding the effect, on the loss attributable to common shareholders of the unrealized gain on derivatives and realized loss on derivatives and any loss/ gain on sale of vessels, the adjusted net loss per share attributable to common shareholders for the nine-month period ended September 30, 2014 would have been $0.22 compared to loss of $0.34 per share basic and diluted for the same period in 2013. Usually, security analysts do not include the above items in their published estimates of earnings per share.
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Source: Euroseas Ltd.