Shares of Euroseas Ltd. (NASDAQ:ESEA) Explode Following the Financial Results for the Nine-Month Period and Quarter Ended September 30, 2016

Owner and operator of drybulk and container carrier vessels and provider of seaborne transportation, Euroseas Ltd. (NASDAQ:ESEA), announces Q3, 2016 financial reports.

MAROUSSI, ATHENS, GREECE–(Marketwired – Nov 10, 2016) – 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 nine month periods ended September 30, 2016.

Third Quarter 2016 Highlights:

    Total net revenues of $7.2 million. Net loss of $4.6 million; net loss attributable to common shareholders (after a $0.4 million dividend on Series B Preferred Shares) of $5.0 million or $0.61 loss per share basic and diluted. Adjusted net loss attributable to common shareholders1 for the period was $0.401 per share basic and diluted.

    Adjusted EBITDA1 was $0.3 million.

    An average of 11.0 vessels were owned and operated during the third quarter of 2016 earning an average time charter equivalent rate of $7,737 per day.

    The Company declared its eleventh 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 Monthss 2016 Highlights:

    Total net revenues of $21.1 million. Net loss of $26.6 million; net loss attributable to common shareholders (after a $1.3 million dividend on Series B Preferred Shares) of $27.9 million or $3.43 loss per share basic and diluted. Adjusted net loss per share attributable to common shareholders1 for the period was $1.291.

     Adjusted EBITDA1 was $(0.8) million.

    An average of 11.3 vessels were owned and operated during the first nine months of 2016 earning an average time charter equivalent rate of $7,220 per day.

1Adjusted 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 U.S. 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: “In early September, we cancelled the second of our Ultramax newbuildings due to excessive construction delays. Along with our other Ultramax contract cancelled in June, we have requested and are pursuing return of our deposits and other expenses plus interest as specified in the newbuilding contracts and secured by refund guarantees. On the operating front, the markets remain challenging. Both of the market segments we operate in, continue being at depressed levels despite a modest recovery of drybulk charter rates. Containership rates remained depressed and the idle fleet is increasing. We have been able to extend the employment for 3 of our containerships whose charter was expiring but another onehas been idle for almost two months. As we are entering the cyclically slow season till the end of the Chinese New Year we decided to lay the vessel up till the market improves thus saving on costs.

“Thus, our focus over the next twelve months is to manage our liquidity effectively until receiving our newbuilding deposits and exploit to the extent possible market opportunities to renew our fleet. We continue to expect that the supply and demand balance will shift in favor of demand for both sectors over the next two years. We want to take advantage of such a development for the benefit of our shareholders. To this end we are evaluating various financing alternatives.”

Tasos Aslidis, Chief Financial Officer of Euroseas commented: “The results of the third quarter of 2016 reflect the continued depressed state of the drybulk and container markets. Comparing our results for the third quarter of 2016 with the same period of 2015, our net revenues declined by about $4.1 million and we incurred $0.1 million lower voyage expenses.”

“Total daily vessel operating expenses, including management fees, general and administrative expenses but excluding drydocking costs, were at about the same level compared to the third quarter of 2016 and registered a decrease of about 2.7% for the nine month period ended September 30, 2016 over the same period of 2015. Drydocking expenses expressed on a per vessel per day basis were higher by 20.9% in the nine month period of 2016 and 16.0% lower for the third quarter of 2016, respectively, as compared to the same periods in 2015. As always, we want to emphasize that cost control remains a key component of our strategy. The results for the nine months 2016, also include a loss of $3.2 million on termination of two newbuilding contracts, one terminated in June and the other in September 2016. This loss relates to expenses that cannot be refunded as a result of the cancelations (like management and supervision costs). Also, our results for the first nine months of 2016 include an impairment charge of $14.0 million taken in June 2016 on our equity minority investment in Euromar LLC, our joint venture with two private equity firms, as a result of continuing depressed containership markets and new debt restructuring agreements between Euromar LLC and its banks.

“As of September 30, 2016, our net outstanding debt was $52.4 million versus restricted and unrestricted cash of about $8.8 million.”

Third Quarter 2016 Results:

For the third quarter of 2016, the Company reported total net revenues of $7.2 million representing a 36.1% decrease over total net revenues of $11.3 million during the third quarter of 2015. The Company reported net loss for the period of $4.6 million and a net loss attributable to common shareholders of $5.0 million, as compared to a net loss of $1.4 million and $1.8 million respectively, for the third quarter of 2015. The results for the third quarter of 2016 include a $0.05 million gain on derivatives, a $1.8 million loss on contract termination of a newbuilding contract as compared to $0.2 million loss on derivatives for the same period of 2015. Drydocking expenses amounted to $0.6 million during the third quarter of the year 2016 as one vessel underwent drydocking compared to two vessels that underwent drydocking during the end of the second quarter and the beginning of the third quarter of 2015 for a total amount of $0.89 million. Depreciation expense for the third quarter of 2016 was $2.2 million compared to $2.8 million during the same period of 2015. On average, 11.0 vessels were owned and operated during the third quarter of 2016 earning an average time charter equivalent rate of $7,737 per day compared to 15.0 vessels in the same period of 2015 earning on average $8,929 per day.

Adjusted EBITDA1 for the third quarter of 2016 was $0.3 million compared to $2.0 million achieved during the third 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 third quarter of 2016 was $0.61 calculated on 8,139,060 basic and diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $0.29 for the third quarter of 2015, calculated on 6,140,438 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, the realized loss on derivatives and the loss on termination of one newbuilding contracts, the adjusted net loss per share attributable to common shareholders for the quarter ended September 30, 2016 would have been $0.40 per share basic and diluted compared to net loss of $0.26 per share basic and diluted for the quarter ended September 30, 2015. Usually, security analysts do not include the above items in their published estimates of earnings per share.

First Nine Months 2016 Results:

For the first nine months of 2016, the Company reported total net revenues of $21.1 million representing a 26.9% decrease over total net revenues of $28.9 million during the first nine months of 2015. The Company reported a net loss for the period of $26.6 million and a net loss attributable to common shareholders of $27.9 million, as compared to net loss of $10.1 million and $11.33 million respectively, for the first nine months of 2015. The results for the first nine months of 2016 include a $0.2 million loss on derivatives, a $0.01 million gain on sale of a vessel, $3.2 million loss on termination of two newbuilding contracts and a $14.0 million impairment of investment in joint venture as compared to $0.4 million loss on derivatives for the same period of 2015. Depreciation expense for the first nine months of 2016 was $6.6 million compared to $8.6 million during the same period of 2015. On average, 11.3 vessels were owned and operated during the first nine months of 2016 earning an average time charter equivalent rate of $7,220 per day compared to 15.0 vessels in the same period of 2015 earning on average $7,529 per day.

Adjusted EBITDA1 for the first nine months of 2016 was $(0.8) million compared to $0.1 million achieved during the first nine months 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 first nine months of 2016 was $3.43, calculated on 8,116,343 basic and diluted weighted average number of shares outstanding compared to basic and diluted loss per share of $1.92 for the first nine months of 2015, calculated on 5,903,609 basic and diluted weighted average number of shares outstanding.

Excluding the effect, on the loss attributable to common shareholders, for the first nine months of 2016 of the unrealized and realized loss on derivatives, the loss on termination of two newbuilding contracts, the gain on sale of a vessel and the impairment of investment in a joint venture, the adjusted net loss per share attributable to common shareholders for the nine-month period ended September 30, 2016 would have been $1.29 compared to loss of $1.85 per share basic and diluted for the same period in 2015. Usually, security analysts do not include the above items in their published estimates of earnings per share.

Original Source

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Euroseas Ltd. (NASDAQ:ESEA) shares are moving +55.0269% on the news today and have traded in the range of $1.3500 – 2.2900 during the current trading session. A number of brokerage analysts have recently weighed in on the stock, providing price target projections. The covering firms currently have a consensus one-year price target of $1.6000 on the stock.  This is according to brokerage analysts polled by Thomson Reuters First Call.  This is the average number from the individual targets provided by the firms.  Analysts are projecting earnings per share of $0.0000 for the next fiscal quarter.  For the current year, analysts are predicting earnings of $-1.5400 per share according to First Call.

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In looking at where Euroseas Ltd. (NASDAQ:ESEA) is trading on a technical level, the stock is trading +26.7907% away from its 50-day moving average of $1.7269.  Based on the most recent available data, the equity is -46.0690% off of its 52-week high of $4.0600 and +110.5385% away from its 52-week low which is $1.0400.

Today, the stock opened at $1.4199 and the last bid at the time of writing stood at $2.1896.  During the session thus far, the equity dipped down to $1.3500 and touched $2.2900 as the high point.   Euroseas Ltd. (NASDAQ:ESEA) has a market cap of $17.94M and has seen an average daily volume of 65,575 over the past three months.

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Disclaimer: The views, opinions, and information expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any company stakeholders, financial professionals, or analysts. Examples of analysis performed within this article are only examples. They should not be utilized to make stock portfolio or financial decisions as they are based only on limited and open source information. Assumptions made within the analysis are not reflective of the position of any analysts or financial professionals.

 

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