SOURCE: Euroseas

Euroseas

August 11, 2016 08:52 ET

Euroseas Ltd. Reports Results for the Six-Month Period and Quarter Ended June 30, 2016

MAROUSSI, ATHENS, GREECE--(Marketwired - Aug 11, 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 six month period ended June 30, 2016 as well as certain fleet updates.

Second Quarter 2016 Highlights:

  • Total net revenues of $7.3 million. Net loss of $19.2 million; net loss attributable to common shareholders (after a $0.4 million of dividend on Series B Preferred Shares) of $19.6 million or $2.42 loss per share basic and diluted. The results include an impairment charge of $14.0 million on our "Investment in joint venture." Adjusted net loss attributable to common shareholders1 for the period was $0.51 per share basic and diluted.

  • Adjusted EBITDA1 was $(0.9) million.

  • An average of 11.4 vessels were owned and operated during the second quarter of 2016 earning an average time charter equivalent rate of $7,373 per day.

  • The Company declared its tenth 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 Half 2016 Highlights:

  • Total net revenues of $13.9 million. Net loss of $22.0 million; net loss attributable to common shareholders (after a $0.8 million of dividend on Series B Preferred Shares) of $22.9 million or $2.82 loss per share basic and diluted. The results for the first half also include an impairment charge of $14.0 million of "Investment in joint venture". Adjusted net loss per share attributable to common shareholders1 for the period was $0.89.

  • Adjusted EBITDA1 was $(1.0) million.

  • An average of 11.5 vessels were owned and operated during the first half of 2016 earning an average time charter equivalent rate of $6,967 per day.

Other developments:

Recently, the Company announced that it canceled one of its newbuilding contracts with the Dayang shipyard due to excessive delays in the construction of the vessel (Hull DY 160) as specified in the contract. The Company has demanded the return of its progress payments and other expenses including interest of approximately $8.6 million as specified in the newbuilding contract and secured by refund guaranties. The parties have referred the matter to arbitration.

Also the Company announced that it amended its newbuilding contract with the YSJ yard for the construction of a Kamsarmax vessel to provide the Company with the option until December 31, 2016 to change the type of the vessel to be built, buy another vessel built by the yard transferring any payments made under the newbuilding contract, or cancel the newbuilding contract without additional cost.

Furthermore, the Company announces that it has agreed to purchase M/V Aegean Express, a 1997-built 1,439 teu fully cellular containership for approximately $3 million, to replace M/V Cpt. Costas, a 1992-built containership which was sold during the second quarter of 2016.

Finally, the Company announces that the Company's Board authorized the establishment of an ATM offering of up to 15% of the Company's outstanding shares.

Aristides Pittas, Chairman and CEO of Euroseas commented: "While the charter markets for both sectors we operate remain challenging, we have managed to improve the liquidity of the Company by restructuring or refinancing some of our loans. Our revised loan profile combined with certain developments in our newbuilding contracts have reduced the required capital expenditures and significantly improved the liquidity outlook of Euroseas. We are now focused on how to take advantage of the low vessel price environment and find opportunities to expand and renew our fleet, as we have done with the replacement of M/V Cpt. Costas with a five year younger vessel for a marginally higher price.

We remain guardedly optimistic about the prospects of the markets mainly because of the significant adjustments underway in the supply of vessels both in terms of vessel scrapping but also in the form of newbuilding contract delays and cancellations, and furthermore, non-existent new order levels. Thus, on the chartering front, as we expect a modest improvement of both segments over the next twelve months, we are pursuing a chartering strategy focused on ensuring that our vessels remain employed and committed to shorter term charters.

Lately, we have seen an increased interest in our stock evidenced by a very significant increase in the trading liquidity. This is, of course, very positive and we hope it continues. The ATM that our Board approved is intended to facilitate new investors to participate in the Company and help keep the trading liquidity high, something essential for the longer term good of our shareholders. As we are not facing any cash needs, we may or may not execute fully on the ATM depending on whether we deem this would help our trading liquidity or assist in further vessel acquisitions or renewals."

Tasos Aslidis, Chief Financial Officer of Euroseas commented: "The results of the second quarter of 2016 reflect the low levels of the containership and drybulk markets compared to the same quarter of 2015.

Total daily vessel operating expenses, including management fees, general and administrative expenses but excluding drydocking costs, averaged $6,065 per vessel per day during the second quarter of 2016 as compared to $6,145 per vessel per day for the same quarter of last year, and $6,096 per vessel per day for the first half of 2016 as compared to $6,342 per vessel per day for the same period of 2015, reflecting a 1.3% and 3.9% decline, respectively. As always, we want to emphasize that cost control remains a key component of our strategy. The results also include a loss on termination of a newbuilding contract we canceled related to expenses that cannot be refunded as a result of the cancelation (like management and supervision costs). Also, our results include an impairment charge of $14.0 million 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 June 30, 2016, our outstanding debt was $53.7 million (excluding the unamortized loan fees of $0.4 million) versus restricted and unrestricted cash of about $12.9 million. As of the same date, our scheduled debt repayments over the next 12 months amounted to about $11.1 million (excluding the unamortized loan fees). All our debt covenants are satisfied subject to completion of documentation of a restructuring agreement with one of our banks."

Second Quarter 2016 Results:
For the second quarter of 2016, the Company reported total net revenues of $7.3 million representing a 22.3% decrease over total net revenues of $9.4 million during the second quarter of 2015. The Company reported net loss for the period of $19.2 million and a net loss attributable to common shareholders of $19.6 million, compared to $3.3 million and $3.7 million respectively for the second quarter of 2015. The results for the second quarter of 2016 include a $0.1 million unrealized loss on derivatives, a $0.01 million realized loss on derivatives, a $0.01 million gain on sale of a vessel, a $1.4 million loss on termination of new building vessel contract and a $14.0 million impairment charge on investment in joint venture, as compared to $0.1 million unrealized gain on derivatives, a $0.1 million realized loss on derivatives for the same period of 2015. Drydocking expenses amounted to $1.2 million during the second quarter of the year 2016 as one vessels underwent drydock compared to three vessels that underwent in-water surveys (in lieu of drydock) during the second quarter of 2015 for a total amount of $0.4 million. Depreciation expenses for the second quarter of 2016 were $2.2 million compared to $2.9 million during the same period of 2015. On average, 11.4 vessels were owned and operated during the second quarter of 2016 earning an average time charter equivalent rate of $7,373 per day compared to 15.0 vessels in the same period of 2015 earning on average $7,127 per day.

Adjusted EBITDA for the second quarter of 2016 was $(0.9) million compared to $(0.1) million achieved during the second 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 second quarter of 2016 was $2.42 calculated on 8,104,860 basic and diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $0.64 for the second quarter of /2015, calculated on 5,784,025 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 loss on derivatives and the realized loss on derivatives the loss on the termination of the newbuilding contract and the impairment charge on the investment in joint venture, the adjusted net loss per share attributable to common shareholders for the quarter ended June 30, 2016 would have been $0.51 per share basic and diluted compared to net loss of $0.65 per share basic and diluted for the quarter ended June 30, 2015. Usually, security analysts do not include the above items in their published estimates of earnings per share.

First Half 2016 Results:
For the first half of 2016, the Company reported total net revenues of $13.9 million representing a 21.0% decrease over total net revenues of $17.6 million during the first half of 2015, as a result of the decreased average number of vessels. The Company reported a net loss for the period of $22.0 million and a net loss attributable to common shareholders of $22.9 million, as compared to net loss of $8.7 million and $9.5 million respectively, for the first half of 2015. The results for the first half of 2016 include a $0.2 unrealized loss on derivatives, a $0.1 million realized loss on derivatives, a $0.01 million gain on sale of a vessel, a $1.4 million loss on termination of a new building vessel contract and a $14.0 million impairment charge on investment in joint venture, as compared to $0.04 million unrealized loss on derivatives, a $0.1 million realized loss on derivatives for the same period of 2015. Depreciation expenses for the first half of 2016 were $4.4 million compared to $5.8 million during the same period of 2015. On average, 11.5 vessels were owned and operated during the first half of 2016 earning an average time charter equivalent rate of $6,967 per day compared to 15.0 vessels in the same period of 2015 earning on average $6,823 per day.

Adjusted EBITDA for the first half of 2016 was $(1.0) million compared to $(1.9) million achieved during the first half 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 half of 2016 was $2.82, calculated on 8,104,860 basic and diluted weighted average number of shares outstanding compared to basic and diluted loss per share of $1.64 for the first half of 2015, calculated on 5,784,025 basic and diluted weighted average number of shares outstanding.

Excluding the effect on the loss attributable to common shareholders for the first half of 2016 of the unrealized loss on derivatives, realized loss on derivatives, the loss on the termination of the newbuilding contract and the impairment charge on the investment in joint venture, the adjusted net loss per share attributable to common shareholders for the six-month period ended June 30, 2016 would have been $0.89 compared to loss of $1.62 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.

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.

Fleet Profile:
The Euroseas Ltd. fleet profile is as follows:

                         
Name   Type   Dwt   TEU   Year Built   Employment  
TCE Rate ($/day)
Dry Bulk Vessels                        
Vessels in the water                        
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-17   Hire 104%
of Average
BPI*** 4TC
PANTELIS   Panamax   74,020       2000   TC 'till Sep-16   Hire 100.5%
of Average
BPI*** 4TC
ELENI P   Panamax   72,119       1997   Open    
MONICA P   Handymax   46,667       1998   TC 'til Sep-16   $4,000
Vessels under construction(*)                        
Hull Number YZJ 1153   Kamsarmax   82,000       2018   N/A    
Hull Number DY 161**   Ultramax   63,500       2016   N/A    
Total Dry Bulk Vessels  
7
  496,772                
Container Carriers                        
EVRIDIKI G   Intermediate   34,677   2,556   2001   TC 'till Mar-18   $11,000
AGGELIKI P   Intermediate   30,360   2,008   1998   TC 'till Jan-17 +
6 months Option
  $7,000
$9,000
VENTO DI GRECALE   Handy size   22,301   1,732   1999   TC 'till Aug-16   $7,250
MANOLIS P   Handy size   20,346   1,452   1995   TC 'till Feb-17   $6,800
NINOS   Feeder   18,253   1,169   1990   TC 'til Oct-16   $7,000
KUO HSIUNG   Feeder   18,154   1,169   1993   TC 'til Oct-16   $6,900
Total Container Carriers   6   144,091   10,086            
Fleet Grand Total   13   640,863   10,086            
                         
Note:    
(*)   Hull Number DY 161 is due to be delivered in the third quarter of 2016 but it is facing construction delays.
 
 
 
 
 
 
 
 
Contract for the construction of ALEXANDROS P (DY 160) was cancelled due to excessive
construction delays. The Company has demanded the return of its progress payments and
other expenses as specified in the newbuilding contract and secured by refund guaranties. The
parties have referred the matter to arbitration.
(**)   Hull Number YZJ 1153 is due to be delivered in the first quarter of 2018.
(***)   BPI is the Baltic Panamax Index.

Summary Fleet Data:

                 
    3 months, ended
June 30, 2015
  3 months, ended
June 30, 2016
  6 months, ended
June 30, 2015
  6 months, ended
June 30, 2016
FLEET DATA                
Average number of vessels (1)   15.00   11.44   15.00   11.49
Calendar days for fleet (2)   1,365   1,041.0   2,715   2,091.0
Scheduled off-hire days incl. laid-up (3)   20.48   31.3   47.08   31.3
Available days for fleet (4) = (2) - (3)   1,345   1,009.7   2,668   2,059.7
Commercial off-hire days (5)   21.14   28.7   91.14   94.9
Operational off-hire days (6)   1.92   7.5   3.62   7.5
Voyage days for fleet (7) = (4) - (5) - (6)   1,321   973.5   2,573   1,957.3
Fleet utilization (8) = (7) / (4)   98.3%   96.4%   96.4%   95.0%
Fleet utilization, commercial (9) = ((4) - (5)) / (4)   98.4%   97.2%   96.6%   95.4%
Fleet utilization, operational (10) = ((4) - (6)) / (4)   99.9%   99.3%   99.9%   99.6%
                 
AVERAGE DAILY RESULTS                
Time charter equivalent rate (11)   7,127   7,373   6,823   6,967
Vessel operating expenses excl. drydocking expenses (12)   5,563   5,179   5,711   5,203
General and administrative expenses (13)   582   886   631   894
Total vessel operating expenses (14)   6,145   6,065   6,342   6,097
Drydocking expenses (15)   324   1,128   365   561
                 

(1)Average number of vessels is the number of vessels that constituted the Company's fleet for the relevant period, as measured by the sum of the number of calendar days each vessel was a part of the Company's 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.

(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. We use available days to measure the number of days in a period during which vessels were available to generate revenues.

(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. We use 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. We use 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 days 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 determined by dividing revenue generated from voyage charters net of voyage expenses by voyage 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. 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. Drydocking expenses are reported separately.

(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 excluding drydocking expenses and general and administrative expenses. Daily TVOE is calculated by dividing TVOE by fleet calendar days for the relevant time period.

(15) Drydocking expenses, which include expenses during drydockings that would have been capitalized and amortized under the deferral method divided by the fleet calendar days for the relevant period. Drydocking expenses could vary substantially from period to period depending on how many vessels underwent drydocking during the period.

Conference Call and Webcast:
Later today, Thursday, August 11, 2016 at 9:30 a.m. Eastern Time, 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 (from outside the US). Please quote "Euroseas".

A replay of the conference call will be available until Thursday, August 18, 2016. The United States replay number is 1(866) 247-4222; from the UK 0(800) 953-1533; the standard international replay number is (+44) (0) 1452 550 000 and the access code required for the replay is: 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 2016 results in PDF format will also be available 10 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.  
Unaudited Consolidated Condensed Statements of Operations  
(All amounts expressed in U.S. Dollars - except number of shares)  
   
    Three Months Ended June 30,     Three Months Ended June 30,     Six Months Ended June 30,     Six Months Ended June 30,  
    2015     2016     2015     2016  
    (unaudited)     (unaudited)  
Revenues                        
Voyage revenue   9,846,372     7,688,414     18,474,782     14,544,476  
Related party revenue   60,000     60,000     120,000     120,000  
Commissions   (537,786 )   (410,503 )   (1,044,290 )   (778,714 )
Net revenues   9,368,586    
7,337,911
    17,550,492     13,885,762  
                         
Operating expenses                        
Voyage expenses   432,570     510,160     918,433     907,725  
Vessel operating expenses   6,545,949     4,600,817     13,384,584     9,295,507  
Drydocking expenses   442,758     1,173,833     989,309     1,173,833  
Depreciation   2,890,476     2,247,066     5,780,952     4,381,540  
Management fees   1,047,540     790,189     2,122,035     1,584,385  
Gain on vessel sale   -     (10,597 )   -     (10,597 )
Loss on termination of newbuilding contract  
 -
   
 1,448,268
   
 -
   
 1,448,268
 
Other general and administrative expenses  
 794,144
   
 922,045
   
 1,712,085
   
 1,869,221
 
Total operating expenses   12,153,437     11,681,781     24,907,398     20,649,882  
                         
Operating loss   (2,784,851 )   (4,343,870 )   (7,356,906 )   (6,764,120 )
                         
Other income/(expenses)                        
Interest and finance cost   (363,848 )   (540,618 )   (849,384 )   (915,774 )
Gain / (loss) on derivatives, net   38,539     (65,243 )   (165,272 )   (264,887 )
Other investment income   282,625     341,571     565,250     683,141  
Foreign exchange gain / (loss)   (2,188 )   (20,347 )   33,462     (27,132 )
Interest income   4,233     4,570     22,205     9,605  
Other (expenses) / income, net   (40,639 )   (280,067 )   (393,739 )   (515,047 )
Equity loss and impairment of investment in joint venture   (476,658 )   (14,566,842 )   (955,540 )   (14,752,556 )
Net loss   (3,302,148 )   (19,190,779 )   (8,706,185 )   (22,031,723 )
Dividend Series B Preferred shares   (406,773 )   (426,333 )   (808,524 )   (847,417 )
Net loss attributable to common shareholders   (3,708,921 )   (19,617,112 )   (9,514,709 )   (22,879,140 )
Loss per share, basic and diluted   (0.64 )   (2.42 )   (1.64 )   (2.82 )
Weighted average number of shares, basic and diluted   5,784,025     8,104,860     5,784,025     8,104,860  
                         
   
Euroseas Ltd.  
Unaudited Consolidated Condensed Balance Sheets  
(All amounts expressed in U.S. Dollars - except number of shares)  
   
    December 31,
 2015
    June 30,
2016
 
             
ASSETS   (unaudited)  
Current Assets:            
  Cash and cash equivalents   8,715,636     1,326,921  
  Trade accounts receivable   1,408,272     1,226,307  
  Other receivables, net   1,231,391     1,055,135  
  Inventories   1,464,940     902,344  
  Restricted cash   5,916,743     4,292,172  
  Prepaid expenses   175,506     228,715  
  Vessels held for sale   2,671,811     -  
Total current assets   21,584,299     9,031,594  
             
Fixed assets:            
  Vessels, net   88,957,752     113,771,383  
  Advances for vessels under construction   32,701,867     13,585,428  
Long-term assets:            
  Restricted cash   4,550,000     7,250,000  
  Other receivables   -     8,587,944  
  Deferred charges, net   418,034     745,313  
  Other Investments   7,396,738     8,079,879  
  Investment in joint venture   16,515,701     1,763,146  
Total long-term assets   150,540,092     153,783,093  
Total assets   172,124,391     162,814,687  
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Current liabilities:            
  Long term debt, current portion   14,685,766     10,969,351  
  Trade accounts payable   1,394,874     2,092,785  
  Accrued expenses   1,203,070     1,084,234  
  Liabilities from assets held from sale   1,122,208     -  
  Deferred revenue   462,124     613,020  
  Due to related company   322,703     107,242  
  Derivatives   50,402     32,111  
Total current liabilities   19,241,147     14,898,743  
             
Long-term liabilities:            
  Long term debt, net of current portion   25,552,702     42,281,995  
  Derivatives   202,700     402,698  
Total long-term liabilities   25,755,402     42,684,693  
Total liabilities   44,996,549     57,564,300  
             
Mezzanine equity:Series B Preferred shares (par value $0.01, 20,000,000 preferred shares authorized, 33,779 and 34,627 shares issued and outstanding, respectively)  



32,079,249
    32,926,666  
             
Shareholders' equity:            
  Common stock (par value $0.03, 200,000,000 shares authorized, 8,195,760 and 8,195,760 issued and outstanding)  
245,873
   
 245,873
 
  Additional paid-in capital   278,833,156     278,968,287  
  Accumulated deficit   (184,030,436 )   (206,909,575 )
Total shareholders' equity   95,048,593     72,304,585  
Total liabilities and shareholders' equity   172,124,391     162,814,743  
             
   
Euroseas Ltd.  
Unaudited Consolidated Condensed Statements of Cash Flows  
(All amounts expressed in U.S. Dollars)  
   
    Six Months Ended June 30,     Six Months Ended June 30,  
2015     2016  
             
Cash flows from operating activities:      
Net loss   (8,706,185 )   (22,031,723 )
Adjustments to reconcile net loss to net cash (used in) / provided by operating activities:            
Depreciation of vessels   5,780,952     4,381,540  
Amortization of deferred charges   75,052     128,103  
Share-based compensation   222,068     140,131  
Loss on termination of newbuilding contract   -     1,448,268  
Loss in and Impairment of investment in joint venture   -     14,752,556  
Gain on sale of a vessel   -     (10,597 )
Unrealized (gain) / loss on derivatives   35,945     181,707  
Other investment income accrued   (565,250 )   (683,141 )
Changes in operating assets and liabilities   1,406,873     1,721,218  
Net cash (used in) / provided by operating activities   (795,005 )   28,062  
             
Cash flows from investing activities:            
Vessel acquisition and advances for vessels under construction  
(6,741,203
)  
(23,080,296
)
Proceeds from sale of a vessel   -     4,196,268  
Change in restricted cash   2,502,131     (1,075,429 )
Net cash used in investing activities   (4,239,072 )   (19,959,457 )
             
Cash flows from financing activities:            
Loan fees paid   (245,300 )   (602,818 )
Offering expenses paid   (28,282 )   (47,377 )
Proceeds from long term debt   5,000,000     28,300,000  
Repayment of long-term debt   (9,436,000 )   (15,107,125 )
Net cash (used in) / provided by financing activities   (4,709,582 )   12,542,680  
             
Net decrease in cash and cash equivalents   (9,743,659 )   (7,388,715 )
Cash and cash equivalents at beginning of period   25,411,420     8,715,636  
Cash and cash equivalents at end of period   15,667,761     1,326,921  
             
   
Euroseas Ltd.  
Reconciliation of Adjusted EBITDA to  
Net loss and Cash Flow Provided By (Used In) Operating Activities  
(All amounts expressed in U.S. Dollars)  
   
    Three Months Ended
June 30, 2015
    Three Months Ended
June 30, 2016
    Six Months Ended
June 30, 2015
    Six Months Ended
June 30, 2016
 
Net loss   (3,302,148 )   (19,190,779 )   (8,706,185 )   (22,031,723 )
Interest and finance costs, net (incl. interest income)   359,615     536,048     827,179     906,169  
Depreciation   2,890,476     2,247,066     5,780,952     4,381,540  
Loss on termination of newbuilding contract   -     1,448,268     -     1,448,268  
Impairment of investment in joint venture   -     14,000,000     -     14,000,000  
Gain on sale of a vessel   -     (10,597 )   -     (10,597 )
Unrealized and realized loss / (gain) on derivatives, net   (38,539 )   65,243     165,272     264,887  
Adjusted EBITDA   (90,596 )   (904,751 )   (1,932,782 )   (1,041,456 )
                         
                         
    Three Months Ended
June 30, 2015
    Three Months Ended
June 30, 2016
    Six Months Ended
June 30, 2015
    Six Months Ended
June 30, 2016
 
Net cash flow provided by / (used in) operating activities   666,233     (346,026 )   (795,005 )   28,062  
Changes in operating assets / liabilities   (818,501 )   (777,323 )   (1,406,873 )   (1,721,218 )
Loss on derivatives (realized)   50,845     13,197     129,327     83,180  
Equity (loss) / gain in joint venture and Other investment income, net   (194,033 )   (225,271 )   (390,290 )   (69,415 )
Share-based compensation   (117,229 )   (71,714 )   (222,068 )   (140,131 )
Interest, net   322,089     502,386     752,127     778,066  
Adjusted EBITDA   (90,596 )   (904,751 )   (1,932,782 )   (1,041,456 )
                         

Adjusted EBITDA Reconciliation:
Euroseas Ltd. considers Adjusted EBITDA to represent net earnings / (loss) before interest, income taxes, depreciation, amortization, gain / loss in derivatives and loss on termination of a newbuilding contract and impairment of investment in joint venture. Adjusted EBITDA does not represent and should not be considered as an alternative to net income /(loss) or cash flow from operations, as determined by United States generally accepted accounting principles, or U.S. GAAP, and the Company's 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 the Company assesses its financial performance and liquidity position and because the Company believes 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 loss to Adjusted net loss  
(All amounts expressed in U.S. Dollars - except share data and number of shares)  
   
    Three Months Ended
June 30, 2015
    Three Months Ended
June 30, 2016
    Six Months Ended
June 30, 2015
    Six Months Ended
June 30, 2016
 
Net loss   (3,302,148 )   (19,190,779 )   (8,706,185 )   (22,031,723 )
Unrealized (gain) / loss on derivatives   (89,384 )   52,046     35,945     181,707  
Realized loss on derivatives   50,845     13,197     129,327     83,180  
Gain on sale of a vessel   -     (10,597 )   -     (10,597 )
Loss on termination of newbuilding contract   -     1,448,268     -     1,448,268  
Impairment of investment in joint venture         14,000,000           14,000,000  
Adjusted net loss   (3,340,687 )   (3,687,865 )   (8,540,913 )   (6,329,165 )
Preferred dividends   (406,773 )   (426,333 )   (808,524 )   (847,417 )
Adjusted net loss attributable to common shareholders   (3,747,460 )   (4,114,198 )   (9,349,437 )   (7,176,582 )
Adjusted net loss per share, basic and diluted   (0.65 )   (0.51 )   (1.62 )   (0.89 )
Weighted average number of shares, basic and diluted   5,784,025     8,104,860     5,784,025     8,104,860  
                         

"Adjusted net loss" and "Adjusted net loss per share" Reconciliation:

Euroseas Ltd. considers "Adjusted net loss" to represent net loss before gain / loss on derivatives, loss on termination of new building contract and gain on sale of a vessel. "Adjusted net loss" and "Adjusted net loss per share" is included herein because we believe it assists our management and investors by increasing the comparability of the Company's fundamental performance from period to period by excluding the potentially disparate effects between periods of gain / loss on derivatives, loss on termination of new building contract and gain on sale of a vessel, which items may significantly affect results of operations between periods.

"Adjusted Net loss" and "Adjusted net loss per share" do not represent and should not be considered as an alternative to net loss or loss per share, as determined by U.S. GAAP, The Company's definition of "Adjusted net loss" and "Adjusted net loss per share" may not be the same as that used by other companies in the shipping or other industries.
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 Market under the ticker ESEA since January 31, 2007.

Euroseas operates in the dry cargo, drybulk and container shipping markets. Euroseas' operations are managed by Eurobulk Ltd., an ISO 9001:2008 certified affiliated ship management company and Eurobulk (FE) Ltd. Inc., also an affiliated ship management company, which are 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 11 vessels, including 3 Panamax drybulk carriers, 1 Handymax drybulk carrier and 1 Kamsarmax drybulk carrier, 2 Intermediate containership, 2 Handysize containerships, 2 Feeder containerships. Euroseas 5 drybulk carriers have a total cargo capacity of 351,272 dwt, its 6 containerships have a cargo capacity of 10,086 teu. The Company has also signed contracts for the construction of one Ultramax (63,500 dwt) fuel efficient drybulk carriers and one extra Kamsarmax (82,000 dwt) fuel efficient drybulk carrier. Including the three new-buildings, the total cargo capacity of the Company's drybulk vessels will be 496,772 dwt.

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

Contact Information

  • Company Contact
    Tasos Aslidis
    Chief Financial Officer
    Euroseas Ltd.
    11 Canterbury Lane,
    Watchung, NJ 07069
    Tel. (908) 301-9091
    E-mail: aha@euroseas.gr

    Investor Relations / Financial Media
    Nicolas Bornozis
    President
    Capital Link, Inc.
    230 Park Avenue, Suite 1536
    New York, NY 10169
    Tel. (212) 661-7566
    E-mail: nbornozis@capitallink.com