SOURCE: Euroseas

November 13, 2008 16:05 ET

Euroseas Ltd. Reports Results for the Third Quarter and Nine Month Period Ended September 30, 2008

MAROUSSI, ATHENS, GREECE--(Marketwire - November 13, 2008) - 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 third quarter of 2008 and nine month period ended September 30, 2008.

Third Quarter 2008 Highlights:

--  Net income of $15.3 million or $0.50 per share basic and diluted on
    total net revenues of $35.5 million. Excluding the effect on the earnings
    for the quarter from the amortization of the fair value of time charter
    contracts acquired the earnings per share for the quarter ended September
    30, 2008 would have been $0.46 per share basic and diluted.
    
--  Adjusted EBITDA was $23.0 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 operated during the third quarter of
    2008 earning an average time charter equivalent rate of $25,951 per day.
    
--  Declared a quarterly dividend of $0.20 per share for the third quarter
    of 2008 payable on December 23, 2008 to shareholders of record on December
    16, 2008. This is the thirteenth consecutive quarterly dividend declared.
    

Nine Months 2008 Highlights:

--  Net income of $46.2 million or $1.52 per share basic and $1.51 per
    share diluted on total net revenues of $102.7 million. Excluding the effect
    on the earnings for the period from the amortization of the fair value of
    time charter contracts acquired the earnings per share for the nine months
    ended September 30, 2008 would have been $1.33 per share basic and $1.32
    per share diluted.
    
--  Adjusted EBITDA was $65.7 million. Please refer to a subsequent
    section of the Press Release for a reconciliation of adjusted EBITDA to net
    income.
    
--  An average of 15.48 vessels were operated during the first nine months
    of 2008 earning an average time charter equivalent rate of $25,868 per day
    
--  Declared quarterly dividends for the first, second and third quarters
    of 2008, aggregating $0.83 per share.
    

Aristides Pittas, Chairman and CEO of Euroseas commented: "The third quarter of 2008 was one of our best in terms of vessel operating results. However, starting in September 2008 and continuing in October and November the global shipping markets were directly affected by the credit crisis and trade effectively came to a standstill. As a result spot charter rates plummeted. While we believe that the long term prospects of world trade continue to remain strong, we expect that the broad economic slowdown will continue to have a negative effect on the amount of the goods being shipped in the near term, thus, exerting downward pressure on shipping rates and vessel prices.

Given the strength of our balance sheet, Euroseas is especially well positioned to benefit from such a market environment by pursuing attractive investments. We avoided investing in dry bulk vessels at historically high prices over the last 2 years, focusing instead on investing in older ships which we employed mostly on the spot market thus minimizing residual value and charterer risk. Such a strategy put us in a solid financial position with a significant amount of cash, ready to exploit opportunities to renew our fleet as we believe this is the time to buy younger vessels.

To increase our purchasing power, our Board has decided to reduce our quarterly dividend to $0.20 per share to maximize our flexibility in pursuing the above strategy for the long term benefit of our shareholders. This dividend still represents a significant yield of about 20% on the basis of our stock price on November 12, 2008. Our aim remains to continue providing substantial dividends throughout the market cycles while exploiting unique investment opportunities that might emerge."

Tasos Aslidis, Chief Financial Officer of Euroseas commented: "The results of the first nine months of 2008 reflect significantly higher revenues compared to the first nine months of 2007 due to the higher average time charter equivalent rate our vessels have achieved and the higher number of vessels in our fleet. Our results for the quarter were however affected by the general conditions affecting the credit markets. For example, one of our previous charterers against whom we had a claim for approximately $0.5 million went bankrupt and as a result we needed to make a provision for it. Still, our net revenues of $35.5 million for the quarter were the highest ever. Our results were also negatively affected by non-cash losses on interest rate derivatives and declines in value of a small amount of securities held for a total of about ($0.04) per share.

Daily vessel operating expenses, including management fees, during the first nine months of 2008 reflect an increase of about 20.3% on a per vessel per day basis compared to the same period in 2007. Despite this increase, we maintain one of the lowest operating cost structures amongst the public shipping companies which, we believe, is one of our competitive advantages. It is worth noting that in the third quarter of 2008 most of the cost increases that occurred in the second quarter were reversed. We will continue to focus on controlling and reducing our costs while ensuring safe operations.

I would like to note that we are comfortably -- given our low leverage -- in compliance with all our debt covenants as of September 30, 2008. In addition, we have approximately $74 million of unrestricted cash plus about $7 million of restricted cash against total debt of about $62 million. Our scheduled debt repayments in 2009 are about $12.5 million, a number low enough to provide us with operational cash flow comfort."

Third Quarter 2008 Results:

For the third quarter of 2008, the Company reported total net revenues of $35.5 million and net income of $15.3 million representing a 65.3% and 61.8% increase, respectively, over total net revenues of $21.5 million and net income of $9.5 million during the third quarter of 2007. On average, 16 vessels were operated during the third quarter 2008 earning an average time charter equivalent rate of $25,951 per day compared to 12.13 vessels in the same period 2007 earning on average $20,024 per day.

Adjusted EBITDA for the third quarter of 2008 was $23.0 million, a 51.0% increase over $15.2 million achieved during the third quarter of 2007. Please see below for Adjusted EBITDA reconciliation to net income and cash flow provided by operating activities.

Basic earnings per share for the third quarter of 2008 were $0.50, calculated on 30,476,135 weighted average number of shares outstanding, compared to earnings per share of $0.40 for the third quarter of 2007, calculated on 23,934,434 weighted average number of shares outstanding. Diluted earnings per share were $0.50 and $0.39 calculated on 30,551,315 and 24,061,880 weighted average number of shares outstanding for the third quarter of 2008 and 2007, respectively.

Excluding the effect on the earnings for the quarter from the amortization of the fair value of time charter contracts acquired the earnings per share for the quarter ended September 30, 2008 would have been $0.46 per share basic and diluted and, for the quarter ended September 30, 2007 would have been $0.42 per share basic and diluted. Usually, security analysts do not include amortization of the fair value of period charter contracts in their published estimates of earnings per share.

The Company has declared a quarterly dividend of $0.20 per share, which represents its thirteenth consecutive quarterly dividend and a 31% decrease over last year's third quarter dividend, reflecting the recent dramatic change of market conditions and the Company's investment strategy. The dividend is payable on December 23, 2008 to shareholders of record as of December 16, 2008.

Nine Months Ended September 30, 2008 Results:

For the nine months ended September 30, 2008, the Company reported total net revenues of $102.7 million and net income of $46.2 million, representing a 103.2% and 82.2% increase, respectively over the same period of 2007. Adjusted EBITDA for the period was $65.7 million, a 63.4% increase over 2007 (please see below for Adjusted EBITDA reconciliation to net income and cash flow from operating activities). In the first nine months ended September 30, 2007, net revenues were $50.6 million, net income was $25.3 million and Adjusted EBITDA was $40.2 million. On average, 15.48 vessels were operated during the nine month period 2008 earning an average time charter equivalent rate of $25,868 per day compared to 10.41 vessels in the same period 2007 earning a time charter equivalent rate of $19,177. Results for the nine month period ended September 30, 2007 included a capital gain of $3.4 million from the sale of M/V "Ariel." Excluding the capital gains from the 2007 results, net income and Adjusted EBITDA for the nine month period ended September 30, 2008 increased 110.6% and 78.6%, respectively, over the same period of 2007.

Basic earnings per share for the nine months ended September 30, 2008 were $1.52 calculated on 30,409,078 weighted average number of shares outstanding, compared to earnings per share of $1.30 for the same period of 2007 calculated on 19,508,351 weighted average number of shares outstanding. Diluted earnings per share were $1.51 and $1.30 calculated on 30,555,095 and 19,557,805 weighted average number of shares outstanding for the first nine months of 2008 and 2007, respectively.

Excluding the effect on the earnings for the quarter from the amortization of the fair value of time charter contracts acquired the earnings per share for the nine month period ended September 30, 2008 would have been $1.33 per share basic and $1.32 per shares diluted and, for the nine month period ended September 30, 2007 would have been $1.22 per share basic and diluted exclusive of a $0.17 per share capital gain from the sale of M/V Ariel in February 2007. Usually, security analysts do not include amortization of the fair value of period charter contracts or contribution from capital gains in their published estimates of earnings per share.

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


                                        Year                   TCE Rate
Name           Type        Dwt    TEU   Built   Employment      ($/day)
           ------------- ------- ------ ----- -------------- --------------

Dry Bulk
 Vessels
           ------------- ------- ------ ----- -------------- --------------
                                              Baumarine Pool
                                                  - ‘til end    Spot/Partly
IRINI (*)        Panamax  69,734         1988           2008          fixed
           ------------- ------- ------ ----- -------------- --------------

ARISTIDES
 N.P             Panamax  69,268         1993 TC ‘til Jan-09 $       52,000
           ------------- ------- ------ ----- -------------- --------------

IOANNA P         Panamax  64,873         1984           Spot           Spot
           ------------- ------- ------ ----- -------------- --------------

NIKOLAOS P     Handysize  34,750         1984           Spot           Spot
           ------------- ------- ------ ----- -------------- --------------

GREGOS         Handysize  38,691         1984           Spot           Spot
           ------------- ------- ------ ----- -------------- --------------
Total Dry
 Bulk
 Vessels              5  277,316
           ------------- ------- ------ ----- -------------- --------------

Multipurpose
 Dry Cargo
 Vessels
           ------------- ------- ------ ----- -------------- --------------
                                                              $  8,850 ‘til
                                                                    Dec-08,
                                                              $  9,500 ‘til
                                                                    Dec-10,
TASMAN                                               TC ‘til  $  9,000 ‘til
 TRADER                1  22,568    950  1990         Mar-12         Mar-12
           ------------- ------- ------ ----- -------------- --------------

Container
 Carriers
           ------------- ------- ------ ----- -------------- --------------

                                                              $ 16,800 ‘til
                                                                     Aug 11
                                                              $ 18,735 ‘til
                                                                     Aug 12
                                              TC ‘til Aug-11  $ 19,240 ‘til
                                                   (3 annual         Aug 13
MAERSK                                          options ’til  $ 19,750 ‘til
 NOUMEA     Intermediate  34,677  2,556  2001         Aug-14)        Aug 14
           ------------- ------- ------ ----- -------------- --------------
TIGER
 BRIDGE     Intermediate  31,627  2,228  1990 TC ‘til Jul-09 $       16,500
           ------------- ------- ------ ----- -------------- --------------

ARTEMIS     Intermediate  29,693  2,098  1987 TC ‘til Dec-08 $       19,000
           ------------- ------- ------ ----- -------------- --------------

DESPINA P     Handy size  33,667  1,932  1990 TC ‘til Jan-09 $      15,250
           ------------- ------- ------ ----- -------------- --------------

OEL
 INTEGRITY
 (ex-
 JONATHAN P   Handy size  33,667  1,932  1990 TC ‘til Mar-09 $       16,500
           ------------- ------- ------ ----- -------------- --------------

OEL
 TRANSWORld
 (ex-CLAN
 GLADIATOR)   Handy size  30,007  1,742  1992 TC ‘til Sep-09 $       18,500
           ------------- ------- ------ ----- -------------- --------------

YM
 XINGANG I    Handy size  23,596  1,599  1993 TC ‘til Jul-09 $       26,650
           ------------- ------- ------ ----- -------------- --------------

MANOLIS P     Handy size  20,346  1,452  1995 TC ‘til Oct-09 $       15,800
           ------------- ------- ------ ----- -------------- --------------

                                                             $  12,800 ‘til
NINOS                                                                Apr-08
 (ex-YM                                                      $  13,175 ‘til
 QINGDAO I)       Feeder  18,253  1,169  1990 TC ‘til Apr-09         Apr-09
           ------------- ------- ------ ----- -------------- --------------
KUO
 HSIUNG           Feeder  18,154  1,169  1993 TC ‘til Jan-09 $       15,800
           ------------- ------- ------ ----- -------------- --------------

Total
 Container
 Carriers             10 273,687 17,877
           ------------- ------- ------ ----- -------------- --------------
Fleet
 Grand
 Total                16 573,571 18,827
           ------------- ------- ------ ----- -------------- --------------

(*) "IRINI" is employed in the Baumarine spot pool that is managed by Klaveness, a major global charterer in the dry bulk area, and also participates in "short" funds (contracts to carry cargo at agreed rates), reducing its exposure to the spot market.

Summary Fleet Data:

                                3 months,  3 months,  9 months,  9 months,
                                  ended      ended      ended      ended
                                September  September  September  September
                                30, 2007   30, 2008   30, 2007   30, 2008
                                ---------  ---------  ---------  ---------
FLEET DATA
Average number of vessels (1)       12.13      16.00      10.41      15.48
Calendar days for fleet (2)       1,116.0    1,471.0    2,844.0    4,242.0
Available days for fleet (3)      1,100.4    1,430.0    2,727.0    4,103.1
Voyage days for fleet (4)         1,100.3    1,402.6    2,723.4    4,048.8
Fleet utilization (5)               100.0%      98.0%      99.9%      98.7%

AVERAGE DAILY
 RESULTS
(USD/day/vessel)
Time charter equivalent rate
 (6)                               20,024     25,951     19,177     25,868
Vessel operating expenses (7)       5,233      5,674      4,797      5,770
General and administrative
 expenses (8)                         434        671        411        774
Total vessel operating expenses
 (9)                                5,667      6,345      5,208      6,544
                                ---------  ---------  ---------  ---------

(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. 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) 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 off-hire days associated with scheduled repairs, drydockings or special or intermediate surveys. The shipping industry uses available days to measure the number of days in a period during which vessels were available to generate revenues.

(4) 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 off-hire days associated with scheduled and unscheduled repairs, drydockings or special or intermediate surveys or days waiting to find employment or other offhire. The shipping industry uses voyage days to measure the number of days in a period during which vessels actually generate revenues.

(5) 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.

(6) 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.

(7) Daily vessel operating expenses, which includes crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance, repairs and management fees are calculated by dividing vessel operating expenses plus management fees by fleet calendar days for the relevant time period.

(8) Daily general and administrative expense is calculated by dividing general and administrative expense by fleet calendar days for the relevant time period.

(9) 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, management fees 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, November 14, 2008 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 November 21, 2008 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 slides presentation on the third quarter and nine month period ended September 30, 2008 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 Statement of Income
       (All amounts expressed in U.S. Dollars - except share amounts)


                    Three Months  Three Months  Nine Months   Nine Months
                        Ended        Ended,        Ended,         Ended
                      September     September     September     September
                      30, 2007      30, 2008      30, 2007      30, 2008
                    (unaudited)   (unaudited)   (unaudited)   (unaudited)
Revenues
      Voyage revenue  22,538,504    37,111,568    53,062,852   107,564,775
         Commissions  (1,086,167)   (1,660,638)   (2,507,268)   (4,827,793)
Net revenues          21,452,337    35,450,930    50,555,584   102,736,982

Operating expenses
     Voyage expenses     506,663       712,403       835,286     2,829,862
    Vessel operating
            expenses   4,867,262     6,944,686    11,217,421    20,352,597
    Amortization and
        depreciation   4,667,638     8,887,717    10,830,769    25,344,198
     Management fees     973,416     1,407,120     2,424,794     4,121,655
   Other general and
      administrative
            expenses     484,302       987,746     1,168,218     3,285,175
Total operating
 expenses             11,499,281    18,939,672    26,476,488    55,933,487

Net gain from sale
 of vessel                     -             -     3,411,397             -

Operating income       9,953,056    16,511,258    27,490,493    46,803,495

Other income/
 (expenses)
        Interest and
        finance cost  (1,233,086)     (610,924)   (3,591,190)   (2,311,660)
     Interest income     751,966       525,123     1,447,947     2,385,342
           Loss from
         investments           -      (992,706)            -      (561,011)
    Loss on interest
           rate swap           -      (110,206)            -      (110,206)
    Foreign exchange
                loss      (1,824)       (2,894)       (1,764)      (16,276)
 Other expenses, net    (482,944)   (1,191,607)   (2,145,007)     (613,811)

                    ------------  ------------  ------------  ------------

 Net income            9,470,112    15,319,652    25,345,486    46,189,684
                    ------------  ------------  ------------  ------------

Earnings, per
 share, basic               0.40          0.50          1.30          1.52
Weighted average
 number of shares,
 basic                23,934,434    30,476,135    19,508,351    30,409,078
Earnings, per
 share, diluted             0.39          0.50          1.30          1.51
Weighted average
 number of shares,
 diluted              24,061,880    30,551,315    19,557,805    30,555,095




                               Euroseas Ltd.
                    Consolidated Condensed Balance Sheet
                  (All amounts expressed in U.S. Dollars)


                                                December 31,  September 30,
                                                   2007          2008
                                               (unaudited)    (unaudited)
ASSETS
Current Assets:
  Cash and cash equivalents                      104,135,320     74,297,153
  Trade accounts receivable                        1,174,045      1,441,850
  Other receivables, net                             741,081      1,445,275
  Due from related company                         5,291,197      4,862,004
  Inventories                                      1,903,678      1,649,820
  Restricted cash                                  1,739,879      2,359,781
  Trading securities                               2,891,658      2,118,935
  Prepaid expenses                                   430,605        465,015
Total current assets                             118,307,463     88,639,833

Fixed assets:
  Vessels, net                                   238,248,984    268,824,600
Long-term assets:
  Restricted cash                                  4,500,000      4,800,000
  Deferred charges, net                            5,529,870      7,937,391
  Deferred offering expenses                               -        143,505
  Fair value of above market time charter
   acquired                                        4,604,514      2,391,195
Total long-term assets                           252,883,368    284,096,691
                                               ------------- --------------
Total assets                                     371,190,831    372,736,524
                                               ------------- --------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Long term debt, current portion                 25,575,000     15,740,000
  Trade accounts payable                           3,789,764      3,082,489
  Accrued expenses                                 2,043,585      1,202,518
  Accrued dividends                                        -        132,525
  Deferred revenue                                 3,774,162      3,415,007
Total current liabilities                         35,182,511     23,572,539

Long-term liabilities:
  Long term debt, net of current portion          56,015,000     46,590,000
  Interest rate swap                                       -        110,206
  Fair value of below market time charter
   acquired                                        8,202,972      9,782,579
Total long-term liabilities                       64,217,972     56,482,785
Total liabilities                                 99,400,483     80,055,324

Shareholders' equity:
  Common stock (par value $0.03, 100,000,000
   shares authorized, 30,261,113 and
   30,508,111 issued and outstanding)                907,834        915,244
  Preferred shares (par value $0.01,
   20,000,000 shares authorized, no shares
   issued and outstanding)
  Additional paid-in capital                     231,147,700    234,344,035
  Retained earnings                               39,734,814     57,421,921
Total shareholders' equity                       271,790,348    292,681,200
                                               ------------- --------------
Total liabilities and shareholders' equity       371,190,831    372,736,524
                                               ------------- --------------




                              Euroseas Ltd.
              Consolidated Condensed Statements of Cash Flows
                  (All amounts expressed in U.S. Dollars)

                                            Nine Months      Nine Months
                                               Ended            Ended
                                           September 30,    September 30,
                                          ---------------  ---------------
                                                2007             2008
                                          ---------------  ---------------
                                            (unaudited)      (unaudited)
                                          ---------------  ---------------
Cash flows from operating activities:
Net income                                     25,345,486       46,189,684
Adjustments to reconcile net income to
 net cash provided by operating
 activities:
Depreciation of vessels                         9,818,391       22,604,142
Amortization of deferred charges                1,066,931        2,804,537
Amortization of fair value of time
 charters                                       1,852,543       (5,804,512)
Gain on sale of vessels                        (3,411,397)               -
Share-based compensation                                -        1,392,823
Investment in trading securities, net                   -          (62,045)
Loss on trading securities                              -          834,768
Loss on interest rate swap                              -          110,206
Changes in operating assets and
 liabilities                                   (1,359,099)      (7,476,078)
                                          ---------------  ---------------
Net cash provided by operating activities      33,312,855       60,593,525
                                          ---------------  ---------------

Cash flows from investing activities:
Purchase of vessels including
 improvements                                 (95,699,902)     (43,582,320)
Advances for vessel acquisition                (2,408,154)               -
Change in restricted cash                      (1,005,376)        (919,902)
Proceeds from sale of vessels                   5,223,522                -
                                          ---------------  ---------------
Net cash (used in) investing activities       (93,889,910)     (44,502,222)
                                          ---------------  ---------------

Cash flows from financing activities:
Issuance of share capital                         348,685            5,030
Net proceeds from shares issued               118,687,556        1,805,892
Dividends paid                                (13,237,819)     (28,370,052)
Loan arrangement fees paid                        (40,000)               -
Offering expenses paid                         (1,223,065)        (110,340)
Proceeds from long term debt                   10,000,000                -
Repayment of long-term debt                   (13,590,000)     (19,260,000)
                                          ---------------  ---------------
Net cash provided by / (used in)
 financing activities                         100,945,357      (45,929,470)
                                          ---------------  ---------------

Net increase / (decrease) in cash and
 cash equivalents                              40,368,302      (29,838,167)
Cash and cash equivalents at beginning of
 period                                         2,791,107      104,135,320
                                          ---------------  ---------------
Cash and cash equivalents at end of
 period                                        43,159,409       74,297,153
                                          ---------------  ---------------




                              Euroseas Ltd.
                   Reconciliation of Adjusted EBITDA to
        Net Income and Cash Flow Provided By Operating Activities
                  (All amounts expressed in U.S. Dollars)



                              Three       Three        Nine        Nine
                              Months      Months      Months      Months
                              Ended       Ended       Ended       Ended
                            September   September   September   September
                             30, 2007    30, 2008    30, 2007    30, 2008
                            ----------  ----------  ----------  ----------
Net income                   9,470,112  15,319,652  25,345,486  46,189,684
                            ----------  ----------  ----------  ----------
Interest and finance costs,
 net (includes interest
 income)                       481,120      85,801   2,143,243     (73,682)
                            ----------  ----------  ----------  ----------
Depreciation and
 amortization                4,667,638   8,887,717  10,830,769  25,344,198
                            ----------  ----------  ----------  ----------
Amortization of deferred
 revenue of below market
 time charter acquired        (116,856) (2,025,674)   (348,647) (8,017,831)
                            ----------  ----------  ----------  ----------
Amortization of deferred
 revenue of above market
 time charter acquired         737,773     737,773   2,201,190   2,213,319
                            ----------  ----------  ----------  ----------
Adjusted EBITDA             15,239,787  23,005,269  40,172,041  65,655,688
                            ==========  ==========  ==========  ==========




                              Three       Three       Nine        Nine
                              Months      Months      Months      Months
                              Ended       Ended       Ended       Ended
                            September   September   September   September
                             30, 2007    30, 2008    30, 2007    30, 2008
                            ----------- ----------  ----------- ----------
Net cash flow provided by
 operating activities        11,989,767 20,638,993   33,312,855 60,593,525
                            ----------- ----------  ----------- ----------
Changes in operating assets
 / liabilities                2,785,603  3,673,539    1,359,099  7,476,078
                            ----------- ----------  ----------- ----------
Gain from vessel sale                 -          -    3,411,397          -
                            ----------- ----------  ----------- ----------
Loss on trading securities,
 net                                  - (1,091,463)           -   (834,768)
                            ----------- ----------  ----------- ----------
Investment in trading
 securities, net                      -    344,691            -     62,045
                            ----------- ----------  ----------- ----------
Loss on interest rate swap            -   (110,206)           -   (110,206)
                            ----------- ----------  ----------- ----------
Share based compensation              -   (515,425)           - (1,392,823)
                            ----------- ----------  ----------- ----------
Interest, net                   464,417     65,140    2,088,690   (138,163)
                            ----------- ----------  ----------- ----------
Adjusted EBITDA              15,239,787 23,005,269   40,172,041 65,655,688
                            =========== ==========  =========== ==========

EBITDA Reconciliation:

Euroseas Ltd. considers Adjusted EBITDA to represent net earnings before interest, taxes, depreciation, amortization 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 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
         the Amortization of the Fair Value of Charters Acquired
               and Gains from Vessel Sales to Net Income
         (All amounts expressed in U.S. Dollars - except share data
                             and per share amounts)

                Three Months   Three Months    Nine Months    Nine Months
                    Ended          Ended          Ended          Ended
                September 30,  September 30,  September 30,  September 30,
                    2007           2008           2007           2008
                -------------  -------------  -------------  -------------
Net income          9,470,112     15,319,652     25,345,486     46,189,684
                -------------  -------------  -------------  -------------
Amortization of
 deferred
 revenue of
 below market
 time charter
 acquired            (116,856)    (2,025,673)      (348,647)    (8,017,831)
                -------------  -------------  -------------  -------------
Amortization of
 deferred
 revenue of
 above market
 time charter
 acquired             737,773        737,773      2,201,190      2,213,319
                -------------  -------------  -------------  -------------
Gain on vessel
 sale                       -              -     (3,411,397)             -
                -------------  -------------  -------------  -------------
Net Income
 excluding
 amortization
 of the fair
 value of
 charters
 acquired and
 gains on
 vessel sales      10,091,029     14,031,752     23,786,632     40,385,172
                -------------  -------------  -------------  -------------
Net Income per
 share
 excluding
 amortization
 of the fair
 value of
 charters
 acquired,
 basic                   0.42           0.46           1.22           1.33
                -------------  -------------  -------------  -------------
Weighted
 average number
 of shares,
 basic             23,934,434     30,476,135     19,508,351     30,409,078
                -------------  -------------  -------------  -------------
Net Income per
 share
 excluding
 amortization
 of the fair
 value of
 charters
 acquired,
 diluted                 0.42           0.46           1.22           1.32
                -------------  -------------  -------------  -------------
Weighted
 average number
 of shares,
 diluted           24,061,880     30,551,315     19,557,805     30,555,095
                =============  =============  =============  =============

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 16 vessels, including 3 Panamax drybulk carriers, 2 Handysize drybulk carriers, 3 Intermediate container ship, 5 Handysize container ships, 2 Feeder container ships and a multipurpose dry cargo vessel. Euroseas` 5 drybulk carriers have a total cargo capacity of 277,316 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.

Contact Information

  • Contact:

    Visit our website www.euroseas.gr

    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