EuroDry Ltd., an owner and operator of drybulk vessels and provider of seaborne transportation for drybulk cargoes, announced today its results for the three and six month periods ended June 30, 2022.
Second Quarter 2022 Highlights:
- Total net revenues for the quarter of $21.0 million.
- Net income attributable to common shareholders of $10.6 million, or, $3.66 and $3.61 earnings per share basic and diluted, respectively.
- Adjusted net income attributable to common shareholders1 for the quarter of $9.9 million, or, $3.43 and $3.38 adjusted earnings per share basic and diluted, respectively, before unrealized gain on derivatives.
- Adjusted EBITDA1 for the quarter was $13.7 million.
- An average of 10.79 vessels were owned and operated during the second quarter of 2022 earning an average time charter equivalent rate of $23,490 per day.
The Board of Directors has approved a share repurchase program for up to a total of $10 million of the Company’s common stock. The Board will review the program after a period of 12 months. Share repurchases will be made from time to time for cash in open market transactions at prevailing market prices or in privately negotiated transactions. The timing and amount of purchases under the program will be determined by management based upon market conditions and other factors. The program does not require the Company to purchase any specific number or amount of shares and may be suspended or reinstated at any time at the Company’s discretion and without notice.
First Half 2022 Highlights:
- Total net revenues of $39.3 million.
- Net income attributable to common shareholders was $21.1 million, or, $7.35 and $7.25 earnings per share basic and diluted, respectively.
- Adjusted net income attributable to common shareholders1 for the period was $19.4 million, or, $6.77 and $6.68 adjusted earnings per share basic and diluted, respectively, before unrealized gain on derivatives.
- Adjusted EBITDA1 of $26.4 million.
- An average of 10.17 vessels were owned and operated during the first half of 2022 earning an average time charter equivalent rate of $24,025 per day.
Aristides Pittas, Chairman and CEO of EuroDry commented:
“We are very pleased to report another quarter with very good earnings, one of the highest since the inception of the EuroDry. It is notable though that in the latter part of the second quarter of 2022, and during the month of July, the drybulk market started reflecting the volatility and uncertainties present in the broader economic and geopolitical environment registering charter rate declines of nearly 40% as compared to their late May levels, though still well into profitable range. During the third quarter, we will also have 3 drydockings and we therefore expect our profitability to be reduced but still remain significant.
“On the global scene, high energy prices, mainly due to the Ukraine-Russia conflict, resulted in high inflation which came on top of inflationary pressures that were building up as a result of the COVID-fighting stimuli. This, in turn, magnified the reaction of the central banks to fight it by raising interest rates, thus, increasing the chances of a broad economic recession which would affect the demand for drybulk trade. In addition to this, the continuing COVID pandemic and its regional flare-ups prompted some countries, mainly China, to impose regional lock-downs that also negatively affected drybulk demand. The good news for the sector continue to come from the supply side where the orderbook remains at about 7% of the fleet near its lowest level ever. The resulting reduced vessel deliveries over the next 2-3 years should allow the market to quickly recover as long as demand uncertainties subside and average economic growth resumes.
“Within this environment, we continue to look for ways to add value to our shareholders. With our stock trading at a very steep discount to our net asset value, our Board of Directors considers that buying our own stock represents a very attractive investment for us and has authorized a share repurchase program. At the same time, we are positioning ourselves liquidity-wise to capitalize on more traditional investment opportunities and acquire vessels consistent with our investment criteria should such opportunities appear.”
Tasos Aslidis, Chief Financial Officer of EuroDry commented:
“The net revenues of the second quarter of 2022 increased significantly compared to the second quarter of 2021 as a result of the increased average number of vessels owned and operated during the quarter compared to the same period of last year. In addition, the time charter equivalent rates our vessels earned during the second quarter of 2022 were higher by 3.9% on average compared to the time charter equivalent rates our vessels earned in the second quarter of 2021.
“Total daily vessel operating expenses, including management fees, general and administrative expenses but excluding drydocking costs, averaged $6,562 per vessel per day during the second quarter of 2022 as compared to $6,467 per vessel per day for the same quarter of last year, and $6,584 per vessel per day for the first half of 2022 as compared to $6,518 per vessel per day for the same period of 2021. This increase is mainly due to increased crewing costs and insurances in 2022 compared to 2021.
“Adjusted EBITDA during the second quarter of 2022 was $13.7 million versus $9.2 million in the second quarter of last year. As of June 30, 2022, our outstanding debt (excluding the unamortized loan fees) was $71.8 million, while unrestricted and restricted cash was $8.5 million. As of the same date, our scheduled debt repayments including balloon payments over the next 12 months amounted to about $23.2 million (excluding the unamortized loan fees) and all our loan covenants are satisfied.”
Second Quarter 2022 Results:
For the second quarter of 2022, the Company reported total net revenues of $21.0 million representing a 48.9% increase over total net revenues of $14.1 million during the second quarter of 2021 which was the result of the slightly higher time charter rates our vessels earned during the second quarter of 2022 compared to the same period of 2021, and the increase in the average number of vessels owned and operated in the second quarter of 2022 compared to the same period of 2021. The Company reported net income and net income attributable to common shareholders for the period of $10.6 million, as compared to net income of $2.2 million and net income attributable to common shareholders of $1.9 million, for the same period of 2021.
The results for the second quarter of 2022 include an unrealized gain of $0.2 million on five interest rate swap contracts and an unrealized gain of $0.5 million on forward freight agreement (“FFA”) contracts as compared to an unrealized gain of $0.03 million on three interest rate swap contracts and an unrealized loss of $3.1 million on FFA contracts during the second quarter of 2021.
For the second quarter of 2022, voyage expenses, net amounted $0.1 million, relating to voyage expenses incurred during the commercial off hire period and repositioning of M/V “Pantelis P.” In the same period of 2021, a gain on bunkers resulted in positive voyage expenses of $0.1 million. Vessel operating expenses were $5.0 million for the second quarter of 2022 as compared to $3.2 million for the second quarter of 2021. The increase is primarily attributable to the increase in the average number of vessels owned and operated in the second quarter of 2022 compared to the corresponding period in 2021. Depreciation expenses for the second quarter of 2022 amounted to $2.9 million, as compared to $1.8 million for the same period of 2021. This increase is due to the higher number of vessels operating in the second quarter of 2022 as compared to the same period of 2021. General and administrative expenses were slightly higher at $0.7 million in the second quarter of 2022, compared to $0.6 million in the second quarter of 2021. This increase is mainly attributable to the increased cost of our stock incentive plan. During the second quarter of 2022, one of our vessels completed its special survey, for a total cost of $0.8 million, while there were no vessels undergoing drydocking during the second quarter of 2021.
Interest and other financing costs for the second quarter of 2022 amounted to $0.8 million compared to $0.5 million for the same period of 2021. Interest expense during the second quarter of 2022 was higher mainly due to the increased amount of debt during the period as compared to the same period of last year.
On average, 10.79 vessels were owned and operated during the second quarter of 2022 earning an average time charter equivalent rate of $23,490 per day, compared to 7.37 vessels in the same period of 2021 earning on average $22,614 per day.
Adjusted EBITDA for the second quarter of 2022 was $13.7 million compared to $9.2 million achieved during the second quarter of 2021.
Basic and diluted earnings per share attributable to common shareholders for the second quarter of 2022 were $3.66 calculated on 2,898,557 basic, and $3.61 calculated on 2,942,123 diluted weighted average number of shares outstanding, compared to $0.83 calculated on 2,353,364 basic, and $0.81 calculated on 2,401,192 diluted weighted average number of shares outstanding for the second quarter of 2021.
Excluding the effect on the income attributable to common shareholders of the unrealized gain on derivatives, the adjusted earnings attributable to common shareholders for the quarter ended June 30, 2022 would have been $3.43 and $3.38 per share basic and diluted, respectively. For the quarter ended June 30, 2021, excluding the unrealized loss on derivatives and the loss on debt extinguishment, the adjusted earnings attributable to common shareholders would have been $2.81 and $2.76 per share basic and diluted, respectively. Usually, security analysts do not include the above items in their published estimates of earnings per share.
First Half 2022 Results:
For the first half of 2022, the Company reported total net revenues of $39.3 million representing a 73.2% increase over total net revenues of $22.7 million during the first half of 2021, which was the result of the higher time charter rates our vessels earned during the first half of 2022 and the increased average number of vessels owned and operated compared to the same period of 2021. The Company reported net income and net income attributable to common shareholders for the period of $21.1 million, as compared to net income of $3.1 million and net income attributable to common shareholders of $2.4 million, for the first half of 2021.
For the first half of 2022, a gain on bunkers resulted in positive voyage expenses of $0.9 million, as compared to positive voyage expenses of $0.4 million in the same period of 2021. Vessel operating expenses were $9.2 million for the first half of 2022 as compared to $6.2 million for the first half of 2021. The increase is primarily attributable to the increase in the average number of vessels owned and operated in the first half of 2022 compared to the corresponding period in 2021. Depreciation expenses for the first half of 2022 were $5.3 million compared to $3.4 million during the same period of 2021, mainly due to the higher number of vessels operating in the same period. General and administrative expenses were higher during the first half of 2022 at $1.4 million as compared to $1.1 million for the same period of last year. This increase is mainly attributable to the increased cost of our stock incentive plan. During the first half of 2022 two of our vessels completed their special survey with drydocking for a total cost of $1.7 million, while in the first half of 2021 there were no vessels undergoing drydocking.
Interest and other financing costs for the first half of 2022 amounted to $1.4 million compared to $1.1 million for the same period of 2021. This increase is mainly due to the increased amount of debt in the current period compared to the same period of 2021. For the six months ended June 30, 2022, the Company recognized a $1.0 million gain on five interest rate swaps and a $0.5 million unrealized gain on FFA contracts entered into during the second quarter of 2022 as compared to a $0.1 million gain on three interest rate swaps and a $4.1 million unrealized loss and $1.3 million realized loss on FFA contracts entered into during the second quarter of 2021.
On average, 10.17 vessels were owned and operated during the first half of 2022 earning an average time charter equivalent rate of $24,025 per day compared to 7.19 vessels in the same period of 2021 earning on average $18,879 per day.
Adjusted EBITDA for the first half of 2022 was $26.4 million compared to $13.2 million achieved during the first half of 2021.
Basic and diluted earnings per share attributable to common shareholders for the first half of 2022 was $7.35, calculated on 2,872,966 basic and $7.25, calculated on 2,911,737 diluted weighted average number of shares outstanding compared to basic and diluted earnings per share of $1.03, calculated on 2,322,588 basic and $1.01, calculated on 2,364,879 diluted weighted average number of shares outstanding.
Excluding the effect on the earnings attributable to common shareholders for the first half of the year of the unrealized gain on derivatives, the adjusted earnings attributable to common shareholders for the six-month period ended June 30, 2022, would have been $6.77 and $6.68 per share basic and diluted, respectively. For the six-month period ended June 30, 2021, excluding the unrealized loss on derivatives and the loss on debt extinguishment, the adjusted earnings attributable to common shareholders would have been, compared to earnings of $3.40 per share basic and $3.33, respectively. As previously mentioned, usually, security analysts do not include the above items in their published estimates of earnings per share.
