Release Date: November 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Euroseas Ltd (ESEA, Financial) reported a 6.9% increase in total net revenues for Q3 2024 compared to the same period in 2023, driven by a higher number of vessels operated.
- The company declared a quarterly dividend of $0.60 per common share, maintaining an annualized dividend yield of around 5.7%.
- Euroseas Ltd (ESEA) has secured strong charter coverage with approximately 70% of its fleet fixed for 2025 and about 35% for 2026, ensuring significant profitability.
- The company announced the construction of two LNG-ready, eco-design containerships, enhancing its fleet's environmental efficiency.
- Euroseas Ltd (ESEA) has successfully repurchased 414,000 shares in the open market, demonstrating a commitment to enhancing long-term shareholder value.
Negative Points
- Interest and other financing costs increased significantly in 2024 due to higher levels of debt compared to the previous year.
- The average time charter equivalent rate decreased from $30,074 per day in Q3 2023 to $26,480 per day in Q3 2024.
- Despite the increase in revenues, basic and diluted earnings per share for Q3 2024 were lower than the same period in 2023.
- The company faces potential market headwinds in 2025 due to easing Red Sea disruptions and geopolitical uncertainties.
- Euroseas Ltd (ESEA) operates older vessels, which may require increased maintenance and could be less attractive to investors.
Q & A Highlights
Q: What rates would be required for the two new fuel-efficient container vessels to achieve breakeven, and what are the financing plans for these vessels?
A: Aristides Pittas, Vice Chairman of the Board, stated that assuming a 20-year life for the vessels, rates below $20,000 per day would be profitable, though they aim for higher rates. The financing plan involves 60-65% debt and the remainder in equity, with the first 15% installment already paid.
Q: What are the expectations for the Diamantis and Aegean Express, whose charters expire soon?
A: Aristides Pittas mentioned that both ships will be fixed within the next couple of weeks, with interest levels between $13,000 and $20,000 for a year or 1.5 years. Negotiations are ongoing, and the market is positive.
Q: Can you expand on the decision to expand the newbuild effort to larger class ships with TEUs of about 4,000?
A: Aristides Pittas explained that the decision was based on the older age of the global fleet in this size range, with 50-60% of the existing fleet over 15 years old. The new ships are more economical and environmentally friendly, and there is a need for replacements.
Q: How do you expect to market the newbuild vessels, and is there any plan to secure contracts soon?
A: Aristides Pittas stated they are comfortable waiting until closer to delivery to secure contracts, but would consider a good rate for a long period if offered.
Q: With the positive rate environment, what are Euroseas' capital allocation priorities for 2025?
A: Anastasios Aslidis, CFO, mentioned that they will balance investing in the business, paying dividends, and funding buybacks. The decision on dividends will be discussed in the next Board meeting, aiming to provide a good yield.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
