Euroseas Ltd. Reports Results for the Six-Month Period and Quarter Ended June 30, 2014

Marketwired

MAROUSSI, ATHENS, GREECE--(Marketwired - Aug 7, 2014) - 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, 2014 as well as certain fleet updates.

Second Quarter 2014 Highlights:

  • Net loss of $5.0 million; net loss available to common shareholders of $5.4 million or $0.09 loss per share basic and diluted. Total net revenues of $9.6 million. Adjusted net loss available to common shareholders1 for the period remained the same at $0.09 per share basic and diluted.

  • Adjusted EBITDA1 was $(1.6) million.

  • An average of 14.4 vessels were owned and operated during the second quarter of 2014 earning an average time charter equivalent rate of $7,373 per day.

  • The Company declared its second 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 2014 Highlights:

  • Net loss of $7.2 million; net loss available to common shareholders of $7.9 million or $0.15 loss per share basic and diluted. Total net revenues of $19.1 million. Adjusted net loss per share available to common shareholders1 for the period was $0.15.

  • Adjusted EBITDA1 was $(0.6) million.

  • An average of 14.2 vessels were owned and operated during the first half of 2014 earning an average time charter equivalent rate of $7,585 per day.

1 Adjusted EBITDA, Adjusted net loss, Adjusted net loss available to common shareholders and Adjusted loss per share available to common shareholders 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.

Aristides Pittas, Chairman and CEO of Euroseas commented: "During the first half and during the month of July of 2014, the drybulk market weakened significantly against expectations widely held in the industry while the containership market remained static at low levels. Despite these developments, we continue to believe that both markets will show a gradual improvement over the rest of 2014 and during 2015. Our fleet continues to have a high exposure to the spot market and our chartering strategy remains to pursue short term charters of 3-12 months when possible. We are thus well positioned to take advantage of an improving market."

Tasos Aslidis, Chief Financial Officer of Euroseas commented: "The results of the second quarter of 2014 reflect the depressed level of the containership and drybulk markets compared to the same quarter of 2013, despite the better commercial utilization rate of the vessels.

"Total daily vessel operating expenses, including management fees, general and administrative expenses but excluding drydocking costs, averaged $6,449 per vessel per day during the second quarter of 2014 as compared to $6,115 per vessel per day for the same quarter of last year, and $6,398 per vessel per day for the first half of 2014 as compared to $6,192 per vessel per day for the same period of 2013, reflecting a 5.5% and 3.3% increase, respectively. As always, we want to emphasize that cost control remains a key component of our strategy.

"On the financing front, we were able to secure financing for our recent acquisition of M/V Eirini P as well as refinance the balloon payment of loan of M/V Eleni P. As of June 30, 2014, our outstanding debt was $59.4 million versus restricted and unrestricted cash of about $46.4 million. As of the same date, our scheduled debt repayments over the next 12 months amounted to about $14.6 million, inclusive of about $4.9 million of balloon repayments which may be refinanced. All our debt covenants are satisfied."

Second Quarter 2014 Results:
For the second quarter of 2014, the Company reported total net revenues of $9.6 million representing a 0.7% increase over total net revenues of $9.6 million during the second quarter of 2013. The Company reported net loss for the period of $5.0 million, net loss available to common shareholders of $5.4 million, as compared to net loss of $8.9 million for the second quarter of 2013. The results for the second quarter of 2014 include a $0.2 million unrealized gain on derivatives, a $0.2 million realized loss on derivatives, as compared to $0.4 million unrealized gain on derivatives, a $0.4 million realized loss on derivatives and $3.2 million loss on sale of a vessel for the same period of 2013.

Depreciation expenses for the second quarter of 2014 were $3.0 million compared to $4.2 million during the same period of 2013. On average, 14.4 vessels were owned and operated during the second quarter of 2014 earning an average time charter equivalent rate of $7,373 per day compared to 14.96 vessels in the same period of 2013 earning on average $7,708 per day. 

Adjusted EBITDA for the second quarter of 2014 was $(1.6) million compared to $(1.0) million achieved during the second quarter of 2013. Please see below for Adjusted EBITDA reconciliation to net loss and cash flow provided by operating activities.

Basic and diluted loss per share available to common shareholders for the second quarter of 2014 was $0.09 calculated on 56,888,123 basic and diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $0.20 for the second quarter of 2013, calculated on 45,319,605 basic and diluted weighted average number of shares outstanding. 

Excluding the effect, on the loss available to common shareholders, for the quarter of the unrealized gain on derivatives and the realized loss on derivatives, the adjusted net loss per share available to common shareholders for the quarter ended June 30, 2014 remained $0.09 per share basic and diluted compared to net loss of $0.12 per share basic and diluted for the quarter ended June 30, 2013. Usually, security analysts do not include the above items in their published estimates of earnings per share.

First Half 2014 Results:
For the first half of 2014, the Company reported total net revenues of $19.1 million representing a 6.5% decrease over total net revenues of $20.5 million during the first half of 2013. The Company reported a net loss for the period of $7.2 million, net loss available to common shareholders of $7.9, as compared to net loss of $13.5 million for the first half of 2013. The results for the first half of 2014 include a $0.3 million unrealized gain on derivatives, a $0.4 million realized loss on derivatives as compared to $0.9 million unrealized gain on derivatives, a $0.9 million realized loss on derivatives and a $3.2 million loss on sale of a vessel for the same period of 2013.

Depreciation expenses for the first half of 2014 were $5.8 million compared to $8.5 million during the same period of 2013. On average, 14.2 vessels were owned and operated during the first half of 2014 earning an average time charter equivalent rate of $7,585 per day compared to 14.98 vessels in the same period of 2013 earning on average $8,256 per day. 

Adjusted EBITDA for the first half of 2014 was $(0.6) million compared to $(1.1) million achieved during the first half of 2013. Please see below for Adjusted EBITDA reconciliation to net loss and cash flow provided by operating activities.

Basic and diluted loss per share available to common shareholders for the first half of 2014 was $0.15 respectively, calculated on 52,446,850 basic and diluted weighted average number of shares outstanding compared to basic and diluted loss per share of $0.30 for the first half of 2013, calculated on 45,319,605 basic and diluted weighted average number of shares outstanding. 

Excluding the effect, on the loss available to common shareholders, for the first half of 2014 of the unrealized gain on derivatives, realized loss on derivatives and the loss on sale of vessel, the adjusted net loss per share available to common shareholders for the six-month period ended June 30, 2014 remained $0.15 compared to loss of $0.23 per share basic and diluted for the same period in 2013. Usually, security analysts do not include the above items in their published estimates of earnings per share.

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                        
EIRINI P   Panamax   76,466       2004   TC 'til Oct-14   $9,000
PANTELIS   Panamax   74,020       2000   TC 'til Feb-15   105% of average BPI 4TC
ELENI P   Panamax   72,119       1997   TC 'til Oct-14   97% of average BPI 4TC
ARISTIDES N.P.   Panamax   69,268       1993   TC 'til Aug-14   $4,000
MONICA P   Handymax   46,667       1998   TC 'til Sep-14   $7,500
Vessels under construction (*)                        
Hull Number YZJ 1116   Kamsarmax   82,000       2015   N/A    
Hull Number YZJ 1153   Kamsarmax   82,000       2016   N/A    
Hull Number DY 160   Ultramax   63,500       2015   N/A    
Hull Number DY 161   Ultramax   63,500       2016   N/A    

Total Dry Bulk Vessels
  9   629,540                

Container Carriers
                       
EVRIDIKI G   Intermediate   34,677   2,556   2001   TC 'til Apr -15   $8,200
TIGER BRIDGE   Intermediate   31,627   2,228   1990   TC 'til Sep -14   $6,800
AGGELIKI P   Intermediate   30,360   2,008   1998   TC 'til Sep-14   $6,950
DESPINA P   Handy size   33,667   1,932   1990   TC 'til Sep-14   $6,950
CAPTAIN COSTAS  
Handy size
 
30,007
 
1,742
 
1992
  TC 'til Aug-14
Thereafter TC 'til Jul-15
  $6,500
$7,750
JOANNA   Handy size   22,301   1,732   1999   Voyage Colombia - China starting Aug 2014   $400,000 (lumpsum)
MARINOS  
Handy size
 
23,596
 
1,599
 
1993
  TC 'til Nov-14
+ 5 months in Charterers Option
  $7,150
$8,000
MANOLIS P   Handy size   20,346   1,452   1995   TC 'til Mar-15   $7,200
NINOS   Feeder   18,253   1,169   1990   TC 'til Oct-14   $8,200
KUO HSIUNG   Feeder   18,154   1,169   1993   TC 'til Jul-15   $8,700
Total Container Carriers   10   262,988   17,587            
Fleet Grand Total   19   892,528   17,587            
                         

Note: (*) Vessels are to be delivered in the fourth quarter of 2015 (one ultramax and one kamsarmax), the other ultramax in the first quarter of 2016 and the other kamsarmax in the fourth quarter of 2016.

Summary Fleet Data:

                 
    Three Months, ended
June 30, 2013
  Three Months, ended
June 30, 2014
  Six Months, ended
June 30, 2013
  Six Months, ended
June 30, 2014
FLEET DATA                
Average number of vessels (1)   14.96   14.40   14.98   14.20
Calendar days for fleet (2)   1,361   1,310   2,711   2,570
Scheduled off-hire days incl. laid-up (3)   34.26   64.25   100.37   64.25
Available days for fleet (4) = (2) - (3)   1,327   1,246   2,611   2,506
Commercial off-hire days (5)   124.07   6.67   132.5   6.67
Operational off-hire days (6)   2.90   3.66   19.35   5.94
Voyage days for fleet (7) = (4) - (5) - (6)   1,200   1,235   2,459   2,493
Fleet utilization (8) = (7) / (4)   90.4%   99.2%   94.2%   99.5%
Fleet utilization, commercial (9) = ((4) - (5)) / (4)   90.6%   99.5%   95.0%   99.7%
Fleet utilization, operational (10) = ((4) - (6)) / (4)   99.8%   99.7%   99.3%   99.8%
                 
AVERAGE DAILY RESULTS                
Time charter equivalent rate (11)   7,708   7,373   8,256   7,585
Vessel operating expenses excl. drydocking expenses (12)   5,534   5,708   5,545   5,628
General and administrative expenses (13)   581   741   647   771
Total vessel operating expenses (14)   6,115   6,449   6,192   6,398
Drydocking expenses (15)   783   982   1,063   525
                 

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

(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 including days of vessels laid-up.

(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 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:
Tomorrow, Friday, August 8, 2014 at 9:00 a.m. ET, 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 recording of the conference call will be available until August 15, 2014 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 slide presentation on the Second Quarter and First Half 2014 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.  
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,
 
    2013     2014     2013     2014  
    (unaudited)     (unaudited)  
Revenues                        
Voyage revenue   9,986,356     10,081,816     21,325,722     20,048,813  
Related party revenue   60,000     60,000     120,000     120,000  
Commissions   (474,540 )   (502,688 )   (962,283 )   (1,030,826 )
Net revenues   9,571,816     9,639,128     20,483,439     19,137,987  
                         
Operating expenses                        
Voyage expenses   748,642     1,002,655     997,718     1,138,951  
Vessel operating expenses   6,298,912     6,238,260     12,558,899     12,036,879  
Drydocking expenses   1,066,242     1,286,807     2,878,644     1,372,211  
Depreciation   4,218,799     2,972,497     8,501,893     5,825,417  
Net loss on sale of vessel   3,191,678     -     3,191,678     -  
Management fees   1,232,925     1,238,792     2,473,650     2,430,598  
Other general and administrative expenses  
 790,850
   
 970,903
   
 1,754,396
   
 1,978,792
 
Total operating expenses   17,548,048     13,709,914     32,356,878     24,782,848  
                         
Operating loss   (7,976,232 )   (4,070,786 )   (11,873,439 )   (5,644,861 )
                         
Other income/(expenses)                        
Interest and finance cost   (489,237 )   (487,781 )   (968,577 )   (957,923 )
Loss on derivatives, net   (22,802 )   (54,211 )   (2,027 )   (95,865 )
Other investment income   -     237,500     -     475,000  
Foreign exchange gain / (loss)   (2,929 )   (702 )   3,766     404  
Interest income   48,350     145,653     236,818     255,269  
Other expenses, net   (466,618 )   (159,541 )   (730,020 )   (323,115 )
Equity loss in joint venture   (431,760 )   (786,770 )   (897,459 )   (1,262,204 )
Net loss   (8,874,610 )   (5,017,097 )   (13,500,918 )   (7,230,180 )
Dividend Series B Preferred shares   -     (387,055 )   -     (651,416 )
Net loss available to common shareholders   -     (5,404,152 )   -     (7,881,596 )
Loss per share, basic and diluted   (0.20 )   (0.09 )   (0.30 )   (0.15 )
Weighted average number of shares, basic and diluted   45,319,605     56,888,123     45,319,605     52,446,850  
                         
                         
   
Euroseas Ltd.  
Unaudited Consolidated Condensed Balance Sheets  
(All amounts expressed in U.S. Dollars - except number of shares)  
   
    December 31,
2013
    June 30,
2014
 
             
ASSETS   (unaudited)  
Current Assets:            
  Cash and cash equivalents   11,400,237     38,384,909  
  Trade accounts receivable   1,879,151     535,190  
  Other receivables, net   1,440,833     1,015,299  
  Inventories   1,474,114     1,950,650  
  Restricted cash   462,415     294,059  
  Prepaid expenses   295,248     325,093  
Total current assets   16,951,998     42,505,200  
             
Fixed assets:            
  Vessels, net   105,463,737     120,962,255  
  Advances for vessels under construction   50,122     12,462,459  
Long-term assets:            
  Restricted cash   7,400,000     7,700,000  
  Deferred charges, net   338,431     370,775  
  Other Investments   5,196,196     5,671,196  
  Investment in joint venture   21,215,870     19,953,665  
Total long-term assets   139,664,356     167,120,350  
Total assets   156,616,354     209,625,550  
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Current liabilities:            
  Long term debt, current portion   12,862,000     14,617,000  
  Trade accounts payable   2,336,952     4,135,843  
  Accrued expenses   1,002,445     1,534,726  
  Accrued dividends   13,050     13,050  
  Deferred revenue   996,599     1,544,644  
  Due to related company   903,478     1,025,071  
  Derivatives   697,889     501,015  
Total current liabilities   18,812,413     23,371,349  
             
Long-term liabilities:            
  Long term debt, net of current portion   32,782,000     44,821,000  
  Derivatives   319,859     174,831  
Total long-term liabilities   33,101,859     44,995,831  
Total liabilities   51,914,272     68,367,180  
             
Mezzanine equity:            
  Series B Preferred shares (par value $0.01, 20,000,000 preferred shares authorized, 0 and 31,351 shares issued and outstanding, respectively)   -     29,651,416  
             
Shareholders' equity:            
  Common stock (par value $0.03, 200,000,000 shares authorized,45,723,255 and 56,888,123 issued and outstanding)  
 1,371,698
   
 1,706,644
 
  Additional paid-in capital   252,314,683     266,766,205  
  Accumulated deficit   (148,984,299 )   (156,865,895 )
Total shareholders' equity   104,702,082     111,606,954  
Total liabilities and shareholders' equity   156,616,354     209,625,550  
             
             
 
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,
 
    2013     2014  
             
Cash flows from operating activities:            
Net loss   (13,500,918 )   (7,230,180 )
Adjustments to reconcile net loss to net cash provided by operating activities:            
Depreciation of vessels   8,501,893     5,825,417  
Loss on sale of vessel   3,191,678     -  
Amortization of deferred charges   84,236     61,978  
Loss in investment in joint venture   897,459     1,262,204  
Share-based compensation   367,429     286,468  
Unrealized gain on derivatives   (882,937 )   (341,902 )
Other income accrued   -     (475,000 )
Changes in operating assets and liabilities   4,222,768     3,541,086  
Net cash provided by operating activities   2,881,608     2,930,071  
             
Cash flows from investing activities:            
Contribution to joint venture   (6,250,000 )   -  
Vessel acquisition and advances for vessels under construction  
(636,602
)  
(33,230,898
)
Proceeds from sale of vessel   3,569,159     -  
Change in restricted cash   (995,497 )   (131,644 )
Net cash used in investing activities   (4,312,940 )   (33,362,542 )
             
Cash flows from financing activities:            
Proceeds from issuance of common stocks, net   -     14,550,000  
Proceeds from issuance of preferred stocks, net   -     29,700,000  
Dividends paid   (1,357,986 )   -  
Loan fees paid   -     (260,000 )
Offering expenses paid   -     (366,857 )
Proceeds from long term debt   -     23,300,000  
Repayment of long-term debt   (7,456,000 )   (9,506,000 )
Net cash (used in) / provided by financing activities   (8,813,986 )   57,417,143  
             
Net (decrease) / increase in cash and cash equivalents   (10,245,318 )   26,984,672  
Cash and cash equivalents at beginning of period   33,374,960     11,400,237  
Cash and cash equivalents at end of period   23,129,642     38,384,909  
             
             
   
Euroseas Ltd.  
Reconciliation of Adjusted EBITDA to  
Net loss and Cash Flow Provided by Operating Activities  
(All amounts expressed in U.S. Dollars)  
   
    Three Months Ended
June 30, 2013
    Three Months Ended
June 30, 2014
    Six Months Ended
June 30, 2013
    Six Months Ended
June 30, 2014
 
Net loss   (8,874,610 )   (5,017,097 )   (13,500,918 )   (7,230,180 )
Interest and finance costs, net (incl. interest income)   440,887     342,128     731,759     702,654  
Depreciation   4,218,799     2,972,497     8,501,893     5,825,417  
Unrealized and realized loss on derivatives, net   22,802     54,211     2,027     95,865  
Loss on sale of vessel   3,191,678     -     3,191,678     -  
Adjusted EBITDA   (1,000,444 )   (1,648,261 )   (1,073,561 )   (606,244 )
                         
                         
    Three Months Ended
June 30, 2013
    Three Months Ended
June 30, 2014
    Six Months Ended
June 30, 2013
    Six Months Ended
June 30, 2014
 
Net cash flow provided by operating activities   1,266,355     3,164,759     2,881,608     2,930,071  
Changes in operating assets / liabilities   (2,527,115 )   (4,651,269 )   (4,222,768 )   (3,541,086 )
Loss on derivatives (realized)   443,825     216,946     884,964     437,767  
Equity loss in joint venture and Other investment income, net   (431,760 )   (549,270 )   (897,459 )   (787,204 )
Share-based compensation   (158,683 )   (140,428 )   (367,429 )   (286,468 )
Interest, net   406,934     311,001     647,523     640,676  
Adjusted EBITDA   (1,000,444 )   (1,648,261 )   (1,073,561 )   (606,244 )
                         
                         

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 sale of vessel. 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, 2013
    Three Months
Ended
June 30, 2014
    Six Months
Ended
June 30, 2013
    Six Months
Ended
June 30, 2014
 
Net loss   (8,874,610 )   (5,017,097 )   (13,500,918 )   (7,230,180 )
Unrealized gain on derivatives   (421,023 )   (162,735 )   (882,937 )   (341,902 )
Realized loss on derivatives   443,825     216,946     884,964     437,767  
Loss on sale of vessel   3,191,678     -     3,191,678     -  
Adjusted net loss   (5,660,130 )   (4,962,886 )   (10,307,213 )   (7,134,315 )
Preferred dividends   -     (387,055 )   -     (651,416 )
Adjusted net loss available to common shareholders   (5,660,130 )   (5,349,941 )   (10,307,213 )   (7,785,731 )
Adjusted net loss per share, basic and diluted   (0.12 )   (0.09 )   (0.23 )   (0.15 )
Weighted average number of shares, basic and diluted   45,319,605     56,888,123     45,319,605     52,446,850  
                         
                         

Adjusted Net Loss and Adjusted Net Loss per share Reconciliation:
Euroseas Ltd. considers Adjusted Net Loss to represent net loss before gain / loss in derivatives and loss on sale of 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 and loss on sale of 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 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 15 vessels, including 4 Panamax drybulk carriers and 1 Handymax drybulk carrier, 3 Intermediate containership, 5 Handysize containerships, 2 Feeder containerships. Euroseas` 5 drybulk carriers have a total cargo capacity of 338,540 dwt, its 10 containerships have a cargo capacity of 17,587 teu. The Company has also signed contracts for the construction of two Ultramax (63,500 dwt) fuel efficient drybulk carriers and two Kamsarmax (82,000 dwt) fuel efficient drybulk carriers. Including the four new-buildings, the total cargo capacity of the Company's drybulk vessels will be 629,540 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:
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: euroseas@capitallink.com
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