Earnings call transcript: Euroseas Q4 2024 shows modest EPS miss, stock steady

Euroseas Ltd (NASDAQ:ESEA) reported its fourth-quarter 2024 earnings, revealing a minor miss on earnings per share (EPS) but a slight beat on revenue expectations. The company posted an EPS of $3.33, just shy of the forecasted $3.34. Revenue reached $53.3 million, surpassing the anticipated $52.91 million. In pre-market trading, Euroseas’ stock showed a slight decline of 0.24%, trading at $33.90, following a previous close of $33.98. According to InvestingPro data, the company maintains impressive gross profit margins of 72.5% and trades at an attractive P/E ratio of 2.07, suggesting potential value opportunity.

Key Takeaways

• Euroseas reported a slight EPS miss but exceeded revenue forecasts.
• The company increased its quarterly dividend to $0.65 per share.
• Euroseas took delivery of two new vessels, enhancing its fleet capacity.
• Strong charter coverage with 85% of the fleet fixed for 2025.

Company Performance

Euroseas reported significant year-over-year growth in both quarterly and annual revenue, with Q4 2024 revenues up 8.7% and full-year revenues increasing by 12.4%. The company’s net income for the quarter was $24.4 million, contributing to a full-year net income of $112.8 million. The robust performance is attributed to strategic fleet expansion and increased charter rates in the container shipping market. InvestingPro analysis reveals the company’s strong financial health with an overall score of "GREAT" (3.29/5), supported by solid profitability metrics and relative value scores.

Financial Highlights

• Revenue: $53.3 million, an 8.7% increase YoY
• Earnings per share: $3.33, slightly below forecast
• Full year revenue: $212.9 million, a 12.4% increase YoY
• Quarterly dividend: Increased to $0.65 per share

Earnings vs. Forecast

Euroseas reported an EPS of $3.33, narrowly missing the forecast of $3.34, marking a minor deviation from expectations. However, the company exceeded revenue forecasts with $53.3 million against the anticipated $52.91 million, showcasing resilient operational performance.

Market Reaction

Following the earnings release, Euroseas’ stock experienced a minor dip of 0.24% in pre-market trading, reflecting investor reactions to the slight EPS miss. The stock remains within its 52-week range, with recent trading showing a 2.38% increase to $33.98 prior to the earnings announcement. InvestingPro analysis indicates the stock is currently undervalued, with analyst targets ranging from $57 to $65. The company offers an attractive dividend yield of 7.06% and has maintained dividend growth for three consecutive years. For comprehensive valuation insights and additional ProTips, investors can access the detailed Pro Research Report available on InvestingPro.

Outlook & Guidance

Euroseas maintains a positive outlook for 2025, with strong charter coverage and fleet optimization efforts. The company expects a cash flow breakeven rate of $12,600 per vessel per day for 2025. Two new 4,300 TEU vessels are under construction, with delivery anticipated in Q4 2027, further enhancing future capacity. The company’s current ratio of 1.65 indicates strong liquidity to support its expansion plans, though InvestingPro data shows the company is currently burning through cash rapidly.

Executive Commentary

CEO Aristides Pitas emphasized growth opportunities, stating, "We continue to look at opportunities that will help us grow the company and enhance shareholder returns." CFO Tasos Aslidis highlighted the company’s strong balance sheet, noting, "Our balance sheet is very simple... cash and some other current assets, advances we paid for our new buildings and of course the book value of our assets in the water."

Risks and Challenges

• Potential decline in container trade, as projected by Clarkson’s, could impact future demand.
• Market volatility and economic uncertainties may affect charter rates and profitability.
• Ongoing fleet expansion requires significant capital investment and efficient management.

Q&A

During the earnings call, analysts inquired about vessel charter rates and the accounting treatment for the Euro Holdings spin-off. Management confirmed minimal drydocking expectations for 2025, estimating 70-75 days, which should not significantly disrupt operations.

Full transcript - Euroseas Ltd (ESEA) Q4 2024:

Conference Operator: Thank you for standing by, ladies and gentlemen, and welcome to the ERC’s conference call on the fourth quarter twenty twenty four financial results. We have with us Mr. Aristides Pitas, Chairman and Chief Executive Officer and Mr. Tasos Alidis, Chief Financial Officer of the company. At this time, all participants are in a listen only mode.

There will be a presentation followed by a question and answer session, at which time if you wish to ask a question, please press star one on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded today. Please be reminded that the company announced the results with a press release that has been publicly distributed. Before passing the floor to Mr. Pitas, I would like to remind everyone that in today’s presentation and conference call, ERCs will be making forward looking statements.

These statements are within the meaning of the federal securities laws. Matters discussed may be forward looking statements, which are based on current management expectations that involve risks and uncertainties that may result in such expectations not being realized. I kindly draw your attention to Slide number two of the webcast presentation, which has the full forward looking statement, and the same statement was also included in the press release. Please take a moment to go through the full statement and read it. And now I would like to pass the floor to Mr.

Pritas. Please go ahead, sir.

Aristides Pitas, Chairman and Chief Executive Officer, Euroseas: Hello, everybody, and good morning. Thank you for joining us today for our scheduled conference call. Together with me is Tasos Aslidis, our Chief Financial Officer. The purpose of today’s call is to discuss our financial results for the three and twelve month period ended 12/31/2024. Let’s turn to Slide three of the presentation to go over our income statement highlights.

For the fourth quarter of twenty twenty four, we reported total net revenues of $53,300,000 and a net income of $24,400,000 or $3.49 diluted. Adjusted net income for the quarter was $23,300,000 or $3.33 per diluted share. Adjusted EBITDA for the period was $32,800,000 Please refer to the press release for the reconciliation of adjusted net income and adjusted EBITDA. Our CFO, Tasos, will go over our financial highlights in more detail later on in the presentation. As part of the company’s common stock dividend policy, our Board of Directors declared a quarterly dividend of $0.65 per common share for the fourth quarter of twenty twenty four, increasing by $0.05 the quarterly dividend given throughout last year.

The dividend will be payable on or about March 18 to shareholders of record on March 11. The annualized dividend yield of our stock given the current share price is approximately 7.8%. Additionally, the company is dividending off to one of its shareholders the sales of Euro Holdings Ltd, a subsidiary owning our three eldest vessels, which represents about 5% of our NAV. The shares will be distributed on March 17 to all shareholders of record on March 7. As of 02/27/2025, and since the initiation of our repurchase program in May 2022, which has been extended since twice to May 2025, we have repurchased 425,000 of our common stock in the open market for a total consideration of about $9,250,000 We will continue to make measured use of the plan at management’s discretion depending on the level of our stock price, aiming to enhance long term shareholder value.

Please turn to Slide four, where we discuss our recent developments, including an update on our sales and purchase charter and operational highlights. On January 7 and 01/08/2025, we took delivery of Motor Vessel D Panel and Motor Vessel Simeon B, respectively. These are two EKO EDI Phase III 2,800 TEU feeder containership newbuildings that were built in Hyundai (OTC:HYMTF) Meepo Dockyard in South Korea. The vessels were financed through a combination of bank debt and loan funds as usual. Following their delivery, both vessels commenced charters with a duration of thirty four to thirty six months at a daily rate of $32,000 per day.

Continuing on our chartering developments, Mottoversal AGN Express has been fixed for a minimum of ten months and up to twelve months at a rate of $16,700 per day, with the earliest delivery being in November 2025. Additionally, Motor Vessel Synergy Killung and Motor Vessel Synergy Jansburg have been fixed for thirty six to thirty nine months at $35,500 per day. Finally, motor vessel Lea Niedra secured a charter for twenty four to twenty six months at $19,000 per day, with the earliest delivery expected in May 2027. Throughout this period, the fleet experienced low idle periods of commercial off hire, except for motor vessel Yamandis P, which underwent necessary maintenance works for twenty three days from 12/16/2024 to 01/08/2025, ensuring that the vessel can continue trading efficiently till the next drydocking date. Please turn to slide five.

On 01/30/2025, we contributed our three auto vessels, motor vessel Aegean Xpress, motor vessel Diamantis P and motor vessel Joanna into a separate company, Euro Holdings Ltd, in exchange for 100% of the sales of Euro Holdings. Subsequently, Euro Holdings sold Motor Vessels Yemenis for net proceeds of about $13,000,000 Therefore, Euro Holdings, as of the January, had cash of about $13,000,000 plus old motor vessel Aegean Express, which is on charter at $16,700 per day till minimum November 25 and Motor Vessel Joanna, which is on charter till minimum October 2026, at $16,500 per day. Euro Holdings will dividend out the Euro Holdings shares to its shareholders, providing every shareholder on record on March 7 with one Euro Holdings share for every 2.5 Euro Holdings shares, a EuroC shares. Distribution will occur upon effectiveness of the registration statement and is expected to occur on March 17. Simultaneously, the sales will start trading on the NASDAQ.

Further details of the distribution will be provided in the subsequent press release. Whilst regulatory clearance and listing processes are practically completed, there can be no assurance that the transaction will ultimately occur, as if a material event occurs before the final implementation date, either the SEC or the NASDAQ may not finally sign off. Please turn to Slide six for an update on our current fleet profile. Our current fleet is comprised of 24 vessels in the water, including 17 feeder container ships and seven intermediate container carriers with a total carrying capacity of just under 71,000 TEU and an average age of about thirteen point five years. Following the contribution of the two vessels, and with Joanna and VAG and Xpress to Euro Holdings, our fleet will be reduced to 22 vessels in the water with a carrying capacity of approximately 67,500 TEU and another average of twelve point eight years.

Turning to Slide seven, you can also see the two vessels that are currently under construction, which are expected to be delivered in the fourth quarter of twenty twenty seven. These are two four thousand three hundred TEU vessels. Let’s now turn to Slide eight to see our full vessel employment chart. As you can see, the recent charters helped improve the visibility of our expected cash flows and we have now secured strong charter coverage over the next two years with approximately 85% of our fleet fixed for 2025 and about 49% fixed for 2026. Let’s move to slide 10 for our broader market overview, focusing on the development of six twelve month time charter rates over the past ten years.

In the fourth quarter of twenty twenty four, containership charter rates experienced a slight decline, except for the larger segments where they held their levels. As you see from the graphs on the slide, as of 02/21/2025, the six to twelve month charter rate for the 2,500 TEU container ships reached approximately $32,500 per day, which is more than three times the $9,400 per day median rate. Notably, this fixture is also significantly higher than the ten year average rate, which is approximately $16,500 per day. This positive trend is observed across all vessel sizes, with the current rates significantly outpacing historical averages, highlighting the market’s robust recovery and resilience. Moving on to Slide 11, we go over some further market highlights.

As already shown, during the last quarter of twenty twenty four, feeder vessel rates decreased by 9%, while the rates for Panamax and post Panamax versus Urals. The Red Sea region continues to be a key factor in shaping the 2025 container ship outlook. While the Gaza ceasefire has eased some tensions, the ongoing Houthi threat remains and shipping lines may begin rebooting via the Suez Canal. However, they will require clear evidence of apparently reduced risk before making the shift. In the first quarter of twenty twenty four, average secondhand prices increased by approximately 7% compared to Q3 twenty twenty four.

While prices have risen significantly since the past COVID period, they are still above 50% below the peak levels they had reached during the pandemic. Also, the newbuilding price index increased by just 1% quarter on quarter, but still an increase, which is due to limited availability and increased competition between yards, particularly for eco units and larger feeders. As of 02/10/2025, the idle fleet stood at 200,000 TEU or just 0.6% of the fleet. Recycling activity picked up just slightly with 58 vessels accounting for 83,000 TEU sent to scrap yards during 2024. Given that about 25% of the sub 8,000 TEU fleet is over twenty years old, we expect recycling volumes to increase if market conditions soften.

Scratching prices eased slightly in Q4 to approximately $490 per lightweight ton, but still remain around 20% above 2019 levels. Overall, the fleet grew in 2024 by a staggering 10.8%. Please turn to Slide 12. The IMF’s latest start date from January 2025 projects stable yet somewhat underwhelming global economic growth with unchanged forecasts on that in October 2024 hovering around levels similar levels for both 2025 and 2026. Undoubtedly, the new U.

S. Administration’s rapid policy changes and reversals, particularly concerning trade policies and geopolitical conflicts, collectively pose risks to medium term growth prospects. Within this background, The U. S. Has seen an upward revision by the IMF with growth forecast trending to grow at 2.7%.

This stands in stark contrast to other advanced economies, particularly in Europe, which have seen either downgrades or stagnant growth outlooks at around 1%. Emerging markets continue to drive global growth led by India, the Asian five countries and of course China. China’s growth appears to be slightly revised upwards, but in a lopsided fashion with projections of 4.6% this year and 4.5% next year as the country continues to face steady domestic demand, persistent deflationary pressures and finally and then falling property and equity markets. India is projected to maintain steady economic growth of 6.5% in both 2025 and 2026, driven by strong investment activity, robust agricultural performance and continued expansion in the services sector, which remains a key engine of economic growth. Southeast Asian countries are also positioned for solid growth, benefiting from regional demand and investment momentum.

Global inflation is expected to decline. However, the near term trajectory may still face challenges with persistent services and wage inflation in several parts of the world, leading to desynchronized monetary policy responses. Risks to the global inflation now outlook will be tilted to the upside given the prospect of increased protectionism, geopolitical tensions, derisking and demographic constraints. According to Clarksons, the container demand outlook for 2025 remains murky with many variables at play. In its latest market report, Clarkson’s projects trade growth to decline by 1%.

This is attributed to factors such as U. S. Status, ongoing geopolitical risks in the Red Sea and despite the Gaza ceasefire, the persisting Houthi threat making a return to normal shipping operations more challenging. Looking into 2026, the containerized freight demand is forecast to decline even further by 3.9% with further potential for a demand supply imbalance due to continued fleet growth and possible easing of the Red Sea disruption. In light of this, we remain mindful that both the IMF and Clarkson’s projections could change, depending on microeconomic risks, U.

S. Trade policy and evolving geopolitical tensions, which could impact mid term growth prospects. Please turn to Slide 13, where you can see the total fleet age profile and container ship order. The container ship fleet is relatively young with most vessels under 15 years old and only 11% of the fleet over 20 years old. As of February 2025, the order book as a percentage stands at 27%.

Turning on to Slide 14, we go over the fleetage profile and order book only for six in the 1,000 to 3,000 TEU range, the sizes we mostly operate in. And there, we see a very different picture. The order book here stands at just 3.2% as of February 2025. According to Clarksons, in 2025, new deliveries are projected to amount to just 2.1%. This pace will slow down even further in 2026 and 2027, with even fewer ships expected to be delivered.

You can also notice that about 15% of the fleet in this size range is over fifteen years old.

: Let’s move to Slide 15.

Aristides Pitas, Chairman and Chief Executive Officer, Euroseas: As shown in the previous two slides, the order book is predominantly focused on large container ships. The increase in mainline volumes inevitably drives greater demand for regional distribution by feeder vessels as well. In Russia, we believe that there will continue to be quite high demand for feeder and intermediate sized vessels, despite a cascading effect, of course, which pushes towards the use of larger ships when this is possible due to port capacity improvements and increased volume requirements. This category of ships is, however, aging extremely rapidly and currently the percentage of vessels exceeding twenty years is on average about 27%. All these ships are prime candidates for scrapping in case there is a market decline, also due to the new environmental regulations.

Thus, it is highly likely that the fleet capacity in these segments will decline in contrast to the anticipated growth in the larger vessel categories in the overall fleet. Moving on to slide 16. As already discussed, container shipping market saw substantial gains in 2024 with both freight and charter rates reaching levels not seen since the COVID period. However, in recent weeks, freight rates, particularly on the East Europe Road, have dropped sharply due to expectations of the routing through the Suez Canal following the Gaza cease This shift has yet to be reflected in the time charter market. Looking ahead, in 2025 and beyond, the container shipping market’s development is very uncertain, primarily driven by two factors: geopolitical risks and trade war related issues.

While the Gaza cease fire has prompted discussions, it remains uncertain when shipping lines will resume routing through the Suez Canal. On the trade war front, the anticipation of high U. S. Customs duties under the new Trump administration had led to a surge in early August, driving up trade routes. This is now reversing.

The 10% tariff on Chinese goods and the 25% tariff on goods from Mexico and Canada set to take effect in March 2025, if that happens, plus tariffs on Europe yet to be on Europe yet to be determined and the recently announced fees on Chinese built and owned vessels entering U. S. Ports. All these, we remain to see how these controversial actions could lead to slower global growth. Anyway, their full impact remains to be seen as they may also trigger additional inefficiencies, which may create opportunities as often happens in shipping.

In the supply side, vessels ordered by shipping companies in the post COVID years are now entering the market in large numbers. This trend, as discussed, is expected to continue in 2025 up to 2028. And based on cargo volume forecasts, many of these vessels will likely struggle to fill their capacity. If the factors currently supporting the containership market begin to fade, the market downturn could be quite swift. However, potential reductions in vessel speeds, driven by efforts to reduce emissions and support green initiatives, may help ease supply pressures and contribute to market stability.

The energy transition has continued to gain traction in the container sub sector. Although there is a clear shift towards adopting new fuels, the pace of this transition is likely to be slower than anticipated due to technical and economic hurdles. Meanwhile, the premium for charter rates of eco friendly vessels is expected to grow as both charters and the industry as a whole become increasingly focused on sustainable transport solutions. Please turn to Slide 16. The left hand side slide graph depicts the strengthening in the containership market throughout the year.

As of 02/21/2025, ’1 year time charter rate for 2,500 TEU container ships stood at $2,500 New building prices also picked up a little bit during the fourth quarter and into the beginning of twenty twenty five, reflecting consistent demand driven by the limited shipyard capacity to rising construction costs. Over the long term, elevated costs for greener technologies and stricter emission standards are expected to help keep new building prices high. Similarly, secondhand vessel prices have increased from a low of $15,000,000 in late twenty twenty three to $31,000,000 by December 2024, supported by the improving market sentiment and the robust charter demand. In this environment and with our very strong cash position, we continue to look at opportunities that will help us grow the company and enhance shareholder returns. And with that, I will pass the floor over to our CFO, Tasos Aslidis, to go over our financial highlights in further detail.

Tasos Aslidis, Chief Financial Officer, Euroseas: Thank you very much, Aristides. Good morning from you as well, ladies and gentlemen. Over the next four slides, I will give you an overview of our financial highlights for the fourth quarter and full year of 2024 and will make the related comparisons to the same periods of last year. For that, let’s start by going to Slide 19. For the fourth quarter of twenty twenty four, Euroseas reported total net revenues of $53,300,000 representing an 8.7% increase over total net revenues of $49,100,000 during the fourth quarter of last year.

And that increase was mainly the result of the increased average number of vessels we operated in the fourth quarter of this year compared to the last. We reported net income for the period of $24,400,000 as compared to net income of $24,700,000 for the fourth quarter of twenty twenty three. Interest and other financing costs for the fourth quarter of twenty twenty four amounted to $3,700,000 of which $4,560,000 relates to interest income, imputed interest, charged and capitalized in relation to our newbuilding program compared to $2,500,000 for the last year of which $260,000 relates to included interest started to capitalize in relation to our newbuilding program for that period. This increase is due to the increased amount of debt that we get in the current year to compare to last. Also interest income during the fourth quarter of this year was $800,000 compared to $500,000 for the fourth quarter of twenty twenty three.

Adjusted EBITDA for the fourth quarter of this year increased to $32,800,000 compared to $32,400,000 for the corresponding period of the fourth quarter of twenty twenty three. Base Chicken diluted earnings per share for the fourth quarter of twenty twenty four were $3.51 and $3.49 per share calculated on about $7,000,000 basic and diluted weighted average number of shares outstanding, compared to basic and diluted earnings per share of 3.58

Conference Operator: Unfortunately, his line did just drop. Yes. Let me call him back. Please stand by.

Tasos Aslidis, Chief Financial Officer, Euroseas: I’m continuing from the point of the base of the earnings per share. So I might repeat the last part here. Basically, diluted earnings per share for the fourth quarter of twenty twenty four were $3.51 basic and $3.49 diluted calculated on about 7,000,000 weighted average number of shares outstanding, respectively, compared to basic and diluted earnings per share of 3.58 and $3.56 per share, basically diluted for the fourth quarter of twenty twenty three, which was calculated on the basis of about 6,900,000.0 shares weighted average numbers of shares outstanding. The adjusted earnings per share for the fourth quarter ending 12/31/2024 were $3.35 per share basic and $3.33 per share diluted compared to adjusted earnings of $3.62 and $3.61 per share, basically diluted respectively for the same period of last year. I will refer you to the press release we issued earlier today for a reconciliation between earnings and adjusted earnings.

Let us now look at the numbers for the corresponding full year periods of year 2024 versus 2023. For the full year of 2024, we reported total net revenues of $212,900,000 representing a 12.4% increase over net revenues of 189,400,000.0 during 2023, again, mainly the result of the increased number of vessels we own and operated, partly offset by the lower other steins charter rates we earn in 2024. We reported net income for the year of $112,800,000 as compared to $114,500,000 for the twelve months of 2023. Total (EPA:TTEF) interest and other financing costs for 2024 amounted to 10,600,000.0 for which $4,200,000 relates to interest income imputed interest charged and capitalized in relation to our newbuilding program compared to $6,400,000 for 2023, of which BRL3.2 million is interest income. So the total interest expense was BRL9.8 million.

And in future interest related to the interest charge and capitalized in relation to our new printing program. Again, this increase is due to the higher amount of debt we carry in 2024 versus 2023. Interest income in 2024 was about $2,400,000 versus $1,400,000 in 2023 as a result of the higher cash balances we maintained during the year. Adjusted EBITDA for 2024 increased to $135,800,000 compared to $123,600,000 during 2023, as a result of higher revenues and almost 10% increase. In terms of earnings per share, in 2024, basic earnings were $16.25 and diluted $16.18 calculated both approximately 6,900,000.0 and 7,000,000 respectively, basically diluted to weighted average number of shares outstanding compared to $16.53 and $6.52 per share, basically diluted for the twelve months of 2022.

The adjusted earnings for the year of 2024 were $14.92 basic and $14.85 per share diluted compared to $14.99 and 14.98 for 2023. Again, our release our press release for failure today shows the exact reconciliation between earnings and adjusted earnings. Please now move to Slide 20 to review some figures from our fleet and our fleet performance. Starting first with our utilization rate, date and first for the fourth quarter. During the fourth quarter of twenty twenty four, our overall utilization rate was 99.6% compared to 99.9% overall utilization rate for the fourth quarter of twenty twenty three.

Last year in the fourth quarter, we operated 23 vessels, earning an average time charter equivalent rate of $26,479 per day compared to 19 vessels in the same period fourth quarter of twenty twenty three earning on average $29,266 per vessel per day. Our operating expenses including management fees and G and A expenses, but excluding the idiotic costs, were a bit lower in the fourth quarter of twenty twenty four compared to the previous year and stood at $7,728 per vessel per day in the fourth quarter of twenty twenty four compared to $7,932 per vessel per day for the same period in 2023. At the bottom of this table, in this section of this table, we can see the cash flow breakeven rate, which also takes into account dry docking expenses, interest expenses and loan repayments. Thus for the fourth quarter of twenty twenty four, our daily cash flow breakeven rate was $14,935 per vessel per day compared to a bit above 15,000 for the same period of 2023. Let’s quickly look now at the same numbers for the full year.

During the full year of 2024, overall utilization rate was 91.7% compared to 98.6% for 2023. For the whole year, we operate on average 21.7 vessels earning just above $28,000 per day on average compared to 18.3 vessels for the whole year of 2023, earning on average about $29,700 per vessel per day. On the cost side, on the operating cost side for the full year, again, including running expenses, management fees and G and A, but not including the operating costs, we averaged $7,524.26 dollars per vessel per day in 2024 compared to $7,875 per vessel per day in 2023, showing an improvement of about just below 5% improvement on the cost side. The cash flow breakeven rate for 2024, including again the interest expenses, cash interest expenses, driver expenses and loan repayments was about $14,800 for 2024 compared to $14,150 in 2023. The increase partly due or mainly due to higher drybocking expenses and a little bit higher interest expenses.

At the bottom of this table, we can look at the at another line, which shows our common dividend expressed in dollars per day per vessel and in both on a quarterly for the last quarter and for the full year. So in all cases, our interest translates to around $2,000 per vessel per day for the fourth quarter of both twenty three-twenty four and about $2,100 per vessel per day for the respective full years. Let’s now move to Slide 21 to review our debt and our debt profile. As of 12/31/2024, our total debt stood at approximately $2.00 $8,000,000 and we had this and we did that figure does not include about $52,000,000 of additional debt that we assumed in January, early January ’20 ’20 ’5 to finance the delivery of our last two two thousand eight hundred and fifty unit buildings. Including this latest 32,000,000 in our loan book, in 2025, we expect loan repayments of about $24,400,000 and additionally, balloon repayments of about $16,250,000 In 2026, we have scheduled repayments of about $19,550,000 with no balloon payments due during that year.

In 2027, we have to pay we have to make payments loan payments of $16,850,000 along with scheduled balloon payments of $20,000,000 Thus, at the end of last year, our senior debt carried an average margin of 2.1% from adding that to a base off rate of about 4.3%, this results in total cost of debt of around 6.4%. Because we have swapped part of our debt, part of our software exposure for a lower software level, our adjusted overall debt costs amount to about 6.34% under these assumptions of software. And if we actually include in the averages the last two loans that I mentioned earlier that were that they serve as smaller margin over software, the overall cost of our debt including gold loans drops below 6.3%. I would like to draw your attention finally on this slide at the bottom of the slide where we present our projected cash flow breakeven for the next twelve months and we break it down in its components. But overall, we expect our cash flow breakeven for 2025 essentially to be around $12,600 per vessel per day, a level that is significantly below the average daily earnings of our fleet.

To conclude my brief remarks, let’s move to Slide 22 to review some highlights from our balance sheet as we do every time. Our balance sheet is very simply it includes cash and some other current assets, advances we paid for our new buildings and of course the book value of our assets in the water. Thus, as of December 31, we had cash and other current assets of about 90,300,000.0, while we made advances for our new building program near $57,000,000 and shareholders have the book value for our assets, which is closed, which about $443,400,000 resulting in total book value for our assets and our balance sheet of $590,600,000 On the liability side, we said debt was good, as I mentioned in the previous slide, $207,300,000 as of the end of last year, which indirectly presents about the third thirty five percent of the book value of our assets. We also had various other liabilities that amounted altogether about $18,000,000 of about or about 3% of the book value of our assets, which leaves as book value of our shareholders equity about $365,000,000 give or take or around $52 per share. However, it is important here to note that the charter adjusted market value of our fleet is significantly higher than its book value.

We estimate as of the end of last year, the charter adjusted market value for our fleet to be about $130,000,000 higher in each book value. That adds about $20 per share to our net asset value, increasing our net asset value per share to close $72 On a pro form a basis for the Euro Holdings spin off that Aristides mentioned earlier, If as we as of December 31, we exclude the value of the assets that has been contributed to Euro Holdings after the spin off of those of that company, we will have to adjust our NAV by about 5%. So the NAV after the spin off, we expect to be around $68.2 per share. In either case, for us, there is spin off, given that our stock is currently trading around $34 per share, you can see a significant substantial discount. You can see that you create a significant discount to our net asset value, highlighting the substantial upside potential that our shares have and the gains that would be expected for our shareholders and investors.

And with that, I would like to turn the floor back to our teams to continue the call.

Aristides Pitas, Chairman and Chief Executive Officer, Euroseas: Thank you, Carlos. Let me now open up the floor for any questions we may have.

Conference Operator: Thank you. We will now be conducting a question and answer session. Our first question is coming from the line of Mark Reichman with Noble Capital Markets. Please proceed with your questions.

Mark Reichman, Analyst, Noble Capital Markets: Yes. While we haven’t removed the two vessels from our estimates yet, I mean, it seems pretty safe to do so. And the question is regardless of whether the distribution occurs on March 17 or even July 17, U. S. C.

Income statements for the will be based on the drop down as of January 8. Is that correct? Yes. Okay. Thank you.

And second, expected scheduled off hire days, including the laid up, What are your expectations for 2025?

: I think we have fifty days a quarter. Does that seem

Tasos Aslidis, Chief Financial Officer, Euroseas: good? I

Aristides Pitas, Chairman and Chief Executive Officer, Euroseas: think we have very little drydocking because that is really what the off hire is. Only when we have a drydock because commercial of hire we are not having these days with the high charter rates. And technical breakdowns, you can calculate one day per quarter to be pretty safe. So it all depends on dry dockings and we have extremely few dry dockings this year. Yes.

Mark Reichman, Analyst, Noble Capital Markets: So I

Tasos Aslidis, Chief Financial Officer, Euroseas: think we

: are budgeting about seventy, seventy five days for dry dockings in 2025. Well, seventy to seventy five for the full year. Well, that’s reflected in your projections here on your breakeven. I mean, you

Mark Reichman, Analyst, Noble Capital Markets: have very little expenditure in there for dry dockings. And then just a last question. The rate for the MV Oakland, it looked like it increased to $42,000 from $35,500 and you’ve got the Emmanuel and the Arena, which are both similar intermediate vessels, which come up for recharter in, I believe, April. Would you kind of expect a similar rate as to the Oakland for those vessels?

Aristides Pitas, Chairman and Chief Executive Officer, Euroseas: I don’t think the Oakland has increased. I mean, the 42,000 on the Oakland has been getting it for quite a long time. Current market is at 35.5%, which is what we did on the Synergy Alpert and the Synergy Tulum just two or three weeks ago. So this is the current market for those ships. These ships, they don’t open up yet.

So charters are waiting a little bit to see how the market develops. And we have to see how we will able we will be able to fix them. But current market is 35.5% is what we did on our near sister vessels.

Tasos Aslidis, Chief Financial Officer, Euroseas: Yes, for three year services, 35.5.

Aristides Pitas, Chairman and Chief Executive Officer, Euroseas: Yes, that’s for three year. If we do shorter duration, it would be probably a higher rate that we would like to fix for a longer duration.

Mark Reichman, Analyst, Noble Capital Markets: Okay. And so and this is the final question. If the distribution happens on the seventeenth, would that mean Euro Holdings’ first day of trading would be the eighteenth?

: I think we have to get back on you on

Tasos Aslidis, Chief Financial Officer, Euroseas: that, but I believe the seventeenth will be the first day of trading. There will be some when issued trading possibilities even before that, but we will probably we will issue a release clarifying to these technicalities.

Mark Reichman, Analyst, Noble Capital Markets: Okay. Thank you very much.

Tasos Aslidis, Chief Financial Officer, Euroseas: Thank you. Thank you, Mark.

: Thank

Conference Operator: you. Our next question comes from the line of Poe Fratt with Alliance Global Partners (NYSE:GLP). Please proceed with your questions.

: Hello, Eric Stevens. Hello, Tautos. Hi. Tautos, can you, well, one, Eric Stevens, I’d like to compliment you because you always, not only do a thorough overview of the container ship market, but also it’s a very measured one, which I really appreciate. You highlight a lot of things that potentially could go wrong, but, I really appreciate that.

Could you talk about fourth quarter OpEx or G and A per day? It looks like it was over $1,000 you’re forecasting fourth quarter? Yes.

Tasos Aslidis, Chief Financial Officer, Euroseas: I mean, typically our fourth quarter, it has a little bit bump on the G and A. So it’s not so much on the expense for this spinoff, but there is a year end bonus that certain the company pays that is reflected in the fourth quarter numbers.

: Okay, great. And then as you mentioned, you’re going to report the first quarter with ex the spin out, correct, just from a modeling standpoint?

Tasos Aslidis, Chief Financial Officer, Euroseas: What’s going to happen is that we would expect to include I mean, Euroseas will include the Euro Holdings vessel up to the date of the actual distribution. So I think it will include earnings from Euro Holdings up until March 17, assuming that is the distribution date. So you will have those extra vessels, but we will provide an adjusted earnings to reflect the continuing feed. Because what we are distributing is a very small percentage, we will not have to report historically we won’t have to adjust historically the results of Euroseids to reflect the continuing capacity. I mean, it was very different in the Euroseas case seven years ago.

In this case, it would be like you are selling the vessels or providing dividends. So the formal accounting numbers will include the two of the three vessels up until March 17. They will include the capital gain from Yemenis also in Euroseas, but we will provide some adjustments and some explanatory. So it’s going to the first quarter is going to

: be a little noisy. And if it’s just a little bit of a nitpick, nitpicky thing, but in your time charter chart, you know, the fleet profile, it shows the Antwerp is not having any follow on work after March. I just want to make sure and confirm that, you know, that also was a awarded a three year time charter at $35,500 just like the KeyLog. Yes. I mean, I have in

Tasos Aslidis, Chief Financial Officer, Euroseas: front of me the slide from my computer though, not from the version that we insert on the web. And you does see that show Adverb having 35,500 until May 28.

: Okay. Yeah. In your press release, It’s just a, overpay. But can you just highlight how much you’re going to spend on the new builds in 2025 and 2026 and 2027, if you have those numbers handy? I have.

Tasos Aslidis, Chief Financial Officer, Euroseas: Think I don’t think we have any payments to do on 2025.

Aristides Pitas, Chairman and Chief Executive Officer, Euroseas: Correct. So it’s nothing on 2025.

Tasos Aslidis, Chief Financial Officer, Euroseas: And I think the next time we pay is 2026. And I will tell you momentarily. So we make we have to make an installment, the progress installment payment in the fall in the third quarter of twenty twenty six and then the remaining 2027 for a run of our vessels and the same for the other run, I believe. And

: then Amit, I’m sorry.

Tasos Aslidis, Chief Financial Officer, Euroseas: There would be 6,000,000 vessels in 2026. So $12,000,000 not in 2025, ’12 million dollars for both vessels in 2026 and the remaining in 2027. Great. Thank you so much. Thank you both.

Conference Operator: Thank you. Our next question comes from the line of Mark Reichman with Noble Capital Markets. Please proceed with your question.

Mark Reichman, Analyst, Noble Capital Markets: Yes. I just wanted to clarify. So the first quarter twenty twenty five, when you report, so those two vessels will be in your earnings until March 17. It won’t be based on the drop down date. It won’t be based on the January 8.

And then so that would also you mentioned some adjustments. What were some of those adjustments that will

: I think we

Tasos Aslidis, Chief Financial Officer, Euroseas: will provide the figure without those vessels as well.

Mark Reichman, Analyst, Noble Capital Markets: With and without the vessels. Okay, great.

Tasos Aslidis, Chief Financial Officer, Euroseas: All

Mark Reichman, Analyst, Noble Capital Markets: right. That’s very helpful. Thank you very much.

Conference Operator: Our next question is from the line of Beau Fratt with Alliance Global Partners. Please proceed with your questions.

: Sorry, just two quick ones, if I may. Well, first of all, congratulations on increasing the dividend. And then secondly, can you just talk about stock buybacks, Tasos? It looks like you the last time you reported in third quarter versus the fourth quarter, you bought back about 11,000 shares at just under I think $40 Can you just talk about stock buybacks and how they what priority they are in your capital allocation process?

Tasos Aslidis, Chief Financial Officer, Euroseas: Obviously,

Aristides Pitas, Chairman and Chief Executive Officer, Euroseas: we’ve been more involved with all the procedures and the practicalities of getting Euroholdings over the bar and we are happy that we have reached that point. We will have to wait and see how we trade after the spin off. But it is always something that we have in mind and we might use. We have also been looking at various investment opportunities because indeed we have quite a lot of cash. So unless we proceed with an investment opportunity with buying an asset supported by time charter or whatever.

If we feel that our share price doesn’t respond as we are hoping it will, we might be using it again, yes.

Tasos Aslidis, Chief Financial Officer, Euroseas: I I mean, in any event, our sales probably represent the best investment opportunity and we always say that in the back of our mind to when we decide about capital budgeting.

: Great. Thank you so much.

Conference Operator: Thank you. I’m not showing any

Tasos Aslidis, Chief Financial Officer, Euroseas: further questions at this time.

Conference Operator: I’d now like to hand the call back over to Mr. Aristides Pitas for any closing remarks.

Aristides Pitas, Chairman and Chief Executive Officer, Euroseas: Thank you all for being part of this discussion today. We will be back to you in three months’ time to go over Q1 results. Thank you very much. Bye bye.

Conference Operator: Thank you. This does conclude today’s teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

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