EuroDry Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
June 5, 2025

There are 6 speakers on the call.

Operator

Thank you for standing by, ladies and gentlemen, and welcome to the Eurodrive Limited Conference Call on the First Quarter twenty twenty five Financial Results. We have with us today, Mr. Aristides Petas, Chairman and Chief Executive Officer and Mr. Tassos Aslidis, Chief Financial Officer of the company.

Operator

At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer I must advise you that this conference is being recorded today. Please be reminded that the company announced its results for the press release and has been publicly distributed. Before passing the floor to Mr. Pietis, I would like to remind everyone that in today's presentation and conference call, Eurodry will be making forward looking statements.

Operator

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 whole statement and read it. And now I would like to pass the floor over to Mr.

Operator

Pidas. Please go ahead, sir.

Speaker 1

Thank you. Good morning, ladies and gentlemen, and thank you all for joining us today for our scheduled conference call. Together with me is Mr. Tassos Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the three month period ended 03/31/2025.

Speaker 1

Please turn to Slide three of the presentation for our quarterly financial highlights. In the first quarter of twenty twenty five, we reported total net revenues of $9,200,000 and a net loss attributable to controlling shareholders of $3,700,000 or $1.35 loss per basic and diluted share. Adjusted net loss attributable to controlling shareholders for the quarter was $5,700,000 or $2.707 loss per basic and diluted share. Adjusted EBITDA for the period stood at a negative $1,000,000 Please refer to the press release for the reconciliation of adjusted net loss and adjusted EBITDA. Our CFO, Tassos Aslidis, will anyway go over our financial highlights in more detail later in the presentation.

Speaker 1

Since initiating our $10,000,000 share repurchase program in August 2022, which has been extended twice since then until August 2025, we have repurchased 334,000 shares of our common stock in the open market, totaling $5,300,000 We intend to continue executing repurchases opportunistically at current price levels, reflecting our confidence in the company's long term value. Please turn to Slide four to view our recent chartering and operational developments. Firstly, please note that we delivered the motor vessel taxes to her buyers as have been arranged during the previous quarter. The company recorded a net book profit of $2,100,000 On the chartering front, the majority of our fixtures are short term or longer term betting based. We do not wish to commit our vessels to the current low rates offered and prefer to be able to maintain operational flexibility and fix longer term when the market recovers.

Speaker 1

There were no scheduled dry dockings or repair activities during the quarter. However, motor vessel black was commercially off hire for approximately eleven point six days during the quarter. And whilst arranging the sale and delivery of motor vessel Tassos, it also experienced a total of six point five days of commercial hire. You can see the specific of the various charges we fixed during the period in the accompanying presentation. Please turn to Slide five.

Speaker 1

EuroDry's current fleet consists of 12 vessels with an average age of around thirteen point six years and capacity of approximately 843,000 deadweight tons. In addition, we have two Ultramax vessels under construction with capacities of 63,500 deadweight tons each scheduled for delivery in the second and third quarters of twenty twenty seven. Upon delivery, our fleet will grow to 14 vessels with a total carrying capacity of approximately 970,000 deadweight tons. At this point, I'd like to remind you that Eurodry owns 61% of the entities that own motor vessels, Vistas K and Maria. The remaining 39% is owned by owners represented by NRP Project Finance, otherwise referred to as the NRP investors.

Speaker 1

Next, please turn to Slide six for the further update on our fleet employment. As of March 31, our fixed rate coverage for the remainder of the year stands at approximately 22% based on existing time charter agreements. This figure excludes our five vessels operating under index linked charters, which are subject to market fluctuations that have secured employment. Turning to an overview of the market on Slide eight, we will go over the drybulk market highlights for the first quarter of twenty twenty five up until recently. The market has been softer in Q1 twenty twenty five with average spot rates at less than $8,000 per day for Panamax vessels and average one year time charter rate standing at a little less than $12,000 per day for the same type of vessels.

Speaker 1

On the last day of the quarter, March 30, both spot and one year time charter rates appeared to be higher across all segments as shown on the slide. However, by the end of last week, spot rates have dropped across the board. In the Panamax segment, rates have dropped as much as 28%, while one year time charter rates in the same segment have dropped as much as 12% from $13,125 per day to $11,500 per day. Both of the Baltic Panamax Index and the Baltic Dry Index experienced notable contractions during the first quarter, declining by approximately 2716% year on year respectively. These developments highlight the continued weakness in freight markets, driven by weaker demand, muted cargo volumes and uncertain macroeconomic conditions.

Speaker 1

Please now turn to Slide nine. The IMF April twenty twenty five update presents a more cautious global economic outlook, revising its global GDP growth forecast for 2025, downwards to 2.8% from 3.3% projected in January. Global growth in 2026 is expected to edge up modestly to 3%, but still lower than the 3.3% expected previously. The revision reflects mounting downside risks intensified by The United States announcements of multiple tariffs on major trading partners and sectors. These global tensions and heightened policy uncertainty have shaped the outlook for 2025 and 2026.

Speaker 1

The United States projected growth rate has been reduced by nearly 1% to 1.8% GDP growth for 2025 and one point seven percent in 2026 from the previously expected 2.82.1% respectively. However, the other advanced economies have also taken a beating compared to previous expectations, with Europe's growth forecast at just 0.8 this year and 1.2% next year. Many European countries continue to face subdued domestic demand, manufacturing weakness and the lingering effects of the energy shock. U. S.

Speaker 1

Government policy remains largely in focus these days through the direct impacts of tariffs and possible counter tariffs. Of course, these have the potential to have wider implications. Global inflation continues to trend downwards, but at the pace that is slightly slower than what was expected in January, with headline inflation reaching 4.3% in 2025 and three point six percent in 2026, with notable upward revisions for advanced economies and slight downward revisions for emerging markets and developing markets in 2025. However, the near term path to price stability remains uneven. Persistent services and wage inflation in several economies, coupled with rising protectionism and demographic headwinds may delay full convergence to target inflation levels.

Speaker 1

As a result, central banks are expected to maintain a more cautious approach to monitor easing that has previously been thought. Emerging markets remain the primary drivers of global growth. India is focused to expand by 6.26.3% in 2025 and 2026 respectively, fueled by strong investments, robust agriculture and dynamic services sector. The Asian five countries are also projected to post healthy gains. In China, growth has been revised downward to 4% in both 2025 and 2026.

Speaker 1

As in addition to the Trump induced effect, structural challenges persist, particularly around weak domestic consumption, deflationary pressures and instability in the property sector. Turning to the drybulk sector specifically, Clarkson reserves now projects a significant deceleration in trade growth with ton mile demand expected to contract by 0.2% in 2025, following strong growth of 4.3% in 2024. A modest recovery of 0.6% is anticipated in 2026. This reflects the increased macroeconomic headwinds and softening industrial activity across major demand centers, including of course these new tariffs that may reduce global trade and reallocate flows across countries. While supply constraints and environmental regulations may offer some relief, geopolitical risks in the Red Sea persist and will likely continue across 2025, but will probably end by 2026.

Speaker 1

In light of these projections, we still remain cautious of the outlook for the drybulk sector. Please turn to Slide 10. Let's review now the current state of the order book in the drybulk sector. As you can see, as of May 2025, the order book is currently at 10.5% of the fleet, still standing amongst the lowest historical levels through higher both higher than the 7% low seen just after the COVID pandemic started in 2021. Turning to Slide 11, let us look into the supply fundamentals in a bit more detail.

Speaker 1

As of May 2025, the total drybulk vessel operating fleet was 14,300 vessels. According to Clarkson's latest report, new deliveries as a percentage of total fleet are expected to be 3.8% in 2025, '3 point '9 percent in 2026 and three point six percent in 2027 onwards. The actual fleet growth is of course expected to be lower than the aforementioned figures due to higher scrapping rates and slippage. On the fleet sales profile, it's noticeable that about 10% of the fleet is older than 20 years old, indicating these vessels likely be scrapped if the drybulk sector continues operating in this suppressed environment. Please turn to Slide 12, where we summarize our outlook for the drybulk market.

Speaker 1

The bulk carrier sector has faced a relatively weak start to 2025. Time charter rates bottomed out in the first quarter, briefly recovering to profitable levels across all vessel classes by the end of the quarter. However, the turning momentum has since faded, largely in response to the U. S. Administration's new tax proposals and effects.

Speaker 1

Demand side pressures continue to mount. Geopolitical instability and the slowdown in key markets have contributed to growing uncertainty. Average fleet charter rates for Ultramax and Ultramax vessels are currently now down approximately 25% year over year. Looking ahead, the demand outlook for the remainder of 2025 suggests an overall softer market relative to 2024. In China, drybulk import volumes are not expected to replicate the robust growth experienced over the twenty twenty three, twenty twenty four period.

Speaker 1

While the recent government stimulus measures have improved sentiment, they are unlikely to translate into a structural increase in demand, particularly given high existing stockpiles. In The United States, trade policy under the new Trump administration has become a major source of concern for drybulk markets. Proposed tariffs on China, Mexico, Canada and other key partners pose a threat to grain and minor bulk trade flows, especially if retaliatory actions escalate trade tensions. Shipping activity through the Red Sea remains disrupted. And while energy escalation could support operational stability, a reduction in rerouting may also temper ton mile demand, thereby easing pressure on rates.

Speaker 1

On the supply side, new building activity remains constrained. Seafarer capacity remains tight and many owners are hesitant to place orders amid continued uncertainty surrounding the industry's long term fuel transition. Although methanol and LNG fuel volumes have increased, the lack of clarity around the fuel of the future has contributed to a relatively low order book to fleet ratio. That said, the order book for Panamax and Ultramax vessels, which has increased to 13.5, is trending towards historical median levels of 17.5%, still low, but not that low. For 2026, we still do not expect a strong recovery unless demand growth and ton mile growth surprised positively and exceed the historically low expected supply growth of below two percent after adjusting for scrap.

Speaker 1

What could influence the market positively is the regulatory environment as emissions related measures, EEXI, CII, EU ETS and fuel EU maritime could lead to increased vessel scrapping and lower operating speeds, particularly among all the less efficient ships. These developments may tighten effective supply over time, setting the stage for rate support if demand stabilizes. Let's turn to Slide 13. As of 05/30/2025, the one year time charter rate Panamax vessels with a capacity of 75,000 tons deadweight stands at approximately $11,500 per day, which remains below the historical median of $13,500 per day. At the same time, however, the market for ten year old Panamax bulk carriers remained relatively firm, with current asset values estimated at approximately $24,000,000 This is significantly above both the historical 10 median of $15,000,000 and the ten year average of $17,500,000 reflecting residual strength in secondhand values.

Speaker 1

This can be explained by the increased cost to build new vessels and the full order book of existing yards, plus the fact that vessel owners have accumulated significant profits over the years and are on standby mode to reinvest. Although current pricing marks a clear decline from the mid-twenty twenty four peak of $29,500,000 we believe values can drop further in the next few months unless we witness an unexpected market recovery. We are closely monitoring the developments. We intend to use the market moves and financial tools available to us in such a way as to optimize the modernization of our fleet. For sure, good markets will let reappear at some point and we should be ready for them.

Speaker 1

Let me now pass the floor over to our CFO, Tassos Ostlidis, to go over Verbilis' financial highlights in more detail.

Speaker 2

Thank you very much, Aravindis. Good morning from me as well, ladies and gentlemen. Over the next four slides, I will give you the usual overview of our financial highlights for the first quarter of twenty twenty five and compare those results to the same period of last year. For first quarter of twenty twenty five, the company reported total net revenues of 9,200,000.0 representing a 26.2% decrease over total net revenues of $14,400,000 during the first quarter of twenty twenty four, which was the result of the decreased time charter rates of vessel churn during the first quarter of this year and also the decreased number of vessels owned and operated during this period compared to the same period of last year. The company reported a net loss for the period of 4,000,000 and a net loss attributable to controlling shareholders of $3,700,000 as compared to a net loss of $1,900,000 and a net loss attributable to controlling shareholders of $1,800,000 for the same period the first quarter of twenty twenty four.

Speaker 2

The net loss attributable to non controlling non controlling interest of $300,000 in the first quarter of this year represents the loss associated with the 39% ownership of the entities owning our vessels, Fristoskaya and Maria. Interest and other financing costs, net of a small amount of interest income for the first quarter of twenty twenty five decreased $1,800,000 as compared to $2,000,000 for the same period of 2024. Impact expense during the first quarter of twenty twenty five was lower, mainly due to the decreased benchmark rates our loans were charged, partially offset by the increased average debt we carried during the quarter as compared to the same quarter of last year. Adjusted EBITDA for the first quarter of twenty twenty five was a negative $1,000,000 compared to $2,100,000 achieved during the first quarter of twenty twenty four. Basic and diluted loss per share attributable to controlling shareholders for the first quarter of twenty twenty five was $1.35 calculated on about $2,700,000 basic and diluted weighted average number of shares outstanding compared to basic and diluted loss per share of $0.65 for the first quarter of last year, calculated again on about $2,700,000 basic and diluted weighted average number of shares outstanding.

Speaker 2

Excluding the effect on the net loss attributable to controlling shareholders for the quarter Of the unrealized gain or loss on derivatives and excluding the net gain on sale of vessels, the adjusted loss for the quarter ended 03/31/2025 would have been $2.07 per share, basically diluted, compared to an adjusted loss of $1.18 per share, diluted for the quarter ended 03/31/2024. Let's now turn to slide 16 to review our fleet performance. As usual, we will start our review by first examining the utilization rates for the first quarter of this year and comparing them to the same period of the previous year. Our fleet utilization rate as usual is broken down into commercial and operational. During the first quarter of twenty twenty five, our commercial utilization rate was 98.4%, while our operational utilization rate was 99% compared with 100% commercial and 98.1% operational for the same period of last year.

Speaker 2

Our overall utilization rate was in the first quarter of this year '90 '7 point '4 percent compared to 98.1% in the respective quarter of twenty twenty four. Our total daily operating expenses, including management fees, general and administrative expenses, but excluding variable costs were $7,304 per vessel per day during the first quarter of this year compared to $6,867 per vessel per day for the first quarter of twenty twenty four. If we move further down on this table, we can see the cash flow breakeven levels, which takes into account in addition to the above, the third quarter expenses, interest expenses and loan repayments. For the first quarter of twenty twenty five, our daily cash flow breakeven level was $11,528 per vessel per day compared to $12,962 per vessel per day for the same period of last year, primarily because of minimal dry docking expenses this period. Let's now turn our attention to slide 17 to review our debt profile.

Speaker 2

As of 03/31/2025, Euroterror's outstanding debt stood at $105,200,000 Total loan repayments during 2025 are expected to amount to approximately $12,100,000 including the $3,000,000 paid already during the first quarter. And in 2026, we expect to have loan repayments of $13,300,000 including a payment of $2,000,000 volume. In 2027, repayments amount to about 10,000,000 but there is also a balloon of $10,200,000 related to the loan for our vessel Ekaterini, which would mature at the time and will very likely refinance. An important point to highlight in this slide is the average margin of our debt, which as of 03/31/2025, stood at approximately 2.07% over software. Assuming a three month software rate of 4.32%, the estimated cost of our senior debt was around 6.4%.

Speaker 2

In reality, our cost is slightly lower as we can swap the portion of our debt into a lower fixed rate. And as a result of that, our effective cost of our senior debt would be approximately 6.3%. At the bottom of this slide, we can see our projected cash flow breakeven level for the next twelve months broken down again into its various components. Our EBITDA breakeven level is projected to be at around 7,007 and $33 per vessel per day over the next twelve months, while our overall cash flow breakeven level, we expect it to be approximately $11,935 per vessel per day. Taking into account commissions and possible off hire days, we need to have a gross average time charter equivalent rate of around $13,000 to cash flow breakeven.

Speaker 2

Let's now conclude our presentation by moving to Slide 18, where we can see some highlights from our balance sheet in a simplified way. This slide offers a quick snapshot of our assets and liabilities. As of March thirty one of this year, cash and other assets stood at about $21,500,000 in our balance sheet, while we also had made advances for the newbuildings of about $7,200,000 The book value of our vessels was approximately $192,000,000 resulting in total book value of assets of about $211,000,000 On our liability side, our debt again as of 03/31/2025, as I previously mentioned, stood at about $105,200,000 amounting to about 49.8% of the book value of our assets. While other liabilities amounted to about $4,000,000 or almost 2% of our total assets, resulting in turn into a book shareholder's equity of $93,300,000 which in turn translates to a net book value of $33 per share. However, according to market reports and our estimates, our vessels as of 03/31/2025 were worth $32,000,000 more than their book value, approximately $214,000,000 Thus resulting in net asset value per share of more than $43 almost $44 per share.

Speaker 2

In comparison to that, our current share price trading between $8 and $9 highlights a big discount to NAV and the potential appreciation should market conditions and rates improve. As Howard Bauchet once said, a tight lifts all boats and certainly in this case, it will lift our boat more than others since we start from a lower base. And with that, I will turn my floor back to Alstides to proceed with the call.

Speaker 1

Thank you very much, Tasor. And let me now open up the floor for any questions you may have.

Operator

Thank you, sir. Thank you. Thank you. Our first question today is from the line of Marc Reichman with NOBLE Capital Markets. Please proceed with your questions.

Speaker 3

Thank you for taking my questions. Vessel operating expenses compared to the prior year period rose, I guess due to the spare parts and maintenance. And I was wondering, should we expect this level of spending to continue in Q2 and Q3 or is this front loaded?

Speaker 2

I think, judging from the first quarter numbers, it's a little bit premature. Our budget for OpEx this year was 2% higher than our last year's budget. And during the first quarter, we had 2% overrun of our budget, but it's hard to say from just one quarter. I mean, the timing of certain expenses could distort the picture. I would wait at least until the first half is completed to make a statement about the OpEx levels.

Speaker 2

Certainly, we expect to meet our budget, which was 2% higher than last year's results.

Speaker 3

And then what's your forecast for scheduled commercial and operational off hire days for the remainder of the year, particularly for the drydocking?

Speaker 1

Mean, I think we have one drydocking. We just have one drydocking during this year, which is going to happen soon. Otherwise, we don't have any other scheduled stoppages. We will have to see how the charter market plays out. If the market is very poor, we might have some increased commercial of hire.

Speaker 1

But we wouldn't expect and we're not budgeting really anything more than one day per month.

Speaker 2

Think one point five days per quarter is our running assumption, generic assumption about off hire.

Speaker 3

Okay. And then just the last question is, you sold the MV Tassos. I was just wondering if you could provide some commentary on how you're managing your fleet via vessel acquisitions, sales, joint ventures or even mergers or acquisitions with other operators?

Speaker 2

Well,

Speaker 1

as you said, we sold our eldest vessel. Our strategy is to eventually sell the other four elder vessels and replace them with younger vessels. So this is going to happen depending on how the markets move during the next few months. But yes, the modernization of the fleet We'll take delivery of our two new buildings in 2027.

Speaker 1

And especially if the market remains low as is possible, that would probably allow us to buy a couple more modern vessels.

Speaker 3

Thank you very much.

Operator

The next question comes from the line of Tate Sullivan with Maxim Group.

Speaker 4

From your comments on the scrapping of the vessel in the first quarter, do you have active opportunities to scrap the other old vessels? Is there a quick negotiation time to decide to scrap and do so, please?

Speaker 1

We scratched the Tasos, which was built February, right? And Bleslach, which is no, not Bleslach, the Santa Cruz, which has a dry dock due as well in a few months, we've decided to pass that. The other vessels that are built 02/2004, they've passed the special survey. Usually, that's when we consider if we're going to pass a vessel through special survey or scrap it. So we don't have any scrap candidates at this point in time, even though Delta ships, we feel that they can continue trading in today's market.

Speaker 4

Have you seen a pickup in scrap activity besides your vessel in the first quarter in the drybulk?

Speaker 1

I would say very slight pickup. There's been a pickup, a very slight pickup. Let's see how the market develops within the next three to six months. If it is not if it does not recover strongly, I think we will see more scrapping coming in.

Speaker 4

And then for your fleet, have you seen the average voyage length in terms of the distances increase or decrease from last year in general?

Speaker 1

No, that is steady. It's pretty steady because the vessels are on usually on time charter trips, I. E, one trip, one business per time charter. Recently, we've added a few ships on index based charters. So we have employment guaranteed for longer term periods for a year, most of them.

Speaker 1

But there is for the charterer to decide how the vessel will trade. And we will get what the market is, what the index gives us. So we are indeed dependent on where the index trades at.

Speaker 4

Yes. I was just wondering with all the news of trade negotiations and tariffs, if there's any sign of changes in trade patterns to Yes.

Speaker 1

The only trade pattern that we've seen is that we haven't passed Suez for quite some time, and we've gone around The Cape, which increases distances a bit. But that's on the occasional business from the Far East to the Med.

Speaker 4

Any anecdotal evidence from your fleet of any port loading or unloading times taking longer due to any inspections or tariff levies or anything like that? I haven't heard any, but I would be interested in your comments.

Speaker 1

No, we haven't really seen that effect yet.

Speaker 4

Okay. And last, thank you. And then you mentioned you saw high stockpiles in China. What specifically is it coal, iron ore and grain, all the drybulk goods or something specifically that you've seen?

Speaker 1

I have in mind more the coal and the iron ore. I'm not I don't offhand have the numbers for grain.

Operator

Ms. Paul, you may go ahead. Your line is live for questions.

Speaker 5

I apologize, I missed the call. Tassos. Hello, Aristides. Can you just talk about the newbuild program? I'd like the lobby that you renamed or you name one of the newbuilds Tassos so that you have a Tassos in the fleet.

Speaker 5

But can you just talk about the it didn't look like you spent much in newbuilds in the quarter. Can will there be any newbuild payments in the rest of the year? And then maybe if you could remind me how much you plan to spend on newbuilds in 2026?

Speaker 2

I think we have one more payment to make possibly towards the end of this year. In the fourth quarter, there might need to be 10% installment for each of the two vessels. Might not happen, it's sort of the contract is said not before that date. So, but we count on having to make the payment 3.66, seven point two in total for the two ships. Then do

Speaker 5

you have a figure for 2026 plateaus?

Speaker 2

I think we're making five payments of 10% and then 50% of delivery. So there should be another at least another two payments per vessel in 2026. So a total of $14,400,000 in 2026 and then a 10% payment and the final payment in 2027.

Speaker 5

Great. That's helpful. And then it didn't look like you bought any stock back in the first quarter. Is there anything that prevented you from buying stock back? Can you just comment on buyback activity and why there wasn't any in the first quarter?

Speaker 1

'2 reasons for this. One reason is the very, very limited liquidity that we see in the stock during the last few months. So that is one thing. And the second thing is, the market was improving up till the March. And the truth is we felt that it would improve further.

Speaker 1

It did improve, but the last month in May, it dropped again. So probably we are at levels where if the liquidity allows us, we will be buying some more stock.

Speaker 5

Great. Thank you, Arch

Speaker 1

Davis. Thank you.

Operator

Thank you. At this time, we've reached the end of our question and answer session. And I'll turn the floor back to Mr. Aristides Petis for closing remarks.

Speaker 1

Thank you, everybody, for standing by. We will be back to you at the end of At the beginning, yes, of next Of Of August, exactly. Okay. Thank you. Bye bye.

Speaker 1

Thanks for attending.

Operator

This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day.

Powered by Quartr

Key Takeaways

  • In Q1 2025 Eurodry reported a net loss of $3.7 million (–$1.35 per share) and an adjusted EBITDA loss of $1 million.
  • Since August 2022 the company has repurchased 334,000 shares for $5.3 million under a $10 million buyback program, signaling management’s confidence in long-term value.
  • Dry bulk markets remained weak as Q1 Panamax spot rates fell up to 28% and one-year time charter rates by 12%, while Baltic indices declined ~27% year-on-year.
  • Two Ultramax vessels (63,500 dwt each) under construction for delivery in 2H 2027 will expand the fleet to 14 vessels (~970,000 dwt) as the company plans to modernize by selling older vessels.
  • Eurodry’s NAV per share is estimated at ~$44 versus a market price of $8–9, reflecting a deep discount and potential for stock appreciation if market conditions improve.
AI Generated. May Contain Errors.
Earnings Conference Call
EuroDry Q1 2025
00:00 / 00:00