Eurodry Ltd. Q4 FY2024 earnings call

• Financial Highlights: For the fourth quarter of 2024, total net revenues were $14.5 million, with a net loss attributable to controlling shareholders of $3.3 million. Adjusted net loss was $0.7 million and adjusted EBITDA was $4.8 million. For the full year 2024, total net revenues were $61.1 million, a 28.6% increase from 2023. - Share Repurchase: Since the initiation of the share repurchase plan in August 2022, 334,000 shares have been repurchased for $5.3 million. - Vessel Refinancing: Successfully refinanced two vessels with a $30 million loan, increasing cash reserves by approximately $11 million. - New Builds: Signed a contract with Nantong Tianzhu for the construction of two 63,000 dwt full Kamsarmax bulk carriers, to be delivered in Q2-Q3 2027, each costing ~$36 million, financed by debt and equity. - Vessel Sale: Sold motor vessel Tassos for demolition, with an expected gain of approximately $2.1 million. - Chartering: Majority of fixtures are short-term (20-65 days), providing flexibility. - Fleet: Currently has 13 vessels; after selling Tassos, it will have 12, with average age dropping; 14 vessels expected by 2027 with new builds delivered.

For the fourth quarter of 2024, EuroDry reported total net revenues of $14.5 million. The net loss attributable to controlling shareholders was $3.3 million or $1.20 loss per basic and diluted share. Adjusted net loss attributable to shareholders for the quarter was $0.7 million or $0.25 per basic and diluted share. Adjusted EBITDA for the period was $4.8 million. For the full year 2024, total net revenues were $61.1 million, representing a 28.6% increase over the total net revenues of $47.6 million in the twelve months of 2023. Adjusted EBITDA for the twelve months of 2024 was $12.4 million compared to $14.6 million in 2023.

• Dry Bulk Market: Cautious outlook due to global economic uncertainties, US trade policy changes, and Red Sea political risks. Dry bulk demand growth is expected to sharply decelerate. - New Builds: Monitoring the market for financing the delivery of two new vessels in Q2-Q3 2027. - Market Recovery: Hoping for charter market improvement to make the current fleet profitable again; may consider acquisitions if asset values drop further.

• Global Economic Uncertainty: IMF projects stable but underwhelming global GDP growth, with US growth revised up but other advanced economies facing downgrades. - US Trade Policy: New administration's rapid policy changes, particularly trade policies, pose risks to medium-term growth prospects. - Red Sea Political Risks: Persistent political risks in the Red Sea, with shipping operations unlikely to return to normal soon, potentially constraining dry bulk demand growth. - Dry Bulk Demand: Demand growth is sharply decelerating, with supply constraints and environmental regulations offering some rate support but overall market challenging.

Q: For the 4Q impairment, $2.8 million. Was that related to Tassos and then reversed in the current quarter?

A: No. Tassos should be recorded. Capital gain on we report a gain on sale. As Tasos mentioned, the number around $2 million. That was on another vessel, the Santa Cruz, that was the last one that we bought. One of the last ones that we bought that was bought at a higher point in the cycle, and our test indicated we should incur in terms of Q: Can you talk about the newbuild negotiations with any of your organizations? Have you worked with the specific shipyard before, and did their new build price decrease in the last couple of months? Or how did the price negotiations work?

A: Well, we haven't built anything at that shipyard in the past. But we did a lot of research and talked to a lot of shipyards before we finally concluded with these guys. We got a lot of information from other owners that we know that have also ordered ships at those shipyards maybe the last few years and have had a good cooperation and seen quality results. So this obviously played a major impact in us selecting that shipyard. Having said that, okay, it was a tough negotiation, as always, on price and on the equipment that will be put on board and all that stuff. And I feel we got a good price. Today, prices may be slightly softening, but not with the deliveries in 2027. We're talking about deliveries in 2028 these days mostly. So I think prices are probably around the same levels that we secured Q: On page eight of your presentation, one can see the difference between the spot and the one-year TC rates. So at what point would you begin locking in one-year charters, and what might you expect the average to be for the last three quarters of the year?

A: Very difficult to make projections, right? About what the average will be for the next three quarters of the year. Extremely difficult. I will not risk it. However, Tasos showed that our breakeven levels are around $11,500 per day. If we go up to time charters for the more modern ships, of $15,000 to $16,000 a day, we might consider it for one or two of our ships. Otherwise, we will probably continue to play the spot market. The spot market is improving. The traditional lull of the first two months, you know, we've experienced it, and we are hoping that we will see a further improvement in rates within the next two, three months Q: You know, looking at page seventeen and your breakevens, but I was just wondering if you might just elaborate a little bit on the vessel expense expectations for 2025 relative to 2024, given that you'll have lower or fewer dry dock days and also you've got the sale of the MV Tassos.

A: I think the chart I put on slide seventeen reflects the scheduled dry dockings. On the OpEx side, we haven't finalized our budget for 2025, but there's a preliminary budget. We are using a 3% increase over the past year. I think the year ended just below last year's budget for the operating expenses, and we are budgeting, you know, conservatively 3% over last year's budget. I think all the details of the various components are shown on the bottom part of Slide seventeen Q: Just how do you kind of think about financing that? I mean, I know you've talked about debt and equity.

A: It would definitely be we have a good part of it financed with debt. I think that's from our previous financings. Fifty-five percent to sixty percent of that was financed by debt. We might try to give you a higher percentage in this case. The equity portion, we have obviously paid the first installment of ten percent. And we have to make another three of such installments before we deliver the vessels or another ten percent, which would be another $7.2 million, but we would need to pay the yard in 2026 and 2027 before the vessels are delivered. So we haven't really finalized our plans on how to finance that. We have hopefully, we generate that organically, but we at the present market, it will be tough. But hopefully, the market will improve. Say that, we can look for alternative ways to finance the equity Q: Can you just go over the new build payments? It sounds like你're not gonna have any new build payments in 2025. Could you quantify how much of the new build cost will land in 2026 and then 2027?

A: I think in 2026, we will have to pay $14.4 million, two times ten percent per vessel, and another ten percent, that is another $7.2 million in 2027 as a pre-delivery payment. And then finally, the final sixty percent, I guess, which will be paid with the delivery of the vessels. I think Aristides mentioned the second and the third quarter of 2027 Q: It doesn't make sense to put scrubbers on new builds at this point in time. Correct?

A: This is not something which is certain. But some owners are putting on scrubbers on the smaller vessels. Some are not. Why is that? I think that the verdict is out there for the very big vessels that have high consumptions, that you should put the scrubber on. For Ultramax vessels that consume so little, I'm not sure that it is worth it. I also have some reservations against the whole concept of scrubbers and how much they are and if at all, they are polluting the sea. But no, we are not putting them on. It only depends, of course, on how the price differential between heavy fuel oil and the low sulfur fuel oil develops. Right now, it is quite low, so there is no huge advantage in having the scrubber. It might become even lower. So then there is definitely no advantage in having the scrubber. It might pick up again, and you know, you might recover that investment of the scrubber in a small period of time. It's a different kind of investment, really Q: Are you seeing a lot more potential transactions, or are asset values close to where you might pull the trigger on acquisitions? Can you just give us a flavor for your current assessment of the S&P market?

A: I can tell you that prices have been dropping ever since October, November last year. Still, at the beginning of February, they had corrected, I would say, on the ten-year-old ships that we traditionally are looking at. They had dropped by about fifteen percent. We thought that if they were to drop by about thirty percent from those highs, they could become an interesting proposition. And a couple of deals were done in the last two weeks. In fact, we bid on one of those ships. But the prices, rather than continuing their drop, were elevated for these vessels. So they rose a little bit again. And now with the charter market improving, I don't think that we will see, you know, imminently lower prices. So we would like to see prices drop by another fifteen percent to consider buying something. I think我couldn't have been more clear. Sorry, Tasos. But we're always on the lookout for interesting transactions. We keep my group busy evaluating deals all the time, although they don't pass the threshold yet Q: How current is that NAV that you talked about in the mid-40s? Does that fully incorporate a fifteen percent drop in asset values, or is that fifteen percent sort of a lagging, or I'm sorry, is that forty-five dollars sort of a lagging? Is there a lag between which, you know, you see the softness hit the NAV?

A: It's already, I mean, if I recall on the top of my head, our previous valuation in September was around $250 million, if I'm not mistaken. So by the year-end, the market's just dropped by essentially fifteen percent. Maybe by the middle of January, late January, it might have dropped a little bit more, but it sounds like it's rebounded a bit more recently. So I mean, it's on the ballpark. It is BMO headquarters for the end of the year. Remember, I quoted you in the presentation. But if we were to recalculate it on a pro forma basis, but values, it should be not far from it Q: Can you, you know, many other companies talk about what they booked in the quarter so far, you know, a percentage that's already booked for the quarter and a rate that's associated with those bookings. Do you have a similar, you know, metric available for us? Where do we stand at this point in the quarter as far as the first quarter?

A: I think Tasos is gonna tell you how the call where we are based on our existing charters because now we're at the end of February. So, obviously, I would think eighty percent of what we're gonna make is already booked. So there is, we have an idea about it. But I don't have it for fun. Tasos: And you on slide four, you get a flavor of the charters we concluded recently, and they really cover the quarter to date pretty much. And I think on average, I can eyeball them to be below $10,000, the average. Aristides: But improving, firming up. And so the second quarter potentially would look a little bit better than the first quarter. Tasos: Hopefully, March would be a little better. There are better than what they contract rollover in March would be better. And我would better to say most certainly Q2 will be a little better because it's also a seasonally better quarter. Aristides: But also already, I mean, the last fixture we did, I think, was the Yanis Pitas, which was fixed for $12,000, which is higher than, you know, the levels we were seeing even one month ago