Euroholdings Ltd. Q2 FY2026 earnings call

Corporate Background and Shareholder Returns

• Euro Holdings spun off from Euroseas in March 2025, listed on Nasdaq as EHRD with two debt-free container vessels and $14 million in initial cash. Marla Investments (affiliated with the Lattis family) holds a 51% controlling stake, with the Pittas family retaining an 8% ownership stake.
• The company has declared six consecutive quarterly dividends of 14 cents per share, representing an annualized yield of ~6.7% based on recent trading prices above $8 per share.
• The board approved a strategic pivot to focus on the MR product tanker sector, while retaining the two legacy container vessels through their remaining useful commercial life to generate cash for growth. The second MR product tanker (Alas Fighter, a sister vessel to Alas Avatar) is expected to deliver by September 2026, bringing the total fleet to four vessels (2 container, 2 product tanker).

Container Market and Vessel Operations

• Current feeder container charter rates ($31,750 per day as of August 7, 2026) are well above the 10-year average of $18,500 per day and nearly three times the 10-year median, creating strong incentives to retain and recharter the existing vessels rather than selling or scrapping them.
• The two container vessels are fully contracted through November 2026, and management is in active discussions to extend charters for an additional 1-2 years at improved market rates, with agreements expected within 1-2 months.

Tanker Market Fundamentals

• Current 1-year MR tanker time charter rates ($29,000 per day) are above the 5-year average, while 3-year rates ($23,500 per day) are in line with the 5-year median. Even after moderating from early 2026 peaks, rates remain well above long-term averages.
• Supply-side fundamentals are constructive: 47% of the global MR fleet is over 15 years old, and 27% of the current fleet will be over 20 years old by 2028, driving significant need for replacement. The current MR order book represents ~16.5% of the existing fleet (well below historical peaks), and 2026 new vessel deliveries are projected to be lower than 2025 levels, limiting net fleet growth.
• Demand-side fundamentals are supported by structural shifts: global oil consumption has grown to over 110 million barrels per day in H1 2026, and product tanker trade volumes remain at historically high levels despite a projected 2026 moderate contraction. Ton-mile demand has grown faster than volume due to structural shifts to longer voyage distances, driven by reduced Middle East exports, greater reliance on Atlantic-basin suppliers, and Russian sanctions. Low current global inventories create upside potential from future inventory rebuilding in 2027-2028.

Balance Sheet and Asset Valuation

• As of June 30, 2026, the company held $13.7 million in cash, with total assets of $47.9 million, total bank debt of $19.2 million (equal to ~40% of total asset book value), and shareholder equity of over $26 million.
• Management estimates the charter-adjusted market value of the current fleet is $54-55 million, implying a net asset value of $46-47 million (or ~$16.65 per share), a substantial premium to the current trading price of ~$8.5 per share.

The company operates two business segments: Legacy Feeder Container Vessels and Product Tankers. For Q2 2026, the company reported total net revenue of $8.6 million (up 200% from $2.9 million in Q2 2025), net income of $4.29 million (up from $0.8 million in Q2 2025), and adjusted EBITDA of $5.04 million. For the first half of 2026, total net revenue was $16.2 million (up 101% from $5.8 million in H1 2025), net income was $6.7 million, and adjusted EBITDA was $8.2 million. The legacy container segment contributes steady baseline revenue: two vessels are fully employed on profitable time charters through November 2026, with current contracted rates of $16,700 per day and $9,500 per day (average $13,000 per day), and a cash breakeven of ~$8,300 per vessel per day, generating a consistent cash cushion for growth. The product tanker segment contributes upside exposure to market rates: one 2015-built MR tanker (Alas Avatar) was active in Q2 2026, with an EBITDA breakeven of $9,700 per day and total cash breakeven of $18,450 per day after including debt costs. Across the entire fleet of 3 vessels in Q2 2026, 100% utilization was achieved, with an average time-charter equivalent rate of $28,039 per day, operating expenses of $8,042 per vessel per day, and a fleet-wide break-even rate of $10,440 per vessel per day.

Management expects MR product tanker markets to remain structurally stronger than historical norms, with higher volatility than in past decades. While the extreme peak rates seen during the initial post-geopolitical disruption period are not expected to recur, structural factors including longer voyage distances, geopolitical fragmentation, Atlantic-basin supply growth, and future inventory rebuilding will support rates above long-term averages. Management projects normalized MR rates in the range of $25,000 to $30,000 per day for current forecasting. The company remains committed to growing its product tanker fleet gradually, leveraging existing cash flow from container vessels to fund incremental expansion while pursuing creative solutions to overcome the constraints of a smaller equity base. Management expects to secure extensions for both container vessels for a minimum of one additional year (and potentially up to two or more) within the next 1-2 months.

• Tanker charter rates are extremely volatile, with large recent swings from near $100,000 per day to $10,000 per day, making accurate forecasting difficult. While current rates are above long-term averages, they can fall sharply amid changing market conditions.
• The company's current equity base is only sufficient to fund one additional tanker acquisition beyond the already contracted Alas Fighter, limiting near-term growth prospects unless additional capital can be raised.
• The company's share price trades at a large discount to management's estimated net asset value, which complicates equity-funded growth initiatives.
• Global clean petroleum product demand is projected to contract by ~5.9% in 2026, which could create near-term headwinds for tanker rates.

Q: What is your outlook for future MR tanker rates, following extreme volatility tied to geopolitical developments? / A: Management notes extreme volatility remains a core feature of the current market, and the extraordinary peak rates seen earlier are no longer available. For forecasting purposes, management uses a normalized projected rate range of $25,000 to $30,000 per day.

Q: What are your plans for the two legacy container vessels, and when might you sell or scrap them? / A: The original plan was to sell or scrap the vessels as the market corrected, but current rates remain exceptionally strong. Management will retain both vessels for at least one additional year (and potentially two or more) after their current charters expire, and expects to secure new long-term charters within the next 1-2 months.

Q: What are your plans for additional tanker acquisitions after Alas Fighter delivers in September? / A: The company is firmly committed to building out its product tanker fleet, and has relevant operational expertise through its major shareholder, the Latsis family. The current equity base is only sufficient to add one more vessel, so management is actively exploring alternative creative structures to support further growth.

Q: Your share trades at a growing discount to your stated NAV, what will you do to close this gap and support growth? / A: Management (which is also a shareholder) is committed to finding creative solutions to grow the business despite the small size of the company, and expects the share price will rise over time. The company will continue returning capital to shareholders through its consistent dividend policy to deliver value to investors.