Euroseas Ltd. Q2 FY2025 earnings call

• Dividend increase: Quarterly dividend raised to $0.70 per share, a 7.7% growth from the first quarter, with an annualized yield of about 5.5%.
• Share repurchase: Continues to utilize share repurchase program.
• ESG report: Published 2024 ESG report, fifth consecutive year.
• Ship sale: Agreed to sell motor vessel Marcos V for $50M, proceeds to renew fleet.
• Vessel charter: Chartered motor vessel Emmanuel P for 3 years at $38,000 per day.
• Operations: Planned repairs for Evridiki G and EM Corfu caused off-hire periods of ~12.5 and 10 days respectively.

For the second quarter of 2025, Euroseas reported total net revenues of $57.2 million, a net income of $29.9 million ($4.29 per diluted share), and adjusted EBITDA of $39.3 million. The company declared a quarterly dividend of $0.70 per share, a $0.05 increase from the first quarter. Since May 2022, they have repurchased 463,000 shares for about $10.5 million. The fleet consists of 22 vessels, including 15 feeder container ships and 7 intermediate container ships with an average age below 13 years.

• Confident in maintaining dividend yield based on charter coverage for next couple of years.
• Will continue share repurchase program in disciplined manner.
• Expect time charter rates to remain strong for remainder of 2025; market conditions in 2026 depend on geopolitical and economic events.
• Maintain reserves to cater for possible downturn while keeping costs to grow the company.

• Geopolitical tensions and Red Sea disruptions affecting trade patterns.
• U.S. tariffs impacting trade flows and market uncertainty.
• Slow adoption of alternative fuels delaying transition.
• Potential market downturn despite current strong rates.

Q: With most of your days contracted for a year -- more than a year, I'm looking at the potential variability in the results. Do any of your containership contracts have different rates based on the voyage or are they all fixed regardless, please?

A: I think they're all fixed. All our contracts are fixed rate contracts.

Q: And on the planned sale of one of your ships and if you do decide to sell other ships in a good market, are there any trends in terms of the potential buyers? Are they from specific countries or specific entities? And have you disclosed the buyer of the ship, please?

A: The buyer of the ship is MSC. They are, as you know, the biggest buyer around over the last few years buying older ships. I don't anticipate that we will be selling anything else within this year. You never know, obviously. But we have fixed all the vessels and I don't think we will be selling anything else.

Q: The feeder and intermediate containership segments have small order books. You've mentioned the fleet is relatively old and the shift towards adopting new fuels remains slow. So how are you thinking about your fleet in terms of growth in the number of intermediates versus feeders and newbuilds versus secondhand? I think you've mentioned you're not really interested in secondhand, but just kind of interested in your thoughts there?

A: Yes, sure. We don't -- I mean, we would buy 10, 15-year-old vessels if we could find a suitable charter that would bring the residual value down at the end of the charter. But this is something that we have been trying to do and without much success because the asking prices of the ships are too high. So I think it's rather difficult that we invest now in ships that are in the water currently. We like both sectors, the feeder sector and the intermediate sector. The dynamics are very, very similar, order books of below 7%, 8% and ships over 20 years old in excess of 20 years -- of 10%. So the dynamic is very nice over there. We look at potential projects, and we will see how we will move ahead.

Q: The drydocking expenses were $3.5 million for the first 6 months of 2025. But based on the information on Slide 19, is it fair to say that drydocking activity will be light over the next 12 months?

A: Yes.

Q: Most has already been covered, but I wanted to ask whether you have any plans on what to do with the proceeds of the sale of the Marcos V. Could you comment on potential avenues to allocate that capital? Could special dividends be in the cards? Or would you prefer to make a debt prepayment or allocate it towards the newbuild on order?

A: We are considering the various options. The vessel will be delivered within October. And we are looking at various options. We will let you know more when we next talk.