Euroseas CEO Discusses Q2 2012 Results - Earnings Call Transcript

Euroseas Ltd. (ESEA)

Q2 2012 Earnings Call

August 9, 2012; 09:30 am ET

Executives

Aristides Pittas - Chief Executive Officer

Anastasios Aslidis - Chief Financial Officer

Analysts

Josh Canter - Deutsche Bank

Nick (ph) - Wells Fargo

Chris Snyder - Sidoti & Company

Presentation

Operator

Thank you for standing by ladies and gentlemen and welcome to the Euroseas conference call on the second quarter 2012 financial results. We have with us Mr. Aristides Pittas, Chief Executive Officer and Anastasios Aslidis, Chief Financial Officer of the company. At this time all participations are in a listen-only mode. (Operator Instructions).

Please be reminded that the company (inaudible) their results after the market closed yesterday with a press release that has been publicly distributed. If you have not received the press release you may log on to Euroseas website at www.euroseas.gr and navigate to the Investor Relations page or you can call Capital Link at 212-661-7566 or the Chief Financial Officer of Euroseas, please request the press release details and we will be happy to send it to you.

For those of you who want to follow the audio webcast please look on to your computer to the homepage of the Euroseas website as I mentioned, www.euroseas.gr. Once again the participants of the webcast can download the PDF from the website. Kindly not the slides are user controlled.

Before passing the floor to Mr. Pettas, I would like to remind everyone that in today’s presentation and conference call Euroseas will be making forward-looking statements. These statements are within the meaning of the federal securities laws. The ones that are discussed, there may be forward-looking statements which are based on current management exceptions that involve risks and uncertainty that may results in such expectations not being realized.

I kindly turn your attention to slide number two of the webcast presentation, which has the forward-looking statements and the same statement was also included in the press release. I kindly suggest that you take a minute to go through the whole statement and read it.

Without taking any more of your time, I would now like to pass the floor to Mr. Aristides Pittas, Chairman and Chief Executive Officer of Euroseas. Please go ahead Mr. Pittas.

Aristides Pittas

Good morning and thank you for joining Euroseas for our conference call. Together with me today is Anastasios Aslidis our CFO.

The purpose of today’s call is to discuss the results for the three and six-month periods ended June 30, 2012. Let us turn to slide three for our 2012, second quarter and first half overview.

For the second quarter of 2012 we reported total net revenues of $12.8 million. Net loss for the period was $1.4 million or $0.04 per sale basic and diluted. The results for the second quarter of 2012 includes a $1.3 million net unrealized gain in derivatives and a $0.4 million net realized loss on derivatives.

Excluding the effect of the earnings for the quarter, the unrealized gains and derivatives and the realized loss on derivatives, the adjusted net loss for the period would have been $1.3 million or $0.04 per share loss, basic and diluted.

Adjusted EBITDA for the second quarter 2012 was $3.4 million. We declared a quarterly dividend of $0.02 per share for the second quarter of 2012, payable on about 7 September 2012; the shareholders of record on August 31, 2012. This is the 28 th consecutive quarterly dividend declared.

Fro the first half of 2012 we reported total net revenues of $26.7 million. Net loss for the period was $10.4 million or $0.32 per share, basic and diluted. Excluding the effect of the losses for the first of 2012 of the realized loss on derivatives, realized gain on trading securities and loss on sale of a vessel, the adjusted net loss for the period would have been $1.4 million or $0.04 loss per share, basic and diluted.

Adjusted EBITDA for the first half of 2012 was $8.3 million. We declared two quarterly dividends during the first half of 2012 for a total of $0.06 per share.

Please turn to slide four. For the last seven years we have been aiming to declare a dividend, which would present an yield of between 5% to 12%. In view of the challenging market conditions and their desire to preserve cash, to take advantage of new investment opportunities, our board decided to reduce our quarterly dividend to $0.02 per share, which however still represents a healthy annual view of about 6.8% from the basis of our stock price of $1.17 on August 8, 2012. Our intention moving forward remains continuing our policy of providing healthy dividends throughout market cycles, without compromising growth opportunities.

Please turn to slide five to review our company developments. In regards to recent feed developments we renewed the samples for three of our container vessels in the second quarter for short durations, one of which at a slightly lower rate. During the first half of 2012 the container ship market remained depressed for the size of vessels we operate and stayed very close to the low levels last seen in the beginning of 2010.

Our strategy of employing our vessels on a short period cycles during market downturns has generally worked well for us in the past. It puts us in a position to capture upside in the freight markets and thus positively impact our revenues once this occurs. On the other hand the dry bulk market, although also depressed, did not affect our revenues during the second quarter of 2012 as our vessels have sorted well into 2015.

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