EuroDry Ltd (EDRY) 2025 Q1 法說會逐字稿

Thank you for standing by. Ladies and gentlemen, and welcome to the EuroDry Limited conference call on the first quarter 2025 financial results. We have with us today, Mr. Aristides Pittas, Chairman and Chief Executive Officer, and Mr. Tasos Aslidis, Chief Financial Officer of the company.

(Operator Instructions) I must advise you that this conference is being recorded today. Please be reminded that the company announced its results through the press release and publicly distributed. Before passing the floor to Mr. Pittas, I would like to remind everyone that in today's presentation and call, EuroDry will be making forward-looking statements.

These statements are within the meaning of the Federal Securities Laws. Matters discussed may be forward-looking statements, which are 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 2 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. Pittas. Please go ahead, sir.

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. Tasos Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the three month period ended March 31, 2025.

Please turn to slide 3 of the presentation for our quarterly financial highlights. In the first quarter of 2025, we reported total net revenues of $9.2 million and a net loss attributable to controlling shareholders of $3.7 million or $1.35 loss per basic and diluted share.

Adjusted net loss attributable to controlling shareholders for the quarter was $5.7 million or $2.07 loss per basic and diluted share. Adjusted EBITDA for the period stood at a negative $1 million. Please refer to the press release for the reconciliation of adjusted net loss and adjusted EBITDA.

Our CFO, Tasos Aslidis will go over our financial highlights in more detail later in the presentation. Since initiating our 10 million 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 $5.3 million. We intend to continue executing these purchases opportunistically at current price level, reflecting our confidence in the company's long-term value. Please turn to slide 4 to view our recent chartering and operational developments.

Firstly, please note that we delivered the motor vessel Tasos to have buyers as had been arranged during the previous quarter. The company recorded a net book profit of $2.1 million. On the chartering front, the majority of ours or term being fix 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. There were no scheduled dry docking or repair activities during the quarter.

However motor vessel Blessed Luck was commercially off-hire for approximately 11.6 days during the quarter, and while arranging the sale and delivery of motor vessel Tasos also experienced a total of 6.5 days commercial hire. You can see the specifics of the various charges we fixed during the period in the accompanying presentation.

Please turn to slide 5. EuroDry's current fleet consists of 12 vessels with an average age of around 13.6 years and the total carrying capacity of approximately 843,000 deadweight tonnes. In addition, we have two Ultramax vessels under construction with capacities of 63,500 deadweight tonnes each, scheduled for delivery in the second and third quarters of 2027.

Upon delivery, our fleet will grow to 14 vessels with a total carrying capacity of approximately 970,000 deadweight tonnes. At this point, I'd like to remind you that EuroDry owns 61% of the entities that own motor vessels in Maria.

The remaining 39% is owned by owners represented by NFP Project Finance, otherwise refers to the NFP Investors. Next, please turn to slide 6 for a 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 8.

We will go over the dry bulk market highlights for the first quarter of 2025 up until recently. The market has been softer in Q1 2025 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.

On the last day of the quarter, March 30, both spot and one year time charter rates appear to be higher across all segments as shown on the slide. However, by the end of last week, spot rate has dropped across the board.

The Panamax segment rates have dropped as much as 28%, while one year time charters 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 contraction during the first quarter declined by 27% and 16% year-on-year, respectively.

These developments highlight the continued weakness in freight markets driven by weaker demand muted cargo volumes and then certain macroeconomic conditions. Please now turn to slide 9.

The IMF April '25 update presents a more global economic outlook, revising its global GDP growth forecast for 2025 downward 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 of major trading partners and sectors. These global tensions and heightened policy uncertainty have phased the outlook for 2025 and 2026.

The United States projected growth rate has been reduced by nearly 1% to 1.8% GDP growth for 2025 and 1.7% in 2026 from the previously expected 2.8% and 2.1%, respectively. However, the other advanced economies have also taken a beating, compared to previous expectations, with Europe 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 stock. US government policy remains largely in focus these days through the direct impact of tariffs and possible counter tariffs.

Of course, this has the potential to have wider implications. Global inflation continues to trend downwards, but at a pace that is slightly slower than what was expected in January, with headline inflation reaching 4.3% in 2025 and 3.6% 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 unable persistent services and rate inflation in several economies, coupled with rising protectionism and demographic headwinds to delay full conversion to target inflation levels. As a result, central banks are expected to maintain a more cautious approach to monetary easing that has previously been sold.

Emerging markets remain the primary drivers of global growth. India is focused to expand by 6.2% and 6.3% in 2025 and 2026, respectively, fueled by strong investment robust agriculture and the dynamic services sector. The ASEAN five countries are also projected to post healthy gains.

In China, growth has been revised downward to 4% in both 2025 and 2026. As in addition to the Trump induced effects, structural challenges persist, particularly around weak domestic consumption, deflationary prices and instability in the property sector.

Turning to the dry bulk sector, specifically, Clarkson results projects a significant deceleration in trade growth with 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 and reallocate flows across countries. While supply constraints and environmental regulations may offer some relief, the political risks in the Red Sea persist and will likely continue across 2025, but will probably end by 2026.

In light of these projections, we still remain cautious of the outlook for the dry bulk sector. Please turn to slide 10. Let's review now in the current state of the order book in the dry bulk 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 than the 7% low seen just after the COVID pandemic started in 2021. Turning to slide 11.

Let's look into the supply demands trends in a bit more detail. As of May 2025, the total dry bulk 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, 3.9% in 2026, and 3.6% in 2027 onwards.

The actual fleet growth is, of course, expected to be lower than aforementioned figures due to higher scrubbing rates and slippers. 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 dry bulk sector continues operating in this suppressed environment.

Please turn to slide 12, where we summary outlook for the dry bulk market. The bulk carrier sector has faced a relatively weak start to 2025. Time charter rates bottomed out in the first quarter, briefly regarding to profitable levels across all vessel classes by the end of the quarter.

However, the turning momentum has seen faced largely in response to the US administration's new tariff proposals and FX. Demand side pressures continue to mount. Geopolitical instability and the slowdown in key markets have contributed to growing uncertainty.

Average fleet charter rates 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, dry bulk import volumes are not expected to replicate the robust growth experienced over the 2023, 2024 period. While the recent government stimulus measures have improved sentiment, they are unlikely to translate into a structural increase in demand, particularly given high existing stock price.

In the United States, trade policy under the new Trump administration has become a major source of concern for dry bulk markets. Proposed tariffs on China, Mexico, Canada and other key partners pose a threat to grain and minor bulk trade flows, especially if retaliated actions, escalate trade tensions.

Shipping activity through the Red Sea remains disrupted, and while any of the escalation could support operational stability, a reduction in rerouting may also temper tonne mile demand led by easing pressure rates. On the supply side, new building activity remains constrained.

Social capacity remains tight, and many owners are hesitant to place orders and amid continued uncertainties surrounding the industry's long-term fuel transition. Although methanol and LNG fuel adopters have increased, the lack of clarity around the fuel of the future has contributed to a relatively lower order book fleet ratio.

That said, the order book for Panamax and Ultramax vessels, which has increased to 13.5% is trending towards historical medium levels of 17.5%, still low but not that low. For 2026, we still do not expect a strong recovery demand growth in ton mile surprised positively and exceed the historically low expected supply growth of below 2% after adjusting prescribed.

What could influence the market positively is the regulatory environment as emissions-related measures ICII, EU ETS and fuel EU maritime could lead to increased vessel scrapping and lower operating speeds, particularly among the less efficient ships. These developments may tighten effective supply over time setting the stage for age support if demand stabilizes.

Let's turn to slide 13. As of May 30, 2025, the one year time charter rate for Panamax vessels with a capacity of 75,000 tonnes 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 10 year-old Panamax bulk carriers remained relatively firm, with current asset values estimated at approximately $24 million. This is significantly above both the historical 10 year median of $15 million and the 10 year average of $17.5 million, reflecting residual strength in secondhand values.

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 losses over the years and are on standby mode to reinvest.

Order current backlog marks a clear decline from the mid-2024 peak of $29.5 million, we believe values can drop further in the next few months and less witnessing an expected 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, assuring good markets will reappear at some point, and we should be ready for them. Let me now pass the floor over to our CFO, Tasos Aslidis, to go over various financial highlights in more detail.

Thank you very much, Aristides. Good morning from me as well, ladies and gentlemen. Over the next 4 slides, I will give you the usual overview of our financial highlights for the first quarter of 2025 and compare those results to the same period of last year. So let's turn to slide 15.

For the first quarter, the company reported total net revenues of $9.2 million, representing a 36.2% decrease of a total net revenue of $14.4 million during the first quarter of 2024, which was the result of the decreased time charter rates our vessels served during the first quarter of this year. And also the decreased number of vessels owned and operated during period compared to the same period of last year.

The company reported a net loss of period of $4 million and a net loss attributable to controlling shareholders of $3.7 million as compared to a net loss of $5.9 million and net loss attributable to controlling shareholders of $1.8 million for the same period of the first quarter of 2024. The net loss attributable to non-controlling of $0.3 million in the first quarter of this year represents a loss associated with a 39% ownership of the entities owning our vessels, Christos and Maria.

Interest and other financing costs net of a small amount of interest income for the first quarter of 2025 decreased $1.8 million as compared to $2 million for the same period of 2024. Interest expense during the first quarter of 2025 was lower, mainly due to the decreased benchmark rates, our loss or charge partially offset by the increased other debt we have during the quarter as compared to the same quarter of the year.

Adjusted EBITDA for the first quarter of 2025 was a negative $1 million compared to $2.1 million achieved during the first quarter of 2024. Basic and diluted loss per share attributable to controlling shareholders for the first quarter of 2025 was $1.35 calculated on about 2.7 million basic and diluted weighted average non-gross shares outstanding, compared to basic diluted loss per share of $0.65 for the first quarter of the year calculated again on about 2.7 million basic and diluted weighted average number of shares outstanding.

Excluding the effect from 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 debt, the adjusted loss reported ended March 31, 2025, would have been $2.07 per share basic and diluted compared to a net profit loss of $1.18 per share, basic and diluted for the quarter ended March 31, '24 month.

Let's now turn to slide 16 to review our fleet performance. As usual, we will start review you by first examining the utilization rate 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 coming down into commercial and operational.

During the first quarter of 2025, our commercial utilization rate was 98.4%, while our operational utilization rate was 99% compared to 100% commercial and 98.1% operational for the same period of last year. Our overall utilization rate was in the first quarter of this year, 97.4% compared to 98.1% in the respective quarter of 2024.

Our total daily operating expenses, including management fees, general and administrative expenses, but excluding [dilated] costs, were $7,604 per vessel per day during the first quarter of this year compared to $6,867 per vessel per day for the first quarter of 2024.

If we move further down on this page, we can see the cash flow breakeven level, which takes into account in addition to daily working expenses, interest expenses and loan repayments. For the first quarter of 2025, our daily cash flow breakeven level was $11,528 per vessel per day compared to $12,963 per vessel per day for the same period of last year, primarily because of minimum dry bulk expenses received.

Let's now turn our attention to slide 17 to review our debt profile. As of March 31, 2025, EuroDry's outstanding debt stood $105.2 million. Total loan repayments during 2025, are expected to amount to approximately $12.1 million, including the (inaudible) already during the first quarter.

And in 2026, we expect to have loan repayments of $13.3 million, including a payment of $15 million value. In 2027, repayments amount to about $10 million, but there is also of $10.2 million related to the loan for our vessel EKATERINI, which would and we very likely finance.

An important point to highlight on this slide is the other margin of our debt, which as of March 31, 2025, stood approximately 2.07% over SOFR, assuming a three month soft rate of 4.2%, the estimated cost of our senior debt was around 6.4%.

In reality, our cost is slightly lower (inaudible) a portion of our debt into a lower fixed rate, and take of that, our effective cost of our senior debt would be approximately 6.3%. At the bottom of this slide, we can see our presented cash flow breakeven level for the next 12 months.

Broken down again into charge components. Our EBITDA per level is projected to be at around $7,733 per vessel per day over the next 12 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 rate of $12,000 to cash flow breaking. Let's now conclude our presentation by moving to slide 18, you 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 30 2025, cash and other assets stood at about $21.5 million on our balance sheet while we also had made advances for the new buildings of about $7.2 million.

The book value was approximately $182 million, resulting in total book value of assets of about $211 million. On liability side, our debt, again, as of March 31, 2025, as I previously mentioned, stood at about $105.2 million, amounting to about 49.8% of the book value for our assets, while other liabilities amounted to about $4 million or almost 2% of our assets, resulting in turn into a book holders equity of $93.3 million, which in turn translates to a value of $33 per share.

However, according to market reports and our estimates, our vessels as of March 31, 2025. were about $72 million more than their book value, approximately $214 million. Thus, resulting in net asset value per share of more than $43 almost $44 per share.

In comparison that, our current share price trading between $8 and $9, highlights a big discount to NAV and the potential appreciation should the market conditions and rates improve. (inaudible) and certainly, in this case, it will lift our growth more than others since we start from a lower base. And with that, I will turn our floor back to Aristides to proceed with the call.

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

(Operator Instructions)

Mark Reichman, Noble Capital Markets.

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

I think judging from the first quarter numbers, it's a little bit premature. Our budget for OpEx this year was 2% in our last year's budget. And during the first quarter, we had 2% overall of our budget, but it's hard to say from just one quarter.

I mean the timing of certain expenses could destroy the picture, I would wait at least until the first half is completed to make a statement about the OpEx levels. Certainly, we expect to meet our budget which was 2% higher than last year's results.

And then what is your forecast for scheduled commercial and operational off-hire days for the remainder of the year? Particularly for the dry docking.

I mean I think we have one dry bulk we have --

We just had one dry bulking during this year, which is going to happen soon. Otherwise, we don't have any other scheduled stoppages. And we will have to see how the charter market plays out. If the market is very poor, we might have increased the commercial lot higher, but we wouldn't expect and we're not budgeting really anything more than one day per month.

1.5 days per quarter. It's our running assumption, generic assumption about (inaudible).

Okay. And then just the last question is you sold the M/V Tasos, and I was just wondering, provide some commentary on how you're managing your fleet via vessel acquisitions, sales, joint ventures or even mergers or acquisitions with other operators.

Well, 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 markets move during the next few months.

But yes, the modernization of the fleet is what we are looking at. We'll take delivery of our two new buildings in 2027. And especially if the market remains low as is possible, that would probably allow us to buy a couple more modern vessels.

Thank you very much.

Tate Sullivan, Maxim Group.

Hello, thank you. Good day, and from your comments on the scrapping of the vessel in the first quarter, do you have active opportunities to scrap the other old vessel there, a quick negotiation time to decide to scrap them do so, please?

We scraped the Tasos, which was built in 2,000. The Blessed Luck, which has a as well in since we've decided to pass that. The other vessels that have been 2004, they've passed 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 that the ships, we feel they can continue trading in today's market.

Have you seen a pickup in scrap activity besides your vessel in the first quarter? In the dry bulk?

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

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?

That is steady. It's pretty steady because the vessels are 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 one year, most of them.

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

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

Yeah, 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 gate, which increases distances a bit. But that's on the occasional business from the Far East to (inaudible).

An anecdotal evidence from your fleet of any port loading or unloading times taking longer due to any inspections or RF levies or anything like that? I haven't heard any but it would be interested if you're contemplating.

No. We haven't really seen that effect yet.

Okay. And last, and then you mentioned you saw high stockpiles in China. What specifically is it? Coal, iron ore and grain. All the drive goods or something specific that you have seen?

I have more the coal and the iron ore. I'm not, I don't have the number for grain.

Okay. Wonderful. Thank you very much. Have a great day.

(inaudible)

I apologize. I missed the call. Hello Anastasios, hello Aristides. Can you just talk about the new build program. I'd like the law that you rename or you name one of the new build Tasos so that you have a Tasos in the fleet.

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

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, is sort of the contract is not before that date. So but we account having to make the payment [3.66, 7.2] in total for the two section.

And then do you have a figure for 2026 Tasos?

I think we are making five payments of 10% and then 50% on delivery. So there should be at least another two payments per vessel in 2026, so a total of $14.4 million in 2026 and then a 10% payment in the final payment in 2027.

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?

Two 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 end of March.

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

Great, 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 Pittas for closing remarks.

Thank you, everybody, for standing by. We will be back to you at the end of, by the beginning of next quarter of August, exactly. Okay. Thank you.

Bye-bye. Thanks for attending.

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