ESEA - Euroseas (ESEA) - Smooth Sailing as Euroseas Rides The Tide of Higher Shipping Rates

Solid top-line growth. Euroseas reported 2022-2Q net revenues of $48.5 million up 165% over the same period last year and modestly ahead of our $44.8 million estimate. Higher results reflect vessel additions (1,487 voyage days versus 1,273) and higher shipping rates (TCE of $33,714 versus $14,853). Operating costs rose modestly. Adjusted EBITDA was $34.2 million up from $10.5 million and slightly above our $33.7 million estimate. Adjusted net income was $29.6 million ($4.08 per diluted) versus $7.6 million ($1.11) and our estimate of $28.8 million ($3.96).Locked-in rates looking good as shipping rates decline. The company has locked-in rates for 98% of voyage days for the rest of 2022, 78% for 2023 and 54% for 2024. Average TCE rates are near $30,000, which is down from this quarter's TCE rate but still high relative to historical rates. Eurosea's largest exposure to spot rates comes largely from ships under construction that will be delivered in 2024. Eurosea's fleet is getting younger and receives premium pricing. Euroseas locked in a TCE rate of $48,000 for two vessels to be delivered in 2023. High TCE rates should result in strong cash flow and earnings levels for the foreseeable future. Read More >>