Euroseas Ltd.

Thank you for standing by, ladies and gentlemen, and welcome to the Euroseas Conference Call on the Third Quarter 2021 Financial Results. We have with us Mr. Aristides Pittas, Chairman and Chief Executive Officer, and Mr. Tassos Aslidis, Chief Financial Officer of the company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session, at which time, if you wish to ask a question... Please press star and 1 on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded today. Forward-looking statement. Please be reminded that the company announced their results with the press release that has been publicly distributed. Before passing the floor to Mr. Pittas, 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 Law. Matters discussed may be forward-looking statements which are based 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 two 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 to Mr. Pittas. Please go ahead, sir.

Good morning, ladies and gentlemen, and thank you all for joining us today for our scheduled conference call. Together with me is Stasios Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the third quarter, a nine-month period ended September 30, 2021. Let us turn to slide three. Our income statement highlights are shown here. For the third quarter of 2021, we reported total net revenues of $23 million and net income of $8.5 million. Adjusted net income attributable to common shareholders for the period was $8.4 million, or $1.16 per share basic and diluted. Adjusted EBITDA for the period stood at $10.6 million. For the nine-month period, our total net revenues were $55.6 million, and net income was $10.2 million. Adjusted net income attributable to common shareholders was $19.1 million, or $2.74 per share, basic and diluted. Adjusted EBITDA for the period was $36.6 million. These results are strikingly better than our equivalent 3- and 9-month period results of last year, and Tasos will go over them in more detail later on in the presentation. This turns slide 4, where we discuss our recent operating developments. On October 18, 2021, we took delivery of motor vessel Jonathan P, a 1740 TEU container feeder vessel built in 2006, , Persuant to the previously announced transaction of September 7, 2021. Upon delivery of the company, the vessel commenced a three-year charter at a net rate of $26,662 per day. On November 11, 2021, the company announced the acquisition of MV Leo Paramount to be renamed MV Marcos V, a 6,350 TEU container ship, built in 2005 for $40 million. The vessel, which is expected to be delivered to the company within 2021, will be financed by own funds and a bank loan. Contemporaneously with the acquisition, the vessel will enter into a three-year time charter contract at a daily rate of $42,200 per day. with a possible extension for an additional four years at the option of the charter at $15,000 per day. Continuing on the chartering front, Diamandis P. was fixed for a minimum period of 36 to 40 months at $27,000 per day starting from October 2021. The E.M. Speces was also fixed for a minimum period of 36 to a maximum of 40 months $29,500 per day starting from August. The Synergy Auckland was fixed for a fixed minimum period of 60 to 85 days, a $202,000 per day gross as from November 2021. Last but not least, The EM Corfu was fixed for a repositioning charter to the Far East for her next dry docking beginning in December 2021 at a rate of $5,125 per day for the first 37 days and $37,500 per day thereafter. Two of our vessels passed a special survey with a dry dock in the third quarter. The Amandis P for 46 days between September and October 2021, and Agriviki G for 38 days from mid-July to around mid-August of 2021. Please turn to slide 5 where you can see our current fleet profile. Eiroseas' current fleet is comprised of 16 vessels now, including 10 feeder and 6 intermediate container ships with fleet average age of about 16 years in TEU terms. After the delivery of the two feeder container ship new buildings in the first and second quarter of 2023, Eirini's fleet will consist of 18 vessels with a total carrying capacity of 56,000 TEU. Slide 6 shows our vessel employment chart. As you may see, coverage for the fourth quarter of 2021 stands at 100% and the contracted EBITDA is $28.5 million. In 2022, we have already covered 68% of our vessel days at the contracted EBITDA level of about $60.8 million, whilst in 2023, our coverage stands at 40% and contracted EBITDA at $47.7 million. Our contracted average time charter rate for the fourth quarter of 2021 stands at about $30,000 per day, driven up by the high $202,000 per day short charter of the synergy Auckland. While for 2022 and 2023, it is estimated at $24,000 and $27,500 per day respectively. Let's now turn to slide 8 to review how time charter rates have developed in the last 10 years. As you can see, all previous moves seem meaningless in front of the huge heights that rates have been climbing to since the fall of last year, reaching, of course, new all-time highs, by far exceeding previous highs. The health of the market is reflected in all the data points in slide 9, where we give a bird's-eye view of the general container market for the third quarter and beyond. As shown in the table, time shutter rates across all segments skyrocketed over the past 12 months and have reached the all-time highs just described. During the third quarter, the smaller vessels' rates caught up with those of the larger ones and doubled relative to the second quarter, whilst for the bigger ships the increases were between 50% to 80%. Around November 2021, rates are still generally above the average of Q3, but we have seen over the last month a small correction over the peak values that were witnessed in early October. The average second-hand price index rose on average by about 35% in the third quarter of 2021 over the second quarter of 2021. Price increases varied across different age groups, with the elder vessels increasing even over 100%. During the third quarter, new building prices increased by approximately 6% due to steel prices being on the rise and strong interest for new buildings on the back of the container ship market rises. The inactive container ship fleet as of October stands at about 140,000 TEU, approximating 0.6% of the fleet, the lowest level ever. The percentage of containers in scrap today has dropped dramatically to approximately 12,000 EU, or 0.05% of the fleet. Again, the lowest point ever. This is despite the fact that prices have increased to 615 per lightweight ton due to the high demand for steel. Overall, the fleet has grown by 3.6% year-to-date, without, of course, accounting for idle reactivations. The order book has more than doubled in the last six months, with the current order book to fleet ratio hovering around 23%, compared to only 10% six months ago.

Please turn to slide 10.