EuroDry (NASDAQ:EDRY) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.

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Access the full call at https://www.eurodry.gr/investor-relations/ir-webcast-2026-2Q.html

Summary

EuroDry Limited reported a significant increase in financial performance for Q2 2026 with total net revenues of $17.7 million, a 57% increase from the previous year, and net income of $6.59 million, reversing a loss from the previous year.

The company's share repurchase program continues, with 358,130 shares repurchased for $5.8 million, and a new refinancing agreement for M/V Katerini was signed, enhancing liquidity.

Operational efficiency was highlighted with a 100% commercial and operational utilization rate, and no idle periods or off-hire days recorded during the quarter.

The market outlook remains positive with strengthening Panamax rates and a modest order book supporting future market conditions, alongside strategic fleet expansions with eco-friendly newbuildings.

Management plans to continue monitoring chartering strategies, intending to secure longer-term charters if rates reach favorable levels, while maintaining exposure to the spot market.

Full Transcript

OPERATOR

Thank you for standing by, ladies and gentlemen, and welcome to the EuroDry Limited conference call on the second quarter 2026 financial results. We have with us today Mr. Anastasios Aslidis, Chief Financial Officer, and Ms. Athena Atalioti, Finance Manager of the company. At this time all participants are in 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 1 on your telephone keypad and wait for your name to be announced.

I must advise you that this conference is being recorded today. Please be reminded that the company announced its results with a press release that has been publicly distributed. Before passing the floor to Mr. Aslidis, I would like to remind everyone that in today's presentation and conference 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 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 that 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. Aslidis. Please go ahead, sir.

Anastasios Aslidis, CFO

Thank you. Good morning ladies and gentlemen, and thank you all for joining us today for our earnings conference call. Together with me is Ms. Athena Atalioti, our Finance Manager. The purpose of today's call is to discuss our financial results for the three- and six-month periods ended June 30, 2026. For that, please turn to slide three of the presentation. Our financial highlights are shown here. For the second quarter of 2026, we reported total net revenues of 17.7 million and net income attributable to controlling shareholders of 6.59 million, or $2.32 per diluted share.

Adjusted net income attributable to controlling shareholders for the quarter was 6.95 million, or $2.44 per diluted share. Adjusted EBITDA for the quarter was 11.71 million. Please refer to the press release for the reconciliation of adjusted net income and adjusted EBITDA. Athena will go over our financial highlights in more detail later on the presentation. Since initiating our 10 million share repurchase program in August 2022, we have repurchased 358,130 shares of common stock in the open market for a total of 5.8 million.

Our board re-approved the program recently and approves and extends it annually, and the most recent authorization was granted earlier this month and runs for another year. We will continue to execute repurchases in a disciplined, measured manner based on market conditions and other capital allocation priorities. We are also pleased to announce that on July 28, 2026 we signed terms to refinance the M/V Katerini, one of our Kamsarmax vessels, with a 19 million loan facility, higher by almost 8 million over the existing balance of the loan, further boosting our liquidity.

This agreement is subject to customary closing documentation. Let's now move to slide four. In that slide we outline our chartering and operational developments. In the second quarter we continued to deploy our fleet with flexibility. Four of our vessels are currently operating on index-linked charters tied to the average Baltic Supramax 10 TC index, which provides direct exposure to market conditions while, as I mentioned, maintaining commercial flexibility.

Our remaining vessels are employed on fixed-rate time charters with most having durations of one to three months. The exception is our vessel M/V Christos K, which is fixed on a longer-term charter through November 2026. Further charter details are provided in the following slides. In the second quarter we entered two forward freight agreements: on November 19th and on March 30th we sold two 90-day Kamsarmax 82.5 TC average contracts for the third quarter 2026 at $17,250 and $17,100 per day respectively, each equivalent to one vessel.

These contracts I mentioned are based on the Kamsarmax 82.5 TC index, which averages these five major time charter routes and provides a good hedge on our market exposure. Similar positions for the second quarter of 2026 were settled very close to the rates agreed in the FFA contract. The final point on this slide is that, operationally, we had no idle period for the quarter, no commercial off-hire or dry-dockings during the second quarter. Let's move to slide 5, which provides an overview of our fleet.

Today we operate a few vessels with total carrying capacity of approximately 766,000 deadweight tons and an average age of around 13.8 years. In addition, we have four newbuildings on order. Two Ultramax vessels are scheduled for delivery in the second and third quarters of 2027, each with capacity of 63,500 deadweight tons. We also have two Kamsarmax vessels on order scheduled for delivery in the first and second quarters of 2028, each with capacity of 82,000 deadweight tons.

Upon delivery of these four vessels, our fleet will grow to 15 vessels with a total carrying capacity of approximately 1.06 million deadweight tons, including an Ultramax segment of eight vessels, a Kamsarmax segment of four vessels, all 12 of these vessels being eco-friendly ones, while continuing to operate our three legacy Panamaxes, which are all Japanese builds. Next let's move to slide six where we show our fleet employment profile. Our current fixed-rate coverage for the remainder of the year tends to be more than 25% based on existing charter arrangements.

This excludes our four vessels operating on index-linked charters. Let's now move to slide 8 to review key market developments for the second quarter and initial trends to late July. Panamax rates averaged $17,961 per day in the second quarter and have moderated slightly to $17,150 as of the end of last week. On the time charter side, one-year time charter rates have also strengthened accordingly. The standard Panamax one-year time charter rate is approximately $17,125 per day as of July 31.

Notably, time charter rates are now trading in line with spot market levels, reflecting continued confidence in the underlying market outlook. During the second quarter, the Baltic Dry Index and the Baltic Panamax Index recorded year-over-year increases of approximately 78% and 54% respectively, reflecting the strengthening of the dry bulk freight market compared to the second quarter of last year. Let me now turn to slide 9. Athena, thank you very much. Good morning from me as well. Ladies and gentlemen, over the next five slides I will give you an overview of our financial highlights for the second quarter and first half of 2026 and compare those results to the same period of last year. For that, let's turn to Slide 15. For the second quarter of 2026, the company reported total net revenues of 17.7 million, representing a 57% increase over total net revenues of 11.3 million during the second quarter of 2025.

As a result of the higher time charter rates our vessels earned during the second quarter of 2026 compared to the same period of 2025, the company reported a net income attributable to controlling shareholders of 6.6 million as compared to a net loss attributable to controlling shareholders of $3.1 million for the same period of 2025. Interest and other financing costs for the second quarter of 2026 decreased to 1.5 million compared to 1.7 million for the same period of 2025.

Interest expense during the second quarter of 2026 was lower mainly due to the decreased benchmark rates of our loans and the decreased average debt during the second quarter of 2026 as compared to the same period of last year. Adjusted EBITDA for the second quarter of 2026 was 11.7 million compared to 1.9 million achieved during the second quarter of 2025, recording a larger than a fivefold increase over the same period of last year. Basic and diluted earnings per share attributable to controlling shareholders for the second quarter of 2026 was $2.36 and $2.32 respectively, calculated on approximately 2.8 million basic and diluted weighted average number of shares outstanding, compared to a basic and diluted loss per share attributable to controlling shareholders of $1.12 per share for the second quarter of 2025, calculated on approximately 2.7 million basic and diluted weighted average number of shares outstanding. Excluding the effect on the net income attributable to controlling shareholders for the quarter of the unrealized loss on derivatives, the adjusted earnings attributable to controlling shareholders for the quarter ended June 30, 2026 would have been $2.49 and $2.44 per share, basic and diluted, while for the second quarter of 2025 it would be $1.1 per share, basic and diluted.

Let's now look at the corresponding six-month period ended June 30, 2026 and compare it to the same period of 2025. For the first half of 2026, the company reported total net revenues of 30.5 million, representing a 49% increase over total net revenues of 20.5 million during the first half of 2025, which was the result of the higher time charter rates our vessels earned during the first half of 2026 compared to 2025. The company reported a net income attributable to controlling shareholders of 6.8 million as compared to a net loss attributable to controlling shareholders of 6.8 million for the first half of 2025.

Interest and other financing costs for the first half of 2026 amounted to 3 million compared to 3.5 million for the same period of 2025. This decrease is mainly due to the decreased benchmark rates of our loans and the decreased average debt during the first half of 2026 as compared to the same period of last year. In the first half of 2025, the company signed an agreement to sell motor vessel Patsis for demolition for approximately $5 million. The vessel was delivered to its buyers in March 2025, resulting in a gain of 2.1 million.

There were no vessel sales in the first half of 2026. Adjusted EBITDA for the first half of 2026 was 16.6 million compared to 0.85 million achieved during the first half of 2025, an 18-fold increase compared to the same period of 2025. Basic and diluted earnings per share attributable to controlling shareholders for the first half of 2026 was $2.45 and $2.41 respectively, calculated on approximately 2.8 million basic and diluted weighted average number of shares outstanding, compared to a loss per share of $2.47, calculated on approximately 2.7 million basic and diluted weighted average number of shares outstanding.

Excluding the effect on the net income attributable to controlling shareholders for the first half of the year of the unrealized loss on derivatives, the adjusted earnings attributable to controlling shareholders for the six-month period ended June 30, 2026 would have been $2.61 and $2.57 per basic and diluted share respectively. For the first half of 2025, excluding the effect on the loss attributable to controlling shareholders of the unrealized loss on derivatives and the net gain on sale of vessel, net loss attributable to controlling shareholders would have been $3.17 per share, basic and diluted.

Let's now move to Slide 16 to review our fleet performance for the second quarter of 2026 with a comparison to the same period of 2025. During the second quarter of 2026, both our commercial and operational utilization rates reached 100%, compared with commercial utilization of 100% and operational utilization of 99.3% in the second quarter of 2025. On average, 11 vessels were owned and operated during the second quarter of 2026, earning an average time charter equivalent rate of $20,398 per day, compared to 12 vessels in the same period of 2025 earning on average $10,428 per day.

This reflects a more than doubling of daily charter rates on a per-vessel basis year over year for the respective periods. Turning to operating cost, total operating expenses, including management fees and G&A expenses but excluding drydocking costs, were $7,444 per vessel per day during the second quarter of this year compared to $7,539 per vessel per day for the second quarter of 2025, reflecting a slight decrease. If we move further down, we can see our daily cash flow breakeven rate, which takes into account the operating expenses, drydocking cost, interest expense and scheduled loan repayments but excludes balloon payments.

This stood at $11,858 per vessel per day compared to $12,222 per vessel per day for the second quarter of 2025. Let me now turn to the right-hand side of the table and review the same metrics for the first six months of 2026 compared with the corresponding period of 2025. During the first six months of 2026, our commercial and operational utilization rates were 100% and 99.9% respectively, compared with 99.2% for both commercial and operational utilization during the first six months of 2025.

On average, 11 vessels were owned and operated during the first half of 2026, earning an average time charter equivalent rate of $17,452 per day, compared to 12.4 vessels in the same period of 2025 earning per day. Our operating expenses, including management fees and G&A expenses, averaged $7,462 per vessel per day in the first half of this year, compared to $7,419 per vessel per day for the same period of last year. Including interest expense, drydocking and loan repayments without balloon repayments, the cash breakeven rate amounted to $12,198 per vessel per day for the first six months of 2026 compared to $11,869 per vessel per day for the same period of 2025. Please turn to Slide 17. This slide serves as a calculation tool which enables our shareholders and investors to assess the earnings potential in the remainder of 2026 in the current environment. The table shown in this slide has two components. The top chart refers to our fixed-rate contracts. Starting with our fixed-rate contracts, coverage is approximately 28% for the remainder of 2026. This is about 50% in the third quarter and about 6% in the fourth quarter of 2026.

The table also shows the average contracted daily charter rate and the resulting EBITDA contribution for the contracted days. The second section of the table estimates the EBITDA contribution from our remaining open and index-linked days. For this purpose, we use the current forward freight market rates for the Supramax and Panamax/Kamsarmax Baltic forward rates as of July 30, 2026. These forward market assumptions are then translated into an indicative blended earning rate for our open days, which you can see across the Supramax, Panamax and Kamsarmax forward rates.

Based on these assumptions and by further assuming a $7,500 per day per vessel OPEX and G&A cost and a 5% commission rate, one can calculate the EBITDA contribution. The final result is additionally adjusted for our preliminary drydocking expenses expected during the year. This calculation results in an annualized EBITDA contribution of $38.4 million during 2026. Naturally, investors can adjust the forward freight rate assumptions to evaluate different market scenarios and their potential impact on the company's earnings in the rest of 2026.

We can also easily estimate our EBITDA dependence to the average rate earned by our open days. For example, a change of $1,000 per day in the average rate earned would result in a 1.4 million change in our 2026 EBITDA and have a $0.50 change on the earnings per share. Let's now move to Slide 18 and review our debt profile and cash flow breakeven estimates. As of June 30, 2026, our outstanding debt stood at 98.1 million with an average margin of about 1.99%.

Assuming a three-month SOFR rate of 3.75% as of June 30, 2026, the all-in cost of our senior debt averages at 5.74%. The upper chart illustrates our debt amortization schedule. Scheduled debt repayments total approximately 12.2 million during 2026, 21 million in 2027, 17 million in 2028 and 28.8 million in 2029 inclusive of balloon payments of approximately 1.2 million, 10.2 million, 6.7 million and 19 million respectively. We have routinely been able to refinance balloon payments in the past and we are confident that we would be able to do the same if we choose so in the future.

Please note that although we have arranged the debt financing of our two Ultramax newbuildings, our current debt figure that I quoted includes only the portion of one of the two loans drawn to date, representing the pre-delivery payments made thus far. The 2027 and 2028 repayment figures include scheduled repayments under both newbuilding loan facilities to finance our Ultramax newbuildings, which are scheduled for delivery during the second and third quarter of 2027.

Our debt figures do not include any debt that we will draw to finance the newbuildings or the refinancing of motor vessel Katerini. Turning to the bottom of this slide, we present our cash flow breakeven estimates for the next 12 months broken down by its major components. Our EBITDA breakeven level is at $8,458 per day while our all-in cash flow breakeven incorporating operating expenses, drydocking cost, interest expense and loan repayments is estimated at $12,872 per day.

Let's move now to my final slide, Slide 19, and review some highlights from our balance sheet as of June 30, 2026. This slide offers a snapshot of our assets and liabilities and provides a concise picture of our financial position. Cash and other assets stood at approximately 37.5 million. Advances for newbuildings amounted to approximately 14.4 million and the book value of our vessels was approximately 160.2 million, bringing our total assets to approximately 212.5 million.

On the liability side, total debt stood at approximately 98.1 million, while other short-term liabilities amounted to 5 million, for combined liabilities of approximately 103.1 million, representing approximately 48.5% of total assets. After excluding the equity attributable to minority interest in the amount of 9.4 million, the shareholders' equity of common shareholders on a book value basis stood at approximately 100 million, or $34.92 per share.

However, based on our internal estimates and external valuations, the market value of our fleet is meaningfully above its book value. We estimate the current market value of our vessels at approximately 240 million, compared to a book value of approximately 160 million, implying an excess value of approximately 80 million. Adjusting for this difference yields an estimated net asset value in excess of $6.81 per share. When compared to the recent trading range of our shares, which has moved up to around $28 recently, it becomes evident that there is still a substantial discount to our estimated net asset value and, by extension, a significant upside potential for both shareholders and potential investors. With that, I will hand the call back to Dasos to continue.

OPERATOR

Thank you very much, Anthony. We would like to open the floor now for questions, if there are any. Thank you. First question comes from Tate Sullivan with Maxim Group. Please go ahead.

Tate Sullivan, Analyst at Maxim Group

Hi, thank you. Good day. Thanks for having the update call. And just a couple for me. The first on the debt margin of 1.99%. I think that was your average margin in June. Do you think that will change going forward if you do decide to add any debt with your new builds? Or do you have more recent indications of a lower spread? So

Anastasios Aslidis, CFO

Most likely if it change will go down, I think we are getting quotes from our banks well below 2% closer at 1.5% lately. And I think in fact the latest loan that refinance that we did was much closer to 1.5%. So the average if anything will come down, we hope.

Tate Sullivan, Analyst at Maxim Group

Okay, thank you. And then it's great for the last couple quarters, including the slide on the forward EBITDA sensitivities. And then I just noticed that dry docking days estimates for the second half, you now have 17. And I think in the first quarter presentation you had two. I'm sorry if I missed something, but did you move forward some dry dock days from 2027?

Anastasios Aslidis, CFO

I think that involves our vessel Alexandros, which this dry docking falls right on the turn of the fourth quarter. So now we have the budget at 20 something, 20 to 23 days. Now we have 16 on Q4 and the remaining on Q1 27. So I mean that changes based on operational planning.

Tate Sullivan, Analyst at Maxim Group

Okay. I mean it's impressive with the fleet renewal and adding the new builds. I mean your off hire days decreased from. I have 97 in 2025 now to what, maybe 36 this year in 2027. And will probably the off hire days increase a little bit just based on timing or is that not necessarily?

Anastasios Aslidis, CFO

I mean, that's why we make a distinction between commercial and operational off hire. Of course we have offhire days due to the dry dockings, which we don't count in these figures. But we hope that we're going to keep to minimum the operational commercial. Obviously we have in 2027 a couple of an additional dry docking schedule I think is the vessel Starlight that is coming due for the dry dock and some in-water surveys. So there would be some offhire days on the basis of the dry dockings and the in-water surveys.

Tate Sullivan, Analyst at Maxim Group

Okay, thank you. And last for me, I noticed you put the word, you put Indonesia in the market commentary slide and hearing from some other companies on more export restrictions or changes thereof from Indonesia. Do you think that's a more important consideration for your fleet going forward than anything going on in the Middle East in terms of exports?

Anastasios Aslidis, CFO

I think by far not only for us, for the whole market, anything going on in the Middle East is the overwhelming consideration because it has so many side effects, either in the form of direct effects on trade or on inefficiencies introduced in the various routes.

Tate Sullivan, Analyst at Maxim Group

Okay, great. Thank you. Have a great rest of the day.

Anastasios Aslidis, CFO

Thank you. Tate, thanks for the call. Questions?

OPERATOR

Thank you. Ladies and gentlemen, as a reminder, should you have any questions, please press Star one. Next question from Mark Reichman with Noble Capital Markets. Please go ahead.

Mark Reichman, Analyst at Noble Capital Markets

Thank you. I've got several questions here. The first is on the voyage expenses. So during the quarter, voyage expenses had a positive impact of 1.5 million on your operating expenses. And I understand that's related to the bunker fuel. But what would your expectations be? Maybe if you could just maybe provide a little more color on that number and maybe expectations for the second half of the year.

Anastasios Aslidis, CFO

I mean, as you have insinuated, this number typically has to be a small negative number. Because our vessels are chartered on a time charter basis. The fuel costs are paid generally by the charter. So a little bit of voyage expenses is left for us for certain situations. However, we deliver our vessels with fuel in their tanks and we buy back fuel when the vessels are delivered to us. So in an environment with increasing oil prices, you tend to make money on the fuel.

What you take back at the pre-agreed price. If the price has increased in between while the charter was being performed and you resell to the next charter, you record the gain. So during the second quarter, the oil price was increasing and we benefited from that trend. Obviously if the oil price is stable, you would expect that number to be near zero. I mean the gains and if the oil price is dropping, you will probably have to give back some of those gains.

Mark Reichman, Analyst at Noble Capital Markets

Okay, so just looking at the forward curve on crude oil, you might expect that maybe the second half you'll have a little bit of an expense or stay relatively flat. Is that a good way to think about it?

Anastasios Aslidis, CFO

A small negative number is expected because of the nature of the charter. We do, we do time charters and we don't have major voyage expenses, but we do have some and those should always be recorded as a negative number. So if the number is positive in the situations that I mentioned.

Mark Reichman, Analyst at Noble Capital Markets

Okay, and then the second question is just, you know, vessel operating expenses have remained well controlled despite inflation. So would you expect daily operating expenses to remain near current levels or are there any cost pressures from, you know, labor, maintenance or regulatory compliance?

Anastasios Aslidis, CFO

I think we expect it to remain near our budget levels. I think we are doing well versus our budget. Our budget was slightly higher compared to last year. I think less than 3% overall. And we recently comparing the results to our budget, we are just on budget or maybe a little less. I have no reason to feel that the second half would result in higher operating expenses. You cannot exclude that possibility. But we have taken into account when we did our budget, the new levels of all the costs and inflationary pressures.

Mark Reichman, Analyst at Noble Capital Markets

And then just on the chartering strategy. Several vessels roll off charter between August and November while others remain index linked. Are you inclined to lock in longer term fixed rates or retain greater exposure to the spot market? I'm assuming kind of the latter based on the commentary.

Anastasios Aslidis, CFO

I think when we discussed in our last board meeting the chartering strategy, the support was to put a few more vessels on one-year charters. Let's say if certain levels in the high teens, or if we can find charters that start with a two for one year, then we might put a little more, a few more of our vessels on longer-term charters. So that's the approach. If we are in the mid teens and below, we try to be on the spot market. If we're approaching the high teens and beyond that, we try to secure some of our components on longer-term charters.

Mark Reichman, Analyst at Noble Capital Markets

Okay, and then my last question is just more of a macro question. And that is, you know, with the earnings improvement, there's always the argument structural versus cyclical. And, you know, maybe it was a couple weeks ago, the management of a Cape size vessel operator, you know, had made the comment that vessel supply rather than demand represented the critical driver of future market conditions. And they had cited their historically low Cape size order book, together with the aging fleet, as kind of an important structural support that might outweigh any economic or macroeconomic uncertainty. So you've got kind of a structural support there. Would you say the same is true for the vessel classes that you operate, or do you think you're a little more exposed to cyclical?

Maybe just that discussion on kind of the cyclical versus structural in terms of the market outlook,

Anastasios Aslidis, CFO

Cyclicality comes both from demand and supply. For our sizes, the middle range of sizes, the order book is a little higher than the Cape size order book, but the age profile of the segments is older. The average age is higher. So that counterbalances the lower order book, I guess, of the Cape size in some sense. And if anything, if regulations become stricter, they would have more of an effect on an older vessel than on a newer one. So I believe that in our case too, the order book is still a supporting factor, but it has been a supportive factor for the last three or four years.

And the market did not do well in 2025, especially until late 2024. So demand was really the determining factor then. And I believe that's why we talk about the supply-demand balance. Both sides of the equation are equally important. I think demand during these years has improved for all the reasons that we discussed, and it was supported by a good supply story. We feel that that will continue in 2026, and we are hopeful that it will continue in 2027.

Mark Reichman, Analyst at Noble Capital Markets

Well, that was a very concise answer. I really appreciate that. Very helpful.

Anastasios Aslidis, CFO

Thank you, Mark.

OPERATOR

Thank you. That concludes today's Q and A session. I will turn the call back over to the CFO for any closing comments.

Anastasios Aslidis, CFO

We would like to thank everybody for attending our call. Wish you have a nice remaining summer and look forward to welcoming you to our November call. Virtually.

OPERATOR

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and we ask that you please disconnect your lines.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.