Euroseas Ltd. Accelerates Growth with New Eco-Friendly Ships and a Strategic Spin-Off

Euroseas Ltd. , a leading owner and operator of container vessels and provider of seaborne transportation for containerized cargoes, was recently hosted at Capital Link’s 2025 Company Presentation Series. During the webinar, Chairman and CEO, Mr. Aristeidis Pittas and CFO and Treasurer, Dr. Anastasios Aslidis , shared insights into the company’s current operations, business development, growth strategy, and sector outlook.

To watch the full presentation, please visit the following link:

Highlights:

• Fleet Modernization Update: The nine-vessel newbuilding program is complete; two 4,300 TEU intermediate-size container vessels are expected to be delivered in Q4 2027; two oldest vessels will be spun off in a separate company.
• Strategic Spin-Off of Euroholdings Ltd.: New entity, offers flexibility to pursue its own growth and distribution strategies, including potential acquisitions in other shipping sectors such as dry bulk and tankers, awaits NASDAQ listing approval in February 2025.
• Charter Coverage: Secured 82% of available charter days for 2025 and 45% for 2026, providing strong revenue visibility.
• Feeder and intermediate Segments Supply Squeeze to Boost Charter Rates:? With vessel scrapping accelerating and a low ~5% order book recorded in the feeder and intermediate containership segments, supply could drive higher charter rates despite short-term volatility.
• Enhancing Shareholder Value: ESEA trades at ~45% of its NAV, presenting significant discount and appreciation potential while a ~7.5% annualized dividend yield and an active share repurchase program further enhance shareholder returns.

A Legacy Rooted in Shipping Excellence

Euroseas Ltd. is built on a rich maritime legacy, with Chairman and CEO Aristides Pittas representing the fourth generation of the Pittas family in shipping. With deep expertise and a lifelong connection to the industry, the company’s leadership brings a profound understanding of the global shipping landscape. Backed by a management team with decades of collective experience, Euroseas continues to foster stability, strategic continuity, and a strong industry presence. The company also benefits from the guidance of an independent Board of Directors, composed of highly accomplished professionals from diverse industries, who provide valuable oversight and strategic direction.

Strategic Fleet Modernization and Spin-off of Euroholdings Ltd.

Founded in 2005, Euroseas Ltd. has been publicly traded on the NASDAQ Capital Market under the ticker symbol ESEA since 2007. The company operates a modern and efficient fleet of 22 container ships, consisting of 15 feeder and 7 intermediate containerships, with a total cargo capacity of 67,494 TEU. Its daily operations are overseen by Eurobulk Ltd., an affiliated ship management company that operates on an arm’s-length basis, ensuring transparency and cost efficiency. As a vertically integrated organization, Eurobulk has cultivated long-standing relationships with charterers, suppliers, financial institutions, and key industry stakeholders, ensuring operational resilience and strategic flexibility in a dynamic shipping market.

In 2022, Euroseas commenced a nine-vessel newbuilding program at the Hyundai Mipo shipyard in South Korea. This initiative included nine feeder containerships equipped with Tier III engines and sustainability-linked features, such as alternative maritime power and LNG readiness. These eco-efficient vessels are designed to be 30-40% more fuel-efficient than older, non-eco ships. As of 2025, all nine vessels have been delivered. Building on this momentum, Euroseas has expanded its fleet renewal strategy by ordering two 4,300 TEU intermediate-sized containerships, which are scheduled for delivery in Q4 2027. The total consideration for each of these two newbuilding contracts is approximately $60m and will be financed with a combination of debt and equity.

In addition to its fleet renewal program, Euroseas has embarked on a vessel retrofit program to further modernize and enhance the performance and competitiveness of its fleet. To-date, three vessels have been retrofitted, with two more scheduled for upgrades in 2025. The types of retrofits that are implemented include a new bulbous bow, a new and lighter propeller, silicone hull coatings, and LED lights, among other enhancements. The investment required for these modifications is approximately $2-3 million, and, in some cases, have been carried out in cooperation with the vessel’s charterers. These retrofits are already generating significant improvements, with fuel savings of around 25%, making them a highly effective and cost-efficient investment, while also achieving substantial emission reductions.

In line with its modernization strategy, the company recently announced the spin-off of its oldest vessels, forming ??a new entity, Euroholdings Ltd., which is currently awaiting ??NASDAQ approval for listing in February 2025. This strategic move allows Euroseas to focus on modernizing its fleet with high specification, eco vessels with a smaller environmental footprint, while Euroholdings would pursue its own growth strategy, including potential acquisitions in other shipping sectors like dry bulk or tankers. Balance sheet structure and distributions to shareholders are likely to be different. Currently Euroholdings will hold significant cash and have no debt.

Market Outlook and Strong Chartering Market

According to Mr. Pittas, the container shipping market experienced a prolonged downturn between 2013 and 2020, primarily due to over-ordering of vessels in the early 2000s. However, the market rebounded during the COVID-19 pandemic, driven by shifts in trading patterns, increased demand for finished goods and inefficiencies in the transportation system. In early 2024, as the effects of the COVID-19 pandemic subsided, geopolitical events such as Houthi attacks in the Red Sea and the avoidance of crossing the Suez Canal by major shippers have further disrupted trade routes, increasing demand for containerships. While these disruptions have impacted supply chains, Mr. Pittas emphasized that the long-term fundamentals of the market remain more closely tied to fleet supply, new vessel orders, and environmental regulations rather than short-term geopolitical shocks. Looking ahead, Mr. Pittas identified several factors that could impact the container shipping market, including continuing geopolitical disturbances and their impact on global trade routes, new vessel orders and their effect on fleet supply and capacity, and stringent greenhouse gas environmental regulations shaping fleet renewal and scrapping decisions. He noted that, absent one-off events, containerized trade growth is closely linked to global GDP trends, meaning that any decline in economic growth could impact trade volumes. Nevertheless, he remains confident that the aging? fleet and expected scrapping of older, less efficient vessels will help rebalance the market quickly if it drops to very low levels.

Additionally, Mr. Pittas did express optimism about the feeder and intermediate-sized containership segment. The supply and demand picture for these vessels looks promising, with 25% of the fleet being over 20 years old and the order book at just 5%, creating a potential supply gap that could support charter rates. He further explained that charter durations for feeder vessels depend on vessel age. Newer feeder ships typically secure contracts of up to three years, while older vessels are chartered for one to two years. This variation reflects market preferences, as newer, more efficient vessels are favoured for longer-term commitments, aligning with the industry's emphasis on fuel efficiency and operational cost savings.

Regarding the potential substitution of feeder vessels by mid-sized ships, industry insights indicate that while larger vessels offer certain operational advantages, their deployment remains limited by port infrastructure constraints. Many smaller ports lack the capacity to accommodate mid-sized ships, ensuring a continued need for feeder vessels to service these trade routes. Despite the potential for cascading effects, the demand for smaller ships remains structurally intact.

In the last quarter of 2024, Euroseas fixed several charters at profitable rates. For example, the M/V Synergy Busan was fixed for 36 to 38 months at $35,500 per day, and the M/V Jonathan was fixed for 11 to 13 months at $20,000 per day. The company has secured 82% of its available days in 2025 at an average charter rate of over $31,000 per day and 45% of 2026 at the same level, ensuring continued profitability for the next couple of years.

Achieving Financial Stability

Dr. Aslidis, CFO of Euroseas, mentioned that for the first nine months of 2024, the company reported total net revenues of $159.6 million, adjusted EBITDA of $102.9 million, and adjusted net income of $80.2 million. With a quarterly dividend of $0.60 per share, at the current share price of about $32.0, the company provides an annualized dividend yield of approximately 7.5%. Their earnings per share for the first nine months were approximately $11.50 corresponding to annualized earnings per share of about $15.

The balance sheet as of September 30, 2024, showed total assets of approximately $580.9 million and total liabilities of $236.3 million, resulting in about $344 million of book shareholders equity. The charter adjusted market value of the vessels is estimated at $583 million about $133m higher than the book value of the vessels, resulting in a net asset value (“NAV”) of around $69 per share. It’s important to note that despite its strong financials, Euroseas trades at a significant discount to its NAV, with its share price hovering around $32 per share. This presents an attractive investment opportunity with considerable upside potential.

Furthermore, Euroseas maintains a low leverage ratio, with outstanding debt standing at just 36% of its current charter-adjusted vessel values. Dr. Aslidis further disclosed that the company plans to assume additional debt to partly fund its newbuilding program, targeting a 55-60% debt level relative to the contracted price of new vessels, while maintaining an overall leverage ratio of about 40%.

Euroholdings' Strategic Direction and Growth Prospects

Euroholdings is exploring diversification opportunities beyond the containership sector. The company remains open to acquiring dry bulk or tanker vessels, provided market conditions present viable opportunities. Rather than being confined to a single segment, Euroholdings will pursue value-driven acquisitions, even if they involve older vessels if these make economic sense. With management holding 50-60% of the common stock, shareholder interests remain a core priority. Any equity issuances will be done at a valuation that aligns with long-term common shareholder value creation.

Industry Consolidation and Market Dynamics

Finally, Mr. Pittas noted that the independently owned container shipping fleet has not seen significant ownership consolidation due to reduced economies of scale in costs beyond a certain fleet size. At the same time, smaller independent operators like Euroseas can achieve similar charter rates to larger shipping companies. Euroseas remains focused on maintaining a modern, efficient fleet and securing long-term charters to maximize profitability.

As Mr. Aristides Pittas said, “We have built a charter book and a fleet model that largely insulates us from near-term disturbances. Our profitability is expected to continue unabated, and we remain committed to rewarding our shareholders.”

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